HighMark Semi-Annual Report
January 31, 1999
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[logo]
Table of Contents
Letter to Shareholders & Message from the Investment Advisor ..................1
Management's Discussion & Analysis ............................................4
Statements of Net Assets .....................................................24
Statements of Operations .....................................................86
Statements of Changes in Net Assets ..........................................90
Financial Highlights .........................................................94
Notes to Financial Statements ...............................................102
This report and the financial statements contained herein are submitted for the
general information of HighMark(SM) Funds' shareholders. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus.
Shares of HighMark Funds are not deposits or obligations of, or guaranteed by
Union Bank of California, N.A., or any of its subsidiaries or affiliates. Such
shares are also not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. Investments in
shares of mutual funds involve risk, including the possible loss of principal.
SEI Investments Distribution Co., serves as Distributor for HighMark Funds and
is not affiliated with the Advisor, HighMark Capital Management, Inc. or with
Union Bank of California, N.A.
<PAGE>
Letter to Shareholders
[PHOTO]
Greg Knopf
Dear Shareholder:
We are pleased to report that your HighMark Funds generally did very well
against their peer groups and compared to their standard benchmarks of
investment performance for the period ended January 31, 1999. We are especially
pleased by the performance of our HighMark Growth Fund, which outperformed the
Standard & Poor's (S&P) 500 Composite Index for the one- and three-year periods
ended December 31, 1998. In addition, the HighMark California Intermediate
Tax-Free Bond Fund is ranked #1 in its Lipper Universe for the four-year period
ending December 31, 1998.* We believe these Funds may make an attractive
addition to your asset allocation.
Asset Growth
The HighMark Funds have grown by nearly $1 billion in assets under management
during the past six months. We are proud to state that our fund family had total
assets under management of over $8.7 billion as of the period ending January 31,
1999.
Asset Allocation Review
As you are well aware, though the market has been quite volatile over the past
six months, we are once again approaching record highs in many of the key market
indexes. Now would be a good time to review your asset allocation mix to ensure
that your portfolio is in line with your long-term goals while maintaining your
overall tolerance for risk.
New HighMark Fund
During the period we added our newest fund to the HighMark family, the Small Cap
Value Fund. This fund invests in companies with a market capitalization of under
$1.5 billion. The Small Cap Value Fund invests approximately 75% of its assets
in U.S. small cap stocks, and approximately 25% of its assets in international
small cap stocks. The domestic portion of the Fund is managed by HighMark
Capital Management's Value Momentum team, and the international portion is
managed by Brandes Investment Partners, LLP. We believe the Small Cap Value Fund
may make an attractive addition to your long-term asset allocation strategy. For
more information about this Fund, please consult your investment representative
or call HighMark Funds directly at 1(800) 433-6884.
As always, we thank you for your continued confidence and investment in HighMark
Funds.
Sincerely,
/s/Signature Omitted
Greg Knopf
Managing Director, Mutual Funds
HighMark Capital Management, Inc.
February 1999
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* For the four-year period ended 12/31/98, the HighMark California
Intermediate Tax-Free Bond Fund was ranked #1 out of 20 funds by Lipper,
Inc. in the California Tax-Free Bond Fund category.
1
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[LOGO]
Message from the Investment Advisor
[PHOTO]
Luke Mazur
Dear Shareholder:
The period beginning August 1, 1998 looked like the end of the great bull market
of the 1990s. After peaking on July 17th at 9337, the Dow Jones Industrial
Average fell nearly 20% over the next ten weeks, as concerns about the global
economy enveloped the markets. However, decisive action by the Federal Reserve
Board between late September and mid-November restored confidence, and the Dow
recovered all of its losses and posted new highs. Meanwhile, Treasury bonds
initially soared as global investors sought a safe haven for their money.
The Economy: Surging Ahead
Recession fears were put to rest when it was reported that fourth quarter 1998
Gross Domestic Product grew at an annual rate of 5.6%. It was the third calendar
year in a row in which GDP growth approached 4%. The end of 1998 also recorded
the 93rd month of uninterrupted growth, surpassing the 92-month growth period of
the 1980s.
While Asia has remained in a deep recession, U.S. growth has been supported by
buoyant consumer spending, booming housing and auto sales, and the wealth effect
created by a soaring stock market. Inflation is benign, interest rates are
trending down, unemployment is just 4.3% and there is a federal budget surplus
for the first time in 30 years.
Of course, no expansion is truly perfect. While the service sector soars, the
U.S. manufacturing sector is under pressure, as exports to Asia and Latin
America have dwindled. Growth in factory output has slowed to the lowest level
since 1992. Total capacity utilization declined to 80.6%, continuing its
downtrend since January 1998.
Fortunately, consumer spending represents 65% of the economy, and consumer
confidence is extremely high. Remarkably, it has remained high despite the third
quarter 1998 stock market swoon, the bombing of Iraq and the impeachment of the
President. Reflecting the favorable consumer sentiment, both new and existing
home sales continued to be very strong, while new single family construction
surged to the highest level since 1984.
Stocks: A Dramatic Recovery
The six-month period from August 1, 1998 to January 31, 1999 was a roller
coaster for investors. During the depths of the bear market in September,
investors were bombarded with news coverage and so-called experts telling them
to reduce their holdings in stocks. Essentially, these pundits were telling
investors to sell when the environment looked bleak. But once again, those who
viewed their investments from a long-term perspective tuned out this advice--and
came out ahead.
To be sure, the U.S. stock market faces many challenges in 1999. Corporate
profits are growing slowly, and stock prices are at record valuation levels. The
S&P 500 Composite Index is selling at 26 times earnings, which is a record.
There continues to be a huge disparity in performance between large cap and
small cap stocks, as well as between the growth and value style of investing.
One industry--technology--accounts for a disproportionate share of recent stock
market performance. Other industries, such as commodities and energy, had a
dismal year.
2
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In addition, global economic concerns are still significant. Brazil's currency
recently devalued sharply, and the worry is that Latin America's five year
economic renaissance could be in jeopardy. In Japan, the government is
attempting to stimulate the economy, but the unemployment rate continues to
rise, and there is no end in sight to a decade-long recession. So far, the U.S.
economy has withstood these and other international difficulties. However, the
international environment is one reason why U.S. corporate profits are under
pressure.
Bonds: Balancing Volatility from Stocks
If the U.S. economy slows down in 1999 as forecasted, then the bond market will
likely benefit as interest rates continue to decline. However, it is unlikely
that one bond sector--Treasury bonds--will continue to be so dominant.
Fearing a global credit crunch last summer, investors from around the world
sought the safety and liquidity of Treasury securities. As a result, Treasury
bonds performed very well during the period. Investors who had diversified their
stock portfolios by owning bonds, particularly during August and September,
would have cushioned their returns.
While Treasury securities provided excellent performance, corporate bonds and
mortgage-backed securities performed relatively poorly. Corporate bonds,
particularly lower quality issues, were shunned by investors when the fear of a
global credit crunch was most intense. Mortgage-backed securities, which can be
refinanced by borrowers, also underperformed due to the declining interest rate
environment. At January 31, 1999, corporates and mortgages offered unusually
high yields compared to Treasury bonds. Unless we see more global turmoil, we
would expect corporates and mortgages to do better in the next several months.
There are always pros and cons to every investment scenario. On balance,
however, we believe that low inflation, low interest rates, solid economic
growth, and America's position as the world's technology leader are just a few
good reasons to be optimistic about the markets in 1999.
Sincerely,
/s/Signature Omitted
Luke Mazur
Managing Director - Chief Investment Officer
HighMark Capital Management, Inc.
February 1999
3
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[LOGO]
HighMark Growth Fund
Performance
For the six months ended January 31, 1999, the HighMark Growth Fund returned
15.65% (Fiduciary Shares).* In comparison, the Lipper Growth Funds Average rose
13.26% during the period while the S&P 500 Composite Index was up 15.05%.
Factors Affecting Performance
The Fund's emphasis on technology worked to its advantage during the period. A
big winner was America Online, which benefited from the surging interest in
Internet stocks. AOL has 15.5 million paying members, and is one of the few
Internet companies that is profitable. Its strategy of focusing on consumers who
are not technologically savvy has led to booming growth. The company was
recently added to the S&P 500 Index, which means it will receive broad
institutional ownership. Another big technology winner was Solectron, a contract
manufacturer that has taken advantage of the trend toward outsourcing. The
company has enjoyed 30% to 50% earnings growth over the past several years.
Yet another strong performer was Harley Davidson, the leading heavyweight
motorcycle manufacturer, with steady earnings and a loyal customer base. The
company recently completed a major manufacturing capacity expansion, in an
effort to meet customer demand and reduce customer waiting time.
The Fund also benefited from an absence of energy and precious metals stocks,
which have performed very poorly in this period of commodity deflation. The
Fund's traditional holdings in Coca-Cola and Gillette were disappointing, as
these global companies were negatively impacted by the global economic downturn.
In addition, the Fund's gaming holding performed poorly, as the industry suffers
from overcapacity. Meanwhile, the downturn in Asia has diminished the number of
gaming customers from that region.
Current Strategy & Outlook
We continue to focus on our strategy of finding proven growth companies that
have demonstrated an ability to perform in all economic environments. The
current environment of low inflation, low interest rates and low unemployment is
an excellent one for the portfolio, and we expect it to continue well into 1999.
- ---------------
* The HighMark Growth Fund (Retail Class A Shares) produced a total return of
15.45% for the period. Including the maximum sales charge of 4.50%, the
total return for the Fund's Retail Class A Shares was 10.24%. The Fund's
Retail Class B shares produced a return of 15.17% for the period. Including
the maximum contingent deferred sales charge of 5.00%, the total return for
the Fund's Retail Class B shares was 10.17%.
4
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HighMark Growth Fund
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[PHOTO]
Team Leader:
Craig Braemer
HighMark Capital
Management, Inc.
Fund's Date of Inception:
November 18, 1993 (Fiduciary Shares)
June 20, 1994 (Retail Class A Shares)
February 2, 1998 (Retail Class B Shares)
Net Assets (000):
$733,955 (Fiduciary Shares)
$ 17,679 (Retail Class A Shares)
$ 5,271 (Retail Class B Shares)
Investment Objective:
The HighMark Growth Fund seeks long-term capital appreciation through
investments in equity securities. The production of current income is an
incidental objective.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
Growth Fund (Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B
Shares) versus the S&P 500 Composite Index and the Lipper Growth Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
<TABLE>
<CAPTION>
HighMark Growth Fund HighMark Growth Fund
HighMark Growth Fund Synthetic Retail Synthetic Retail S&P 500 Lipper Growth
Fiduciary Shares Class A Shares Class B Shares Composite Index Funds Average
<S> <C> <C> <C> <C> <C>
11/93 10,000 9,550 10,000 10,000 10,000
7/94 9,650 9,225 9,650 10,100 9,962
7/95 12,085 11,541 12,085 12,733 12,517
7/96 13,622 13,028 13,622 14,841 13,745
7/97 20,234 19,345 20,234 22,574 19,740
7/98 24,805 23,651 24,498 26,926 22,335
1/99 28,687 27,305 28,345 30,979 25,297
</TABLE>
Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year Inception
Return Return Return Return to Date
--------- -------- ------ ------ ---------
Fiduciary Shares 15.65% 35.81% 28.61% 22.24% 22.85%
Retail Class A Shares 15.45% 35.45% 28.37% 22.16%+ 26.62%
Retail Class A Shares
with load* 10.24% 29.36% 26.42% 21.05%+ 25.36%
Retail Class B Shares 15.17% 34.67%+ 28.25%+ 22.04%+ 31.68%
Retail Class B Shares
with load** 10.17% 29.67%+ 27.64%+ 21.86%+ 26.64%
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 5.00%.
+ Synthetic, not actual.
Past performance is not predictive of future results.
5
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[LOGO]
HighMark Value Momentum Fund
Performance
For the six-months ended January 31, 1999, the HighMark Value Momentum Fund
returned 5.08% (Fiduciary Shares).* In comparison, the Lipper Growth & Income
Funds Average rose 7.65% during the period while the S&P 500 Composite Index was
up 15.05%.
Factors Affecting Performance
Once again, technology led the stock market to new highs during the period,
accounting for much of the S&P 500 Composite Index's total return. However,
technology generally doesn't fall into the value category.
In addition, the differential in performance between growth and value shares was
extremely wide. While earnings for growth companies have been better than
expected, value includes underperformers such as energy, basic materials,
transportation, financial services and utilities.
Nevertheless, the portfolio did have its share of winners, including: 1) Alcoa,
which reported better than expected earnings, not from pricing, which has been
soft, but from major cost cutting; 2) Amgen, a biotechnology company with
accelerating earnings whose stock nearly doubled during the period; 3) Chase
Manhattan, which reported solid earnings despite economic concerns in Asia and
Latin America; 4) Ford, on the basis of strong auto sales and the Volvo
acquisition that broadens its offerings; and 5) Morgan Stanley Dean Witter,
which bounced back strongly after the Asian crisis eased last fall.
Current Strategy & Outlook
Although value companies look extremely attractive, no catalyst is yet apparent
that would narrow the spread between growth and value. Meanwhile, value dividend
yields are increasing as the stock prices decline and some companies raise
dividends. The portfolio includes some technology companies, but only those that
were bought a few years back at low price/earnings multiples.
Today, the technology sector's price/earnings multiple is nearly 50 times 1998
earnings, representing a record premium to the overall market. Because we
recognize the importance of this industry to the U.S. economy, we continue to
search for eligible stocks in the technology and communications sectors.
The value momentum style of investing has proven to be a very successful process
over time. We believe that investors will ultimately recognize the increasingly
compelling investments that make up the value style.
- -----------------
* The HighMark Value Momentum Fund (Retail Class A Shares) produced a total
return of 4.93% for the period. Including the maximum sales charge of
4.50%, the total return for the Fund's Retail Class A Shares was 0.20%. The
Fund's Retail Class B Shares produced a total return of 4.54% for the
period. Including the maximum contingent deferred sales charge of 5.00%,
the total return for the Fund's Retail Class B Shares was -0.46%.
6
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HighMark Value Momentum Fund
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[PHOTO]
Team Leader:
Richard Earnest
HighMark Capital
Management, Inc.
Fund's Date of Inception:
February 1, 1991 (Fiduciary Shares)
April 2, 1992 (Retail Class A Shares)
February 2, 1998 (Retail Class B Shares)
Net Assets (000):
$ 861,638 (Fiduciary Shares)
$ 35,306 (Retail Class A Shares)
$ 5,943 (Retail Class B Shares)
Investment Objective:
The HighMark Value Momentum Fund seeks long-term capital growth with a secondary
objective of income. The Fund will be invested primarily in stocks that appear
undervalued relative to the market and/or their historic price valuations. In
addition, stocks are screened for positive price or earnings momentum. Most of
the securities pay a dividend.
Comparison of Change in the Value of a $10,000 Investment in the HighMark Value
Momentum Fund (Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B
Shares) versus the S&P 500 Composite Index and the Lipper Growth & Income Funds
Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
<TABLE>
<CAPTION>
HighMark Value HighMark Value HighMark Value
Momemtum Fund Momemtum Fund Synthetic Momemtum Fund Synthetic S&P 500 Lipper Growth &
Fiduciary Shares Retail Class A Shares Retail Class B Shares Composite Index Income Funds Average
<S> <C> <C> <C> <C> <C>
2/91 10,000 9,550 10,000 10,000 10,000
7/91 10,640 10,160 10,640 10,690 10,650
7/92 11,870 11,340 11,870 12,070 11,980
7/93 13,340 12,750 13,340 13,120 13,340
7/94 13,910 13,290 13,910 13,790 14,060
7/95 17,440 16,600 17,450 17,380 16,950
7/96 20,380 19,430 20,380 20,260 19,290
7/97 30,050 28,590 30,070 30,820 28,000
7/98 32,830 31,150 32,690 36,760 30,960
1/99 34,500 32,690 34,170 42,290 33,320
</TABLE>
Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year Inception
Return Return Return Return to Date
--------- -------- ------ ------ ---------
Fiduciary Shares 5.08% 9.91% 20.27% 18.80% 17.61%
Retail Class A Shares 4.93% 9.63% 19.98% 18.60% 17.71%
Retail Class A Shares
with load* 0.20% 4.68% 18.15% 17.52% 16.92%
Retail Class B Shares 4.54% 8.84%+ 19.88%+ 18.56%+ 6.64%
with load** -0.46% 3.84%+ 19.18%+ 18.36%+ 1.62%
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 5.00%.
+ Synthetic, not actual.
Past performance is not predictive of future results. Performance presented from
February 1, 1991, (commencement of operations of Fiduciary Shares) and April 2,
1992, (commencement of operations of Retail Shares) to April 25, 1997 reflects
the performance of the Stepstone Value Momentum Fund.
7
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[LOGO]
HighMark Income Equity Fund
Performance
For the six months ended January 31, 1999, the HighMark Income Equity Fund
returned 7.70% (Fiduciary Shares).* In comparison, the Lipper Equity Income
Funds Average rose 4.57% during the period while the S&P 500 Composite Index was
up 15.05%. According to Lipper Inc. the Fund performed in the top 20th
percentile of its peer group for the period.**
Factors Affecting Performance
The Fund's best-performing sectors included computer systems, automobiles,
telephones, pharmaceuticals, publishing and medical supplies. In computing, our
largest holding is IBM which we purchased in early 1998 at an excellent value.
While the company still makes big mainframes and personal computers, it has
successfully diversified into data processing services.
The telephone industry performed well because the companies provided relatively
stable earnings as well as good revenue and earnings growth driven by
technological advances. AT&T provided solid returns based on its diversification
into wireless, the Internet and global markets.
The pharmaceutical industry was a favorite with investors because of its
predictable growth. We added Pharmacia & Upjohn to the portfolio at a good value
when we became convinced that the company was successfully executing a
turnaround strategy.
The Fund's biggest disappointments were in financial services and energy. Banks
have yet to fully recover from the fears of a global credit crunch last summer.
Although we lowered our energy exposure in mid-1998, the remaining holdings did
poorly in the fall as oil prices plunged.
Current Strategy & Outlook
We seek investments that provide high dividend income and low volatility.
However, we also seek total return, which is why we will continue to look for
attractively priced securities in high growth areas such as technology, health
care and consumer staples. By being broadly diversified, the Fund is expected to
be less vulnerable than other less diversified income funds to the risk of
rising interest rates.
We are also examining the investment merits of certain undervalued sectors such
as basic materials and capital goods that have been beaten down by the global
economic environment. Another area of interest is energy, where stock prices are
extremely attractive. We expect some improvement in this area as oil prices
stabilize and the industry consolidates.
- --------------
* The HighMark Income Equity Fund (Retail Class A Shares) produced a total
return of 7.57% for the period. Including the maximum sales charge of
4.50%, the total return for the Fund's Retail Class A Shares was 2.70%. The
Fund's Retail Class B Shares produced a total return of 7.23% for the
period. Including the maximum contingent deferred sales charge of 5.00%,
the total synthetic return for the Fund's Retail Class B Shares was 2.52%.
** For the period of 07/31/98 to 01/31/99 the HighMark Income Equity Fund was
ranked 44th out of 243 funds by Lipper Inc. in the Income Equity category.
8
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HighMark Income Equity Fund
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[PHOTO]
Team Leader:
Michael McBurney
HighMark Capital
Management, Inc.
Fund's Date of Inception:
February 9, 1984 (Fiduciary Shares)
June 20, 1994 (Retail Class A Shares)
February 2, 1998 (Retail Class B Shares)
Net Assets (000):
$ 651,156 (Fiduciary Shares)
$ 21,180 (Retail Class A Shares)
$ 2,740 (Retail Class B Shares)
Investment Objective:
The HighMark Income Equity Fund seeks 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. The opportunity for long-term growth of asset value is a secondary
consideration.
Comparison of Change in the Value of a $10,000 Investment in the
HighMark Income Equity Fund (Fiduciary, Synthetic Retail Class A or
Synthetic Retail Class B Shares) versus the S&P 500 Composite Index and the
Lipper Equity Income Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
<TABLE>
<CAPTION>
HighMark Income HighMark Income HighMark Income
Equity Fund Equity Fund Synthetic Equity Fund Synthetic S&P 500 Lipper Equity
Fiduciary Shares Retail Class A Shares Retail Class B Shares Composite Index Income Funds Average
<S> <C> <C> <C> <C> <C>
2/84 10,000 9,550 10,000 10,000 10,000
7/84 9,660 9,220 9,660 9,790 9,840
7/85 13,210 12,620 13,210 12,970 12,600
7/86 16,870 16,110 16,870 16,650 15,380
7/87 21,400 20,440 21,400 23,190 19,190
7/88 21,090 20,140 21,090 20,470 18,160
7/89 27,030 25,810 27,030 26,990 22,810
7/90 26,790 25,580 26,790 28,740 22,680
7/91 30,160 28,810 30,160 32,400 24,990
7/92 35,000 33,420 35,000 36,550 28,610
7/93 38,410 36,680 38,410 39,730 32,220
7/94 40,040 38,230 40,040 41,770 33,700
7/95 46,950 44,930 46,950 52,660 39,350
7/96 55,520 53,110 55,520 61,380 45,160
7/97 77,800 74,340 77,800 93,360 63,280
7/98 86,190 82,150 85,820 111,360 69,910
1/99 92,830 88,370 92,020 128,120 73,110
</TABLE>
<TABLE>
<CAPTION>
Annualized Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year 10 Year Inception
Return Return Return Return Return to Date
--------- -------- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Fiduciary Shares 7.70% 16.95% 18.67% 17.85% 14.89% 15.88%
Retail Class A Shares 7.57% 16.66% 18.47% 17.77%+ 14.85%+ 20.16%
Retail Class A Shares
with load* 2.70% 11.44% 16.68% 16.70%+ 14.33%+ 18.96%
Retail Class B Shares 7.23% 15.95%+ 18.33%+ 17.65%+ 14.79%+ 14.24%
Retail Class B Shares
with load** 2.52% 10.95%+ 17.61%+ 17.44%+ 14.79%+ 9.22%
</TABLE>
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 5.00%.
+ Synthetic, not actual.
Past performance is not predictive of future results.
9
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[LOGO]
HighMark Balanced Fund
Performance
For the six month period ended January 31, 1999, the HighMark Balanced Fund
returned 5.97% (Fiduciary Shares).* In comparison, the Lipper Balanced Funds
Average rose 7.39%. Meanwhile, the Standard & Poor's 500 Composite Index was up
15.05% and the Lehman Brothers Aggregate Bond Index reflected a return of 5.10%.
Factors Affecting Performance
In a period of generally falling interest rates and robust economic growth,
stocks as well as bonds performed very well. Last summer's global credit crunch
caused investors to seek the safety and liquidity of Treasury bonds, causing
them to outperform corporates and mortgage-backed securities. The Federal
Reserve Board's decisive action to lower interest rates ignited the stock
market, after stocks appeared to be entering a bear market.
During the period, the Fund's asset allocation between stocks and bonds remained
constant, with bonds somewhat underweighted between 32% and 39% versus a target
of 40%. Common stocks were weighted between 59% and 65% versus a target of 60%.
The Fund's cash position remained between 2% and 3% as we correctly believed
that cash would not be able to outperform stocks or bonds.
The equity portion of the portfolio has tended to focus on value stocks, which
did not do as well as growth companies. In addition, the portfolio included a
number of companies in basic industry and capital goods that held back
performance.
Current Strategy & Outlook
We believe that the economic environment will continue to be characterized by
low inflation and declining interest rates. Despite the surprising strength of
the U.S. economy in late 1998, we expect growth to slow in 1999 and corporate
profits to come under pressure. The bond market should benefit from this
environment as well as the emergence of a large U.S. federal budget surplus,
which reduces the supply of government securities. In addition, we expect
corporate bonds and mortgage-backed securities to perform better, and for yield
spreads to narrow against Treasury bonds. The stock market will have to cope
with sluggish corporate profits, but should be buoyed by merger activity,
continuing demand from retirement accounts and corporate buybacks. We intend to
continue our target allocation of 60% stocks / 40% bonds during 1999, while
remaining fully invested.
- -------------------
* The HighMark Balanced Fund (Retail Class A Shares) produced a total return
of 5.79% for the period. Including the maximum sales charge of 4.50%, the
total return for the Fund's Retail Class A Shares was 1.02%. The Fund's
Retail Class B Shares produced a total return of 5.45% for the period.
Including the maximum contingent deferred sales charge of 5.00%, the total
synthetic return for the Fund's Retail Class B shares was 0.45%.
10
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HighMark Balanced Fund
- --------------------------------------------------------------------------------
[PHOTO]
Team Leader:
Carl Colombo
HighMark Capital
Management, Inc.
Fund's Date of Inception:
February 1, 1991 (Fiduciary Shares)
November 13, 1992 (Retail Class A Shares)
February 2, 1998 (Retail Class B Shares)
Net Assets (000):
$ 452,854 (Fiduciary Shares)
$ 11,122 (Retail Class A Shares)
$ 2,111 (Retail Class B Shares)
Investment Objective:
The HighMark Balanced Fund seeks capital appreciation and income with a
secondary investment objective of conservation of capital. Under normal market
conditions, the Fund invests between 50% to 70% of its total assets in equity
securities, at least 25% in bonds and the rest in cash equivalents.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
Balanced Fund (Fiduciary, Synthetic Retail Class A or Synthetic Retail Class
B Shares) versus the Lehman Brothers Aggregate Bond Index, the S&P 500
Composite Index and the Lipper Balanced Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
<TABLE>
<CAPTION>
HighMark HighMark HighMark Lehman Brothers
Balanced Fund Balanced Fund Synthetic Balanced Fund Synthetic Aggregate S&P 500 Lipper Balanced
Fiduciary Shares Retail Class A Shares Retail Class B Shares Bond Index Composite Index Funds Average
<S> <C> <C> <C> <C> <C> <C>
2/91 10,000 10,000 10,000 10,000 10,000 10,000
7/91 10,440 10,440 10,440 10,370 10,690 10,560
7/92 11,600 11,600 11,600 11,910 12,070 11,940
7/93 12,810 12,810 12,810 13,120 13,120 13,210
7/94 13,180 13,190 13,190 13,130 13,790 13,560
7/95 15,700 15,710 15,710 14,460 17,380 15,810
7/96 17,420 17,390 17,420 15,260 20,260 17,360
7/97 22,730 22,620 22,730 16,900 30,820 22,550
7/98 24,380 24,230 24,320 18,230 36,760 24,750
1/99 25,840 25,640 25,650 19,160 42,290 26,580
</TABLE>
Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year Inception
Return Return Return Return to Date
--------- -------- ------ ------ ---------
Fiduciary Shares 5.97% 10.01% 14.45% 13.41% 13.15%
Retail Class A Shares 5.79% 9.76% 14.18% 13.21% 13.29%
Retail Class A Shares
with load* 1.02% 4.81% 12.43% 12.17% 12.46%
Retail Class B Shares 5.45% 9.14%+ 14.15%+ 13.23%+ 7.73%
Retail Class B Shares
with load** 0.45% 4.14%+ 13.38%+ 12.98%+ 2.70%
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 5.00%.
+ Synthetic, not actual.
Past performance is not predictive of future results. Performance presented from
February 1, 1991 (commencement of operations of Fiduciary Shares) and November
13, 1992 (commencement of operations of Retail Shares) to April 25, 1997
reflects the performance of the Stepstone Balanced Fund.
11
<PAGE>
[LOGO]
HighMark Emerging Growth Fund
Performance
For the six months ended January 31, 1999, the HighMark Emerging Growth Fund
returned 1.52% (Fiduciary Shares). In comparison, the Lipper Small Cap Funds
Average rose 1.30% during the period while the S&P 600 Small Cap Index returned
- -0.53%. Finally, the Russell 2000 Growth Index was up 9.45%.
Factors Affecting Performance
The small cap sector as a whole improved dramatically in the latter part of the
period, as investor nervousness over Asia and other emerging markets subsided.
The Fund's overexposure to technology, including semiconductor capital equipment
companies, and Internet stocks, was very helpful.
In particular, Broadcom, which provides semiconductor chips for cable modems and
digital set-top boxes, was up 112.15% during the six-month period. The company's
chips will help broaden the pipeline for Internet access to the home. Unlike
some Internet stocks that represent short-term trading opportunities, we view
Broadcom to be viable over the long term.
In the entertainment industry, Cinar Films, a Canadian-based programmer of
nonviolent children's programs, performed very well. Among the company's most
popular programs is "Arthur," an animated series about an aardvark, that appears
on PBS. The company is starting to leverage its popular characters, by
merchandising them in educational materials.
Another excellent company is Provident Bankshares, a Baltimore-based bank that
has a large market share and would make an attractive acquisition candidate for
a larger regional bank.
Current Strategy & Outlook
We intend to remain overweighted in technology and communication services
because many of these companies offer superior growth prospects. For example,
Lattices Semiconductor, a top holding in the Fund, is likely to benefit from
increased chip utilization by computer, telecom and consumer goods markets.
Another top holding, Adaptec, is a world leader in the manufacturer of hardware
and software that speeds the transfer of data between computers, peripherals and
networks.
We're also emphasizing companies that can produce steady growth regardless of
the economy. Examples include Stewart Enterprises, the third largest funeral
home company in the U.S. and Blyth Industries, a leading manufacturer of candles
and fragrance products.
Although we have few holdings in energy, we view the group as excessively
oversold based on the decline in oil prices. A rebound in prices would be a
strong catalyst for energy stocks, and we plan to increase our exposure as
conditions improve.
Investors continue to prefer large companies, but the disparity in valuations
between large cap and small cap stocks continues to grow. Eventually, we expect
that the gap will close when investors take notice that small caps offer faster
earnings growth potential at lower price/earnings ratios.
12
<PAGE>
HighMark Emerging Growth Fund
- --------------------------------------------------------------------------------
[LOGO]
Portfolio Manager:
Steve Riccio
Bank of Tokyo-
Mitsubishi Trust Co.
Fund's Date of Inception:
February 1, 1994 (Fiduciary Shares)
Net Assets (000):
$ 63,003 (Fiduciary Shares)
Investment Objective:
The HighMark Emerging Growth Fund seeks long-term growth of capital by investing
in a diversified portfolio of equity securities of small capitalization,
emerging growth companies.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
Emerging Growth Fund (Fiduciary Shares) versus the Russell 2000 Growth Index,
the S&P 600 Small Cap Index and the Lipper Small-Cap Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
Highmark Frank Russell S&P 600 Lipper
Emerging Growth 2000 Growth Small Cap Small-Cap
Fiduciary Shares Growth Index Index Funds Average
2/94 10,000 10,000 10,000 10,000
7/94 9,282 8,923 9,003 9,126
7/95 11,888 11,932 11,513 12,039
7/96 13,258 12,291 12,558 13,352
7/97 16,455 15,396 17,443 17,671
7/98 17,010 15,194 18,090 18,138
1/99 17,268 16,630 17,994 18,373
Annualized Annualized
Six Month One Year 3 Year Inception
Return Return Return to Date
------ ------ ------ -------
Fiduciary Shares 1.52% 4.77% 10.89% 11.16%
Past performance is not predictive of future results. Performance presented from
February 1, 1994 (commencement of operations of Fiduciary Shares) to April 25,
1997 reflects the performance of the Stepstone Emerging Growth Fund.
13
<PAGE>
[LOGO]
HighMark Small Cap Value Fund
Performance
Between inception on September 17, 1998 and January 31, 1999, the HighMark Small
Cap Value Fund produced a cumulative total return of 8.64% (Fiduciary Shares).*
For the period October 1, 1998 to January 31, 1999, the Fund produced a total
return of 7.99%. In comparison, S&P 600 Small Cap BARRA Value Index returned
- -3.15% and the Financial Times/S&P Actuaries World Excluding U.S. Medium/Small
Cap Index, a measure of international small cap stocks, was up 14.94% for the
period.
Factors Affecting Performance
The value style of investing continued to lag growth during the period. We are
currently in a "momentum"-based market, primarily driven by the enthusiasm for
Internet stocks, which often have no earnings and typically do not fit the
definition of value.
Nevertheless, the portfolio had a number of winners during the period. Two
healthcare companies were acquired: Circon, a surgical equipment maker and
Physicians Reliance Network, a physician practice-management company
specializing in cancer clinics. In computer software, the stock of Autodesk
strengthened as the company prepared to introduce a new version of its flagship
product. In contract manufacturing, Applied Power was a big winner. The company
capitalized on the increasing trend of high tech companies to focus on product
innovation and design, and outsourced their manufacturing functions.
On the negative side, Earthgrains, a bread manufacturer spun off from
Anheuser-Busch, operates in a slow-growing industry and performed poorly during
the period. However, the industry is consolidating, margins are improving and
earnings have been rising at more than 25% for the past several quarters. We
expect the stock to do better in 1999.
The Fund maintains a 25% weighting in international small cap stocks, which was
a plus in October and November, but a minus in December. Over time, we believe
that the international component will provide superior performance and reduce
volatility in the portfolio, because international markets generally move
independently of U.S. stock markets.
Current Strategy & Outlook
Typically, small cap stocks sell at higher price/earnings (P/E) multiples to
reflect their greater growth opportunities. However, the P/E for the S&P 600
Index is 19 times 1999 earnings, while the P/E for the S&P 500 Composite Index
is 26 times expected earnings. Yet earnings growth for small caps is projected
to be 28% versus just 9% for large cap stocks in 1999. Thus, we continue to
believe that the Fund is focusing on a very attractive part of the investment
universe.
- --------------------
* The HighMark Small Cap Value Fund (Retail Class A Shares), launched on
9/17/98, produced a total cumulative return of 8.53%. Including the maximum
sales charge of 4.50%, the total cumulative return for the Fund's Retail
Class A Shares was 3.66%. The Fund's Retail Class B Shares, launched on
9/17/98, produced a total cumulative return of 8.20% for the period.
Including the maximum contingent sales charge of 5.00%, the total
cumulative return for the Fund's Retail Class B Shares was 3.20%.
14
<PAGE>
HighMark Small Cap Value Fund
- --------------------------------------------------------------------------------
[PHOTO]
Portfolio Manager:
Elizabeth Pearce
HighMark Capital Management, Inc.
Sub-Advisor of the International Portion only, Brandes Investment Partners, LLP
Fund's Date of Inception:
September 17, 1998 (Fiduciary Shares)
September 17, 1998 (Retail Class A Shares)
September 17, 1998 (Retail Class B Shares)
Net Assets (000):
$ 73,185 (Fiduciary Shares)
$ 285 (Retail Class A Shares)
$ 225 (Retail Class B Shares)
Investment Objective:
The HighMark Small Cap Value Fund seeks to provide long term capital
appreciation through investments in equity securities.
Comparison of Change in the Value of a $10,000 Investment in the
HighMark Small Cap Value Fund (Fiduciary or Synthetic Retail Class A or Retail
Class B Shares) versus the S&P 600/BARRA Value Index, FT/S&P World ex US
Medium/Small Cap Index, and the Lipper Small Cap Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
<TABLE>
<CAPTION>
HighMark HighMark HighMark S&P 600/ FT/S&P World ex Lipper
Small Cap Value Fund Small Cap Value Fund Small Cap Value Fund BARRA Value U.S.Medium Small cap
Fiduciary Shares Retail Class A Shares Retail Class B Shares Index Small Cap Index Funds Average
<S> <C> <C> <C> <C> <C> <C>
9/30/98 10,000 9,550 10,000 10,000 10,000 10,000
1/99 10,799 10,313 10,266 11,180 11,494 11,927
</TABLE>
Cumulative
Inception
to Date
----------
Fiduciary Shares 8.64%
Retail Class A Shares 8.53%
Retail Class A Shares w/load* 3.66%
Retail Class B Shares 8.20%
Retail Class B Shares w/load** 3.20%
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 5.00%.
Past performance is not predictive of future results.
