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3/8/00 DRAFT
CODE OF ETHICS
OF
HIGHMARK CAPITAL MANAGEMENT, INC.
HighMark Capital Management, Inc. ("HighMark") conducts its investment
management and advisory activities in accordance with the highest standards of
ethical conduct and in compliance with all applicable laws, rules and
regulations including Rule 17j-1 issued under the Investment Company Act of 1940
(the "Act"). All directors, officers and employees of HighMark are subject to
this Code, although certain specific requirements apply only to Access Persons
or Advisory Persons as set forth below. Failure to comply with this Code could
result in disciplinary action up to and including termination of employment.
CERTAIN DEFINITIONS
"ACCESS PERSON" means each director and officer of HighMark and each Advisory
Person. For this purpose, an "officer" of HighMark means each person who is
appointed by the board of directors of HighMark as a corporate officer. Access
Person could also include any other person who performs a policy making function
for HighMark similar to that of an officer and is designated as an Access Person
by the President of HighMark.
"ADVISORY PERSON" means any director, officer or employee of HighMark who in
connection with his or her regular functions or duties, makes, participates in,
or obtains information regarding the purchase or sale of Covered Securities by a
Client, or whose functions relate to the making of any recommendations with
respect to such purchases or sales; or any natural person in a control
relationship (as defined in Section 2(a)(9) of the Act) to HighMark who obtains
information concerning recommendations made to a Client with regard to the
purchase or sale of Covered Securities by a Client. "Advisory Persons" include
all fund managers, associate fund managers, members of Fixed Income, Equity, or
Balanced teams, securities research analysts, regional portfolio managers,
assistant regional portfolio managers, fund traders and all personnel who make
or participate in the making of investment recommendations or decisions for
Clients. All Advisory Persons are also Access Persons.
"BENEFICIAL INTEREST" in a Security means a pecuniary interest acquired directly
or indirectly through any contract, arrangement, understanding, relationship or
otherwise. "Pecuniary interest" means the opportunity to profit directly or
indirectly from a transaction in a Security, and can include an opportunity to
profit from an interest in a Security held by members of immediate family or by
certain partnership, trust, corporate or other relationships.
"CLIENTS" means the clients of HighMark to whom it provides investment
management or advisory services from time to time, including investment
companies registered under the Act.
"COVERED SECURITY" means any Security except the following:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
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(iii) Shares issued by open-end investment companies registered under
the Act.
"HIGHMARK COMPLIANCE" means the unit within HighMark responsible for the
compliance function and for administration of this Code.
"HIGHMARK PERSONNEL" means all directors, officers and employees of HighMark.
"SECURITY" means a security as defined in Sec. 2(a)(36) of the Act, and
includes, among other things, any interest or instrument commonly known as a
"Security" whether in the nature of debt or equity, including any stock, bond,
note, debenture, evidence of indebtedness, or certificate of interest or
participation, and including any put, call, straddle, option or privilege on a
Security or on a group or index of Securities, or (to the extent traded on a
national securities exchange) on foreign currency. A Security includes any
option to purchase or sell a Security and any Security convertible into or
exchangeable for a Security.
STATEMENT OF GENERAL PRINCIPLES
FIDUCIARY PRINCIPLES. HighMark Personnel shall:
1. Conduct themselves and their activities so as to place the interests
of Clients before their own personal interests;
2. Conduct their personal transactions in Securities in a manner that
avoids any actual or potential conflict of interest, and ensures that
their personal trading does not interfere with or take precedence over
the business of HighMark or the interests of its Clients; and
3. Avoid conduct that allows them or appears to allow them to profit or
benefit from their positions with HighMark or abuse their position of
trust and responsibility.
UNLAWFUL OR DISHONEST ACTS.
HighMark Personnel shall not engage in any professional conduct involving
dishonesty, fraud, deceit or misrepresentation, or commit any act that reflects
adversely on their honesty, trustworthiness, or professional competence.
