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HIGHMARK LOGO
SEMI-ANNUAL REPORT
JANUARY 31, 1997
----------------
Not FDIC Insured
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HIGHMARK LOGO TABLE OF CONTENTS
Message from the Chairman and the Investment Adviser
Page 1
Statements of Assets and Liabilities
Page 23
Statements of Operations
Page 26
Statements of Changes in Net Assets
Page 29
Schedules of Portfolio Investments
Page 33
Notes to Financial Statements
Page 64
Financial Highlights
Page 79
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MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
We are pleased to report another strong period for The HighMark Group for the
six months ended January 31, 1997. The period was characterized by a surging
stock market but modest returns for bonds. The HighMark funds performed well
against their peer groups and versus the standard benchmarks of investment
performance.
At HighMark, we are keenly aware that we are in the midst of one of the longest
bull markets in history, with the Dow Jones Industrial Average closing above
7000 on February 13, 1997. It is clearly a time for caution, as the current
economic expansion reaches seven years. As a means of managing risks, mutual
funds such as HighMark offer professional management as well as broad
diversification by investing in a wide array of securities in a variety of
industry groups.
MUTUAL FUNDS TO COMBINE
On April 1, 1996, Union Bank and The Bank of California were joined to become
Union Bank of California. Each of the former banks had its own proprietary
mutual fund family. The fund families--the Stepstone Funds (Union Bank) and The
HighMark Group (The Bank of California) are similar in many ways. As a result,
the Board of Trustees of both the Stepstone Funds and The HighMark Group believe
it is in the best interest of shareholders that the two fund families combine,
and recently voted in favor of combining the funds.
The combination of the two fund groups is scheduled to take place in two steps,
on April 25, 1997 and on April 30, 1997, subject to the required approvals. The
combined fund family, called HighMark Funds, will grow to $5 billion, and offer
a stronger lineup of funds with an expanded array of investment options. Pacific
Alliance Capital Management will continue as the investment advisor for the
funds.
A COMMITMENT TO SERVICE
This semiannual report includes interviews with portfolio managers followed by a
Schedule of Portfolio Investments, which provides a list of each fund's
holdings. We urge you to read the entire report closely to help you monitor the
progress of your investment in The HighMark Group.
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As always, we thank you for the confidence you have placed in us as managers of
your assets and look forward to serving your investment needs in the future.
Sincerely,
/s/ Stephen G. Mintos
Stephen G. Mintos
Chairman
The HighMark Group
February 14, 1997
For more complete information on any HighMark fund, including fees, expenses and
sales charges, please call 1-800-433-6884 for a prospectus. Please read the
prospectus carefully before you invest or send money.
Mutual funds:
- are not FDIC insured
- have no bank guarantee
- may lose value
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MESSAGE FROM THE INVESTMENT ADVISER
DEAR SHAREHOLDER:
The six-month period ending January 31, 1997 was an extremely strong period for
stocks, with the Standard & Poor's 500 Stock Index up 24.15%. This surge came
after a brief correction which took place early in the summer. Meanwhile, the
bond market produced modest returns during the past six months, as long-term
interest rates tracked a volatile range from a peak of 7.20% to a trough of
about 6.35%.
STOCKS: YET ANOTHER PLEASANT SURPRISE
The stock market continues to surprise investors. In late 1996, we forecast
corporate profit growth for 1997 in the 8-10% range, and we projected that the
stock market would rise by a similar amount. However, by mid-February of 1997,
the market had already risen 9% for the year. Corporate profits continue to come
in stronger than expected, and that may translate into higher gains for the
stock market in the months ahead. However, we are finding it increasingly
difficult to identify stocks that represent good value. As the current bull
market continues to exceed all expectations, a true 10% correction has not yet
taken place. Instead, we often see a few down days but then the market resumes
its advance. After rising more than 60% during the past two years, we don't
expect 1997 to continue at the same pace. However, we have been pleasantly
surprised many times in the past few years.
INFLATION REMAINS CALM
One reason that the Dow Jones Industrial Average reached 7000--it was 4000 just
two years ago--is that inflation and interest rates remain subdued. Indeed, the
Federal Reserve Board has suggested that inflation may actually be lower than
reported. The markets are behaving as if inflation is more like 2% rather than
3%, as reported by the Consumer Price Index. However, adjusting the CPI to
reflect a more realistic portrait of inflation is a very contentious political
issue, because entitlement payments are based on it.
A TRADING RANGE FOR INTEREST RATES
Because of modest inflation, we expect long-term interest rates to remain in a
trading range over the next six months. That suggests a modestly positive bond
market, in which investors earn a stream of current income plus modest capital
gains. The Federal Reserve Board has kept short-term interest rates at the same
level--5.25%--for more than a year. Moderate economic growth and subdued
inflation suggests a neutral Fed policy over the next several months.
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A STRONG DOLLAR: THE U.S. ECONOMY GETS RESPECT
The U.S. economy continues to grow at a moderate rate with low inflation. In
contrast, Japan's economy is struggling. Europe's economy is sluggish as
governments cut spending to prepare for a unified currency. In Germany,
unemployment is running at a double-digit rate, as the country continues to face
difficulty in absorbing the former Eastern Germany. Throughout the world,
investors have looked to the U.S. for the most stable economy, a strong
currency, and the best performing equity market in recent years.
LOOKING AHEAD
The S&P 500 Index is trading at 21 times trailing earnings and at 19 times
projected 1997 earnings. Dividend yields are below 2%, an all-time low. We
recognize that the stock market has come a long way very quickly. However, there
is some historical precedence for these high valuation levels. In the 1960s,
when economic growth was moderate and inflation was low, price/earnings
multiples also reached into the low 20s. Indeed, excluding the Great Depression
of the 1920s and the energy crises of the 1970s, the current valuation may be
the norm rather than the exception. Nevertheless, the market remains extremely
volatile, as investors overreact to every economic report. We remain optimistic
but cautious on stocks in 1997, as they continue to move into uncharted
territory.
Sincerely,
/s/ Luke Mazur
Luke Mazur
Chief Investment Officer
Pacific Alliance Capital Management
February 14, 1997
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HIGHMARK INCOME EQUITY FUND
For the six-month period ended January 31, 1997, the HighMark Income Equity Fund
returned 17.06% (Investor Shares)*, trailing its benchmark, the Standard &
Poor's 500 Stock Index, which was up 24.15% for the period. The average equity
income fund as measured by Lipper Analytical Services rose 18.07% during the
same period.
Thomas M. Arrington, CFA, is the team leader for the HighMark Income Equity
Fund. Mr. Arrington, who holds an MBA from San Francisco State University and a
bachelor's degree in economics from UCLA, has more than a decade of investment
management experience.
HOW WOULD YOU ASSESS YOUR PERFORMANCE FOR THE SIX-MONTH PERIOD?
Although our performance trailed the broad market, it was not unexpected in the
current market environment. Our strategy, which is to invest in dividend-paying
stocks of established companies, typically lags in a strong market. It typically
moves with the market when it is flat to slowly rising, and often outperforms in
a falling market. Through a full market cycle, we strive to produce an
investment result that outperforms the broad market with less risk.
WHAT AREAS OF THE MARKET PERFORMED WELL FOR YOU?
For the six month period, the Fund's bank, petroleum and pharmaceutical stocks
outperformed the broad market. The bank stocks benefited from cost cutting
measures and the relatively stable economy, which resulted in strong loan demand
and low default rates. Petroleum stocks posted strong results reflecting the
pronounced increase in oil prices. Pharmaceutical stocks produced strong
earnings during the year. These companies are producing promising new drugs
while facing a more rapid FDA review process. On the downside, the Fund's
utilities, forest product and retail stocks lagged during the period. Investors
are concerned about the deregulation of the utility industry, and the
competitive pressures that will follow. Forest products slipped because of
declining pulp and paper prices. Retailers slumped because they failed to
produce strong sales during the Christmas season.
WHERE DO YOU CURRENTLY SEE VALUE?
One stock we like is McGraw-Hill (2.98% of the portfolio), which we think is
undervalued. Their educational publishing division is strong. In his recent
State Of The Union address, President Clinton argued that education is the
nation's number one priority--which should benefit this company. In addition,
many large states are in the process of adopting new textbooks for their
schools. Demographically, the number of children needing new books is growing
rapidly. We also like Anheuser Busch (1.99%), a company that is growing volume
and marketshare. It's the only major brewer to
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increase both market share and sales volume for the year. Their theme park
attendance has also been very strong. As of January 31, 1997, the Fund's top
five holdings were Amoco Corp. (3.59%), Bristol-Myers Squibb Co. (3.51%),
McGraw-Hill, Inc. (2.98%), Banc One Corp. (2.91%) and Atlantic Richfield Co.
(2.89%).**
WHAT IS YOUR OUTLOOK?
The S&P 500 has produced remarkable results over the last two years. We believe
1997 will be another good year for the equity markets and the U.S. economy. We
expect moderate economic growth, low inflation, lower interest rates and modest
growth in corporate earnings. However, we would encourage investors to exercise
caution given the length and strong price appreciation of the market. The Income
Equity strategy offers investors a relatively conservative approach to stock
investing. It seeks to purchase well-managed, undervalued, dividend-paying firms
that are poised for a turnaround. We believe the Income Equity strategy could
produce strong investment results in the future, as it has in certain market
cycles in the past.
- ---------------
* Including the maximum sales charge of 4.50%, the Fund's total return
(Investor Shares) was 11.82% for the period.
** The composition of the Fund's holdings is subject to change.
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<TABLE>
<CAPTION>
HIGHMARK INCOME EQUITY FUND
Growth of a $10,000 Investment
MEASUREMENT PERIOD INVESTOR FIDUCIARY S&P 500
(FISCAL YEAR COVERED) SHARES SHARES STOCK INDEX
<S> <C> <C> <C>
2/84 9550 10000 10000
7/84 9221 9656 9774
7/85 12618 13213 12953
7/86 16106 16865 16637
7/87 20437 21400 23181
7/88 20140 21089 20497
7/89 25812 27028 27035
7/90 25580 26785 28792
7/91 28805 30163 32463
7/92 33423 34998 36615
7/93 36681 38410 39812
7/94 38233 40035 41866
7/95 44931 46945 52786
7/96 53113 55517 61542
1/97 62175 65010 77537
</TABLE>
<TABLE>
<CAPTION>
HighMark Income Equity Fund
Performance Average Annual
Total Return as of 1/31/97
------------------------------------
Since
Inception
6 months* 1 Year 5 Years 10 Years (2/9/84)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Fiduciary 17.10% 17.04% 15.08% 12.66% 15.33%
Investor 17.06% 17.01% 15.12% 12.67% 15.34%
Investor, with load** 11.82% 11.77% 14.07% 12.16% 14.93%
</TABLE>
The performance of the HighMark Income Equity Fund is measured against the S&P
500 Stock Index, an unmanaged index generally considered to be representative of
the U.S. stock market. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance reflects these value-added services. Past
performance is not predictive of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
- ---------------
* Aggregate total return.
** Reflects 4.50% sales charge.
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HIGHMARK GROWTH FUND
For the six-month period ended January 31, 1997, the HighMark Growth Fund
returned 23.47% (Investor Shares).* In comparison, the Standard & Poor's 500
Stock Index was up 24.15% for the period. The average growth fund as measured by
Lipper Analytical Services rose 21.07% during the same period.
The HighMark Growth Fund strategy team is lead by Scott A. Chapman, CFA. Mr.
Chapman, who holds an MBA from Golden Gate University and a bachelor's degree in
accounting from Santa Clara University, has 17 years' experience in the
investment business.
WHAT FACTORS AFFECTED YOUR PERFORMANCE FOR THE SIX-MONTH PERIOD?
We were overweighted in several industries that outperformed the market as a
whole. Those industries include semiconductors, which as a group was up 89%
during the period, consumer finance, which was up 37%, banks, up 33%, software,
up 29%, pharmaceuticals, up 28%, personal care products, up 28% and oil & gas,
up 26%. This was offset by weaker performance in the gaming, computer services,
retail and biotechnology industries.
WHAT INDIVIDUAL STOCKS PERFORMED PARTICULARLY WELL?
Intel, our largest holding (3.13% of the portfolio), was up 116% during the six
month period. Prior to 1995, Intel had traded at a discount to the overall
market's price/earnings ratio due to cyclical earnings. However, it now has 90%
of the market for microprocessors installed in personal computers. Even though
the stock has tripled over the last year, it's now just selling at an average
market multiple. Intel spends five times as much on research and development and
capital spending as its nearest competitor. We're still bullish on Intel: Here's
a brand that is known worldwide and that has produced over 30% average annual
earnings per share growth over the past ten years. Another company is Travelers
(1.45%), which was up 24% during the six month period. The company is a
diversified financial services company, including the Smith Barney brokerage
firm as well as property & casualty insurance divisions. They have very
predictable earnings with a diverse product line. Part of the overall trend in
the financial services industry is to encircle the customer with a total
solution in financial service products. For example, the recent merger
announcement of Morgan Stanley and Dean Witter represents a marriage between the
retail broker and institutional investment advisor. The lines of distinction
between financial service firms are blurring, and the successful companies will
take advantage of cross-selling opportunities to encircle the aging baby boomer
who needs broad portfolio advice. Travelers appears well positioned to take
advantage of these opportunities. We also owned Duracell, which was acquired by
Gillette, boosting our investment 56% during the period. Gillette is an
extremely well-managed company with international exposure and a
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product with worldwide brand recognition. As of January 31, 1997, the Fund's top
five holdings were Intel Corp. (3.13%), Wells Fargo & Co. (2.49%), Gillette Co.
(2.48%), General Electric Co. (2.28%) and Chase Manhattan Bank (2.18%).**
WHAT IS YOUR OUTLOOK?
Since the United States has been through six years of an economic expansion, it
wouldn't be surprising to see an economic slowdown, which is typically when
growth stocks shine. In the early stages of an economic recovery, cyclical
stocks report huge earnings increases because they're compared to low bases.
Growth becomes a commodity. But in an economic slowdown, cars, office equipment
and other big ticket products start showing deteriorating performance. The
companies with consistent earnings are valued at a premium. If we do enter a
period of economic slowdown, then that should be a positive for the financial
companies in our portfolio since interest rates would typically decline. We're
also overweighted in companies such as Disney (2.00%) and Coca Cola Co. (1.94%)
that we believe may continue to report earnings growth despite the economy.
- ---------------
* Including the maximum sales charge of 4.50%, the Fund's total return
(Investor Shares) was 17.95% for the period.
** The composition of the Fund's holdings is subject to change.
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<TABLE>
<CAPTION>
HIGHMARK GROWTH FUND
Growth of a $10,000 Investment
GROWTH FUND, GROWTH FUND,
MEASUREMENT PERIOD SYNTHETIC IN- FIDUCIARY S&P 500 STOCK
(FISCAL YEAR COVERED) VESTOR SHARES SHARES INDEX
<S> <C> <C> <C>
11/30/93 9550 10000 10000
7/31/94 9225 9650 10100
7/31/95 11541 12085 12733
7/31/96 13028 13622 14841
1/31/97 16085 16838 18422
</TABLE>
<TABLE>
<CAPTION>
HighMark Growth Fund
Performance Average Annual
Total Return as of 1/31/97
----------------------------------
Since
Inception
6 months* 1 Year (11/18/93)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
Fiduciary 23.59% 24.84% 18.24%
Investor 23.47% 24.62% 18.26%
Investor,
with load** 17.95% 19.02% 16.58%
</TABLE>
The performance of the HighMark Growth Fund is measured against the S&P 500
Stock Index, an unmanaged index generally considered to be representative of the
U.S. stock market. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance reflects these value-added services. Past
performance is not predictive of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
- ---------------
* Aggregate total return.
** Reflects 4.50% sales charge.
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HIGHMARK INCOME & GROWTH FUND
For the six-month period ended January 31, 1997, the HighMark Income & Growth
Fund returned 20.25% (Investor Shares).* In comparison, the Standard & Poor's
500 Stock Index was up 24.15% for the period.
The HighMark Income & Growth Fund is managed by David L. Freeman, CFA. Mr.
Freeman holds a bachelor's degree in economics and psychology from Western
Michigan University and did graduate work at UCLA. He has 20 years' experience
in the investment business.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
The Income & Growth strategy is a little more conservative and has tended to be
less volatile than the S&P 500. The Fund doesn't move as much as the overall
market on the upside or the downside. During strong upward moves on the S&P 500
like we've seen recently, we should expect the Fund to do well, but not be
surprised if it doesn't quite match the Index. The Fund has a slightly greater
yield than the S&P 500, a greater exposure to growth stocks than the S&P and a
lower price/earnings ratio. So the portfolio has characteristics of value with
higher yield, lower price/earnings--and at the same time the companies have a
greater-than-average expected growth of earnings and dividends. If we ever get a
market that reverts back to its long-term average return of 10-12%, then we
would expect this strategy to work very well.
WHAT INDUSTRIES HAVE BEEN STRONG PERFORMERS?
We increased our weighting in technology, which has out-performed the overall
market during the second half of 1996. Early in the year, the whole group was
depressed. A lot of stocks had come down sharply, including very high quality
companies like Intel (2.49% of the portfolio) and Texas Instruments (1.20%), and
we added to those positions. Now they've rebounded very nicely. We also hold
Motorola (1.57%), Microsoft (1.57%), EDS (0.35%), IBM (1.21%) and Pitney Bowes
(0.44%). Other strong industries included petroleum, financial services and
pharmaceuticals.
WHAT INDIVIDUAL STOCKS STOOD OUT AS SUCCESS STORIES?
IBM had a nice run. It's a huge company and over the past five years it has
tried to implement a different strategy than it had employed over the prior 15
years. It was the proverbial battleship--it took a while to turn, but we saw
evidence of success in the new IBM, which is more of a systems and
solutions-oriented approach. In the 1960s and 1970s, IBM just sold the "box" and
the software and had the market to itself. But competition caused the Company to
change their approach, to be a solutions oriented company serving the high-end
market. It proved to be a good strategy, and in 1996,
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HIGHMARK LOGO
we saw the fruits of that approach in that the cash flow from the company grew
greatly. IBM bought back stock, increased its dividend and it generally was well
accepted by investors. Another excellent company during the period was General
Electric (2.77%). It's a stock which has produced very steady growth of
earnings, cash flow and dividends. As of January 31, 1997, the Fund's top five
holdings were General Electric Co. (2.77%), Intel Corp. (2.49%), Anheuser-Busch
Co. (2.18%), Minnesota Mining & Mfg. Co. (1.69%) and Motorola, Inc. (1.57%).**
WHAT IS YOUR OUTLOOK?
The stock and bond markets react sharply to almost every significant economic
report. The Fund itself has been benefiting from money coming into the larger
capitalization stocks, which continue to outperform the smaller companies, and
that favors the Income & Growth strategy since we tend to use larger names.
There seems to be more focus on quality names as the outlook for the economy,
interest rates and inflation is more uncertain. We believe that investors will
continue to focus on the higher-quality, more well-known growth companies--the
stocks that we have emphasized.***
- ---------------
* Including the maximum sales charge of 4.50%, the Fund's total return
(Investor Shares) was 14.84% for the period.
** The composition of the Fund's holdings is subject to change.
*** The Fund closed on March 21, 1997, in accordance with a decision of
shareholders on March 12, 1997. The Fund's assets have been sold and the
proceeds are being used to redeem shares.
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<TABLE>
<CAPTION>
HIGHMARK INCOME & GROWTH FUND
Growth of a $10,000 Investment
MEASUREMENT PERIOD FIDUCIARY
(FISCAL YEAR COVERED) INVESTOR SHARES* SHARES S&P 500 STOCK INDEX
<S> <C> <C> <C>
11/30/93 9550 10000 10000
7/31/94 9776 10226 10100
7/31/95 11797 12342 12733
7/31/96 13569 14198 14841
1/31/97 16316 17076 18422
</TABLE>
<TABLE>
<CAPTION>
HighMark Income & Growth Fund
Performance Average Annual
Total Return as of 1/31/97
----------------------------------
Since
Inception
6 months* 1 Year (11/14/93)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Fiduciary 20.27% 23.44% 17.85%
Investor 20.25% 23.52% 17.87%
Investor,
with load** 14.84% 17.96% 16.20%
</TABLE>
The performance of the HighMark Income & Growth Fund is measured against the S&P
500 Stock Index, an unmanaged index generally considered to be representative of
the U.S. stock market. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance reflects these value-added services. Past
performance is not predictive of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
- ---------------
* Aggregate total return.
** Reflects 4.50% sales charge.
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HIGHMARK BALANCED FUND
For the six-month period ended January 31, 1997, the HighMark Balanced Fund
returned 13.04% (Investor Shares).* In comparison, the Fund's benchmarks, the
Standard & Poor's 500 Stock Index and the Lehman Brothers Aggregate Bond Index,
were up 24.15% and 4.94%, respectively.
The HighMark Balanced Fund is managed by a strategy team lead by E. Jack
Montgomery, CFA, who also manages the Bond Fund, and David L. Freeman, CFA, who
is the strategy team leader for the Income & Growth Fund. Mr. Montgomery, who
holds an MBA from the University of Oregon, has 15 years' experience in
financial analysis and portfolio management. Mr. Freeman holds a bachelor's
degree in economics and psychology from Western Michigan University and did
graduate work at UCLA. He also has 20 years' experience in the investment
business.
HOW DID THE MIXTURE OF STOCKS, BONDS AND CASH CHANGE DURING THE PERIOD?
As of August 1, 1996, the mixture of stocks, bonds and cash was 53%, 38% and 9%,
respectively. Since stock prices continued to rise during the six month period,
one might expect our models to favor bonds. However, due to the continuing
favorable environment for stocks, our allocation was virtually unchanged as of
January 31, 1997, when the mixture was 54% stocks, 39% bonds and 7% cash. Bonds
are advantageous because they produce substantial income, are relatively
inexpensive, and are not as volatile as stocks. With the Dow at 7000, stocks may
be fully valued.
HOW WOULD YOU ASSESS THE PERFORMANCE OF THE BOND PORTION OF THE BALANCED FUND?
Interest rates were volatile during the six month period ending January 31,
1997. At its peak last summer, the 30-year U.S. Treasury bond yielded 7.2%. The
market rallied during the three months of September, October and November,
producing a cumulative gain of about 6% during that period. However, the market
gave up ground in December, when investors became concerned that the economy was
growing too fast and that inflation would return. Overall, the Fund's
longer-than-average duration (sensitivity to interest rates) was beneficial
during the fall when interest rates were coming down. Our strategy is to own the
highest quality corporate bonds, which had a somewhat adverse impact on our
performance. Because the yield differential between corporates, mortgages and
U.S. Treasuries continues to shrink, there's still an ongoing search for
performance and yield and it's leading other investment managers to take more
and more risk. We continue to maintain a high quality portfolio and believe that
this strategy will serve us well during 1997.