15
<PAGE>
[LOGO]
HighMark International Equity Fund
Performance
For the six months ended January 31, 1999, the HighMark International Equity
Fund returned 0.63% (Fiduciary Shares). In comparison, the Lipper International
Funds Average returned -2.98%. The unmanaged Morgan Stanley Capital
International EAFE Index, a benchmark made up of companies in 20 nations,
reflected a return of 2.17% for the period.
The Fund's sub-advisor is AXA Asset Management Partenaires, a unit of the AXA
Group, one of the world's largest money management firms.
Factors Affecting Performance
In this highly volatile time period, the Fund benefited from its Japan strategy,
which was to increase exposure to Japan as its currency was strengthening late
in 1998. Retail, telecommunications and utility shares performed well. In
addition, the Fund is underexposed to banking and export companies, which helped
performance.
Throughout the period, the Fund emphasized Europe at a time when interest rates
were falling and the region was gearing up for the euro. A positive theme was
corporate restructuring in the banking and pharmaceutical industries, giving a
strong signal that European companies were emphasizing shareholder value. In
addition, telecommunications companies performed very well during the period.
Although that situation has improved recently, some of our stock selections
continued to be adversely affected by the recession in Asia.
Current Strategy & Outlook
We expect to see volatility in Europe as 1998 corporate earnings results are
announced, reminding investors that growth is not as strong as was forecast one
year ago. But we still find information technology, pharmaceuticals and
telecommunications companies attractive. In general, we believe that the impact
of the Y2K computer problem will be relatively minor on earnings and stock
prices in Europe. On the whole, we remain slightly overweighted in Europe.
Although the consensus is very negative for Japan, we are more optimistic based
on recent economic data. In addition, we are encouraged by recent government
action to strengthen the banking system, such as the recent nationalization of
Nippon Credit Bank. The positive is that the government moved quickly before the
news filtered into the market. However, the negative is that the level of bad
loans is rising fast as the economy struggles and fears of credit risk are
rising. The issue is a complex one but we are encouraged by the fact that most
banks and the authorities are now accepting reality. We remain neutrally
weighted in Japan.
The rest of Asia showed strong stock market gains in the fourth quarter,
bolstered by lower interest rates and improving investor sentiment. However,
more conclusive evidence of economic bottoming will be required, as well as
continued progress on reforms of financial systems, for markets to hold these
strong gains.
16
<PAGE>
HighMark International Equity Fund
- --------------------------------------------------------------------------------
[PHOTO]
Portfolio Manager:
Robert De Guigne
AXA Asset Management
Partenaires
Fund's Date of Inception:
February 1, 1995 (Fiduciary Shares)
Net Assets (000):
$ 97,096 (Fiduciary Shares)
Investment Objective:
The HighMark International Equity Fund seeks to provide long-term capital
appreciation by investing primarily in a diversified portfolio of equity
securities of non-U.S. issuers.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
International Equity Fund (Fiduciary Shares) versus the Morgan Stanley Capital
International EAFE Index and the Lipper International Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
Highmark International Morgan Stanley Lipper
Equity Fund Capital International International
Fiduciary shares EAFE Index Funds Average
2/95 10,000 10,000 10,000
7/95 11,143 11,368 11,332
7/96 11,650 11,770 11,990
7/97 12,585 13,902 14,921
7/98 12,482 14,663 15,931
1/99 12,561 14,981 15,456
Annualized Annualized
Six Month One Year 3 Year Inception
Return Return Return to Date
------ ------ ------ -------
Fiduciary Shares 0.63% 13.73% 3.06% 5.59%
Past performance is not predictive of future results. Performance presented from
February 1, 1995 (commencement of operations of Fiduciary Shares) to April 25,
1997 reflects the performance of the Stepstone International Equity Fund.
17
<PAGE>
[LOGO]
HighMark California Intermediate Tax-Free Bond Fund
Performance
For the six months ended January 31, 1999, the HighMark California Intermediate
Tax-Free Bond Fund produced a total return of 5.01% (Fiduciary Shares).* In
comparison, the Lipper California Intermediate Municipal Debt Funds Average
returned 4.42%. The unmanaged Lehman Brothers 7-Year Municipal Bond Index
reflected a return of 4.99%.
Factors Affecting Performance
The Fund continued to have a longer than average duration (sensitivity to
interest rates), which was a plus in a period of falling interest rates. In
addition, we continued to improve the Fund's call protection. When interest
rates are falling, issuers try to refinance their debt, forcing bondholders to
reinvest at lower yields. The Fund's performance is enhanced to the extent that
it has call protection. In addition, the Fund's credit quality remains very
high, with more than 75% of the issues rated AAA. That was an advantage in a
period such as last summer when investors were more sensitive to credit risk.
Because of the global financial crisis, investors sought the safety and
liquidity of Treasury bonds and thus, municipal bonds underperformed Treasury
securities. Global investors don't buy muni bonds as a general rule: typically,
they need to buy large quantities of securities, which is difficult to do in the
muni market and they can't use the tax deduction. As a result, municipal bond
yields rose in relation to Treasury bonds. For example, a seven-year municipal
bond was yielding 75.7% of the comparable Treasury on July 31, 1998. By January
31, 1999, the same bond was yielding 81.3% of the comparable Treasury. The
30-year muni yielded 86.7% of the Treasury yield on July 31, 1998 and 94.1% on
January 31, 1999. By historical standards, municipal bond yields are currently
very attractive compared to Treasury bonds.
Current Strategy & Outlook
So far, California has not been hurt by the Asian recession, although certain
industries, such as agriculture, have lost export revenues. Nevertheless, the
State continues to enjoy high credit ratings--AA3 by Moody's Investor Service
and A+ by Standard & Poor's Corporation. Credit quality for most municipalities
has improved due to rising tax revenues and improved budgeting processes. It is
too early to tell whether Brazil's shaky economy will have a domino effect on
the rest of Latin America and nearby Mexico. We will continue to focus the
portfolio on the highest quality issues.
- ------------
* The HighMark California Intermediate Tax-Free Bond Fund (Retail Class A
Shares) produced a total return of 5.02% for the period. Including the maximum
sales charge of 3.00%, the total return for the Fund's Retail Class A Shares
was 1.87%.
18
<PAGE>
HighMark California Intermediate Tax-Free Bond Fund
[PHOTO Omitted]
Team Leader:
Robert Bigelow
HighMark Capital
Management, Inc.
Fund's Date of Inception:
October 15, 1993 (Fiduciary Shares)
October 15, 1993 (Retail Class A Shares)
Net Assets (000):
$ 154,582 (Fiduciary Shares)
$ 15,012 (Retail Class A Shares)
Investment Objective:
The HighMark California Intermediate Tax-Free Bond Fund seeks to provide
high current income that is exempt from federal and State of California income
taxes. The Fund invests primarily in bonds and notes issued by the State of
California, its agencies, instrumentalities, and political subdivisions.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
California Intermediate Tax-Free Bond Fund (Fiduciary or Retail Class A Shares)
versus the Lehman Brothers 7-Year Municipal Bond Index and the Lipper California
Intermediate Municipal Debt Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which
depicts the following plot points:
<TABLE>
<CAPTION>
Highmark CA Intermediate Highmark CA Intermediate Lehman Brothers Lipper Brothers CA
Tax-Free Bond Fund, Tax-Free Bond Fund, 7 Year Municipal Intermediate Municipal
Fiduciary Shares Retail Class A Shares Index Debt Funds Average
<S> <C> <C> <C> <C>
10/93 10,000 9,700 10,000 10,000
7/94 9,702 9,401 9,953 9,914
7/95 10,407 10,086 10,760 10,538
7/96 11,102 10,748 11,307 11,144
7/97 12,079 11,696 12,284 12,063
7/98 12,652 12,241 12,930 12,588
1/99 13,286 12,856 13,575 13,144
</TABLE>
<TABLE>
<CAPTION>
Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year Inception
Return Return Return Return to Date
--------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Fiduciary Shares 5.01% 6.44% 6.15% 5.35% 5.34%
Retail Class A Shares 5.02% 6.36% 6.09% 5.32% 5.29%
Retail Class A Shares
with load* 1.87% 3.19% 5.04% 4.68% 4.68%
</TABLE>
* Reflects 3.00% sales charge.
Past performance is not predictive of future results. Performance presented from
October 15, 1993 (commencement of operations of Fiduciary and Retail Shares) to
April 25, 1997 reflects the performance of the Stepstone California Intermediate
Tax-Free Bond Fund.
19
<PAGE>
[LOGO]
HighMark Bond & Intermediate-Term Bond Funds
Performance
For the six-months ended January 31, 1999, the HighMark Bond Fund produced a
total return of 4.86% (Fiduciary Shares).* In comparison, the Lipper Corporate
A-Rated Debt Funds Average produced a 4.30% return, while the unmanaged Lehman
Brothers Aggregate Bond Index reflected a return of 5.10%.
The HighMark Intermediate-Term Bond Fund produced a total return of 4.36%
(Fiduciary Shares).** In comparison, the Lipper Intermediate Investment-Grade
Debt Average reflected a 4.09% return, while the unmanaged Lehman Brothers
Intermediate Government/Corporate Bond Index rose 5.00%.
Factors Affecting Performance
Interest rates continued to decline during the period, but not all bond
categories benefited equally. After Russia devalued its currency in August, a
worldwide credit crunch ensued and global investors fled emerging markets for
the safety and liquidity of U.S. Treasury securities. As a result, Treasury
notes and bonds outperformed all other fixed-income categories.
Corporate bonds, particularly lower-rated issues, lagged. Yield spreads between
corporate bonds and Treasury securities widened to levels not seen since the
1980s. Mortgage-backed securities also underperformed, as homeowners refinanced,
requiring mortgage bondholders to reinvest at lower yields. Our performance was
enhanced to the extent that our portfolios included U.S. government securities
and very high quality corporate bonds.
Current Strategy & Outlook
Although yield spreads between corporates and governments have narrowed, they
are still as wide as they were during the last recession in 1990-1991. That's
very unusual, considering the U.S. economy grew by nearly 4% in 1998. However,
due to the turbulent global economic environment, we continue to focus on
high-quality corporate bonds, adding issues by IBM, U.S. Bancorp and Morgan
Stanley Dean Witter. The HighMark. Bond and Intermediate-Term Bond Funds carry
average credit ratings of Aa1 and Aa3, respectively.***
At January 31, 1999, our allocation to corporate bonds had dropped slightly from
the prior period, while our allocation to mortgage-backed securities increased.
In addition, the portfolios have a longer-than-average duration (sensitivity to
interest rates), reflecting our belief that interest rates will trend downward.
- -----------
* The HighMark Bond Fund (Retail Class A Shares) produced a total return of
4.71% for the period. Including the maximum sales charge of 3.00%, the
total return for the Fund's Retail Class A Shares was 1.58%.
** The HighMark Intermediate-Term Bond Fund (Retail Class A Shares) produced a
total return of 4.36% for the period. Including the maximum sales charge of
3.00%, the total return for the Fund's Retail Class A Shares was 1.22%.
*** Based on Moody's ratings as of 1/31/99.
20
<PAGE>
HighMark Bond Fund
[PHOTO]
Team Leader:
Jack Montgomery
HighMark Capital
Management, Inc.
Fund's Date of Inception:
February 15, 1984 (Fiduciary Shares)
June 20, 1994 (Retail Class A Shares)
Net Assets (000):
$ 338,166 (Fiduciary Shares)
$ 2,679 (Retail Class A Shares)
Investment Objective:
The HighMark Bond Fund seeks current income through investments in long-term,
fixed income securities. The dollar-weighted average portfolio maturity of the
Fund will be from five to twenty years.
Comparison of Change in the Value of a $10,000 Investment in the HighMark Bond
Fund (Fiduciary, Synthetic Retail Class A Shares) versus the Lehman Brothers
Aggregate Bond Index and the Lipper Corporate A-Rated Debt Funds Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which
depicts the following plot points:
HighMark HighMark Lehman Brothers Lipper Corporate
Bond Fund Bond Fund Synthetic Aggregate Bond A-Rated Debt
Fiduciary Shares Retail Class A Shares Index Funds Average
2/84 10,000 9,700 10,000 10,000
7/84 9,890 9,600 10,120 10,010
7/85 12,320 11,950 12,540 12,350
7/86 15,600 15,140 15,240 14,710
7/87 15,850 15,380 15,920 15,460
7/88 16,780 16,280 17,130 16,580
7/89 19,260 18,680 19,730 18,930
7/90 20,320 19,710 21,130 19,930
7/91 22,150 21,480 23,390 21,870
7/92 25,350 24,590 26,840 25,420
7/93 27,900 27,060 29,580 28,240
7/94 27,020 26,030 29,600 27,950
7/95 29,570 28,450 32,600 30,620
7/96 30,990 29,850 34,400 32,080
7/97 34,270 33,040 38,110 35,570
7/98 36,810 35,510 41,100 38,070
1/99 38,600 37,180 43,200 39,710
<TABLE>
<CAPTION>
Annualized Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year 10 Year Inception
Return Return Return Return Return to Date
--------- -------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Fiduciary Shares 4.86% 7.60% 6.66% 6.54% 8.17% 9.36%
Retail Class A Shares 4.71% 7.57% 6.68% 6.39%+ 8.09%+ 8.09%
Retail Class A Shares
with load* 1.58% 4.36% 5.61% 5.73%+ 7.76%+ 7.38%
</TABLE>
* Reflects 3.00% sales charge.
+ Synthetic, not actual.
Past performance is not predictive of future results.
21
<PAGE>
[LOGO]
HighMark Intermediate-Term Bond Fund
[PHOTO]
Team Leader:
Jack Montgomery
HighMark Capital
Management, Inc.
Fund's Date of Inception:
February 1, 1991 (Fiduciary Shares)
February 3, 1992 (Retail Class A Shares)
Net Assets (000):
$ 265,889 (Fiduciary Shares)
$ 5,288 (Retail Class A Shares)
Investment Objective:
The HighMark Intermediate-Term Bond Fund seeks total return through investments
in fixed-income securities. The dollar-weighted average portfolio maturity of
the Fund will be three to ten years.
Comparison of Change in the Value of a $10,000 Investment in the HighMark
Intermediate-Term Bond Fund (Fiduciary or Synthetic Retail Class A Shares)
versus the Lehman Brothers Intermediate Government/Corporate Index and the
Lipper Intermediate Investment-Grade Debt Average.
[GRAPHIC]
In the printed version of the document, a line graph appears which
depicts the following plot points:
<TABLE>
<CAPTION>
HighMark Intermediate HighMark Intermediate Lehman Brothes Lipper Intermediate
Term Bond Fund Term Bond Fund Intermediate Govt/ Invesment Grade
Fiduciary Shares Synthetic Retail Class A Corp Index Debt Average
<S> <C> <C> <C> <C>
2/01 10,000 9,700 10,000 10,000
7/91 10,427 10,114 10,362 10,388
7/92 12,026 11,670 11,826 11,947
7/93 13,127 12,737 12,843 13,131
7/94 13,066 12,666 12,964 13,050
7/95 14,164 13,731 14,106 14,246
7/96 14,749 14,344 14,853 14,943
7/97 16,140 15,650 16,201 16,474
7/98 17,169 16,649 17,292 17,596
1/99 17,917 17,375 18,157 18,316
</TABLE>
<TABLE>
<CAPTION>
Annualized Annualized Annualized
Six Month One Year 3 Year 5 Year Inception
Return Return Return Return to Date
--------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Fiduciary Shares 4.36% 6.86% 5.58% 5.64% 7.71%
Retail Class A Shares 4.36% 6.87% 5.59% 5.63% 6.82%
Retail Class A Shares
with load* 1.22% 3.66% 4.52% 4.99% 6.37%
</TABLE>
* Reflects 3.00% sales charge.
Past performance is not predictive of future results. Performance presented from
February 28, 1991 (commencement of operations of Fiduciary Shares) and February
29, 1992 (commencement of operation of the Retail Shares) to April 25, 1997
reflects the performance of the Stepstone Intermediate-Term Bond Fund.
22
<PAGE>
HighMark Taxable Money Market Funds*
Objectives and Performance
The HighMark Taxable Money Market Funds seek current income with liquidity and
stability of principal. The 100% U.S. Treasury Money Market Fund invests
exclusively in direct U.S. Treasury obligations with maturities of less than 13
months. The U.S. Government Money Market Fund invests in U.S. Treasury and
government agency securities, and in repurchase agreements collateralized by
like instruments. The Diversified Money Market Fund invests in U.S. Treasury and
government agency securities, as well as high-quality short-term obligations
issued by banks and corporations.
The HighMark Taxable Money Market Funds (Fiduciary Shares)** produced the
following one-month effective yields as of January 31, 1999: 100% U.S. Treasury
Money Market Fund: 4.36%; U.S. Government Money Market Fund: 4.54%; Diversified
Money Market Fund: 4.68%.
Factors Affecting Performance
In late September, the Federal Reserve became concerned that the Russian debt
default would cause a spread of the crisis to Latin America and perhaps,
eventually, to the United States. This prompted the first of three short-term
interest-rate cuts over a six-week period, resulting in a 0.75% overall decline
in the overnight federal funds rate to 4.75%. The portfolios employed a
"barbell" strategy, balancing liquid overnight investments with longer-term
high-quality instruments, maintaining the average maturities of the portfolios
modestly longer than their respective peer groups. The portfolios proved to be
well-positioned for the Fed actions, having locked in the higher yields
available prior to these moves. The 100% U.S. Treasury Money Market Fund ended
the period with a weighted average maturity of 73 days. The U.S. Government
Money Market Fund closed the period with an average life of 46 days, while the
Diversified Money Market Fund ended the period with a 59-day average life.
HighMark California Tax-Free Money Market Fund***
Objective and Performance
The HighMark California Tax-Free Money Market Fund seeks as high a level of
current interest income free from federal income tax and California personal
income taxes as is consistent with the preservation of capital and the relative
stability of principal. The Fund's one-month effective yield as of January 31,
1999 (Fiduciary Shares) was 2.57%.**** Using a combined federal and California
state income tax rate of 41.95%, the one-month effective yield is equivalent to
a 4.43% taxable yield.
Factors Affecting Performance
During the period, the Fund increased its holdings in longer-term securities
such as fixed notes and tax-exempt commercial paper. By extending its weighted
average maturity, the Fund was able to lock in higher yields as interest rates
declined.
- ---------
* An investment in the HighMark Taxable 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.
** For Retail Class A Shares of the HighMark 100% U.S. Treasury, U.S.
Government and Diversified Money Market Funds, the one-month effective
yield as of January 31, 1999 was 4.10%, 4.29% and 4.42%, respectively. The
one-month effective yield for U.S. Government Money Market Fund's Retail
Class B Shares was 3.51% for the same period.
*** An investment in the HighMark California Tax-Free Money Market Fund is
neither insured nor guaranteed by the U.S. government. Although this fund
seeks to maintain a stable net asset value of $1.00, there can be no
assurance that it will be able to do so. Some or all of the income may be
subject to certain state and local taxes, and in some cases, to the federal
alternative minimum tax.
**** The one-month effective yield as of January 31, 1999 for the Retail Class A
Shares of the California Tax-Free Money Market Fund was 2.13%.
23
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
Growth Fund
- -------------------------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks -- 98.8%
Air Transportation -- 0.4%
Southwest Airlines 117,915 $ 3,169
-------
Aircraft -- 0.1%
Allied Signal 15,910 620
-------
Apparel/Textiles -- 1.3%
Cintas (A) 127,600 9,706
-------
Banks -- 4.1%
BankAmerica 103,876 6,947
Comerica 30,000 1,873
First Union 65,332 3,438
Firstar* 55,380 4,884
Northern Trust 33,610 2,909
State Street Bank 46,510 3,325
U.S. Bancorp 158,481 5,339
Washington Mutual (A) 29,800 1,252
Wells Fargo 22,600 790
-------
30,757
-------
Beauty Products -- 0.8%
Avon Products 53,610 1,980
Colgate-Palmolive 29,170 2,346
Proctor & Gamble 16,050 1,459
-------
5,785
-------
Broadcasting, Newspapers & Advertising -- 4.1%
Comcast, Cl A 213,870 14,540
Gannett 73,070 4,809
Infinity Broadcasting Corp-A* 54,360 1,505
Interpublic Group (A) 54,590 4,319
Mediaone Group* 32,660 1,831
Univision Communications* 91,200 4,093
-------
31,097
-------
Communications Equipment -- 0.8%
Nokia ADR 41,470 5,972
-------
- -------------------------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks (continued)
Computers & Services -- 4.4%
Cisco Systems* 159,705 $17,817
Computer Sciences* 87,650 6,009
EMC* 90,150 9,815
-------
33,641
-------
Computers & Software Services -- 12.0%
America Online* (A) 86,680 15,229
Compaq Computer 163,270 7,776
Dell Computer* 99,142 9,914
Fiserv* 93,712 4,586
Hewlett Packard 22,005 1,725
IBM 20,720 3,797
Intel 174,598 24,607
Microsoft* 133,660 23,390
-------
91,024
-------
Diversified Operations -- 6.6%
Berkshire Hathaway, Cl B* (A) 12,102 26,019
General Electric 231,720 24,302
-------
50,321
-------
Drugs -- 10.5%
Alza* (A) 190,185 9,616
American Home Products 98,410 5,775
Amgen* 15,926 2,036
Bristol-Myers Squibb 55,160 7,071
Eli Lilly 76,874 7,202
Johnson & Johnson 76,760 6,525
Merck 44,055 6,465
Monsanto 59,670 2,838
Pfizer 111,230 14,307
Schering Plough 215,810 11,762
Warner Lambert 77,240 5,576
-------
79,173
-------
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
Growth Fund (continued)
- -------------------------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks (continued)
Entertainment -- 1.9%
Mirage Resorts* (A) 350,430 $ 5,016
Walt Disney 287,194 9,477
-------
14,493
-------
Financial Services -- 11.1%
American Express 92,765 9,543
Associates First Capital 152,620 6,191
Citigroup 189,675 10,634
Fannie Mae 194,495 14,174
Franklin Resources 193,540 6,484
Merrill Lynch 189,960 14,437
S&P 500 Depository Receipt,
SPYDRS (A) 174,655 22,296
-------
83,759
-------
Food, Beverage & Tobacco -- 4.2%
Coca-Cola Company 146,256 9,571
Hershey Foods (A) 60,610 3,409
PepsiCo 100,900 3,941
Philip Morris Companies 115,220 5,415
Ralston-Ralston Purina Group 50,080 1,371
Sara Lee 43,880 1,119
Tootsie Roll Industries 12,170 548
Wrigley, Wm. Jr. (A) 65,690 6,150
-------
31,524
-------
Household Products -- 1.5%
Clorox (A) 7,500 938
Gillette 172,724 10,148
-------
11,086
-------
Insurance -- 2.2%
Allstate 29,616 1,112
American International Group 85,554 8,807
Hartford Financial Services Group 59,910 3,112
Marsh & McLennan 9,005 566
Mutual Risk Management (A) 80,242 2,949
-------
16,546
-------
- -------------------------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks (continued)
Leisure -- 2.9%
Carnival, Cl A 147,530 $ 7,238
Harley-Davidson 144,020 7,489
Mattel (A) 310,032 7,034
Nike, Cl B 10,952 501
-------
22,262
-------
Machinery -- 1.8%
Applied Materials* 39,860 2,519
Danaher (A) 91,780 4,910
Illinois Tool Works 105,880 6,386
-------
13,815
-------
Measuring Devices -- 0.5%
Perkin Elmer 39,850 3,788
-------
Medical Products & Services -- 5.6%
Covance* 42,000 1,323
IMS HEALTH Inc. 706,660 25,881
Medtronic (A) 108,890 8,677
Safeskin* (A) 249,040 5,821
Stryker (A) 13,990 649
-------
42,351
-------
Miscellaneous Business Services -- 1.7%
Automatic Data Processing 68,630 2,921
Robert Half International* 261,134 9,874
-------
12,795
-------
Printing & Publishing -- 2.2%
McGraw-Hill 30,450 3,292
New York Times, Cl A 16,020 550
Time Warner 88,400 5,525
Washington Post, Cl B 13,327 7,583
-------
16,950
-------
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
Growth Fund (continued)
- -------------------------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------------------------
Common Stocks (continued)
Professional Services -- 1.7%
Devry* 385,730 $11,355
Paychex 35,480 1,727
-------
13,082
-------
Retail -- 11.0%
Bed Bath & Beyond* (A) 73,230 2,343
Costco* 214,855 17,806
CVS 95,400 5,223
Dayton-Hudson (A) 92,810 5,917
Home Depot 236,644 14,287
Kohl's* (A) 202,710 13,734
Lowe's (A) 99,760 5,817
McDonald's 117,878 9,290
Safeway* 139,040 7,804
Staples* 45,000 1,288
-------
83,509
-------
Semi-Conductors/Instruments -- 2.0%
Texas Instruments 98,200 9,710
Xilinx* (A) 68,480 5,684
-------
15,394
-------
Specialty Machinery -- 1.1%
Solectron* (A) 93,430 8,321
-------
Telephones & Telecommunication -- 2.3%
AirTouch Communications* 60,070 5,801
Lucent Technologies 101,446 11,419
-------
17,220
-------
Total Common Stocks
(Cost $511,930) 748,160
-------
- -------------------------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------------------------
Corporate Bonds -- 5.6%
Banc One Columbus, OH, N.A. (B) (C)
5.030%, 04/26/99 $10,000 $ 10,000
Household CCMT ABT Ser A4 (B) (C)
5.060%, 01/18/00 12,500 12,500
Merrill Lynch & Co. FE MTN (B) (C)
4.950%, 09/23/99 10,000 10,000
Salomon Smith Barney Holding Co. (B) (C)
5.000%, 10/28/99 10,000 10,000
--------
Total Corporate Bonds
(Cost $42,500) 42,500
--------
Cash Equivalents -- 5.3%
Janus Money Fund (B) (C) 25,000 25,000
Merrimac Cash Fund (B) (C) 15,000 15,000
--------
Total Cash Equivalents
(Cost $40,000) 40,000
--------
Repurchase Agreements -- 7.6%
J.P. Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$14,972,686 (collateralized by
U.S. Treasury Note, par value
$14,953,000, 5.625%, 10/31/99:
total market value $15,266,786) 14,967 14,967
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99, matures
02/01/99, repurchase price
$1,872,622 (collateralized by
various corporate obligations,
0.000%-14.250%, 02/15/99-
05/15/09: total market
value $1,909,305) 1,872 1,872
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
Growth Fund (continued)
- -------------------------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------------------------
Repurchase Agreements (continued)
Lehman Brothers, Inc. (B) (C)
4.920%, dated 01/29/99, matures
02/01/99, repurchase price
$40,783,768 (collateralized by
various corporate obligations,
0.000%-0.010%, 11/25/23-
02/25/28: total market
value $41,582,395) $40,767 $ 40,767
--------
Total Repurchase Agreements
(Cost $57,606) 57,606
--------
Total Investments -- 117.3%
(Cost $652,036) 888,266
--------
Payable Upon Return of
Securities Loaned -- (16.5%) (125,139)
--------
Other Assets and Liabilities, Net -- (0.8%) (6,222)
--------
Net Assets:
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value)
based on 40,458,914 outstanding shares
of beneficial interest 482,609
Fund Shares of Retail Class A (unlimited
authorization -- no par value)
based on 975,533 outstanding shares
of beneficial interest 14,348
Fund Shares of Retail Class B (unlimited
authorization -- no par value)
based on 293,114 outstanding shares
of beneficial interest 4,752
Accumulated net investment loss (311)
Accumulated net realized gain on investments 19,277
Net unrealized appreciation on investments 236,230
---------
Total Net Assets -- 100.0% $ 756,905
---------
- -------------------------------------------------------------------------------
Description Value
- -------------------------------------------------------------------------------
Net Assets (continued)
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $18.14
======
Net Asset Value and Redemption Price
Per Share -- Retail Class A $18.12
======
Maximum Offering Price Per Share --
Retail Class A ($18.12 / 95.5%) $18.97
======
Net Asset Value and Redemption Price
Per Share -- Retail Class B $17.98
======
- ---------
* Non-income producing security.
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at January
31, 1999 was $121,541,374.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
ADR -- American Depository Receipt
Cl -- Class
SPYDRS -- Standard & Poor Depository Receipts
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value Momentum Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks -- 96.5%
Aircraft -- 0.7%
Sundstrand 145,000 $ 6,452
-------
Apparel/Textiles -- 0.1%
V.F. Corporation 20,000 852
-------
Automotive -- 1.9%
Arvin Industries 146,800 5,808
Ford Motor 101,000 6,205
TRW 115,300 5,542
-------
17,555
-------
Banks -- 4.1%
Bank One 101,447 5,313
Bank United, Cl A (A) 160,000 6,400
BankAmerica 148,847 9,954
Chase Manhattan Bank 78,800 6,063
First Union 110,000 5,789
J.P. Morgan 35,400 3,735
-------
37,254
-------
Building -- 2.0%
Fleetwood Enterprises (A) 147,800 5,469
Lafarge (A) 175,000 6,836
Masco 52,000 1,680
Southdown 65,775 3,655
-------
17,640
-------
Chemicals -- 2.2%
Avery Dennison 211,000 10,431
Cabot (A) 146,000 3,668
Du Pont (E.I.) de Nemours 114,600 5,866
-------
19,965
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Communications Equipment -- 2.4%
CTS (A) 225,000 $10,702
Harris (Del) (A) 120,000 4,500
Lucent Technologies 59,058 6,648
-------
21,850
-------
Computers & Services -- 5.4%
Cisco Systems* 135,000 15,061
Equifax (A) 165,000 6,528
Hewlett Packard 154,000 12,070
IBM 84,000 15,393
-------
49,052
-------
Diversified Operations -- 2.6%
General Electric 182,800 19,171
Textron 60,000 4,466
-------
23,637
-------
Drugs -- 8.1%
American Home Products 167,000 9,801
Amgen* 107,700 13,765
Bristol Myers Squibb 90,000 11,537
Merck 95,000 13,941
Monsanto 118,000 5,612
Novo-Nordisk ADR 25,000 1,544
SmithKline Beecham ADR 115,300 7,819
Watson Pharmaceuticals* 171,500 9,368
-------
73,387
-------
Electrical Utilities -- 1.0%
General Public Utilities 36,000 1,534
Sempra Energy (A) 312,544 7,189
-------
8,723
-------
Entertainment -- 0.1%
Park Place Entertainment* 95,000 647
-------
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value Momentum Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Financial Services -- 5.5%
Associates First Capital 52,940 $ 2,147
Bear Stearns 116,504 5,490
Fannie Mae 200,300 14,597
Morgan Stanley, Dean Witter, Discover 140,000 12,154
Providian Financial 127,500 12,854
Waddell & Reed Financial, Cl A 35,000 739
Waddell & Reed Financial, Cl B* 69,714 1,460
-------
49,441
-------
Food, Beverage, & Tobacco -- 4.6%
Dole Food (A) 145,000 4,395
IBP 120,000 2,895
Philip Morris Companies 225,000 10,575
Ralston-Ralston Purina Group 110,700 3,030
Sara Lee 334,000 8,517
Universal 155,000 4,698
Universal Foods (A) 315,000 7,088
-------
41,198
-------
Gas/Natural Gas -- 4.1%
Coastal 280,000 8,347
Eastern Enterprises 168,100 6,766
MCN (A) 150,000 2,662
Oneok* 150,000 4,387
Questar 473,000 7,893
Sonat 50,000 1,287
Williams Companies (A) 180,000 5,940
-------
37,282
-------
Glass Products -- 0.3%
PPG Industries 55,000 2,956
-------
Hotels & Lodging -- 0.2%
Hilton Hotels 95,000 1,372
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Household Furniture & Fixtures -- 0.9%
Leggett & Platt (A) 376,000 $ 7,661
-------
Insurance -- 5.0%
Aegon N.V. ADR* 44,179 4,890
Allstate 146,952 5,520
Chubb 68,000 3,995
Citigroup 204,501 11,465
Marsh & McLennan 144,750 9,101
Provident 80,000 3,430
Torchmark 213,000 6,989
-------
45,390
-------
Leasing & Renting -- 2.9%
Comdisco 549,503 7,350
GATX 176,000 6,545
Rollins Truck Leasing 802,500 9,530
Xtra (A) 70,000 2,918
-------
26,343
-------
Leisure Products -- 1.4%
Hasbro (A) 245,000 9,111
Mattel (A) 138,350 3,139
-------
12,250
-------
Machinery -- 1.9%
Deere 91,000 2,963
Kennametal (A) 181,500 4,220
Parker-Hannifin (A) 178,000 5,473
Rockwell International* 45,000 1,955
Toro (A) 62,500 2,172
-------
16,783
-------
Measuring Devices -- 1.1%
Perkin Elmer (A) 43,000 4,088
Tektronix 232,500 5,885
-------
9,973
-------
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value Momentum Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Baxter International 156,000 $11,066
Becton, Dickinson (A) 180,000 6,435
Fresenius National Medical
Care ADR* (A) 88,613 1,800
HCR Manor Care* (A) 135,000 3,611
Mallinckrodt 130,000 4,542
NovaCare* 400,000 1,150
Tenet Healthcare* (A) 210,000 4,357
-------
32,961
-------
Miscellaneous Business Services -- 1.9%
Cendant* (A) 372,479 8,101
Manpower 128,100 3,154
Wallace Computer Services (A) 240,000 5,760
-------
17,015
-------
Office Furniture & Fixtures -- 0.5%
Hon Industries (A) 240,000 4,890
-------
Paper & Paper Products -- 2.3%
Kimberly-Clark 199,920 9,959
Weyerhaeuser 106,800 5,781
Willamette Industries (A) 152,500 5,337
-------
21,077
-------
Petroleum & Fuel Products -- 2.5%
Atlantic Richfield 45,000 2,582
Chevron (A) 78,500 5,868
Exxon 19,000 1,338
Halliburton 246,700 7,324
Occidental Petroleum 246,700 3,716
Union Pacific Resources 165,408 1,334
-------
22,162
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Petroleum Refining -- 2.1%
Ashland (A) 30,000 $ 1,425
Mobil 142,000 12,452
Royal Dutch Petroleum 106,000 4,247
Valero Energy 50,000 941
-------
19,065
-------
Photographic Equipment & Supplies -- 1.5%
Xerox 108,700 13,479
-------
Printing & Publishing -- 2.2%
Banta 200,000 4,775
Houghton Mifflin 150,000 6,291
McGraw-Hill 85,000 9,191
-------
20,257
-------
Professional Services -- 0.5%
ServiceMaster 210,000 4,003
-------
Railroads -- 1.2%
Burlington Northern Santa Fe 213,300 7,386
Florida East Coast Railway 150,000 4,369
-------
11,755
-------
Real Estate -- 3.9%
BRE Properties, Cl A (A) 268,262 6,438
CBL Associates Properties 260,000 6,402
First Industrial Realty Trust 200,000 5,137
JP Realty 208,000 3,640
Kimco Realty 90,000 3,510
Kimco Realty Depository Share* 32,400 828
Meditrust 30,700 482
Post Properties 195,000 7,264
Reckson Associates 60,000 1,320
-------
35,021
-------
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value Momentum Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Retail -- 3.9%
Dayton-Hudson (A) 258,000 $ 16,448
Federated Department Stores* (A) 216,700 9,061
Kroger* (A) 60,000 3,810
Sears Roebuck 153,700 6,167
--------
35,486
--------
Rubber & Plastic -- 1.3%
Sealed Air Convertible, Ser A 109,400 5,812
Sonoco Products 220,000 6,133
--------
11,945
--------
Semi-Conductors/Instruments -- 3.3%
Applied Materials* 125,000 7,898
Avnet 60,000 2,696
Conexant Systems* 22,500 409
Intel 134,000 18,886
--------
29,889
--------
Steel & Steel Works -- 1.1%
Alcoa (A) 44,500 3,721
Engelhard 226,000 4,421
Harsco (A) 80,000 2,135
--------
10,277
--------
Telephones & Telecommunication -- 6.1%
AT&T (A) 102,000 9,257
Bell Atlantic 193,000 11,580
Century Telephone Enterprises 202,500 13,770
GTE 118,000 7,965
SBC Communications 228,034 12,314
--------
54,886
--------
Total Common Stocks
(Cost $513,751) $871,831
--------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Certificate of Deposit -- 1.7%
Bank Brussels Lembert FYCD (B)
5.195%, 02/16/99 $15,000 $15,003
-------
Total Certificate of Deposit
(Cost $15,003) 15,003
-------
Corporate Bonds -- 6.6%
Bankers Trust Corp FMTN (B) (C)
4.950%, 08/06/99 15,000 14,999
Household CCMT ABT Ser A4 (B) (C)
5.060%, 01/18/00 10,000 10,000
Merrill Lynch & Co. FE MTN (B) (C)
4.950%, 09/23/99 10,000 10,000
4.980%, 10/04/99 10,000 10,000
Salomon Smith Barney Holding Co. (B) (C)
5.000%, 10/28/99 15,000 15,000
------
Total Corporate Bonds
(Cost $59,999) 59,999
------
Repurchase Agreements -- 6.8%
J.P. Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$31,681,519 (collateralized
by U.S. Treasury Note, par value
$28,332,000, 7.000%, 07/15/06;
total market value $32,303,245) 31,669 31,669
Lehman Brothers, Inc. (B) (C)
4.920%, dated 01/29/99, matures
02/01/99, repurchase price
$29,551,914 (collateralized by
various corporate obligations,
0.000%-0.010%, 11/25/23-02/25/28:
total market value $30,130,598) 29,540 29,540
-----------
Total Repurchase Agreements
(Cost $61,209) 61,209
-----------
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Value Momentum Fund (concluded)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Total Investments -- 111.6%
(Cost $649,962) $ 1,008,042
-----------
Payable Upon Return of
Securities Loaned-- (11.6%) (104,542)
-----------
Other Assets and Liabilities, Net -- (0.0%) (613)
-----------
Net Assets:
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value) based on
31,195,051 outstanding shares of
beneficial interest 510,780
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based on
1,278,658 outstanding shares of
beneficial interest 24,483
Fund Shares of Retail Class B (unlimited
authorization -- no par value) based on
215,706 outstanding shares of
beneficial interest 6,082
Undistributed net investment income 345
Accumulated net realized gain on investments 3,117
Net unrealized appreciation on investments 358,080
--------
Total Net Assets-- 100.0% $902,887
--------
--------
- --------------------------------------------------------------------------------
Description Value
- --------------------------------------------------------------------------------
Net Assets (continued)
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $27.62
------
------
Net Asset Value and Redemption Price
Per Share -- Retail Class A $27.61
------
------
Maximum Offering Price Per Share --
Retail Class A ($27.61 / 95.5%) $28.91
------
------
Net Asset Value and Redemption Price
Per Share -- Retail Class B $27.55
------
------
- --------------------------------------------------------------------------------
* Non-income producing security
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $101,080,082.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
ADR -- American Depository Receipt
Cl -- Class
Ser -- Series
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Income Equity Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks -- 98.7%
Automotive -- 2.0%
Ford Motor 214,300 $13,166
-------
Banks -- 12.8%
Bank One (A) 226,898 11,884
BankAmerica 208,350 13,933
Chase Manhattan Bank 167,900 12,918
First Union 267,350 14,069
Fleet Financial Group 487,475 21,601
National City 163,275 11,603
Washington Mutual (A) 17,475 734
-------
86,742
-------
Chemicals -- 1.2%
Du Pont (E. I.) de Nemours 97,600 4,996
Engelhard 34,675 678
Hercules 76,625 2,064
-------
7,738
-------
Computers & Services -- 7.8%
Hewlett Packard 259,350 20,327
IBM 178,200 32,655
-------
52,982
-------
Electrical Equipment -- 4.9%
Emerson Electric 135,575 7,889
General Electric 199,925 20,967
Thomas & Betts 95,625 4,225
-------
33,081
-------
Electrical Utilities -- 2.4%
Baltimore Gas & Electric 71,725 1,955
Central & South West 50,375 1,332
Duke Energy 85,325 5,274
FPL Group 88,950 4,881
Southern 93,700 2,524
-------
15,966
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Financial Services -- 5.0%
Citigroup 134,525 $ 7,542
Fannie Mae 183,700 13,387
Merrill Lynch 171,275 13,017
-------
33,946
-------
Food, Beverage & Tobacco -- 6.6%
General Mills 208,650 17,514
H.J. Heinz (A) 137,650 7,751
Philip Morris 221,825 10,426
Sara Lee 334,325 8,525
-------
44,216
-------
Gas/Natural Gas -- 3.3%
Eastern Enterprises 33,500 1,348
Enron Corporation 165,550 10,926
Sempra Energy 112,725 2,593
Williams Companies (A) 230,050 7,592
-------
22,459
-------
Healthcare -- 11.3%
Abbott Labs 86,450 4,015
Baxter International 256,875 18,222
Bristol-Myers Squibb 168,250 21,568
Merck 97,075 14,246
Pharmacia & Upjohn 202,500 11,644
SmithKline Beecham ADR (A) 93,900 6,368
-------
76,063
-------
Household Products -- 0.3%
Kimberly-Clark 45,100 2,247
-------
Insurance -- 7.6%
American General 142,225 10,142
Jefferson Pilot (A) 151,137 11,449
Lincoln National 58,975 4,913
Marsh & McLennan 396,762 24,946
-------
51,450
-------
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Income Equity Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Manufacturing -- 0.8%
National Service Industries 81,675 $ 2,797
Tenneco 78,175 2,414
-------
5,211
-------
Miscellaneous Business Services -- 0.2%
Shared Medical Systems 26,325 1,237
-------
Office Equipment -- 1.3%
Pitney Bowes 123,325 8,486
-------
Personal Care -- 0.7%
Avon Products 125,375 4,631
-------
Petroleum & Fuel Products -- 8.4%
BP Amoco PLC-Spons ADR 102,262 8,296
Chevron (A) 69,500 5,195
Exxon 256,375 18,058
Halliburton 51,765 1,537
Mobil 142,550 12,500
Phillips Petroleum 127,500 4,925
Texaco 134,350 6,365
-------
56,876
-------
Photographic Equipment & Supplies -- 0.7%
Eastman Kodak 75,000 4,903
-------
Printing & Publishing -- 6.3%
McGraw-Hill 261,525 28,277
R.R. Donnelley & Sons 380,750 14,350
-------
42,627
-------
Real Estate -- 0.8%
Kimco Realty 68,275 2,663
Simon Property Group 93,275 2,454
-------
5,117
-------
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Retail -- 2.3%
J.C. Penney (A) 55,398 $ 2,171
May Department Stores 116,575 7,038
Sears Roebuck & Company 163,075 6,543
-------
15,752
-------
Steel & Steel Works -- 0.3%
Worthington Industries 152,875 2,121
-------
Telephones & Telecommunication -- 11.3%
Alltel 206,950 13,361
Ameritech 125,025 8,142
AT&T (A) 157,100 14,257
Bell Atlantic 133,590 8,015
GTE 124,700 8,417
Motorola 121,600 8,786
SBC Communications 132,900 7,177
U.S. West 135,454 8,356
-------
76,511
-------
Waste Management -- 0.4%
Browning-Ferris Industries (A) 108,725 2,990
-------
Total Common Stocks
(Cost $526,579) 666,518
-------
Commercial Paper -- 0.8%
Orange & Rockland Utility (B) (C)
4.927%, 02/05/99 $5,541 5,533
------
Total Commercial Paper
(Cost $5,533) 5,533
------
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Income Equity Fund (concluded)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Bonds -- 3.0%
Bankers Trust Corp FMTN (B) (C)
4.950%, 08/06/99 $10,000 $ 9,999
Merrill Lynch & Co. FE MTN (B) (C)
4.950%, 09/23/99 10,000 10,000
-------
Total Corporate Bonds
(Cost $19,999) 19,999
-------
Repurchase Agreements -- 4.5%
JP Morgan Securities, Inc.