HighMark Personnel shall not, in connection with the purchase or sale, directly
or indirectly, for their own account of a Security held or to be acquired by a
Client:
1. Employ any device, scheme or artifice to defraud a Client;
2. Make any untrue statement of a material fact to a Client or omit to
state a material fact necessary in order to make the statements made to
the Client, in light of the circumstances under which they are made, not
misleading;
3. Engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on a Client; or
4. Engage in any manipulative practice with respect to a Client.
CONFIDENTIAL INFORMATION
HighMark Personnel shall not seek to obtain Confidential Information from any
affiliate of HighMark or from any other source. HighMark Personnel shall not use
Confidential Information for personal benefit or benefit of a Client. For
instance, HighMark Personnel shall
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not enter into personal or Client-related Securities transactions or make
investment decisions for a Client, based on such information, nor shall
HighMark Personnel provide such information to others who may then profit
from it. "Confidential Information" is any information about a company, or
its Securities, which has not been generally disclosed or made available to
the public.
CONFLICTS OF INTEREST
HighMark Personnel shall not do any of the following.
1. Without prior written approval of HighMark Compliance engage in any
outside business, employment or activity for compensation which could
compete with, or conflict with the interests of, HighMark or any
affiliate, or interfere with the person's regular duties for HighMark, or
serve as an officer, director, trustee or general partner of a publicly
traded company.
2. Without prior written approval of HighMark Compliance, participate in
joint financial or investment activities with a Client if the arrangement
would create an actual or potential conflict of interest. Joint accounts
with immediate family members are permitted.
3. Solicit or accept any gift, entertainment or other personal benefit of
more than nominal value (currently $100) from a person or entity that
does or expects to do business with HighMark or an affiliate of
HighMark.
4. Provide at personal expense any gifts, entertainment or other
personal benefit to existing prospective Clients or suppliers of
HighMark or an affiliate HighMark.
RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS.
HIGHMARK PERSONNEL. HighMark Personnel shall not:
1. FRONT RUNNING. Directly or indirectly, acquire or dispose of a
Beneficial Interest in a Security with advance knowledge of a Client
or Client-related transaction in the Security or a related Security
which could influence the market price of the Security.
ADVISORY PERSONS. Advisory Persons shall not:
1. IPO's. Directly or indirectly, acquire a Beneficial Interest in a
Security in an Initial Public Offering without prior written
approval from HighMark Compliance. "Initial Public Offering" is
any offering of Securities registered under the Securities Act of 1933,
the issuer of which, immediately before the registration, was not
subject to the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934; or
2. PRIVATE PLACEMENTS. Directly or indirectly, acquire a Beneficial
Interest in a Security in a Private Placement without prior written
approval from HighMark Compliance. A "Private Placement" is any
offering that is exempt from registration pursuant to Sections 4(2) or
4(6) (or Rules 504, 505, or 506) under the Securities Act of 1933.
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3. PRE-CLEARANCE. Without prior written approval of HighMark
Compliance, directly or indirectly acquire or dispose of a Beneficial
Interest in any Covered Security in any transaction except the
following:
a. A transaction in a Covered Security which consists of an
interest in a broad-based market-basket or index of publicly
traded Securities, approved for trading by the appropriate
federal governmental authority, such as Standard & Poor's
Depository Receipts (SPDR's);
b. A transaction over which the Advisory Person has no direct
or indirect influence or control;
c. A transaction in a Security issued by Union BanCal
Corporation;
d. Acquisitions which are part of an automatic dividend
reinvestment plan or employee restricted stock award plan;
and
e. A transaction which is non-volitional on the part of the
Advisory Person, such as a transaction upon exercise of a
put or call written by the Advisory Person, or an
acquisition of Securities through BONA FIDE gift or
bequest; or
4. BLACKOUT PERIOD. Directly or indirectly, acquire or dispose of a
Beneficial Interest in any Covered Security with access to
information that a Client acquired or disposed of the same or a related
Covered Security within the prior 7 days, or that a Client is
considering acquiring or selling the same or a related Covered Security
within the following 7 days.
REPORTING REQUIREMENTS OF ACCESS PERSONS AND ADVISORY PERSONS.
All Access Persons must submit the following reports to HighMark Compliance.
Each report must be dated the date the report is submitted by the Access Person.
This includes all individual and joint accounts. Nil reports are required.
INITIAL HOLDINGS REPORTS. Within 10 days after the person becomes an Access
Person, a report containing the following information:
1. The title, number of shares and principal amount of each Covered
Security in which the Access Person had a Beneficial Interest when the
person became an Access Person, except any Covered Security held in an
account over which the Access Person has no direct or indirect
influence or control; and
2. The name of any broker, dealer or bank with whom the Access Person
maintained an account in which any Securities were held for the direct
or indirect benefit of the Access Person as of the date the person
became an Access Person.