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<PAGE> 17
WHAT STOCKS HAVE BEEN THE STRONGEST?
We increased our weighting in technology, which has performed very well during
the second half of 1996. Early in the year, the whole group was pretty
depressed. A lot of stocks had come down sharply, including very high quality
companies like Intel (1.41% of the portfolio) and Texas Instruments (0.70%), and
we added to those positions. Now they've rebounded very nicely. Other strong
industries included petroleum, financial services and pharmaceuticals. As of
January 31, 1997, the Fund's top five holdings were General Electric Co.
(1.72%), Intel Corp. (1.41%), BankAmerica (1.16%), Anheuser-Busch Co. (1.14%)
and Fleet Financial Group, Inc. (0.94%).**
WHAT IS YOUR OUTLOOK FOR THE FUND?
We believe that investors continue to focus on the higher-quality, more
well-known growth companies--the stocks that we emphasize. Inflation remains low
and the economy is growing moderately. However, there could be some short-term
pressure on interest rates. The economy is doing very well and we're close to
full employment. Wages are trending upward, and oil prices have risen sharply.
Since the economy is at full capacity, it probably wouldn't take much growth to
force the Federal Reserve Board to raise interest rates. Over the long term,
however, we have a favorable view of interest rates, inflation and the bond
market.
- ---------------
* Including the maximum sales charge of 4.50%, the Fund's total return
(Investor Shares) was 8.00%.
** The composition of the Fund's holdings is subject to change.
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HIGHMARK LOGO
<TABLE>
<CAPTION>
HIGHMARK BALANCED FUND
Growth of a $10,000 Investment
LEHMAN
BROTHERS
MEASUREMENT PERIOD INVESTOR FIDUCIARY S&P 500 AGGREGATE
(FISCAL YEAR COVERED) SHARES* SHARES STOCK INDEX BOND INDEX
<S> <C> <C> <C> <C>
11/30/93 9550 10000 10000 10000
7/31/94 9502 10002 10100 9858
7/31/95 10985 11564 12733 10855
7/31/96 12187 12843 14841 11455
1/31/97 13777 14518 18422 12021
</TABLE>
<TABLE>
<CAPTION>
HighMark Balanced Fund
Performance Average Annual
Total Return as of 1/31/97
----------------------------------
Since
Inception
6 months* 1 Year (11/14/93)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Fiduciary 13.04% 13.89% 12.36%
Investor 13.04% 14.00% 12.14%
Investor,
with load** 8.00% 8.86% 10.55%
</TABLE>
The performance of the HighMark Balanced Fund is measured against the S&P 500
Stock Index, an unmanaged index generally considered to be representative of the
U.S. stock market, the Lehman Brothers Aggregate Bond Index, an unmanaged
broad-based index generally considered to be representative of the bond market
as a whole. This index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees.
However, the fund's performance reflects these value-added services. Past
performance is not predictive of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
- ---------------
* Aggregate total return.
** Reflects 4.50% sales charge.
16
<PAGE> 19
HIGHMARK BOND FUND
For the six-month period ended January 31, 1997, the HighMark Bond Fund returned
4.68% (Investor Shares).* In comparison, the Lehman Brothers Aggregate Bond
Index was up 4.94% for the period.
The HighMark Bond Fund strategy team is lead by E. Jack Montgomery, CFA. Mr.
Montgomery, who holds an MBA from the University of Oregon and a bachelor's
degree from the University of Oklahoma, has 15 years' experience in financial
analysis and portfolio management.
WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE?
Interest rates were volatile during the six month period ending January 31,
1997. At its peak last summer, the 30-year U.S. Treasury bond yielded 7.2%. The
market rallied during the three months of September, October and November,
producing a cumulative gain of about 6% during that period. However, the market
gave up ground in December, when investors became concerned that the economy was
growing too fast and that inflation would return. To be sure, the bond market
has been nervous all year. Whenever an economic number came out that showed
stronger growth, the market sold off because it feared that the Federal Reserve
Board would have to raise interest rates. This investor skittishness caused the
Fund's NAV to be volatile during the period. However, when the period was over,
the Fund produced modestly positive returns. Corporate bonds and mortgage-backed
securities significantly outperformed similar-duration Treasuries during the
period.
WHAT IS YOUR STRATEGY?
Overall, the Fund's longer-than-average duration (sensitivity to interest rates)
was beneficial during the fall when interest rates were coming down. The best
performing corporates were the lowest rated bonds--BAA bonds, non-investment
grade and emerging market debt. Our strategy, however, is to own the highest
quality corporate bonds. This strategy had a somewhat adverse impact on our
performance. Because the yield differential between corporates, mortgages and
U.S. Treasuries continues to shrink, there's still an ongoing search for
performance and yield and it's leading other investment managers to take more
and more risk. We continue to maintain a high quality portfolio and believe that
that strategy will serve us well during 1997. At the same time, we have added
callable bonds, which boosts the Fund's income level. Issuers pay a premium for
the right to retire bonds if interest rates fall. We have also added more
mortgage-backed securities, which we hope will provide higher yields.
17
<PAGE> 20
HIGHMARK LOGO
WHAT IS YOUR OUTLOOK?
Over the long term, we're still optimistic about the interest rate environment.
Inflation remains low and the economy is growing moderately. However, there
could be some short-term pressure on interest rates. The economy is doing very
well and we're close to full employment. Wages are trending upward, and oil
prices have risen sharply. After being quiet for six years, oil has risen 35% to
$25 per barrel. That has boosted the Consumer Price Index from under 3% to about
3.2%. It's not a big increase, but it warrants close attention. Since the
economy is near full capacity, it shouldn't take much growth to force the
Federal Reserve Board to raise interest rates.
- ---------------
* Including the maximum sales charge of 3.00%, the Fund's total return
(Investor Shares) was 1.58%.
18
<PAGE> 21
<TABLE>
<CAPTION>
HIGHMARK BOND FUND
Growth of a $10,000 Investment
LEHMAN
BROTHERS AG-
MEASUREMENT PERIOD FIDUCIARY GREGATE BOND
(FISCAL YEAR COVERED) INVESTOR SHARES SHARES INDEX
<S> <C> <C> <C>
2/84 9700 10000 10000
7/84 9599 9896 10119
7/85 11952 12322 12541
7/86 15135 15601 15236
7/87 15378 15853 15923
7/88 16276 16779 17129
7/89 18681 19259 19734
7/90 19712 20322 21127
7/91 21484 22149 23388
7/92 24585 25345 26844
7/93 27058 27895 29577
7/94 26027 27019 29604
7/95 28445 29567 32597
7/96 29853 30989 34399
1/97 31250 32458 36699
</TABLE>
<TABLE>
<CAPTION>
HighMark Bond Fund
Performance Average Annual
Total Return as of 1/31/97
----------------------------------
Since
Inception
6 months* 1 Year 5 Years 10 Years (2/15/84)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Fiduciary 4.74% 2.03% 6.49% 6.99% 9.41%
Investor 4.68% 2.05% 6.34% 6.91% 9.34%
Investor,
with load** 1.58% -1.00% 5.69% 6.58% 9.08%
</TABLE>
The performance of the HighMark Bond Fund is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged broad-based index generally
considered to be representative of the bond market as a whole. The index does
not reflect the deduction of expenses associated with a mutual fund, such as
investment management and fund accounting fees. However, the fund's performance
reflects these value-added services. Past performance is not predictive of
future results. The investment return and NAV will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than the original
cost.
- ---------------
* Aggregate total return.
** Reflects 3.00% sales charge.
19
<PAGE> 22
HIGHMARK LOGO
HIGHMARK GOVERNMENT BOND FUND
For the six-month period ended January 31, 1997, the HighMark Government Bond
Fund, which invests primarily in U.S. Government securities maturing in one to
five years, produced a total return of 3.95% (Investor Shares).* In comparison,
the Lehman Brothers Mutual Fund Short Government Index returned 3.97%.
The HighMark Government Bond Fund is managed by Bill Howard, who has more than
15 years of experience in the investment field. He holds an MBA from Golden Gate
University and a bachelor's degree from Seattle University.
WHAT FACTORS AFFECTED YOUR PERFORMANCE?
During the period, interest rates on intermediate-term bonds fell about 0.30%,
which had a positive influence on performance. However, the bond market was
volatile as investor reaction to economic data was magnified by the mixed
signals the data generated.
WHAT WAS YOUR STRATEGY?
The Fund's duration (sensitivity to interest rates) was shorter than average,
which indicates a conservative strategy. It was also appropriate given our
expectation that the Fund would be closing in anticipation of the merger with
the Stepstone Funds.** Bonds with shorter durations have less price risk
associated with them.
WHAT IS YOUR OUTLOOK?
We think short-term interest rates will remain fairly steady over the next few
months. However, we may begin to see some upward pressure on interest rates
towards the end of the year, as wage pressures begin to build and cause upward
pressure on inflation.
- ---------------
* Including the maximum sales charge of 3.00%, the Fund's total return
(Investor Shares) was .80%.
** The Fund closed on March 21, 1997, in accordance with a decision of
shareholders on March 12, 1997. The Fund's assets have been sold and the
proceeds are being used to redeem shares.
20
<PAGE> 23
<TABLE>
<CAPTION>
HIGHMARK GOVERNMENT BOND FUND
Growth of a $10,000 Investment
LEHMAN
BROTHERS
MEASUREMENT PERIOD FIDUCIARY MUTUAL FUND INDEX
(FISCAL YEAR COVERED) INVESTOR SHARES* SHARES SHORT GOVT.
<S> <C> <C> <C>
11/30/93 9700 10000 10000
7/31/94 9507 9885 10006
7/31/95 10217 10606 10795
7/31/96 10707 11110 11382
1/31/97 11130 11545 11834
</TABLE>
<TABLE>
<CAPTION>
HighMark Government Bond Fund
Performance Average Annual
Total Return as of 1/31/97
----------------------------------
Since
Inception
6 months* 1 Year (11/14/93)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Fiduciary 3.92% 2.94% 4.43%
Investor 3.95% 2.97% 4.22%
Investor,
with load** 0.80% -0.13% 3.24%
</TABLE>
The performance of the HighMark Government Bond Fund is measured against the
Lehman Brothers Mutual Fund Short Government Index, an unmanaged broad-based
index generally considered to be representative of U.S. Government securities
with maturities of one to five years. The index does not reflect the deduction
of expenses associated with a mutual fund, such as investment management and
fund accounting fees. However, the fund's performance reflects these value-added
services. Past performance is not predictive of future results. The investment
return and NAV will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than the original cost.
- ---------------
* Aggregate total return.
** Reflects 3.00% sales charge.
21
<PAGE> 24
HIGHMARK LOGO
HIGHMARK MONEY MARKET FUNDS**
THE TAXABLE MONEY MARKET FUNDS
For the six months ended January 31, 1997, the Diversified Money Market Fund
(formerly Diversified Obligations Fund), which primarily invests in certificates
of deposit, commercial paper and repurchase agreements, produced a total return
of 2.39% for both Investor and Fiduciary Shares. The U.S. Government Money
Market Fund (formerly U.S. Government Obligations Fund), comprised mostly of
U.S. Government agency issues, produced a total return of 2.31% for Investor
Shares and 2.32% for Fiduciary Shares. The 100% U.S. Treasury Money Market Fund
(formerly U.S. Treasury Obligations Fund) produced a total return of 2.26% for
both Investor and Fiduciary Shares.
While the Federal Reserve has not changed interest rates in over a year,
contradictory economic reports have made the market increasingly volatile. Late
in the six-month period, short-term interest rates rose by about 0.30 percentage
points, as fears resurfaced that policy makers would be forced to tighten
credit. The Funds' maturities were modestly lengthened to lock in those higher
rates. As of January 31, 1997, the maturity of the Funds stood at 63 days for
the 100% U. S. Treasury Money Market Fund, 65 days for the U.S. Government Money
Market Fund and 66 days for the Diversified Money Market Fund.
THE TAX-FREE MONEY MARKET FUNDS***
For the six months ended January 31, 1997, the California Tax-Free Money Market
Fund (formerly the California Tax-Free Fund) produced a total return of 1.42%
for both Investor and Fiduciary Shares. The Tax-Free Fund, which includes
municipal bonds issued throughout the country, produced a total return of 1.37%.
The average maturity of the California Tax-Free Money Market Fund and Tax-Free
Fund is 20-25 days and 10-15 days, respectively. Both funds are conservatively
managed from a maturity and credit standpoint.
Effective February 24, 1997, the assets of the Tax-Free Fund were combined with
the assets of the California Tax-Free Money Market Fund.
- ---------------
** An investment in the HighMark money market funds is neither insured nor
guaranteed by the U.S. Government. Although these funds seek to maintain a
stable net asset value of $1.00 per share, there can be no assurance that
they will be able to do so.
*** Some or all of the income may be subject to certain state and local taxes,
and, depending on a shareholder's tax bracket, to the federal alternative
minimum tax.
22
<PAGE> 25
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
100% U.S. CALIFORNIA
DIVERSIFIED U.S. GOVERNMENT TREASURY TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET TAX-FREE
FUND FUND FUND FUND FUND
------------ --------------- ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at amortized
cost..................................... $421,598 $ 207,102 $269,084 $152,453 $44,103
Repurchase agreements, at cost............. 5,202 19,513 -- -- --
-------- -------- -------- -------- -------
Total Investments...................... 426,800 226,615 269,084 152,453 44,103
Cash....................................... -- -- -- 6,187 199
Interest receivable........................ 1,103 367 3,277 721 134
Receivable from brokers for investments
sold..................................... -- 10,001 -- 500 2,700
Prepaid expenses and other assets.......... 6 39 5 6 1
-------- -------- -------- -------- -------
Total Assets........................... 427,909 237,022 272,366 159,867 47,137
-------- -------- -------- -------- -------
LIABILITIES:
Distributions payable...................... 1,645 850 975 364 105
Payable to brokers for investments
purchased................................ 10,000 10,000 -- -- 300
Accrued expenses and other payables:
Investment advisory fees................. 141 75 92 33 14
Administration fees...................... 71 38 46 20 4
Shareholder services fees................ 11 5 7 3 3
Custodian, accounting and transfer agent
fees................................... 75 56 41 38 29
Other.................................... 91 53 73 36 10
-------- -------- -------- -------- -------
Total Liabilities...................... 12,034 11,077 1,234 494 465
-------- -------- -------- -------- -------
NET ASSETS:
Capital.................................... 416,245 226,116 271,112 159,422 46,687
Accumulated net realized gains (losses) on
investment transactions.................. (370) (171) 20 (49) (15)
-------- -------- -------- -------- -------
Net Assets............................. $415,875 $ 225,945 $271,132 $159,373 $46,672
======== ======== ======== ======== =======
Net Assets
Investor................................. $151,112 $ 38,486 $ 89,129 $ 60,562 $10,037
Fiduciary................................ 264,763 187,459 182,003 98,811 36,635
-------- -------- -------- -------- -------
Total.................................. $415,875 $ 225,945 $271,132 $159,373 $46,672
======== ======== ======== ======== =======
Outstanding units of beneficial interest
(shares) (Note 4)
Investor................................. 151,190 38,497 89,126 60,575 10,041
Fiduciary................................ 265,055 187,619 181,986 98,847 36,646
-------- -------- -------- -------- -------
Total.................................. 416,245 226,116 271,112 159,422 46,687
======== ======== ======== ======== =======
Net asset value -- offering and redemption
price per share
Investor................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Fiduciary................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
</TABLE>
See notes to financial statements.
23
<PAGE> 26
HIGHMARK LOGO
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME
BOND GOVERNMENT EQUITY
FUND BOND FUND FUND
-------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $59,966; $2,985; and $246,911,
respectively)............................................................... $ 60,471 $2,972 $ 307,924
Repurchase agreements, at cost................................................ 2,862 133 6,811
------- ------ --------
Total Investments......................................................... 63,333 3,105 314,735
Interest and dividends receivable............................................. 904 69 794
Receivable from brokers for investments sold.................................. -- -- 2,293
Receivable for capital shares sold............................................ -- -- 70
Prepaid expenses and other assets............................................. 2 15 8
------- ------ --------
Total Assets.............................................................. 64,239 3,189 317,900
------- ------ --------
LIABILITIES:
Payable for capital shares redeemed........................................... -- -- 75
Payable to brokers for investments purchased.................................. 1,300 -- 2,723
Accrued expenses and other payables:
Investment advisory fees.................................................... 23 -- 172
Administration fees......................................................... 7 -- 60
Custodian, accounting and transfer agent fees............................... 30 14 44
Other....................................................................... 28 4 89
------- ------ --------
Total Liabilities......................................................... 1,388 18 3,163
------- ------ --------
NET ASSETS:
Capital....................................................................... 65,504 3,483 243,350
Net unrealized appreciation (depreciation) on investments..................... 505 (13) 61,013
Undistributed net investment income........................................... 126 6 73
Accumulated net realized gains (losses) on investment transactions............ (3,284) (305) 10,301
------- ------ --------
Net Assets................................................................ $ 62,851 $3,171 $ 314,737
======= ====== ========
Net Assets
Investor.................................................................... $ 926 $ 656 $ 11,750
Fiduciary................................................................... 61,925 2,515 302,987
------- ------ --------
Total..................................................................... $ 62,851 $3,171 $ 314,737
======= ====== ========
Outstanding units of beneficial interest (shares) (Note 4)
Investor.................................................................... 90 70 762
Fiduciary................................................................... 5,950 267 19,684
------- ------ --------
Total..................................................................... 6,040 337 20,446
======= ====== ========
Net asset value
Investor -- redemption price per share...................................... $ 10.32 $ 9.35 $ 15.42
Fiduciary -- offering and redemption price per share........................ $ 10.41 $ 9.42 $ 15.39
======= ====== ========
Maximum Sales Charge (Investor Shares)........................................ 3.00% 3.00% 4.50%
======= ====== ========
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of net asset value
adjusted to nearest cent) per share (Investor Shares)....................... $ 10.64 $ 9.64 $ 16.15
======= ====== ========
</TABLE>
See notes to financial statements.
24
<PAGE> 27
STATEMENTS OF ASSETS AND LIABILITIES
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME &
BALANCED GROWTH GROWTH
FUND FUND FUND
-------- ------- --------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $34,665; $51,066; and $4,379,
respectively).................................................................. $42,904 $61,774 $6,406
Repurchase agreements, at cost................................................... 3,213 3,097 1,400
------- ------- -------
Total Investments............................................................ 46,117 64,871 7,806
Interest and dividends receivable................................................ 324 48 11
Receivable for capital shares sold............................................... -- 2 --
Prepaid expenses................................................................. 19 21 13
------- ------- -------
Total Assets................................................................. 46,460 64,942 7,830
------- ------- -------
LIABILITIES:
Payable to brokers for investments purchased..................................... -- 2,104 --
Accrued expenses and other payables:
Investment advisory fees....................................................... 23 29 --
Administration fees............................................................ 9 10 --
Custodian, accounting and transfer agent fees.................................. 14 16 14
Other.......................................................................... 9 10 7
------- ------- -------
Total Liabilities............................................................ 55 2,169 21
------- ------- -------
NET ASSETS:
Capital.......................................................................... 38,101 49,349 5,616
Net unrealized appreciation on investments....................................... 8,239 10,708 2,027
Undistributed net investment income.............................................. 37 8 2
Accumulated net realized gains on investment transactions........................ 28 2,708 164
------- ------- -------
Net Assets................................................................... $46,405 $62,773 $7,809
======= ======= =======
Net Assets
Investor....................................................................... $ 717 $ 3,617 $ 503
Fiduciary...................................................................... 45,688 59,156 7,306
------- ------- -------
Total........................................................................ $46,405 $62,773 $7,809
======= ======= =======
Outstanding units of beneficial interest (shares) (Note 4)
Investor....................................................................... 56 250 36
Fiduciary...................................................................... 3,580 4,089 514
------- ------- -------
Total........................................................................ 3,636 4,339 550
======= ======= =======
Net asset value
Investor -- redemption price per share......................................... $ 12.67 $ 14.49 $14.22
Fiduciary -- offering and redemption price per share........................... $ 12.76 $ 14.47 $14.21
======= ======= =======
Maximum Sales Charge (Investor Shares)........................................... 4.50% 4.50% 4.50%
======= ======= =======
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of net asset value
adjusted to nearest cent) per share (Investor Shares).......................... $ 13.27 $ 15.17 $14.89
======= ======= =======
</TABLE>
See notes to financial statements.
25
<PAGE> 28
HIGHMARK LOGO
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
U.S. 100% U.S. CALIFORNIA
DIVERSIFIED GOVERNMENT TREASURY TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET TAX-FREE
FUND FUND FUND FUND FUND
------------ ------------ ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income...................... $11,308 $6,082 $7,374 $2,599 $ 816
------- ------- ------- ------ ------
Total Income..................... 11,308 6,082 7,374 2,599 816
------- ------- ------- ------ ------
EXPENSES:
Investment advisory fees (Note 5).... 830 456 569 307 94
Administration fees (Note 5)......... 415 228 285 153 47
Distribution fees (Investor shares)
(Note 5)........................... 205 71 140 67 17
Shareholder services fees (Note 5)... 519 285 355 192 59
Custodian and accounting fees (Note
5)................................. 135 86 87 60 40
Legal and audit fees................. 49 29 38 21 5
Trustees' fees and expenses.......... 9 4 5 3 1
Transfer agent fees.................. 46 22 25 23 17
Registration and filing fees......... 14 8 9 4 2
Printing costs....................... 31 26 17 9 2
Other................................ 7 4 4 2 1
------- ------- ------- ------ ------
Total Expenses................... 2,260 1,219 1,534 841 285
Expenses voluntarily reduced (Note
5)................................. (685) (333) (469) (397) (105)
------- ------- ------- ------ ------
Net Expenses..................... 1,575 886 1,065 444 180
------- ------- ------- ------ ------
Net Investment Income................ 9,733 5,196 6,309 2,155 636
------- ------- ------- ------ ------
REALIZED GAINS ON INVESTMENTS:
Net realized gains on investments.... -- 5 15 -- 1
------- ------- ------- ------ ------
Change in net assets resulting from
operations......................... $ 9,733 $5,201 $6,324 $2,155 $ 637
======= ======= ======= ====== ======
</TABLE>
See notes to financial statements.
