<PAGE>
EXHIBIT (p)(2)
Code of Ethics of HighMark Capital Management, Inc.
<PAGE>
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 or otherwise pursuant to the By-laws 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
(iii) Shares issued by open-end investment companies registered under the
Act.
1
<PAGE>
"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. Not engage in 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 AND 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 not enter into personal or Client-related
Securities transactions or make investment decisions or recommendations 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.
2
<PAGE>
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 then 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 gift, entertainment or other personal
benefit to existing or prospective Clients or suppliers of HighMark or an
affiliate of 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.
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;
3
<PAGE>
c. A transaction in a Security issued by UnionBanCal 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 a
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 has 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;
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:
4
<PAGE>
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.
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 efforts 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 this 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.
5
<PAGE>
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.
6
