highmark
ANNUAL
REPORT
July 31, 1999
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445 South Figueroa Street, Suite 306
Los Angeles, CA 90071
WWW.HIGHMARK-FUNDS.COM
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To learn more about HighMark please call:
INVESTMENT PROFESSIONAL SUPPORT DESK
1.800.455.5609
OR
INVESTOR SERVICES DESK
1.800.433.6884
or visit us at
WWW.HIGHMARK-FUNDS.COM
84806 (7/99)
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TABLE OF
CONTENTS
letter to shareholders and
message from the investment adviser ................................... 2
management's discussion and analysis .................................. 4
statements of net assets / schedules of investments ................... 24
statements of assets and liabilities .................................. 79
statements of operations .............................................. 80
statements of changes in net assets ................................... 84
financial highlights .................................................. 88
notes to financial statements ......................................... 96
independent auditors' report .......................................... 105
notice to shareholders ................................................ 106
This report and the financial statements contained herein are submitted for the
general information of HighMarkSM 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 Adviser, HighMark Capital Management, Inc. or with
Union Bank of California, N.A.
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GREG KNOPF
LETTER TO SHAREHOLDERS
MY FELLOW SHAREHOLDERS:
We are pleased to provide your HighMark Funds Annual Report for the fiscal year
ended July 31st, 1999. With the recent market volatility, now would be a good
time to review your current asset allocation mix to make sure that your
portfolio is in line with your long-term goals while maintaining your overall
tolerance for risk.
As you may have noticed, we have changed the format of our report. Our goal was
to make the report more reader-friendly and include more useful information
while keeping production costs down. We hope you like it.
ASSET ALLOCATION CALCULATOR AVAILABLE
As many investment professionals will tell you, your asset allocation among
stocks, bonds and cash is the key to your overall investment performance. To
assist you in developing an effective asset allocation strategy, HighMark Funds
is currently offering a free asset allocation calculator. To receive your free
calculator, please call 1(800)776-5511 and our friendly staff will see that you
get one right away.
ENHANCED HIGHMARK WEB SITE
We have significantly enhanced the HighMark Funds Web site during the past
several months. Along with incorporating our new look, we have added features
such as stock market updates, daily NAVs, monthly performance updates, a new
section called INVESTMENT RESOURCE CENTER, and transaction capabilities for
shareholders who invest in HighMark Funds directly through our transfer agent.
Take a look at our Web site at www.highmark-funds.com: I believe you will find
it to be an excellent resource in helping you to more effectively manage your
investments.
NEW FUND OFFERING
On December 1st, we will offer Retail Shares of our International Equity Fund.
This Fund, previously available only to institutional investors, will offer
HighMark retail investors the opportunity to take advantage of the long-term
growth potential of developed markets outside of the United States. You may want
to consider adding this fund to your portfolio. To request a prospectus, please
call 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.
September 1999
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MESSAGE FROM
THE INVESTMENT ADVISER
[Photo omitted]
LUKE MAZUR
MY FELLOW SHAREHOLDERS:
The fiscal year ended July 31, 1999 was tumultuous but ultimately successful for
stocks, with the Dow Jones Industrial Average falling as low as about 7,500 last
autumn before soaring to 11,200 in the spring -- a swing of nearly 50%. During
the brief bear market last August and September, investors worried that the
Asian financial crisis would engulf the global economy. Instead, central banks
throughout the world, led by the Federal Reserve Board, lowered interest rates
and boosted liquidity. By early 1999, the crisis faded, and the U.S. economy
began to accelerate.
THE ECONOMY: MODERATING GROWTH
After posting 5.6% and 4.3% growth in the fourth quarter of 1998 and first
quarter of 1999, respectively, the U.S. economy finally showed signs of slowing,
Gross Domestic Product rose a modest 1.8% in the second quarter of 1999.
However, the Federal Reserve Board still raised short-term interest rates from
4.75% to 5.00% on June 30, 1999 and to 5.25% on August 24, 1999. Indications
that Asia and Latin America may be recovering undoubtedly played a role in the
Fed's decision.
Also playing a role in the Fed's cautious stance is recent data regarding
inflation. The Consumer Price Index rose 0.7% during April, the largest increase
in nearly nine years. In addition, a June report from the National Association
of Purchasing Management indicated pricing pressure in the manufacturing sector.
Even so, inflation is still relatively modest.
STOCKS: CONTINUED STRENGTH
Reflecting the improving global economy and surprisingly strong U.S. corporate
profits, stocks reached record levels during the second calendar quarter of
1999. Leadership shifted to cyclicals and smaller cap stocks, areas that had
significantly lagged the market in recent years. Given the U.S. leadership in
innovation and technology, we are still positive on the U.S. stock market. Led
by technology companies, corporate profits have been surprisingly strong.
Meanwhile, prospects for the stock markets in Asia and Europe have improved.
Japanese corporations have begun the painful restructuring process that rescued
Corporate America a decade ago. Economic growth is beginning to firm up in
Europe, as the new euro currency stabilizes and the Continent becomes a haven
for mergers & acquisitions activity.
BONDS: A REASONABLE VALUE
Last fall, investors sought the safety and liquidity of U.S. Treasury bonds as a
global credit crunch threatened other assets. As a result, the 30-year bond
yield fell to 4.7% as bond prices soared. In that environment, corporate bonds
and mortgages performed very poorly. By February, the Asian economic crisis
began to fade and investors reversed course, selling Treasury bonds and buying
riskier assets. As a result, bond yields quickly rose back up. By the end of the
fiscal period, the 30-year Treasury bond was yielding about 6%. Mortgages and
corporate bonds, particularly non-rated securities, outperformed Treasuries
until May, when the Federal Reserve Board shifted toward a tightening bias.
High-quality corporates and mortgages were yielding about 7.5% at July 31, 1999.
At current yields, we believe that bonds represent reasonable value.
Given the current strength in corporate profits bolstering stocks and the
relatively high yields offered by bonds, we remain moderately optimistic about
the markets for the balance of 1999.
Sincerely,
/s/ signature omitted
Luke Mazur
Managing Director, Chief Investment Officer
HighMark Capital Management, Inc.
September 1999
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PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 112
PORTFOLIO TURNOVER 52%
INCEPTION DATE
FIDUCIARY 11/18/93
RETAIL CLASS A 6/20/94
RETAIL CLASS B 2/2/98
NET ASSETS (000)
FIDUCIARY $738,548
RETAIL CLASS A $24,579
RETAIL CLASS B $11,111
EXPENSE RATIOS:
FIDUCIARY 0.90%
RETAIL CLASS A 1.14%
RETAIL CLASS B 1.79%
CUSIP NUMBERS:
FIDUCIARY 431114818
RETAIL CLASS A 431114768
RETAIL CLASS B 431114511
TICKER SYMBOLS:
FIDUCIARY HMGRX
RETAIL CLASS A HMRGX
RETAIL CLASS B HMGBX
GROWTH
FUND
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark Growth Fund returned
17.24% (Fiduciary Shares).* In comparison, the Lipper Growth Funds Average rose
18.63% during the period while the Standard & Poor's 500 Composite Index was up
20.23%.
