Investment Company Act of 1940
File No. 812-13843
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FIRST AMENDED AND RESTATED APPLICATION FOR AN ORDER PURSUANT TO
SECTION 6(c) OF THE INVESTMENT
COMPANY ACT OF 1940 FOR AN ORDER OF EXEMPTION
FROM RULE 12d1-2(a) OF SUCH ACT
THE MATTER OF
HIGHMARK FUNDS
and
HIGHMARK CAPITAL MANAGEMENT, INC.
(File No. 812-13843)
Communications, copies and notice to:
Gregory C. Davis, Esq.
Ropes & Gray LLP
Three Embarcadero Center
San Francisco, California 94111-4006
copy to:
Karen Seaman, Esq.
Union Bank, N.A.
400 California Street, 16th Floor
San Francisco, CA 94104
Page 1 of 21 sequentially numbered pages (including exhibits)
As filed with the Securities and Exchange Commission on April 29, 2011
TABLE OF CONTENTS
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| EXHIBIT B – Verifications of Application and Statements of Fact |
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UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
IN THE MATTER OF
| HighMark Funds 350 California Street, Suite 1600 San Francisco, CA 94104
HighMark Capital Management, Inc. 350 California Street, Suite 1600 San Francisco, CA 94104 |
: : : : : : : |
First Amended and Restated Application for an Order Pursuant to Section 6(c) of the Investment Company Act of 1940 for an Order of Exemption from Rule 12d1-2(a) of such Act |
HighMark Funds (the “Trust”) and HighMark Capital Management, Inc. (“HCM” and together with the Trust, the “Applicants”) hereby file this First Amended and Restated Application (the “Application”) pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the “Act”), for an order exempting the Applicants from Rule 12d1-2(a) under the Act. Applicants request the exemption to the extent necessary to permit any existing or future series of the Trust and any other existing or future registered open-end investment company or series thereof advised by HCM or any person controlling, controlled by or under common control with HCM (any such adviser or HCM, an “Adviser”) that invests in other open-end management investment companies (“Underlying Funds”) in reliance on Section 12(d)(1)(G) of the Act and Rule 12d1-2 under the Act, and which is also eligible to invest in securities (as defined in Section 2(a)(36) of the Act) in reliance on Rule 12d1-2 under the Act (each a “Fund of Funds”) to also invest, to the extent consistent with its investment objective, policies, strategies
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and limitations, in financial instruments that may not be securities within the meaning of Section 2(a)(36) of the Act (“Other Investments”).1
A. The Trust and the Funds of Funds
The Trust is organized as a business trust formed under the laws of the Commonwealth of Massachusetts and is registered with the Securities and Exchange Commission (the “Commission”) as an open-end management investment company. The existing Funds of Funds are separate investment series of the Trust, each of which invests in other registered investment companies in reliance on Section 12(d)(1)(G) of the Act and Rule 12d1-2 under the Act. The Funds of Funds are not prohibited from investing directly in securities that are not issued by an investment company, and they may invest directly in non-investment company securities in reliance on Rule 12d1-2(a) to the extent consistent with their respective investment objectives, policies, strategies and limitations.
1. HighMark Capital Growth Allocation Fund
HighMark Capital Growth Allocation Fund’s investment objective is primarily to seek capital appreciation. As of January 31, 2011, the Fund of Funds pursued its objective by investing its assets in a combination of affiliated and non-affiliated registered open-end investment companies. As of such date, the Fund of Funds was invested in the following investment companies: HighMark Cognitive Value Fund, HighMark Core Equity Fund, HighMark Enhanced Growth Fund, HighMark Fundamental Equity Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark International
| 1 | Every existing entity that currently intends to rely on the requested order is named as an applicant. Any existing or future entity that relies on the requested order will do so only in accordance with the terms and conditions in this application. |
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Opportunities Fund, HighMark Large Cap Growth Fund, HighMark Large Cap Value Fund, HighMark NYSE Arca Tech 100 Index Fund, HighMark Small Cap Advantage Fund, HighMark Small Cap Value Fund, HighMark Value Momentum Fund, HighMark Bond Fund, HighMark Short Term Bond Fund, Fidelity Advisor Industrials Fund, JP Morgan Small Cap Growth Fund, Lazard Emerging Markets Equity Portfolio, Morgan Stanley Institutional Fund and Eaton Vance Income Fund of Boston.