QUARTERLY TRANSACTION REPORTS. Within 10 days after the end of a calendar
quarter, a report containing the following information:
1. With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any Beneficial Interest, except
any transaction effected for an account over which the Access Person
has no direct or indirect influence or control:
a. The date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and
the principal amount of each Covered Security involved;
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b. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. The price of the Covered Security at which the transaction
was effected; and
d. The name of the broker, dealer or bank with or through
which the transaction was effected; and
2. With respect to any account established by the Access Person in
which Securities were held during the quarter for the direct or
indirect benefit of the Access Person:
a. The name of the broker, dealer or bank with whom the Access
Person established the account; and
b. The date the account was established.
3. For Advisory Persons only, the following additional information:
a. A report of any Covered Securities in which the Access
Person held a Beneficial Interest during the quarter which
constitute more than one-half of one percent of outstanding
voting stock in any company whose stock is publicly traded or
is about to become publicly traded.
b. A report of any Covered Securities in which the Access
Person held a Beneficial Interest during the quarter which
were also held during the quarter by a Client whose portfolio
is managed by the Access Person.
ANNUAL HOLDINGS REPORTS. On or before January 30 of each year, the following
information current as of December 31 of the previous year:
1. The title, number of shares and principal amount of each Covered
Security in which the Access Person had any Beneficial Interest, except
any Covered Security held in an account over which the Access Person
has no direct or indirect influence or control; and
2. The name of any broker, dealer or bank with whom the Access Person
maintains an account in which any Securities are held for the direct or
indirect benefit of the Access Person.
IMMEDIATE NOTIFICATION OF CONTROL POSITION. An Access Person shall notify
HighMark Compliance immediately if the Access Person acquires a Beneficial
Interest in 5% or more of the voting stock of a publicly traded company, or is
otherwise deemed to be in control of the company under Section 13(d) of the
Securities and Exchange Act of 1934.
ADDITIONAL INFORMATION. Any additional information regarding personal Securities
trading activity that may be requested by HighMark Compliance, including account
statements and other information, to confirm the information contained in the
reports described above.
ADMINISTRATION OF THIS CODE
PROCEDURES. HighMark shall adopt and maintain procedures reasonably necessary to
prevent violations of this Code.
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APPROVALS. Any approval given by HighMark Compliance pursuant to this Code may
be subject to such conditions and limitations as specified by HighMark
Compliance.
CONFIDENTIALITY. HighMark Compliance will use its best effots to ensure that
all reports of Securities transactions and any other information of a
confidential nature submitted to HighMark Compliance pursuant to this
Code shall be treated as confidential. Such reports and information shall,
however, be available for inspection by appropriate regulatory agencies and
other parties within and outside HighMark as are necessary to evaluate
compliance with or disciplinary action under the Code.
AMENDMENTS. Any material change to this Code shall be approved by the board of
directors (or trustees) of HighMark and of any Client of HighMark which is an
investment company registered under the Act, no later than six months after
adoption of the change.
FUND REPORTS. At least annually HighMark shall furnish to its board of directors
and to the board of directors (or trustees) of any Client of HighMark which is
an investment company registered under the Act, a written report that:
1. Describes any issues arising under this Code or procedures since the
last report, including, but not limited to, information about material
violations of this Code or procedures and sanctions imposed in response
to the material violations; and
2. Certifies that HighMark has adopted procedures reasonably necessary
to prevent Access Persons from violating this Code.
ACKNOWLEDGEMENT. All HighMark Personnel shall be required annually to
acknowledge that they have read and understand this Code and that they are
subject to it. They shall also required to certify annually that they have
complied with the requirements of this Code for the previous period.
RECORDS RETENTION. HighMark Compliance shall maintain, at HighMark's principal
place of business, appropriate records related to this Code, at least to the
extent and for the time periods required by Rule 17j-1 under the Act.
RESOLUTION OF CONFLICTS. To the extent HighMark Personnel are subject to any
other code of ethics or policy of personal conduct, such as the business
standards of conduct of Union Bank of California, N.A., and any provision of
such code or policy conflicts with this Code, HighMark Personnel are required
to comply with the higher standard or stricter provision.
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