4.670%, dated 01/29/99,
matures 02/01/99, repurchase
price $2,715,246 (collateralized
by U.S. Treasury Note, par value
$2,758,000, 4.625%, 12/31/00:
market value $2,768,660) 2,714 2,714
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99,
matures 02/01/99, repurchase
price $27,676,506 (collateralized
by various corporate obligations,
0.000%-14.250%, 02/15/99-
05/15/09: total market
value $28,218,656) 27,665 27,665
--------
Total Repurchase Agreements
(Cost $30,379) 30,379
--------
Total Investments -- 107.0%
(Cost $582,490) 722,429
--------
Payable Upon Return of
Securities Loaned -- (7.9%) (53,197)
--------
Other Assets and Liabilities, Net-- 0.9% 5,844
--------
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value) based
on 38,551,076 outstanding shares of
beneficial interest $ 484,805
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based
on 1,252,041 outstanding shares of
beneficial interest 19,117
Fund Shares of Retail Class B (unlimited
authorization -- no par value) based
on 162,514 outstanding shares of
beneficial interest 2,868
Distributions in excess of net investment income (22)
Accumulated net realized gain on investments 28,369
Net unrealized appreciation on investments 139,939
---------
Total Net Assets -- 100.0% $ 675,076
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 16.89
=========
Net Asset Value and Redemption
Price Per Share -- Retail Class A $ 16.92
=========
Maximum Offering Price Per Share --
Retail Class A ($16.92 / 95.5%) $ 17.72
=========
Net Asset Value and Redemption
Price Per Share -- Retail Class B $ 16.86
=========
- --------------------------------------------------------------------------------
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $51,726,775.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks -- 63.6%
Aerospace & Defense -- 0.5%
Lockheed Martin 71,300 $ 2,513
-------
Air Transportation -- 0.7%
FDX* (A) 16,800 1,372
KLM Royal Dutch Air* 75,945 2,093
-------
3,465
-------
Aircraft -- 1.0%
Allied Signal 46,500 1,814
Textron 40,000 2,978
-------
4,792
-------
Apparel/Textiles -- 0.1%
Donna Karan International* 61,200 394
-------
Auto Rental and Leasing -- 0.4%
Rollins Truck Leasing 139,200 1,653
-------
Automotive -- 0.9%
Daimler Chrysler AG* 20,000 2,071
TRW 41,000 1,971
-------
4,042
-------
Banks -- 3.9%
Bank of New York 96,000 3,408
Bank United, Cl A* 30,000 1,200
BankAmerica 25,000 1,672
BankBoston 80,000 2,955
Chase Manhattan Bank 28,400 2,185
First Union 20,000 1,053
J.P. Morgan 14,700 1,551
Washington Mutual (A) 60,000 2,520
Wells Fargo 50,600 1,768
-------
18,312
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Beauty Products -- 2.1%
Avon Products 62,000 $ 2,290
Colgate-Palmolive 30,000 2,413
Gillette 55,000 3,231
Proctor & Gamble 20,000 1,817
-------
9,751
-------
Chemicals -- 2.8%
Avery Dennison 40,000 1,978
B.F. Goodrich (A) 42,400 1,442
Cabot 76,000 1,910
Du Pont (E. I.) de Nemours 38,600 1,976
Monsanto 71,000 3,377
Morton International 83,800 2,168
-------
12,851
-------
Communications Equipment -- 0.9%
Motorola 59,100 4,270
-------
Computers & Software Services -- 3.5%
Compaq Computer* 82,500 3,929
Computer Associates International 54,437 2,756
Hewlett Packard 36,000 2,822
IBM 30,000 5,498
Microsoft* 7,200 1,260
-------
16,265
-------
Construction Materials -- 0.6%
Lafarge 71,000 2,773
-------
Drugs -- 4.6%
American Home Products 60,000 3,521
Amgen* 30,000 3,834
Bristol-Myers Squibb 26,400 3,384
Merck 24,800 3,639
SmithKline Beecham (A) 56,000 3,797
Warner Lambert 42,500 3,068
-------
21,243
-------
The accompanying notes are an integral part of the financial statments.
36
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Electrical Utilities -- 0.9%
Duke Power 10,000 $ 618
FirstEnergy 50,700 1,575
PacifiCorp 88,000 1,809
-------
4,002
-------
Entertainment -- 1.1%
Mirage Resorts* (A) 120,000 1,717
Walt Disney 100,000 3,300
-------
5,017
-------
Financial Services -- 2.7%
American Express 30,000 3,086
Citigroup 74,197 4,160
Fannie Mae 69,700 5,079
Franklin Resources 10,000 335
-------
12,660
-------
Food, Beverage & Tobacco -- 3.4%
Archer-Daniels-Midland 121,476 1,837
Coca-Cola Company 21,400 1,400
Hershey Foods (A) 10,000 563
PepsiCo 70,700 2,762
Philip Morris 69,900 3,285
Ralston-Ralston Purina Group 50,000 1,369
Sara Lee 90,000 2,295
Universal Foods (A) 103,400 2,326
-------
15,837
-------
Forestry -- 0.2%
Rayonier 25,000 1,100
-------
Gas/Natural Gas -- 1.9%
Coastal 70,000 2,087
Eastern Enterprises 35,900 1,445
Sempra Energy (A) 63,008 1,449
Williams Companies (A) 116,400 3,841
-------
8,822
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Glass Products -- 0.4%
Corning (A) 41,600 $ 2,028
-------
Hotels & Lodging -- 0.2%
Hilton Hotels 70,000 1,011
-------
Household Furniture & Fixtures -- 0.2%
Leggett & Platt (A) 52,400 1,068
-------
Insurance -- 3.5%
AFLAC 75,000 3,216
Allstate 56,522 2,123
Equitable 60,000 4,185
Hartford Financial Services Group 55,200 2,867
HSB Group 49,350 1,863
Marsh & McLennan 33,350 2,097
-------
16,351
-------
Leasing & Renting -- 0.5%
Comdisco 126,750 1,695
Xtra (A) 15,000 625
-------
2,320
-------
Leisure Products -- 0.6%
Hasbro 45,000 1,673
Mattel 40,600 921
-------
2,594
-------
Machinery -- 4.4%
Applied Materials* 62,000 3,918
Baker Hughes 99,200 1,674
Deere 41,200 1,342
General Electric 52,600 5,516
Ingersoll Rand (A) 45,250 2,149
Minnesota Mining & Manufacturing 25,750 1,999
Parker-Hannifin (A) 52,500 1,614
Tenneco 67,600 2,087
-------
20,299
-------
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Measuring Devices -- 0.5%
Mallinckrodt 25,000 $ 873
Tektronix 57,250 1,449
-------
2,322
-------
Medical Products & Services -- 1.1%
Baxter International 46,500 3,299
Tenet Healthcare* 90,000 1,867
-------
5,166
-------
Miscellaneous Business Services -- 1.5%
Electronic Data Systems 63,100 3,309
Equifax (A) 40,000 1,583
Wallace Computer Services (A) 80,400 1,930
-------
6,822
-------
Miscellaneous Consumer Services -- 0.2%
Robert Half International* 20,000 756
-------
Miscellaneous Transportation -- 0.5%
Fleetwood Enterprises (A) 65,000 2,405
-------
Paper & Paper Products -- 1.4%
Kimberly-Clark 43,800 2,182
Mead 38,000 1,088
Weyerhaeuser 25,600 1,386
Willamette Industries (A) 50,300 1,761
-------
6,417
-------
Petroleum & Fuel Products -- 1.4%
Halliburton 71,500 2,123
Occidental Petroleum 81,700 1,231
Phillips Petroleum 41,300 1,595
Union Pacific Resources Group 173,504 1,399
-------
6,348
-------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Petroleum Refining -- 2.7%
Chevron (A) 35,300 $ 2,639
Mobil 35,200 3,087
Royal Dutch Petroleum 54,200 2,171
Ultramar Diamond Shamrock 79,200 1,742
Unocal 60,000 1,710
USX-Marathon Group 62,000 1,411
-------
12,760
-------
Precious Metals -- 0.5%
Barrick Gold 114,636 2,185
-------
Printing & Publishing -- 1.3%
Houghton Mifflin 50,000 2,097
Media General 45,000 2,250
Viacom, Cl B* 22,500 1,913
-------
6,260
-------
Railroads -- 0.5%
Burlington Northern Santa Fe 71,100 2,462
-------
Real Estate -- 2.2%
BRE Properties, Cl A 68,600 1,646
CBL & Associates Properties 69,100 1,702
First Industrial Realty Trust 90,000 2,312
JP Realty 75,700 1,325
Kimco Realty Corp. 32,000 1,248
Kimco Realty Depository Share 11,520 294
Post Properties 52,200 1,944
-------
10,471
-------
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Retail -- 3.5%
American Stores 84,000 $ 3,045
Costco* 45,000 3,729
Federated Department Stores* (A) 52,000 2,174
J.C. Penney 50,000 1,959
McDonald's 41,500 3,271
Sears Roebuck 58,600 2,351
--------
16,529
--------
Rubber & Plastic -- 0.2%
Mark IV Industries 65,100 977
--------
Semi-Conductors/Instruments -- 1.1%
Intel 37,500 5,285
--------
Telephones & Telecommunication -- 2.8%
AirTouch Communications* 30,300 2,926
Bell Atlantic 84,800 5,088
Century Telephone Enterprises 20,000 1,360
SBC Communications 64,000 3,456
--------
12,830
--------
Wholesale -- 0.2%
Arrow Electronics* 68,000 1,122
--------
Total Common Stocks
(Cost $184,455) 296,550
--------
U.S. Treasury Obligations -- 2.4%
U.S. Treasury Notes
6.250%, 04/30/01 $ 1,000 1,034
6.500%, 05/31/01 2,000 2,081
6.625%, 06/30/01 1,000 1,044
5.875%, 11/30/01 2,000 2,065
6.500%, 05/15/05 4,500 4,931
--------
Total U.S. Treasury Obligations
(Cost $10,536) 11,155
--------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Government Agency Mortgage-Backed Bonds -- 10.3%
FHLMC
6.000%, 02/01/28 $ 2,882 $ 2,853
FNMA
7.500%, 08/01/01 1,305 1,335
5.450%, 10/10/03 1,950 1,978
6.850%, 09/12/05 1,400 1,432
6.000%, 05/15/08 2,000 2,113
6.500%, 03/01/24 320 323
8.000%, 08/01/24 446 464
8.000%, 05/01/25 1,633 1,695
7.000%, 09/01/25 1,355 1,385
8.000%, 07/01/26 497 516
7.000%, 09/01/26 975 996
7.500%, 09/01/26 796 820
7.000%, 12/01/26 1,358 1,388
7.500%, 03/01/27 956 985
6.500%, 10/01/27 1,283 1,294
6.500%, 12/01/27 2,341 2,361
7.000%, 12/01/27 2,266 2,316
6.000%, 03/01/28 1,860 1,840
6.000%, 03/01/28 1,948 1,926
6.000%, 05/01/28 1,002 991
GNMA
6.500%, 09/15/08 2,442 2,494
6.000%, 11/15/08 1,677 1,693
6.500%, 06/15/23 230 233
6.500%, 02/15/24 84 85
7.500%, 05/15/24 334 345
7.500%, 09/15/25 687 710
7.000%, 02/15/26 783 803
6.500%, 04/15/26 838 848
7.000%, 08/15/26 2,155 2,209
7.500%, 09/15/26 1,388 1,434
7.500%, 09/15/26 994 1,029
7.500%, 01/15/27 1,892 1,955
7.000%, 10/15/27 1,785 1,830
6.500%, 05/15/28 992 1,004
6.000%, 12/15/28 2,500 2,481
--------
Total U.S. Government Agency
Mortgage-Backed Bonds
(Cost $46,645) 48,164
--------
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations -- 20.1%
Airtouch Communications
6.650%, 05/01/08 $2,000 $2,140
Allied-Signal
6.200%, 02/01/08 4,000 4,075
American General
6.250%, 12/18/02 2,000 2,045
6.750%, 06/15/05 2,000 2,097
AT&T
7.500%, 06/01/06 2,000 2,255
Associates of North America
7.875%, 09/30/01 2,000 2,122
6.950%, 11/01/18 3,000 3,240
Avco Financial Services
7.375%, 08/15/01 2,000 2,090
Bankers Trust NY
7.500%, 11/15/15 2,000 2,020
Bass America
6.750%, 08/01/99 595 599
Bell Atlantic
6.500%, 04/15/28 3,000 3,124
8.000%, 10/15/29 175 217
Caterpillar Tractor
6.000%, 05/01/07 605 605
Chemical Banking
6.700%, 08/15/08 1,500 1,599
Chesapeake & Potomac Telephone
of Maryland
6.000%, 05/01/03 1,500 1,534
Citicorp
6.750%, 08/15/05 450 474
Dow Chemical
6.850%, 08/15/13 2,000 2,107
Du Pont (E.I.) de Nemours
6.750%, 09/01/07 3,000 3,277
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Fannie Mae Medium Term Note
6.375%, 06/29/05 $2,000 $2,003
First Bank System
6.875%, 09/15/07 500 536
First Chicago
6.125%, 02/15/06 1,000 1,025
First National Bank of Boston
8.000%, 09/15/04 2,000 2,217
Ford Motor
6.500%, 08/01/18 2,000 2,072
Ford Motor Credit
6.850%, 08/15/00 250 255
6.500%, 02/28/02 500 514
6.125%, 01/09/06 3,250 3,339
General Mills
5.400%, 12/08/08 2,500 2,494
General Motors Acceptance
8.000%, 10/01/99 555 565
5.750%, 11/10/03 2,600 2,626
6.125%, 01/22/08 3,000 3,060
Golden West Financial
6.700%, 07/01/02 150 156
GTE
6.840%, 04/15/18 3,000 3,184
Hydro Quebec
8.050%, 07/07/24 150 183
IBM
5.370%, 09/22/03 2,500 2,503
8.375%, 11/01/19 200 256
JC Penney
6.000%, 05/01/06 100 99
JCI
6.300%, 02/01/08 2,000 2,050
Joseph E. Seagram & Sons
7.000%, 04/15/08 1,500 1,560
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Lehman Brothers Holding
8.500%, 05/01/07 $ 2,000 $ 2,247
Litton Industries
6.750%, 04/15/18 2,500 2,531
Lockheed Martin
7.700%, 06/15/08 2,000 2,268
Monsanto Company
5.875%, 12/01/08 2,500 2,531
New England Telephone & Telegraph
7.875%, 11/15/29 250 310
Duke Energy
7.875%, 08/15/04 1,000 1,115
Phillips Petroleum
6.650%, 07/15/18 1,000 1,025
Province of British Columbia
7.000%, 01/15/03 1,500 1,592
Ralston Purina
7.750%, 10/01/15 2,000 2,240
Raytheon
6.550%, 03/15/10 2,000 2,113
Royal Bank of Scotland
6.375%, 02/01/11 2,500 2,519
Sears Roebuck Acceptance
6.900%, 08/01/03 2,000 2,098
US West Capital Funding
6.375%, 07/15/08 2,000 2,130
Wal-Mart
6.375%, 03/01/03 450 473
5.875%, 10/15/05 2,000 2,050
-------
Total Corporate Obligations
(Cost $89,060) 93,559
-------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Asset Backed Securities -- 0.5%
Citibank Credit Card Master Trust
1997-3 Cl A
6.839%, 02/10/04 $ 100 $ 102
Contimortgage Home Equity Loan Trust,
Ser 1994-4, Cl A3
8.090%, 09/15/09 174 174
Contimortgage Home Equity Loan Trust,
Ser 1995-3, Cl A4
7.440%, 09/15/12 200 204
Equity Capital Home Equity Loan Trust,
Ser 1996-3, Cl A6
7.400%, 12/15/19 450 471
Green Tree Financial, Ser 1995-9, Cl A5
6.800%, 01/15/27 350 353
J.C. Penney Master Credit Card Trust,
Ser C, Cl A
9.625%, 06/15/00 1,000 1,054
-------
Total Asset Backed Securities
(Cost $2,280) 2,358
-------
Corporate Bonds -- 3.2%
Household CCMT ABT Ser A4 (B) (C)
5.060%, 01/18/00 5,000 5,000
Merrill Lynch & Co FE MTN (B) (C)
4.950%, 09/23/99 10,000 10,000
-------
Total Corporate Bonds
(Cost $15,000) 15,000
-------
Cash Equivalent -- 1.1%
Janus Money Fund (B) 5,000 5,000
-------
Total Cash Equivalent
(Cost $5,000) 5,000
-------
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Balanced Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Repurchase Agreements -- 3.9%
JP Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$7,054,734 (collateralized by
U.S. Treasury Note, par value
$7,046,000, 5.625%, 10/31/99:
market value $7,193,859) $ 7,052 $ 7,052
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99, matures
02/01/99, repurchase price
$11,218,953 (collateralized by
various corporate obligations,
0.000%-14.250%, 02/15/99-
05/15/09: total market
value $11,438,719) 11,214 11,214
---------
Total Repurchase Agreements
(Cost $18,266) 18,266
---------
Total Investments -- 105.1%
(Cost $371,242) 490,052
---------
Payable Upon Return of
Securities Loaned -- (6.7%) (31,214)
---------
Other Assets and Liabilities, Net -- 1.6% 7,249
---------
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Asset:
Fund Shares of Fiduciary Class (unlimited authorization -- no
par value) based on 26,951,037 outstanding shares of
beneficial interest $ 332,233
Fund Shares of Retail Class A (unlimited authorization -- no
par value) based on 662,342 outstanding shares of
beneficial interest 8,142
Fund Shares of Retail Class B (unlimited authorization -- no
par value) based on 125,784 outstanding shares of
beneficial interest 2,108
Undistributed net investment income 262
Accumulated net realized gain on investments 4,532
Net unrealized appreciation on investments 118,810
---------
Total Net Assets -- 100.0% $ 466,087
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 16.80
=========
Net Asset Value and Redemption Price
Per Share -- Retail Class A $ 16.79
=========
Maximum Offering Price Per Share --
Retail Class A ($16.79 / 95.5%) $ 17.58
=========
Net Asset Value and Redemption Price
Per Share -- Retail Class B $ 16.78
=========
- --------------------------------------------------------------------------------
* Non-income producing security
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $30,224,826.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
Cl -- Class
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
Ser -- Series
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Emerging Growth Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks -- 92.6%
Advertisimg -- 0.3%
Getty Images* 10,000 $ 199
------
Aerospace & Defense -- 0.6%
Simula* (A) 50,000 391
------
Automotive -- 1.0%
Strattec Strategy* 20,000 642
------
Banks -- 8.6%
Commercial Federal 30,000 686
Cullen/Frost Bankers 17,400 904
Downey Financial 20,000 441
FirstFed Financial* 40,000 637
Peoples Heritage Financial Group 20,000 360
Provident Bankshares 40,000 1,080
Reliance Bancorp 20,000 630
Resource Bancshares Mortgage Group 20,000 297
Telebanc Financial Group* 10,000 396
------
5,431
------
Broadcasting, Newspapers & Advertising -- 3.3%
Broadcast* 2,500 417
Capstar Broadcasting, Cl A* 20,000 535
Univision Communications* 25,000 1,122
------
2,074
------
Building & Construction -- 1.2%
Insituform Technologies, Cl B* 30,000 450
Morrison Knudsen* 30,000 328
------
778
------
Building & Construction Supplies -- 0.8%
Mobile Mini* 40,000 480
------
Business Credit Institutions -- 1.3%
Blyth Industries* 30,000 834
------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Communications Equipment -- 4.1%
Advanced Radio Telecom* 30,000 $ 251
Broadcom Corporation, Cl A* 7,500 998
Intervoice* 10,000 109
Omnipoint* (A) 25,000 356
Polycom* (A) 35,000 888
------
2,602
------
Computers & Services -- 1.2%
Inspire Insurance Solutions* 20,000 340
Splash Technologies Holdings* 20,000 140
Western Digital* (A) 20,000 276
------
756
------
Computers & Software Services -- 12.5%
Gasonics International* 32,000 392
ISS Group* (A) 5,000 310
Infoseek* 6,000 469
Lycos* 5,000 685
Micromuse* 24,000 734
Peregrine Systems* 20,000 1,245
Platinum Software* 50,000 541
Platinum Technology* (A) 25,000 331
Progress Software* 25,000 841
Saville Systems Ireland ADR* 20,000 437
Symantec* 20,000 409
Timberline Software 50,000 841
Visio* 25,000 630
------
7,865
------
Electrical Technology -- 1.0%
Electro Scientific Industries* 15,000 621
------
Electrical Utilities -- 1.2%
Sierra Pacific Resources 20,000 740
------
Entertainment -- 1.4%
Cinar Films, Cl B* 43,000 860
------
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Emerging Growth Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Financial Services -- 1.9%
Southwest Securities Group 25,700 $ 744
Waddell & Reed Financial, Cl A* 20,000 422
------
1,166
------
Food, Beverage & Tobacco -- 2.5%
Celestial Seasonings* 20,000 577
Earthgrains 15,000 386
Fresh Del Monte Produce* 15,000 292
Horizon Organic Holding* 20,000 315
------
1,570
------
Insurance -- 1.6%
Arm Financial Group 20,000 369
Healthcare Recoveries* 40,000 640
------
1,009
------
Leisure Products -- 0.6%
Metromedia International Group* 50,000 350
------
Measuring Devices -- 0.1%
Input/Output* 10,000 64
------
Medical Products & Services -- 7.4%
Adac Laboratories (A) 15,000 331
ATS Medical* 50,000 397
Cambridge Heart* (A) 55,000 485
MedImmune* 20,000 990
Novoste* 25,000 700
PSS World Medical Inc.* 15,000 234
Safeskin* (A) 15,000 351
Henry Schein* (A) 20,000 841
Veterinary Centers of America* 20,000 365
------
4,694
------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Miscellaneous Business Services -- 12.2%
Adaptec* 80,000 $1,850
American Management Systems 20,000 734
Aware* 10,000 396
C-Net* (A) 5,000 525
E*Trade Group* (A) 6,500 717
G. & K. Services 16,000 876
PRI Automation* (A) 10,000 355
Sapiens International* (A) 50,000 444
Think New Ideas* (A) 10,000 93
USWeb* 25,000 763
Xircom* 20,000 905
------
7,658
------
Miscellaneous Consumer Services -- 4.5%
Carriage Services* 31,000 678
Central Parking (A) 25,000 773
Rock of Ages* 50,000 625
Stewart Enterprises, Cl A (A) 45,000 788
------
2,864
------
Petroleum & Fuel Products -- 1.5%
Atmos Energy 20,000 596
Key Energy Group* 10,000 39
Oceaneering International* 10,000 96
Pogo Producing 10,000 109
Pride International* 10,000 64
Vintage Petroleum 10,000 73
------
977
------
Photographic Equipment & Supplies -- 1.3%
Pinnacle Systems* 20,000 800
------
Professional Services -- 1.5%
Caliber Learning Network* (A) 41,000 165
ITT Educational Services* 20,000 769
------
934
------
The accompanying notes are an integral part of the financial statements.
44
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Emerging Growth Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Retail -- 4.9%
Action Performance* (A) 25,000 $ 1,200
Omnicare (A) 15,000 459
Petsmart* 20,000 180
Pier 1 Imports 25,000 238
Whole Foods Market* 15,000 481
Williams Sonoma* 15,000 520
-------
3,078
-------
Semi-Conductors/Instruments -- 10.4%
Benchmark Electronics* 15,000 578
DuPont Photomasks* 10,000 510
Lattice Semiconductor* 25,000 1,369
Mips Technologies* (A) 20,000 783
National Semiconductor* 40,000 518
Read-Rite* 50,000 834
Sanmina* (A) 10,000 660
Speedfam International* 25,000 522
Ultratech Stepper* 15,000 259
Vitesse Semiconductor* 10,000 517
-------
6,550
-------
Telephones & Telecommunication -- 1.0%
Alpine Group* 25,000 348
Metro One Telecommunications* 15,000 278
-------
626
-------
Wholesale -- 2.7%
Barrett Resources* 10,000 174
Winstar Communications* (A) 35,000 1,503
-------
1,677
-------
Total Common Stocks
(Cost $51,848) 58,290
-------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Commercial Paper -- 3.9%
South Western Electric PLC (B)
4.999%, 02/18/99 $ 2,499 $ 2,489
-------
Total Commercial Paper
(Cost $2,489) 2,489
-------
Time Corporate Bond -- 40.0%
Household CCMT ABT Ser A4 (B) (C)
5.060%, 01/18/00 2,500 2,500
-------
Total Corporate Bond
(Cost $2,500) 2,500
-------
Repurchase Agreements -- 18.1%
Deutsche Bank Securities, Inc.