2. HighMark Diversified Equity Allocation Fund
HighMark Diversified Equity Allocation Fund’s investment objective is to seek capital appreciation. As of January 31, 2011, the Fund of Funds pursued its objective by investing its assets in a combination of affiliated and non-affiliated registered open-end investment companies. As of such date, the Fund of Funds was invested in the following investment companies: HighMark Cognitive Value Fund, HighMark Core Equity Fund, HighMark Enhanced Growth Fund, HighMark Fundamental Equity Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark International Opportunities Fund, HighMark Large Cap Growth Fund, HighMark Large Cap Value Fund, HighMark NYSE Arca Tech 100 Index Fund, HighMark Small Cap Advantage Fund, HighMark Small Cap Value Fund, HighMark Value Momentum Fund, HighMark Diversified Money Market Fund, Fidelity Advisor Industrials Fund, JPMorgan Small Cap Growth Fund, Lazard Emerging Markets Equity Portfolio and Morgan Stanley Institutional Fund.
3. HighMark Growth & Income Allocation Fund
HighMark Growth & Income Allocation Fund’s investment objective is to seek capital appreciation and income. As of January 31, 2011, the Fund of Funds pursued its objective by investing its assets in a combination of affiliated and non-affiliated registered open-end investment companies. As of such date, the Fund of Funds was invested in the following
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investment companies: HighMark Cognitive Value Fund, HighMark Core Equity Fund, HighMark Enhanced Growth Fund, HighMark Fundamental Equity Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark International Opportunities Fund, HighMark Large Cap Growth Fund, HighMark Large Cap Value Fund, HighMark NYSE Arca Tech 100 Index Fund, HighMark Small Cap Advantage Fund, HighMark Small Cap Value Fund, HighMark Value Momentum Fund, HighMark Bond Fund, HighMark Short Term Bond Fund, Fidelity Advisor Industrials Fund, JPMorgan Small Cap Growth Fund, Lazard Emerging Markets Equity Portfolio, Morgan Stanley Institutional Fund and Eaton Vance Income Fund of Boston.
4. HighMark Income Plus Allocation Fund
HighMark Income Plus Allocation Fund’s investment objective is primarily to seek income and secondarily to seek capital appreciation. As of January 31, 2011, the Fund of Funds pursued its objective by investing its assets in a combination of affiliated and unaffiliated registered open-end investment companies. As of such date, the Fund of Funds was invested in the following investment companies: HighMark Bond Fund, HighMark Short Term Bond Fund, HighMark Cognitive Value Fund, HighMark Core Equity Fund, HighMark Enhanced Growth Fund, HighMark Fundamental Equity Fund, HighMark Geneva Mid Cap Growth Fund, HighMark Geneva Small Cap Growth Fund, HighMark International Opportunities Fund, HighMark Large Cap Growth Fund, HighMark Large Cap Value Fund, HighMark NYSE Arca Tech 100 Index Fund, HighMark Small Cap Advantage Fund, HighMark Small Cap Value Fund, HighMark Value Momentum Fund, Eaton Vance Income Fund of Boston, Fidelity Advisor Industrials Fund, JPMorgan Small Cap Growth Fund, Lazard Emerging Markets Equity Portfolio and Morgan Stanley Institutional Fund.
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B. The Adviser
Each Fund of Funds has entered or will enter into an investment advisory agreement with an Adviser pursuant to which the Adviser provides or will provide investment management advice and manages or will manage the Fund of Funds’ business affairs, subject to the general oversight of the Fund of Funds’ Board of Trustees (“Board”). HCM is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and currently serves as investment adviser to each existing Fund of Funds. Any other Adviser will also be registered under the Advisers Act. HCM is a California corporation and is a wholly-owned subsidiary of Union Bank, N.A., which is a wholly-owned subsidiary of UnionBanCal Corporation. UnionBanCal Corporation is wholly-owned by The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a wholly-owned subsidiary of Mitsubishi UFJ Financial Group, Inc.