LOGO
26
LOGO
<PAGE> 29
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
GOVERNMENT INCOME
BOND BOND EQUITY
FUND FUND FUND
------ ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income...................................................... $2,155 $131 $ 279
Dividend income...................................................... -- -- 4,904
------ ---- -------
Total Income..................................................... 2,155 131 5,183
------ ---- -------
EXPENSES:
Investment advisory fees (Note 5).................................... 268 18 975
Administration fees (Note 5)......................................... 63 4 298
Distribution fees (Investor shares) (Note 5)......................... 1 1 14
Shareholder services fees (Note 5)................................... 78 4 373
Custodian and accounting fees (Note 5)............................... 42 21 95
Legal and audit fees................................................. 7 6 31
Trustees' fees and expenses.......................................... 1 -- 6
Transfer agent fees.................................................. 25 16 51
Registration and filing fees......................................... 4 -- 15
Printing costs....................................................... 8 1 24
Other................................................................ 1 -- 4
------ ---- -------
Total Expenses................................................... 498 71 1,886
Expenses voluntarily reduced (Note 5)................................ (222) (27) (362)
------ ---- -------
Total expenses before expense reimbursements..................... 276 44 1,524
Expense reimbursements(Note 5)................................... -- (28) --
------ ---- -------
Net Expenses..................................................... 276 16 1,524
------ ---- -------
Net Investment Income................................................ 1,879 115 3,659
------ ---- -------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investment transactions............... (84) 5 15,999
Net change in unrealized appreciation on investments................. 1,060 26 26,664
------ ---- -------
Net realized/unrealized gains on investments......................... 976 31 42,663
------ ---- -------
Change in net assets resulting from operations....................... $2,855 $146 $46,322
====== ==== =======
</TABLE>
See notes to financial statements.
27
<PAGE> 30
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
INCOME &
BALANCED GROWTH GROWTH
FUND FUND FUND
-------- ------- --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................................................ $ 660 $ 39 $ 13
Dividend income........................................................ 293 318 83
------ ------ ------
Total Income....................................................... 953 357 96
------ ------ ------
EXPENSES:
Investment advisory fees (Note 5)...................................... 213 242 36
Administration fees (Note 5)........................................... 43 52 7
Distribution fees (Investor shares) (Note 5)........................... 1 4 1
Shareholder services fees (Note 5)..................................... 54 65 9
Custodian and accounting fees (Note 5)................................. 16 13 21
Legal and audit fees................................................... 5 4 7
Trustees' fees and expenses............................................ 1 1 --
Transfer agent fees.................................................... 15 22 16
Registration and filing fees........................................... 2 3 --
Printing costs......................................................... 3 4 --
Other.................................................................. -- 1 1
------ ------ ------
Total Expenses..................................................... 353 411 98
Expenses voluntarily reduced (Note 5).................................. (134) (160) (52)
------ ------ ------
Total expenses before expense reimbursements....................... 219 251 46
Expense reimbursements............................................. (6) -- (11)
------ ------ ------
Net Expenses....................................................... 213 251 35
------ ------ ------
Net Investment Income.................................................. 740 106 61
------ ------ ------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions.......................... 410 4,021 267
Net change in unrealized appreciation on investments................... 4,125 6,791 974
------ ------ ------
Net realized/unrealized gains on investments........................... 4,535 10,812 1,241
------ ------ ------
Change in net assets resulting from operations......................... $5,275 $10,918 $1,302
====== ====== ======
</TABLE>
See notes to financial statements.
28
<PAGE> 31
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
DIVERSIFIED U.S. GOVERNMENT
MONEY MARKET FUND MONEY MARKET FUND
-------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
JANUARY 31, JULY 31, JANUARY 31, JULY 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........................ $ 9,733 $ 19,481 $ 5,196 $ 11,248
Net realized gains on investment
transactions............................... -- 16 5 15
--------- ---------- --------- ----------
Change in net assets resulting from
operations................................... 9,733 19,497 5,201 11,263
--------- ---------- --------- ----------
DISTRIBUTIONS TO INVESTOR SHAREHOLDERS:
From net investment income................... (3,851) (7,738) (1,295) (3,707)
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income................... (5,882) (11,743) (3,901) (7,541)
--------- ---------- --------- ----------
Change in net assets from shareholder
distributions................................ (9,733) (19,481) (5,196) (11,248)
--------- ---------- --------- ----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................. 776,212 1,943,043 967,113 1,933,728
Dividends reinvested......................... 4,245 7,326 1,495 3,487
Cost of shares redeemed...................... (795,309) (1,918,325) (969,865) (1,918,254)
--------- ---------- --------- ----------
Change in net assets from capital
transactions................................. (14,852) 32,044 (1,257) 18,961
--------- ---------- --------- ----------
Change in net assets........................... (14,852) 32,060 (1,252) 18,976
NET ASSETS:
Beginning of period.......................... 430,727 398,667 227,197 208,221
--------- ---------- --------- ----------
End of period................................ $ 415,875 $ 430,727 $ 225,945 $ 227,197
========= ========== ========= ==========
</TABLE>
See notes to financial statements.
29
<PAGE> 32
HIGHMARK LOGO
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
100% U.S. TREASURY CALIFORNIA TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND TAX-FREE FUND
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JANUARY 31, JULY 31, JANUARY 31, JULY 31, JANUARY 31, JULY 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..... $ 6,309 $ 13,980 $ 2,155 $ 4,456 $ 636 $ 1,224
Net realized gains
(losses) on investment
transactions............ 15 (51) -- -- 1 --
--------- ---------- --------- --------- -------- --------
Change in net assets
resulting from
operations................ 6,324 13,929 2,155 4,456 637 1,224
--------- ---------- --------- --------- -------- --------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment
income.................. (2,484) (4,948) (757) (1,404) (192) (400)
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment
income.................. (3,825) (9,032) (1,398) (3,052) (444) (824)
--------- ---------- --------- --------- -------- --------
Change in net assets from
shareholder
distributions............. (6,309) (13,980) (2,155) (4,456) (636) (1,224)
--------- ---------- --------- --------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 407,698 1,004,680 186,054 343,893 67,853 132,220
Dividends reinvested...... 2,650 4,571 718 1,425 204 419
Cost of shares redeemed... (413,194) (1,014,501) (179,378) (339,625) (65,643) (131,897)
--------- ---------- --------- --------- -------- --------
Change in net assets from
capital transactions...... (2,846) (5,250) 7,394 5,693 2,414 742
--------- ---------- --------- --------- -------- --------
Change in net assets........ (2,831) (5,301) 7,394 5,693 2,415 742
NET ASSETS:
Beginning of period....... 273,963 279,264 151,979 146,286 44,257 43,515
--------- ---------- --------- --------- -------- --------
End of period............. $ 271,132 $ 273,963 $ 159,373 $ 151,979 $ 46,672 $ 44,257
========= ========== ========= ========= ======== ========
</TABLE>
See notes to financial statements.
30
<PAGE> 33
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JANUARY 31, JULY 31, JANUARY 31, JULY 31, JANUARY 31, JULY 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..... $ 1,879 $ 3,766 $ 115 $ 267 $ 3,659 $ 7,682
Net realized gains
(losses) on investment
transactions............ (84) (369) 5 (8) 15,999 19,384
Net change in unrealized
appreciation
(depreciation) on
investments............. 1,060 (465) 26 (67) 26,664 13,911
-------- -------- ------- -------- -------- --------
Change in net assets
resulting from
operations................ 2,855 2,932 146 192 46,322 40,977
-------- -------- ------- -------- -------- --------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment
income.................. (26) (63) (27) (53) (134) (239)
From net realized gains on
investments............. -- (1) -- -- (761) (277)
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment
income.................. (1,759) (3,703) (84) (214) (3,452) (7,443)
From net realized gains on
investments............. -- (32) -- (2) (19,911) (11,279)
-------- -------- ------- -------- -------- --------
Change in net assets from
shareholder
distributions............. (1,785) (3,799) (111) (269) (24,258) (19,238)
-------- -------- ------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 7,095 15,630 542 1,352 20,543 63,282
Dividends reinvested...... 1,673 3,043 131 266 22,684 17,495
Cost of shares redeemed... (8,518) (16,591) (2,027) (1,035) (23,357) (54,919)
-------- -------- ------- -------- -------- --------
Change in net assets from
capital transactions...... 250 2,082 (1,354) 583 19,870 25,858
-------- -------- ------- -------- -------- --------
Change in net assets........ 1,320 1,215 (1,319) 506 41,934 47,597
NET ASSETS:
Beginning of period....... 61,531 60,316 4,490 3,984 272,803 225,206
-------- -------- ------- -------- -------- --------
End of period............. $ 62,851 $ 61,531 $ 3,171 $ 4,490 $ 314,737 $ 272,803
======== ======== ======= ======== ======== ========
</TABLE>
See notes to financial statements.
31
<PAGE> 34
HIGHMARK LOGO
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
------------------------ ------------------------ ------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
JANUARY 31, JULY 31, JANUARY 31, JULY 31, JANUARY 31, JULY 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income..... $ 740 $ 1,217 $ 106 $ 354 $ 61 $ 124
Net realized gains on
investment
transactions............ 410 446 4,021 3,272 267 628
Net change in unrealized
appreciation on
investments............. 4,125 1,716 6,791 155 974 56
------- ------- ------- ------- ------ -------
Change in net assets
resulting from
operations................ 5,275 3,379 10,918 3,781 1,302 808
------- ------- ------- ------- ------ -------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment
income.................. (12) (23) (6) (21) (4) (6)
From net realized gains on
investments............. (10) -- (229) (94) (23) (14)
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment
income.................. (692) (1,194) (92) (333) (55) (118)
From net realized gains on
investments............. (623) (2) (3,458) (1,566) (334) (314)
------- ------- ------- ------- ------ -------
Change in net assets from
shareholder
distributions............. (1,337) (1,219) (3,785) (2,014) (416) (452)
------- ------- ------- ------- ------ -------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued.................. 3,910 15,840 10,996 19,239 609 2,923
Dividends reinvested...... 1,454 1,172 3,678 1,965 387 434
Cost of shares redeemed... (3,093) (9,404) (3,372) (4,947) (480) (4,190)
------- ------- ------- ------- ------ -------
Change in net assets from
capital transactions...... 2,271 7,608 11,302 16,257 516 (833)
------- ------- ------- ------- ------ -------
Change in net assets........ 6,209 9,768 18,435 18,024 1,402 (477)
NET ASSETS:
Beginning of period..... 40,196 30,428 44,338 26,314 6,407 6,884
------- ------- ------- ------- ------ -------
End of period........... $46,405 $40,196 $62,773 $44,338 $ 7,809 $ 6,407
======= ======= ======= ======= ====== =======
</TABLE>
See notes to financial statements.
32
<PAGE> 35
DIVERSIFIED MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (0.6%):
$ 3,000 Ford, 5.45%, 11/15/97........ $ 3,000
--------
CERTIFICATES OF DEPOSIT (14.4%):
Yankee Certificates of Deposit (14.4%):
10,000 Dresdner Bank, 5.05%,
2/26/97.................... 10,000
10,000 Industrial Bank of Japan YCD,
5.45%, 4/3/97.............. 10,000
10,000 Landesbank, 6.03%, 6/13/97... 10,016
10,000 Rabobank, 5.40%, 4/16/97..... 10,000
5,000 Sanwa Bank, Ltd., 5.54%,
3/10/97.................... 5,000
10,000 Sanwa Bank Yankee CD, 5.44%,
2/10/97.................... 10,000
5,000 Societe Generale, 5.50%,
4/8/97..................... 5,000
--------
Total Certificates of Deposit 60,016
--------
COMMERCIAL PAPER/MASTER DEMAND
NOTES (81.2%):(a)
Automotive (7.5%):
5,000 Daimler-Benz North America
Corp., 5.32%, 4/17/97...... 4,945
6,500 Daimler-Benz North America
Corp., 5.40%, 2/4/97....... 6,495
5,000 Daimler-Benz North America
Corp., 5.31%, 4/16/97...... 4,945
10,000 Ford Motor Credit Corp.,
5.29%, 3/13/97............. 9,940
5,000 Ford Motor Credit Corp.,
5.27%, 2/7/97.............. 4,996
--------
Total Automotive 31,321
--------
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND
NOTES, CONTINUED:
Banking (16.5%):
$ 5,000 ABN Amro North America
Finance Inc., 5.36%,
7/28/97.................... $ 4,868
5,000 ABN Amro North America
Finance Inc., 5.33%,
7/9/97..................... 4,883
5,000 ABN Amro North America
Finance Inc., 5.37%,
7/9/97..................... 4,882
5,000 ANZ (DE) Inc., 5.34%,
10/3/97.................... 4,819
10,000 Dresdner U.S. Finance Inc.,
5.32%, 2/4/97.............. 9,996
10,000 National Australia Funding DE
Inc., 5.32%, 4/16/97....... 9,891
10,000 Toronto Dominion Holdings
(USA) Inc., 5.30%,
4/4/97..................... 9,909
5,000 Toronto Dominion Holdings
(USA) Inc., 5.32%,
5/2/97..................... 4,934
5,000 Toronto Dominion Holdings
(USA) Inc., 5.38%,
10/24/97................... 4,802
10,000 Westpac Capital Corp., 5.36%,
7/15/97.................... 9,756
--------
Total Banking 68,740
--------
Beverages (4.2%):
5,000 Bass Finance (C.I.) Ltd.,
5.36%, 2/11/97............. 4,993
5,000 Bass Finance (C.I.) Ltd.,
5.35%, 2/12/97............. 4,992
7,551 Bass Finance (C.I.) Ltd.,
5.32%, 2/7/97.............. 7,544
--------
Total Beverages........................... 17,529
--------
</TABLE>
Continued
33
<PAGE> 36
HIGHMARK LOGO DIVERSIFIED MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND
NOTES, CONTINUED:
Business Credit Institutions (15.5%):
$10,000 American Express Credit
Corp., 5.29%, 5/30/97...... $ 9,827
5,000 Apreco Inc., 5.35%,
3/12/97.................... 4,971
5,000 Assets Securitization
Cooperative Corp., 5.29%,
2/12/97.................... 4,992
5,000 Beta Finance Inc., 5.35%,
6/30/97.................... 4,889
5,000 Beta Finance Inc., 5.33%,
2/27/97.................... 4,981
10,000 Ciesco, L.P., 5.35%,
4/7/97..................... 9,903
5,000 Ciesco, L.P., 5.30%,
3/11/97.................... 4,972
10,000 CXC, Inc., 5.41%, 2/20/97.... 9,972
5,000 CXC, Inc., 5.30%, 2/26/97.... 4,982
5,000 CXC, Inc., 5.30%, 2/27/97.... 4,981
--------
Total Business Credit Institutions 64,470
--------
Foreign Governments (5.4%):
10,000 Province of Alberta, 5.45%,
3/17/97.................... 9,933
5,000 Province of British Columbia,
5.31%, 2/28/97............. 4,980
7,500 Western Australia Treasury
Corp., 5.29%, 2/13/97...... 7,487
--------
Total Foreign Governments 22,400
--------
Industrial Goods & Services (3.6%):
10,000 Akzo Nobel Inc., 5.35%,
4/14/97.................... 9,893
5,000 Akzo Nobel Inc., 5.34%,
5/9/97..................... 4,928
--------
Total Industrial Goods & Services 14,821
--------
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
COMMERCIAL PAPER/MASTER DEMAND
NOTES, CONTINUED:
Insurance (2.4%):
$ 5,000 TransAmerica Corp., 5.28%,
2/24/97.................... $ 4,983
5,000 TransAmerica Corp., 5.40%,
7/14/97.................... 4,878
--------
Total Insurance 9,861
--------
Mining (1.9%):
7,734 RTZ America Inc., 5.30%,
2/13/97.................... 7,720
--------
Multiple Industry (7.1%):
5,000 BTR Dunlop Finance Inc.,
5.35%, 4/7/97.............. 4,952
10,000 BTR Dunlop Finance Inc.,
5.37%, 7/7/97.............. 9,767
5,000 General Electric Capital
Corp., 5.22%, 5/20/97...... 4,922
10,000 General Electric Capital
Corp., 5.27%, 6/2/97....... 9,823
--------
Total Multiple Industry 29,464
--------
Printing and Publishing (2.4%):
10,000 Gannett Co., 5.28%,
2/14/97.................... 9,981
--------
Real Estate (1.2%):
5,000 Embarcadero Center Venture
(Four), 5.42%, 3/11/97(b).. 4,971
--------
Tobacco and Tobacco Products (2.5%):
10,495 B.A.T. Capital Corp., 5.28%,
2/20/97.................... 10,466
--------
</TABLE>
Continued
34
<PAGE> 37
DIVERSIFIED MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND
NOTES, CONTINUED:
Trading Company (3.6%):
$10,000 Cargill Inc., 5.50%,
2/3/97..................... $ 9,997
5,000 Cargill Financial Services
Corp., 5.33%, 7/8/97....... 4,884
--------
Total Trading Company 14,881
--------
Utility (7.4%):
5,000 Electricity, 5.38%,
2/11/97.................... 4,993
11,000 Electricity, 5.41%,
2/11/97.................... 10,983
10,000 National Rural Utilities
Co-op. Finance Corp.,
5.28%, 3/3/97.............. 9,956
5,000 National Rural Utilities
Co-op. Finance Corp.,
5.28%, 3/21/97............. 4,965
--------
Total Utility............................. 30,897
--------
Total Commercial Paper/Master Demand
Notes................................... 337,522
--------
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
MEDIUM TERM NOTES/CORPORATE
BONDS (1.5%):
Technology (1.5%):
$ 6,250 IBM Credit Corp., 5.86%,
4/14/97*................... $ 6,255
--------
U.S. GOVERNMENT AGENCY (1.2%):
5,000 FFCB, 5.29%, 10/16/97........ 4,811
--------
U.S. TREASURY BILLS (2.4%):
10,000 4.62%, 2/6/97(a)............. 9,994
--------
Total Investments, at value 421,598
--------
REPURCHASE AGREEMENTS (1.3):
5,202 C. S. First Boston Corp.,
5.45%, 2/3/97
(collateralized by various
U.S. Treasury Notes, total
par value $5,213; 6.38%-
6.75%; market value
$5,321).................... 5,202
--------
Total $426,800 (c)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $415,875.
(a) Discount yield at date of purchase.
(b) Backed by an irrevocable, direct pay letter of credit -- DAICHI Kangyo Bank
LTD.
(c) Cost for federal income tax and financial reporting purposes are the same.
* Adjustable rate security. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect on January 31, 1997.
FFCB -- Federal Farm Credit Bank
See notes to financial statements.
35
<PAGE> 38
HIGHMARK LOGO U.S. GOVERNMENT MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ------------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS (4.4%):
$10,000 4.62%, 2/6/97*............... $ 9,993
--------
Total U.S. Treasury Bills 9,993
--------
U.S. GOVERNMENT AGENCIES (87.2%):
Federal Farm Credit Bank:
5,000 5.32%, 2/3/97................ 5,000
5,000 5.14%, 6/2/97................ 4,914
6,500 5.28%, 10/30/97.............. 6,241
Federal Home Loan Bank:
5,000 5.21%, 2/4/97................ 4,998
5,000 5.21%, 3/3/97................ 4,978
5,000 5.23%, 7/1/97................ 4,891
5,000 5.23%, 7/8/97................ 4,886
5,000 5.35%, 10/7/97............... 4,816
5,000 5.28%, 10/27/97.............. 4,803
Federal Home Loan Mortgage Corp.:
5,000 5.23%, 2/3/97................ 4,998
5,000 5.24%, 2/3/97................ 4,999
10,000 5.48%, 2/3/97................ 9,997
5,000 5.22%, 2/19/97............... 4,987
5,000 5.23%, 2/19/97............... 4,987
5,000 5.24%, 4/7/97................ 4,953
5,000 5.22%, 4/29/97............... 4,937
Federal National Mortgage Assoc.:
5,000 5.21%, 2/12/97............... 4,992
5,000 5.22%, 3/5/97................ 4,977
5,000 5.21%, 3/6/97................ 4,976
5,000 5.28%, 3/7/97................ 4,975
5,000 5.20%, 3/10/97............... 4,973
5,000 5.22%, 3/14/97............... 4,970
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ------------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 5,000 5.22%, 3/20/97............... $ 4,966
5,000 5.21%, 4/9/97................ 4,952
5,000 5.18%, 4/11/97............... 4,950
5,000 5.24%, 4/21/97............... 4,943
5,000 5.25%, 4/29/97............... 4,937
20,000 5.06%, 5/5/97(b)............. 19,996
5,000 5.20%, 5/16/97............... 4,925
5,000 5.23%, 5/27/97............... 4,916
5,000 5.22%, 6/10/97............... 4,906
5,600 5.38%, 7/16/97(b)............ 5,599
5,000 5.29%, 12/12/97.............. 4,769
Student Loan Marketing Assoc.:
2,000 5.87%, 4/21/97 *............. 2,002
10,000 5.33%, 7/18/97 *............. 10,000
--------
Total U.S. Government Agencies............ 197,109
--------
Total Investments, at value............... 207,102
--------
REPURCHASE AGREEMENTS (8.7%):
19,513 C.S. First Boston Corp.,
5.45%, 2/3/97
(collateralized by U.S.
Treasury Notes, total par
value $18,305; 6.00%-8.50%;
market value $19,944)...... 19,513
--------
Total $226,615(a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $225,945.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Variable rate securities. The rate reflected on the Schedule of Portfolio
Investments is the rate in effect at January 31, 1997.
* Discount yield at date of pruchase.
See notes to financial statements.
36
<PAGE> 39
100% U.S. TREASURY MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS (36.4%):
$ 3,049 4.91%, 2/6/97*............... $ 3,047
3,249 5.01%, 2/6/97*............... 3,247
2,870 5.11%, 2/6/97*............... 2,868
4,000 4.98%, 2/13/97*.............. 3,993
5,000 4.99%, 2/13/97*.............. 4,992
4,491 5.01%, 2/20/97*.............. 4,479
578 5.02%, 2/20/97*.............. 576
1,183 4.92%, 2/27/97*.............. 1,179
1,111 4.95%, 2/27/97*.............. 1,107
2,080 4.87%, 3/6/97*............... 2,071
2,389 4.87%, 3/6/97*............... 2,378
5,000 4.91%, 3/6/97*............... 4,977
4,294 4.90%, 3/13/97*.............. 4,271
7,540 4.91%, 3/13/97*.............. 7,499
1,914 4.98%, 3/13/97*.............. 1,903
8,625 4.95%, 3/27/97*.............. 8,561
734 5.02%, 4/3/97*............... 728
4,676 4.97%, 4/10/97*.............. 4,632
4,154 5.01%, 4/10/97*.............. 4,115
122 5.02%, 4/10/97*.............. 121
1,564 5.00%, 4/17/97*.............. 1,548
1,388 5.03%, 4/17/97*.............. 1,373
2,730 5.09%, 4/17/97*.............. 2,701
5,483 5.03%, 4/24/97*.............. 5,420
5,023 5.01%, 5/1/97*............... 4,961
1,252 5.02%, 5/1/97*............... 1,236
10,000 5.02%, 5/1/97*............... 9,876
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS, CONTINUED:
$ 5,000 5.01%, 6/5/97*............... $ 4,914
--------
Total U.S. Treasury Bills................... 98,773
--------
U.S. TREASURY NOTES (62.8%):
10,000 4.75%, 2/15/97*.............. 9,997
10,000 4.75%, 2/15/97*.............. 9,998
15,000 4.75%, 2/15/97*.............. 14,995
5,000 6.75%, 2/28/97*.............. 5,005
10,000 6.75%, 2/28/97*.............. 10,011
10,000 6.75%, 2/28/97*.............. 10,012
5,000 6.63%, 3/31/97*.............. 5,010
10,000 6.63%, 3/31/97*.............. 10,017
15,000 6.63%, 3/31/97*.............. 15,032
10,000 6.88%, 3/31/97*.............. 10,026
10,000 8.50%, 4/15/97*.............. 10,062
5,000 6.50%, 4/30/97*.............. 5,010
10,000 6.50%, 4/30/97*.............. 10,029
5,000 6.88%, 4/30/97*.............. 5,019
5,000 6.50%, 5/15/97*.............. 5,017
10,000 6.50%, 5/15/97*.............. 10,032
5,000 5.63%, 6/30/97*.............. 5,007
10,000 5.63%, 6/30/97*.............. 10,011
5,000 5.88%, 7/31/97*.............. 5,010
5,000 5.88%, 7/31/97*.............. 5,011
--------
Total U.S. Treasury Notes 170,311
--------
Total $269,084 (a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $271,132.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Discount yield at date of purchase.