4.690%, dated 01/29/99, matures
02/01/99, repurchase price $4,440,979
(collateralized by U.S. Treasury Bond,
par value $3,444,000, 7.500%,
11/15/24: market value
$4,528,831) 4,439 4,439
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99, matures
02/01/99, repurchase price $6,961,609
(collateralized by various corporate
obligations, 0.000%-14.250%,
02/15/99-05/15/09: total market
value $7,097,979) 6,959 6,959
-------
Total Repurchase Agreements
(Cost $11,398) 11,398
-------
Total Investments -- 118.6%
(Cost $68,235) 74,677
-------
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Emerging Growth Fund (continued)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Payable Upon Return of
Securities Loaned -- (19.0%) $(11,948)
--------
Other Assets and Liabilities, Net -- 0.4% 274
--------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization -- no
par value) based on 5,777,146 outstanding shares of
beneficial interest $62,906
Distributions in excess of net investment income (11)
Accumulated net realized gain on investments (6,334)
Net unrealized appreciation on investments 6,442
--------
Total Net Assets -- 100.0% $ 63,003
========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 10.91
========
- --------------------------------------------------------------------------------
* Non-income producing security
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $11,507,678.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
ADR -- American Depository Receipt
Cl -- Class
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Small Cap Value Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks -- 73.6%
Aircraft -- 0.6%
Kaman 29,400 $ 428
------
Apparel/Textiles -- 0.7%
Kellwood 17,500 486
------
Automotive -- 2.4%
Copart* 62,000 961
Teleflex 21,000 795
------
1,756
------
Banks -- 2.5%
Bank United, Cl A 14,000 560
Imperial Bancorp* 41,000 753
Silicon Valley Bancshares* 27,500 517
------
1,830
------
Building & Construction -- 0.9%
DR Horton 30,000 634
------
Cement -- 1.2%
Southdown 15,500 861
------
Chemicals -- 1.7%
International Specialty Products* 57,500 579
Quaker Chemical 43,000 683
------
1,262
------
Communications Equipment -- 3.7%
Antec* 36,800 819
Brite Voice Systems* 80,000 800
CTS 23,500 1,118
------
2,737
------
Computer Hardware -- 1.1%
Imation* 52,000 809
------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Computer Programing & Software -- 6.9%
Autodesk 27,000 $1,193
Caere* 55,000 942
Primark* 32,000 768
Progress Software* 26,500 891
Reynolds & Reynolds, Cl A 30,000 600
Sterling Software* 29,500 690
------
5,084
------
Electrical Utilities -- 0.7%
El Paso Electric* 64,800 526
------
Food -- 4.8%
Earthgrains 21,000 541
J & J Snack Foods* 36,500 885
Ralcorp Holdings* 48,000 870
Smucker (J.M.), Cl B 22,500 506
Universal Foods 33,500 754
------
3,556
------
Health Services -- 1.7%
Integrated Health Services 42,500 595
Physician Reliance Network* 57,500 690
------
1,285
------
Household Furniture -- 1.1%
La-Z-Boy Chair 44,000 792
------
Industrial -- 1.6%
Insituform Technologies, Cl B* 38,000 570
Watsco 41,000 630
------
1,200
------
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Small Cap Value Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Insurance -- 6.7%
American Heritage Life Insurance 31,500 $ 768
Amerus Life Holdings, Cl A 27,000 532
Capital Re 36,000 655
Fremont General 29,000 656
HSB Group 13,000 491
Liberty Financial Companies 25,500 641
Protective Life 19,500 674
Reliance Group Holdings 44,000 484
------
4,901
------
Machinery -- 3.2%
Applied Power 24,500 906
Aptar Group 21,500 587
Pentair 22,500 861
------
2,354
------
Marine Transportation -- 0.8%
Kirby* 34,000 578
------
Measuring Devices -- 0.9%
Esterline Technologies* 36,500 691
------
Medical Products & Services -- 1.6%
Adac Laboratories* 25,000 552
Sola International* 39,000 651
------
1,203
------
Natural Gas -- 0.8%
Questar 37,000 617
------
Office Furniture & Fixtures -- 0.8%
Hon Industries 30,000 611
------
Oil Service -- 0.8%
Seacor Holdings* 13,500 601
------
Paper Mills -- 0.6%
PH Glatfelter 40,000 455
------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Petroleum & Fuel Products -- 1.5%
Equitable Resources 25,000 $ 652
Evergreen Resources* 27,000 418
------
1,070
------
Petroleum Refining -- 1.5%
Pennzoil-Quaker State* 41,020 631
Valero Energy 24,500 461
------
1,092
------
Pharmaceutical Preparations -- 2.7%
Cambrex 30,000 741
Dura Pharmaceuticals* 36,000 520
Roberts Pharmaceutical* 38,000 741
------
2,002
------
Plastic -- 0.7%
Myers Industries 21,500 543
------
Printing & Publishing -- 0.8%
World Color Press* 25,000 616
------
Railroad Equipment -- 2.2%
Harmon Industries 35,500 799
Varlen 33,125 795
------
1,594
------
Real Estate -- 2.5%
Duke Realty Investments 22,500 517
First Industrial Realty Trust 30,000 771
Reckson Associates Realty 24,500 539
------
1,827
------
Restaurant -- 1.3%
Ruby Tuesday 47,500 947
------
Retail -- 2.6%
Casey's General Stores 53,000 715
Dress Barn* 38,500 618
Pier 1 Imports 60,000 570
------
1,903
------
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Small Cap Value Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Common Stocks (continued)
Security Brokers & Dealers -- 1.6%
Hambrecht and Quist* 40,000 $ 1,140
---------
Semi-Conductors/Instruments -- 2.4%
Avnet 9,750 438
Cypress Semiconductor* 82,000 820
Ibis Technology* 50,000 544
---------
1,802
---------
Steel & Steel Works -- 1.6%
Imco Recycling 34,500 423
Intermet 57,100 778
---------
1,201
---------
Textiles, Apparel, Carpets -- 1.8%
Delta Woodside Industries 130,000 682
Interface 60,000 619
---------
1,301
---------
Tobacco -- 0.6%
Universal 15,000 455
---------
Travel Trailer & Campers -- 0.8%
Fleetwood Enterprises 15,500 573
---------
Trucking -- 1.2%
Landstar System* 18,500 772
Werner Enterprises 7,000 145
---------
917
---------
Total Common Stocks
(Cost $51,364) 54,240
---------
Foreign Common Stocks -- 22.9%
Argentina -- 0.3%
Nobleza Piccardo 62,720 204
---------
Australia -- 0.4%
Reinsurance Australia 248,980 337
---------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Austria -- 1.3%
Bau Holding 13,060 $ 489
Bohler Uddeholm ADR 35,080 513
---------
1,002
---------
Brazil -- 0.5%
Centrais Eletricas ADR 3,700 86
Centrais Geradoras do Sul ADR* 30,260 77
Copene Petroquimica ADR 46,620 186
---------
349
---------
Cayman Islands -- 0.5%
Anangel American Shipholdings ADR 75,200 367
---------
Chile -- 0.4%
Quinenco ADR* 39,683 258
---------
China -- 0.7%
Beijing Petrochemical ADR* 60,140 195
Shandong Huaneng Power ADR 80,500 297
---------
492
---------
France -- 0.4%
Fonclere Financiere et Participations 4,450 293
---------
Germany -- 0.4%
Dyckerhoff 1,301 325
---------
Hong Kong -- 5.2%
Dickson Concepts International* 222,000 166
First Pacific ADR* 209,110 658
Giordano International ADR* 104,650 253
Guoco 434,000 672
Harbour Ring International 6,798,000 228
Mandarin Oriental International 98,660 562
Oriental Press 1,642,000 144
Sing Tao* 2,156,000 231
Smartone Telecommunications* 147,500 440
South China Morning ADR* 203,390 446
---------
3,800
---------
The accompanying notes are an integral part of the financial statements.
49
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Small Cap Value Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Italy -- 0.8%
Ansaldo Trasporti* 324,170 $ 578
----------
Japan -- 4.5%
Azwell 80,900 268
Chofu Seisakusho 65,000 654
Daicel Chemical 186,000 528
Fuji Oil 78,000 463
Higo Bank 83,000 355
Osaka Steel 102,800 428
Snow Brand Milk Products 73,000 338
Yokogawa Bridge 97,000 272
----------
3,306
----------
Netherlands -- 0.8%
European Vinyls 29,290 233
Hollandsche Beton Groep 36,090 367
----------
600
----------
Peru -- 0.4%
Banco Wiese ADR* 97,030 297
----------
Philippines -- 0.5%
RFM 2,863,000 370
----------
Singapore -- 0.7%
Time Publishing 377,000 550
----------
South Africa -- 0.4%
Toyota South Africa 116,420 269
----------
Spain -- 1.6%
Construcciones y Auxiliar Ferrocariles 19,260 574
Empresa Hidroelectrica del Ribargorzana 22,390 638
----------
1,212
----------
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Switzerland -- 1.2%
Daetwyler 365 $ 593
Edipresse 1,191 316
---------
909
---------
United Kingdom -- 1.9%
Elementis 299,225 350
Heywood Williams 179,460 620
Lambert Fenchurch 296,850 401
---------
1,371
---------
Total Foreign Common Stocks
(Cost $16,110) 16,889
---------
Repurchase Agreement -- 2.6%
Deutsche Bank Securities, Inc., 4.690%, dated
01/29/99, matures 02/01/99, repurchase price
$1,938,978 (collateralized by various
U.S. Treasury Obligations, total par value
$1,699,000, 6.000%-13.250%, due
08/15/00-05/15/14, total market value
$1,978,541) $1,938 1,938
----------
Total Repurchase Agreement
(Cost $1,938) 1,938
----------
Total Investments -- 99.1%
(Cost $69,412) 73,067
----------
Other Assets and Liabilities, Net -- 0.9% 628
----------
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Small Cap Value Fund (continued)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 6,741,471 outstanding shares of
beneficial interest $68,108
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 26,271 outstanding shares of
beneficial interest 289
Fund Shares of Retail Class B (unlimited authorization --
no par value) based on 20,791 outstanding shares of
beneficial interest 230
Distributions in excess of net investment income (47)
Accumulated net realized gain on investments 1,460
Net unrealized appreciation on investments 3,655
-------
Total Net Assets -- 100.0% $73,695
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $10.86
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class A $10.85
=======
Maximum Offering Price Per Share --
Retail Class A ($10.85 / 95.5%) $11.36
=======
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class B $10.82
=======
- --------------------------------------------------------------------------------
*Non-Income producing security
Cl -- Class
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
51
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Equity Fund
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks -- 97.2%
Australia -- 1.5%
Australia & New Zealand Bank Group 18,000 $ 118
Brambles Industries 3,500 95
National Australia Bank 14,400 242
News Corporation 20,000 145
Rio Tinto 8,400 104
Smith Howard 13,000 90
Southcorp Holdings 30,000 101
Telstra 43,000 234
Westfield Holdings 20,000 116
Westpac Banking 12,700 88
Woolworths 32,000 112
------
1,445
------
Belgium -- 0.7%
Dexia 4,240 709
------
Denmark -- 0.6%
ISS International 7,950 565
------
Finland -- 1.2%
Nokia Oyj, Cl A 7,660 1,118
------
France -- 10.8%
Accor 1,620 331
Air Liquide 3,680 602
Alcatel Alsthom 3,170 369
Cap Gemini 2,300 454
Carrefour 520 348
Castorama 1,720 391
France Telecom 8,940 842
Groupe Danone 2,930 822
Groupe GTM 3,440 335
L'Oreal 530 383
Lafarge 4,790 419
Legrand 1,650 369
Pernod Ricard 6,540 412
Peugeot 2,870 488
Pinault-Printemps-Redoute 2,910 532
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
France (continued)
STMicroelectronics ADR 4,690 $ 490
Suez Lyonnaise des Eaux 5,350 1,102
Total, Ser B 7,080 720
Vivendi 3,830 1,120
-------
10,529
-------
Germany -- 9.0%
Adidas 3,560 296
Allianz 2,590 950
BASF 11,590 428
Bayerische Motoren Werke 176 122
Bayerische Vereinsbank 11,400 741
BMW 380 269
DaimlerChrysler* 5,534 576
Dresdner Bank 13,140 537
Henkel KGAA 4,480 308
Hoechst 8,310 357
Mannesmann 11,330 1,601
SAP 2,110 832
Veba 18,190 1,083
Viag 1,170 634
-------
8,734
-------
Hong Kong -- 1.5%
Cheung Kong Holdings 34,000 236
China Telecom (Hong Kong)* 66,000 118
CLP Holdings 31,500 143
Hang Seng Bank 22,800 191
Hong Kong Telecommunications 68,000 110
Hutchison Whampoa 52,000 369
Sun Hung Kai Properties 38,000 250
-------
1,417
-------
Ireland -- 1.4%
Bank of Ireland 17,440 390
CRH 30,790 503
Irish Life 44,840 441
-------
1,334
-------
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Equity Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Italy -- 6.0%
Alleanza Assicurazioni 38,312 $ 479
Autogrill 52,100 484
Banca Di Roma* 246,700 366
Credito Italiano 104,390 568
ENI SPA 93,420 554
San Paolo-IMI 52,030 848
Seat-Pagine Gialle 752,850 684
Telecom Italia 190,390 1,287
Telecom Italia Mobile 130,180 546
-------
5,816
-------
Japan -- 18.7%
Advantest 9,700 789
East Japan Railway 131 804
Fujikura 98,000 590
Fujitsu 41,000 537
Honda Motor 16,000 594
Ito-Yokado 5,000 314
Kao 32,000 646
Kirin Brewery 45,000 545
Marui 19,000 340
Minebea 49,000 543
Mitsubishi Chemical 231,000 488
Mitsubishi Estate 35,000 325
Nintendo 4,200 390
Nippon Sheet Glass 163,000 504
Nippon Telegraph & Telephone 169 1,362
Nitto Denko 46,000 724
Nomura Securities 41,000 357
NTT Data 179 891
Osaka Gas 148,000 438
Oji Paper 75,000 389
Rohm Company 6,000 565
Shizuoka Bank 52,000 644
Sony 8,300 603
Sumitomo Bank 80,000 1,000
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Japan (continued)
Sumitomo Forestry 44,000 $ 318
Takeda Chemical 30,000 1,070
Tokio Marine & Fire Insurance 47,000 533
Tokyo Electric Power 21,000 456
Tokyo Kikai Seisaku 81,000 501
Toyota Motor 35,000 920
-------
18,180
-------
Malaysia -- 0.1%
Petronas Gas (A) 33,000 76
-------
Netherlands -- 6.5%
Akzo Nobel 11,750 470
Heineken 15,420 832
ING Groep 13,907 810
Koninklijke Ahold 25,870 1,005
Philips Electronics 5,250 382
Royal Dutch Petroleum 30,870 1,239
Unilever 10,380 793
Wolter Kluwer 4,000 790
-------
6,321
-------
Portugal -- 1.4%
Banco Espirito Santo 22,722 678
Portugal Telecom 13,180 663
-------
1,341
-------
Singapore -- 0.4%
City Developments 11,000 45
Development Bank Singapore-F 8,000 61
Natsteel Electronics 9,000 27
Overseas Chinese Bank 10,000 69
Singapore Airlines-F 9,000 61
Singapore Press Holdings 3,038 34
Singapore Tech Engineering 50,000 44
Singapore Telecommunications 46,000 64
-------
405
-------
The accompanying notes are an integral part of the financial statements.
53
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Equity Fund (continued)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
Spain -- 3.7%
Agroman Empresa Constructora* 41,470 $ 551
Argentaria 20,340 521
Aumar 14,100 363
Banco Central Hispanoamericano 49,911 576
Endesa 30,840 858
Gas Natural 1,829 189
Telefonica de Espana 12,170 556
Telefonica de Espana Rights* 12,170 11
------
3,625
------
Sweden -- 2.8%
Astra AB, Cl A 35,233 761
Electrolux, Cl B 21,800 338
Ericsson, Cl B 24,850 672
Nordbanken Holding AB 71,250 493
Volvo, Cl B 16,300 444
------
2,708
------
Switzerland -- 8.0%
Alusuisse Lonza, Reg 520 583
Credit Suisse Holdings, Reg 2,590 414
Holderbank Financiere Glarus 280 294
Nestle SA, Reg 640 1,174
Novartis SA, Reg 700 1,314
Roche Holdings 119 1,556
Schindler Holding 240 390
UBS AG, Reg 3,413 1,108
Zurich Allied, Reg 1,300 962
------
7,795
------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
Foreign Common Stocks (continued)
United Kingdom -- 22.9%
Abbey National 49,075 $ 965
BAA 46,328 551
Bank of Scotland 58,430 737
Barclays 30,700 687
Boots 46,850 682
BP Amoco 98,530 1,333
British Aerospace 86,390 657
British Telecom 76,182 1,167
Cable & Wireless Communications 35,830 467
CMG 12,840 391
Compass Group 70,779 921
Glaxo Wellcome 40,183 1,345
HSBC Holdings 24,620 671
Lloyds TSB Group 90,110 1,170
Misys 98,580 1,037
Powergen 32,800 452
Prudential 76,963 1,186
Railtrack Group 22,880 580
Reed International 71,530 665
Scottish & Southern Energy 51,350 500
SmithKline Beecham 96,700 1,300
Tesco 247,040 761
Unilever 105,490 1,054
Vodafone Group 69,380 1,352
Zeneca Group 35,880 1,648
-------
22,279
-------
Total Foreign Common Stocks
(Cost $82,697) 94,397
-------
Total Investments -- 97.2%
(Cost $82,697) 94,397
-------
Other Assets and Liabilities, Net -- 2.8% 2,699
-------
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
International Equity Fund (continued)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value)
based on 2,594,951 outstanding shares
of beneficial interest $ 87,863
Distributions in excess of net investment
income (223)
Accumulated net realized loss on investments (2,242)
Net unrealized depreciation on forward foreign
currency contracts, foreign currency and
translation of other assets and liabilities
in foreign currency (2)
Net unrealized appreciation on investments 11,700
--------
Total Net Assets -- 100.0% $ 97,096
========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 37.42
========
- -------------------------------------------------------------------------------
* Non-income producing security
(A) The repatriation of proceeds received from the sale of this security are
subject to a levy depending upon the length of time the position has been
held. This levy is applicable to securities purchased before February 15,
1999. The levy ranges from 30% to 0% and is based on the date the proceeds
are repatriated. As a result, this security is being treated as illiquid
until September 1, 1999, when the levy is no longer in effect.
ADR -- American Depository Receipt
Cl -- Class
F -- Foreign
Reg -- Registered
Ser -- Series
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds -- 97.9%
Alameda County, Santa Rita Jail Project,
COP, MBIA Insured
5.250%, 12/01/04 $ 500 $ 539
Anaheim Public Financing Authority,
Electric Utility Projects, RB,
MBIA Insured, Callable 04/01/03 @ 102
5.500%, 10/01/10 1,750 1,881
Anaheim, Water, RB,
Callable 02/06/99 @ 100
5.750%, 04/01/04 250 251
Antioch Public Finance Authority,
Police Facilities Project, Lease RB,
MBIA Insured
4.550%, 01/01/03 500 512
Atascadero, School District, Measure B,
Ser A, COP, MBIA Insured,
Callable 08/01/06 @ 102
5.200%, 08/01/08 1,000 1,095
Bakersfield, Convention Center
Expansion Project, COP,
MBIA Insured
5.000%, 04/01/03 335 353
5.300%, 04/01/06 500 547
Berkeley, School District, Ser D, GO,
FGIC Insured
8.250%, 08/01/04 295 361
8.250%, 08/01/05 345 433
Calleguas, Municipal Water District,
Systems Improvement Project, COP,
AMBAC Insured, Pre-refunded
07/01/01 @ 102
6.250%, 07/01/05 1,000 1,086
Central Coast, Water Authority, RB,
Ser A, AMBAC Insured,
Callable 10/01/06 @ 102
5.000%, 10/01/07 2,000 2,160
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Coachella Valley, Water District
Improvement Flood Control Project,
COP, AMBAC Insured
4.500%, 10/01/06 $1,045 $1,093
Coast Community College, Coastline
Community College Center Project,
COP, MBIA Insured,
Callable 02/01/06 @ 102
5.200%, 02/01/08 500 542
5.500%, 02/01/11 640 700
Contra Costa Water District,
Ser G, RB, MBIA Insured,
Callable 10/01/04 @ 102
5.700%, 10/01/06 2,500 2,800
Contra Costa, Merrithew Memorial
Hospital Project, COP, MBIA Insured,
Callable 11/01/07 @ 102
5.200%, 11/01/09 2,000 2,180
5.500%, 11/01/12 2,160 2,381
Contra Costa, Transportation Authority
Sales Tax, Ser A, RB, FGIC Insured
6.875%, 03/01/07 500 541
Contra Costa, Transportation Authority,
Sales Tax, RB, Ser A, FGIC Insured,
Callable 03/01/05 @ 100
5.300%, 03/01/06 600 650
Cupertino, Ser A, COP,
Callable 01/01/03 @ 102
5.500%, 01/01/05 500 539
Desert Sands, School District, COP,
FSA Insured, Callable 03/01/05 @ 102
5.400%, 03/01/08 660 722
5.500%, 03/01/09 565 619
Downey, Civic Center Project, COP,
MBIA Insured
5.300%, 02/01/06 600 653
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
- --------------------------------------------------------------------------------
East Bay, Municipal Utility District
Wastewater Treatment System,
RB, FGIC Insured
6.000%, 06/01/06 $ 750 $ 855
East Bay, Regal Park District,
Ser C, GO, FGIC Insured
6.500%, 09/01/01 685 738
Eastern Municipal Water District,
Waste & Sewer, RB, COP, FGIC Insured
5.000%, 07/01/03 1,395 1,473
5.000%, 07/01/04 1,000 1,064
Eastern Municipal Water District,
Water Treatment Plant, COP
Pre-refunded 11/01/02 @ 100
6.900%, 11/01/03 1,755 1,963
Education Facilities Authority, Santa Clara
University, RB, MBIA Insured
Callable 09/01/06 @ 102
5.000%, 09/01/07 400 432
5.100%, 09/01/08 510 556
Educational Facilities Authority, Pooled
College & University Project,
Ser C, RB, MBIA Insured
5.000%, 03/01/05 560 598
5.000%, 03/01/06 655 703
Escondido, High School District,
GO, MBIA Insured
5.200%, 11/01/06 1,000 1,094
Escondido, High School District,
GO, MBIA Insured,
Callable 11/06/06 @ 102
5.600%, 11/01/09 1,000 1,127
Gilroy, School District, COP, FSA
Insured, Callable 09/01/04 @ 102
5.750%, 09/01/05 1,235 1,382
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Glendale, School District, Ser A,
GO, FGIC Insured
5.500%, 09/01/05 $ 600 $ 661
Glendale School District, Ser B,
GO, FSA Insured,
Callable 09/01/08 @ 101
4.625%, 09/01/09 670 703
Hawthorne, School District, Ser A,
GO, FGIC Insured
4.650%, 11/01/06 1,000 1,056
Health Facilities Finance Authority,
Catholic Health Care West,
Ser A, RB, AMBAC Insured
Callable 07/01/05 @ 102
5.750%, 07/01/07 925 1,042
Health Facilities Finance Authority,
Catholic Health Facility,
Ser A, RB, MBIA Insured,
Callable 07/01/04 @ 102
5.000%, 07/01/07 1,500 1,599
Health Facilities Finance Authority,
Cedars Sinai Medical Center,
Ser B, RB, MBIA Insured,
Callable 08/01/07 @ 102
4.750%, 08/01/09 500 526
Hollister, Redevelopment Agency,
Tax Allocation Community
Development Project, GO,
AMBAC Insured,
Callable 10/01/07 @ 102
5.000%, 10/01/08 740 799
Industry, Ser 95, GO, FGIC Insured,
Callable 07/01/05 @ 100.625
5.500%, 07/01/10 670 729
The accomopanying notes are an integral part of the financial statements.
57
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Joshua Basin, Desert Financing Authority,
RB, AMBAC Insured
4.800%, 05/01/08 $ 445 $ 474
4.900%, 05/01/09 465 498
Kern County, Water Agency District,
GO, Callable 05/01/99 @ 101.75
5.900%, 05/01/06 300 308
Las Virgenes, School District,
GO, Ser A, MBIA Insured
5.000%, 11/01/05 1,000 1,074
Los Angeles, County Public Works
Financing Authority, Regal Park &
Open Space Dist, Ser A, RB, GO,
Callable 10/01/07 @ 101
5.500%, 10/01/08 1,870 2,101
Los Angeles County Public Works
Financing Authority, Regal Park &
Open Space District, Ser A, RB, GO
6.000%, 10/01/03 900 992
5.250%, 10/01/05 1,700 1,849
Los Angeles, Department of Airports, RB,
Ser A, FGIC Insured,
Callable 05/15/05 @ 101
5.500%, 05/15/08 1,000 1,099
Los Angeles, Department of Airports,
RB, Ser A, FGIC Insured
6.000%, 05/15/05 1,000 1,125
Los Angeles, Department of Airports, RB,
Ser B, FGIC Insured
6.500%, 05/15/04 1,840 2,086
Los Angeles, Department of
Water & Power, RB,
Crossover Refunded 04/01/01 @ 102
6.750%, 04/01/06 1,460 1,579
Los Angeles, Ser A, GO, FGIC Insured,
Callable 09/01/03 @ 101
5.400%, 09/01/06 300 324
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Los Angeles, Ser A, GO, FGIC Insured,
Pre-refunded 09/01/03 @ 101
5.800%, 09/01/09 $1,000 $1,102
Los Angeles, GO, Ser A, MBIA Insured
5.500%, 09/01/04 700 763
Los Angeles, School District, Ser A
GO, FGIC Insured
4.600%, 07/01/06 1,050 1,104
6.000%, 07/01/07 1,000 1,150
Los Angeles, School District, COP
Ser A, GO, FSA Insured
4.200%, 11/01/03 930 952
Los Angeles, Wastewater System,
Ser B, RB, MBIA Insured,
Callable 06/01/03 @ 102
5.400%, 06/01/08 300 324
Los Angeles, Wastewater Systems,
RB, Ser B, FGIC Insured
5.250%, 06/01/07 1,000 1,095
M-S-R Public Power Agency, San Juan
Project, RB, Ser F, AMBAC Insured,
Callable 07/01/03 @ 102
6.000%, 07/01/08 230 255
Merced County Construction &
Equipment Project, COP, CSAC Lease,
FSA Insured, Callable 10/01/02 @ 101
6.000%, 10/01/05 1,250 1,366
Metropolitan Water District of Southern
California, Waterworks, RB, Ser C,
Callable 01/01/07 @ 102
6.000%, 07/01/07 1,900 2,206
Metropolitan Water District of Southern
California Waterworks, Ser B, RB,
MBIA Insured,
Callable 07/01/06 @ 102
5.250%, 07/01/07 1,820 2,002
The accompanying notes are an integral part of the financial statements.
58
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Metropolitan Water District of Southern
California Waterworks, RB,
Callable 07/01/02 @ 102
5.400%, 07/01/04 $1,000 $1,072
Milpitas Redevelopment Agency, Tax
Allocation, Redevelopment Project
Area # 1, MBIA Insured
4.600%, 01/15/06 1,040 1,091
Modesto, Community Center
Refinancing Project, COP,
AMBAC Insured,
Pre-refunded 11/01/01 @ 102
6.500%, 11/01/07 1,000 1,101
Mojave Water Agency, Supplemental
Water Entitlement, COP, MBIA Insured
4.950%, 09/01/06 500 536
Mojave Water Agency, Supplemental
Water Entitlement, COP, MBIA Insured,
Callable 09/01/07 @ 102
5.100%, 09/01/08 500 544
Monrovia, Redevelopment Agency Tax
Allocation Project, GO, Area #1-B
AMBAC Insured
4.200%, 05/01/02 500 511
4.300%, 05/01/03 500 514
Mountain View, Los Altos High School
District, Ser B, GO,
Callable 05/01/07 @ 102
5.250%, 05/01/08 500 554
5.350%, 05/01/09 755 838
5.650%, 05/01/12 585 654
Mountain View, Shoreline Regal Park,
Community Tax Allocation Project,
Ser A, MBIA Insured,
Callable 08/01/06 @ 102
5.400%, 08/01/08 700 778
5.600%, 08/01/10 500 558
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Northern California Power Agency,
Multiple Capital Facilities,
Ser A, RB, MBIA Insured,
Callable 08/01/02 @ 102
6.400%, 08/01/07 $2,500 $2,774
Oak Park, School District,
GO, MBIA Insured
5.250%, 05/01/08 1,015 1,116
Orange County, Municipal Water
District, Allen-McColloch
Pipeline, COP, MBIA Insured
5.500%, 07/01/05 2,000 2,192
Orange County, Local Transportation
Authority, Sales Tax,
Measure M, RB
5.500%, 02/15/01 1,000 1,041
Orange County, Transportation
Authority, Sales Tax, Measure M,
RB, FGIC Insured
5.800%, 02/15/05 1,000 1,110
6.000%, 02/15/07 965 1,100
6.000%, 02/16/07 1,345 1,538
Orange County, Water District,
Ser A, RB, COP, MBIA Insured,
Callable 08/15/07 @ 101
4.875%, 08/15/10 2,655 2,788
Port Oakland, Ser D, RB, MBIA Insured
6.500%, 11/01/03 500 562
Redding, Electric System, Ser A,
RB, COP, MBIA Insured
6.150%, 07/01/02 1,000 1,082
Redwood City, Elementary School
District, GO, FGIC Insured
5.500%, 08/01/10 1,140 1,284
Riverside, Water, RB,
Callable 04/01/99 @ 101
5.750%, 04/01/03 250 254
The accompanying notes are an integral part of the financial statements.
59
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Sacramento Municipal Utility District
Electric, Ser C, RB, FGIC Insured,
Callable 11/15/02 @ 102
5.750%, 11/15/08 $ 950 $1,053
Sacramento, Regional County
Sanitation District, GO
5.000%, 08/01/03 1,000 1,084
5.000%, 08/01/04 870 926
Sacramento, County Sanitation District
Financing Authority, RB, GO
5.500%, 12/01/03 1,000 1,057
San Bernardino, County Transportation
Authority, Sales Tax, Ser A, RB,
MBIA Insured
6.000%, 03/01/06 1,735 1,969
San Bernardino, County Transportation
Authority, Sales Tax, Ser A,
RB, FGIC Insured
6.000%, 03/01/06 1,000 1,094
San Bernardino, County Transportation
Authority, Sales Tax, RB,
Ser A, FSA Insured
5.250%, 03/01/07 2,000 2,185
San Bernardino, Municipal Water
Department, RB, COP, FGIC Insured
4.050%, 02/01/03 425 432
4.500%, 02/01/09 875 908
San Diego, COP, Water Utility System,
RB, FGIC Insured
4.400%, 08/01/07 600 619
4.400%, 08/01/08 1,000 1,031
San Diego County Regional
Transportation Commission,
Sales Tax RB, Second Ser,
Ser A, FGIC Insured
5.250%, 04/01/06 2,100 2,289
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
San Diego County Water
Authority, RB, COP, Ser A
5.000%, 05/01/04 $2,445 $2,595
San Diego County, Regional
Transportation Commission,
Sales Tax, Second Ser, Ser A,
RB, AMBAC Insured
6.000%, 04/01/06 3,000 3,409
San Diego County Regional
Transportation Commission,
Sales Tax, RB, Ser A
7.000%, 04/01/06 355 403
San Diego County, Regional
Transportation Commission,
Sales Tax, RB, Ser A,
ABMAC Insured,
Callable 04/01/06 @ 102
5.000%, 04/01/08 1,995 2,155
San Diego County, Water Authority,
Ser A, RB, COP, Pre-refunded
05/01/01 @ 102
6.400%, 05/01/08 2,000 2,170
San Diego Lease, RB,
Callable 09/01/04 @ 102
5.500%, 09/01/07 450 494
San Diego, Public Facility Financing
Authority, Sewer, RB, FGIC Insured
6.000%, 05/15/06 2,800 3,189
San Francisco, City & County Airport,
Second Ser, RB, MBIA Insured,
Callable 05/01/08 @ 101
4.250%, 05/01/09 1,000 1,061
San Francisco City & County, Utility
Public Safety Improvement
Project, GO, Ser F, FGIC Insured,
Pre-refunded 06/15/01 @ 100
6.500%, 06/15/08 1,000 1,074
The accompanying notes are an integral part of the financial statements.
60
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
San Francisco, Bay Area Rapid
Transportation District, Sales Tax RB,
FGIC Insured
5.500%, 07/01/05 $2,200 $2,417
San Francisco, Bay Area Rapid
Transportation District,
Sales Tax RB, FGIC Insured,
Pre-refunded 07/01/01 @ 102
6.500%, 07/01/07 2,000 2,185
San Francisco, New Public
Housing Authority,
Callable 08/01/99 @ 102
5.000%, 08/01/03 350 360
San Joaquin County, Capital Facilities
Project, COP, MBIA Insured
4.625%, 11/15/05 1,035 1,085
4.800%, 11/15/07 1,000 1,063
San Jose, School District, Santa Clara,
Ser B, GO, MBIA Insured,
Callable 08/01/08 @ 102
4.000%, 08/01/09 800 797
San Jose, Redevelopment Agency,
Tax Allocation, Merged Area
Redevelopment Project,
RB, AMBAC Insured,
Callable 08/01/08 @102
5.000%, 08/01/09 1,500 1,622
San Jose, Redevelopment Agency, Tax
Allocation Merged Area Redevelopment
Project, RB, MBIA Insured
6.000%, 08/01/06 1,000 1,143
6.000%, 08/01/07 1,100 1,266
6.000%, 08/01/08 2,000 2,323
Santa Ana, Community Redevelopment
Agency, Tax Allocation, Ser E
6.400%, 12/15/10 780 857
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Santa Barbara County, Local Transportation
Authority, Sales Tax RB, FGIC Insured,
Callable 04/01/04 @ 101
5.000%, 04/01/07 $1,000 $1,059
Santa Clara County, Financing Authority
Lease, Ser A, RB, AMBAC Insured
4.600%, 11/15/06 1,350 1,423
Santa Clara County, Facilities Project,
COP, AMBAC Insured
Pre-refunded 05/15/02 @ 102
6.000%, 05/15/12 400 439
Santa Clara, Electric RB,
Ser A, MBIA Insured,
Pre-refunded 07/01/02 @ 102
6.000%, 07/01/05 1,000 1,080
Santa Cruz County, Public
Financing Authority, Tax Allocation,
RB, Ser A, MBIA Insured,
Callable 09/01/03 @ 102
5.100%, 09/01/05 500 536
Saratoga School District,
Ser A, GO, FGIC Insured,
Callable 09/01/07 @ 102
4.800%, 09/01/08 825 881
South Coast, County Water District, RB,
5.900%, 05/01/99 245 247
South Orange County, Public
Financing Authority, Special Tax RB,
Foothill Area, Ser C,
GO, FGIC Insured
7.500%, 08/15/07 1,000 1,255
Southern California, Public Power
Authority, Special Obligation,
Crossover, Ser B, AMBAC Insured,
Callable 07/01/02 @ 102
5.900%, 07/01/04 1,000 1,093
The accompanying notes are an integral part of the financial statements.
61
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
State Department of Water,
Ser J-2, RB
6.000%, 12/01/06 $1,400 $1,606
State Public Works Board,
various University of California
Projects, Ser A, RB,
Pre-refunded 12/01/02 @ 102
6.600%, 12/01/22 800 902
State Public Works Board, Department of
Corrections-Del Norte, Ser C, RB,
4.750%, 12/01/05 500 528
State Public Works Board, various
University California Project,
Ser A, AMBAC Insured,
Callable 12/01/07 @ 102
5.100%, 12/01/10 1,000 1,081
State, GO,
7.000%, 08/01/02 1,500 1,667
6.000%, 10/01/05 1,300 1,471
6.250%, 04/01/08 1,000 1,171
State, GO, AMBAC Insured
6.500%, 09/01/06 1,000 1,179
Tulare County, Capital Improvement
Project, Ser A, COP, MBIA Insured
5.250%, 02/15/05 1,000 1,078
5.375%, 02/15/06 500 547
Turlock, District Revenue,
Ser A, MBIA Insured
6.000%, 01/01/07 1,000 1,143
University of California,
Multiple Purpose Projects,
Ser B, RB, MBIA Insured,
Callable 09/01/03 @ 102
4.800%, 09/01/07 1,500 1,577
University of California,
UCLA Center, RB, COP,
Callable 11/01/03 @ 102
5.000%, 11/01/04 1,000 1,064
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Upland, Community Redevelopment
Agency, Tax Allocation, AMBAC Insured,
Callable 09/01/08 @ 102
4.200%, 09/01/09 $ 860 $ 872
Walnut Valley, Water District,
Badillo/Grand Transmission
Project, COP, FGIC Insured,
Pre-refunded 02/01/01 @ 102
6.125%, 02/01/07 730 784
West Basin Municipal Water District,
Ser A, COP, AMBAC Insured,
Callable 08/01/07 @ 101
5.000%, 08/01/08 425 458
West Hollywood, COP, MBIA Insured,
Callable 02/01/08 @ 102
4.550%, 02/01/09 665 690
Yorba Linda, Tax Allocation
Redevelopment Project, RB
Ser A, MBIA Insured
4.250%, 09/01/04 800 822
--------
Total California Municipal Bonds
(Cost $155,314) $166,126
--------
Cash Equivalents -- 0.5%
Provident California Tax
Free Money Market 674 674
SEI California Tax Exempt Portfolio 127 127
--------
Total Cash Equivalents
(Cost $801) 801
--------
Total Investments -- 98.4%
(Cost $156,115) $166,927
--------
Other Assets and Liabilities, Net -- 1.6% 2,667
--------
The accompanying notes are an integral part of the financial statements.
62
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Intermediate Tax-Free Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value) based on
14,974,227 outstanding shares of
beneficial interest $ 144,822
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based
on 1,458,558 outstanding shares of
beneficial interest 14,362
Undistributed net investment income 170
Accumulated net realized loss on investments (572)
Net unrealized appreciation on investments 10,812
---------
Total Net Assets -- 100.0% $ 169,594
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 10.32
=========
Net Asset Value and Redemption Price
Per Share -- Retail Class A $ 10.29
=========
Maximum Offering Price Per Share --
Retail Class A ($10.29 / 97%) $ 10.61
=========
- --------------------------------------------------------------------------------
AMBAC -- American Municipal Bond Assurance Company
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GO -- General Obligation
MBIA -- Municipal Bond Investors Assurance
RB -- Revenue Bond
Ser -- Series
The accompanying notes are an integral part of the financial statements.