FACTORS AFFECTING PERFORMANCE
For most of the fiscal year, large cap growth stocks posted superior
performance. Starting in April 1999, however, investor preference broadened from
large cap growth stocks to value and smaller cap shares, which had a moderately
negative impact on the portfolio.
Even though Internet stocks such as America Online sold off sharply late in the
fiscal year, AOL's overall contribution to the Fund's results was still quite
good. We reduced the portfolio's weighting in AOL when the stock was about $151
and added shares when it fell to $115. We continue to believe that the company's
strategy of focusing on consumers who are not technologically savvy is sound.
With 17 million subscribers, AOL remains one of the few profitable Internet
companies.
Another strong performer during the year was Univision, the largest Hispanic
television network in the U.S. Unlike the broadcast networks, CBS, NBC and ABC,
Univision is actually gaining viewership. The Fund's traditional holdings in
Coca-Cola and Gillette continued to be disappointing due to weakness in foreign
earnings and currencies. Fortunately, we have been underweighted in the
pharmaceutical sector, an area that has been battered in part by the
Congressional debate over the expansion of Medicare to include prescription
drugs. Investors fear that such a government role would lead to price controls.
CURRENT STRATEGY & OUTLOOK
Our strategy is to find attractively priced companies with a strong brand
franchise and sustainable superior earnings growth over time. We remain positive
on the stock market because inflation is still low, the U.S. economy is strong
and global economic conditions are improving. Although interest rates have risen
steadily in 1999, that should slow U.S. economic growth, which in turn is likely
to cause investors to shift away from economically cyclical stocks and towards
the types of companies in which this Fund invests.
* The HighMark Growth Fund (Retail Class A Shares) produced a total return of
16.92% for the period. Including the maximum sales charge of 4.50%, the
total return for the Fund's Retail Class A Shares was 11.64%. The Fund's
Retail Class B shares produced a return of 16.26% 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 11.26%.
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HIGHMARK GROWTH FUND
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.
[Photo omitted]
TEAM LEADER
CRAIG BRAEMER
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK GROWTH
FUND* VERSUS THE S&P 500 COMPOSITE INDEX AND THE LIPPER GROWTH FUNDS AVERAGE.
[Graphic Omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Growth Fiduciary Growth Synth Ret Cl A Growth Synth Ret Cl B S&P 500 Comp Index Lipper Growth 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 9,976
7/95 12,085 11,541 12,085 12,733 12,518
7/96 13,622 13,028 13,622 14,841 13,771
7/97 20,234 19,345 20,234 22,574 19,818
7/98 24,805 23,651 24,698 26,926 22,504
7/99 29,082 27,652 28,614 32,374 26,696
</TABLE>
* Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 17.24% 28.76% 24.68% 20.95%
Retail Class A Shares 16.92% 28.52% 24.55% 24.05%
Retail Class A Shares
with load** 11.64% 26.57% 23.41% 22.93%
Retail Class B Shares 16.26% 28.22% 24.37% 20.92%
Retail Class B Shares
with load*** 11.26% 27.61% 24.20% 18.46%
+ Synthetic, not actual. See Note 12 on page 104 for a definition of Synthetic
Return.
** Reflects 4.50% sales charge. *** Reflects maximum CDSC of 5.00%.
Past performance is not predictive of future results.
TOP TEN HOLDINGS
% OF
PORTFOLIO
Berkshire Hathaway, Cl B 3.2
Intel 3.1
General Electric 3.0
Microsoft 2.7
IMS Health 2.7
Lucent Technologies 2.2
Coca-Cola 2.0
Cisco Systems 1.9
Citigroup 1.8
Texas Instruments 1.7
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Technology 26.2
Financial 18.6
Consumer Staples 17.3
Consumer Cyclicals 16.5
Healthcare 10.1
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VALUE
MOMENTUM
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 135
PORTFOLIO TURNOVER 9%
INCEPTION DATE
FIDUCIARY 2/1/91
RETAIL CLASS A 4/2/92
RETAIL CLASS B 2/2/98
NET ASSETS (000)
FIDUCIARY $843,316
RETAIL CLASS A $ 36,495
RETAIL CLASS B $ 6,506
EXPENSE RATIOS:
FIDUCIARY 0.81%
RETAIL CLASS A 1.06%
RETAIL CLASS B 1.81%
CUSIP NUMBERS:
FIDUCIARY 431114677
RETAIL CLASS A 431114628
RETAIL CLASS B 431114529
TICKER SYMBOLS:
FIDUCIARY HMVMX
RETAIL CLASS A HMVLX
RETAIL CLASS B N/A
PERFORMANCE
For the fiscal year ending July 31, 1999, the HighMark Value Momentum Fund
returned 13.08% (Fiduciary Shares).* In comparison, the Lipper Growth & Income
Funds Average rose 14.11%. Meanwhile, the unmanaged Standard & Poor's 500
Composite Index was up 20.23%.
FACTORS AFFECTING PERFORMANCE
The fiscal year continued to be characterized by a two-tiered market in which
the "Nifty Fifty" stocks--primarily large-cap growth companies--continued to
substantially outperform all other issues. Although the market shifted to value
in April and May, large cap growth dominated the twelve months ended July 31,
1999.
The Fund's performance improved during the shift towards value, with
overweighted positions in raw materials and capital goods. Investments in Alcoa
and Weyerhauser performed very well along with firmer commodity prices as these
raw material companies began to report stronger earnings. In capital goods,
shares of Parker Hannifin and Textron began to improve as economic growth
appeared to accelerate throughout the world.
Consumer cyclicals such as Kimberly Clark performed well as foreign currencies
began to firm. Hasbro benefited from Star Wars toy merchandising. McGraw-Hill
has seen business in its educational publishing division improve along with
continuing solid results from Standard & Poor's Corporation.
Amgen, a biotechnology company with accelerating earnings, continued to
outperform based on an impressive product pipeline including Epogen, a drug
taken during kidney dialysis. Amgen's performance is particularly impressive
because it is occurring while pharmaceutical stocks in general face pressure
from Congressional proposals to expand Medicare to include prescription drugs.
CURRENT STRATEGY & OUTLOOK
The HighMark Value Momentum Fund continues to represent a portfolio of
inexpensively priced stocks compared to the S&P 500, with a price/earnings ratio
at about a 30% discount to the market. Overweights continue to be traditional
value areas such as raw materials, consumer cyclicals and capital goods, while
traditional growth areas such as technology, communications, consumer staples
and healthcare are underweighted. We continue to find strong companies with good
earnings growth that, while not qualifying for the Nifty Fifty, represent
attractive value for our shareholders.