Each Fund of Funds invests in certain Underlying Funds as set forth in its prospectus. Applicants propose that, subject to the terms and conditions set forth in this Application, the Funds of Funds be permitted to invest in Other Investments while investing in Underlying Funds and other securities in reliance on Section 12(d)(1)(G) of the Act and Rule 12d1-2 under the Act. The opportunity to invest in Other Investments will allow the Funds of Funds greater flexibility to meet their investment objectives. For example, there may be times when using a derivative may allow a Fund of Funds to invest in eligible asset classes with greater efficiency and lower cost than is possible through investment in an Underlying Fund. Each Fund of Funds would use Other Investments for a purpose that is consistent with the Fund of Funds’ investment objectives, policies, strategies and limitations. Consistent with its fiduciary obligations under the Act, each Fund of Funds’ Board will review the advisory fees charged by the Fund of Funds’ investment adviser to ensure that they are based on services provided that are in addition to, rather than
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duplicative of, services provided pursuant to the advisory agreement of any investment company in which the Fund of Funds may invest. The Applicants state that the proposed arrangement would comply with the provisions of Rule 12d1-2 under the Act, but for the fact that the Funds of Funds may invest a portion of their assets in Other Investments.
IV. APPLICABLE LAW AND LEGAL ANALYSIS
Section 12(d)(1)(A) of the Act provides that no registered investment company may acquire securities of another investment company if such securities represent more than 3% of the acquired company’s outstanding voting stock or more than 5% of the acquiring company’s total assets, or if such securities, together with the securities of other investment companies, represent more than 10% of the acquiring company’s total assets. Section 12(d)(1)(B) of the Act provides that no registered open-end investment company may sell its securities to another investment company if the sale will cause the acquiring company to own more than 3% of the acquired company’s voting stock, or cause more than 10% of the acquired company’s voting stock to be owned by investment companies.
In 1996 Congress added Section 12(d)(1)(G) to the Act to permit the operation of funds of funds involving investment companies which are part of the same “group of investment companies,” which is defined in Section 12(d)(1)(G)(ii) as any two or more registered investment companies that hold themselves out to investors as related companies for purposes of investment and investor services. Section 12(d)(1)(G)(i) provides, in relevant part, that Section 12(d)(1) will not apply to securities of a registered open-end investment company or registered unit investment trust if:
(I) the acquired company and the acquiring company are part of the same group of investment companies;
(II) the securities of the acquired company, securities of other registered open- end investment companies and registered unit investment trusts that are part of the
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same group of investment companies, Government securities, and short-term paper are the only investments held by the acquiring company;
(III) with respect to
(aa) securities of the acquired company, the acquiring company does not pay and is not assessed any charges or fees for distribution-related activities, unless the acquiring company does not charge a sales load or other fees or charges for distribution-related activities; or
(bb) securities of the acquiring company, any sales loads and other distribution-related fees charged, when aggregated with any sales load and distribution-related fees paid by the acquiring company with respect to securities of the acquired company, are not excessive under rules adopted pursuant to section 22(b) or section 22(c) by a securities association registered under section 15A of the Securities Exchange Act of 1934, or the Commission; [and]
(IV) the acquired company has a policy that prohibits it from acquiring any securities of registered open-end investment companies or registered unit investment trusts in reliance on [Section 12(d)(1)(F) or Section 12(d)(1)(G)].
In 2006 the Commission adopted Rule 12d1-2 under the Act.2 That Rule permits a registered open-end investment company or a registered unit investment trust relying on Section 12(d)(1)(G) of the Act to acquire:
(1) Securities issued by an investment company, other than securities issued by another registered investment company that is in the same group of investment companies, when the acquisition is in reliance on Section 12(d)(1)(A) or 12(d)(1)(F) of the Act;
(2) Securities (other than securities issued by an investment company); and
(3) Securities issued by a money market fund, when the acquisition is in reliance on Rule 12d1-1.