63
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------
Bond Fund
- --------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------
U.S. Treasury Obligations -- 19.5%
U.S. Treasury Notes
5.875%, 02/28/99 $ 200 $ 200
6.500%, 04/30/99 3,250 3,266
5.875%, 07/31/99 1,500 1,509
7.750%, 01/31/00 1,500 1,544
6.750%, 04/30/00 1,000 1,024
5.750%, 11/15/00 (A) 4,800 4,887
7.750%, 02/15/01 2,000 2,119
6.375%, 09/30/01 1,500 1,563
5.500%, 01/31/03 (A) 1,500 1,544
7.250%, 05/15/04 1,580 1,769
U.S. Treasury Bonds
10.375%, 11/15/12 (A) 3,000 4,130
7.250%, 05/15/16 (A) 9,850 11,987
8.125%, 08/15/19 1,000 1,341
8.750%, 08/15/20 4,860 6,947
7.250%, 08/15/22 (A) 1,500 1,876
7.125%, 02/15/23 2,800 3,466
6.625%, 02/15/27 (A) 11,700 13,923
6.125%, 11/15/27 (A) 3,000 3,371
--------
Total U.S. Treasury Obligations
(Cost $58,432) 66,466
--------
U.S. Government Agency Obligaitons -- 40.5%
Aid-Israel
7.125%, 08/15/99 2,000 2,022
FHLMC
7.000%, 02/20/18 1,862 1,873
6.250%, 01/15/24 2,000 2,021
FNMA
5.625%, 03/15/01 (A) 18,500 18,770
6.200%, 09/25/02 2,000 2,001
5.250%, 01/15/03 3,500 3,537
5.750%, 04/15/03 (A) 2,000 2,058
5.450%, 10/10/03 4,800 4,869
6.850%, 09/12/05 2,000 2,046
6.700%, 11/10/05 1,000 1,021
6.500%, 03/25/13 1,500 1,519
6.500%, 03/01/24 1,153 1,163
- --------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------
U.S. Government Agency Obligations (continued)
FNMA (continued)
8.000%, 08/01/24 $ 149 $ 154
8.000%, 09/01/24 32 33
8.000%, 10/01/24 123 128
8.500%, 05/01/25 657 690
6.500%, 01/01/26 720 726
6.500%, 05/01/26 672 678
8.000%, 07/01/26 994 1,032
6.000%, 12/01/27 1,955 1,933
6.500%, 01/01/28 979 988
6.500%, 02/01/28 1,663 1,677
6.500%, 03/01/28 1,814 1,830
6.500%, 04/01/28 4,763 4,805
6.000%, 07/01/28 7,953 7,866
6.000%, 08/01/28 993 983
6.000%, 10/01/28 5,033 4,977
6.500%, 11/30/28 14,803 14,933
6.000%, 12/01/28 33,021 32,650
GNMA
8.000%, 04/15/17 342 356
8.000%, 05/15/17 156 162
6.500%, 06/15/23 2,157 2,181
6.500%, 12/15/23 1,207 1,221
6.500%, 01/15/24 445 450
7.000%, 01/15/24 574 588
7.500%, 01/15/24 952 984
6.500%, 02/15/24 806 816
7.500%, 02/15/24 1,167 1,206
7.000%, 04/15/24 1,394 1,428
7.500%, 09/15/25 698 722
6.500%, 10/15/25 775 784
6.500%, 04/15/26 1,780 1,801
7.500%, 02/15/27 781 808
7.500%, 06/15/27 423 437
7.500%, 07/15/27 1,171 1,211
7.500%, 08/15/27 912 943
6.000%, 09/15/28 3,018 2,995
--------
Total U.S. Government Agency Obligations
(Cost $135,216) 138,076
--------
The accompanying notes are an integral part of the financial statements.
64
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------
Bond Fund (continued)
- --------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------
Supra-National -- 1.5%
Asian Development Bank
5.750%, 05/19/03 $5,000 $ 5,019
Total Supra-National
(Cost $4,971) 5,019
--------
Corporate Obligations -- 28.2%
Aerospace & Defense -- 1.2%
Lockheed Martin
7.700%, 06/15/08 1,500 1,701
Ratheon
6.150%, 11/01/08 2,500 2,572
--------
4,273
--------
Automotive -- 2.3%
Ford Motor Credit
6.500%, 02/28/02 6,500 6,679
7.750%, 11/15/02 1,000 1,072
--------
7,751
--------
Banks -- 4.4%
BankBoston, N.A.
8.375%, 12/15/02 1,250 1,358
Citicorp
6.750%, 08/15/05 4,100 4,315
U.S. Bancorp
6.875%, 09/15/07 4,500 4,826
Golden West Financial (A)
6.700%, 07/01/02 2,800 2,909
Mercantile Bancorp
7.050%, 06/15/04 1,500 1,592
--------
15,000
--------
Beauty Products -- 0.2%
Procter & Gamble
8.500%, 08/10/09 500 622
--------
Computers & Services -- 1.6%
IBM
6.500%, 01/15/28 5,000 5,344
--------
- --------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------
Corporate Obligations (continued)
Entertainment -- 0.4%
Walt Disney
6.375%, 03/30/01 $1,500 $ 1,538
--------
Financial Services -- 4.5%
American General Finance
5.370%, 12/10/01 2,000 1,998
Associates Corporation of N.A.
6.500%, 07/15/02 1,000 1,032
6.000%, 04/15/03 2,000 2,035
General Electric Capital Services
6.500%, 11/01/06 3,500 3,741
Lehman Brothers
8.375%, 02/15/99 1,000 1,001
Merrill Lynch & Co.
Medium Term Note
6.330%, 08/25/00 3,000 3,059
Morgan Stanley Dean Witter
6.125%, 10/01/03 1,300 1,324
Salomon Brothers
7.300%, 05/15/02 1,000 1,045
--------
15,235
--------
Food, Beverage & Tobacco -- 0.4%
Bass America
6.750%, 08/01/99 200 201
Philip Morris
7.750%, 01/15/27 1,000 1,149
--------
1,350
--------
Foreign Governments -- 1.3%
Hydro Quebec
8.050%, 07/07/24 1,125 1,375
Province of British Columbia
7.000%, 01/15/03 1,500 1,592
Province of Ontario
7.375%, 01/27/03 1,500 1,607
--------
4,574
--------
The accompanying notes are an integral part of the financial statements.
65
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Insurance -- 1.8%
Travelers Property Casualty
6.750%, 04/15/01 $ 6,000 $ 6,165
-------
Machinery -- 1.0%
Caterpillar Tractor
6.000%, 05/01/07 3,360 3,360
-------
Metals & Mining -- 0.5%
Potash
7.125%, 06/15/07 1,500 1,566
-------
Petroleum Refining -- 0.6%
Phillips Petroleum
7.125%, 03/15/28 2,000 2,067
-------
Printing & Publishing -- 1.2%
E.W. Scripps
6.375%, 10/15/02 4,000 4,140
-------
Retail -- 1.7%
JC Penney
6.000%, 05/01/06 1,230 1,216
Sears Finance
7.000%, 06/15/07 1,500 1,614
Wal-Mart Stores (A)
6.375%, 03/01/03 2,850 2,992
-------
5,822
-------
Telephones & Telecommunication -- 5.1%
Bell Atlantic
8.000%, 10/15/29 2,980 3,695
Cable and Wireless Communications
6.625%, 03/06/05 4,500 4,629
New England Telephone & Telegraph
6.250%, 03/15/03 1,500 1,547
7.875%, 11/15/29 1,000 1,239
Worldcom
6.400%, 08/15/05 6,000 6,262
-------
17,372
-------
Total Corporate Obligations
(Cost $91,846) 96,179
-------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Asset-Backed Securities -- 6.2%
American Express Master Trust 1998-1
5.900%, 04/15/04 $ 4,000 $ 4,076
Chase Manhattan Auto Grantor Trust
6.610%, 09/15/02 476 483
Citibank Credit Card Master Trust
1997-3 Cl A
6.839%, 02/10/04 2,700 2,744
Citibank Credit Card Master Trust
1998-3 Cl A
5.800%, 02/07/05 2,000 2,025
Contimortgage Home Equity Loan Trust
1994-4 Cl A3
8.090%, 09/15/09 970 972
Contimortgage Home Equity Loan Trust
1995-2 Cl A4
8.050%, 07/15/12 888 899
Contimortgage Home Equity Loan Trust,
1995-3 Cl A4
7.440%, 09/15/12 1,000 1,019
EQCC Home Equity Loan Trust
1995-2 Cl A4
7.800%, 12/15/10 2,190 2,307
EQCC Home Equity Loan Trust
1996-3 Cl A6
7.400%, 12/15/19 2,500 2,617
Green Tree Financial 1995-9 Cl A
6.800%, 01/15/27 2,500 2,524
J.C. Penney Master Credit Card Trust
9.625%, 06/15/00 1,500 1,581
-------
Total Asset-Backed Securities
(Cost $20,801) 21,247
-------
Collateralized Mortgage Obligations -- 0.9%
GE Capital Mortgage Service
1994-1 Cl A6
6.500%, 01/25/24 2,138 2,140
Residential Funding Mortgage
1992-S36 Cl A4
6.750%, 11/25/07 964 969
-------
Total Collateralized Mortgage Obligations
(Cost $2,826) 3,109
-------
The accompanying notes are an integral part of the financial statements.
66
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Bond Fund (concluded)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Cash Equivalent -- 4.4%
Merrimac Cash Fund (B) (C) $ 15,000 $ 15,000
---------
Total Cash Equivalent
(Cost $15,000) 15,000
---------
Repurchase Agreements -- 14.4%
J.P. Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$6,731,902 (collateralized by U.S.
Treasury Note, 5.625%, 10/31/99;
market value $6,864,081) 6,729 6,729
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99, matures
02/01/99, repurchase price
$42,309,011 (collateralized by
various corporate obligations,
0.000%-14.250%, 02/15/99-
05/15/09: total market value
$43,137,795) 42,292 42,292
---------
Total Repurchase Agreements
(Cost $49,021) 49,021
---------
Total Investments -- 115.6%
(Cost $378,113) 394,117
---------
Payable Upon Return of
Securities Loaned-- (16.8%) (57,292)
---------
Other Assets and Liabilities, Net -- 1.2% 4,020
---------
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assents:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 30,660,809 outstanding shares of
beneficial interest $ 324,482
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 244,951 outstanding shares of
beneficial interest 2,618
Undistributed net investment income 460
Accumulated net realized loss on investments (2,719)
Net unrealized appreciation on investments 16,004
---------
Total Net Assets -- 100.0% $ 340,845
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $11.03
=========
Net Asset Value and Redemption Price
Per Share -- Retail Class A $10.94
=========
Maximum Offering Price Per Share --
Retail Class A ($10.94 / 97%) $11.28
=========
- --------------------------------------------------------------------------------
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $56,203,506.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
The accompanying notes are an integral part of the financial statements.
67
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Intermediate-Term Bond Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Treasury Obligations -- 6.3%
U.S. Treasury
6.250%, 05/31/00 $ 5,000 $ 5,099
6.125%, 09/30/00 (A) 2,000 2,045
7.250%, 05/15/04 (A) 7,000 7,836
5.875%, 11/15/05 (A) 2,000 2,131
-------
Total U.S. Treasury Obligations
(Cost $16,775) 17,111
-------
U.S. Government Agency Obligations -- 16.2%
FHLMC
8.000%, 05/15/00 347 351
7.000%, 09/01/01 4,423 4,501
FNMA
6.200%, 09/25/02 1,000 1,000
5.750%, 04/15/03 (A) 2,000 2,058
5.450%, 10/10/03 650 659
6.770%, 09/01/05 6,750 7,342
6.850%, 09/12/05 (A) 2,000 2,046
6.700%, 11/10/05 3,750 3,828
6.500%, 12/01/07 1,300 1,323
5.750%, 02/15/08 (A) 2,000 2,080
6.000%, 05/01/09 704 706
6.000%, 09/01/10 1,405 1,410
6.000%, 05/01/11 2,200 2,208
6.000%, 01/01/12 1,705 1,712
6.000%, 03/01/13 2,774 2,785
GNMA
6.000%, 07/15/28 2,011 1,996
6.000%, 08/15/28 1,006 998
6.000%, 10/15/28 2,011 1,997
6.500%, 01/15/29 5,000 5,058
Total U.S. Government Agency Obligations
(Cost $42,991) 44,058
-------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations -- 6.3%
Aerospace & Defense -- 5.0%
Lockheed Martin
7.450%, 06/15/04 $5,500 $ 5,933
McDonnell Douglas
6.875%, 11/01/06 1,000 1,086
Raytheon
6.750%, 08/15/07 6,000 6,405
-------
13,424
-------
Automotive -- 7.7%
Ford Motor Credit
8.200%, 02/15/02 6,000 6,450
6.500%, 02/28/02 4,500 4,624
General Motors
8.950%, 07/02/09 4,455 4,809
General Motors Acceptance
5.350%, 12/07/01 5,000 4,988
-------
20,871
-------
Auto Rental & Leasing -- 1.5%
Hertz
6.625%, 05/15/08 4,000 4,115
-------
Banks -- 9.8%
Bank of Boston
8.375%, 12/15/02 2,500 2,716
Bankers Trust
7.250%, 01/15/03 3,500 3,657
Banponce
6.750%, 12/15/05 2,000 2,120
Citicorp
6.750%, 08/15/05 4,075 4,289
Fleet Financial
7.125%, 04/15/06 5,000 5,387
Golden West Financial
6.700%, 07/01/02 1,000 1,039
Mellon Bank Na
7.000%, 03/15/06 1,500 1,605
The accompanying notes are an integral part of the financial statements.
68
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Intermediate-Term Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Mercantile Bancorp
7.050%, 06/15/04 $ 2,500 $ 2,653
U.S. Bancorp
6.875%, 09/15/07 3,000 3,217
-------
26,683
-------
Chemicals -- 2.7%
Du Pont (E.I.) de Nemours
6.500%, 09/01/02 7,000 7,306
-------
Diversified Manufacturing -- 0.7%
Tyco International Limited
6.500%, 11/01/01 1,800 1,838
-------
Electrical-Utilities -- 7.0%
Arkansas Electric Cooperative
7.330%, 06/30/08 2,219 2,432
Baltimore Gas & Electric
5.780%, 10/01/08 4,000 4,075
Oklahoma Gas & Electric
6.650%, 07/15/27 2,500 2,738
Old Dominion Electric
7.480%, 12/01/13 5,550 6,251
Pacific Gas & Electric
8.750%, 01/01/01 3,280 3,485
-------
18,981
-------
Entertainment -- 0.8%
Walt Disney (A)
6.375%, 03/30/01 2,000 2,050
-------
Financial Services -- 9.9%
Associates Corporation N.A
6.000%, 04/15/03 2,000 2,035
Avco Financial Services
7.375%, 08/15/01 3,500 3,657
Bear Stearns
6.500%, 06/15/00 4,000 4,047
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Commercial Credit
6.200%, 11/15/01 $ 2,000 $ 2,040
General Electric Capital Services
6.500%, 11/01/06 2,000 2,138
Lehman Brothers Holdings
8.750%, 05/15/02 4,000 4,280
Merrill Lynch & Co. Medium Term Note
6.330%, 08/25/00 1,500 1,530
Morgan Stanley Dean Witter
6.125%, 10/01/03 3,000 3,056
Salomon
7.300%, 05/15/02 4,000 4,180
-------
26,963
-------
Food, Beverage & Tobacco -- 1.9%
Bass America
6.750%, 08/01/99 4,000 4,025
Grand Metro Investment
8.625%, 08/15/01 1,000 1,074
-------
5,099
-------
Foreign Governments -- 3.7%
Province of British Columbia
7.000%, 01/15/03 1,500 1,592
Province of Manitoba
6.125%, 01/19/04 4,000 4,145
Province of Ontario
7.375%, 01/27/03 4,000 4,285
-------
10,022
-------
Gas/Natural Gas -- 1.2%
Duke Energy
7.875%, 08/15/04 3,000 3,345
-------
The accompanying notes are an integral part of the financial statements.
69
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Intermediate-Term Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (continued)
Insurance -- 2.8%
American General Finance
5.370%, 12/10/01 $ 2,500 $ 2,497
Travelers Property Casualty
6.750%, 04/15/01 5,000 5,138
--------
7,635
--------
Machinery -- 0.4%
Caterpillar Tractor
6.000%, 05/01/07 1,000 1,000
--------
Retail -- 3.1%
Sears Finance
7.000%, 06/15/07 5,000 5,381
Wal-Mart
6.375%, 03/01/03 3,000 3,150
--------
8,531
--------
Telephones &
Telecommunication -- 4.5%
Cable and Wireless Communications
6.625%, 03/06/05 7,000 7,201
New England Telephone & Telegraph
6.250%, 03/15/03 2,000 2,063
WorldCom
7.750%, 04/01/07 2,500 2,825
--------
12,089
--------
Total Corporate Obligations
(Cost $162,812) 169,952
--------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Asset-Backed Securities -- 9.8%
Chase Manhattan Auto Grantor Trust
6.610%, 09/15/02 $ 2,859 $ 2,897
Citibank Credit Card Master Trust
1997-3 Cl A
6.839%, 02/10/04 3,000 3,049
Citibank Credit Card Master Trust
1998-3 Cl A
5.800%, 02/07/05 3,400 3,442
Contimortgage Home Equity Loan Trust,
Ser 1995-3 Cl A4,
7.440%, 09/15/12 3,110 3,168
EQCC 1996-3 Cl A6
7.400%, 12/15/19 2,500 2,617
Green Tree Financial
6.750%, 07/15/25 2,000 2,036
J.C. Penney Master Credit Card Trust
9.625%, 06/15/00 6,000 6,323
J.C. Penney Master Credit Card Trust
Series B Class A
8.950%, 10/15/01 1,000 1,074
Sears Credit Account Master Trust,
Ser 1994-1 Cl A
7.000%, 01/15/00 1,979 2,006
--------
Total Asset-Backed Securities
(Cost $25,813) 26,612
--------
Collateralized Mortgage Obligations -- 0.06%
Residential Funding Mortgage
1992-S36 Cl A4
6.750%, 11/25/07 1,554 1,563
--------
Total Collateralized Mortgage Obligation
(Cost $1,554) 1,563
--------
The accompanying notes are an integral part of the financial statements.
70
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Intermediate-Term Bond Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Repurchase Agreements -- 6.5%
J.P. Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price $7,698,866
(collateralized by U.S. Treasury
Note, par value $7,689,000,
5.625%, 10/31/99; market
value $7,850,352) $ 7,696 $ 7,696
HSBC Securities, Inc. (B) (C)
4.880%, dated 01/29/99, matures
02/01/99, repurchase price
$10,001,966 (collateralized by
various corporate obligations,
0.000%-14.250%, 02/15/99-
05/15/09: total market value
$10,197,893) 9,998 9,998
--------
Total Repurchase Agreements
(Cost $17,694) 17,694
--------
Total Investments -- 102.1%
(Cost $267,639) 276,990
--------
Payable Upon Return
of Securities Loaned -- (3.6%) (9,998)
--------
Other Assets and Liabilities, Net -- 1.5 4,185
--------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 25,391,271 outstanding shares of
beneficial interest $258,370
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 505,153 outstanding shares of
beneficial interest 5,780
Undistributed net investment income 316
Accumulated net realized loss on investments (2,640)
Net unrealized appreciation on investments 9,351
--------
Total Net Assets -- 100.0% $271,177
========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $10.47
========
Net Asset Value and Redemption Price
Per Share -- Retail Class A $10.47
========
Maximum Offering Price Per Share --
Retail Class A ($10.47 / 97%) $10.79
========
- --------------------------------------------------------------------------------
(A) This security or a partial position of this security is on loan at January
31, 1999. (See footnote 2). The total value of securities on loan at
January 31, 1999 was $9,784,194.
(B) This security purchased with cash collateral held from securities lending.
(C) Floating Rate Security
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
The accompanying notes are an integral part of the financial statements.
71
<PAGE>
[LOG]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
100% U.S. Treasury Money Market Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Treasury Bills* -- 67.3%
4.548%, 02/04/99 $ 63,453 $ 63,430
4.455%, 03/11/99 185,668 184,811
4.464%, 03/18/99 73,233 72,833
4.451%, 03/25/99 15,745 15,646
4.599%, 04/01/99 150,000 148,900
4.295%, 04/15/99 31,591 31,325
4.549%, 05/27/99 117,613 115,962
4.544%, 06/10/99 108,581 106,875
4.696%, 07/01/99 50,000 49,057
-----------
Total U.S. Treasury Bills
(Cost $788,839) 788,839
-----------
U.S. Treasury Notes -- 53.1%
5.000%, 01/31/99 30,159 30,159
5.875%, 01/31/99 226,611 226,611
5.000%, 02/15/99 159,266 159,262
6.250%, 05/31/99 30,539 30,694
5.875%, 07/31/99 50,000 50,295
5.875%, 08/31/99 125,426 126,290
-----------
Total U.S. Treasury Notes
(Cost $623,311) 623,311
-----------
Total Investments -- 120.4%
(Cost $1,412,150) 1,412,150
-----------
Payable for Securities Purchased -- (21.3%) (249,329)
-----------
Other Assets and Liabilities, Net -- 0.9% 9,931
-----------
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 236,431,810 outstanding shares of
beneficial interest $ 236,432
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 936,299,268 outstanding shares of
beneficial interest 936,299
Undistributed net investment income 47
Accumulated net realized loss on investments (26)
----------
Total Net Assets -- 100.0% $1,172,752
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $1.00
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class A $1.00
==========
- --------------------------------------------------------------------------------
* Represents the yield to maturity at date of purchase.
The accompanying notes are an integral part of the financial statements.
72
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. Government Money Market Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Government Agency Obligations-Discounted* -- 51.3%
FFCB
4.734%, 02/04/99 $ 10,330 $ 10,326
4.809%, 03/15/99 17,610 17,512
FHLB
5.073%, 02/03/99 20,000 19,994
FHLMC
4.734%, 02/04/99 10,000 9,996
4.814%, 02/05/99 10,390 10,384
5.079%, 02/09/99 10,000 9,989
4.798%, 02/10/99 7,500 7,491
4.744%, 02/11/99 20,000 19,974
5.137%, 02/11/99 10,000 9,986
4.737%, 02/18/99 10,000 9,978
5.079%, 02/26/99 10,000 9,965
5.019%, 03/10/99 10,000 9,949
5.042%, 03/10/99 10,000 9,949
5.060%, 03/26/99 20,803 20,650
4.822%, 07/08/99 12,770 12,508
FNMA
5.134%, 02/10/99 20,000 19,975
4.960%, 02/16/99 15,000 14,969
5.012%, 03/08/99 19,000 18,909
4.706%, 04/20/99 17,720 17,543
--------
Total U.S. Government Agency
Obligations-Discounted*
(Cost $260,047) 260,047
--------
U.S. Government Agency Obligations -- 33.2%
FFCB
5.375%, 03/02/99 15,000 14,997
FHLB
5.150%, 09/30/99 10,000 10,000
4.800%, 10/13/99 (A) 15,000 15,000
5.030%, 10/29/99 30,000 29,998
5.000%, 01/05/00 15,000 14,997
4.790%, 02/04/00 15,000 14,991
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Government Agency Obligations (continued)
FNMA
4.912%, 04/28/99 (A) $ 10,000 $ 9,999
5.880%, 11/03/99 13,625 13,749
SLMA (A)
5.112%, 05/20/99 15,000 15,000
5.062%, 06/17/99 15,000 15,000
5.062%, 02/14/00 15,000 14,989
--------
Total U.S. Government Agency Obligations
(Cost $168,720) 168,720
--------
U.S. Treasury Bill* -- 2.0%
4.119%, 04/15/99 10,000 9,918
--------
Total U.S. Treasury Bill
(Cost $9,918) 9,918
--------
Repurchase Agreements -- 16.5%
Deutsche Bank Securities, Inc.
4.690%, dated 01/29/99, matures
02/01/99, repurchase price
$55,006,347 (collateralized by
various U.S. Treasury Obligations,
total par value $47,390,000,
6.000%-9.1250,08/15/00-05/15/18;
total market value $56,084,796) 54,985 54,985
Warburg, Dillon, Read, LLC
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$28,945,093 (collateralized by
various U.S. Treasury Obligations,
total par value $30,117,000, 0.00%-
5.625%, 07/15/99-05/15/01:
market value 29,512,871) 28,934 28,934
--------
Total Repurchase Agreements
(Cost $83,919) 83,919
--------
The accompanying notes are an integral part of the financial statements.
73
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
U.S. Government Money Market Fund (concluded)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Total Investments -- 103.0%
(Cost $522,604) $ 522,604
---------
Payable for Securities Purchased -- (3.0%) (14,991)
---------
Other Assets and Liabilities, Net -- (0.0%) (281)
---------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 369,451,431 outstanding shares
of beneficial interest $ 369,451
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 137,942,322 outstanding shares of
beneficial interest 137,943
Fund Shares of Retail Class B (unlimited authorization --
no par value) based on 51,666 outstanding shares of
beneficial interest 52
Undistributed net investment income 1
Accumulated net realized loss on investments (115)
---------
Total Net Assets -- 100.0% $ 507,332
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $1.00
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class A $1.00
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class B $1.00
=========
- --------------------------------------------------------------------------------
*Represents the yield to maturuty at date of purchase.
(A) Adjustable Rate Security -- The rate reflected on the statement of net
assets is the rate in effect on January 31, 1999.
FFCB -- Federal Farm Credit Bank
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
SLMA -- Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
74
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Diversified Money Market Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Certificates of Deposit - Domestic -- 3.8%
Chase Manhattan Bank (USA),
Wilmington, DE
5.000%, 02/22/99 $ 50,000 $ 50,000
Huntington National Bank,
Columbus, OH
4.900%, 10/22/99 50,000 50,000
--------
Total Certificates of Deposit
(Cost $100,000) 100,000
--------
Certificates of Deposit - Yankee -- 14.0%
ABN AMRO Bank, N.V. Chicago
5.750%, 03/31/99 50,000 49,996
4.940%, 12/02/99 25,000 25,012
Bank Austria A.G., New York
5.670%, 07/23/99 51,000 51,124
Barclays Bank PLC, New York (A)
4.937%, 06/01/99 50,000 49,988
Rabobank Nederland N.V., New York
4.990%, 04/20/99 50,000 50,000
5.660%, 07/06/99 40,000 40,103
Societe Generale, New York
5.780%, 03/31/99 50,000 49,996
Toronto Dominion Bank, New York
4.980%, 07/06/99 50,000 50,002
--------
Total Certificates of Deposit - Yankee
(Cost $366,221) 366,221
--------
Eurodollar Certificates of Deposit -- 3.8%
Bayerische Hypo-Und Vereinsbank,
A.G. London
5.140%, 02/08/99 50,000 50,000
5.070%, 04/09/99 50,001 50,001
--------
Total Eurodollar Certificates of Deposit
(Cost $100,001) 100,001
--------
Eurodollar Time Deposit -- 1.9%
Westdeutsche Landesbank Girozentrale, London
4.813%, 02/01/99 50,000 50,000
--------
Total Eurodollar Time Deposit
(Cost $50,000) 50,000
--------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Bank Notes -- 9.4%
American Express Centurion Bank (A)
4.943%, 07/14/99 $ 50,000 $ 50,000
Bank One, Texas (A)
5.362%, 02/12/99 46,000 46,005
FCC National Bank, Wilmington, DE
4.950%, 03/23/99 50,000 50,000
Keybank N.A. (A)
5.304%, 09/30/99 50,000 50,000
NationsBank N.A
5.070%, 04/15/99 50,000 50,000
--------
Total Bank Notes
(Cost $246,005) 246,005
--------
Commercial Paper* -- 45.5%
ABS - Trade Receivables -- 16.7%
Clipper Receivables Corp. (B)
4.881%, 02/23/99 50,000 49,852
Corporate Receivables Corp. (B)
4.877%, 03/04/99 50,000 49,791
CXC, Inc. (B)
5.192%, 05/17/99 50,000 49,262
Edison Asset Secur Corp., LLC (B)
5.275%, 03/22/99 30,000 29,788
5.076%, 05/18/99 40,000 39,417
Eureka Securitization, Inc. (B)
4.870%, 04/14/99 40,000 39,614
International Securitization Corp. (B)
5.505%, 02/24/99 53,470 53,285
Lexington Parker Capital
Co., LLC (B)
4.896%, 04/14/99 22,050 21,837
Park Avenue Receivables Corp. (B)
4.934%, 02/18/99 41,155 41,060
WCP Funding, Inc. (B)
4.938%, 03/09/99 25,000 24,878
Windmill Funding Corp. (B)
5.452%, 02/05/99 12,650 12,642
5.529%, 02/19/99 25,000 24,932
--------
436,358
--------
The accompanying notes are an integral part of the financial statements.
75
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Diversified Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Commercial Paper* (continued)
ABS - Diversified Financial Assets -- 7.7%
Beta Finance, Inc. (B)
5.130%, 04/07/99 $ 50,000 $ 49,549
CC (USA), Inc. (B)
5.177%, 02/16/99 50,000 49,894
5.130%, 04/07/99 25,000 24,774
Sigma Finance, Inc. (B)
5.317%, 03/12/99 30,000 29,830
5.171%, 05/21/99 29,474 29,024
5.171%, 05/24/99 20,000 19,686
----------
202,757
----------
Automotive -- 11.6%
Daimler Benz N.A
5.086%, 04/23/99 40,000 39,550
5.130%, 05/18/99 19,000 18,720
5.136%, 05/28/99 50,000 49,194
General Motors Acceptance Corp.
4.822%, 02/01/99 50,000 50,000
5.311%, 02/18/99 50,000 49,876
Hertz Corporation
4.891%, 05/07/99 50,000 49,364
5.066%, 06/21/99 50,000 49,039
----------
305,743
----------
Banking -- 1.9%
Nationwide Building Society
5.372%, 03/15/99 50,000 49,695
----------
Brokerage -- 5.7%
Goldman Sachs Group LP (A)
4.922%, 03/25/99 100,000 100,000
Morgan Stanley, Dean Witter & Co.
4.902%, 02/01/99 50,000 50,000
----------
150,000
----------
Diversified Operations -- 1.9%
General Electric Capital, Corp.
4.812%, 02/01/99 50,000 50,000
----------
Total Commercial Paper
(Cost $1,194,553) 1,194,553
----------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Corporate Obligations (Medium Term Notes) -- 7.9%
General Electric Capital, Corp. (A)
5.189%, 09/09/99 $ 50,000 $ 50,000
Merrill Lynch & Co. Inc., Ser B (A)
5.010%, 03/24/99 30,000 30,004
5.087%, 02/04/00 50,000 50,000
Merrill Lynch & Co. Inc., Ser B
5.765%, 06/10/99 10,000 10,025
6.070%, 09/27/99 12,800 12,879
Sigma Finance Inc. (A) (B)
4.960%, 02/22/00 40,000 40,000
Suntrust Banks, Inc. (A)
5.406%, 08/06/99 15,000 15,017
----------
Total Corporate Obligations
(Medium Term Notes)
(Cost $207,925) 207,925
----------
U.S. Treasury Bill* -- 3.8%
4.195%, 04/15/99 100,000 99,178
----------
Total U.S. Treasury Bill
(Cost $99,178) 99,178
----------
U.S. Government Agency Obligations -- 5.7%
FHLB
5.150%, 09/30/99 50,000 50,000
FNMA (A)
4.812%, 03/16/99 50,000 49,997
4.822%, 07/28/99 50,000 49,975
----------
Total U.S. Government Agency Obligations
(Cost $149,972) 149,972
----------
The accompanying notes are an integral part ofthe financial statements.
76
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Diversified Money Market Fund (concluded)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Repurchase Agreements -- 4.0%
Deutsche Bank Securities, Inc.
4.690%, dated 01/29/99, matures
02/01/99, repurchase price
$81,391,579 (collateralized by
various U.S. Treasury Obligations,
total par value $92,729,000, 0.000%-
13.250%, 08/19/99-11/15/24;
total market value $82,987,049) $81,360 $ 81,360
J.P. Morgan Securities, Inc.
4.670%, dated 01/29/99, matures
02/01/99, repurchase price
$1,836,469 (collateralized by
U.S. Treasury Note, par value
$1,866,000, 4.625%, 12/31/00;
market value $1,873,212) 1,836 1,836
Warburg, Dillon, Read, LLC
4.670%, dated 01/29/99,
matures 02/01/99, repurchase
price (collateralized by U.S.
Treasury Bill, par value
$22,687,000, 0.000%, 04/15/99;
market value $22,477,690) 22,030 22,030
----------
Total Repurchase Agreements
(Cost $105,226) 105,226
----------
Total Investments -- 99.8%
(Cost $2,619,081) 2,619,081
----------
Other Assets and Liabilities, Net-- 0.2% 5,014
----------
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Fund Shares of Fiduciary Class (unlimited authorization --
no par value) based on 1,215,680,288 outstanding shares of
beneficial interest $1,215,679
Fund Shares of Retail Class A (unlimited authorization --
no par value) based on 1,410,347,261 outstanding shares
of beneficial interest 1,410,348
Undistributed net investment income 5
Accumulated net realized loss on investments (1,937)
----------
Total Net Assets -- 100.0% $2,624,095
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $1.00
==========
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class A $1.00
==========
- --------------------------------------------------------------------------------
* Represents the yield to maturity at date of purchase.
(A) Adjustable Rate Security -- The rate reflected on the Statement of Net
Assets is the rate in effect on January 31, 1999.
(B) Securities sold within the terms of a private placement memorandum, except
from registration under Section 3a-4, 4(2) or 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Board of Directors.
FHLB -- Federal Home Loan Bank
FNMA -- Federal National Mortgage Association
Ser -- Series
The accompanying notes are an integral part of the financial statements.
77
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds -- 98.5%
ABAG, California Financial
Authority For Nonprofit Corps
American Baptist Homes
West Project, Ser C (A) (B)(C)
3.100%, 02/01/99 $1,000 $1,000
Alameda County Water District Tax
Exempt RB 3.5% 06/01/99
MBIA Insured
3.500%, 06/01/99 500 501
Alternative Energy Source Finance
Authority, GE Capital Corporation-
Arroyo Energy Project, VRDN
(A) (B) (C)
2.350%, 02/03/99 1,100 1,100
Anaheim Public Improvement
Corporation, 1995 Police Facilities
Refinancing Project, COP, VRDN,
AMBAC Insured (A) (B) (C)
2.230%, 02/03/99 3,100 3,100
Anaheim, Housing Authority, Bel Page
Project, VRDN (A) (B) (C)
2.300%, 02/03/99 6,000 6,000
Brea Public Finance Authority
Lease Tax Exempt RB 3.5% 07/01/99
MBIA Insured
3.500%, 07/01/99 500 501
Camarillo, Public Finance Authority-
Lease, TECP, MBIA Insured
3.500%, 12/01/99 1,120 1,125
Camarillo, Multi-Family Housing
Revenue, Heritage Park Apartments,
VRDN, (A) (B) (C)
2.300%, 07/15/19 1,900 1,900
Carlsbad, Housing & Revenue, Ser A,
VRDN, RB (A) (B)(C)
2.400%, 12/01/05 1,000 1,000
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Central Valley School District, RB,
MBIA Insured
5.600%, 02/01/99 $ 1,000 $ 1,000
Contra Costa, Water District, TECP
2.800%, 03/09/99 5,000 5,000
2.550%, 04/06/99 5,000 5,000
Culver City, Finance Authority, RB
7.100%, 11/01/99 1,000 1,049
Dublin, Housing Finance
Authority, Multi-Family, RB,
VRDN (A) (B) (C)
2.350%, 06/15/28 2,500 2,500
East Bay, Waste Water, TECP
2.600%, 03/04/99 9,000 9,000
Eastern Municipal Water District,
COP, Ser B, VRDN, RB,
FGIC Insured (A) (B)
2.300%, 07/01/20 16,635 16,635
Economic Development Financing
Authority, California Independent
Systems Project, Ser C, VRDN
(A) (B) (C)
2.610%, 04/01/08 3,000 3,000
Education Facilities Authority,
Carnegie Institute, TECP
2.600%, 02/18/99 1,000 1,000
3.150%, 02/18/99 1,000 1,000
2.550%, 04/15/99 5,000 5,000
Education Facilities Authority,
Stanford University, Ser L,
VRDN, RB (A) (B)
2.200%, 10/01/14 1,000 1,000
Encina, Wastewater
Management, RB,
Pre-refunded 08/01/99 @ 102
6.875%, 08/01/11 3,400 3,527
Escondino, County Deviation,
VRDN (A) (B)(C)
2.400%, 10/12/16 2,800 2,800
The accompanying notes are an integral part of the financial statements.