* The HighMark Value Momentum Fund (Retail Class A Shares) produced a total
return of 12.79% for the period. Including the maximum sales charge of
4.50%, the total return for the Fund's
Retail Class A Shares was 7.70%. The Fund's Retail Class B shares produced
a total return of 11.89% 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 6.89%.
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HIGHMARK VALUE MOMENTUM FUND
INVESTMENT OBJECTIVE
THE HIGHMARK VALUE MOMENTUM FUND SEEKS LONG-TERM CAPITAL GROWTH WITH A SECONDARY
OBJECTIVE OF INCOME.
[Photo Omitted]
TEAM LEADER
RICHARD EARNEST
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK VALUE
MOMENTUM FUND* VERSUS THE S&P 500 COMPOSITE INDEX AND THE LIPPER GROWTH & INCOME
FUNDS AVERAGE.
[Graph Omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Value Momentum Value Momentum Synth Value Momentum Synth S&P 500 Lipper Growth
Fiduciary Ret Cl A Ret Cl A Comp Index & Income Income
<S> <C> <C> <C> <C> <C>
2/91 10,000 9,550 10,000 10,000 10,000
7/91 10,637 10,158 10,637 10,694 10,649
7/92 11,869 11,335 11,869 12,065 11,973
7/93 13,344 12,745 13,344 13,116 13,340
7/94 13,914 13,289 13,914 13,788 14,043
7/95 17,450 16,666 17,450 17,383 16,927
7/96 20,383 19,429 20,383 20,260 19,265
7/97 30,065 28,588 30,065 30,817 27,761
7/98 32,837 31,149 32,689 36,759 30,937
7/99 37,132 35,133 36,576 44,195 35,302
</TABLE>
* Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 13.08% 22.13% 21.69% 17.50%
Retail Class A Shares 12.79% 21.83% 21.46% 17.56%
Retail Class A Shares
with load** 7.70% 19.96% 20.36% 16.83%
Retail Class B Shares 11.89% 21.52% 21.32% 9.26%
Retail Class B Shares
with load*** 6.89% 20.84% 21.14% 6.67%
+ Synthetic, not actual. See Note 12 on page 104 for a definition of
Synthetic Return.
** Reflects 4.50% sales charge. *** Reflects maximum CDSC of 5.00%.
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.
TOP TEN HOLDINGS
OF
PORTFOLIO
IBM 2.0
General Electric 1.9
CTS 1.8
Intel 1.8
Dayton Hudson 1.7
Mobil 1.7
AMGEN 1.7
Hewlett Packard 1.7
Cisco Systems 1.6
Baxter International 1.4
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Financial 18.0
Technology 16.5
Consumer Cyclicals 12.1
Healthcare 9.7
Capital Goods 9.5
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INCOME
EQUITY
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 105
PORTFOLIO TURNOVER 71%
INCEPTION DATE
FIDUCIARY 2/9/84
RETAIL CLASS A 6/20/94
RETAIL CLASS B 2/2/98
NET ASSETS (000)
FIDUCIARY $628,839
RETAIL CLASS A $ 22,329
RETAIL CLASS B $ 4,543
EXPENSE RATIOS:
FIDUCIARY 0.88%
RETAIL CLASS A 1.13%
RETAIL CLASS B 1.78%
CUSIP NUMBERS:
FIDUCIARY 431114206
RETAIL CLASS A 431114784
RETAIL CLASS B 431114537
TICKER SYMBOLS:
FIDUCIARY HMIEX
RETAIL CLASS A HMERX
RETAIL CLASS B N/A
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark Income Equity Fund
returned 14.23% (Fiduciary Shares).* In comparison, the Lipper Equity Income
Funds Average rose 11.57% during the period while the unmanaged Standard &
Poor's 500 Composite Index was up 20.23%. According to Lipper Inc., the Fund
performed in the top 25th percentile of its peer group for the fiscal year.**
FACTORS AFFECTING PERFORMANCE
In the first half of the fiscal year, the market was led by the technology and
drug sectors. In the second half of the fiscal year, the market leadership
broadened, and such sectors as metals, chemicals and energy outperformed the
market. Fortunately, just before this change occurred, we restructured the
portfolio by reducing our holdings of many of those stocks that performed well
in the first half of the year and by increasing our holdings in these emerging
industries.
Some of the Fund's strongest performance came from value-oriented technology,
such as IBM and Hewlett-Packard, stocks that had been selling at moderate
valuations. Energy companies, such as Baker Hughes and Halliburton, benefited
from the doubling of oil prices during the second half of the fiscal year.
In addition, basic industry companies that are sensitive to the global economic
recovery have done well.
On the negative side, financial companies have been adversely impacted by rising
interest rates. Because these stocks tend to offer very attractive yields, it
is an area of heavy concentration for this portfolio. In addition,
pharmaceutical companies have been under pressure since Congress began debating
the expansion of Medicare to cover prescription drugs.
CURRENT STRATEGY & OUTLOOK
Due to recent Federal Reserve Board policy changes, we expect economic growth to
slow into next year. We will continue to emphasize defensive sectors with higher
yields and lower volatility.
* The HighMark Income Equity Fund (Retail Class A Shares) produced a total
return of 13.94% for the period. Including the maximum sales charge of
4.50%, the total return for the Fund's Retail Class A Shares was 8.79%. The
Fund's Retail Class B shares produced a total return of 13.25% 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 8.29%.
** Between 7/31/98 and 7/31/99, the HighMark Income Equity Fund was ranked
54th out of 219 funds by Lipper Inc. in the Income Equity
category.
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HIGHMARK INCOME EQUITY FUND
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.
[Photo omitted]
TEAM LEADER
MICHAEL MCBURNEY
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE HIGHMARK INCOME EQUITY FUND* VERSUS THE S&P 500 COMPOSITE INDEX AND THE
LIPPER EQUITY INCOME FUNDS AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Income Equity Income Equity Synth Income Equity Synth S&P 500 Lipper Equity
Fiduciary Ret Cl A Ret Cl B Comp Index Income
<S> <C> <C> <C> <C> <C>
7/89 10,000 9,550 10,000 10,000 10,000
7/90 9,910 9,464 9,910 10,648 9,973
7/91 11,160 10,657 11,160 12,003 10,969
7/92 12,949 12,365 12,949 13,542 12,568
7/93 14,211 13,571 14,211 14,722 14,159
7/94 14,812 14,145 14,812 15,477 14,799
7/95 17,369 16,623 17,369 19,512 17,283
7/96 20,540 19,650 20,540 22,741 19,808
7/97 28,783 27,505 28,783 34,592 27,757
7/98 31,889 30,393 31,751 41,261 30,763
7/99 36,427 34,629 35,958 49,608 34,323
</TABLE>
* Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B Shares.