See notes to financial statements.
37
<PAGE> 40
HIGHMARK LOGO CALIFORNIA TAX-FREE MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES (92.6%):
California (92.6%):
$ 4,925 Contra Costa County, Park Regency, Series 1992, 3.70%, 8/1/32, AMT*............. $ 4,925
3,500 Health Facilities Authority, Enloe Memorial Hospital, 3.25%, 1/1/16*............ 3,500
7,800 Health Facilities Authority, Memorial Health Services, 3.45%, 10/1/24*.......... 7,800
6,700 Health Facilities Authority, Catholic Healthcare West, 3.45%, 7/1/05*........... 6,700
1,000 Health Facilities Authority, St. Joseph's Health Systems, Series A, 3.55%, 1,000
7/1/13*.......................................................................
1,300 Health Finance Authority, Catholic Healthcare West, 3.45%, 7/1/09*.............. 1,300
6,900 Health Finance Authority, Kaiser Permanente Series, 3.45%, 5/1/28*.............. 6,900
2,200 Health Finance Authority, Pooled Program, Series 1990 A, 3.40%, 9/1/20*......... 2,200
3,000 Health Finance Authority Pooled Program, Series B, 3.40%, 10/1/10*.............. 3,000
1,800 Health Finance Authority, Santa Barbara Cottage, 3.50%, 9/1/15*................. 1,800
1,490 Health Finance Authority, Santa Barbara Cottage, Series B, 3.50%, 9/1/05*....... 1,490
2,900 Kern County Public Facilities, Project Series B, 3.45%, 8/1/06*................. 2,900
1,900 Lancaster Multi-Family Housing, Westwood Park Apartments, 3.45%, 12/1/07*....... 1,900
5,100 Los Angeles County Transportation, 3.40%, 7/1/12*............................... 5,100
700 Los Angeles Multi-Family Housing, Crescent Gardens, 3.30%, 7/1/14*.............. 700
4,300 Los Angeles Multi-Family Housing, Series K, 3.40%, 7/1/10*...................... 4,300
7,500 Los Angeles Multi-Family Housing, Skyline at Southpark Project, 3.65%, 7,500
12/1/05*......................................................................
5,000 Los Angeles Waste Water System Commercial Paper, 3.40%, 3/14/97................. 5,000
4,600 Metropolitan Water District of Southern California, 3.45%, 6/1/23*.............. 4,600
2,800 Oxnard Housing Authority, Seawind Apartments Project, 3.60%, 12/1/20, AMT*...... 2,800
7,700 Pollution Control Finance Authority, Burney Forest 1988, 3.65%, 9/1/20, AMT*.... 7,700
1,900 Pollution Control Finance Authority, Delano Project 1989, 3.70%, 8/1/19, AMT*... 1,900
2,200 Pollution Control Finance Authority, Delano Project 1990, 3.70%, 8/1/19, AMT*... 2,200
3,000 Pollution Control Finance Authority, Delano Project 1991, 3.70%, 8/1/19, AMT*... 3,000
4,020 Pollution Control Finance Authority, Honey Lake Power Project, Series 88, 3.70%, 4,020
9/1/18, AMT*..................................................................
2,000 Pollution Control Finance Authority, Southern California Edison, Series 85C, 2,000
3.50%, 3/1/08.................................................................
2,600 Pollution Control Finance Authority, Southern California Edison, Series 85C, 2,600
3.35%, 3/1/08.................................................................
200 Pollution Control Revenue -- Shell Oil, 3.55%, 10/1/08, AMT*.................... 200
</TABLE>
Continued
38
<PAGE> 41
CALIFORNIA TAX-FREE MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
California, continued:
$ 1,100 Pollution Control Revenue -- Shell Oil, 3.55%, 10/1/10, AMT*.................... $ 1,100
2,000 Pollution Control Finance Authority, Southern California Edison, Series 85C, 2,000
3.55%, 3/1/08.................................................................
2,000 Pollution Control Finance Authority, Southern California Edison, Series 85C, 2,000
3.60%, 3/1/08.................................................................
3,600 Pollution Control Finance Authority, Southern California Edison, Series 86A, 3,600
3.70%, 2/28/08................................................................
1,000 Pollution Control Finance Authority, Southern California Edison, Series 86B, 1,000
3.70%, 2/28/08................................................................
3,500 SCAPPA, Revenue, 91 Refunding Series, 3.40%, 7/1/19*............................ 3,500
7,000 San Bernardino County, TRANs, 4.50%, 6/30/97.................................... 7,020
2,500 Sacramento County Multi-Family Housing Authority, River Terrace Apartments, 2,500
3.65%, 12/1/21*...............................................................
2,200 Sacramento County Multi-Family Housing, River Oaks Apartments, Series E, 3.70%, 2,200
9/15/07*......................................................................
500 San Jose, Multi-Family Housing, Somerset Park, 3.45%, 11/1/17, AMT*............. 500
1,500 San Jose, Redevelopment -- Merged Area, 3.60%, 7/1/26*.......................... 1,500
3,000 State of California, General Obligation, 3.15%, 3/25/97......................... 3,000
300 State of California, Tax Exempt Commercial Paper, 3.35%, 5/20/97................ 300
1,200 State of California, Tax Exempt Commercial Paper, 3.50%, 3/6/97................. 1,200
4,000 State of California, Tax Exempt Commercial Paper, 3.35%, 2/26/97................ 4,000
4,000 State of California, Tax Exempt Commercial Paper, 3.35%, 3/5/97................. 4,000
7,265 Statewide Community Development Authority, Series 95A, 3.40%, 5/15/25*.......... 7,265
900 Vacaville Multi-Family Housing, The Sycamores Apartments, 3.30%, 4/1/05*........ 900
1,000 Walnut Creek Multi-Family Housing, Creekside Drive Apartments, 3.30%, 4/1/07*... 1,000
Total Municipal Securities 147,620
</TABLE>
Continued
39
<PAGE> 42
HIGHMARK LOGO CALIFORNIA TAX-FREE MONEY MARKET FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- -------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
INVESTMENT COMPANIES (3.1%):
$ 87 Goldman Sachs California Tax-Exempt Money Market Fund........................... $ 87
4,746 Provident California Tax-Exempt Money Market Fund............................... 4,746
--------
Total Investment Companies 4,833
--------
Total $152,453 (a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $159,373.
<TABLE>
<C> <S>
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of credit or other credit and/or
liquidity agreements. The interest rate, which will change periodically, is based upon bank prime rates or an
index of market interest rates. The rate reflected on the Schedule of Portfolio Investments is the rate in
effect at January 31, 1997.
AMT Alternative Minimum Tax Paper
TRANs Tax Revenue Anticipation Notes
</TABLE>
See notes to financial statements.
40
<PAGE> 43
TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES (93.8%):
California (65.5%):
$ 100 California Catholic Healthcare, 3.45%, 7/1/09*................................... $ 100
400 California Pollution Control Revenue -- Shell Oil Service, 3.55%, 10/1/06,
AMT*........................................................................... 400
1,100 California Pollution Control Revenue -- Shell Oil Service, 3.55%, 10/1/08,
AMT*........................................................................... 1,100
700 California Pollution Control Revenue -- Shell Oil Service, 3.55%, 11/1/00,
AMT*........................................................................... 700
500 Health Facilities Finance Authority, Catholic Healthcare West, 3.45%, 7/1/05*.... 500
700 Health Facilities Finance Authority, Pooled Loan Program, Series B, 3.40%,
10/1/10*....................................................................... 700
200 Health Facilities Finance Authority Revenue, Enloe Memorial Hospital Series A,
3.25%, 1/1/16*................................................................. 200
1,600 Health Facilities Finance Authority Revenue, Kaiser Permanent Series B, 3.45%,
5/1/28*........................................................................ 1,600
2,400 Health Facilities Finance Authority Revenue, Memorial Health Services, 3.45%,
10/1/24*....................................................................... 2,400
700 Health Facilities Finance Authority, Santa Barbara Cottage Hospital, 3.50%,
9/1/05*........................................................................ 700
1,300 Health Facilities Finance Authority, Santa Barbara Cottage Hospital, 3.50%,
9/1/15*........................................................................ 1,300
1,640 Health Facilities Finance Authority, St. Joseph's Health Systems, Series A,
3.55%, 7/1/13*................................................................. 1,640
500 Health Facilities Finance Authority, St. Joseph's Health Systems, Series B,
3.60%, 7/1/13*................................................................. 500
1,500 Irvine Ranch Water District, Series 85B, 3.55%, 10/1/04*......................... 1,500
600 Irvine Ranch Water District, Series 85B, 3.55%, 10/1/09*......................... 600
500 Lancaster MFH, West Wood Park Apartments Redevelopment, 3.45%, 12/1/07*.......... 500
400 Los Angeles MFH Crescent Gardens Apartments, 3.30%, 7/1/14*...................... 400
2,000 Los Angeles MFH, Series K, 3.40%, 7/1/10*........................................ 2,000
200 Los Angeles MFH, Skyline at Southpark Project, 3.65%, 12/1/05*................... 200
80 Pollution Control Finance Authority, Honey Lake Power Project, Series 88,
3.70%, 9/1/18, AMT*............................................................ 80
2,100 Pollution Control Finance Authority, Burney Forest 1988, 3.65%, 9/1/20, AMT*..... 2,100
200 Pollution Control Finance Authority, Delano Project, 1989, 3.70%, 8/1/19, AMT*... 200
700 Pollution Control Finance Authority, Delano Project, 1990, 3.70%, 8/1/19, AMT*... 700
900 Pollution Control Finance Authority, Southern California Edison, Series 85C,
3.00%, 3/1/08.................................................................. 900
1,000 Pollution Control Finance Authority, Southern California Edison, Series 85D,
3.25%, 3/1/08.................................................................. 1,000
1,000 Sacramento Co. Housing Authority, 3.65%, 12/1/21*................................ 1,000
100 San Jose, MFH, Somerset Park, 3.45%, 11/1/17, AMT*............................... 100
1,800 San Jose, Redevelopment -- Merged Area, 3.60%, 7/1/26*........................... 1,800
</TABLE>
Continued
41
<PAGE> 44
HIGHMARK LOGO TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
California, continued:
$ 200 SCAPPA Revenue, 3.40%, 7/1/19*................................................... $ 200
2,000 Southern California Metropolitan Water District, Series A, 3.45%, 6/1/23*........ 2,000
1,000 State of California General Obligation, 3.10%, 2/13/97........................... 1,000
2,300 Statewide Community Development Authority, Series 95A, 3.40%, 5/15/25*........... 2,300
135 West Covina Redevelopment Lakes Public Package, 3.50%, 8/1/18, AMT*.............. 135
-------
30,555
-------
Connecticut (3.6%):
1,700 State Development Authority PCR, Connecticut Light and Power Co. Series 1993B,
3.45%, 9/1/28, AMT*............................................................ 1,700
-------
Florida (2.1%):
1,000 Indian Trace Community Development, Water Management Special Benefit,
3.35%, 5/1/10.................................................................. 1,000
-------
Illinois (1.7%):
800 Illinois Health Facilities Finance Authority, Methodist Medical Center, Series
1985B,
3.65%, 10/1/14*................................................................ 800
-------
Indiana (1.4%):
600 City of Sullivan, PCR, 3.20%, 2/3/97............................................. 600
-------
Louisiana (1.7%):
800 Public Facilities, Authority for Kenner Hotel, Ltd., 3.65%, 12/1/15*............. 800
-------
Missouri (2.6%):
1,200 St. Charles, Sun River Village Apartments, 3.60%, 12/1/07*....................... 1,200
-------
Nevada (3.2%):
1,500 Clark County Airport, Sub Lien Revenue, Series 1995A-1, 3.50%, 7/1/25*........... 1,500
-------
New York (6.2%):
1,500 Local Government Assistance Corp., Series 1995D, 3.45%, 4/1/25*.................. 1,500
400 New York General Obligation Bonds, Series 1993, 3.75%, 10/1/20*.................. 400
1,000 New York General Obligation Bonds, Series 1993, 3.75%, 10/1/22*.................. 1,000
-------
2,900
-------
</TABLE>
Continued
42
<PAGE> 45
TAX-FREE FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
Oregon (1.5%):
$ 700 Port Morrow Revenue, Portland General Electric Co., Series A, 3.75%, 10/1/13*.... $ 700
-------
Texas (4.3%):
2,000 Amoco Gulf Coast Waste Disposal, 3.60%, 10/1/17*................................. 2,000
-------
Total Municipal Securities 43,755
-------
INVESTMENT COMPANIES (0.7%):
29 Goldman Sachs Tax Exempt National Fund........................................... 29
319 SEI Institutional Tax Exempt Money Market Fund................................... 319
-------
Total Investment Companies 348
-------
Total $44,103(a)
=======
</TABLE>
- ------------
Percentages indicated are based on total net assets of $46,672.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities collateralized by bank letters of credit or other
bank credit arrangements. The interest rate, which will change periodically,
is based upon bank prime rates or an index of market interest rates. The rate
reflected on the Schedule of Portfolio Investments is the rate in effect on
January 31, 1997.
AMT Alternative Minimum Tax Paper
MFH Multi-Family Housing
PCR Pollution Control Revenue
See notes to financial statements.
43
<PAGE> 46
HIGHMARK LOGO BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (16.4%):
$ 131 Advanta Mortgage Loan Trust,
7.90%, 3/25/07............... $ 131
1,000 Carco Auto Loan Master Trust,
Series 1994-2, 7.88%,
8/15/97...................... 1,012
1,125 Contimortgage Home Equity Loan
Trust, 8.09%, 9/15/09........ 1,143
1,000 Contimortgage Home Equity Loan
Trust, 8.05%, 7/15/12........ 1,035
1,200 EQCC Home Equity Loan Trust,
7.80%, 12/15/10.............. 1,234
1,250 EQCC Home Equity Loan Trust,
7.40%, 12/15/19.............. 1,255
1,250 Green Tree Financial Corp.,
6.80%, 1/15/26............... 1,241
456 MBNA Credit Card, 7.25%,
6/15/99...................... 460
714 Mid State Trust 4, 8.33%,
4/1/30....................... 753
321 Premier Auto Receivable Trust,
4.90%, 10/15/98.............. 319
1,000 Standard Credit Card Master
Trust, 4.65%, 3/7/99......... 1,000
336 UCFC Home Equity Loan, 7.78%,
12/10/06..................... 339
360 UFSB Grantor Trust, 5.08%,
5/15/00...................... 355
-------
Total Asset Backed Securities................ 10,277
-------
COLLATERALIZED MORTGAGE OBLIGATIONS (6.1%):
Bear Stearns Secured Investors:
190 7.50%, 1/20/99................. 189
Country Wide Mortgage:
899 6.75%, 3/25/08................. 888
GE Capital Mortgage Service, Inc.:
1,850 6.50%, 1/25/24................. 1,804
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED:
Residential Funding Mortgage:
$ 950 6.75%, 11/25/07................ $ 928
-------
Total Collateralized Mortgage Obligations.... 3,809
-------
CORPORATE BONDS (27.8%):
Automotive (5.4%):
2,290 General Motors Acceptance
Corp., 8.00%, 10/1/99........ 2,380
1,000 Ford Motor Credit -- Global
Fund, 7.00%, 9/25/01......... 1,018
-------
3,398
-------
Banking (8.1%):
1,785 Bank of America, 6.00%,
7/15/97...................... 1,789
1,300 Citibank Credit Card, 6.84%,
2/10/04...................... 1,303
600 Citicorp, 6.75%, 8/15/05....... 590
900 U.S. Bancorp, 6.75%,
10/15/05..................... 879
500 First Bank System, Inc., 6.88%,
9/15/07...................... 489
-------
5,050
-------
Computer Hardware (1.4%):
800 IBM Corp., 8.38%, 11/1/19...... 882
-------
Financial Services (1.0%):
650 Golden West Financial, 6.70%,
7/1/02....................... 649
-------
Governments (Foreign) (1.4%):
825 Hydro-Quebec, 8.05%, 7/7/24.... 894
-------
Industrial Goods & Services (1.3%):
860 Caterpillar Tractor Co., 6.00%,
5/1/07....................... 792
-------
Retail Stores (5.8%):
980 J. C. Penney Inc., 6.00%,
5/1/06....................... 900
900 Sears Roebuck Co., 9.25%,
8/1/97....................... 914
</TABLE>
Continued
44
<PAGE> 47
BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
CORPORATE BONDS, CONTINUED:
Retail Stores, continued:
$ 1,850 Wal-Mart Stores, 6.38%,
3/1/03....................... $ 1,820
-------
3,634
-------
Telecommunications (3.4%):
1,500 Bell Atlantic-Maryland, 8.00%,
10/15/29..................... 1,620
500 New England Telephone &
Telegraph, 7.88%, 11/15/29... 534
-------
2,154
-------
Total Corporate Bonds........................ 17,453
-------
U.S. GOVERNMENT AGENCIES (26.7%):
Federal Home Loan Bank:
300 8.38%, 10/25/99................ 317
Federal Home Loan Mortgage Corp.:
1,500 6.25%, 1/15/24................. 1,405
Federal National Mortgage Association:
1,000 9.05%, 4/10/00................. 1,078
2,000 6.20%, 9/25/02................. 1,960
1,750 5.45%, 10/10/03................ 1,647
1,500 6.50%, 3/25/13................. 1,455
1,548 6.50%, 3/1/24, Pool #276510.... 1,479
1,549 8.50%, 5/1/25, Pool #303300.... 1,610
1,012 6.50%, 5/1/26.................. 967
Government National Mortgage Association:
1,821 6.50%, 6/15/23, Pool #354601... 1,736
579 6.50%, 12/15/23, Pool #369270.. 552
818 7.50%, 1/15/24, Pool #352844... 820
148 7.50%, 1/15/24, Pool #360285... 148
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 34 7.50%, 1/15/24, Pool #362734... $ 34
296 7.50%, 1/15/24, Pool #368677... 297
349 7.50%, 2/15/24, Pool #353297... 350
62 7.50%, 2/15/24, Pool #336245... 62
852 7.00%, 4/15/24, Pool #392055... 835
-------
Total U.S. Government Agencies 16,752
-------
U.S. TREASURY BONDS (16.3%):
1,500 10.38%, 11/15/12............... 1,916
2,500 7.25%, 5/15/16................. 2,604
2,360 8.75%, 8/15/20................. 2,863
2,800 7.13%, 2/15/23................. 2,874
-------
Total U.S. Treasury Bonds 10,257
-------
U.S. TREASURY NOTES (3.0%):
1,000 8.13%, 2/15/98................. 1,024
430 9.00%, 5/15/98................. 447
420 8.50%, 11/15/00................ 452
-------
Total U.S. Treasury Notes 1,923
-------
Total Investments, at value 60,471
-------
REPURCHASE AGREEMENTS (4.5%):
2,862 C. S. First Boston Corp.,
5.45%, 2/3/97 (collateralized
by U.S. Treasury Notes, total
par value $2,791;
6.38%-8.00%; market value
$2,929)...................... 2,862
-------
Total (cost $62,828) (a) $63,333
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $62,851.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation............................................ $1,301
Unrealized depreciation............................................ (796)
------
Net unrealized appreciation........................................ $ 505
======
</TABLE>
See notes to financial statements.