For the purposes of Rule 12d1-2, the term “securities” means any security as that term is defined in Section 2(a)(36) of the Act.3 The Commission noted in the Adopting Release that permitting
| 2 | See Fund of Funds Investments, Investment Company Act Rel. No. IC-27399 (Jun. 20, 2006) (the “Adopting Release”). |
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an affiliated fund of funds to invest, consistent with the fund’s investment policies, directly in stocks, bonds, and other types of securities “would allow an acquiring fund greater flexibility in meeting investment objectives that may not be met as well by investments in other funds in the same fund group, while not presenting any additional concerns that [S]ection 12(d)(1)(G) was intended to address.”4 The passage of the Rule also reflects the Commission’s response to Congress’ expectation “that the Commission will use this authority [set forth in Section 12(d)(1)(J)] to adopt rules and process exemptive applications in the fund of funds area in a progressive way as the fund of funds concept continues to evolve over time.”5
Section 6(c) of the Act provides a means for the Commission to respond to developments in the financial markets not specifically contemplated when the Act was passed or subsequently amended.6 It permits the Commission to grant exemptions from particular provisions of the Act, or any rule thereunder, that would inhibit the development of new and innovative investment products. Section 6(c) provides as follows:
The Commission, . . . by order upon application, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of [the Act] or of any rule or regulation thereunder, if and to the extent that such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of [the Act].
Applicants believe that permitting the Funds of Funds to invest in Other Investments would not raise any of the concerns that Section 12(d)(1) of the Act as originally adopted and as amended in 1970 was intended to address, namely: (1) pyramiding of voting control of the
| 3 | See Adopting Release at 17, n.58. |
| 4 | Id. At 17-18. |
| 5 | See H.R. REP. No. 622, 104th Cong., 2nd Sess., at 43-44 (1996). |
| 6 | See, e.g., Trust Fund Sponsored by The Scholarship Club. Inc., Investment Company Act Rel. No. 5524 (Oct. 25, 1968) (“[T]he broad exemptive power provided in 6(c) was designed to enable [the Commission] to deal equitably with situations which could not be foreseen at the time the legislation was enacted.”); Sisto Financial Corp., Investment Company Act Rel. No. 923 (July 17, 1946) (Section 6(c) is intended “to deal with situations unforeseen at the time of the passage of the Act and unprovided for elsewhere in the Act”). |
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underlying funds; (2) undue influence over portfolio management of underlying funds through the threat of large scale redemptions; (3) unnecessary duplication of costs (such as sales loads, advisory fees and administrative costs); and (4) complex pyramidal structures that may be confusing to investors.7 Section 12(d)(1)(G) reflects a determination by Congress that certain fund of funds arrangements do not raise the concerns underlying the prohibitions in Sections 12(d)(1)(A) and (B). Section 12(d)(1)(G) addresses these concerns by requiring that the acquiring fund and the acquired fund be part of the same group of investment companies, limiting charges and fees of the acquiring company and acquired company and requiring that the acquired fund not act as a fund of funds itself.8 The approval of Rule 12d1-2 demonstrates a determination by the Commission that fund of funds investments in stocks, bonds and other types of securities that are not issued by registered investment companies do not raise any of the concerns that Section 12(d)(1)(G) was intended to address.
Likewise, permitting the Funds of Funds to invest in Other Investments in furtherance of their investment objectives, policies, strategies and limitations as requested herein will not raise any of the concerns underlying the prohibitions in Sections 12(d)(1)(A) and (B). Instead, this additional flexibility will provide the Funds of Funds a broader array of investment options through which to pursue their investment objectives.
Applicants submit that the requested exemption offers significant benefits, as detailed in Part III above, and is “necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act” and therefore meets the standards for relief set forth in Section 6(c) of the Act. As indicated
| 7 | See the Report of the Securities and Exchange Commission on the Public Policy Implications of Investment Company Growth, in H.R. Rep. No. 2337, at 311-24 (1966). |
| 8 | While Section 12(d)(1)(G) is commonly referred to as a “fund of funds” exemption, it does not require an acquiring fund to invest in more than one underlying fund. |
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below, the Commission has already granted the same relief to at least three other applicants and granted to a number of other applicants relief similar to that requested in this Application.
Applicants recognize that under Section 12(d)(1)(G)(i)(IV) of the Act no Fund of Funds may invest in an Underlying Fund that is part of the same group of investment companies as the Fund of Funds unless the Underlying Fund has in place a policy prohibiting its investment in funds that rely on Sections 12(d)(1)(F) or 12(d)(1)(G). Applicants are not seeking relief from Section 12(d)(1)(G)(i)(IV).