<TABLE>
<CAPTION>
Annualized Annualized Annualized Annualized
One Year 3 Year 5 Year 10 Year Inception to
Return Return Return Return Date
<S> <C> <C> <C> <C> <C>
Fiduciary Shares 14.23% 21.04% 19.72% 13.80% 15.81%
Retail Class A Shares 13.94% 20.79% 19.61% 13.75% 19.36%*
Retail Class A Shares
with load** 8.79% 18.96% 18.52% 13.23% 18.29%*
Retail Class B Shares 13.25% 20.52% 19.41% 13.65% 13.37%*
Retail Class B Shares
with load*** 8.29% 19.83% 19.21% 13.65% 10.83%*
</TABLE>
+ Synthetic, not actual. See Note 12 on page 104 for a definition of Synthetic
Return.
** Reflects 4.50% sales charge. *** Reflects maximum CDSC of 5.00%.
Past performance is not predictive of future results.
TOP TEN HOLDINGS
% OF
PORTFOLIO
IBM 2.3
Hewlett Packard 2.1
Exxon 2.0
GTE 1.9
Fleet Financial Group 1.9
Bank of America 1.8
Marsh & McLennan 1.7
AT&T 1.6
Bank One 1.6
Mobil 1.6
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Financial 22.5
Energy 12.1
Technology 11.0
Community Services 8.5
Consumer Cyclicals 8.1
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BALANCED
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 222
PORTFOLIO TURNOVER 34%
INCEPTION DATE
FIDUCIARY 2/1/91
RETAIL CLASS A 11/13/92
RETAIL CLASS B 2/2/98
NET ASSETS (000)
FIDUCIARY $451,411
RETAIL CLASS A $ 11,236
RETAIL CLASS B $ 3,594
EXPENSE RATIOS:
FIDUCIARY 0.92%
RETAIL CLASS A 1.17%
RETAIL CLASS B 1.82%
CUSIP NUMBERS:
FIDUCIARY 431114792
RETAIL CLASS A 431114776
RETAIL CLASS B 431114545
TICKER SYMBOLS:
FIDUCIARY HMBAX
RETAIL CLASS A HMBRX
RETAIL CLASS B N/A
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark Balanced Fund returned
9.96% (Fiduciary Shares).* In comparison, the Lipper Balanced Funds Average rose
9.57%. Meanwhile, the unmanaged Standard & Poor's 500 Composite Index was up
20.23% and the Lehman Brothers Aggregate Bond Index reflected a return of 2.48%.
FACTORS AFFECTING PERFORMANCE
During the fiscal year, the Balanced Fund consistently allocated 62-63% of its
assets to the equity market, 35-36% to fixed income securities and the balance
to cash. Despite a volatile interest rate environment and a global economic
crisis, the stock market was generally strong throughout the period, as
corporate profits continued to positively surprise investors. In contrast, the
bond market in 1999 gave up most of the gains that it had achieved in 1998, as
long-term interest rates rose from 4.7% to more than 6%.
The Fund's equity position included a mix of growth and value companies,
which was advantageous since growth and value were strong at different times.
The Fund's technology holdings included Applied Materials, Hewlett-Packard, IBM
and Motorola, stocks that either doubled or nearly doubled during the period.
Basic industry stocks such as Allied Signal, Ingersoll-Rand, Parker-Hannifin and
Weyerhauser rose nearly 50%, reflecting the improving global economy.
Disappointments included Walt Disney, which seems to have hit a creative dry
spell, and Hilton Hotels, which is in the midst of an overbuilt hotel market.
The Fund's fixed-income holdings span U.S. Treasury bonds, high-grade corporate
bonds and mortgage-backed securities. In a rising interest rate environment,
virtually all bond prices fall, although corporate bonds and mortgages, which
offer higher yields, don't fall as much.
CURRENT STRATEGY & OUTLOOK
Despite the difficult environment recently, we believe that the bond market
plays an important role in a diversified portfolio. High-grade corporate bonds,
which yield in the 7.5% range, are particularly attractive. Meanwhile, the
equity market continues to be supported by extremely strong corporate
profitability as well as mergers and acquisitions activity. Investor concerns
about Y2K appear to have faded as the year 2000 approaches. Although there may
be temporary cutbacks in spending, we believe that companies will continue to
spend significant percentages of revenues on technology because of its positive
impact on productivity.
* The HighMark Balanced Fund (Retail Class A Shares) produced a total return
of 9.64% for the period. Including the maximum sales charge of 4.50%, the
total return for the Fund's Retail Class A Shares was 4.70%. The Fund's
Retail Class B shares produced a total return of 8.91% 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 3.91%.
10 -----------------------------------------------------------------------------
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<PAGE>
HIGHMARK BALANCED FUND
INVESTMENT OBJECTIVE
THE HIGHMARK BALANCED FUND SEEKS CAPITAL APPRECIATION AND INCOME, WITH A
SECONDARY INVESTMENT OBJECTIVE OF CONSERVATION OF CAPITAL.
[Photo omitted]
TEAM LEADER
CARL COLOMBO
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
BALANCED FUND* VERSUS THE LEHMAN BROTHERS AGGREGATE BOND INDEX, THE S&P 500
COMPOSITE INDEX AND THE LIPPER BALANCED FUNDS AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Balanced Balanced Synth Balanced Synth Lehman Brothers S&P 500 Lipper Balanced
Fiduciary Ret Cl A Ret Cl B Aggregate Bond Index Comp Index Funds Average
<S> <C> <C> <C> <C> <C> <C>
2/91 10,000 9,950 10,000 10,000 10,000 10,000
7/91 10,437 9,968 10,437 10,694 10,374 10,557
7/92 11,603 11,081 11,603 12,065 11,907 11,933
7/93 12,812 12,225 12,812 13,116 13,119 13,211
7/94 13,186 12,583 13,186 13,788 13,131 13,532
7/95 15,705 14,987 15,705 17,383 14,495 15,770
7/96 17,423 16,593 17,423 20,260 15,258 17,323
7/97 22,732 21,584 22,732 30,817 16,903 22,499
7/98 24,394 23,121 24,321 36,759 18,232 24,704
7/99 26,823 25,350 26,488 44,195 18,684 27,068
</TABLE>
* Fiduciary, Synthetic Retail Class A or Synthetic Retail Class B Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 9.96% 15.47% 15.26% 12.82%
Retail Class A Shares 9.64% 15.17% 15.04% 12.84%*
Retail Class A Shares
with load** 4.70% 13.42% 13.98% 12.08%*
Retail Class B Shares 8.91% 14.99% 14.97% 7.39%*
Retail Class B Shares
with load*** 3.91% 14.22% 14.74% 4.79%*
+ Synthetic, not actual. See Note 12 on page 104 for a definition of Synthetic
Return.