78
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Health Facilities Finance Authority,
Scripps Health Project, Ser B,
VRDN, RB (A) (B) MBIA Insured
2.350%, 10/01/22 $11,000 $11,000
Health Facilities Finance Authority,
Adventist Health Systems,
VRDN, RB, (A) (B) (C)
2.300%, 08/01/21 1,500 1,500
Health Facilities Finance Authority,
Catholic Healthcare, MBIA Insured,
VRDN, RB (A) (B)
2.300%, 07/01/12 1,300 1,300
Health Facilities Finance Authority,
Pooled Loan Program, Ser B,
VRDN, RB (A) (B)
2.100%, 10/01/10 4,100 4,100
Health Facilities Finance Authority,
Pooled Loan Program, Ser A,
VRDN, RB (A) (B) (C)
2.100%, 09/01/20 710 710
Health Facilities Finance Authority,
Pooled Loan Program, VRDN, RB,
Rabo Insured (A)
2.100%, 06/01/07 100 100
Health Facilities Finance Authority,
Santa Barbara Cottage, Ser B,
VRDN, RB (A) (B) (C)
2.300%, 09/01/05 3,555 3,555
Health Facilities Finance Authority,
Santa Barbara Cottage, Ser C,
VRDN, RB (A) (B) (C)
2.300%, 09/01/15 6,000 6,000
Health Facilities Finance Authority,
St. Francis Medical, Ser F, RB,
VRDN, MBIA Insured (A) (B)
2.300%, 07/01/10 3,000 3,000
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Health Facilities Finance Authority,
St. Joseph's Hospital,
VRDN, RB (A) (B)
2.900%, 07/01/13 $5,175 $5,175
Health Facility Authority,
Catholic West Ser 97 B,
VRDN (A) (B) MBIA Insured
2.300%, 07/01/22 2,500 2,500
Health Facility Authority,
Catholic West Ser 97 C,
VRDN (A) (B) MBIA Insured
2.300%, 07/01/22 1,100 1,100
Housing Agency, VRDN, RB (A) (B)
2.250%, 07/15/13 2,300 2,300
Irvine Ranch, Water District,
Consolidated Ser 1989,
VRDN, GO (A) (B) (C)
3.200%, 06/01/15 6,000 6,000
Irvine Ranch, Water District,
VRDN, RB, (A) (B)(C)
3.000%, 09/02/24 1,000 1,000
Jurupa County, Service District,
RB, FSA Insured
3.750%, 09/01/99 1,000 1,005
Livermore, Portola Meadows
Apartments Project, VRDN,
RB, (A) (B) (C)
2.400%, 05/01/19 5,100 5,100
Long Beach, Harbor RB
5.000%, 05/15/99 1,200 1,206
Los Angeles, City Waste Water, TECP
2.850%, 02/17/99 5,000 5,000
2.900%, 03/16/99 1,500 1,500
Los Angeles, Capital Asset Lease, TECP
2.950%, 03/05/99 5,800 5,800
2.800%, 03/08/99 5,000 5,000
The accompanying notes are an integral part of the financial statements.
79
<PAGE>
[LOGO]
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Los Angeles County, California Pension
Obligation, Ser A, VRDN
(A) (B) AMBACInsured
2.200%, 06/30/07 $ 2,300 $ 2,300
Los Angeles County, Metropolitan
Transportation Authority, Ser A,
VRDN, RB MBIA Insured (A) (B)
2.300%, 07/01/20 25,600 25,600
Los Angeles County, Pension
Obligation, Ser B, RB, VRDN (A) (B)
AMBAC Insured
2.200%, 06/30/07 2,000 2,000
Los Angeles County, Public Works
Finance Authority, Ser A,
MBIA Insured
6.000%, 09/01/99 2,000 2,028
Los Angeles County,
Pension Obligation,
Ser C, RB, VRDN, AMBAC
Insured (A) (B)
2.200%, 06/30/07 10,400 10,400
Los Angeles County,
Ser A, VRDN, RB,
FGIC Insured (A) (B)
2.200%, 07/01/12 5,700 5,700
Los Angeles, Meadowridge, Multi-Family
Housing, VRDN (A) (B)
2.400%, 09/01/18 4,600 4,600
Los Angeles, Multi-Family
Housing, Ser K,
VRDN, RB (A) (B)
2.500%, 07/06/10 20,800 20,800
Los Angeles, TRAN, Ser A
4.500%, 06/30/99 1,000 1,004
Los Angeles, Transportation, TECP
3.500%, 03/05/99 12,608 12,608
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Los Angeles, Unified School District
Authority, Belmont Learning
Complex Project, Ser A,
VRDN (A) (B) (C)
2.350%, 12/01/17 $16,700 $16,700
Los Angeles, Waste Water, RB,
Pre-refunded 02/01/99 @ 102
7.100%, 02/01/21 3,500 3,570
Los Angeles, Wastewater System,
Ser A, RB, MBIA Insured
8.500%, 06/01/99 1,775 1,803
Metro Water District of Southern
California, RB
5.000%, 07/01/99 1,000 1,008
7.000%, 07/01/99 2,960 3,002
Metro Water District of Southern
California, TECP
2.900%, 02/17/99 2,000 2,000
3.100%, 02/18/99 1,000 1,000
2.800%, 03/09/99 1,600 1,600
2.750%, 05/17/99 1,800 1,800
Modesto Irrigation District, RB,
AMBAC Insured
4.250%, 07/01/99 1,000 1,005
Modesto Irrigation District, TECP
3.150%, 02/05/99 10,000 10,000
Modesto Multi-Family Housing,
Live Oak Project, VRDN, RB (A) (B)
2.300%, 09/01/24 2,300 2,300
Northern California, Power-Combustion,
RB, MBIA Insured
4.000%, 08/15/99 4,310 4,336
Northern California, Power-Transmission,
TECP, MBIA Insured
4.000%, 08/15/99 1,100 1,107
The accompanying notes are an integral part of the financial statements.
80
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Ontario Industrial Development
Authority, Winsford Partners Project,
Ser A, VRDN, RB (A) (B) (C)
2.600%, 09/01/08 $1,900 $1,900
Orange County, Housing Authority,
VRDN (A) (B)
2.300%, 12/01/08 1,800 1,800
2.200%, 10/01/17 1,050 1,050
Orange County, Transportation
Authority, TECP
3.050%, 02/24/99 3,000 3,000
Orange County, Water District, PN,
MBIA Insured
5.000%, 07/01/99 2,810 2,827
Orange County, Water District, TECP
2.850%, 05/14/99 7,200 7,200
Orange County, Apartment
Development Authority,
Wood Canyon Villas,
AMT (A) (B) (C)
2.450%, 12/01/21 2,000 2,000
Oxnard Housing Authority, Seawind
Apartment Projects, Ser A,
VRDN, RB (A) (B) (C)
2.700%, 12/01/20 2,750 2,750
Pasadena, Electric, RB, MBIA Insured
4.750%, 08/01/99 1,590 1,600
Pleasanton, GO, FGIC Insured
3.500%, 08/01/99 1,130 1,133
Pollution Control Finance
Authority, TECP
2.900%, 03/10/99 4,000 4,000
Pollution Control Finance Authority,
Pacific Gas and Electric, AMT,
VRDN, RB (A) (B) (C)
3.200%, 11/01/26 6,100 6,100
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Pollution Control Finance Authority,
Pacific Gas and Electric,
VRDN, RB (A) (B) (C)
3.100%, 11/01/26 $ 7,000 $ 7,000
Pollution Control Finance
Authority, Shell Oil,
Project A, VRDN, RB (A) (B)
2.900%, 10/01/07 2,800 2,800
Pollution Control Finance Authority,
AMT, Shell Oil, Project A,
VRDN (A) (B)
3.150%, 10/01/24 6,400 6,400
Pollution Control Finance
Authority, Burney Forest,
VRDN, RB (A) (B) (C)
3.150%, 09/01/20 14,800 14,800
Pollution Control Finance
Authority, Chevron Project,
VRDN, RB (A) (B)
4.000%, 05/15/99 2,585 2,585
Pollution Control Finance
Authority, Chevron
USA Project, Ser B,
VRDN, RB (A) (B)
3.900%, 06/15/99 3,100 3,101
Pollution Control Finance Authority,
Delano Project 1989,
VRDN, RB (A)(B)(C)
3.250%, 08/01/19 4,300 4,300
Pollution Control Finance Authority,
Delano Project 1990, VRDN,
RB (A) (B) (C)
3.250%, 08/01/19 1,700 1,700
Pollution Control Finance Authority,
Delano Project 1991, VRDN,
RB (A) (B) (C)
3.250%, 08/01/19 500 500
The accompanying notes are an integral part of the financial statements.
81
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Pollution Control Finance
Authority, Exxon Project,
VRDN, RB (A) (B)
3.050%, 12/01/12 $ 5,000 $ 5,000
Pollution Control Finance Authority,
Honey Lake Power Project,
VRDN, RB (A) (B) (C)
3.250%, 09/01/18 6,500 6,500
Pollution Control Finance Authority,
Shell Oil, Ser A, VRDN, RB (A) (B)
2.900%, 11/01/00 3,000 3,000
2.900%, 10/01/08 4,000 4,000
Pollution Control Finance Authority,
Shell Oil, Ser A, VRDN, RB,
MBIA Insured (A) (B)
2.900%, 10/01/10 600 600
Pollution Control Finance Authority,
Shell Oil, VRDN, RB (A) (B)
2.900%, 10/01/06 3,200 3,200
Pollution Control Finance Authority,
Southern California Edison,
Ser D, VRDN, RB (A) (B)
3.200%, 02/28/08 17,705 17,705
Pollution Control Finance Authority,
Southern California Edison, Ser A,
VRDN, RB (A) (B)
3.200%, 02/28/08 12,600 12,600
Pollution Control Finance Authority,
Southern California Edison, Ser B,
VRDN, RB, (A) (B)
3.200%, 02/28/08 1,600 1,600
Pollution Control Finance Authority,
Shell Oil, Ser A, VRDN, RB, (A) (B)
2.900%, 10/01/11 4,100 4,100
Pollution Control Finance Authority,
Shell Oil, VRDN, RB, (A) (B)
2.900%, 10/01/09 2,500 2,500
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
Pollution Control Finance Authority,
Southern California Edison, Ser C,
VRDN, RB (A) (B)
3.200%, 02/28/08 $ 2,200 $ 2,200
Rancho Mirage, Eisenhower Medical
Center, VRDN (A) (B) MBIA Insured
2.350%, 07/01/22 6,800 6,800
Riverside County, COP, Public
Improvement, VRDN, (A) (B)(C)
2.100%, 12/01/15 1,900 1,900
Riverside County, COP, MBIA Insured
4.750%, 11/01/99 4,210 4,267
Riverside County, TECP (C)
2.600%, 05/13/99 5,000 5,000
Riverside County, Riverside County
Public Facilities, COP, Ser 1985 A,
VRDN (A) (B) (C)
2.100%, 12/01/15 14,700 14,700
Roseville, Finance Authority,
Ser A, FSA Insured
4.000%, 09/01/99 1,000 1,003
Sacramento, Cogeneration Authority,
RB, MBIA Insured
4.500%, 07/01/99 1,000 1,004
Sacramento, Municipal Utility
District, TECP (C)
2.850%, 03/18/99 16,713 16,713
San Bernadino County, Housing
Authority, Victoria Terrace, Project A,
VRDN, RB (A) (B) (C)
2.400%, 06/01/15 2,450 2,450
San Diego, Multi-Family Housing,
VRDN (A) (B)
2.250%, 08/15/13 4,390 4,390
San Diego, County Teeter Projects,
TECP (C)
2.850%, 02/25/99 4,200 4,200
The accompanying notes are an integral part of the financial statements.
82
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
San Diego, Transportation
Sales Tax, TECP
2.700%, 02/05/99 $7,700 $7,700
2.550%, 04/09/99 4,100 4,100
San Francisco, City & County,
AMT (A) (B)
2.550%, 06/15/25 4,000 4,000
San Francisco, City & County Public
Safety Projects, 1990 Ser C
8.000%, 06/15/99 1,050 1,067
San Francisco, City & County Sewer,
RB, Callable 10/01/99 @ 102
6.500%, 10/01/21 1,000 1,042
San Francisco, City and County
Referendum, Ser 1, FGIC Insured
4.500%, 06/15/99 1,015 1,018
San Joaquin County, Transportation
Authority, TECP (C)
3.000%, 02/10/99 7,000 7,000
2.800%, 03/04/99 6,000 6,000
San Jose, Multi-Family Housing,
AMT, (A) (B) (C)
2.500%, 05/01/19 2,000 2,000
San Mateo County, Transportation
District, RB, MBIA Insured
4.000%, 06/01/99 4,890 4,907
Santa Ana, Multi-Family Housing,
RB (A) (B) (C)
2.400%, 12/01/22 1,100 1,100
School Facilities Finance Authority,
COP, Ser B, VRDN (A) (B) (C)
2.300%, 07/01/24 2,700 2,700
School Facility Financing, Capital
Improvement Projects VRDN,
RB (A) (B) (C)
2.300%, 07/01/22 9,600 9,600
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
South Coast, Education Agency TRAN,
RB, Ser A, MBIA Insured
4.500%, 06/30/99 $ 5,000 $ 5,019
South Gate, Tax Allocation, RB,
Pre-refunded 02/01/99 @ 102
7.375%, 09/01/09 1,000 1,045
Southern California, Metro Water
District, Water Revenue Authorization,
Ser B, VRDN, RB (A) (B)
2.200%, 07/01/28 3,200 3,200
Southern California, Metro Water
District, Water Revenue Authorization,
Ser C, VRDN, RB (A) (B)
2.200%, 07/01/28 1,000 1,000
State of California, GO
9.000%, 06/01/99 3,250 3,313
State of California Department of
Water, TECP
4.250%, 12/01/99 5,080 5,136
Statewide Communities Development
Authority, North California
Retirement, VRDN,
RB (A) (B) (C)
3.100%, 06/01/26 25,370 25,370
Statewide Communities Development
Authority, St. Joseph Health System,
COP, VRDN, RB (A) (B)
2.250%, 07/01/08 1,600 1,600
Transportation Finance Authority,
VRDN, RB, FSA Insured (A) (B)
2.550%, 10/01/27 20,200 20,200
Turlock Irrigation District,
Transmission Projects, COP, Ser A,
VRDN (A) (B) (C)
2.250%, 01/01/26 3,950 3,950
The accompanying notes are an integral part of the financial statements.
83
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
California Municipal Bonds (continued)
University of California,
Irvine Pkg System, Ser A,
Pre-refunded 09/01/99 @ 102
7.000%, 03/01/21 $ 2,000 $ 2,079
University of California, Multi-Purpose,
RB Pre-refunded 09/01/99 @ 102
6.900%, 09/01/12 1,000 1,042
University of California, RB,
Pre-refunded 09/01/99 @ 102
6.750%, 09/01/23 3,500 3,638
University of California
Regents, TECP (C)
2.750%, 03/10/99 2,000 2,000
2.900%, 03/16/99 4,500 4,500
2.600%, 04/05/99 5,500 5,500
2.750%, 05/07/99 3,000 3,000
Ventura County, TECP (C)
2.850%, 02/08/99 2,000 2,000
West Basin Municipal Water District,
Phase II Recycled Water Project,
Ser B, COP, VRDN (A) (B) (C)
2.150%, 08/01/27 2,200 2,200
West Basin Municipal Water District,
Phase II Recycled Water Project,
Ser C, COP, VRDN (A) (B) (C)
2.500%, 08/01/27 2,000 2,000
West Covina Redevelopment Agency,
Lakes Public Parking Project,
VRDN, RB (A) (B) (C)
2.300%, 08/01/18 2,455 2,455
Yorba Linda Water District, RB,
AMBAC Insured
3.200%, 05/01/99 1,385 1,385
--------
Total California Municipal Bonds
(Cost $643,804) 643,804
--------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
Puerto Rico -- 0.8%
Puerto Rico, Commonwealth Highway &
Transportation, RB, Series A, (A) (B)
2.350%, 07/01/28 $5,360 $5,360
------
Total Puerto Rico
(Cost $5,360) 5,360
------
Cash Equivalents -- 0.5%
Provident California Tax
Free Money Market 1,698 1,699
SEI California Tax Exempt Portfolio 1,371 1,371
-------
Total Cash Equivalents
(Cost $3,070) 3,070
-------
Total Investments -- 99.8%
(Cost $652,234) 652,234
-------
Other Assets and Liabilities, Net -- 0.2% 1,287
-------
The accompanying notes are an integral part of the financial statements.
84
<PAGE>
STATEMENT OF NET ASSETS
For the six months ended January 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
California Tax-Free Money Market Fund (continued)
- --------------------------------------------------------------------------------
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value) based on
269,571,994 outstanding shares of
beneficial interest $ 269,572
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based on
384,014,389 outstanding shares of
beneficial interest 384,014
Accumulated net realized loss on investments (65)
---------
Total Net Assets-- 100.0% $ 653,521
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Fiduciary Class $ 1.00
=========
Net Asset Value, Offering and Redemption
Price Per Share -- Retail Class A $ 1.00
=========
- --------------------------------------------------------------------------------
(A) Floating Rate Security -- The rate reflected on the Statement of Net Assets
is the rate in effect on January 31, 1999.
(B) Put and Demand Feature -- The date reported is the lesser of the maturity
or the put date.
(C) Securities are held in conjunction with a letter of credit by a major
commercial bank or financial institution.
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
GO -- General Obligation
MBIA -- Municipal Bond Investors Assurance
RB -- Revenue Bond
Ser -- Series
TECP -- Tax Exempt Commercial Paper
TRAN -- Tax and Revenue Anticipation Note
VRDN -- Variable Rate Demand Note
The accompanying notes are an integral part of the financial statements.
85
<PAGE>
[LOGO]
STATEMENTS OF OPERATIONS (000)
- --------------------------------------------------------------------------------
For the Six Months Ended January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
Value
Growth Momentum
Fund Fund
------------ --------
<S> <C> <C>
Interest Income $ 460 $ 739
Dividend Income 1,694 7,803
Less: Foreign Taxes withheld, net of reclaims -- --
--------- ---------
Total Investment Income 2,154 8,542
--------- ---------
Expenses:
Administrative Fees 528 847
Administration Fees Waived (53) (85)
Investment Advisor Fees 1,585 2,540
Investment Advisor Fees Waived -- --
Shareholder Servicing Fees Fiduciary 637 1,009
Shareholder Servicing Fees Retail Class A 19 42
Shareholder Servicing Fees Retail Class B 4 7
Shareholder Servicing Fees Waived (394) (1,051)
Custodian Fees 26 42
Professional Fees 19 29
Registration Fees 17 24
Transfer Agency Fees 27 40
Distribution Fees Retail Class A 19 42
Distribution Fees Retail Class B 13 20
Distribution Fees Waived -- --
Insurance Fees 2 5
Trustees Fees 6 10
Printing Fees 20 30
Miscellaneous Fees 3 6
--------- ---------
Total Expenses 2,478 3,557
Reduction of Expenses (1) (13) (17)
--------- ---------
Total Net Expenses 2,465 3,540
--------- ---------
Net Investment Income (Loss) (311) 5,002
--------- ---------
Net Realized Gain (Loss) on Investments 27,006 14,172
--------- ---------
Net Realized Gain on Option Contracts -- --
--------- ---------
Net Realized Gain (Loss) on Foreign Currency Transactions -- --
--------- ---------
Change in Unrealized Appreciation (Depreciation) on Investments 88,687 18,696
--------- ---------
Change in Unrealized Appreciation on Foreign Currency -- --
--------- ---------
Net Realized and Unrealized Gain on Investments 115,693 32,868
--------- ---------
Increase in Net Assets Resulting from Operations $ 115,382 $ 37,870
========= =========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) See Note 3.
(2) Commenced operations on September 17, 1998.
The accompanying notes are an integral part of the financial statements.
86
<PAGE>
<TABLE>
<CAPTION>
Income Emerging Small Cap International
Equity Balanced Growth Value Equity
Fund Fund Fund Fund (2) Fund
------- -------- ------- --------- --------------
<S> <C> <C> <C> <C> <C>
$ 219 $ 5,315 $ 231 $ 99 $ 42
7,067 2,610 100 356 351
-- -- -- (8) (35)
--------- --------- --------- --------- ---------
7,286 7,925 331 447 358
--------- --------- --------- --------- ---------
657 452 60 51 90
(66) (45) (6) (5) (9)
1,971 1,356 241 257 427
-- -- -- -- --
791 550 75 64 112
27 13 -- -- --
3 2 -- -- --
(491) (338) (75) (38) (112)
33 23 3 44 84
13 14 3 2 4
11 13 3 23 7
22 22 1 1 2
27 13 -- -- --
8 6 -- -- --
-- -- -- -- --
1 2 -- -- --
5 7 1 1 2
15 18 4 2 2
(6) 3 1 6 8
--------- --------- --------- --------- ---------
3,021 2,111 311 408 617
(13) (9) (1) (1) (2)
--------- --------- --------- --------- ---------
3,008 2,102 310 407 615
--------- --------- --------- --------- ---------
4,278 5,823 21 40 (257)
--------- --------- --------- --------- ---------
40,608 6,994 (6,112) 1,460 4,821
--------- --------- --------- --------- ---------
-- 19 -- -- --
--------- --------- --------- --------- ---------
-- -- -- (61) 52
--------- --------- --------- --------- ---------
2,487 13,114 6,598 3,655 (3,284)
--------- --------- --------- --------- ---------
-- -- -- -- 11
--------- --------- --------- --------- ---------
43,095 20,127 486 5,054 1,600
--------- --------- --------- --------- ---------
$ 47,373 $ 25,950 $ 507 $ 5,094 $ 1,343
========= ========= ========= ========= =========
</TABLE>
87
<PAGE>
[LOGO]
STATEMENTS OF OPERATIONS (000)
- --------------------------------------------------------------------------------
For the Six Months Ended January 31, 1999 (Unaudited)
<TABLE>
<CAPTION>
California
Intermediate
Tax-Free
Bond Bond
Fund Fund
-------- --------
<S> <C> <C>
Interest Income $ 4,085 $ 7,534
Dividend Income -- --
Less: Foreign Taxes withheld, net of reclaims -- --
-------- --------
Total Investment Income 4,085 7,534
-------- --------
Expenses:
Administrative Fees 173 232
Administration Fees Waived (17) (23)
Investment Advisor Fees 432 581
Investment Advisor Fees Waived (259) --
Shareholder Servicing Fees Fiduciary 197 287
Shareholder Servicing Fees Retail Class A 19 3
Shareholder Servicing Fees Retail Class B -- --
Shareholder Servicing Fees Waived (216) (279)
Custodian Fees 9 12
Professional Fees 13 17
Registration Fees 13 16
Transfer Agency Fees 16 18
Distribution Fees Retail Class A 19 3
Distribution Fees Retail Class B -- --
Distribution Fees Waived (19) (3)
Insurance Fees 3 2
Trustees Fees 4 4
Printing Fees 12 12
Miscellaneous Fees 2 3
-------- --------
Total Expenses 401 885
Reduction of Expenses (1) (3) (9)
-------- --------
Total Net Expenses 398 876
-------- --------
Net Investment Income 3,687 6,658
-------- --------
Net Realized Gain (Loss) on Investments 429 462
-------- --------
Change in Unrealized Appreciation on Investments 4,202 7,842
-------- --------
Net Realized and Unrealized Gain (Loss) on Investments 4,631 8,304
-------- --------
Increase in Net Assets Resulting from Operations $ 8,318 $ 14,962
======== ========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) See Note 3.
The accompanying notes are an integral part of the financial statements.
88
<PAGE>
<TABLE>
<CAPTION>
100%
Intermediate U.S.Treasury U.S. Government Diversified California Tax-Free
Term Bond Money Market Money Market Money Market Money Market
Fund Fund Fund Fund Fund
-------- ----------- --------------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
$ 8,589 $ 27,952 $ 10,504 $ 68,361 $ 9,136
-- -- -- -- --
-- -- -- -- --
-------- -------- -------- -------- --------
8,589 27,952 10,504 68,361 9,136
-------- -------- -------- -------- --------
267 1,125 404 2,548 619
(27) (113) (40) (255) (62)
666 1,688 605 3,822 928
-- (281) -- -- (619)
326 326 348 1,560 323
7 1,081 157 1,625 451
-- -- -- -- --
(293) (1,407) (504) (3,185) (773)
13 56 20 128 31
10 35 14 68 19
8 45 13 66 26
12 55 17 115 28
7 1,081 157 1,625 451
-- -- -- -- --
(7) -- -- -- --
1 6 1 11 2
3 11 5 26 8
8 37 16 82 20
3 2 1 2 1
-------- -------- -------- -------- --------
1,004 3,747 1,214 8,238 1,453
(5) (22) (8) (50) (12)
-------- -------- -------- -------- --------
999 3,725 1,206 8,188 1,441
-------- -------- -------- -------- --------
7,590 24,227 9,298 60,173 7,695
-------- -------- -------- -------- --------
521 (14) 36 (517) 1
-------- -------- -------- -------- --------
3,232 -- -- -- --
-------- -------- -------- -------- --------
3,753 (14) 36 (517) 1
-------- -------- -------- -------- --------
$ 11,343 $ 24,213 $ 9,334 $ 59,656 $ 7,696
======== ======== ======== ======== ========
</TABLE>
89
<PAGE>
[LOGO]
StatementS of changes in net assets (000)
For the Six Months Ended January 31, 1999
(Unaudited) and for the Year Ended July 31, 1998
<TABLE>
<CAPTION>
Growth Value Momentum
Fund Fund
-------------------------- ---------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) .................................. $ (311) $ 286 $ 5,002 $ 8,150
Net Realized Gain (Loss) on Investments ....................... 27,006 58,251 14,172 16,588
Net Realized Gain (Loss) on Option Contracts .................. -- -- -- --
Net Realized Gain (Loss) on Foreign Currency Transactions ..... -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments 88,687 16,670 18,696 7,625
Change in Unrealized Appreciation on Foreign Currency ......... -- -- -- --
--------- --------- --------- ---------
Net Increase in Net Assets Resulting From Operations ............ 115,382 75,207 37,870 32,363
--------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................ -- (497) (4,906) (7,844)
Retail Class A Shares ....................................... -- (4) (171) (296)
Retail Class B Shares ....................................... -- -- (13) (6)
Capital Gains:
Fiduciary Shares ............................................ (38,687) (63,262) (26,011) (3,243)
Retail Class A Shares ....................................... (1,136) (1,951) (1,101) (161)
Retail Class B Shares ....................................... (309) -- (182) --
--------- --------- --------- ---------
Total Distributions ....................................... (40,132) (65,714) (32,384) (11,550)
--------- --------- --------- ---------
Change in Net Assets ............................................ 75,250 9,493 5,486 20,813
--------- --------- --------- ---------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Blue Chip Growth Fund 134,130 -- -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets .................................. -- 110,041 -- 298,528
Proceeds from Shares Issued ................................. 61,688 113,184 104,048 200,308
Reinvestment of Distributions ............................... 37,499 44,542 27,950 8,410
Cost of Shares Redeemed ..................................... (72,175) (76,109) (139,111) (126,506)
--------- --------- --------- ---------
Total Fiduciary Share Transactions ........................ 161,142 191,658 (7,113) 380,740
--------- --------- --------- ---------
Retail Class A Shares:
Proceeds from Shares Issued ................................. 4,578 9,352 4,399 16,308
Reinvestment of Distributions ............................... 1,057 1,763 1,186 442
Cost of Shares Redeemed ..................................... (6,139) (1,696) (5,868) (3,772)
--------- --------- --------- ---------
Total Retail Class A Share Transactions ................... (504) 9,419 (283) 12,978
--------- --------- --------- ---------
Retail Class B Shares:
Proceeds from Shares Issued ................................. 2,713 1,949 795 5,561
Reinvestment of Distributions ............................... 303 -- 189 5
Cost of Shares Redeemed ..................................... (180) (33) (341) (127)
--------- --------- --------- ---------
Total Retail Class B Share Transactions ................... 2,836 1,916 643 5,439
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From Share Transactions ... 163,474 202,993 (6,753) 399,157
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets ................... 238,724 212,486 (1,267) 419,970
--------- --------- --------- ---------
Net Assets:
Beginning of Period ........................................... 518,181 305,695 904,154 484,184
--------- --------- --------- ---------
End of Period ................................................. $ 756,905 $ 518,181 $ 902,887 $ 904,154
========= ========= ========= =========
Amounts designated as "--" are either $0 or have been rounded to $0.
(1) Commencement of operations.
The accompanying notes are an integral part of the financial statements.
90
<PAGE>
<CAPTION>
Income Equity Balanced Emerging Growth Small Cap Value International Equity
Fund Fund Fund Fund (1) Fund
- ------------------------- ------------------------- -------------------------- ----------- --------------------------
08/01/98 08/01/97 08/01/98 08/01/97 08/01/98 08/01/97 09/17/98 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98 to 01/31/99 to 01/31/99 to 07/31/98
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 4,278 $ 7,614 $ 5,823 $ 11,562 $ 21 $ 34 $ 40 $ (257) $ 471
40,608 75,433 6,994 21,780 (6,112) 14,448 1,460 4,821 (6,100)
-- -- 19 -- -- (410) -- -- --
-- -- -- -- -- -- (61) 52 (142)
2,487 (50,106) 13,114 (4,261) 6,598 (12,019) 3,655 (3,284) 9,175
-- -- -- -- -- -- -- 11 28
-------- --------- --------- --------- --------- --------- --------- --------- ---------
47,373 32,941 25,950 29,081 507 2,053 5,094 1,343 3,432
-------- --------- --------- --------- --------- --------- --------- --------- ---------
(4,340) (7,261) (5,721) (11,577) (30) (43) (26) (343) (789)
(121) (263) (128) (248) -- -- -- -- --
(7) (3) (14) (4) -- -- -- -- --
(77,000) (34,725) (17,872) (10,762) (9,420) (9,793) -- -- (484)
(2,647) (1,703) (439) (250) -- -- -- -- --
(298) -- (73) -- -- -- -- -- --
-------- --------- --------- --------- --------- --------- --------- --------- ---------
(84,413) (43,955) (24,247) (22,841) (9,450) (9,836) (26) (343) (1,273)
-------- --------- --------- --------- --------- --------- --------- --------- ---------
(37,040) (11,014) 1,703 6,240 (8,943) (7,783) 5,068 1,000 2,159
-------- --------- --------- --------- --------- --------- --------- --------- ---------
-- -- -- -- -- -- -- -- --
-- 344,504 -- 15,276 -- -- -- -- --
30,252 70,835 35,838 96,493 10,308 32,520 68,108 7,799 46,760
74,648 34,479 23,002 22,162 9,450 9,757 -- 103 709
(88,381) (121,446) (56,398) (91,701) (16,391) (32,251) -- (3,776) (10,125)
-------- --------- --------- --------- --------- --------- --------- --------- ---------
16,519 328,372 2,442 42,230 3,367 10,026 68,108 4,126 37,344
-------- --------- --------- --------- --------- --------- --------- --------- ---------
6,198 9,577 1,063 2,541 -- -- 291 -- --
2,494 1,938 545 479 -- -- -- -- --
(9,252) (2,461) (1,157) (1,763) -- -- (2) -- --
-------- --------- --------- --------- --------- --------- --------- --------- ---------
(560) 9,054 451 1,257 -- -- 289 -- --
-------- --------- --------- --------- --------- --------- --------- --------- ---------
855 1,881 1,166 1,008 -- -- 230 -- --
295 3 80 4 -- -- -- -- --
(131) (35) (134) (16) -- -- -- -- --
-------- --------- --------- --------- --------- --------- --------- --------- ---------
1,019 1,849 1,112 996 -- -- 230 -- --
-------- --------- --------- --------- --------- --------- --------- --------- ---------
16,978 339,275 4,005 44,483 3,367 10,026 68,627 4,126 37,344
------- --------- --------- --------- --------- --------- --------- --------- ---------
(20,062) 328,261 5,708 50,723 (5,576) 2,243 73,695 5,126 39,503
-------- --------- --------- --------- --------- --------- --------- --------- ---------
695,138 366,877 460,379 409,656 68,579 66,336 -- 91,970 52,467
-------- --------- --------- --------- --------- --------- --------- --------- ---------
$675,076 $ 695,138 $ 466,087 $ 460,379 $ 63,003 $ 68,579 $ 73,695 $ 97,096 $ 91,970
======== ========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
91
<PAGE>
[LOGO]
STATEMENTS OF CHANGES IN NET ASSETS (000)
For the Six Months Ended January 31, 1999
(Unaudited) and for the Year Ended July 31, 1998
<TABLE>
<CAPTION>
California Intermediate
Tax-Free Bond Bond
Fund Fund
-------------------------- ---------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income .............................................. $ 3,687 $ 2,957 $ 6,658 $ 6,958
Net Realized Gain (Loss) on Investments ............................ 429 305 462 122
Change in Unrealized Appreciation (Depreciation) on Investments .... 4,202 1,305 7,842 1,732
--------- --------- --------- ---------
Net Increase in Net Assets Resulting From Operations ............... 8,318 4,567 14,962 8,812
--------- --------- --------- ---------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................................. (3,337) (2,294) (6,369) (6,823)
Retail Class A Shares ............................................ (326) (555) (74) (58)
Retail Class B Shares ............................................ -- -- --
Capital Gains:
Fiduciary Shares ................................................. -- -- -- --
Retail Class A Shares ............................................ -- -- -- --
Retail Class B Shares ............................................ -- -- -- --
--------- --------- --------- ---------
Total Distributions ............................................ (3,663) (2,849) (6,443) (6,881)
--------- --------- --------- ---------
Change in Net Assets ................................................. 4,655 1,718 8,519 1,931
--------- --------- --------- ---------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the
Government Securities Fund ..................................... -- -- 113,026 --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ....................................... -- 137,628 -- 100,626
Proceeds from Shares Issued ...................................... 10,665 21,826 29,945 57,404
Reinvestment of Distributions .................................... 176 300 2,668 3,832
Cost of Shares Redeemed .......................................... (17,622) (15,638) (22,083) (29,230)
--------- --------- --------- ---------
Total Fiduciary Share Transactions ............................. (6,781) 144,116 123,556 132,632
--------- --------- --------- ---------
Retail Class A Shares:
Proceeds from Shares Issued ...................................... 4,142 8,581 1,649 1,333
Reinvestment of Distributions .................................... 213 425 48 44
Cost of Shares Redeemed .......................................... (2,622) (7,359) (964) (80)
--------- --------- --------- ---------
Total Retail Class A Share Transactions ........................ 1,733 1,647 733 1,297
--------- --------- --------- ---------
Retail Class B Shares:
Proceeds from Shares Issued ...................................... -- -- -- --
Reinvestment of Distributions .................................... -- -- -- --
Cost of Shares Redeemed .......................................... -- -- -- --
--------- --------- --------- ---------
Total Retail Class B Share Transactions ........................ -- -- -- --
--------- --------- --------- ---------
Net Increase in Net Assets From Share Transactions ................... (5,048) 145,763 124,289 133,929
--------- --------- --------- ---------
Total Increase in Net Assets ................................... 393 147,481 132,808 135,860
--------- --------- --------- ---------
Net Assets:
Beginning of Period ................................................ 169,987 22,506 208,037 72,177
--------- --------- --------- ---------
End of Period ...................................................... $ 169,594 $ 169,987 $ 340,845 $ 208,037
========= ========= ========= =========
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
92
<PAGE>
<TABLE>
<CAPTION>
Intermediate 100% U.S. Treasury U.S. Government Diversified California Tax-Free
Term Bond Money Market Money Market Money Market Money Market
Fund Fund Fund Fund Fund
- ----------------------- ------------------------ ------------------------- ------------------------- -----------------------
08/01/98 08/01/97 08/01/98 08/01/97 08/01/98 08/01/97 08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 7,590 $ 10,120 $ 24,227 $ 45,028 $ 9,298 $ 15,070 $ 60,173 $ 104,781 $ 7,695 $ 13,617
521 768 (14) 2 36 7 (517) 2 1 (2)
3,232 (25) -- -- -- -- -- -- -- --
-------- -------- --------- -------- -------- -------- ---------- ---------- -------- --------
11,343 10,863 24,213 45,030 9,334 15,077 59,656 104,783 7,696 13,615
-------- -------- --------- -------- -------- -------- ---------- ---------- -------- --------
(7,300) (9,859) (5,879) (13,003) (6,511) (11,796) (30,299) (56,174) (3,403) (6,202)
(158) (296) (18,363) (32,025) (2,785) (3,274) (29,869) (48,607) (4,292) (7,416)
-- -- -- -- (1) -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-------- -------- --------- -------- -------- -------- ---------- ---------- -------- --------
(7,458) (10,155) (24,242) (45,028) (9,297) (15,070) (60,168) (104,781) (7,695) (13,618)
-------- -------- --------- -------- -------- -------- ---------- ---------- -------- --------
3,885 708 (29) 2 37 7 (512) 2 1 (3)
-------- -------- --------- -------- -------- -------- ---------- ---------- -------- --------
-- -- -- -- -- -- -- -- -- --
-- 153,900 -- -- -- -- -- 33,913 -- --
33,441 33,011 278,243 678,448 899,899 1,374,048 1,099,557 2,317,898 241,991 455,192
2,595 5,544 289 635 159 256 5,734 9,864 6 16
(23,472) (96,305) (269,784) (694,817) (813,860) (1,344,194) (1,070,965) (2,153,396) (213,959) (373,015)
-------- -------- ---------- --------- -------- -------- ---------- ---------- -------- --------
12,564 96,150 8,748 (15,734) 86,198 30,110 34,326 208,279 28,038 82,193
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
1,446 414 815,504 1,308,435 201,139 369,119 1,166,221 1,900,298 300,934 512,922
151 295 18,029 31,361 2,754 2,968 29,587 47,070 4,173 7,326
(1,509) (727) (624,320) (1,171,680) (188,018) (292,826) (909,948) (1,622,743) (226,372) (432,217)
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
88 (18) 209,213 168,116 15,875 79,261 285,860 324,625 78,735 88,031
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
-- -- -- -- 51 -- -- -- -- --
-- -- -- -- 1 -- -- -- -- --
-- -- -- -- -- -- -- -- -- --
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
-- -- -- -- 52 -- -- -- -- --
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
12,652 96,132 217,961 152,382 102,125 109,371 320,186 532,904 106,773 170,224
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
16,537 96,840 217,932 152,384 102,162 109,378 319,674 532,906 106,774 170,221
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
254,640 157,800 954,820 802,436 405,170 295,792 2,304,421 1,771,515 546,747 376,526
-------- -------- ---------- ---------- -------- -------- ---------- ---------- -------- --------
$271,177 $254,640 $1,172,752 $ 954,820 $507,332 $405,170 $2,624,095 $2,304,421 $653,521 $546,747
======== ======== ========== ========== ======== ======== ========== ========== ======== ========
</TABLE>
93
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
- -----------
Growth Fund
- -----------
Fiduciary Shares
For the six month period ended January 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $ 16.92 (0.004) 2.494 -- (1.271) $18.14 15.65% $733,955
For the years ended July 31,:
1998 $ 17.36 0.017 3.108 (0.033) (3.532) $16.92 22.59% $499,060
1997 12.58 0.057 5.773 (0.053) (0.996) 17.36 48.54% 297,879
1996 11.87 0.120 1.350 (0.120) (0.640) 12.58 12.72% 41,495
1995 9.76 0.150 2.260 (0.150) (1.150) 11.87 25.23% 25,096
1994 10.00 0.050 (0.240) (0.050) -- 9.76 (1.87)% 15,254
Retail Class A Shares
For the six month period ended January 31,:
1999 $ 16.93 (0.029) 2.489 -- (1.271) $18.12 15.45% $ 17,679
For the years ended July 31,:
1998 $ 17.39 (0.018) 3.100 (0.015) (3.532) $16.93 22.26% $ 17,173
1997 12.60 0.049 5.784 (0.048) (0.996) 17.39 48.49% 7,816
1996 11.87 0.110 1.380 (0.120) (0.640) 12.60 12.88% 2,843
1995 9.77 0.150 2.250 (0.150) (0.150) 11.87 25.10% 1,218
1994 9.74 -- 0.040 (0.010) -- 9.77 (1.77)%(A) --
Retail Class B Shares
For the six month period ended January 31,:
1999 $ 16.85 (0.039) 2.440 -- (1.271) $17.98 15.17% $ 5,271
For the period ended July 31,:
1998(1) $ 14.76 (0.035) 2.125 -- -- $16.85 28.71%* $ 1,948
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- ---------------------------------------------------------------------------------------------------
- -----------
Growth Fund
- -----------
Fiduciary Shares
For the six month period ended January 31,:
<S> <C> <C> <C> <C> <C>
1999 0.92% 1.09% (0.10)% (0.27)% 29%
For the years ended July 31,:
1998 0.91% 1.08% 0.08% (0.09)% 67%
1997 0.92% 1.24% 0.39% 0.07% 118%
1996 0.93% 1.67% 0.98% 0.23% 79%
1995 0.79% 1.92% 1.40% 0.26% 68%
1994 0.77% 2.61% 0.86% (0.98)% 123%
Retail Class A Shares
For the six month period ended January 31,:
1996 1.17% 1.34% (0.35)% (0.52)% 29%
For the years ended July 31,:
1998 1.16% 1.34% (0.17)% (0.35)% 67%
1997 1.04% 1.49% 0.28% (0.18)% 118%
1996 0.93% 1.91% 0.96% (0.02)% 79%
1995 0.84% 2.11% 1.17% (0.10)% 68%
1994 -- -- -- -- 123%
Retail Class B Shares
For the six month period ended January 31,:
1999 1.82% 1.84% (1.00)% (1.02)% 29%
For the period ended July 31,:
1998(1) 1.81%* 1.84%* (0.94)%* (0.97)%* 67%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(A) 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.