45
<PAGE> 48
HIGHMARK LOGO GOVERNMENT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
Amounts in Thousands
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (93.7%):
Federal Home Loan Bank:
$ 240 9.25%, 11/25/98................ $ 254
50 5.43%, 2/25/99................. 49
260 6.31%, 4/6/99.................. 261
Federal Home Loan Mortgage Corp.:
315 5.88%, 3/22/00................. 312
Federal National Mortgage Association:
370 8.20%, 3/10/98................. 379
255 4.88%, 10/15/98................ 251
215 9.55%, 3/10/99................. 229
355 8.55%, 8/30/99................. 375
320 9.05%, 4/10/00................. 345
300 8.25%, 12/18/00................ 319
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 200 6.16%, 4/3/01.................. $ 198
-------
Total U.S. Government Agencies 2,972
-------
Total Investments, at value 2,972
-------
REPURCHASE AGREEMENTS (4.2%):
133 C.S. First Boston Corp., 5.45%,
2/3/97 (collateralized by
U.S. Treasury Notes, total
par value $135; 6.75%; market
value $139).................. 133
-------
Total (cost $3,118)(a) $3,105
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $3,171.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized depreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation............................................. $ 50
Unrealized depreciation............................................. (63)
-----
Net unrealized depreciation......................................... $ (13)
=====
</TABLE>
See notes to financial statements
46
<PAGE> 49
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS (97.8%):
Aerospace (1.7%):
130,500 B.F. Goodrich Co........... $ 5,351
--------
Banks (11.0%):
201,650 Banc One Corp.............. 9,150
26,200 BankAmerica Corp........... 2,925
104,500 Fleet Financial Group,
Inc...................... 5,643
69,900 J.P. Morgan & Co........... 7,200
86,000 National City Corp......... 3,902
98,750 U.S. Bancorp............... 4,499
21,200 Wachovia Corp.............. 1,222
--------
34,541
--------
Beverages (2.0%):
147,180 Anheuser-Busch Co.......... 6,255
--------
Chemicals -- Petroleum & Inorganic (1.1%):
43,700 Dow Chemical Co............ 3,371
--------
Chemicals -- Specialty (3.0%):
57,200 Betz Labs, Inc............. 3,346
86,800 Witco Corp................. 2,582
42,300 Rohm & Haas Co............. 3,469
--------
9,397
--------
Commercial Goods & Services (2.1%):
90,400 National Services
Industries, Inc.......... 3,469
51,900 Pitney Bowes Inc........... 2,991
--------
6,460
--------
Consumer Goods & Services (1.1%):
27,700 Clorox Co.................. 3,286
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Cosmetics & Toiletries (1.5%):
58,700 International Flavors &
Fragrances, Inc.......... 2,605
53,600 Tenneco Inc................ 2,144
--------
4,749
--------
Electrical Equipment (3.6%):
73,600 Thomas & Betts Corp........ $ 3,450
103,000 AMP Inc.................... 4,197
35,900 General Electric Co........ 3,698
--------
11,345
--------
Environmental Services (0.9%):
88,200 Browning-Ferris Industries,
Inc...................... 2,867
--------
Financial Services (1.4%):
35,100 Beneficial Corp............ 2,360
55,400 Federal National Mortgage
Assoc.................... 2,188
--------
4,548
--------
Food & Related (5.1%):
98,100 General Mills, Inc......... 6,646
154,750 H.J. Heinz Co.............. 6,229
46,300 Kellogg Co................. 3,224
--------
16,099
--------
Forest & Paper Products (4.9%):
48,200 Georgia-Pacific Corp....... 3,549
66,170 International Paper Co..... 2,705
134,300 Weyerhaeuser Co............ 6,111
62,400 Union Camp Corp............ 2,956
--------
15,321
--------
</TABLE>
Continued
47
<PAGE> 50
HIGHMARK LOGO INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Health Care (7.0%):
86,900 Bristol-Myers Squibb Co.... $ 11,036
86,900 Pharmacia & Upjohn Co...... 3,237
109,200 American General Corp...... 4,354
53,100 American Home Products
Corp..................... 3,365
--------
21,992
--------
Insurance -- Life (0.9%):
47,025 Jefferson Pilot Corp....... 2,774
--------
Insurance -- Multiline (2.2%):
64,300 Marsh & McLennan Cos.,
Inc...................... 6,928
--------
Insurance -- Property & Casualty (3.5%):
63,900 Lincoln National Corp...... 3,427
81,500 SAFECO Corp................ 3,097
73,600 St. Paul Cos., Inc......... 4,600
--------
11,124
--------
Machinery & Equipment (1.4%):
103,400 Cooper Industries, Inc..... 4,459
--------
Medical Equipment & Supplies (2.1%):
79,000 Minnesota Mining & Mfg.
Co....................... 6,735
--------
Motor Vehicle Parts (3.2%):
113,200 Genuine Parts Co........... 4,995
141,900 Chrysler Corp.............. 4,949
--------
9,944
--------
Petroleum -- Domestic (5.8%):
68,800 Atlantic Richfield Co...... 9,099
86,700 Dresser Industries Inc..... 2,937
43,500 Phillips Petroleum Co...... 1,919
92,900 Baxter International
Inc...................... 4,285
--------
18,240
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
COMMON STOCKS, CONTINUED:
Petroleum -- Internationals (7.9%):
129,900 Amoco Corp................. $ 11,301
46,600 Chevron Corp............... 3,093
59,800 Exxon Corp................. 6,197
41,600 Texaco, Inc................ 4,404
--------
24,995
--------
Publishing (4.1%):
188,800 McGraw-Hill, Inc........... 9,393
50,700 SmithKline Beecham -- Spons
ADR...................... 3,663
--------
13,056
--------
Railroad (0.8%):
44,400 Union Pacific Corp......... 2,664
--------
Retail -- General Merchandise (4.3%):
143,600 J.C. Penney, Inc........... 6,803
82,200 May Department Stores
Co....................... 3,658
60,300 American Brands............ 3,074
--------
13,535
--------
Telecommunications (6.4%):
26,700 Ameritech Corp............. 1,595
60,900 Bell Atlantic Corp......... 4,096
65,900 BellSouth Corp............. 2,924
109,100 GTE Corp................... 5,128
75,000 Nynex Corp................. 3,797
37,570 U.S. West, Inc............. 1,235
32,400 AT&T Corp.................. 1,276
--------
20,051
--------
</TABLE>
Continued
48
<PAGE> 51
INCOME EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities -- Electric (6.0%):
162,600 Baltimore Gas & Electric
Co....................... $ 4,472
156,800 Central & South West
Corp..................... 3,959
123,500 Teco Energy, Inc........... 2,995
105,900 Texas Utilities Co......... 4,289
119,500 Wisconsin Energy Corp...... 3,092
--------
18,807
--------
Utilities -- Gas & Pipeline (2.8%):
132,600 Consolidated Natural Gas
Co....................... 7,375
45,800 Nicor, Inc................. 1,655
--------
9,030
--------
Total Common Stocks 307,924
--------
Total Investments, at value 307,924
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
REPURCHASE AGREEMENTS (2.2%):
6,811,372 First Boston, 5.45%, 2/3/97
(collateralized by U.S.
Treasury Notes, total par
value $5,739; 8.75%;
market value $6,958)..... $ 6,811
--------
Total (cost -- $253,722)(a) $314,735
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $314,737.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 63,267
Unrealized depreciation.......................................... (2,254)
--------
Net unrealized appreciation...................................... $ 61,013
=======
</TABLE>
ADR -- American Depository Receipt
See notes to financial statements.
49
<PAGE> 52
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (3.7%):
$ 190,000 Carco Auto Loan Master
Trust, Series 1994-2,
7.88%, 8/15/97........... $ 192
200,000 Contimortgage Home Equity
Loan Trust, 8.09%,
9/15/09.................. 203
200,000 Contimortgage Home Equity
Loan Trust, 7.44%,
9/15/12.................. 202
250,000 Green Tree Financial Corp.,
6.80%, 1/15/26........... 248
400,000 Standard Credit Card
MasterTrust, 4.65%,
3/7/99................... 400
119,854 UFSB Grantor Trust, 5.08%,
5/15/00.................. 118
350,000 E.Q.C.C. Home Equity Loan,
7.40%, 12/15/19.......... 351
--------
Total Asset Backed Securities............. 1,714
--------
COLLATERALIZED MORTGAGE OBLIGATIONS (2.1%):
76,152 Country Wide Mortgage,
6.75%, 3/25/08........... 75
500,000 Federal Home Loan Mortgage
Corp., 6.25%, 1/15/24.... 468
250,000 GE Capital Mortgage
Service, Inc., 194401,
6.50%, 1/25/24........... 244
175,000 Residential Funding
Mortgage, 6.75%, 1992-
536, 11/25/07............ 171
--------
Total Collateralized Mortgage
Obligations............................. 958
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS (54.0%):
Aerospace (0.5%):
5,800 B.F. Goodrich Co........... $ 237
--------
Air Transportation (0.4%):
2,600 Federal Express Corp.
(b)...................... 133
2,200 Southwest Airlines Co...... 48
--------
181
--------
Banks (4.6%):
2,970 Banc One Corp.............. 135
4,800 BankAmerica Corp........... 536
3,300 Chase Manhattan Corp....... 305
8,000 Fleet Financial Group,
Inc...................... 432
1,300 J.P. Morgan & Co........... 134
3,300 National City Corp......... 150
6,000 Norwest Corp............... 286
2,400 Wachovia Corp.............. 138
--------
2,116
--------
Beverages (2.4%):
12,400 Anheuser-Busch Co.......... 527
4,800 Coca-Cola Co............... 278
8,200 PepsiCo, Inc............... 286
--------
1,091
--------
Building Materials (0.4%):
5,600 Masco Corp................. 192
--------
Business Equipment & Services (0.5%):
1,900 Dun & Bradstreet Corp...... 46
2,800 Pitney Bowes, Inc.......... 161
--------
207
--------
Capital Equipment (0.3%):
5,500 Albany International
Corp..................... 128
--------
</TABLE>
Continued
50
BALANCED FUND
<PAGE> 53
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Chemicals--Petroleum & Inorganic (1.2%):
1,400 Dow Chemical Co............ $ 108
1,400 DuPont, (E.I.) de Nemours
Co....................... 153
2,200 Hercules Inc............... 97
5,000 Monsanto Corp.............. 189
--------
547
--------
Chemicals--Specialty (0.4%):
3,000 Betz Labs, Inc............. 176
--------
Commercial Goods & Services (0.3%):
3,000 National Services
Industries, Inc.......... 115
--------
Computers -- Main & Mini (0.7%):
2,000 International Business
Machines Corp............ 315
281 NCR Corporation (b)........ 11
--------
326
--------
Computers (0.6%):
5,600 Seagate Technology, Inc.
(b)...................... 288
--------
Computer Software (1.0%):
1,900 Electronic Data Systems
Corp..................... 87
2,600 Microsoft Corp. (b)........ 265
2,400 Shared Medical Systems
Corp..................... 113
--------
465
--------
Construction Materials (0.5%):
3,700 Fleetwood Enterprises,
Inc...................... 99
2,700 Ingersoll-Rand Co.......... 123
--------
222
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Cosmetics & Toiletries (0.9%):
2,900 Colgate-Palmolive Co....... $ 281
2,600 International Flavors &
Fragrances, Inc.......... 115
--------
396
--------
Defense (0.5%):
5,400 Raytheon Co................ 248
--------
Diversified Products (0.2%):
1,900 Tenneco Inc................ 75
--------
Electrical Equipment (4.6%):
7,600 AMP, Inc................... 310
2,500 Emerson Electric Co........ 247
7,700 General Electric Co........ 793
4,000 Intel Corp................. 649
3,300 Thomas & Betts Corp........ 155
--------
2,154
--------
Electronics (0.5%):
3,700 Motorola, Inc.............. 253
--------
Electronic Instruments (0.7%):
4,100 Texas Instruments, Inc..... 321
--------
Environmental Services (0.4%):
6,000 Browning-Ferris Industries,
Inc...................... 195
--------
Financial Services (0.9%):
7,600 Federal National Mortgage
Assoc.................... 300
3,600 Mutual Risk Management
Ltd...................... 130
--------
430
--------
Food & Related (1.7%):
3,700 General Mills, Inc......... 251
</TABLE>
Continued
51
<PAGE> 54
HIGHMARK LOGO BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Food & Related, continued:
6,450 H.J. Heinz Co.............. $ 260
3,000 Hershey Foods Corp......... 127
1,700 Ralston-Purina Co.......... 134
--------
772
--------
Forest & Paper Products (1.3%):
2,700 Georgia Pacific Corp....... 199
2,200 International Paper Co..... 90
1,500 Kimberly Clark Corp........ 146
4,000 Weyerhaeuser Co............ 182
--------
617
--------
Health Care--General (1.3%):
2,500 Bristol-Myers Squibb Co. 318
5,000 Johnson & Johnson 288
--------
606
--------
Holdings Company (0.3%):
2,000 ITT Hartford Group Inc..... 147
--------
Hospital Supply & Management (0.5%):
6,150 Columbia/HCA Healthcare
Corp. 242
--------
Household--General Products (0.3%):
6,100 Rubbermaid, Inc............ 141
--------
Insurance--Life (0.5%):
2,250 Jefferson Pilot Corp....... 133
3,000 American General Corp...... 120
--------
253
--------
Insurance--Multiline (1.0%):
1,761 Allstate Corp.............. 116
3,300 Marsh & McLennan Cos.,
Inc...................... 356
--------
472
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Insurance--Property & Casualty (1.0%):
1,500 General Re Corp............ $ 242
2,100 Hartford Steam Boiler
Inspection & Insurance
Co....................... 97
1,900 St. Paul Cos., Inc......... 119
--------
458
--------
Machinery & Equipment (0.8%):
2,800 Deere & Co................. 120
6,450 Snap-On, Inc............... 240
--------
360
--------
Manufacturing (1.2%):
5,000 Minnesota Mining & Mfg.
Co....................... 426
5,000 Service Corp.
International............ 145
--------
571
--------
Medical Equipment & Supplies (0.5%):
5,000 Baxter International,
Inc...................... 231
1,350 Quest Diagnostics, Inc.
(b)...................... 21
--------
252
--------
Motor Vehicles (0.6%):
2,400 Genuine Parts Co........... 106
5,900 Ford Motor Co.............. 190
--------
296
--------
Multiple Industry (0.8%):
10,800 Corning, Inc............... 385
--------
Petroleum--Domestic (1.2%):
1,900 Atlantic Richfield Co...... 251
6,700 Phillips Petroleum Co...... 296
--------
547
--------
Petroleum -- Internationals (3.4%):
4,600 Amoco Corp................. 400
</TABLE>
Continued
52
<PAGE> 55
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Petroleum--Internationals, continued:
5,600 Chevron Corp............... $ 372
2,700 Exxon Corp................. 280
2,000 Mobil Corp................. 263
2,400 Texaco, Inc................ 254
--------
1,569
--------
Petroleum -- Services (0.9%):
3,300 Baker Hughes, Inc.......... 129
3,900 Halliburton Co............. 282
--------
411
--------
Pharmaceuticals (2.7%):
2,600 Abbott Laboratories........ 141
3,800 Merck & Co., Inc........... 345
4,100 Pacific Enterprises........ 124
3,300 Pfizer, Inc................ 306
1,800 Schering-Plough Corp....... 136
2,000 Warner Lambert Co.......... 161
2,700 Convance Inc. (b).......... 51
--------
1,264
--------
Photographic Equipment (0.3%):
1,600 Eastman Kodak Co........... 139
--------
Pipelines (0.0%):
176 El Paso Natural Gas........ 9
--------
Publishing (0.8%):
3,500 Gannett Co., Inc........... 268
2,500 McGraw-Hill Companies
Inc...................... 124
--------
392
--------
Railroad (0.9%):
3,100 Burlington Northern Santa
Fe....................... 271
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------ ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
2,100 Union Pacific Corp......... $ 126
--------
397
--------
Restaurants (0.2%):
6,800 Brinker International Inc.
(b)...................... 74
--------
Retail--General Merchandise (1.2%):
4,400 J.C. Penney, Inc........... 208
5,000 Sears Roebuck & Co......... 240
4,600 Wal-Mart Stores, Inc....... 109
--------
557
--------
Retail--Specialty Stores (0.2%):
2,200 Home Depot, Inc............ 109
--------
Tobacco (1.1%):
2,500 Phillip Morris Co., Inc.... 297
6,200 UST, Inc................... 191
--------
488
--------
Tools (0.3%):
3,800 Stanley Works.............. 144
--------
Toys (0.3%)
4,250 Mattel, Inc................ 120
--------
Transportation--Miscellaneous (0.2%):
3,600 Ryder System Inc........... 103
--------
Utilities--Electric (2.2%):
4,600 FPL Group, Inc............. 204
9,500 PacifiCorp................. 202
9,000 Potomac Electric Power
Co....................... 223
6,500 Public Service Enterprise
Group, Inc............... 178
5,100 Texas Utilities Co......... 207
--------
1,014
--------
</TABLE>
Continued
53
<PAGE> 56
HIGHMARK LOGO BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Gas & Pipeline (0.3%):
2,600 Consolidated Natural Gas
Co....................... $ 145
--------
Utilities -- Telephone (3.5%):
11,400 AirTouch Communications,
Inc. (b)................. 295
3,800 Ameritech Corp............. 227
4,500 AT&T Corp.................. 177
1,900 Bell Atlantic Corp......... 128
5,000 BellSouth Corp............. 222
5,700 GTE Corp................... 268
1,858 Lucent Technologies,
Inc...................... 101
4,000 Network Equipment
Technologies, Inc (b).... 83
3,700 U.S. West, Inc............. 122
--------
1,623
--------
Total Common Stocks....................... 25,040
--------
CORPORATE BONDS (6.8%):
Automotive (1.3%):
$ 300,000 Ford Capital, 9.38%,
1/1/98................... 309
305,000 General Motors Acceptance
Corp., 8.00%, 10/1/99.... 317
--------
626
--------
Banking (2.3%):
215,000 Bank of America, 6.00%,
7/15/97.................. 216
200,000 Citicorp, 6.75%, 8/15/05... 197
First Bank System, 6.88%,
9/15/07.................. 487
150,000 U.S. Bancorp, 6.75%,
10/15/05................. 146
--------
1,046
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
CORPORATE BONDS, CONTINUED:
Beverages (0.2%):
$ 95,000 Bass America, Inc., 6.75%,
8/1/99................... $ 96
--------
Computer Hardware (0.5%):
200,000 IBM Corp., 8.38%, 11/1/19.. 221
--------
Financial Services (0.2%):
100,000 Golden West Financial
Corp., 6.70%, 7/1/02..... 100
--------
Governments (Foreign) (0.2%):
100,000 Hydro-Quebec, 8.05%,
7/7/24................... 108
--------
Industrial Goods & Services (0.4%):
205,000 Caterpillar Tractor Co.,
6.00%, 5/1/07............ 189
--------
Retail Stores (1.0%):
100,000 J.C. Penney, Inc., 6.00%,
5/1/06................... 92
150,000 Sears Roebuck Co., 9.25%,
8/1/97................... 152
200,000 Wal-Mart Stores, Inc.,
6.38%, 3/1/03............ 197
--------
441
--------
Telecommunications (0.7%):
175,000 Bell Atlantic Maryland,
8.00%, 10/15/29.......... 189
125,000 New England Telephone &
Telegraph Co., 7.88%,
11/15/29................. 133
--------
322
--------
Total Corporate Bonds..................... 3,149
--------
</TABLE>
Continued
54
<PAGE> 57
BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (13.3%):
Federal National Mortgage Assoc.:
$1,350,000 5.45%, 10/10/03............ $ 1,271
301,007 6.50%, 3/1/24, Pool
#276510.................. 288
963,690 8.00%, 7/1/26.............. 985
1,200,000 6.85%, 9/12/05............. 1,180
--------
3,724
--------
Government National Mortgage Assoc.:
94,491 6.50%, 2/15/24, Pool
#388599.................. 90
459,166 7.50%, 5/15/24, Pool
#386494.................. 460
997,789 7.00%, 2/15/26............. 978
990,001 6.50%, 4/15/26............. 944
--------
2,472
--------
Total U.S. Government Agencies............ 6,196
--------
U.S. TREASURY BONDS (5.6%):
1,150,000 7.25%, 5/15/16............. 1,198
205,000 8.75%, 8/15/20............. 249
1,125,000 7.13%, 2/15/23............. 1,155
--------
Total U.S. Treasury Bonds................. 2,602
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
U.S. TREASURY NOTES (7.0%):
$ 200,000 8.13%, 2/15/98............. $ 205
1,000,000 8.25%, 7/15/98............. 1,034
1,000,000 5.50%, 4/15/00............. 983
500,000 8.50%, 11/15/00............ 538
500,000 5.88%, 2/15/04............. 485
--------
Total U.S. Treasury Notes 3,245
--------
Total Investments, at value 42,904
--------
REPURCHASE AGREEMENTS (6.9%):
3,213,176 C.S. First Boston Corp.,
5.45%, 2/3/97
(collateralized by
various U.S. Treasury
Notes, total par value
$3,234; 6.38%; market
value $3,286)............ 3,213
--------
Total (cost--$37,878) (a) $46,117
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $46,405.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 8,690
Unrealized depreciation.......................................... (451)
--------
Net unrealized appreciation...................................... $ 8,239
=======
</TABLE>
(b) Represents a non-income producing security.
See notes to financial statements.
55
<PAGE> 58
HIGHMARK LOGO GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS (98.4%):
Aerospace (1.7%):
26,290 BF. Goodrich................. $ 1,082
--------
Banks (6.1%):
2,850 BankAmerica Corp............. 318
15,255 Chase Manhattan.............. 1,411
8,440 Fleet Financial Group,
Inc........................ 456
5,295 Wells Fargo & Co............. 1,613
--------
3,798
--------
Beverages (4.2%):
7,020 Anheuser-Busch Co............ 298
21,780 Coca-Cola Co................. 1,261
29,770 PepsiCo, Inc................. 1,038
--------
2,597
--------
Business Equipment & Services (0.2%):
9,080 OfficeMax, Inc. (b).......... 109
--------
Business Services (3.3%):
5,605 Albany International Corp.... 132
5,990 Danaher Corp................. 300
18,740 CUC International Inc. (b)... 464
13,165 Cognizant Corp............... 423
16,875 Robert Half International
Inc. (b)................... 725
--------
2,044
--------
Capital Equipment (0.9%):
7,275 Illinois Tool Works.......... 594
--------
Computers -- Main & Mini (1.7%):
12,625 Ceridan Corp. (b)............ 477
5,695 Hewlett Packard Co........... 300
1,925 International Business
Machines................... 303
--------
1,080
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Computer Hardware (0.5%):
4,640 3Com Corp. (b)............... $ 311
--------
Computer Software (8.1%):
11,055 Automatic Data Processing,
Inc........................ 458
13,815 Cisco Systems (b)............ 963
12,043 Computer Associates
International, Inc......... 546
4,380 Computer Sciences (b)........ 311
13,300 Electronic Data Systems
Corp....................... 612
12,280 Fiserv Inc. (b).............. 411
8,530 Microsoft Corp. (b).......... 870
11,200 Parametric Technology Corp.
(b)........................ 647
5,910 Shared Medical Systems
Corp....................... 279
--------
5,097
--------
Computers (1.2%):
14,630 Seagate Technology (b)....... 753
--------
Construction (0.5%):
6,480 Ingersoll-Rand Co............ 296
--------
Consumer Goods & Services (1.1%):
15,400 Xilinx, Inc. (b)............. 701
--------
Cosmetics & Toiletries (4.0%):
4,720 Avon Products................ 296
6,335 Colgate-Palmolive Co......... 613
19,738 Gillette Co.................. 1,609
--------
2,518
--------
Electronics (1.5%):
13,995 Motorola, Inc................ 955
--------
</TABLE>
Continued
56
<PAGE> 59
GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (8.2%):
14,340 General Electric Co.......... $ 1,477
12,505 Intel Corp................... 2,029
22,720 National Semiconductor Corp.
(b)........................ 630
16,225 Sensormatic Electronics
Corp....................... 266
9,220 Texas Instruments Inc........ 723
--------
5,125
--------
Electronic Components (0.7%):
8,830 Applied Materials, Inc.