** Reflects 4.50% sales charge. *** Reflects maximum CDSC of 5.00%.
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.
TOP TEN HOLDINGS
% OF
PORTFOLIO
Merrill Lynch(1), 5.270%, 09/23/99 2.0
Bear Stearns (1), 5.355%, 01/07/00 1.4
IBM 1.3
General Electric 1.2
Bell Atlantic 1.1
Intel 1.1
AMEX Centurion (1), 5.200%, 04/19/00 1.0
Fannie Mae 1.0
FNMA, 5.125%, 02/13/04 1.0
U.S. Treasury Note, 6.500%, 05/15/05 1.0
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Financial 22.3
Technology 16.2
Consumer Staples 12.9
Healthcare 11.8
Energy 8.4
(1) This security purchased with cash collateral held from securities lending.
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<PAGE>
[Logo omitted]
EMERGING
GROWTH
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 84
PORTFOLIO TURNOVER 201%
INCEPTION DATE
FIDUCIARY 2/1/94
NET ASSETS (000)
FIDUCIARY $57,386
EXPENSE RATIOS:
FIDUCIARY 1.03%
CUSIP NUMBERS:
FIDUCIARY 431114669
TICKER SYMBOLS:
FIDUCIARY HMEGX
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark Emerging Growth Fund
returned 6.83% (Fiduciary Shares). In comparison, the Lipper Small Cap Funds
Average rose 9.12% during the same period. We are changing the Fund's benchmark
from the Russell 2000 Growth Index to the Standard & Poor's 600 Small Cap Index
because we believe it more consistently reflects the market capitalization
profile of the Fund. The Russell 2000 Growth Index was up 14.51% during the
period while the Standard & Poor's 600 Small Cap Index was up 4.87%.
FACTORS AFFECTING PERFORMANCE
As the global economic crisis faded, the small cap sector improved as investors
became more confident about taking risk and investing in areas that had
underperformed large cap growth stocks. Investors took profits in the "Nifty
Fifty" stocks, which had soared to unprecedented valuation levels, redeploying
those funds into smaller issues, which in turn helped the Fund's results.
Although the Fund performed in line with its peer group, it underperformed the
Russell 2000 Growth Index because that benchmark included several Internet
stocks that had soared in value and market capitalization and thus could not be
purchased by the Fund.
During the period, the Fund was overweighted in technology and communications
services. One of the largest holdings is Adaptec, the world leader in the
manufacturing of hardware and software that speeds the transfer of data between
computers, servers, peripherals and networks. We began buying the stock in the
summer of 1998 when it was about $11. As of July 31, 1999, the stock was trading
at $39. Another big winner was Omnipoint, which provides wireless
telecommuncation services to large metropolitan areas such as New York City. The
stock was purchased at about $8 in late 1998, but closed the period at $43 after
being acquired by a larger rival.
CURRENT STRATEGY & OUTLOOK
We continue to look for growth companies selling at a reasonable price, using
bottom-up fundamental analysis that looks at a candidate's business, financial
strength, management team and valuation. Although technology and
telecommunications will likely continue to be major areas of emphasis for the
Fund, small cap growth can be found in many areas of the economy. For instance,
LCA Vision, an owner of two dozen eye surgery centers nationwide, was a recent
purchase for the Fund. The company is capitalizing on an increasingly popular
laser surgery procedure, and is poised for dramatic growth after forming an
alliance with Cole National, the largest managed care provider for vision care.
Although value was more in favor than growth late in the fiscal period, there is
clear evidence that the U.S. economy is slowing. When growth becomes scarce,
investors will seek out companies that can advance in any economic environment.
That should favor growth stocks, particularly small-cap growth, because
valuation levels are still generally more attractive than large caps.
- ---------------------------------------------------------------------------- 12
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<PAGE>
HIGHMARK EMERGING GROWTH FUND
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.
[PHOTO OMITTED]
PORTFOLIO MANAGER
STEVE RICCIO
BANK OF TOKYO-MITSUBISHI TRUST CO.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
EMERGING GROWTH FUND* VERSUS THE RUSSELL 2000 GROWTH INDEX, THE S&P 600 SMALL
CAP INDEX AND THE LIPPER SMALL-CAP FUNDS AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Highmark Emerging Growth Frank Russell 2000 S&P 600 Lipper Small-Cap
Fiduciary Growth Index Small Cap Index Funds Average
<S> <C> <C> <C> <C>
2/94 10,000 10,000 10,000 10,000
7/94 9,282 8,923 9,003 9,844
7/95 11,888 11,932 11,513 12,991
7/96 13,258 12,291 12,558 14,449
7/97 16,455 15,396 17,443 19,146
7/98 17,010 15,194 18,090 19,730
7/99 18,172 17,399 18,971 21,529
</TABLE>
* Fiduciary Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 6.83% 11.08% 14.38% 11.12%
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.
TOP TEN HOLDINGS
% OF
PORTFOLIO
Adaptec 4.6
Household CCMT, Ser A4(1),
5.240%, 01/18/00 3.7
AGA Capital(1), 5.230%, 08/10/99 3.7
Cinar Films, Cl B 2.7
Winstar Communications 2.7
GST Telecommunication 2.2
Omnipoint Communications 2.2
Symantec 1.8
Medimmune 1.8
Univision Communications 1.5
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Technology 31.7
Consumer Cyclicals 16.5
Cash 8.8
Healthcare 8.1
Capital Goods 7.5
(1) This security purchased with cash collateral held from securities lending.
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<PAGE>
[Logo omitted]
SMALL
CAP VALUE
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 109
PORTFOLIO TURNOVER 74%
INCEPTION DATE
FIDUCIARY 9/17/98
RETAIL CLASS A 9/17/98
RETAIL CLASS B 9/17/98
NET ASSETS (000)
FIDUCIARY $80,423
RETAIL CLASS A $ 912
RETAIL CLASS B $ 1,012
EXPENSE RATIOS:
FIDUCIARY 1.54%
RETAIL CLASS A 1.77%
RETAIL CLASS B 2.39%
CUSIP NUMBERS:
FIDUCIARY 431112101
RETAIL CLASS A 431112200
RETAIL CLASS B 431112309
TICKER SYMBOLS:
FIDUCIARY HMSCX
RETAIL CLASS A N/A
RETAIL CLASS B N/A
PERFORMANCE
Between its inception on September 17, 1998 and July 31, 1999, the HighMark
Small Cap Value Fund produced a cumulative total return of 25.54% (Fiduciary
Shares).* For the period September 30, 1998 to July 31, 1999, the Fund produced
a total cumulative return of 24.79%. In comparison, the Standard & Poor's 600
Small Cap BARRA Value Index returned 20.76%. Because the Fund can invest up to
25% of its assets in non-U.S. stocks, performance is also compared against a
benchmark of international small cap stocks, the Financial Times/S&P Actuaries
World Excluding U.S. Medium/Small Cap Index, which was up 27.30% for the period.