* Annualized.
** Total return does not reflect the sales charge.
(1) Commenced operations on February 2, 1998.
The accompanying notes are an integral part of the financial statements.
94
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
- -------------------
Value Momentum Fund
- -------------------
Fiduciary Shares
For the six month period ending January 13,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $ 27.31 0.159 1.178 (0.161) (0.866) $ 27.62 5.08% $ 861,638
For the year ended July 31,:
1998 $ 25.48 0.332 2.003 (0.341) (0.164) 27.31 9.22% $ 863,627
For the six month period ended July 31,:
1997 $ 21.57 0.132 3.955 (0.176) -- $ 25.48 19.06% $ 463,434
For the years ended January 31,:
1997 $ 18.05 0.436 4.371 (0.438) (0.848) $ 21.57 27.33% $ 317,482
1996 13.40 0.331 5.063 (0.337) (0.408) 18.05 40.88% 222,065
1995 14.27 0.318 (0.817) (0.317) (0.054) 13.40 (3.48)% 150,138
1994 12.76 0.292 1.538 (0.290) (0.030) 14.27 14.56% 140,609
Retail Class A Shares
For the six month period ended January 31,:
1999 $ 27.31 0.125 1.174 (0.133) (0.866) $ 27.61 4.93% $ 35,306
For the year ended July 31,:
1998 $ 25.48 0.262 2.007 (0.275) (0.164) $ 27.31 8.96% $ 35,325
For the six month period ended July 31,:
1997 $ 21.57 0.106 3.953 (0.147) -- $ 25.48 18.90% $ 20,750
For the years ended January 31,:
1997 $ 18.05 0.389 4.368 (0.393) (0.848) $ 21.57 27.04% $ 15,963
1996 13.40 0.320 5.060 (0.323) (0.408) 18.05 40.77% 11,801
1995 14.27 0.321 (0.820) (0.317) (0.054) 13.40 (3.48)% 9,777
1994 12.75 0.297 1.543 (0.290) (0.030) 14.27 14.65% 9,346
Retail Class B Shares
For the six month period ended January 31,:
1999 $ 27.28 0.029 1.168 (0.061) (0.866) $ 27.55 4.54% $ 5,943
For the period ended July 31,:
1998(1) $ 26.82 0.046 0.479 (0.064) -- $ 27.28 3.94%* $ 5,202
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- ---------------------------------------------------------------------------------------------------
- -------------------
Value Momentum Fund
- -------------------
Fiduciary Shares
For the six month period ending January 13,:
<S> <C> <C> <C> <C> <C>
1999 0.82% 1.09% 1.19% 0.92% 5%
For the year ended July 31,:
1998 0.81% 1.08% 1.25% 0.98% 7%
For the six month period ended July 31,:
1997 0.78%* 0.94%* 1.65%* 1.49%* 1%
Retail Class A Shares
For the six month period ended January 31,:
1997 0.79% 0.79% 2.26% 2.26% 9%
1996 0.80% 0.80% 2.07% 2.07% 20%
1995 0.81% 0.81% 2.36% 2.36% 6%
1994 0.77% 0.79% 2.19% 2.17% 5%
Retail Class A Shares
For the six month period ended January 31,:
1999 1.07% 1.34% 0.94% 0.67% 5%
For the year ended July 31,:
1998 1.06% 1.33% 0.99% 0.72% 7%
For the six month period ended July 31,:
1997 1.03%* 1.25%* 1.40%* 1.17%* 1%
For the years ended January 31,:
1997 1.04% 1.19% 2.01% 1.86% 9%
1996 0.89% 1.20% 2.00% 1.69% 20%
1995 0.81% 1.21% 2.37% 1.97% 6%
1994 0.77% 1.20% 2.12% 1.69% 5%
Retail Class B Shares
For the six month period ended January 31,:
1999 1.82% 1.84% 0.19% 0.17% 5%
For the period ended July 31,:
1998(1) 1.81%* 1.84%* 0.15%* 0.13%* 7%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized
** Total return does not reflect the sales charge.
(1) Commenced operations on February 2, 1998.
The accompanying notes are an integral part of the financial statements.
95
<PAGE>
<PAGE>
HIGHMARK
FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------
Income Equity Fund
- -------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $17.92 0.112 1.181 (0.117) (2.206) $16.89 7.70% $651,156
For the years ended July 31,:
1998 $18.21 0.305 1.486 (0.302) (1.776) $17.92 10.79% $670,298
1997 14.27 0.372 5.019 (0.368) (1.083) 18.21 40.13% 352,725
1996 13.00 0.420 1.930 (0.420) (0.660) 14.27 18.25% 262,660
1995 11.92 0.440 1.500 (0.440) (0.420) 13.00 17.26% 221,325
1994 12.13 0.390 0.120 (0.390) (0.330) 11.92 4.23% 213,328
Retail Class A Shares
For the six month period ended January 31,:
1999 $17.95 0.091 1.183 (0.097) (2.206) $16.92 7.57% $ 21,180
For the years ended July 31,:
1998 $18.24 0.262 1.486 (0.258) (1.776) $17.95 10.50% $ 23,024
1997 14.29 0.363 5.028 (0.358) (1.083) 18.24 39.97% 14,152
1996 13.03 0.420 1.920 (0.420) (0.660) 14.29 18.21% 10,143
1995 11.92 0.420 1.550 (0.440) (0.420) 13.03 17.52% 3,881
1994 (1) 11.85 0.040 0.080 (0.050) -- 11.92 4.23%(A) 24
Retail Class B Shares
For the six month period ended January 31,:
1999 $17.90 0.040 1.177 (0.051) (2.206) $16.86 7.23% $ 2,740
For the period ended July 31,:
1998 (2) $16.88 0.057 1.034 (0.072) -- $17.90 13.10%* $ 1,816
(RESTUBBED TABLE)
- -------------------------------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- --------------------------------------------------------------------------------------------------------------------------
- ------------------
Income Equity Fund
- ------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.91% 1.08% 1.31% 1.14% 30%
For the years ended July 31,:
1998 0.92% 1.09% 1.63% 1.45% 69%
1997 0.99% 1.21% 2.39% 2.17% 46%
1996 1.03% 1.27% 2.95% 2.71% 42%
1995 1.06% 1.30% 3.59% 3.34% 37%
1994 1.06% 1.10% 3.29% 3.24% 34%
Retail Class A Shares
For the six month period ended January 31,:
1999 1.16% 1.33% 1.06% 0.89% 30%
For the years ended July 31,:
1998 1.17% 1.34% 1.39% 1.22% 69%
1997 1.06% 1.46% 2.32% 1.92% 46%
1996 1.03% 1.51% 2.89% 2.41% 42%
1995 1.06% 1.55% 3.06% 2.57% 37%
1994 (1) 1.10%* 1.33%* 0.93%* 0.71%* 34%
Retail Class B Shares
For the six month period ended January 31,:
1999 1.81% 1.83% 0.37% 0.35% 30%
For the period ended July 31,:
1998 (2) 1.82%* 1.85%* 0.38%* 0.36% *69%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(A) 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.
* Annualized
** Total return does not reflect the sales charge.
(1) Commenced operations on June 20, 1994.
(2) Commenced operations on February 2, 1998.
The accompanying notes are an integral part of the financial statements.
96
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------
Balanced Fund
- -------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $16.73 0.214 0.756 (0.215) (0.684) $16.80 5.97% $452,854
For the year ended July 31,:
1998 $16.46 0.446 0.724 (0.458) (0.442) $16.73 7.31% $448,783
For the six month period ended July 31,:
1997 $15.04 0.228 1.712 (0.228) (0.290) $16.46 13.35% $400,442
For the years ended January 31,:
1997 $13.92 0.422 1.699 (0.409) (0.595) $15.04 16.30% $307,531
1996 11.45 0.415 2.831 (0.417) (0.362) 13.92 28.93% 233,878
1995 12.21 0.390 (0.756) (0.391) (0.003) 11.45 (2.95)% 167,434
1994 11.50 0.394 0.928 (0.391) (0.221) 12.21 11.79% 152,189
Retail Class A Shares
For the six month period ended January 31,:
1999 $16.73 0.193 0.747 (0.196) (0.684) $16.79 5.79% $ 11,122
For the year ended July 31,:
1998 $16.45 0.402 0.736 (0.416) (0.442) $16.73 7.12% $ 10,629
For the six month period ended July 31,:
1997 $15.03 0.209 1.712 (0.209) (0.290) $16.45 13.22% $ 9,214
For the years ended January 31,:
1997 $13.91 0.464 1.706 (0.455) (0.595) $15.03 16.04% $ 8,833
1996 11.45 0.406 2.825 (0.406) (0.362) 13.91 28.73% 8,422
1995 12.21 0.393 (0.758) (0.392) (0.003) 11.45 (2.95)% 7,128
1994 11.50 0.397 0.925 (0.391) (0.221) 12.21 11.79% 7,292
Retail Class B Shares
For the six month period ended January 31,:
1999 $16.73 0.147 0.739 (0.152) (0.684) $16.78 5.45% $ 2,111
For the period ended July 31,:
1998 (1) $16.55 0.155 0.197 (0.175) -- $16.73 4.32%* $ 967
- --------------------
Emerging Growth Fund
- --------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $12.79 0.004 (0.087) (0.006) (1.791) $10.91 1.52% $ 63,003
1998 14.39 0.006 0.432 (0.008) (2.033) 12.79 3.37% 68,579
For the six month period ended July 31,:
1997 $13.50 0.014 0.888 (0.012) -- $14.39 6.70% $ 66,336
For the years ended January 31,:
1997 $11.94 0.008 2.556 (0.009) (0.991) $13.50 21.79% $ 57,156
1996 9.42 0.026 2.807 (0.033) (0.277) 11.94 30.24% 41,770
1995 (2) 10.00 0.086 (0.535) (0.080) (0.051) 9.42 (4.48)% 23,928
- -------------------------------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- --------------------------------------------------------------------------------------------------------------------------
- -------------
Balanced Fund
- -------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.92% 1.09% 2.58% 2.41% 14%
For the year ended July 31,:
1998 0.91% 1.08% 2.67% 2.50% 22%
For the six month period ended July 31,:
1997 0.83%* 0.98%* 2.99%* 2.85%* 10%
For the years ended January 31,:
1997 0.79% 0.79% 3.48% 3.48% 27%
1996 0.80% 0.80% 3.20% 3.20% 26%
1995 0.80% 0.80% 3.41% 3.41% 48%
1994 0.69% 0.79% 3.35% 3.25% 49%
Retail Class A Shares
For the six month period ended January 31,:
1999 1.17% 1.34% 2.33% 2.16% 14%
For the year ended July 31,:
1998 1.16% 1.33% 2.42% 2.24% 22%
For the six month period ended July 31,:
1997 1.07%* 1.30%* 2.75%* 2.53%* 10%
For the years ended January 31,:
1997 1.04% 1.19% 3.22% 3.07% 27%
1996 0.89% 1.20% 3.12% 2.81% 26%
1995 0.79% 1.19% 3.41% 3.01% 48%
1994 0.69% 1.19% 3.26% 2.76% 49%
Retail Class B Shares
For the six month period ended January 31,:
1999 1.82% 1.84% 1.63% 1.61% 14%
For the period ended July 31,:
1998 (1) 1.80%* 1.83%* 1.77%* 1.74%* 22%
- --------------------
Emerging Growth Fund
- --------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 1.03% 1.30% 0.07% (0.20)% 130%
1998 1.03% 1.30% 0.05% (0.22)% 289%
For the six month period ended July 31,:
1997 1.01%* 1.16%* 0.26%* 0.10%* 116%
For the years ended January 31,:
1997 1.04% 1.04% 0.06% 0.06% 134%
1996 1.05% 1.05% 0.22% 0.22% 131%
1995 (2) 1.05% 1.05% 1.01% 1.01% 123%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized
** Total return does not reflect the sales charge.
(1) Commenced operations on February 2, 1998.
(2) Commenced operations on February 1, 1994.
The accompanying notes are an integral part of the financial statements.
97
<PAGE>
HIGHMARK
FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------
Small Cap Value Fund
- --------------------
Fiduciary Shares
For the five month period ended January 31,:
1999 (1) $10.00 (0.003) 0.867 (0.004) -- $10.86 8.64% $ 73,185
Retail Class A Shares
For the five month period ended January 31,:
1999 (1) $10.00 (0.011) 0.864 (0.003) -- $10.85 8.53% $ 285
Retail Class B Shares
For the five month period ended January 31,:
1999 (1) $10.00 (0.012) 0.832 -- -- $10.82 8.20% $ 225
- -------------------------
International Equity Fund
- -------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $37.32 (0.061) 0.294 (0.133) -- $37.42 0.63% $ 97,096
For the year ended July 31,:
1998 $38.69 0.767 (1.178) (0.592) (0.367) $37.32 (0.82)% $ 91,970
For the six month period ended July 31,:
1997 $34.52 0.212 3.958 -- -- $38.69 12.08% $ 52,467
For the years ended January 31,:
1997 $37.49 0.220 (0.965) (0.812) (1.416) $34.52 (2.14)% $ 46,373
1996 (2) 33.51 0.447 4.084 (0.446) (0.105) 37.49 13.56% 44,188
- ------------------------------------------
California Intermediate Tax-Free Bond Fund
- ------------------------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $10.04 0.221 0.278 (0.219) -- $10.32 5.01% $154,582
For the year ended July 31,:
1998 $10.01 0.457 0.008 (0.435) -- $10.04 4.75% $157,062
For the six month period ended July 31,:
1997 $ 9.76 0.206 0.256 (0.215) -- $10.01 4.84% $ 11,292
For the years ended January 31,:
1997 $ 9.85 0.430 (0.078) (0.442) -- $ 9.76 3.72% $ 7,435
1996 8.95 0.518 0.873 (0.487) -- 9.85 15.83% 4,196
1995 10.04 0.460 (1.098) (0.452) -- 8.95 (6.33)% 12,793
1994 (3) 10.00 0.117 0.028 (0.105) -- 10.04 5.01%* 22,197
Retail Class A Shares
For the six month period ended January 31,:
1999 $10.01 0.217 0.282 (0.219) -- $10.29 5.02% $ 15,012
For the year ended July 31,:
1998 $ 9.99 0.423 0.032 (0.435) -- $10.01 4.66% $ 12,925
For the six month period ended July 31,:
1997 $ 9.74 0.222 0.240 (0.215) -- $ 9.99 4.85% $ 11,214
For the years ended January 31,:
1997 $ 9.84 0.458 (0.112) (0.442) -- $ 9.74 3.62% $ 5,791
1996 8.94 0.470 0.918 (0.487) -- 9.84 15.84% 4,266
1995 10.03 0.439 (1.077) (0.452) -- 8.94 (6.33)% 4,882
1994 (3) 10.00 0.115 0.020 (0.105) -- 10.03 4.67%* 2,830
- -------------------------------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- --------------------------------------------------------------------------------------------------------------------------
- --------------------
Small Cap Value Fund
- --------------------
Fiduciary Shares
For the five month period ended January 31,:
1999 (1) 1.58% 1.75% 0.08% 0.25% 15%
Retail Class A Shares
For the five month period ended January 31,:
1999 (1) 1.83% 2.00% 0.69% 0.86% 15%
Retail Class B Shares
For the five month period ended January 31,:
1999 (1) 2.48% 2.50% 1.30% 1.32% 15%
- -------------------------
International Equity Fund
- -------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 1.36% 1.64% 0.45% 0.73% 45%
For the year ended July 31,:
1998 1.34% 1.61% 0.71% 0.44% 72%
For the six month period ended July 31,:
1997 1.22%* 1.41%* 1.16%* 0.97%* 18%
For the years ended January 31,:
1997 1.18% 1.28% 0.60% 0.50% 29%
1996 (2) 1.16% 1.36% 1.31% 1.11% 21%
- ------------------------------------------
California Intermediate Tax-Free Bond Fund
- ------------------------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.46% 1.03% 4.26% 3.69% 3%
For the year ended July 31,:
1998 0.42% 1.04% 4.46% 3.84% 23%
For the six month period ended July 31,:
1997 0.21%* 0.91%* 4.56%* 3.85%* 5%
For the years ended January 31,:
1997 0.20% 0.85% 4.69% 4.04% 6%
1996 0.24% 0.71% 4.97% 4.50% 30%
1995 0.50% 0.72% 4.84% 4.62% 22%
1994 (3) 0.50%* 0.73%* 4.31%* 4.08% 19%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.46% 1.28% 4.26% 3.44% 3%
For the year ended July 31,:
1998 0.31% 1.29% 4.37% 3.39% 23%
For the six month period ended July 31,:
1997 0.21%* 1.22%* 4.55%* 3.54%* 5%
For the years ended January 31,:
1997 0.20% 1.25% 4.69% 3.64% 6%
1996 0.23% 1.12% 4.93% 4.04% 30%
1995 0.50% 1.12% 4.92% 4.30% 22%
1994 (3) 0.50%* 1.13%* 4.26%* 3.63%* 19%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized.
** Total return does not reflect the sales charge.
(1) Commenced operations on September 17, 1998.
(2) Commenced operations on February 1, 1995.
(3) Commenced operations on October 15, 1993.
The accompanying notes are an integral part of the financial statements.
98
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total** of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------
Bond Fund
- ---------
Fiduciary Shares
For the six month period ended January 31,:
1999 $10.81 0.303 0.218 (0.300) -- $11.03 4.86% $338,166
For the years ended July 31,:
1998 $10.67 0.615 0.150 (0.627) -- $10.81 7.41% $206,125
1997 10.23 0.628 0.421 (0.609) -- 10.67 10.59% 71,571
1996 10.38 0.660 (0.160) (0.650) -- 10.23 4.81% 60,374
1995 10.11 0.640 0.270 (0.640) -- 10.38 9.43% 59,758
1994 11.13 0.630 (1.020) (0.630) -- 10.11 (3.14)% 64,185
Retail Class A Shares
For the six month period ended January 31,:
1999 $10.73 0.304 0.206 (0.300) -- $10.94 4.71% $ 2,679
For the years ended July 31,:
1998 $10.59 0.605 0.162 (0.627) -- $10.73 7.47% $ 1,912
1997 10.15 0.642 0.403 (0.609) -- 10.59 10.68% 606
1996 10.29 0.690 (0.180) (0.650) -- 10.15 4.95% 1,157
1995 10.04 0.660 0.230 (0.640) -- 10.29 9.29% 558
1994 10.12 0.070 (0.050) (0.100) -- 10.04 (3.81)%(A) 7
- ---------------------------
Intermediate-Term Bond Fund
- ---------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 $10.32 0.300 0.145 (0.295) -- $10.47 4.36% $265,889
For the year ended July 31,:
1998 $10.30 0.613 0.021 (0.616) -- $10.32 6.37% $249,520
For the six month period ended July 31,:
1997 $10.16 0.309 0.138 (0.310) -- $10.30 4.54% $152,676
For the years ended January 31,:
1997 $10.62 0.599 (0.460) (0.595) -- $10.16 1.43% $150,411
1996 9.67 0.609 0.951 (0.609) -- 10.62 16.58% 132,942
1995 10.72 0.589 (1.034) (0.590) (0.015) 9.67 (4.11)% 109,848
1994 10.57 0.598 0.352 (0.595) (0.205) 10.72 9.22% 130,308
Retail Class A Shares
For the six month period ended January 31,:
1999 $10.31 0.302 0.153 (0.295) -- $10.47 4.36% $ 5,288
For the year ended July 31,:
1998 $10.29 0.609 0.031 (0.616) -- $10.31 6.38% $ 5,120
For the six month period ended July 31,:
1997 $10.16 0.309 0.128 (0.310) -- $10.29 4.44% $ 5,124
For the years ended January 31,:
1997 $10.61 0.602 (0.462) (0.595) -- $10.16 1.54% $ 5,213
1996 9.67 0.609 0.940 (0.609) -- 10.61 16.48% 6,417
1995 10.72 0.589 (1.034) (0.590) (0.015) 9.67 (4.11)% 6,645
1994 10.57 0.615 0.335 (0.595) (0.205) 10.72 9.23% 9,308
- -------------------------------------------------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets Portfolio
to Average Excluding to Average Excluding Turnover
Net Assets Fee Waivers Net Assets Fee Waivers Rate
- --------------------------------------------------------------------------------------------------------------------------
- ---------
Bond Fund
- ---------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.75% 1.02% 5.65% 5.38% 16%
For the years ended July 31,:
1998 0.75% 1.02% 5.86% 5.60% 16%
1997 0.85% 1.42% 6.11% 5.54% 14%
1996 0.89% 1.61% 6.10% 5.38% 21%
1995 0.92% 1.64% 6.35% 5.62% 36%
1994 0.86% 1.37% 6.11% 5.60% 44%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.75% 1.27% 5.60% 5.08% 16%
For the years ended July 31,:
1998 0.75% 1.26% 5.85% 5.33% 16%
1997 0.85% 1.68% 6.10% 5.27% 14%
1996 0.89% 1.85% 6.10% 5.14% 21%
1995 0.92% 1.89% 6.29% 5.32% 36%
1994 0.99%* 2.96%* 5.77%* 3.80%* 44%
- ---------------------------
Intermediate-Term Bond Fund
- ---------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.75% 1.00% 5.70% 5.45% 11%
For the year ended July 31,:
1998 0.75% 0.99% 5.86% 5.61% 51%
For the six month period ended July 31,:
1997 0.69%* 0.82%* 6.17%* 6.04%* 58%
For the years ended January 31,:
1997 0.67% 0.68% 5.93% 5.92% 106%
1996 0.68% 0.68% 5.97% 5.97% 147%
1995 0.71% 0.71% 5.89% 5.89% 95%
1994 0.69% 0.69% 5.56% 5.56% 72%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.75% 1.25% 5.70% 5.20% 11%
For the year ended July 31,:
1998 0.75% 1.24% 5.83% 5.34% 51%
For the six month period ended July 31,:
1997 0.69%* 1.14%* 6.17%* 5.71%* 58%
For the years ended January 31,:
1997 0.67% 1.08% 5.91% 5.50% 106%
1996 0.68% 1.09% 5.99% 5.58% 147%
1995 0.71% 1.11% 5.87% 5.47% 95%
1994 0.69% 1.09% 5.51% 5.11% 72%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
(A) 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.
* Annualized.
** Total return does not reflect the sales charge.
The accompanying notes are an integral part of the financial statements.
99
<PAGE>
[LOGO]
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Value, End
Beginning Investment Gain (Loss) Investment Capital End Total of Period
of Period Income on Investments Income Gains of Period Return (000)
- --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------
100% U.S. Treasury Money Market Fund
- ------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiduciary Shares
For the six month period ended January 31,:
1999 $ 1.00 0.023 -- (0.023) -- $ 1.00 4.69% $236,475
For the years ended July 31,:
1998 $ 1.00 0.049 -- (0.049) -- $ 1.00 5.02% $227,733
1997 1.00 0.046 -- (0.046) -- 1.00 4.65% 243,464
1996 1.00 0.046 -- (0.046) -- 1.00 4.74% 173,340
1995 1.00 0.046 -- (0.046) -- 1.00 4.69% 190,604
1994 1.00 0.026 -- (0.026) -- 1.00 2.68% 160,721
Retail Class A Shares
For the six month period ended January 31,:
1999 $ 1.00 0.021 -- (0.021) -- $ 1.00 4.44% $936,277
For the years ended July 31,:
1998 $ 1.00 0.047 -- (0.047) -- $ 1.00 4.75% $727,087
1997 1.00 0.045 -- (0.045) -- 1.00 4.58% 558,972
1996 1.00 0.046 -- (0.046) -- 1.00 4.74% 100,623
1995 1.00 0.046 -- (0.046) -- 1.00 4.69% 88,660
1994 1.00 0.026 -- (0.026) -- 1.00 2.68% 39,157
<CAPTION>
- ---------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets
to Average Excluding to Average Excluding
Net Assets Fee Waivers Net Assets Fee Waivers
- ---------------------------------------------------------------------------------
- ------------------------------------
100% U.S. Treasury Money Market Fund
- ------------------------------------
<S> <C> <C> <C> <C>
Fiduciary Shares
For the six month period ended January 31,:
1999 0.47% 0.79% 4.51% 4.19%
For the years ended July 31,:
1998 0.46% 0.78% 4.91% 4.59%
1997 0.64% 0.92% 4.61% 4.33%
1996 0.74% 0.97% 4.64% 4.41%
1995 0.73% 0.97% 4.60% 4.36%
1994 0.74% 0.90% 2.63% 2.48%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.72% 1.04% 4.25% 3.93%
For the years ended July 31,:
1998 0.71% 1.03% 4.65% 4.33%
1997 0.72% 1.10% 4.55% 4.17%
1996 0.74% 1.23% 4.64% 4.15%
1995 0.73% 1.22% 4.68% 4.19%
1994 0.74% 1.15% 2.68% 2.27%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------
U.S. Government Money Market Fund
- ---------------------------------
Fiduciary Shares
For the six month period ended January 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 0.024 -- (0.024) -- $1.00 4.86% $369,320
For the years ended July 31,:
1998 $1.00 0.050 -- (0.050) -- $1.00 5.16% $283,096
1997 1.00 0.047 -- (0.047) -- 1.00 4.78% 252,995
1996 1.00 0.048 -- (0.048) -- 1.00 4.88% 151,483
1995 1.00 0.048 -- (0.048) -- 1.00 4.87% 159,747
1994 1.00 0.027 -- (0.027) -- 1.00 2.74% 162,094
Retail Class A Shares
For the six month period ended January 31,:
1999 $1.00 0.022 -- (0.022) -- $1.00 4.61% $137,960
For the years ended July 31,:
1998 $1.00 0.048 -- (0.048) -- $1.00 4.90% $122,074
1997 1.00 0.046 -- (0.046) -- 1.00 4.70% 42,797
1996 1.00 0.048 -- (0.048) -- 1.00 4.86% 75,714
1995 1.00 0.048 -- (0.048) -- 1.00 4.86% 48,474
1994 1.00 0.027 -- (0.027) -- 1.00 2.74% 24,055
Retail Class B Shares
For the six month period ended January 31,:
1999 $1.00 0.019 -- (0.019) -- $1.00 3.45% $ 52
For the period ended July 31,:
1998 (1) $1.00 0.021 -- (0.021) -- $1.00 4.25%* $ --
<CAPTION>
- ---------------------------------
U.S. Government Money Market Fund
- ---------------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.52% 0.79% 4.68% 4.41%
For the years ended July 31,:
1998 0.51% 0.79% 5.05% 4.77%
1997 0.70% 0.95% 4.69% 4.44%
1996 0.77% 1.00% 4.76% 4.53%
1995 0.78% 1.02% 4.76% 4.52%
1994 0.78% 0.94% 2.70% 2.54%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.77% 1.04% 4.43% 4.16%
For the years ended July 31,:
1998 0.76% 1.04% 4.80% 4.52%
1997 0.78% 1.22% 4.60% 4.16%
1996 0.79% 1.26% 4.77% 4.30%
1995 0.78% 1.27% 4.82% 4.33%
1994 0.77% 1.17% 2.63% 2.23%
Retail Class B Shares
For the six month period ended January 31,:
1999 1.52% 1.54% 3.60% 3.58%
For the period ended July 31,:
1998 (1) 1.26%* 1.54%* 4.30%* 4.02%*
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized.
(1) Commenced operations on February 2, 1998.
The accompanying notes are an integral part of the financial statements.