The Commission has previously granted exemptive relief authorizing registered investment companies relying on Section 12(d)(1)(G) and Rule 12d1-2 to invest in Other Investments. See Pioneer Bond Fund, et al., File No. 812-13727, Investment Company Rel. Nos. 29259 (Apr. 27, 2010) (order) and 29198 (Mar. 31, 2010) (notice); FFCM, LLC and FQF Trust, File No. 812-13748, Investment Company Rel. Nos. 29335 (Jun. 29, 2010) (order) and 29292 (Jun. 2, 2010) (notice); Columbia Funds Series Trust, et al., File No. 812-13631, Investment Company Rel. Nos. 28936 (Sept. 30, 2009) (order) and 28896 (Sept. 4, 2009) (notice).9
Applicants agree that any order granting the requested relief shall be subject to the following condition:
Applicants will comply with all provisions of Rule 12d1-2 under the Act, except for paragraph (a)(2) to the extent that it restricts any Fund of Funds from investing in Other Investments as described in the Application.
| 9 | See Investment Company Act Rel. Nos. IC-29198, 2010 WL 1258592 (Mar. 31, 2010), at *3; IC-29292, 2010 WL 2233814 (Jun. 2, 2010), at *3; IC-28896, 2009 WL 2857620 (Sept. 4, 2009), at *3. |
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Applicants request an order pursuant to Section 6(c) of the Act granting the relief requested in this Application. Applicants submit, for the reasons stated herein, that their request for exemptive relief meets the standard for relief under Section 6(c) of the Act and therefore, Applicants respectfully request that the Commission grant the requested relief.
The Applicants state that all written or oral communications concerning this Application should be directed to:
Gregory C. Davis
Ropes & Gray LLP
Three Embarcadero Center
San Francisco, CA 94111-4006
(415) 315-6327 (phone)
(415) 315-6350 (fax)
gregory.davis@ropesgray.com
With copies to:
Karen Seaman, Esq.
Union Bank
400 California Street, 16th Floor
San Francisco, CA 94104
(415) 765-3616 (phone)
(415) 765-3887 (fax)
karen.seaman@unionbank.com
All requirements in any documents and instruments authorizing the signing and filing of this Application by each Applicant have been complied with and the person signing and filing this Application on behalf of each Applicant is fully authorized to do so. Under the provisions of the Declaration of Trust and Code of Regulations of HighMark Funds, responsibility for the management of the affairs of HighMark Funds is vested in the Board of Trustees. Under the provisions of the Articles of Incorporation and by-laws of HighMark Capital Management, Inc., responsibility for the management of the affairs of HighMark Capital Management, Inc. is vested
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in the Board of Directors of HighMark Capital Management, Inc. Each undersigned officer of the Applicants is fully authorized to execute this Application by resolution adopted by such Applicant’s Board of Trustees or Board of Directors, as applicable, or under authority granted pursuant to said Applicant’s by-laws, charter or other governing document. Where applicable, the Applicants have adopted the resolutions attached as Exhibit A authorizing the filing of the Application and the Verifications of Application and Statements of Fact required by Rule 0-2(d) under the Investment Company Act are attached as Exhibit B.
The Applicants request that the Commission issue the requested exemptive order in accordance with the procedures of Rule 0-5 under the Investment Company Act without a hearing.
Thank you for your consideration.
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| HIGHMARK FUNDS | ||||
| on behalf of each of the series listed on | ||||
| Schedule A | ||||
| By: | /s/ Earle A. Malm II | |||
| April 29, 2011 | Name: Earle A. Malm II | |||
| Title: President | ||||
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| HIGHMARK CAPITAL MANAGEMENT, INC. | ||||
| By: | /s/ Earle A. Malm II | |||
| April 29, 2011 | Name: Earle A. Malm II | |||
| Title: President | ||||
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SCHEDULE A
Income Plus Allocation Fund
Growth & Income Allocation Fund
Capital Growth Allocation Fund
Diversified Equity Allocation Fund
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Resolutions of HighMark Funds
The undersigned certifies that she is the Vice President and Treasurer of HighMark Funds (the “Trust”) and further certifies that the following resolutions were adopted by the Board of Trustees of the Trust and are still in full force and effect.
