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EXHIBIT (12)
Opinion of Ropes & Gray as to Tax Matters
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Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
(617) 951-7000
Fax: (617) 951-7050
August 21, 2000
Highmark Bond Fund
Highmark Intermediate-Term Bond Fund
-- Highmark Funds
1 Freedom Valley Drive
Oaks, PA 19456
Ladies and Gentlemen:
We have acted as counsel in connection with the Plan of Reorganization
made as of April 26, 2000 (the "Plan"), between Highmark Funds (the "Trust"), a
Massachusetts business trust, on behalf of two of its series, Highmark Bond Fund
(the "Acquiring Fund") and Highmark Intermediate-Term Bond Fund (the "Target
Fund"). The Plan describes a proposed transaction (the "Transaction") to occur
on August , 2000, or such other date as may be decided by the parties (the
"Exchange Date"), pursuant to which Acquiring Fund will acquire substantially
all of the assets of Target Fund in exchange for shares of beneficial interest
in Acquiring Fund (the "Acquiring Fund Shares") and the assumption by Acquiring
Fund of all of the liabilities of Target Fund following which the Acquiring Fund
Shares received by Target Fund will be distributed by Target Fund to its
shareholders in liquidation and termination of Target Fund. This opinion as to
certain federal income tax consequences of the Transaction is furnished to you
pursuant to Section 7(g) of the Plan. Capitalized terms not defined herein are
defined in the Plan.
Target Fund is a series of the Trust which is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company. Shares of Target Fund are redeemable at net asset
value at each shareholder's option. Target Fund has elected to be a regulated
investment company for federal income tax purposes under Section 851 of the
Internal Revenue Code of 1986, as amended (the "Code").
Acquiring Fund is a series of the Trust which is registered under the
1940 Act as an open-end management investment company. Shares of Acquiring Fund
are redeemable at net asset value at each shareholder's option.
For purposes of this opinion, we have considered the Plan, the Proxy
Statement, the Registration Statement (including the items incorporated by
reference therein), and such other items as we have deemed necessary to render
this opinion. In addition, you provided us with a letter dated as of the date
hereof, representing as to certain facts, occurrences and information upon which
you have indicated that we may rely in rendering this opinion (whether or not
contained or reflected in the documents and items referred to above).
Based on the foregoing representations and our review of the documents
and items referred to above, we are of the opinion that for federal income tax
purposes:
(i) The Transaction will constitute a reorganization within the meaning
of Section 368(a) of the Code. Acquiring Fund and Target Fund will
each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
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Highmark Bond Fund
Highmark Intermediate-Term Bond Fund
-- Highmark Funds
August 21, 2000
Page 2
(ii) No gain or loss will be recognized by Target Fund upon the transfer
of Target Fund's assets to Acquiring Fund in exchange for Acquiring
Fund Shares and the assumption by Acquiring Fund of the liabilities
of Target Fund, or upon the distribution of Acquiring Fund Shares
by Target Fund to its shareholders in liquidation;
(iii) No gain or loss will be recognized by the Target Fund shareholders
upon the exchange of their Target Fund Shares for Acquiring Fund
Shares;
(iv) The aggregate basis of Acquiring Fund Shares a Target Fund
shareholder receives in connection with the Transaction will be the
same as the aggregate basis of his or her Target Fund Shares
exchanged therefor;
(v) A Target Fund shareholder's holding period for his or her Acquiring
Fund Shares will be determined by including the period for which he
or she held the Target Fund Shares exchanged therefor, provided
that he or she held such Target Fund Shares as capital assets;
(vi) No gain or loss will be recognized by Acquiring Fund upon the
receipt of the assets of Target Fund in exchange for Acquiring Fund
Shares and the assumption by Acquiring Fund of the liabilities of
Target Fund;
(vii) The basis in the hands of Acquiring Fund of the assets of Target
Fund transferred to Acquiring Fund in the Transaction will be the
same as the basis of such assets in the hands of Target Fund
immediately prior to the transfer; and
(viii) The holding periods of the assets of Target Fund in the hands of
Acquiring Fund will include the periods during which such assets
were held by Target Fund.
Very truly yours,
/s/ Ropes & Gray
Ropes & Gray