(b)........................ 436
--------
Entertainment (0.6%):
3,590 Circus Circus Enterprises,
Inc. (b)................... 127
13,815 Harrah's Entertainment (b)... 269
--------
396
--------
Financial Services (6.1%):
10,735 American Express Co.......... 670
15,065 Federal National Mortgage
Assoc...................... 595
4,071 Mutual Risk Management
Ltd........................ 147
17,900 Travelers Corp............... 938
32,826 First Data Corp.............. 1,182
5,670 Franklin Resources Inc....... 309
--------
3,841
--------
Food & Related (0.5%):
7,250 Hershey Foods................ 307
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
COMMON STOCKS, CONTINUED:
Healthcare -- Drugs (8.1%):
11,122 Abbott Laboratories.......... $ 605
11,051 Amgen, Inc. (b).............. 623
14,405 Merck & Co................... 1,307
10,390 Pfizer, Inc.................. 965
13,050 Schering Plough Corp......... 987
7,535 Warner-Lambert Co............ 607
--------
5,094
--------
Healthcare -- General (2.2%):
21,860 Johnson & Johnson............ 1,260
1,890 Medtronic Inc................ 129
--------
1,389
--------
Holdings Company (0.5%):
4,335 ITT Hartford Group Inc....... 317
--------
Hospital Supply & Management (0.2%):
3,516 Columbia/HCA Healthcare
Corp....................... 139
--------
Hotel Management & Related Services (0.5):
9,862 Promus Hotel Corp. (b)....... 322
--------
Household -- General Products (0.5%):
2,670 Proctor & Gamble Co.......... 308
--------
Insurance -- Life (1.0%):
15,495 AFLAC Inc.................... 619
--------
Insurance -- Multiline (1.2%):
9,437 Allstate Corp................ 620
1,400 Marsh & McLennan Cos.,
Inc........................ 151
--------
771
--------
</TABLE>
Continued
57
<PAGE> 60
HIGHMARK LOGO GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Insurance -- Property & Casualty (2.7%):
6,615 American International Group,
Inc........................ $ 801
3,840 General Re Corp.............. 620
4,300 Progressive Corp............. 285
--------
1,706
--------
Leisure Time Industry (3.7%):
16,820 The Walt Disney Co........... 1,232
17,810 Carnival Corp................ 655
25,500 International Game
Technology................. 453
--------
2,340
--------
Manufactured Housing (0.7%):
22,875 Champion Enterprises Inc.
(b)........................ 446
--------
Manufacturing (0.4%):
9,595 Service Corp.
International.............. 278
--------
Medical Equipment & Supplies (1.2%):
38,876 Chiron Corp. (b)............. 724
--------
Petroleum -- Internationals (3.4%):
12,548 Amoco Corp................... 1,092
10,315 Exxon Corp................... 1,069
--------
2,161
--------
Petroleum -- Services (4.0%):
15,290 Baker Hughes, Inc............ 596
9,155 Dresser Industries Inc....... 310
13,245 Halliburton Co............... 959
5,620 Schlumberger Ltd............. 625
--------
2,490
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
--------
COMMON STOCKS, CONTINUED:
Pharmaceuticals (2.4%):
11,260 ALZA Corp., Class A (b)...... $ 325
12,270 Astra AB, Class A (b)........ 587
4,075 SmithKline Beecham PLC-ADR... 294
15,740 Convance Inc. (b)............ 297
--------
1,503
--------
Publishing (1.2%):
9,720 Gannett Co., Inc............. 745
--------
Restaurants (1.5%):
20,665 McDonald's Corp.............. 940
--------
Retail -- Food Stores (1.0%):
13,010 Safeway, Inc. (b)............ 621
--------
Retail -- General Merchandise (3.5%):
16,905 Kohls Corp................... 657
6,000 J.C. Penney Co............... 284
24,020 Price/Costco, Inc. (b)....... 640
12,405 Sears Roebuck & Co........... 595
--------
2,176
--------
Retail -- Specialty Stores (1.6%):
15,640 Home Depot, Inc.............. 776
9,045 Toys R Us Inc. (b)........... 226
--------
1,002
--------
Telecommunications (1.5%):
17,295 Air Touch Communications Inc.
(b)........................ 448
9,259 Lucent Technologies, Inc..... 502
--------
950
--------
Textiles (0.4%):
4,915 Cintas Corp.................. 280
--------
</TABLE>
Continued
58
<PAGE> 61
GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amount)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Tires & Rubber Products (0.5%):
9,410 Pep Boys -- Manny Moe &
Jack....................... $ 298
--------
Toys (1.4%):
30,315 Mattel, Inc.................. 852
--------
Utilities -- Telephone (2.0%):
4,955 Cincinnati Bell Inc.......... 307
20,325 GTE Corp..................... 956
--------
1,263
--------
Total Common Stocks.......................... 61,774
--------
Total Investments, at value.................. 61,774
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
REPURCHASE AGREEMENTS (4.9%):
$3,096,899 C.S. First Boston Corp.,
5.45%, 2/3/97 (collateralized
by U.S. Treasury Notes,
total par value $3,070;
6.75%; market value
$3,161).................... $ 3,097
--------
Total (cost -- $54,163) (a).................. $ 64,871
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $62,773.
(a) Represents cost for federal income tax and financial reporting purposes and
differs from value by net unrealized appreciation of securities as follows
(amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 11,504
Unrealized depreciation.......................................... (796)
--------
Net unrealized appreciation...................................... $ 10,708
=======
</TABLE>
(b) Represents a non-income producing security.
ADR -- American Depository Receipt
PLC -- Public Limited Company
See notes to financial statements.
59
<PAGE> 62
HIGHMARK LOGO INCOME & GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS (82.1%):
Aerospace (0.9%)
1,600 B. F. Goodrich Co............ $ 66
--------
Air Transportation (0.7%):
1,000 Federal Express Corp......... 51
--------
Banks (6.6%):
870 Banc One Corp................ 39
900 BankAmerica Corp............. 100
1,000 Chase Manhattan Corp......... 93
2,200 Fleet Financial Group,
Inc........................ 119
500 J. P. Morgan & Co............ 52
900 National City Corp........... 41
1,500 Norwest Corp................. 71
--------
515
--------
Beverages (4.2%):
4,000 Anheuser-Busch Co............ 170
1,400 Coca-Cola Co................. 81
2,200 PepsiCo, Inc................. 77
--------
328
--------
Building Materials (0.9%):
2,000 Masco Corp................... 69
--------
Business Equipment & Services (0.5%):
600 Pitney Bowes, Inc............ 35
--------
Chemicals -- Petroleum & Inorganic (1.4%):
400 Dow Chemical Co.............. 31
400 Du Pont (E.I.) de Nemours
Co......................... 44
700 Hercules Inc................. 31
--------
106
--------
Chemicals -- Specialty (0.5%):
700 Betz Labs, Inc............... 41
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Commercial Goods & Services (0.5%):
900 National Services Industries,
Inc........................ $ 35
--------
Computer -- Main & Mini (1.3%):
600 International Business
Machines Corp.............. 94
112 NCR Corporation (b).......... 4
--------
98
--------
Computer Software (1.9%):
600 Electronic Data Systems
Corp....................... 28
1,200 Microsoft Corp. (b).......... 122
--------
150
--------
Construction Materials & Engineering (0.8%):
1,100 Fleetwood Enterprises,
Inc........................ 29
800 Ingersoll-Rand Co............ 37
--------
66
--------
Cosmetics & Toiletries (1.4%):
800 Colgate-Palmolive Co......... 77
800 International Flavors &
Fragrances, Inc............ 36
--------
113
--------
Defense (0.8%):
1,300 Raytheon Co.................. 60
--------
Electrical Equipment (7.6%):
1,600 AMP, Inc..................... 65
800 Emerson Electric Co.......... 79
2,100 General Electric Co.......... 216
1,200 Intel Corp................... 195
900 Thomas & Betts Corp.......... 42
--------
597
--------
</TABLE>
Continued
60
<PAGE> 63
INCOME & GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Electronics (1.6%):
1,800 Motorola, Inc................ $ 123
--------
Electronic Instruments (1.2%):
1,200 Texas Instruments, Inc....... 94
--------
Environment Servies (0.8%):
1,900 Browning-Ferris Industries,
Inc........................ 62
--------
Financial Services (1.5%):
2,000 Federal National Mortgage
Association................ 79
1,100 Mutual Risk Management
Ltd........................ 40
--------
119
--------
Food & Related (2.3%):
1,000 General Mills, Inc........... 68
1,900 H. J. Heinz Co............... 76
500 Ralston-Purina Co............ 39
--------
183
--------
Forest & Paper Products (2.2%):
1,000 Georgia-Pacific Corp......... 74
400 Kimberly Clark Corp.......... 39
1,300 Weyerhaeuser Co.............. 59
--------
172
--------
Health Care -- General (2.0%):
600 Bristol-Myers Squibb Co...... 76
1,400 Johnson & Johnson Inc........ 81
--------
157
--------
Holdings Company (0.6%):
600 ITT Hartford Group Inc....... 44
--------
Hospital Supply & Management (0.8%):
1,500 Columbia/HCA Healthcare
Corp....................... 59
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
COMMON STOCKS, CONTINUED:
Household -- General Products (0.7%):
2,300 Rubbermaid, Inc.............. $ 53
--------
Insurance -- Life (0.4%):
575 Jefferson Pilot Corp......... 34
--------
Insurance -- Multiline (1.9%):
756 Allstate Corp................ 50
900 Marsh & McLennan Cos.,
Inc........................ 97
--------
147
--------
Insurance -- Property & Casualty (1.1%):
300 General Re Corp.............. 48
600 St. Paul Cos., Inc........... 38
--------
86
--------
Machinery & Equipment (1.4%):
800 Deere & Co................... 34
2,100 Snap-On, Inc................. 78
--------
112
--------
Manufacturing (2.2%):
1,550 Minnesota Mining & Mfg.
Co......................... 132
1,400 Service Corp.
International.............. 41
--------
173
--------
Medical Equipment & Supplies (0.8%):
1,300 Baxter International, Inc.... 60
--------
Medical Labs & Testing Services (0.1%):
337 Quest Diagnostics, Inc....... 5
--------
Motor Vehicle Parts (1.3%):
850 Genuine Parts Co............. 38
1,900 Ford Motor Co................ 61
--------
99
--------
</TABLE>
Continued
61
<PAGE> 64
HIGHMARK LOGO INCOME & GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Multiple Industry (1.2%):
2,700 Corning, Inc................. $ 96
--------
Petroleum -- Domestic (0.5%):
300 Atlantic Richfield Co........ 40
--------
Petroleum -- Internationals (5.8%):
1,400 Amoco Corp................... 122
1,600 Chevron Corp................. 106
800 Exxon Corp................... 83
600 Mobile Corp.................. 79
600 Texaco, Inc.................. 64
--------
454
--------
Petroleum -- Services (1.5%):
900 Baker Hughes, Inc............ 35
1,100 Halliburton Co............... 80
--------
115
--------
Pharmaceuticals (4.0%):
900 Merck & Co................... 81
1,200 Pacific Enterprises.......... 35
1,000 Pfizer, Inc.................. 92
600 Schering-Plough Corp......... 45
600 Warner-Lambert Co............ 48
600 Convance Inc. (b)............ 13
--------
314
--------
Publishing (1.5%):
1,100 Gannett Co., Inc............. 84
700 McGraw-HIll Companies Inc.... 35
--------
119
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
COMMON STOCKS, CONTINUED:
Railroad (1.5%):
700 Burlington Northern Santa
Fe......................... $ 61
900 Union Pacific Corp........... 54
--------
115
--------
Retail -- General Merchandise (1.7%):
1,300 J. C. Penney, Inc............ 62
1,500 Sears Roebuck & Co........... 72
--------
134
--------
Retail -- Specialty Stores (0.4%):
700 Home Depot, Inc.............. 35
--------
Telecommunications (5.6%):
1,800 AT&T Corp.................... 71
3,200 AirTouch Telecommunications
(b)........................ 83
1,100 Ameritech Corp............... 66
600 Bell Atlantic Corp........... 40
1,600 BellSouth Corp............... 71
1,500 General Telephone Electric
Corp....................... 71
1,100 U.S. West, Inc............... 36
--------
438
--------
Tobacco (1.8%):
700 Phillip Morris Co., Inc...... 83
1,900 UST, Inc..................... 58
--------
141
--------
</TABLE>
Continued
62
<PAGE> 65
INCOME & GROWTH FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JANUARY 31, 1997
(Amounts in Thousands, Except for Shares or Principal Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities -- Electric (3.2%):
1,400 FPL Group, Inc............... $ 62
2,600 PacificCorp.................. 55
2,600 Potomac Electric Power Co.... 64
1,600 Texas Utilities Co........... 65
--------
246
--------
Utilities -- Gas & Pipeline (0.6%):
800 Consolidated Natural Gas
Co......................... 45
46 El Paso Natural Gas.......... 2
--------
47
--------
Total Common Stocks 6,406
--------
Total Investments, at value 6,406
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
REPURCHASE AGREEMENTS (17.9%):
$1,399,889 C.S. First Boston Corp.,
5.45%, 2/3/97 (collateralized
by U.S. Treasury Notes,
total par value $1,395;
6.75%; market value
$1,437).................... $ 1,400
--------
Total (cost--$5,779)(a) $ 7,806
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $7,809.
<TABLE>
<C> <S>
(a) Represents cost for federal income tax and financial reporting purposes and differs from value by net
unrealized appreciation of securities as follows (amounts in thousands):
Unrealized appreciation................................................... $2,068
Unrealized depreciation................................................... (41)
------
Net unrealized appreciation............................................... $2,027
======
(b) Represents a non-income producing security.
</TABLE>
63
<PAGE> 66
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
(UNAUDITED)
1. ORGANIZATION:
The HighMark Group (the "Funds") was organized on March 10, 1987 and is
registered under the Investment Company Act of 1940 as amended (the "1940
Act"), as a diversified, open-end investment company established as a
Massachusetts business trust.
The Funds are authorized to issue an unlimited number of shares which are
units of beneficial interest without par value. The Funds presently offer
shares in the Diversified Money Market Fund (formerly Diversified
Obligations Fund), the U.S. Government Money Market Fund (formerly U.S.
Government Obligations Fund), the 100% U.S. Treasrury Money Market Fund
(formerly 100% U.S. Treasury Obligations Fund), the California Tax-Free
Money Market Fund (formerly California Tax-Free Fund), the Tax-Free Fund,
the Bond Fund, the Government Bond Fund, the Income Equity Fund, the
Balanced Fund, the Growth Fund and the Income & Growth Fund (collectively,
"the Funds" and individually, "a Fund"). Sales of shares may be made to
customers of Union Bank of California, NA ("Union Bank of California") and
to its affiliates, to all accounts of its correspondent banks, to
institutional investors, and to the general public. Pacific Alliance Capital
Management, a division of Union Bank of California, serves as investment
adviser to the Funds.
The investment objective of the Diversified Money Market Fund, the U.S.
Government Money Market Fund, and the 100% U.S. Treasury Money Market Fund
is to seek current income with liquidity and stability of principal. The
Diversified Money Market Fund invests in obligations issued or guaranteed by
the U.S. Government, its agencies, or instrumentalities, and additionally
invests in other high-quality money market instruments and other unrated
instruments deemed to be of comparable high quality by the investment
adviser pursuant to guidelines established by the Funds' Board of Trustees.
Some of the obligations and money market instruments in which the
Diversified Money Market Fund invests may be subject to repurchase
agreements. The U.S. Government Money Market Fund invests in obligations
issued or guaranteed by the U.S. Treasury, and additionally invests in
obligations issued or guaranteed by agencies or instrumentalities of the
U.S. Government. Some of the obligations in which the U.S. Government Money
Market Fund invests may be subject to repurchase agreements. The 100% U.S.
Treasury Money Market Fund invests exclusively in direct U.S. Treasury
obligations guaranteed as to timely payment of principal and interest by the
full faith and credit of the U.S. Treasury. The California Tax-Free Money
Market Fund's investment objective is to seek as high a level of current
interest income free from federal income tax and California personal income
tax as is consistent with the preservation of capital and relative stability
of principal. The Tax-Free Fund's investment objective is to seek as high a
level of current interest income free from federal income taxes as is
consistent with the preservation of capital and relative stability of
principal. The California Tax-Free Fund and the Tax-Free Fund invest
primarily in bonds and notes issued by or on behalf of states (primarily, in
the case of the California Tax-Free Fund, the State of California),
territories and possessions of the United States, and the
Continued
64
<PAGE> 67
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
District of Columbia and their respective authorities, agencies,
instrumentalities and political sub-divisions ("Municipal Securities"). The
investment objective of the Bond Fund is to seek current income through
investments in long-term, fixed-income securities. The investment objective
of the Government Bond Fund is to seek current income and relative stability
of principal through investments in short- to intermediate-term U.S.
Government Securities. The investment objective of the Income Equity Fund is
to seek investments in equity securities that provide current income through
the regular payment of dividends, with the goal that the Fund will have a
high current yield and a low level of price volatility. Opportunities for
long-term growth of asset value is a secondary consideration. The primary
investment objective of the Balanced Fund is to seek total return.
Conservation of capital is a secondary objective. The investment objective
of the Growth Fund is to seek investments in equity securities that provide
opportunity for long-term capital appreciation. The production of current
income is an incidental objective. The investment objective of the Income
and Growth Fund is to seek current income above the average current income
of companies included in the Standard & Poor's 500 Stock Index (the "S&P
500") and to seek total return (dividends plus price appreciation) at least
equal to that of the S&P 500 while maintaining lower price volatility than
the S&P 500. There can, however, be no assurance that any of the Funds'
investment objectives will be achieved.
On December 1, 1990, the Diversified Money Market Fund, the U.S. Government
Money Market Fund, the 100% U.S. Treasury Money Market Fund, the California
Tax-Free Money Market Fund, and the Tax-Free Fund (collectively, "the money
market funds") commenced offering Class A Shares and designated existing
shares as Class B Shares. As of June 20, 1994, Class A and Class B Shares
were designated as "Investor" and "Fiduciary" Shares, respectively. On June
20, 1994, the Bond Fund, the Government Bond Fund, the Income Equity Fund,
the Balanced Fund, the Growth Fund and the Income & Growth Fund
(collectively, "the variable net asset value funds") commenced offering
Investor Shares and designated existing shares as Fiduciary Shares. Investor
and Fiduciary Shares represent interests in the same portfolio investments
of a Fund and are identical in all respects except that Investor Shares bear
the expense, if any, of the distribution fee under the Funds' Distribution
Plan (the "Distribution Plan"), which will cause the Investor Shares to have
a higher expense ratio and to pay lower dividends than Fiduciary Shares.
Investor Shares have certain exclusive voting rights with respect to the
Distribution Plan.
In addition, Investor Shares of the variable net asset value funds are
subject to initial sales charges imposed at the time of purchase, in
accordance with the Funds' prospectuses.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of
Continued
65
<PAGE> 68
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
financial statements requires management to make estimates and assumptions
which affect the reported amounts of assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
SECURITIES VALUATION:
Investments in the money market funds are valued at either amortized cost,
which approximates market value, or at original cost, which when combined
with accrued interest, approximates market value. Under the amortized cost
valuation method, discount or premium is amortized on a constant basis to
the maturity of the security. In addition, the money market funds may not a)
purchase any instrument with a remaining maturity greater than thirteen
months unless such investment is subject to a demand feature, or b) maintain
a dollar weighted average portfolio maturity which exceeds 90 days.
Investments in common stocks and preferred stocks, corporate notes,
commercial paper, and U.S. Government securities of the variable net asset
value funds are valued at their market values determined on the basis of the
mean of the latest available bid prices in the principal market (closing
sales prices if the principal market is an exchange) in which such
securities are normally traded. Investments in investment companies are
valued at their net asset values as reported by such companies. Securities,
including restricted securities, for which market quotations are not readily
available, are valued at fair market value under the supervision of the
Funds' Board of Trustees. The differences between cost and market values of
investments held by the variable net asset value funds are reflected as
either unrealized appreciation or depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable for the money market funds, the pro
rata amortization of premium. The Funds accrete discounts of securities on
the same basis for both financial reporting and federal income tax purposes,
with the applicable portion of market discount recognized as ordinary income
upon disposition or maturity. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements with financial institutions,
such as banks and broker-dealers, which Pacific Alliance Capital Management
deems creditworthy under guidelines approved by the Funds' Board of
Continued
66
<PAGE> 69
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
Trustees, subject to the seller's agreement to repurchase such securities at
a mutually agreed-upon date and price. The repurchase price generally equals
the price paid by a Fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
portfolio securities. The seller, under a repurchase agreement, is required
to pledge securities as collateral pursuant to the agreement at not less
than 102% of the repurchase price (including accrued interest). Securities
subject to repurchase agreements are held by the Funds' custodian in the
Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income are declared daily and paid monthly
for the money market funds. Distributions from net investment income are
declared and paid monthly for the variable net asset value funds.
Distributable net realized capital gains, if any, are declared and
distributed at least annually for each of the Funds.
Distributions from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses for income tax purposes.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, federal income taxes. Accordingly, no provision for federal income tax
is required.
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund and are allocated to each class of shares based on the relative
net assets of each class. Other operating expenses of the Funds are prorated
to the Funds on the basis of relative net assets.