100
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Activities Distributions
Net ------------------------- ---------------------- Net Net
Asset Net Realized Asset Assets,
Value, Net and Unrealized Net Contribution Value, End
Beginning Investment Gain (Loss) Investment Capital of End Total of Period
of Period Income on Investments Income Gains Capital of Period Return (000)
- ----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------
Diversified Money Market Fund
- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fiduciary Shares
For the six month period ended January 31,:
1999 $1.00 0.024 -- (0.024) -- -- $1.00 4.98% $1,214,208
For the year ended July 31,:
1998 $1.00 0.051 -- (0.051) -- -- $1.00 5.27% $1,180,141
For the six month period ended July 31,:
1997 $1.00 0.025 -- (0.025) -- -- $1.00 5.11%* $ 971,858
For the years ended January 31,:
1997 $1.00 0.049 -- (0.049) -- -- $1.00 5.03% $ 523,571
1996 1.00 0.054 -- (0.054) -- -- 1.00 5.57% 503,080
1995 1.00 0.039 (0.001) (0.039) -- 0.001 1.00 3.99% 536,754
1994 1.00 0.029 -- (0.029) -- -- 1.00 2.99% 498,795
Retail Class A Shares
For the six month period ended January 31,:
1999 $1.00 0.023 -- (0.023) -- -- $1.00 4.74% $1,409,887
For the year ended July 31,:
1998 $1.00 0.049 -- (0.049) -- -- $1.00 5.01% $1,124,280
For the six month period ended July 31,:
1997 $1.00 0.024 -- (0.024) -- -- $1.00 4.86%* $ 799,657
For the years ended January 31,:
1997 $1.00 0.047 -- (0.047) -- -- $1.00 4.78% $ 576,566
1996 1.00 0.052 -- (0.052) -- -- 1.00 5.31% 259,608
1995 1.00 0.037 -- (0.037) -- -- 1.00 3.78% 111,267
1994 1.00 0.027 -- (0.027) -- -- 1.00 2.77% 86,291
<CAPTION>
- ---------------------------------------------------------------------------------
Ratio of
Ratio Net Investment
of Expenses Ratio of Income to
Ratio to Average Net Investment Average
of Expenses Net Assets Income Net Assets
to Average Excluding to Average Excluding
Net Assets Fee Waivers Net Assets Fee Waivers
- ---------------------------------------------------------------------------------
Fiduciary Shares
For the six month period ended January 31,:
1999 0.52% 0.79% 4.85% 4.58%
For the year ended July 31,:
1998 0.50% 0.77% 5.15% 4.88%
For the six month period ended July 31,:
1997 0.48%* 0.64%* 5.07%* 4.90%*
For the years ended January 31,:
1997 10.49% 0.49% 4.93% 4.93%
1996 0.50% 0.50% 5.43% 5.43%
1995 0.50% 0.50% 3.93% 3.93%
1994 0.49% 0.49% 2.93% 2.93%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.77% 1.04% 4.60% 4.33%
For the year ended July 31,:
1998 0.75% 1.02% 4.90% 4.63%
For the six month period ended July 31,:
1997 0.72%* 0.95%* 4.82%* 4.59%*
For the years ended January 31,:
1997 0.73% 0.88% 4.69% 4.54%
1996 0.75% 0.90% 5.16% 5.01%
1995 0.70% 0.90% 3.79% 3.59%
1994 0.70% 0.89% 2.71% 2.52%
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------
California Tax-Free Money Market Fund
- -------------------------------------
Fiduciary Shares
For the six month period ended January 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 0.013 -- (0.013) -- -- $1.00 2.81% $269,526
For the year ended July 31,:
1998 $1.00 0.031 -- (0.031) -- -- $1.00 3.14% $241,487
For the six month period ended July 31,:
1997 $1.00 0.016 -- (0.016) -- -- $1.00 3.28%* $159,297
For the years ended January 31,:
1997 $1.00 0.031 -- (0.031) -- -- $1.00 3.12% $ 36,207
1996 1.00 0.034 -- (0.034) -- -- 1.00 3.48% 42,923
1995 1.00 0.026 -- (0.026) -- -- 1.00 2.67% 52,050
1994 1.00 0.021 -- (0.021) -- -- 1.00 2.13% 52,982
Retail Class A Shares
For the six month period ended January 31,:
1999 $1.00 0.012 -- (0.012) -- -- $1.00 2.56% $383,995
For the year ended July 31,:
1998 $1.00 0.028 -- (0.028) -- -- $1.00 2.89% $305,260
For the six month period ended July 31,:
1997 $1.00 0.015 -- (0.015) -- -- $1.00 2.99%* $217,229
For the years ended January 31,:
1997 $1.00 0.027 -- (0.027) -- -- $1.00 2.78% $150,688
1996 1.00 0.031 -- (0.031) -- -- 1.00 3.14% 81,177
1995 1.00 0.023 -- (0.023) -- -- 1.00 2.33% 49,494
1994 1.00 0.018 -- (0.018) -- -- 1.00 1.80% 52,220
Fiduciary Shares
For the six month period ended January 31,:
1999 0.32% 0.79% 2.63% 2.16%
For the year ended July 31,:
1998 0.31% 0.78% 3.07% 2.60%
For the six month period ended July 31,:
1997 0.28%* 0.69%* 3.36%* 2.96%*
For the years ended January 31,:
1997 0.27% 0.49% 3.08% 2.86%
1996 0.28% 0.49% 3.43% 3.22%
1995 0.29% 0.50% 2.66% 2.45%
1994 0.30% 0.54% 2.09% 1.85%
Retail Class A Shares
For the six month period ended January 31,:
1999 0.57% 1.04% 2.38% 1.91%
For the year ended July 31,:
1998 0.56% 1.03% 2.84% 2.37%
For the six month period ended July 31,:
1997 0.55%* 0.97%* 3.02%* 2.59%*
For the years ended January 31,:
1997 0.60% 0.88% 2.75% 2.47%
1996 0.61% 0.88% 3.09% 2.82%
1995 0.62% 0.90% 2.33% 2.05%
1994 0.63% 0.94% 1.76% 1.45%
</TABLE>
Amounts designated as "--" are either $0 or have been rounded to $0.
*Annualized.
The accompanying notes are an integral part of the financial statements.
101
<PAGE>
[LOGO]
NOTES TO FINANCIAL STATEMENTS (unaudited)
For the period ended January 31, 1999
1. Organization
- -------------------------------------------------------------------------------
HighMark Funds ("HighMark" or "the Funds") was organized as a Massachusetts
business trust under a Declaration of Trust dated March 10, 1987. Prior to
December 4, 1996, HighMark was known as the HighMark Group.
The Funds are registered under the Investment Company Act of 1940, as amended,
as a diversified open-end investment company with fourteen funds: the Growth
Fund, the Value Momentum Fund, the Income Equity Fund, the Balanced Fund, the
Emerging Growth Fund, the Small Cap Value Fund, the International Equity Fund,
the California Intermediate Tax-Free Bond Fund, the Bond Fund, the
Intermediate-Term Bond Fund, (the "Non-Money Market Funds") and the 100% U.S.
Treasury Money Market Fund, the U.S. Government Money Market Fund, the
Diversified Money Market Fund and the California Tax-Free Money Market Fund (the
"Money Market Funds"). HighMark is registered to offer three classes of shares,
Class A and Class B shares (collectively called the "Retail Shares") and
Fiduciary Shares. The Funds' prospectuses provide a description of each Fund's
investment objectives, policies and strategies.
On October 18, 1996 and October 17, 1996, respectively, the Board of Trustees of
the HighMark Funds and the Board of Trustees of the Stepstone Funds (Stepstone)
approved an Agreement and Plan of Reorganization (the "Reorganization
Agreement") providing for the transfer of all assets and liabilities of the
Stepstone Funds in exchange for the issuance of shares in the funds in a
tax-free reorganization.
2. Significant Accounting Policies
- -------------------------------------------------------------------------------
The following is a summary of significant accounting policies followed by the
Funds.
Basis of Presentation of Statements -- The HighMark Funds acquired the Stepstone
Funds in a series of tax-free business combinations. While each Fund now exists
legally as a HighMark Fund, a number of the surviving funds for accounting
purposes are Stepstone Funds. In accordance with generally accepted accounting
principles, the financial statements presented herein represent those of the
accounting survivors. Accordingly, the statements of changes in net assets and
financial Highlights presented reflect prior periods beginning on the first day
of the accounting survivor's fiscal year (August 1, 1996 and February 1, 1997,
respectively).
Security Valuation -- Investment securities held by the Money Market Funds are
stated at amortized cost, which approximates market value. Under this valuation
method, purchase discounts and premiums are accreted and amortized ratably to
maturity and are included in interest income.
Investments in equity securities held by the Non-Money Market Funds that are
traded on a national securities exchange (or reported on the NASDAQ national
market system) are stated at the last quoted sales price if readily available
for such equity securities on each business day; other equity securities traded
in the over-the-counter market and listed equity securities for which no sale
was reported on that date are stated at the last quoted bid price. Option
contracts are valued at the last quoted bid price as quoted on the primary
exchange or board of trade on which such option contracts are traded. Debt
obligations exceeding sixty days to maturity for which market quotations are
readily available are valued at the most recently quoted bid price. Debt
obligations with sixty days or less remaining until maturity may be valued at
their amortized cost. Restricted securities for which quotations are not readily
available are valued at fair value using methods determined in good faith under
general Trustee supervision.
Foreign Currency Translation -- The books and records of the International
Equity Fund are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars on the following basis: (I) market value of
investment securities, other assets and liabilities at the current rate of
exchange; and (II) purchases and sales of investment securities, income and
expenses at the relevant rates of exchange prevailing on the respective dates of
such transactions.
The International Equity Fund does not isolate the portion of gains and losses
on investments in securities that is due to changes in the foreign exchange
rates from that which is due to changes in market prices of such securities.
102
<PAGE>
- --------------------------------------------------------------------------------
The International Equity Fund reports gains and losses on foreign currency
related transactions as realized and unrealized gains and losses for financial
reporting purposes, whereas such gains and losses are treated as ordinary income
or loss for U.S. Federal income tax purposes.
Federal Income Taxes -- It is each Fund's intention to continue to qualify as a
regulated investment company for Federal income tax purposes and distribute all
of its taxable income and net capital gains. Accordingly, no provision for
Federal income taxes is required.
The International Equity Fund may be subject to taxes imposed by countries in
which it invests with respect to its investments in issuers existing or
operating in such countries. Such taxes are generally based on either income
earned or repatriated. The International Equity Fund accrues such taxes when the
related income is earned.
Net Asset Value Per Share -- The net asset value per share is calculated each
business day for each Fund. It is computed by dividing the assets of each Fund,
less its liabilities, by the number of outstanding shares of each Fund.
Discounts and Premiums -- Discounts and premiums, except for the Bond Fund, are
accreted or amortized over the life of each security and are recorded as
interest income for each of the Funds using a method that approximates the
effective interest method. the Bond Fund follows the same basis for financial
reporting and federal income tax purposes and does not amortize premiums or
accrete discounts, with the applicable portion of market discount recognized as
ordinary income upon disposition or maturity.
Classes -- Class specific expenses are borne by that class. Income, non-class
specific expenses and realized/ unrealized gains and losses are allocated to the
respective classes on the basis of the relative daily net assets.
Use of Estimates in the Preparation of Financial Statements -- The preparation
of financial statements in accordance with generally accepted accounting
principles 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 estimates.
Repurchase Agreements -- Securities pledged as collateral for Repurchase
Agreements are held by the custodian bank until the respective agreements
mature. Provisions of repurchase agreements and procedures adopted by the
Adviser ensure that the market value of the collateral is sufficient in the
event of default by the counterparty. If the counterparty defaults and the value
of the collateral declines or if the counterparty enters an insolvency
proceeding, realization of the collateral by the fund may be delayed or limited.
Options Transactions -- In order to produce incremental earnings, protect gains,
and facilitate buying and selling of securities for investment purposes, certain
of the Funds, as described in their prospectuses, may participate in options
transactions including writing call options. A risk in writing a call option is
that the fund gives up the opportunity of profit if the market price of the
underlying security increases.
The Fund realizes a gain upon the expiration of a written call option. When a
written call option is closed prior to expiration by being exercised, the
proceeds on the sale are increased by the amount of original premium received.
Also, certain funds may purchase call or put options with respect to securities
that are permitted investments. The risk in purchasing options is limited to the
premium paid.
The Fund recognizes a gain when the underlying securities' market price rises
(in case of a call) or falls (in case of a put) to the extent sufficient to
cover the option premium and transaction costs.
Security Transactions and Investment Income -- Security transactions are
accounted for on the date the security is purchased or sold (trade date). Costs
used in determining realized gains and losses on the sale of investment
securities are those of the specific securities sold adjusted for the accretion
and amortization of purchase discounts and premiums, if any, during the
respective holding periods. Interest income is recorded on the accrual basis;
dividend income is recorded on the ex-dividend date.
Distributions to Shareholders -- Distributions from net investment income for
the Money Market Funds are declared daily and paid monthly. Each of the Non-
103
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
Money Market Funds except the International Equity Fund declare and make
distributions from net investment income monthly. The International Equity Fund
declares and make distributions from net investment income periodically. Any net
realized capital gains will be distributed at least annually for all Funds.
Security Lending -- Certain of the Funds lend their securities to approved
brokers to earn additional income and receive cash and/or securities as
collateral to secure the loans. Collateral is maintained at not less than 102%
of the value of loaned securities. Although the risk of lending is mitigated by
the collateral, the fund could experience a delay in recovering its securities
and a possible loss of income or value if the borrower fails to return them.
Reclassification of Components of Net Assets -- In accordance with Statement of
Position 93-2, "Determination, Disclosure, and Financial Statement Presentation
of Income, Capital Gain, and Return of Capital Distribution by Investment
Companies", differences attributable to the classification of capital gains and
net investment income for tax distribution purposes, as of july 31, 1998, have
been reclassified between accumulated net realized gains/losses and
undistributed net income, as appropriate. These reclassifications had no effect
on net asset value.
3. Transactions with Affiliates
- -------------------------------------------------------------------------------
Effective February 15, 1997, SEI Investments Mutual Funds Services (the
"Administrator"), a Delaware business trust, became the Administrator for the
Funds. SEI Investments Management Corporation, a wholly-owned subsidiary of SEI
Investments Company, is the owner of all beneficial interest in the
Administrator. The Funds and the Administrator are parties to an Administration
Agreement (the "Agreement") dated February 15, 1997, under which the
Administrator provides the Fund with management and administrative services for
an annual fee of 0.20% of the average daily net assets of the Funds. the
Administrator may voluntarily waive its fee, subject to termination at any time
by the Administrator, to the extent necessary to limit the total operating
expenses of a Fund. During the period August 1, 1998 to January 31, 1999 the
Administrator voluntarily agreed to waive its fee to the rate of 0.18% of the
average daily net assets of the Funds.
Pursuant to a separate agreement with the Administrator, HighMark Capital
Management, Inc. performs sub-administration services on behalf of each fund,
for which it receives a fee paid by the Administrator at the annual rate of up
to 0.05% of the average daily net assets of the Funds. For the period from
August 1, 1998 to January 31, 1999, HighMark Capital Management, Inc. received
sub-administration fees from the Funds in the amount of $2,071,000.
State Street Bank and Trust Company serves as the transfer agent, dividend
disbursing agent and shareholder servicing agent for HighMark. The Administrator
has agreed to absorb certain transfer agency related expenses on behalf of the
Fund.
SEI Investments Distribution Co. (the "Distributor") and the Funds are parties
to a distribution agreement dated February 15, 1997. No compensation is paid to
the Distributor for services rendered to the Fiduciary Shares under this
agreement. The Funds have adopted Distribution Plans (the "Plans") on behalf of
Retail A Shares and Retail B Shares pursuant to Rule 12b-1 under the Investment
Company Act of 1940. The Plans provide that Retail A Shares and Retail B Shares
will bear the cost of their distribution expenses. The distributor, as
compensation for its services under the Plans, receives a distribution fee,
computed daily and payable monthly, of 0.25% of the average daily net assets
attributable to each Fund's Retail A Shares and 0.75% of the average daily net
assets attributable to each Fund's Retail B Shares. The California Intermediate
Tax-Free Bond, Bond and Intermediate-Term Bond Funds are currently waiving all
distribution fees.
The Funds have also adopted Shareholder Service Plans permitting payment of
compensation to service providers, that may include Union Bank of California,
N.A., The Bank of Tokyo-Mitsubishi, Ltd., or their respective affiliates, that
have agreed to provide certain shareholder support services for their customers
who own Retail A, Retail B or Fiduciary Shares. In consideration for such
services, a service provider is entitled to receive compensation at the annual
rate of up to .25% of each Fund's average daily net assets. The service provider
104
<PAGE>
- --------------------------------------------------------------------------------
may waive such fees at any time. Any such waiver is voluntary and may be
terminated at any time. For the period from August 1, 1998 to January 31, 1999,
Union Bank of California, N.A. received shareholder servicing fees from the
Funds in the amount of approximately $883,000.
A contingent deferred sales charge (CDSC) is imposed on certain redemptions of
Retail B shares. The CDSC varies depending on the number of years from the time
of payment for the purchase of Retail B shares until the redemption of such
shares.
Years Since Contingent Deferred
Purchase Made Sales Charge
------------------------------------------------
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh and Following None
Union Bank of California, N.A. acts as custodian ("the Custodian") for the
Funds. Fees of the Custodian are being paid on the basis of net assets of the
Funds.
Certain officers of the Funds are also officers and/or Directors of the
Administrator. The Funds pay each unaffiliated Trustee an annual fee for
attendance at quarterly and interim meetings. Compensation of officers is paid
by the Administrator.
4. Investment Advisory Agreement
- -------------------------------------------------------------------------------
The Funds and HighMark Capital Management, Inc. a subsidiary of UnionBanCal
Corporation, (the "Advisor") are parties to an Advisory Agreement. For its
services, the Advisor is entitled to receive a fee, that is calculated daily and
paid monthly, at an annual rate of 0.30% of the average daily net assets of the
100% U.S. Treasury Money Market Fund, the U.S. Government Money Market Fund, the
Diversified Money Market Fund, and the California Tax-Free Money Market Fund,
0.60% of the Growth Fund, the Income Equity Fund, the Value Momentum Fund, and
the Balanced Fund, 0.50% of the Intermediate-Term Bond Fund, the Bond Fund, and
the California Intermediate Tax-Free Bond Fund, 0.80% of the Emerging Growth
Fund, 0.95% of the International Equity Fund and 1.00% of the Small Cap Value
Fund. For the six months ended January 31, 1999 the Advisor voluntarily waived a
portion of its fee in the 100% U.S. Treasury Money Market Fund, the California
Tax-Free Money Market Fund and the California Intermediate Tax-Free Bond Fund in
order to limit the operating expenses of the Funds.
HighMark Capital Management, Inc. provides investment advisory services to the
Emerging Growth Fund pursuant to an investment advisory agreement dated April 1,
1996. The Advisor and Bank of Tokyo-Mitsubishi Trust Company are parties to a
Sub-Advisory Agreement for the Emerging Growth Fund. Bank of Tokyo-Mitsubishi
Trust Company is entitled to a fee of 0.50% of the average daily net assets of
the Fund.
On January 1, 1998 the Advisor and AXA Asset Management Partenaires ("AXA")
entered into an investment sub-advisory agreement for the International Equity
Fund. AXA is entitled to a fee of 0.50% of the average daily net assets of the
Fund.
On August 26, 1998 the Advisor and Brandes Investment Partners, LLP (Brandes)
entered into an investment sub-advisory agreement for the Small Cap Value Fund.
Brandes is entitled to a fee of 0.50% of the average market value of the assets
of the Small Cap Value Fund allocated to Brandes.
105
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
5. Investment Transactions
- -------------------------------------------------------------------------------
The purchases and sales (including maturities) of investment securities other
than short-term securities were as follows:
Investment
Securities
------------------
Purchases Sales
(000's) (000's)
---------- ----------
Growth ..................................... $299,798 $172,711
Value Momentum ............................. 37,186 60,896
Income Equity .............................. 195,059 253,173
Balanced ................................... 60,270 76,659
Emerging Growth ............................ 68,987 74,637
Small Cap Value ............................ 75,945 9,930
International Equity ....................... 43,222 39,496
California Intermediate
Tax-Free Bond ............................. 4,945 10,338
Bond ....................................... 159,890 40,665
Intermediate-Term Bond ..................... 36,095 28,458
Cost for financial statement purposes differs from cost for Federal income tax
purposes primarily due to the deferral of certain losses under Federal income
tax regulations. The aggregate gross unrealized appreciation and depreciation at
January 31, 1999 for each portfolio was as follows:
Appreciation Depreciation Total
(000's) (000's) (000's)
-------------- ------------ ------
Growth ............................. $252,744 $(16,514) $236,230
Value Momentum ..................... 402,002 (43,922) 358,080
Income Equity ...................... 153,528 (13,589) 139,939
Balanced ........................... 130,541 (11,731) 118,810
Emerging Growth .................... 11,202 (4,760) 6,442
Small Cap Value .................... 7,972 (4,317) 3,655
International Equity ............... 14,143 (2,443) 11,700
California Intermediate
Tax-Free Bond .................... 10,812 -- 10,812
Bond ............................... 16,273 (269) 16,004
Intermediate-Term Bond ............. 9,581 (230) 9,351
The Funds have capital loss carryforwards at July 31, 1998, to the extent
provided in the regulations for federal income tax as follows:
<TABLE>
<CAPTION>
Capital Loss
Carryover Expires Expires Expires Expires Expires Expires
07/31/98 2001 2002 2003 2004 2005 2006
------------ ------------ ------------- --------------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
International Equity .. $ 149,444 $ 149,444 $ -- $ -- $ -- $ -- $ --
Cal. Int. Tax-Free Bond 1,001,080 -- -- 279,938 711,043 10,099 --
Bond .................. 3,179,541 -- 2,679,139 -- 69,995 430,407 --
Int.-Term Bond ........ 3,160,224 -- -- 1,196,317 -- 1,963,907 --
U.S. Government
Money Market ........ 971,846 -- -- -- -- -- 971,846
Diversified
Money Market ........ 1,420,929 300,452 29,246 1,078,029 13,202 -- --
Cal. Tax-Free
Money Market ........ 64,602 -- 24,741 24,115 -- -- 15,746
</TABLE>
The 100% U.S. Treasury Money Market Fund and the International Equity Fund had
post 10/31 loss deferrals of $3,641 and $6,077,003, respectively that can be
used to offset future capital gains.
6. Concentration of Credit Risk
- -------------------------------------------------------------------------------
The California Intermediate Tax-Free Bond Fund and the California Tax-Free Money
Market Fund invest in debt securities in the State of California. The ability of
the issuers of the securities held by the Funds to meet their obligations may be
affected by economic and political developments in that state.
The International Equity Fund and the Small Cap Value Fund invest in securities
of foreign issuers in various countries. These investments may involve certain
considerations and risks not typically associated with investments in the United
States as a result of, among other factors, the possibility of future political
and economic developments, lack of liquidity, low market capitalizations,
foreign currency fluctuations, and the level of governmental supervision and
regulation of securities markets in the respective countries.
106
<PAGE>
- -------------------------------------------------------------------------------
7. Common Trust Fund Conversions
- -------------------------------------------------------------------------------
On April 24, 1998, certain common trust funds of Union Bank of California, N.A.
were converted into the HighMark Funds. The assets, which consisted of
securities and related receivables less liabilities, were converted on a
tax-free basis. The Funds involved in the conversion are as follows:
Unrealized
Common Trust Fund HighMark Fund Appreciation
PT Growth A & B Growth...................... $ 36,913
PT Value Momentum A & B Value Momentum.............. 141,260
PT Income Equity Income Equity............... 88,061
PT Balanced Balanced.................... 3,468
PT California Tax-Free Bond California Intermediate
Tax-Free Bond............. 4,581
PT Diversified Bond A & B Bond........................ 4,162
PT Intermediate Bond A & B Intermediate-Term Bond...... 2,778
PT Prime Money Market Diversified Money Market.... --
8. Option Contracts
- -------------------------------------------------------------------------------
Transactions in covered call options during the six month period ended January
31, 1999 are summarized as follows:
Balanced
--------------------------
Number of
Written Option Transaction Contracts Premium
--------------------------------- ---------- --------
Option written and outstanding at
beginning of period .............. -- $ --
Call option written during period 100 21,574
Call option exercised during period -- --
Call option expired during period -- --
Call option closed during period . (100) (21,574)
---- -------
Option written and outstanding at
end of period .................... -- $ --
==== =======
107
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
9. Shares Issued and Redeemed (000):
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Transactions in Fund Shares were as follows:
Growth Value Momentum
Fund Fund
---------------------- ------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
----------------------- ------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C>
Issued from the reorganization of the Blue Chip Growth Fund 7,569 -- -- --
Issued in connection with the acquisition of
Common Trust Fund Assets.................................. -- 6,689 -- 10,319
Issued...................................................... 5,525 7,071 3,911 7,388
Issued in Lieu of Cash Distributions........................ 2,322 3,216 1,055 315
Redeemed.................................................... (4,450) (4,643) (5,391) (4,589)
------- ------- ------- -------
Total Fiduciary Share Transactions........................ 10,966 12,333 (425) 13,433
------- ------- ------- -------
Retail A Shares:
Issued...................................................... 283 543 168 600
Issued in Lieu of Cash Distributions........................ 65 127 45 16
Redeemed.................................................... (387) (105) (228) (136)
------- ------- ------- -------
Total Retail A Share Transactions......................... (39) 565 (15) 480
------- ------- ------- -------
Retail B Shares:
Issued...................................................... 170 118 31 194
Issued in Lieu of Cash Distributions........................ 19 -- 7 --
Redeemed.................................................... (11) (2) (13) (4)
------- ------- ------- -------
Total Retail B Share Transactions......................... 178 116 25 190
------- ------- ------- -------
Net Increase (Decrease) in Share Transactions............... 11,105 13,014 (415) 14,103
====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
California Intermediate
Tax-Free Bond Bond
Fund Fund
-------------------------- --------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
-------------------------- --------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C> <C> <C> <C>
Issued from the reorganization of the Government Securities Fund -- -- 10,341 --
Issued in connection with the acquisition of
Common Trust Fund Assets....................................... -- 13,818 -- 9,361
Issued........................................................... 1,042 2,217 3,009 5,348
Issued in Lieu of Cash Distributions............................. 17 30 243 357
Redeemed......................................................... (1,721) (1,557) (1,994) (2,711)
---------- ---------- ---------- ----------
Total Fiduciary Share Transactions............................. (662) 14,508 11,599 12,355
---------- ---------- ---------- ----------
Retail A Shares:
Issued........................................................... 405 860 151 124
Issued in Lieu of Cash Distributions............................. 21 43 4 4
Redeemed......................................................... (258) (735) (88) (7)
---------- ---------- ---------- ----------
Total Retail A Share Transactions.............................. 168 168 67 (121)
---------- ---------- ---------- ----------
Retail B Shares:
Issued........................................................... -- -- -- --
Issued in Lieu of Cash Distributions............................. -- -- -- --
Redeemed......................................................... -- -- -- --
---------- ---------- ---------- ----------
Total Retail B Share Transactions.............................. -- -- -- --
---------- ---------- ---------- ----------
Net Increase in Share Transactions............................... 494 14,676 11,666 12,476
========== ========== ========== ==========
</TABLE>
108
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Income Equity Balanced
Fund Fund
------------------------ ------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
------------------------ -------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C> <C> <C> <C>
Issued from the reorganization of the Blue Chip Growth Fund -- -- -- --
Issued in connection with the acquisition of
Common Trust Fund Assets.................................. -- 18,743 -- 881
Issued..................................................... 1,781 3,942 2,168 5,729
Issued in Lieu of Cash Distributions....................... 4,557 2,054 1,398 1,346
Redeemed................................................... (5,193) (6,700) (3,432) (5,471)
------- ------- ------- -------
Total Fiduciary Share Transactions....................... 1,145 18,039 134 2,485
------- ------- ------- -------
Retail A Shares:
Issued..................................................... 366 527 65 151
Issued in Lieu of Cash Distributions....................... 152 115 33 29
Redeemed................................................... (548) (135) (71) (105)
------- ------- ------- -------
Total Retail A Share Transactions........................ (30) 507 27 75
------- ------- ------- -------
Retail B Shares:
Issued..................................................... 51 103 71 59
Issued in Lieu of Cash Distributions....................... 18 -- 5 --
Redeemed................................................... (8) (2) (8) (1)
------- ------- ------- -------
Total Retail B Share Transactions........................ 61 101 68 58
------- ------- ------- -------
Net Increase (Decrease) in Share Transactions.............. 1,176 18,647 229 2,618
======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Emerging Growth Small Cap Value International Equity
Fund Fund Fund
----------------------- --------------- -----------------------
08/01/98 08/01/97 09/17/98 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 01/31/99 to 07/31/98
------------------------ -------------- ------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C> <C> <C> <C> <C>
Issued from the reorganization of the Blue Chip Growth Fun -- -- -- -- --
Issued in connection with the acquisition of
Common Trust Fund Assets................................. -- -- -- -- --
Issued..................................................... 960 2,362 6,742 237 1,372
Issued in Lieu of Cash Distributions....................... 1,000 760 -- 3 20
Redeemed................................................... (1,546) (2,369) -- (109) (284)
------- ------- ------- ------- -------
Total Fiduciary Share Transactions....................... 414 753 6,742 131 1,108
------- ------- ------- ------- -------
Retail A Shares:
Issued..................................................... -- -- 26 -- --
Issued in Lieu of Cash Distributions....................... -- -- -- -- --
Redeemed................................................... -- -- -- -- --
------- ------- ------- ------- -------
Total Retail A Share Transactions........................ -- -- 26 -- --
------- ------- ------- ------- -------
Retail B Shares:
Issued..................................................... -- -- 21 -- --
Issued in Lieu of Cash Distributions....................... -- -- -- -- --
Redeemed................................................... -- -- -- -- --
------- ------- ------- ------- -------
Total Retail B Share Transactions........................ -- -- 21 -- --
------- ------- ------- ------- -------
Net Increase (Decrease) in Share Transactions.............. 414 753 6,789 131 1,108
======= ====== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Intermediate- 100% U.S. Treasury
Term Bond Money Market
Fund Fund
------------------------- ------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
------------------------- -------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C> <C> <C> <C>
Issued from the reorganization of the Government Securities Fund -- -- -- --
Issued in connection with the acquisition of
Common Trust Fund Assets....................................... -- 14,956 -- --
Issued........................................................... 3,193 3,217 278,243 678,448
Issued in Lieu of Cash Distributions............................. 248 540 289 635
Redeemed......................................................... (2,239) (9,352) (269,784) (694,817)
---------- ---------- ---------- ----------
Total Fiduciary Share Transactions............................. 1,202 9,361 8,748 (15,734)
---------- ---------- ---------- ----------
Retail A Shares:
Issued........................................................... 138 42 815,504 1,308,434
Issued in Lieu of Cash Distributions............................. 15 29 18,029 31,361
Redeemed......................................................... (144) (70) (624,320) (1,171,680)
---------- ---------- ---------- ----------
Total Retail A Share Transactions.............................. 9 1 209,213 168,115
---------- ---------- ---------- ----------
Retail B Shares:
Issued........................................................... -- -- -- --
Issued in Lieu of Cash Distributions............................. -- -- -- --
Redeemed......................................................... -- -- -- --
---------- ---------- ---------- ----------
Total Retail B Share Transactions.............................. -- -- -- --
---------- ---------- ---------- ----------
Net Increase in Share Transactions............................... 1,211 9,362 217,961 152,381
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Diversified
U.S. Government Money Market
Money Market Fund Fund
------------------------- ---------------------------
08/01/98 08/01/97 08/01/98 08/01/97
to 01/31/99 to 07/31/98 to 01/31/99 to 07/31/98
------------------------- ----------------------------
Shares Issued and Redeemed:
<S> <C> <C> <C> <C>
Fiduciary Shares:
Issued from the reorganization of the Government Securities Fund -- -- -- --
Issued in connection with the acquisition of
Common Trust Fund Assets.................................. -- -- -- 33,913
Issued...................................................... 899,899 1,374,048 1,099,557 2,317,898
Issued in Lieu of Cash Distributions........................ 159 256 5,734 9,864
Redeemed.................................................... (813,860) (1,344,194) (1,070,965) (2,153,396)
---------- ---------- ---------- ----------
Total Fiduciary Share Transactions 86,198 30,110 34,326 208,279
---------- ---------- ---------- ----------
Retail A Shares:
Issued...................................................... 201,139 369,119 1,166,221 1,900,298
Issued in Lieu of Cash Distributions........................ 2,754 2,968 29,587 47,070
Redeemed.................................................... (188,018) (292,826) (909,948) (1,622,743)
----------- ----------- ----------- -----------
Total Retail A Share Transactions......................... 15,875 (79,261) 285,860 324,625
---------- ---------- ---------- ----------
Retail B Shares:
Issued...................................................... 51 -- -- --
Issued in Lieu of Cash Distributions........................ 1 -- -- --
Redeemed.................................................... -- -- -- --
---------- ---------- ---------- ----------
Total Retail B Share Transactions......................... 52 -- -- --
---------- ---------- ---------- ----------
Net Increase in Share Transactions.......................... 102,125 109,371 320,186 532,904
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
California Tax-Free
Money Market
Fund
-------------------------
08/01/98 08/01/97
to 01/31/99 to 07/31/98
-------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
<S> <C> <C>
Issued from the reorganization of the Government Securities Fund -- --
Issued in connection with the acquisition of
Common Trust Fund Assets....................................... -- --
Issued........................................................... 241,991 455,192
Issued in Lieu of Cash Distributions............................. 6 16
Redeemed......................................................... (213,959) (373,015)
---------- ----------
Total Fiduciary Share Transactions............................. 28,038 82,193
---------- ----------
Retail A Shares:
Issued........................................................... 300,934 512,922
Issued in Lieu of Cash Distributions............................. 4,173 7,326
Redeemed......................................................... (226,372) (432,217)
---------- ----------
Total Retail A Share Transactions.............................. 78,735 88,031
---------- ----------
Retail B Shares:
Issued........................................................... -- --
Issued in Lieu of Cash Distributions............................. -- --
Redeemed......................................................... -- --
---------- ----------
Total Retail B Share Transactions.............................. -- --
---------- ----------
Net Increase in Share Transactions............................... 106,773 170,224
========== ==========
</TABLE>
109
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
10. Fund Mergers
- -------------------------------------------------------------------------------
On January 11, 1999, the assets of the HighMark Blue Chip Growth and Government
Securities Funds were reorganized into the HighMark Growth and Bond Funds,
respectively. Under the Plan of Reorganization, 8,729,227 Fiduciary Class shares
of the HighMark Blue Chip Growth Fund were exchanged for 7,569,480 Fiduciary
Class shares of the HighMark Growth Fund and 11,336,718 Fiduciary Class shares
of the HighMark Government Securities Fund were exchanged for 10,341,234
Fiduciary Class shares of the HighMark Bond Fund in a tax free exchange. Upon
the business combinations of such Funds on January 11, 1999, the value of the
HighMark Growth Fund's net assets combined with those of the HighMark Blue Chip
Growth Fund was $714,792,687 and the value of the HighMark Bond Fund's net
assets combined with those of the HighMark Government Securities Fund before
open of business was $332,036,956.
11. Shareholder Voting Results (Unaudited)
- -------------------------------------------------------------------------------
At a shareholder meeting held on December 18, 1998, the shareholders of the
HighMark Convertible Securities Fund voted to approve the liquidation of the
Fund's assets. The results of the voting were as follows:
Convertible Securities
- --------------------------------
FOR 1,745,174 100.00% 68.32% of shares outstanding
AGAINST 0 0.00% 0.00% of shares outstanding
ABSTAIN 0 0.00% 0.00% of shares outstanding
At a shareholder meeting held on December 18, 1998, the shareholders of the
HighMark Blue Chip Growth Fund and HighMark Government Securities Fund voted to
approve a Plan of Reorganization between the HighMark Blue Chip Growth Fund and
HighMark Growth Fund and the HighMark Government Securities Fund and HighMark
Bond Fund. The results of the voting were as follows:
<TABLE>
<CAPTION>
HighMark Blue Chip Growth Fund
- ----------------------------------------------------
<S> <C> <C> <C>
FOR 4,897,817 99.95% of shares voted 59.61% of shares outstanding
AGAINST 0 0.00% of shares voted 0.00% of shares outstanding
ABSTAIN 0 0.00% of shares voted 0.03% of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
HighMark Government Securities Fund
- ----------------------------------------------------------
<S> <C> <C> <C>
FOR 8,235,206 100.00% of shares voted 73.80% of shares outstanding
AGAINST 0 0.00% of shares voted 0.00% of shares outstanding
ABSTAIN 0 0.00% of shares voted 0.00% of shares outstanding
</TABLE>
110
<PAGE>
NOTES
<PAGE>
[LOGO]
NOTES
<PAGE>
Thank you for
your investment
(logo)
Mutual Funds:
o are not FDIC insured
o have no bank guarantee
o may lose value
<PAGE>
For further information
call 1-800-433-6884
or visit our Web site at
www.highmark-funds.com
HighMark Funds
Board of Trustees
David A. Goldfarb, Chairman
Thomas L. Braje, Vice Chairman
Joseph C. Jaeger
Frederick J. Long
Michael L. Noel
Robert M. Whitler
Advisory Board
William R. Howell
Paul L. Smith
(logo)
HighMark Semi-Annual Report
January 31, 1999
Investment Advisor
HighMark Capital Management, Inc.
475 Sansome Street
San Francisco, CA 94104
Sub-Advisor (Emerging Growth Fund)
Bank of Tokyo-Mitsubishi Trust Company
1251 Avenue of the Americas
New York, NY 10116
Sub-Advisor (International Equity Fund)
AXA Asset Management Partenaires
46, Avenue de la Grande Armee
Paris, 75017, France
Sub-Advisor (International Portion of the
Small Cap Value Fund Only)
Brandes Investment Partners, LLP
12750 High Bluff Drive
San Diego, CA 90730
Custodian
Union Bank of California, N.A.
475 Sansome Street
San Francisco, CA 94104
Administrator & Distributor
SEI Investments Mutual Funds Services
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
Legal Counsel
Ropes & Gray
1301 K Street, N.W., Suite 800 East
Washington, D.C. 20005
Auditors
Deloitte & Touche LLP
50 Fremont Street
San Francisco, CA 94105-2230
84808 (1/99)