FACTORS AFFECTING PERFORMANCE
Although the Fund's significant international holdings have served to dampen
volatility compared to other domestic small cap funds, the international
component hurt performance in the fourth calendar quarter of 1998 and the second
quarter of 1999. However, the Fund benefited from the recovery in economic
cyclicals and the outperformance by value stocks. It also benefited from the
recovery in Asia, where 12.72% of the portfolio was invested as of July 31,
1999. In addition, U.S. small cap stocks benefited from the improved global
economic environment, as investors became more risk tolerant.
Notably strong performers included Copart, a chain of auto salvage yards,
Evergreen Resources, a low-cost producer of natural gas, and Ibis Technology, a
semiconductor equipment company. Although the Fund employs a bottom-up approach,
the portfolio currently has a large weighting of stocks in specific sectors,
such as the auto industry. Besides Copart, the Fund includes Lithia Motors and
Sonic Automotive, two retailers, Dollar Thrifty, a car rental company, and
Reynolds & Reynolds, which includes a division that develops software for auto
dealers. Other significant weightings include telecommunication equipment,
semiconductors, natural gas and real estate.
CURRENT STRATEGY & OUTLOOK
Although the global economic crisis appears to have eased, we remain concerned
about the possibility that China may devalue its currency, which could set off
another wave of instability in higher risk assets. In the meantime, we continue
to focus on companies that we believe to be undervalued and have momentum
characteristics.
* The HighMark Small Cap Value Fund (Retail Class A Shares), launched on
9/17/98, produced a total cumulative return of 25.24%. Including the
maximum sales charge of 4.50%, the total cumulative return for the Fund's
Retail Class A Shares was 19.62%. The Fund's Retail Class B Shares,
launched on 9/17/98, produced a total cumulative return of 24.60%
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 19.60%.
14 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
[Photo omitted]
HIGHMARK SMALL CAP VALUE FUND
INVESTMENT OBJECTIVE
THE HIGHMARK SMALL CAP VALUE FUND SEEKS TO PROVIDE LONG TERM CAPITAL
APPRECIATION THROUGH INVESTMENTS IN EQUITY SECURITIES.
PORTFOLIO MANAGER
ELIZABETH PEARCE
HIGHMARK CAPITAL MANAGEMENT, INC.
SUB-ADVISER OF THE INTERNATIONAL PORTION: BRANDES INVESTMENT PARTNERS, LLP
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK SMALL
CAP VALUE FUND* 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.
<TABLE>
<CAPTION>
Highmark Small Cap Highmark Small Cap Highmark Small Cap S&P 600/ FT/S&P World ex US Lipper Small
Value Fund, Fiduciary Value Fund, Retail A Value Fund, Retail B BARRA Value Index Medium/Small Cap Index Cap Funds Average
<S> <C> <C> <C> <C> <C> <C>
9/30/98 10,000 9,550 10,000 10,000 10,000 10,000
7/99 12,479 11,903 11,898 12,076 12,730 12,830
</TABLE>
* Fiduciary, Retail Class A or Retail Class B Shares.
Annualized Cumulative
Inception to Inception to
Date Date
Fiduciary Shares 29.41% 25.54%
Retail Class A Shares 29.06% 25.24%
Retail Class A Shares with load** 22.59% 19.62%
Retail Class B Shares 28.32% 24.60%
Retail Class B Shares with load*** 22.57% 19.60%
** Reflects 4.50% sales charge. *** Reflects maximum CDSC of 5.00%
Past performance is not predictive of future results.
TOP TEN HOLDINGS
% OF
PORTFOLIO
Ibis Technology 3.2
Cypress Semiconductor 2.0
Antec 1.9
Copart 1.9
3DFX Interactive 1.7
Roberts Pharmaceutical 1.6
CTS 1.5
Chofu Seisakusho 1.5
Adtran 1.5
Evergreen Resources 1.4
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Foreign 26.3
Technology 20.2
Consumer Cyclicals 19.5
Financial 17.1
Capital Goods 10.4
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<PAGE>
[Logo omitted]
INTERNATIONAL
EQUITY
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 153
PORTFOLIO TURNOVER 87%
INCEPTION DATE
FIDUCIARY 2/1/95
NET ASSETS (000)
FIDUCIARY $108,537
EXPENSE RATIOS:
FIDUCIARY 1.36%
CUSIP NUMBERS:
FIDUCIARY 431114594
TICKER SYMBOLS:
FIDUCIARY HMIQX
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark International Equity Fund
returned 5.90% (Fiduciary Shares). In comparison, the Lipper International Funds
Average rose 6.11% during the period. Meanwhile, the unmanaged Morgan Stanley
Capital International EAFE Index, a benchmark made up of companies in 20
nations, reflected a return of 9.70%. The Fund's sub-adviser is AXA Asset
Management Partenaires, a unit of the AXA Group, one of the world's largest
money management firms.
FACTORS AFFECTING PERFORMANCE
Investors in European equities began to favor cyclical stocks as an improving
economic growth outlook took hold in mid-1999. That was a positive for the Fund,
which emphasized cyclicals and underweighted growth stocks in Europe as the
fiscal year came to a close.
However, the Fund's overall performance was adversely affected by Europe, which
we prematurely believed was on the verge of a new earnings cycle driven by the
euro, corporate restructuring and the increasing demand from individual
investors for equities. In fact, European economies -- especially Germany --
turned out to be very sensitive to the Asian financial crisis, while the U.S.
economy continued to boom. As a result, the euro declined sharply against the
dollar after being introduced to the world on January 1, 1999.
Of course, markets in Asia were very bearish when the fiscal year
began on August 1, 1998. This began to change when central banks throughout the
world lowered interest rates to boost liquidity. The Asian markets ex-Japan
began to rebound in the fall of 1998, followed by Japan in the first half of
1999, where our holdings in technology and telecommunications have been
particularly beneficial. The Japanese government provided companies with tax
credits to encourage them to write off debt and close down idle capacity and the
stock market finally began to respond. However, the Asia stock market recovery
exacerbated liquidity flows out of Europe, which put additional pressure on the
euro.