Continued
67
<PAGE> 70
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
six months ended January 31, 1997 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Bond Fund..................................................... $ 4,065,857 $ 3,368,126
Government Bond Fund.......................................... $ 0 $ 1,352,555
Income Equity Fund............................................ $ 65,560,273 $ 65,860,926
Balanced Fund................................................. $ 4,992,236 $ 2,896,506
Growth Fund................................................... $ 26,928,117 $ 20,852,443
Income & Growth Fund.......................................... $ 313,930 $ 1,170,452
</TABLE>
Continued
68
<PAGE> 71
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Funds for the six months ended
January 31, 1997 and the year ended July 31, 1996 were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
DIVERSIFIED MONEY MARKET FUND MONEY MARKET FUND
--------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996
---------------- ------------- ---------------- -------------
(UNAUDITED) (UNAUDITED)
Amounts in Thousands
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares issued........................ $ 328,469 $ 1,099,638 $ 199,051 $ 712,337
Dividends reinvested............................... 3,923 7,260 1,418 3,476
Shares redeemed.................................... (367,233) (1,049,143) (237,699) (688,578)
--------- ----------- --------- -----------
Change in net assets from Investor Share
transactions..................................... $ (34,841) $ 57,755 $ (37,230) $ 27,235
========== =========== ========= ===========
FIDUCIARY SHARES:
Proceeds from shares issued........................ $ 447,743 $ 843,405 $ 768,062 $ 1,221,391
Dividends reinvested............................... 322 66 77 11
Shares redeemed.................................... (428,076) (869,182) (732,166) (1,229,676)
---------- ----------- --------- -----------
Change in net assets from Fiduciary Share
transactions..................................... $ 19,989 $ (25,711) $ 35,973 $ (8,274)
========== =========== ========= ===========
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued............................................. 328,469 1,099,638 199,051 712,337
Reinvested......................................... 3,923 7,260 1,418 3,476
Redeemed........................................... (367,23-) (1,049,143) (237,699) (688,578)
--------- ----------- --------- -----------
Change in Investor Shares.......................... (34,841) 57,755 (37,230) 27,235
========== =========== ========= ===========
FIDUCIARY SHARES:
Issued............................................. 447,743 843,405 768,062 1,221,391
Reinvested......................................... 322 66 77 11
Redeemed........................................... (428,076) (869,182) (732,166) (1,229,676)
---------- ----------- --------- -----------
Change in Fiduciary Shares......................... 19,989 (25,711) 35,973 (8,274)
========== =========== ========= ===========
</TABLE>
Continued
69
<PAGE> 72
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
<TABLE>
<CAPTION>
100% U.S. TREASURY CALIFORNIA TAX-FREE
MONEY MARKET FUND MONEY MARKET FUND TAX-FREE FUND
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996
---------------- ------------- ---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Amounts in Thousands
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued............ $ 219,547 $ 463,343 $ 84,554 $ 120,369 $ 31,279 $ 36,847
Dividends
reinvested........ 2,418 4,526 713 1,419 196 402
Shares redeemed..... (233,465) (455,887) (78,331) (108,705) (37,587) (33,803)
---------- --------- --------- --------- -------- --------
Change in net assets
from Investor
Share
transactions...... $ (11,500) $ 11,982 $ 6,936 $ 13,083 $ (6,112) $ 3,446
========== ========= ========= ========= ======== ========
FIDUCIARY SHARES:
Proceeds from shares
issued............ $ 188,151 $ 541,337 $ 101,500 $ 223,524 $ 36,574 $ 95,373
Dividends
reinvested........ 232 45 5 6 8 17
Shares redeemed..... (179,729) (558,614) (101,047) (230,920) (28,056) (98,094)
---------- --------- --------- --------- -------- --------
Change in net assets
from Fiduciary
Share
transactions...... $ 8,654 $ (17,232) $ 458 $ (7,390) $ 8,526 $ (2,704)
========== ========= ========= ========= ======== ========
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued.............. 219,547 463,343 84,554 120,369 31,279 36,847
Reinvested.......... 2,418 4,526 713 1,419 196 402
Redeemed............ (233,465) (455,887) (78,331) (108,705) (37,587) (33,803)
---------- --------- --------- --------- -------- --------
Change in Investor
Shares............ (11,500) 11,982 6,936 13,083 (6,112) 3,446
========== ========= ========= ========= ======== ========
FIDUCIARY SHARES:
Issued.............. 188,151 541,337 101,500 223,524 36,574 95,373
Reinvested.......... 232 45 5 6 8 17
Redeemed............ (179,729) (558,614) (101,047) (230,920) (28,056) (98,094)
---------- --------- --------- --------- -------- --------
Change in Fiduciary
Shares............ 8,654 (17,232) 458 (7,390) 8,526 (2,704)
========== ========= ========= ========= ======== ========
</TABLE>
Continued
70
<PAGE> 73
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996
---------------- ------------- ---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Amounts in Thousands
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued............ $ 150 $ 754 $ 316 $ 1,055 $ 869 $ 10,342
Dividends
reinvested........ 30 60 31 47 912 501
Shares redeemed..... (426) (177) (804) (33) (1,011) (5,008)
-------- -------- ------- ------- -------- --------
Change in net assets
from Investor
Share
transactions...... $ (246) $ 637 $ (457) $ 1,069 $ 770 $ 5,835
======== ======== ======= ======= ======== ========
FIDUCIARY SHARES:
Proceeds from shares
issued............ $ 6,945 $ 14,876 $ 226 $ 297 $ 19,674 $ 52,940
Dividends
reinvested........ 1,643 2,983 100 219 21,772 16,994
Shares redeemed..... (8,092) (16,414) (1,223) (1,002) (22,346) (49,911)
-------- -------- ------- ------- -------- --------
Change in net assets
from Fiduciary
Share
transactions...... $ 496 $ 1,445 $ (897) $ (486) $ 19,100 $ 20,023
======== ======== ======= ======= ======== ========
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued.............. 15 71 34 110 57 721
Reinvested.......... 3 6 3 5 60 35
Redeemed............ (42) (17) (86) (3) (65) (344)
-------- -------- ------- ------- -------- --------
Change in Investor
Shares............ (24) 60 (49) 112 52 412
======== ======== ======= ======= ======== ========
FIDUCIARY SHARES:
Issued.............. 666 1,421 24 32 1,292 3,719
Reinvested.......... 158 284 11 22 1,446 1,200
Redeemed............ (774) (1,563) (130) (104) (1,467) (3,529)
-------- -------- ------- ------- -------- --------
Change in Fiduciary
Shares............ 50 142 (95) (50) 1,271 1,390
======== ======== ======= ======= ======== ========
</TABLE>
Continued
71
<PAGE> 74
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996 JANUARY 31, 1997 JULY 31, 1996
---------------- ------------- ---------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED) (UNAUDITED)
Amounts in Thousands
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued............ $ 83 $ 526 $ 319 $ 1,796 $ 52 $ 213
Dividends
reinvested........ 23 22 228 107 25 17
Shares redeemed..... (150) (358) (212) (370) (23) (66)
-------- -------- -------- -------- ----- -------
Change in net assets
from Investor
Share
transactions...... $ (44) $ 190 $ 335 $ 1,533 $ 54 $ 164
======== ======== ======== ======== ===== =======
FIDUCIARY SHARES:
Proceeds from shares
issued............ $ 3,827 $15,314 $ 10,677 $17,443 $ 557 $ 2,710
Dividends
reinvested........ 1,431 1,150 3,450 1,858 362 417
Shares redeemed..... (2,943) (9,046) (3,160) (4,577) (457) (4,124)
-------- -------- -------- -------- ----- -------
Change in net assets
from Fiduciary
Share
transactions...... $ 2,315 $ 7,418 $ 10,967 $14,724 $ 462 $ (997)
======== ======== ======== ======== ===== =======
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued.............. 6 46 22 143 5 17
Reinvested.......... 2 2 17 9 2 1
Redeemed............ (12) (31) (15) (29) (2) (5)
-------- -------- -------- -------- ----- -------
Change in Investor
Shares............ (4) 17 24 123 5 13
======== ======== ======== ======== ===== =======
FIDUCIARY SHARES:
Issued.............. 310 1,321 764 1,397 41 220
Reinvested.......... 116 100 251 154 27 35
Redeemed............ (238) (789) (226) (365) (34) (343)
-------- -------- -------- -------- ----- -------
Change in Fiduciary
Shares............ 188 632 789 1,186 34 (88)
======== ======== ======== ======== ===== =======
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds by Pacific Alliance
Capital Management. Under the terms of the investment advisory agreement,
Union Bank of California, of which Pacific Alliance Capital Management is a
division, is entitled to receive fees based on a percentage of the average
net assets of each of the Funds. Union Bank of California also serves as
custodian, sub-transfer agent and sub-administrator for the Funds.
Continued
72
<PAGE> 75
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of The BISYS Group, Inc.
BISYS, with whom certain officers and trustees of the Funds are affiliated,
serves the Funds as administrator. Such officers and trustees are paid no
fees directly by the Funds for serving as officers and trustees of the
Funds. Under the terms of the administration agreement, BISYS' fees are
computed daily as a percentage of the average net assets of the Funds. BISYS
also serves as the Funds' distributor. As distributor, BISYS is entitled to
receive fees from the Funds for providing distribution services. For the six
months ended January 31, 1997, BISYS received $38,795 for commissions earned
on sales of shares of the Funds' variable net asset value funds, of which
$2,988 was retained by or reallowed to affiliated parties. BISYS Ohio,
serves the Funds as transfer agent and mutual fund accountant. Transfer
agent fees are computed on a sliding scale, based upon the number of
shareholders.
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act pursuant to which each Fund may pay the Distributor as compensation
for its services in connection with the Distribution Plan a distribution
fee, computed daily and paid monthly, at a maximum annual rate of
twenty-five one-hundredths of one percent (0.25%) of the average daily net
assets attributable to the Funds' Investor Shares. A Fund's Fiduciary Shares
are not subject to the Distribution Plan or a distribution fee. The
Distributor has agreed to voluntarily reduce payments to be received
pursuant to the Distribution Plan with respect to a money market fund to the
extent necessary to ensure that such payments do not exceed the income
attributable to such Fund's shares on any day.
The Funds have also adopted a Shareholder Services Plan permitting payment
of compensation to financial institutions that agree to provide certain
administrative support services for their customers who are Fund
shareholders. Each Fund has entered into a specific arrangement with BISYS
for the provision of such services and reimburses BISYS for its cost of
providing these services, subject to a maximum annual rate of twenty-five
one-hundredths of one percent (0.25%) of each Fund's average daily net
assets.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios. Such fees are permanently waived.
Effective February 15, 1997, SEI Fund Resources and SEI Financial Services
Company, respectively, replaced BISYS as Administrator and Distributor, and
State Street Bank & Trust Company replaced BISYS as Transfer Agent.
Continued
73
<PAGE> 76
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
Information regarding these transactions is as follows for the six months
ended January 31, 1997 (amounts in thousands):
<TABLE>
<CAPTION>
DIVERSIFIED U.S. GOVERNMENT 100% U.S. TREASURY
MONEY MARKET FUND MONEY MARKET FUND MONEY MARKET FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee (percentage of
average net assets)................ 0.40% 1st $500 million 0.40% 1st $500 million 0.40% 1st $500 million
0.35% next $500 million 0.35% next $500 million 0.35% next $500 million
0.30% remaining 0.30% remaining 0.30% remaining
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary
fee reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 205 $ 67 $ 140
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary
fee reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 480 $ 266 $ 329
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
74
<PAGE> 77
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
MONEY MARKET FUND TAX-FREE FUND
----------------------- -----------------------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.40% 1st $500 million 0.40% 1st $500 million
0.35% next $500 million 0.35% next $500 million
0.30% remaining 0.30% remaining
Voluntary fee reductions....................................... $ 115 $ 12
ADMINISTRATION FEES:
Annual fee (percentage of average net assets).................. 0.20% 0.20%
Voluntary fee reductions....................................... $ 38 $ 23
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.25% 0.25%
Voluntary fee reductions....................................... $ 67 $ 18
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.25% 0.25%
Voluntary fee reductions....................................... $ 177 $ 52
CUSTODIAN FEES: (percentage of average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
75
<PAGE> 78
HIGHMARK LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 1.00% 1st $40 million 1.00% 1st $40 million 1.00% 1st $40 million
0.60% remaining 0.60% remaining 0.60% remaining
Voluntary fee reductions............. $ 128 $ 18 $ 1
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
Voluntary fee reductions............. $ 22 $ 4 --
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 1 $ 1 $ 14
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 71 $ 4 $ 347
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
76
<PAGE> 79
NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 1.00% 1st $40 million 1.00% 1st $40 million 1.00% 1st $40 million
0.60% remaining 0.60% remaining 0.60% remaining
Voluntary fee reductions............. $ 82 $ 94 $ 36
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
Voluntary fee reductions............. -- -- $ 7
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 1 $ 4 $ 1
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 51 $ 62 $ 8
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
6. CONCENTRATION OF CREDIT RISK:
The California Tax-Free Money Market Fund invests substantially all of its
assets in a diversified portfolio of tax-exempt debt obligations primarily
consisting of securities issued by the State of California, its
municipalities, counties, and other taxing districts. The issuers' abilities
to meet their obligations may be affected by domestic and foreign or
California economic, regional and political developments.
Continued
77
<PAGE> 80
HIGHMARK NOTES TO FINANCIAL STATEMENTS, CONTINUED
JANUARY 31, 1997
(UNAUDITED)
At January 31, 1997, The California Tax-Free Fund had the following
concentrations by industry sector (as a percentage of total investments):
<TABLE>
<CAPTION>
TAX-EXEMPT CALIFORNIA
INDUSTRY CLASS TAX-FREE FUND
--------------------------------------------------------------------------- -------------
<S> <C>
Hospitals.................................................................. 23.70
Housing.................................................................... 21.50
Governments................................................................ 13.60
Utilities -- Electric...................................................... 11.60
Resource Recovery.......................................................... 7.00
Utilities -- Water & Sewer................................................. 6.80
Industrial Developments.................................................... 6.30
Pollution Control.......................................................... 5.00
Transportation & Shipping.................................................. 3.40
Money Markets.............................................................. 0.80
Public Facilities -- Parks & Recreation.................................... 0.30
-----
100.00%
</TABLE>
7. PLAN OF REORGANIZATION:
At a meeting held on October 18, 1996, the Trustees of the Funds unanimously
approved an Agreement and Plan of Reorganization (the "Plan") by and between
the Funds and the Stepstone Funds. The Plan provides for the transfer of all
of the assets of certain Stepstone Funds to corresponding HighMark Funds
(formerly the HighMark Group) in exchange for Fiduciary and Retail shares
(collectively, "Shares") of such HighMark Funds and the assumption by such
HighMark Funds of all of the liabilities of such Stepstone Funds, followed
by the dissolution and liquidation of such Stepstone Funds and the
distribution of Shares of such HighMark Funds to the shareholders of such
Stepstone Funds. Approval of the Plan will be considered by Stepstone
shareholders at a meeting scheduled for Friday, April 11, 1997.
At a meeting held on December 4, 1996, the Trustees of the Funds unanimously
approved the liquidation of the HighMark Income and Growth Fund and the
HighMark Government Bond Fund. The liquidation of such Funds' assets was
presented to shareholders for consideration and was approved at a special
meeting held on March 12, 1997. All liquidated assets minus outstanding
liabilities and taxes were distributed pro rata to each Fund's shareholders
and thereafter, each Fund was terminated on March 21, 1997.
At a meeting held on December 4, 1996, the Trustees of the Funds unanimously
determined that it was in the best interests of the HighMark Tax-Free Fund
and its shareholders to combine the assets of the HighMark Tax-Free Fund and
the HighMark California Tax-Free Fund into the HighMark California Tax-Free
Fund as of 4:00 p.m. Eastern time on February 24, 1997.
Continued
78
<PAGE> 81
DIVERSIFIED MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
FOR THE ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1997 1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------- ---------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
ACTIVITIES
Net
investment
income... 0.0236 0.0236 0.049 0.049 0.049 0.049 0.028 0.028 0.027 0.027
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
From
net
investment
income... (0.0236) (0.0236) (0.049) (0.049) (0.049) (0.049) (0.028) (0.028) (0.027) (0.027)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET
ASSET
VALUE,
END OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return... 2.39%(b) 2.39%(b) 5.01% 5.01% 4.99% 4.99% 2.88% 2.88% 2.75% 2.75%
RATIOS/
SUPPLEMENTARY
DATA:
Net Assets
at end of
period
(000)...$151,112 $264,763 $185,952 $244,775 $128,191 $270,476 $875,725 $228,934 $ 77,589 $254,034
Ratio
of
expenses
to
average
net
assets... 0.76%(a) 0.76%(a) 0.75% 0.75% 0.74% 0.74% 0.74% 0.74% 0.72% 0.72%
Ratio
of net
investment
income
to average
net
assets... 4.69%(a) 4.69%(a) 4.89% 4.91% 4.92% 4.88% 2.83% 2.83% 2.72% 2.72%
Ratio
of
expenses
to average
net
assets*... 1.24%(a) 0.99%(a) 1.23% 0.99% 1.23% 0.98% 1.14% 0.89% 0.79% 0.73%
Ratio
of net
investment
income
to average
net
assets*... 4.21%(a) 4.46%(a) 4.41% 4.67% 4.43% 4.64% 2.42% 2.67% 2.65% 2.71%
</TABLE>
- ---------------
*During the period, certain expenses were voluntarily reduced. If such voluntary
expense reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not Annualized.
See notes to financial statements.
79
<PAGE> 82
HIGHMARK LOGO U.S. GOVERNMENT MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
FOR THE -----------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1997 1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
ACTIVITIES
Net
investment
income... 0.0229 0.0229 0.048 0.048 0.048 0.048 0.027 0.027 0.027 0.027
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
From
net
investment
income.. (0.0229) (0.0229) (0.048) (0.048) (0.048) (0.048) (0.027) (0.027) (0.027) (0.027)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET
ASSET
VALUE,
END OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return... 2.31%(b) 2.32%(b) 4.86% 4.88% 4.86% 4.87% 2.74% 2.74% 2.72% 2.72%
RATIOS/
SUPPLEMENTARY
DATA:
Net
Assets
at end of
period
(000)... $ 38,486 $187,459 $ 75,714 $151,483 $ 48,474 $159,747 $ 24,055 $162,094 $ 37,332 $166,182
Ratio
of
expenses
to average
net
assets... 0.79%(a) 0.77%(a) 0.79% 0.77% 0.78% 0.78% 0.77% 0.78% 0.71% 0.71%
Ratio
of net
investment
income
to average
net
assets... 4.55%(a) 4.56%(a) 4.77% 4.76% 4.82% 4.76% 2.63% 2.70% 2.67% 2.67%
Ratio
of
expenses
to average
net
assets*... 1.26%(a) 1.01%(a) 1.26% 1.00% 1.27% 1.02% 1.17% 0.94% 0.79% 0.74%
Ratio
of net
investment
income
to average
net
assets*... 4.08%(a) 4.32%(a) 4.30% 4.53% 4.33% 4.52% 2.23% 2.54% 2.59% 2.65%
</TABLE>
- ---------------
*During the period, certain expenses were voluntarily reduced. If such voluntary
expense reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
See notes to financial statements.
80
<PAGE> 83
100% U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
FOR THE ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1997 1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------- ---------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
ACTIVITIES
Net
investment
income... 0.0223 0.0223 0.046 0.046 0.046 0.046 0.026 0.026 0.026 0.026
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
From
net
investment
income.. (0.0223) (0.0223) (0.046) (0.046) (0.046) (0.046) (0.026) (0.026) (0.026) (0.026)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET
ASSET
VALUE,
END OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return... 2.26%(b) 2.26%(b) 4.74% 4.74% 4.69% 4.69% 2.68% 2.68% 2.64% 2.64%
RATIOS/
SUPPLEMENTARY
DATA:
Net
Assets at
end of
period
(000)... $ 89,129 $182,003 $100,623 $173,340 $ 88,660 $190,604 $ 39,157 $160,721 $ 32,629 $191,946
Ratio
of
expenses
to average
net
assets... 0.75%(a) 0.75%(a) 0.74% 0.74% 0.73% 0.73% 0.74% 0.74% 0.67% 0.67%
Ratio
of net
investment
income
to average
net
assets... 4.43%(a) 4.43%(a) 4.64% 4.64% 4.68% 4.60% 2.68% 2.63% 2.60% 2.60%
Ratio
of
expenses
to average
net
assets*... 1.23%(a) 0.98%(a) 1.23% 0.97% 1.22% 0.97% 1.15% 0.90% 0.75% 0.72%
Ratio
of net
investment
income
to average
net
assets*... 3.95%(a) 4.20%(a) 4.15% 4.41% 4.19% 4.36% 2.27% 2.48% 2.52% 2.55%
</TABLE>
- ---------------
*During the period, certain expenses were voluntarily reduced. If such voluntary
expense reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
See notes to financial statements.
81
<PAGE> 84
HIGHMARK LOGO CALIFORNIA TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
FOR THE ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1997 1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------- ---------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
ACTIVITIES
Net
investment
income... 0.0141 0.0141 0.029 0.029 0.031 0.031 0.020 0.020 0.021 0.021
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
From
net
investment
income.. (0.0141) (0.0141) (0.029) (0.029) (0.031) (0.031) (0.020) (0.020) (0.021) (0.021)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET
ASSET
VALUE,
END OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return... 1.42%(b) 1.42%(b) 2.91% 2.91% 3.16% 3.16% 1.99% 1.99% 2.13% 2.13%
RATIOS/
SUPPLEMENTARY
DATA:
Net
Assets at
end of
period
(000)...$ 60,562 $ 98,811 $ 53,627 $ 98,352 $ 40,544 $105,742 $ 31,521 $114,993 $ 44,410 $142,939
Ratio
of
expenses
to average
net
assets... 0.58%(a) 0.58%(a) 0.55% 0.55% 0.50% 0.50% 0.50% 0.50% 0.44% 0.44%
Ratio
of net
investment
income
to average
net
assets... 2.81%(a) 2.81%(a) 2.89% 2.88% 3.14% 3.11% 1.96% 1.96% 2.08% 2.08%
Ratio
of
expenses
to average
net
assets*... 1.26%(a) 1.01%(a) 1.25% 1.00% 1.26% 1.01% 1.18% 0.93% 0.79% 0.73%
Ratio
of net
investment
income
to average
net
assets*... 2.13%(a) 2.38%(a) 2.19% 2.43% 2.38% 2.60% 1.28% 1.53% 1.73% 1.78%
</TABLE>
- ---------------
*During the period, certain expenses were voluntarily reduced. If such voluntary
expense reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
See notes to financial statements.
82
<PAGE> 85
TAX-FREE FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
FOR THE ------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JANUARY 31, 1997 1996 1995 1994 1993
--------------------- --------------------- --------------------- --------------------- ---------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET
ASSET
VALUE,
BEGINNING
OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
INVESTMENT
ACTIVITIES
Net
investment
income... 0.0137 0.0137 0.028 0.028 0.030 0.030 0.019 0.019 0.021 0.021
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS
From
net
investment
income.. (0.0137) (0.0137) (0.028) (0.028) (0.030) (0.030) (0.019) (0.019) (0.021) (0.021)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NET
ASSET
VALUE,
END OF
PERIOD... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total
Return... 1.37%(b) 1.37%(b) 2.87% 2.87% 3.00% 3.00% 1.96% 1.96% 2.16% 2.16%
RATIOS/
SUPPLEMENTARY
DATA:
Net
Assets at
end of
period
(000)...$ 10,037 $ 36,635 $ 16,148 $ 28,109 $ 12,702 $ 30,813 $ 20,032 $ 30,285 $ 40,010 $ 29,799
Ratio
of
expenses
to average
net
assets... 0.76%(a) 0.76%(a) 0.77% 0.76% 0.73% 0.73% 0.69% 0.69% 0.53% 0.53%
Ratio
of net
investment
income
to average
net
assets... 2.72%(a) 2.68%(a) 2.81% 2.86% 2.90% 2.95% 1.93% 1.95% 2.12% 2.12%
Ratio
of
expenses
to average
net
assets*... 1.38%(a) 1.13%(a) 1.42% 1.16% 1.39% 1.14% 1.27% 1.02% 0.96% 0.84%
Ratio
of net
investment
income
to average
net
assets*... 2.10%(a) 2.31%(a) 2.16% 2.46% 2.24% 2.54% 1.36% 1.62% 1.69% 1.82%
</TABLE>
- ---------------
*During the period, certain expenses were voluntarily reduced. If such voluntary
expense reductions had not occurred, the ratios would have been as indicated.
(a) Annualized.
(b) Not annualized.
See notes to financial statements.