| RESOLVED: | That any officer of the Trust be, and hereby is, authorized to prepare and execute on behalf of the Trust and to file with the SEC an application for exemptive relief from the provisions of the Investment Company Act of 1940 (the “Act”) to the extent necessary to permit the following funds to invest in futures contracts, swap agreements, other derivatives and other financial instruments that may not be securities within the meaning of Section 2(a)(36) of the Act, in addition to registered investment companies and other securities: | |
| HighMark Income Plus Allocation Fund | ||
| HighMark Growth & Income Allocation Fund | ||
| HighMark Capital Growth Allocation Fund | ||
| HighMark Diversified Equity Allocation Fund | ||
| RESOLVED: | That any officer of the Trust be, and hereby is, severally authorized to file with the SEC the exemptive application and any amendments thereto in such form as the officer or any one of the officers deem necessary and appropriate and to do any and all other things necessary or proper under the Act, the Investment Advisers Act of 1940, the Securities Act of 1933 and the Securities Exchange Act of 1934, including the submission and filing of any and all applications, amendments to applications, reports and other documents deemed by such officer to be necessary or proper to obtain an order from the SEC and establish and implement the proposed arrangements. | |
IN WITNESS WHEREOF, I hereunto subscribe my name, this 29th day of April, 2011.
| /s/ Pamela O’Donnell |
| Name: Pamela O’Donnell |
| Title: Vice President and Treasurer |
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EXHIBIT A-2
Resolutions of HighMark Capital Management, Inc.
I, Jonathan Fayman, the Secretary of HighMark Capital Management, Inc. (the “Company”), hereby certify that the following is a full, true and correct copy of resolutions duly adopted by the Board of Directors of the Company effective November 10, 2010 by unanimous written consent without a meeting and that said resolutions have not been rescinded or modified and are now in full force and effect.
| RESOLVED: | That the President & Chief Executive Officer, or any other officer, of the Company be, and hereby is, authorized to prepare an application for exemptive relief under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an order or orders under the Act granting an exemption from Rule 12d1-2(a) under the Act (the “Exemptive Application”); | |
| RESOLVED: | That the President & Chief Executive Officer, or any other officer, of the Company be, and hereby is, severally authorized to execute, on behalf of the Company, and file with Securities and Exchange Commission (the “SEC”) the Exemptive Application and any amendments thereto in such form as the officer or any one of the officers deem necessary and appropriate and to do any and all other things necessary or proper under the Act, the Investment Advisers Act of 1940, the Securities Act of 1933 and the Securities Exchange Act of 1934, including the submission and filing of any and all applications, amendments to applications, reports and other documents deemed by such officer to be necessary or proper to obtain an order from the SEC and establish and implement the proposed arrangements. | |
WITNESS, my name on behalf of said Company, as of this 29th day of day of April, 2011.
| /s/ Jonathan Fayman |
| Name: Jonathan Fayman |
| Title: Secretary |
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Verification of Application and Statement of Fact
In accordance with Rule 0-2(d) under the Investment Company Act of 1940, as amended, the undersigned states that he has duly executed the attached Application for an order, dated as of April 29, 2011 for and on behalf of HighMark Funds (the “Trust”); that he is the President of the Trust; and that all action by trustees and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
| HIGHMARK FUNDS |
| /s/ Earle A. Malm II |
| Name: Earle A. Malm II |
| Title: President |
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EXHIBIT B-2
Verification of Application and Statement of Fact
In accordance with Rule 0-2(d) under the Investment Company Act of 1940, as amended, the undersigned states that he has duly executed the attached Application for an order, dated as of April 29, 2011 for and on behalf of HighMark Capital Management, Inc. (the “Adviser”); that he is the President of the Adviser; and that all action by stockholders, directors and other bodies necessary to authorize the undersigned to execute and file such instrument has been taken. The undersigned further states that he is familiar with such instrument, and the contents thereof, and that the facts therein set forth are true to the best of his knowledge, information and belief.
| HIGHMARK CAPITAL MANAGEMENT, INC. |
| /s/ Earle A. Malm II |
| Name: Earle A. Malm II |
| Title: President |
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