CURRENT STRATEGY & OUTLOOK
Our outlook for Europe is a return of better absolute and relative performance
in an environment of a strengthening currency, low inflation and stabilizing
long-term interest rates. We believe that Japan's outlook is also much more
positive than it has been in years, but we continue to have some concerns about
the strengthening yen, which could adversely impact exporters, as well as the
ability of companies to meet earnings expectations. Finally, we are expanding
our holdings in the Pacific Rim, including Hong Kong, South Korea, Australia and
New Zealand.
16 -----------------------------------------------------------------------------
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<PAGE>
[Photo omitted]
HIGHMARK INTERNATIONAL EQUITY FUND
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.
PORTFOLIO MANAGER
ROBERT DE GUIGNE
AXA ASSET MANAGEMENT PARTENAIRES
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
INTERNATIONAL EQUITY FUND* VERSUS THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE
INDEX AND THE LIPPER INTERNATIONAL FUNDS AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Highmark Inter Equity Fiduciary Morgan Stanley MSCI EAFE Index Lipper Inter Funds Average
<S> <C> <C> <C>
2/95 10,000 10,000 10,000
7/95 11,143 11,368 11,341
7/96 11,650 11,770 12,010
7/97 12,585 13,902 14,968
7/98 12,482 14,663 16,007
7/99 13,218 16,085 16,985
</TABLE>
Annualized Cumulative
One Year 3 Year Inception to
Return Return Date
Fiduciary Shares 5.90% 4.30% 6.16%
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.
TOP TEN HOLDINGS
% OF
PORTFOLIO
BP Amoco 2.6
Nippon Telegraph & Telephone 2.4
Takeda Chemical 1.8
Novartis, Reg 1.5
Shell Transporation & Trading 1.4
Toyota Motor 1.4
Fujitsu 1.4
Nestle SA 1.4
Mannesmann 1.3
Glaxo Wellcome 1.3
TOP FIVE COUNTRIES
SECTOR % OF
PORTFOLIO
Japan 25.5
United Kingdom 18.5
France 10.5
Germany 8.3
Switzerland 6.9
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<PAGE>
[Logo omitted]
CALIFORNIA
INTERMEDIATE
TAX-FREE BOND
FUND
PORTFOLIO AT A GLANCE
NUMBER OF HOLDINGS 149
MEDIAN P/E RATIO
PORTFOLIO TURNOVER 11%
INCEPTION DATE
FIDUCIARY 10/15/93
RETAIL CLASS A 10/15/93
NET ASSETS (000)
FIDUCIARY $149,365
RETAIL CLASS A $ 17,759
EXPENSE RATIOS:
FIDUCIARY 0.45%
RETAIL CLASS A 0.45%
CUSIP NUMBERS:
FIDUCIARY 431114644
RETAIL CLASS A 431114578
TICKER SYMBOLS:
FIDUCIARY HMITX
RETAIL CLASS A HMCIX
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark California Intermediate
Tax-Free Bond Fund produced a total return of 3.54% (Fiduciary Shares).* In
comparison, the Lipper California Intermediate Municipal Debt Funds Average
returned 2.66% while the unmanaged Lehman Brothers 7-Year Municipal Bond Index
reflected a return of 3.29%.
FACTORS AFFECTING PERFORMANCE
Due to the global financial crisis, which played out in the second half of 1998,
investors sought the safety and liquidity of Treasury bonds. As a result,
municipal bond yields as a percentage of Treasury bond yields rose sharply. The
opposite occurred during the first half of 1999, as the financial crisis eased.
The yield on seven-year municipal bonds as a percentage of Treasury bonds rose
from about 75% in the summer of 1998 to 90% by the end of September, declining
to 85% by year-end 1998, and finally back to 75% by the end of March 1999 where
it remained through the end of the fiscal year. The 30-year municipal bond
followed the same trend, rising from 86% of 30-year bonds in the summer of 1998
to 95% at year-end 1998, but finally retreating back to 86% by the summer of
1999.
As interest rates declined in the second half of 1998, reaching an October low,
the Fund worked to maintain a longer than average duration, while maintaining
strong call protection. When interest rates are falling, issuers try to
refinance their debt to lower their interest expense. The Fund's performance was
enhanced to the extent that it had call protection as well as longer maturities
in a falling interest rate environment. At the start of 1999, interest rates
began to rise, and we shortened the Fund's duration accordingly, reducing the
portfolio's sensitivity to changes in interest rates.
The Fund continued to maintain its strong credit quality, with more than 75% of
the securities in the portfolio rated AAA, and with all securities in the Fund
being investment grade quality. This posture was maintained because bonds of
lower quality did not offer sufficient extra yield to justify the additional
credit risk. In addition, lower-rated bonds are likely to decline more in value
in a rising interest rate environment than higher quality bonds.
CURRENT STRATEGY & OUTLOOK
We continue to remain cautious in our outlook on interest rates, as the Federal
Reserve appears likely to continue its tightening posture to combat the threat
of future inflation. Due to this outlook, we are maintaining a portfolio with
higher coupons and a shorter-than-average duration to protect against a rising
interest-rate environment.
* The HighMark California Intermediate Tax-Free Bond Fund (Retail Class A
Shares) produced a total return of 3.55% for the period. Including the
maximum sales charge of 3.00%, the total return for the Fund's Retail Class
A Shares was 0.44%.
18 ----------------------------------------------------------------------------
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<PAGE>
[Photo omitted]
HIGHMARK CALIFORNIA INTERMEDIATE
TAX-FREE BOND FUND 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.
TEAM LEADER
ROBERT BIGELOW
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND* VERSUS THE LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX AND THE LIPPER CALIFORNIA INTERMEDIATE MUNICIPAL DEBT FUNDS
AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
California Intermediate California Intermediate Lehman Brothers Lipper California
Tax-Free Bond Fund Tax-Free Bond Fund 7-Year Municipal Intermediate Municipal
Fiduciary Shares Retail Class A Shares Bond Index Debt Funds Average
<S> <C> <C> <C> <C>
10/93 10,000 9,700 10,000 10,000
7/94 9,702 9,402 9,953 9,905
7/95 10,407 10,086 10,760 10,519
7/96 11,102 10,749 11,307 11,142
7/97 12,079 11,697 12,284 12,070
7/98 12,652 12,242 12,930 12,611
7/99 13,100 12,664 13,355 12,946
</TABLE>
* Fiduciary Shares or Retail Class A Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 3.54% 5.68% 6.19% 4.61%