83
<PAGE> 86
HIGHMARK LOGO BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED JANUARY 31, YEAR ENDED YEAR ENDED
1997 JULY 31, 1996 JULY 31, 1995
---------------------- ---------------------- ----------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................... $10.15 $ 10.23 $10.29 $ 10.38 $10.04 $ 10.11
------ ------- ------ ------- ------ -------
INVESTMENT ACTIVITIES
Net investment income................... $ 0.27 $ 0.29 0.69 0.66 0.66 0.64
Net realized and unrealized gains
(losses) on investments............... 0.20 0.19 (0.18) (0.16) 0.23 0.27
------ ------- ------ ------- ------ -------
Total from Investment Activities...... 0.47 0.48 0.51 0.50 0.89 0.91
------ ------- ------ ------- ------ -------
DISTRIBUTIONS
From net investment income.............. (0.30) (0.30) (0.65) (0.65) (0.64) (0.64)
From net realized gains................. -- -- -- -- -- --
In excess of net realized gains......... -- -- -- -- -- --
------ ------- ------ ------- ------ -------
Total Distributions................... (0.30) 0.30 (0.65) (0.65) (0.64) (0.64)
------ ------- ------ ------- ------ -------
NET ASSET VALUE, END OF PERIOD........... $10.32 $ 10.41 $10.15 $ 10.23 $10.29 $ 10.38
====== ======= ====== ======= ====== =======
Total Return (excludes sales charges).... 4.68%(e) 4.74%(e) 4.95% 4.81% 9.29% 9.43%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 926 $61,925 $1,157 $60,374 $ 558 $59,758
Ratio of expenses to average net
assets................................ 0.88%(d) 0.88%(d) 0.89% 0.89% 0.92% 0.92%
Ratio of net investment income to
average net assets.................... 6.03%(d) 6.02%(d) 6.10% 6.10% 6.29% 6.35%
Ratio of expenses to average net
assets*............................... 1.84%(d) 1.59%(d) 1.85% 1.61% 1.89% 1.64%
Ratio of net investment income to
average net assets*................... 5.07%(d) 5.31%(d) 5.14% 5.38% 5.32% 5.62%
Portfolio turnover(f)................... 5.73% 5.73% 20.88% 20.88% 36.20% 36.20%
<CAPTION>
JUNE 20, YEAR YEAR
1994 TO ENDED ENDED
JULY 31, JULY 31, JULY 31,
1994(a)(b) 1994(b) 1993
----------- --------- --------
INVESTOR FIDUCIARY INVESTOR
----------- --------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................... $ 10.12 $ 11.13 $ 11.02
------- ------- -------
INVESTMENT ACTIVITIES
Net investment income................... 0.07 0.63 0.70
Net realized and unrealized gains
(losses) on investments............... (0.05) (0.97) 0.35
------- ------- -------
Total from Investment Activities...... 0.02 (0.34) 1.05
------- ------- -------
DISTRIBUTIONS
From net investment income.............. (0.10) (0.63) (0.70)
From net realized gains................. -- (0.01) (0.24)
In excess of net realized gains......... -- (0.04) --
------- ------- -------
Total Distributions................... (0.10) (0.68) (0.94)
------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 10.04 $ 10.11 $ 11.13
======= ======= =======
Total Return (excludes sales charges).... (3.81)%(c) (3.14)% 10.07%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 7 $64,185 $33,279
Ratio of expenses to average net
assets................................ 0.99%(d) 0.86% 0.93%
Ratio of net investment income to
average net assets.................... 5.77%(d) 6.11% 6.41%
Ratio of expenses to average net
assets*............................... 2.96%(d) 1.37% 1.55%
Ratio of net investment income to
average net assets*................... 3.80%(d) 5.60% 5.79%
Portfolio turnover(f)................... 44.33% 44.33% 58.81%
</TABLE>
- ---------------
(a) Period from commencement of operations.
(b) On June 20, 1994, the Bond Fund commenced offering Investor Shares and
designated existing shares as Fiduciary Shares.
(c) Represents total return for the Fiduciary shares for the period from August
1, 1993 to June 19, 1994, plus the total return for the Investor Shares for
the period from June 20, 1994 to July 31, 1994.
(d) Annualized.
(e) Not annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
* During the period, certain expenses were voluntarily reduced. If such
voluntary expense reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
84
<PAGE> 87
GOVERNMENT BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED JANUARY 31, YEAR ENDED YEAR ENDED
1997 JULY 31, 1996 JULY 31, 1995
---------------------- ---------------------- ----------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD..................... $ 9.28 $ 9.35 $ 9.43 $ 9.50 $ 9.36 $ 9.44
------ ------- ------ ------- ------ -------
INVESTMENT ACTIVITIES
Net investment income................... 0.29 0.27 0.62 0.60 0.66 0.60
Net realized and unrealized gains
(losses) on investments............... 0.07 0.09 (0.18) (0.16) 0.01 0.06
------ ------- ------ ------- ------ -------
Total from Investment Activities...... 0.36 0.36 0.44 0.44 0.67 0.66
------ ------- ------ ------- ------ -------
DISTRIBUTIONS
From net investment income.............. (0.29) (0.29) (0.59) (0.59) (0.60) (0.60)
------ ------- ------ ------- ------ -------
NET ASSET VALUE, END OF PERIOD........... $ 9.35 $ 9.42 $ 9.28 $ 9.35 $ 9.43 $ 9.50
====== ======= ====== ======= ====== =======
Total Return (excludes sales charges).... 3.95%(e) 3.92%(e) 4.79% 4.75% 7.47% 7.30%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)....... $ 656 $ 2,515 $1,104 $ 3,386 $ 68 $ 3,916
Ratio of expenses to average net
assets................................ 0.85%(c) 0.85%(c) 0.85% 0.85% 0.85% 0.85%
Ratio of net investment income to
average net assets.................... 6.33%(c) 6.35%(c) 6.22% 6.12% 6.25% 6.32%
Ratio of expenses to average net
assets*............................... 4.03%(c) 3.78%(c) 4.05% 3.80% 2.54% 2.29%
Ratio of net investment income to
average net assets*................... 3.15%(c) 3.42%(c) 3.02% 3.17% 4.56% 4.88%
Portfolio turnover(d)................... 38.69% 38.69% 44.72% 44.72% 67.49% 67.49%
<CAPTION>
JUNE 20, NOVEMBER 14,
1994 TO 1993 TO
JULY 31, JULY 31,
1994(a) 1994(a)
--------- ---------------
INVESTOR FIDUCIARY
--------- ---------------
<S> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD................... $ 9.47 $ 10.00
------- -------
INVESTMENT ACTIVITIES
Net investment income................. 0.01 0.40
Net realized and unrealized gains
(losses) on investments............. (0.02) (0.56)
------- -------
Total from Investment Activities.... (0.01) (0.16)
------- -------
DISTRIBUTIONS
From net investment income............ (0.10) (0.40)
------- -------
NET ASSET VALUE, END OF PERIOD......... $ 9.36 $ 9.44
======= =======
Total Return (excludes sales charges).. (2.42)%(b)(e) (1.59)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)..... $ -- $ 5,171
Ratio of expenses to average net
assets.............................. 0.87%(c) 0.85%(c)
Ratio of net investment income to
average net assets.................. 4.37%(c) 5.84%(c)
Ratio of expenses to average net
assets*............................. 0.87%(c) 3.09%(c)
Ratio of net investment income to
average net assets*................. 4.37%(c) 3.60%(c)
Portfolio turnover(d)................. 176.26% 176.26%
</TABLE>
- ---------------
(a) Period from commencement of operations. On June 20, 1994, the Government
Bond Fund commenced offering Investor Shares and designated existing shares
as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of
operations to June 19, 1994, plus the total return for the Investor Shares
for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(e) Not annualized.
* During the period, certain expenses were voluntarily reduced and certain
expenses were reinbursed. If such voluntary expense reductions and expense
reimbursements had not occurred, the ratios would have been as indicated.
See notes to financial statements.
85
<PAGE> 88
HIGHMARK LOGO INCOME EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, YEAR YEAR
FOR THE 1994 TO ENDED ENDED
SIX MONTHS ENDED YEAR ENDED YEAR ENDED JULY 31, JULY 31, JULY 31,
JANUARY 31, 1997 JULY 31, 1996 JULY 31, 1995 1994(a)(b) 1994(b) 1993
--------------------- --------------------- --------------------- ---------- --------- --------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY FIDUCIARY
-------- --------- -------- --------- -------- --------- ---------- --------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD......... $ 14.29 $ 14.27 $ 13.03 $ 13.00 $ 11.92 $ 11.92 $11.85 $ 12.13 $ 11.42
------- -------- ------- -------- -------- -------- ------ -------- --------
INVESTMENT
ACTIVITIES
Net investment
income....... 0.18 0.18 0.42 0.42 0.42 0.44 0.04 0.39 0.38
Net realized
and
unrealized
gains on
investments... 2.22 2.21 1.92 1.93 1.55 1.50 0.08 0.12 0.71
------- -------- ------- -------- -------- -------- ------ -------- --------
Total from
Investment
Activities... 2.40 2.39 2.34 2.35 1.97 1.94 0.12 0.51 1.09
------- -------- ------- -------- -------- -------- ------ -------- --------
DISTRIBUTIONS
From net
investment
income....... (0.19) (0.19) (0.42) (0.42) (0.44) (0.44) (0.05) (0.39) (0.38)
From net
realized
gains........ (1.08) (1.08) (0.66) (0.66) (0.42) (0.42) -- (0.33) --
------- -------- ------- -------- -------- -------- ------ -------- --------
Total
Distributions... (1.27) (1.27) (1.08) (1.08) (0.86) (0.86) (0.05) (0.72) (0.38)
------- -------- ------- -------- -------- -------- ------ -------- --------
NET ASSET VALUE,
END OF
PERIOD......... $ 15.42 $ 15.39 $ 14.29 $ 14.27 $ 13.03 $ 13.00 $11.92 $ 11.92 $ 12.13
======= ======== ======= ======== ======= ======== ====== ======== ========
Total Return
(excludes sales
charges)....... 17.06% (e) 17.10% (e) 18.21% 18.25% 17.52% 17.26% 4.23%(c) 4.23% 9.75%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at
end of period
(000)........ $11,750 $302,987 $10,143 $262,660 $ 3,881 $221,325 $ 24 $213,328 $104,840
Ratio of
expenses to
average net
assets....... 1.02% (d) 1.02% (d) 1.03% 1.03% 1.06% 1.06% 1.10%(d) 1.06% 1.15%
Ratio of net
investment
income to
average net
assets....... 2.45% (d) 2.45% (d) 2.89% 2.95% 3.06% 3.59% 0.93%(d) 3.29% 3.27%
Ratio of
expenses to
average net
assets*...... 1.50% (d) 1.25% (d) 1.51% 1.27% 1.55% 1.30% 1.33%(d) 1.10% 1.21%
Ratio of net
investment
income to
average net
assets*...... 1.97% (d) 2.22% (d) 2.41% 2.71% 2.57% 3.34% 0.71%(d) 3.24% 3.22%
Portfolio
turnover(f)... 23.08% 23.08% 41.51% 41.51% 36.64% 36.64% 33.82% 33.82% 29.58%
Average
commission
rate
paid(g)...... $ .0595 $ .0595 $ .0662 $ .0662
</TABLE>
- ---------------
(a) Period from commencement of operations.
(b) On June 20, 1994, the Income Equity Fund commenced offering Investor Shares
and designated existing shares as Fiduciary Shares.
(c) Represents total return for the Fiduciary Shares for the period from August
1, 1993 to June 19, 1994, plus the total return for the Investor Shares for
the period from June 20, 1994 to July 31, 1994.
(d) Annualized.
(e) Not annualized.
(f) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(g) Represents the dollar amount of commissions paid on Portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Portfolio as
a whole without distinguishing between the classes of shares issued.
Disclosure not required for periods prior to fiscal 1996.
* During the period, certain expenses were voluntarily reduced. If such
voluntary expense reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
86
<PAGE> 89
BALANCED FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
FOR THE 1994 TO 1993 TO
SIX MONTHS ENDED YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JANUARY 31, 1997 JULY 31, 1996 JULY 31, 1995 1994(a) 1994(a)
--------------------- --------------------- --------------------- -------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........ $11.56 $ 11.64 $10.79 $ 10.85 $ 9.71 $ 9.76 $ 9.71 $ 10.00
------- ------- ------ ------- ------ ------- ------- --------
INVESTMENT ACTIVITIES
Net investment income...... 0.19 0.19 0.40 0.40 0.43 0.39 -- 0.26
Net realized and unrealized
gains (losses) on
investments.............. 1.30 1.31 0.77 0.79 1.04 1.09 0.06 (0.24)
------- ------- ------ ------- ------ ------- ------- --------
Total from Investment
Activities............. 1.49 1.50 1.17 1.19 1.47 1.48 0.06 0.02
------- ------- ------ ------- ------ ------- ------- --------
DISTRIBUTIONS
From net investment
income................... (0.20) (0.20) (0.40) (0.40) (0.39) (0.39) (0.06) (0.26)
From net realized gains.... (0.18) (0.18) -- -- -- -- -- --
------- ------- ------ ------- ------ ------- ------- --------
Total Distributions...... (0.38) (0.38) (0.40) (0.40) (0.39) (0.39) (0.06) (0.26)
------- ------- ------ ------- ------ ------- ------- --------
NET ASSET VALUE, END OF
PERIOD..................... $12.67 $ 12.76 $11.56 $ 11.64 $10.79 $ 10.85 $ 9.71 $ 9.76
====== ======= ====== ======= ====== ======= ====== ========
Total Return (excludes sales
charges)................... 13.04%(e) 13.04%(e) 10.94% 11.06% 15.60% 15.62% (0.25)%(b) 0.26%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).................... $ 717 $45,688 $ 694 $39,502 $ 467 $29,961 $ -- $ 25,851
Ratio of expenses to
average net assets....... 0.98%(c) 0.98%(c) 0.94% 0.94% 0.90% 0.89% 0 0.87%(c)
Ratio of net investment
income to average net
assets................... 3.41%(c) 3.40%(c) 3.48% 3.49% 3.78% 3.93% 0 3.77%(c)
Ratio of expenses to
average net assets*...... 1.87%(c) 1.62%(c) 2.03% 1.78% 2.05% 1.80% 0 1.79%(c)
Ratio of net investment
income to average net
assets*.................. 2.52%(c) 2.76%(c) 2.39% 2.65% 2.63% 3.02% 0 2.85%(c)
Portfolio turnover (d)..... 7.36% 7.36% 12.84% 12.84% 20.70% 20.70% 44.14% 44.14%
Average commission rate
paid (f)................. $.0600 $ .0600 $.0747 $ .0747
</TABLE>
- ---------------
(a) Period from commencement of operations. On June 20, 1994, the Balanced Fund
commenced offering Investor Shares and designated existing shares as
Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of
operations to June 19, 1994, plus the total return for the Investor Shares
for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(e) Not annualized.
(f) Represents the dollar amount of commissions paid on Portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Portfolio as
a whole without distinguishing between the classes of shares issued.
Disclosure not required for periods prior to fiscal 1996.
* During the period, certain expenses were voluntarily reduced and certain
expenses were reimbursed. If such voluntary expense reductions and expense
reimbursements had not occurred, the ratios would have been as indicated.
See notes to financial statements.
87
<PAGE> 90
HIGHMARK LOGO GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
FOR THE 1994 TO 1993 TO
SIX MONTHS ENDED YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JANUARY 31, 1997 JULY 31, 1996 JULY 31, 1995 1994(a) 1994(a)
--------------------- --------------------- --------------------- -------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........ $12.60 $ 12.58 $11.87 $ 11.87 $ 9.77 $ 9.76 $ 9.74 $ 10.00
------ ------- ------ ------- ------ ------- ------ -------
INVESTMENT ACTIVITIES
Net investment income...... 0.03 0.03 0.11 0.12 0.15 0.15 -- 0.05
Net realized and unrealized
gains (losses) on
investments.............. 2.88 2.88 1.38 1.35 2.25 2.26 0.04 (0.24)
------ ------- ------ ------- ------ ------- ------ -------
Total from Investment
Activities............. 2.91 2.91 1.49 1.47 2.40 2.41 0.04 (0.19)
------ ------- ------ ------- ------ ------- ------ -------
DISTRIBUTIONS
From net investment
income................... (0.03) (0.03) (0.12) (0.12) (0.15) (0.15) (0.01) (0.05)
From net realized gains.... (0.99) (0.99) (0.64) (0.64) (0.15) (0.15) -- --
------ ------- ------ ------- ------ ------- ------ -------
Total Distributions...... (1.02) (1.02) (0.76) (0.76) (0.30) (0.30) (0.01) (0.05)
------ ------- ------ ------- ------ ------- ------ -------
NET ASSET VALUE, END OF
PERIOD..................... $14.49 $ 14.47 $12.60 $ 12.58 $11.87 $ 11.87 $ 9.77 $ 9.76
====== ======= ====== ======= ====== ======= ====== =======
Total Return (excludes sales
charges)................... 23.47%(e) 23.59%(e) 12.88% 12.72% 25.10% 25.23% (1.77)%(b) (1.87)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).................... $3,617 $59,156 $2,843 $41,495 $1,218 $25,096 $ -- $ 15,254
Ratio of expenses to
average net assets....... 0.97%(c) 0.97%(c) 0.93% 0.93% 0.84% 0.79% -- 0.77%(c)
Ratio of net investment
income to average net
assets................... 0.41%(c) 0.41%(c) 0.96% 0.98% 1.17% 1.40% -- 0.86%(c)
Ratio of expenses to
average net assets*...... 1.80%(c) 1.57%(c) 1.91% 1.67% 2.11% 1.92% -- 2.61%(c)
Ratio of net investment
income (loss) to average
net assets*.............. (0.42)%(c) (0.19)%(c) (0.02)% 0.23% (0.10)% 0.26% -- (0.98)%(c)
Portfolio turnover (d)..... 41.37% 41.37% 78.58% 78.58% 67.91% 67.91% 123.26% 123.26%
Average commission rate
paid (f)................. $.0598 $ .0598 $.0769 $ .0769
</TABLE>
- ---------------
(a) Period from commencement of operations. On June 20, 1994, the Growth Fund
commenced offering Investor Shares and designated existing shares as
Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of
operations to June 19, 1994, plus the total return for the Investor Shares
for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(e) Not annualized.
(f) Represents the dollar amount of commissions paid on Portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Portfolio as
a whole without distinguishing between the classes of shares issued.
Disclosure not required for periods prior to fiscal 1996.
* During the period, certain expenses were voluntarily reduced. If such
voluntary expense reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
88
<PAGE> 91
INCOME & GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
FOR THE 1994 TO 1993 TO
SIX MONTHS ENDED YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JANUARY 31, 1997 JULY 31, 1996 JULY 31, 1995 1994(a) 1994(a)
--------------------- --------------------- --------------------- -------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD........ $12.52 $ 12.51 $11.75 $ 11.74 $ 9.97 $ 9.96 $ 9.86 $ 10.00
------ ------- ------ ------- ------ ------- ------ --------
INVESTMENT ACTIVITIES
Net investment income...... 0.11 0.11 0.22 0.25 0.27 0.25 -- 0.20
Net realized and unrealized
gains (losses) on
investments.............. 2.39 2.39 1.49 1.46 1.76 1.78 0.14 (0.04)
------ ------- ------ ------- ------ ------- ------ --------
Total from Investment
Activities............. 2.50 2.50 1.71 1.71 2.03 2.03 0.14 0.16
------ ------- ------ ------- ------ ------- ------ --------
DISTRIBUTIONS
From net investment
income................... (0.11) (0.11) (0.25) (0.25) (0.25) (0.25) (0.03) (0.20)
From net realized gains.... (0.69) (0.69) (0.69) (0.69) -- -- -- --
------ ------- ------ ------- ------ ------- ------ --------
Total Distributions...... (0.80) (0.80) (0.94) (0.94) (0.25) (0.25) (0.03) (0.20)
------ ------- ------ ------- ------ ------- ------ --------
NET ASSET VALUE, END OF
PERIOD..................... $14.22 $ 14.21 $12.52 $ 12.51 $11.75 $ 11.74 $ 9.97 $ 9.96
====== ======= ====== ======= ====== ======= ====== ========
Total Return (excludes sales
charges)................... 20.25%(e) 20.27%(e) 15.02% 15.04% 20.67% 20.68% 1.73%(b) 1.63%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period
(000).................... $ 503 $ 7,306 $ 394 $ 6,013 $ 215 $ 6,669 $ -- $ 4,771
Ratio of expenses to
average net assets....... 0.98%(c) 0.98%(c) 0.98% 0.98% 0.97% 0.97% 0.88%(c) 0.95%(c)
Ratio of net investment
income to average net
assets................... 1.70%(c) 1.71%(c) 1.96% 2.00% 2.23% 2.37% 0.88%(c) 2.86%(c)
Ratio of expenses to
average net assets*...... 2.98%(c) 2.73%(c) 3.52% 3.27% 2.66% 2.41% 0.88%(c) 3.27%(c)
Ratio of net investment
income (loss) to average
net assets*.............. (0.30)%(c) (0.04)%(c) (0.58)% (0.29)% 0.54% 0.93% 0.88%(c) 0.54%(c)
Portfolio turnover (d)..... 4.85% 4.85% 36.64% 36.64% 15.01% 15.01% 97.24% 97.24%
Average commission rate
paid (f)................. $.0600 $ .0600 $.0763 $ .0763
</TABLE>
- ---------------
(a) Period from commencement of operations. On June 20, 1994, the Income &
Growth Fund commenced offering Investor Shares and designated existing
shares as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of
operations to June 19, 1994, plus the total return for the Investor Shares
for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without
distinguishing between the classes of shares issued.
(e) Not annualized.
(f) Represents the dollar amount of commissions paid on Portfolio transactions
divided by the total number of shares purchased and sold for which
commissions were charged and is calculated on the basis of the Portfolio as
a whole without distinguishing between the classes of shares issued.
Disclosure not required for periods prior to fiscal 1996.
* During the period, certain expenses were voluntarily reduced and certain
expenses were reimbursed. If such voluntary expense reductions and expense
reimbursements had not occurred, the ratios would have been as indicated.
See notes to financial statements.
89
<PAGE> 92
HIGHMARK LOGO
Semi-Annual Report
January 31, 1997
Investment Adviser
Pacific Alliance Capital Management,
A division of Union Bank of California, N.A.
400 California Street
P.O. Box 45000
San Francisco, CA 94104
Custodian
Union Bank of California, N.A.
400 California Street
P.O. Box 45000
San Francisco, CA 94104
Administrator & Distributor
SEI Fund Resources,
530 East Swedesford Rd.
Wayne, PA 19087
Not FDIC Insured
HGM-F-001-01