Retail Class A Shares 3.55% 5.65% 6.16% 4.57%
Retail Class A Shares
with load** 0.44% 4.57% 5.51% 4.02%
**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.
TOP TEN HOLDINGS
% OF
PORTFOLIO
San Diego County Regional
Transportation Commission
6.000%, 04/01/06 2.0
Los Angeles County Public
Works Financing Authority,
5.500%, 10/01/08 1.9
San Diego Public Facility
Financing Authority,
6.000%, 05/15/06 1.8
Contra Costa Water District
5.700%, 10/01/06 1.6
Orange County Transportation
Authority, 6.000%, 02/15/07 1.6
San Diego County Water
Authority, 5.000%, 05/01/04 1.5
Orange County Local
Transportation Authority Sales,
5.500%, 02/15/08 1.5
San Francisco Bay Area Rapid
Transportation DIstrict,
5.500%, 07/01/05 1.4
Contra Costa Merrithew
Memorial Hospital Project,
5.500%, 11/01/12 1.3
San Jose Redevelopment Agency
6.000%, 08/01/08 1.3
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Revenue Bonds 60.5
General Obligations 18.3
Participation Notes 18.2
Pre Refunded Securities 2.5
Cash Equivalents/ Money Markets 0.5
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<PAGE>
[Logo omitted]
BOND &
INTERMEDIATE-
TERM BOND
FUNDS
PORTFOLIO AT A GLANCE
BOND FUND
NUMBER OF HOLDINGS 115
PORTFOLIO TURNOVER 39%
INCEPTION DATE
FIDUCIARY 2/15/84
RETAIL CLASS A 6/20/94
NET ASSETS (000)
FIDUCIARY $334,900
RETAIL CLASS A $ 2,638
EXPENSE RATIOS:
FIDUCIARY 0.75%
RETAIL CLASS A 0.75%
CUSIP NUMBERS:
FIDUCIARY 431114305
RETAIL CLASS A 431114743
TICKER SYMBOLS:
FIDUCIARY HMBDX
RETAIL CLASS A HMRBX
INTERMEDIATE-TERM BOND FUND
NUMBER OF HOLDINGS 84
PORTFOLIO TURNOVER 19%
INCEPTION DATE
FIDUCIARY 2/1/91
RETAIL CLASS A 3/2/92
NET ASSETS (000)
FIDUCIARY $257,775
RETAIL CLASS A $ 4,591
EXPENSE RATIOS:
FIDUCIARY 0.75%
RETAIL CLASS A 0.75%
CUSIP NUMBERS:
FIDUCIARY 431114560
RETAIL CLASS A 431114586
TICKER SYMBOLS:
FIDUCIARY HMIBX
RETAIL CLASS A HMBTX
PERFORMANCE
For the fiscal year ended July 31, 1999, the HighMark Bond Fund returned 1.60%
(Fiduciary Shares).* In comparison, the Lipper Corporate A-Rated Debt Funds
Average produced a 0.66% return while the unmanaged Lehman Brothers Aggregate
Bond Index reflected a return of 2.48%.
The HighMark Intermediate-Term Bond Fund produced a total return of 2.60%
(Fiduciary Shares).** In comparison, the Lipper Intermediate Investment-Grade
Debt Average reflected a 1.43% return, while the unmanaged Lehman Brothers
Intermediate Government/Corporate Bond Index rose 3.72%.
FACTORS AFFECTING PERFORMANCE
The two halves of the fiscal year were a mirror image of each other. After
Russia devalued its currency last August, a worldwide credit crunch ensued and
there was a flight to quality. U.S. Treasury bonds soared and yields fell as low
as 4.7%, while corporate bonds and mortgages performed poorly.
After the Federal Reserve Board lowered short-term interest rates last fall,
central banks around the world followed suit, and the global economic crisis
faded. In early 1999, investors aggressively sold U.S. Treasury bonds and bonds
yields climbed above 6%. Both Funds reduced their allocation to Treasury
securities while adding corporate exposure. Corporate bonds, particularly
lower-rated bonds, performed well until May, when a flood of supply depressed
prices. As interest rates steadily rose, mortgages performed very well in 1999.
CURRENT STRATEGY & OUTLOOK
Both Funds continue to emphasize high-quality corporate bonds, a strategy
that works particularly well when the economy is slowing. With recent inflation
data showing some upward movement in labor costs, the Federal Reserve Board
raised short-term interest rates on June 30 and August 24 to slow the economy.
As a result, recent additions to the Funds have not included cyclical companies.
Instead, bonds issued by AT&T, Disney, MCI Worldcom, Nevada Power, Safeway,
Staples and Time Warner were added. Rather than make a prediction on the
direction of interest rates, the Funds' duration strategy is neutral to the
market.
* The HighMark Bond Fund (Retail Class A Shares) produced a total return of
1.52% for the period. Including the maximum sales charge of 3.00%, the
total return for the Fund's Retail Class A Shares was -1.51%.
** The HighMark Intermediate-Term Bond Fund (Retail Class A Shares) produced a
total return of 2.60% for the period. Including the maximum sales charge of
3.00%, the total return for the Fund's Retail Class A Shares was -0.49%.
20 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
[Photo omitted]
HIGHMARK BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK BOND FUND SEEKS CURRENT INCOME THROUGH INVESTMENTS IN LONG-TERM,
FIXED INCOME SECURITIES.
TEAM LEADER
JACK MONTGOMERY
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK BOND
FUND* VERSUS THE LEHMAN BROTHERS AGGREGATE BOND INDEX AND THE LIPPER CORPORATE
A-RATED DEBT FUNDS AVERAGE.
<TABLE>
<CAPTION>
Bond Fund Bond Fund Lehman Brothers Lipper Corporate A-Rated
Fiduciary Shares Synthet Retail A Shares Aggregate Bond Index Debt Funds Average
<S> <C> <C> <C> <C>
7/89 10,000 9,700 10,000 10,000
7/90 10,552 10,235 10,706 10,531
7/91 11,500 11,155 11,852 11,553
7/92 13,160 12,765 13,603 13,436
7/93 14,484 14,049 14,988 14,926
7/94 14,029 13,514 15,001 14,767
7/95 15,352 14,770 16,518 16,188
7/96 16,091 15,501 17,432 16,957
7/97 17,795 17,156 19,311 18,810
7/98 19,113 18,438 20,829 20,133
7/99 19,419 18,718 21,345 20,266
</TABLE>
* Fiduciary or Synthetic Retail Class A Shares.
<TABLE>
<CAPTION>
Annualized Annualized Annualized Annualized
One Year 3 Year 5 Year 10 Year Inception to
Return Return Return Return Date
<S> <C> <C> <C> <C> <C>
Fiduciary Shares 1.60% 6.47% 6.72% 6.86% 8.84%
Retail Class A Shares 1.52% 6.49% 6.73% 6.79%+ 6.62%
Retail Class A Shares
with load** -1.51% 5.43% 6.09% 6.47%+ 6.00%
</TABLE>
+ Synthetic, not actual. See Note 12 on page 104 for a definition of Synthetic
Return.
** Reflects 3.00% sales charge.
Past performance is not predictive of future results.
TOP TEN HOLDINGS
% OF
PORTFOLIO
FNMA, 6.000%, 12/01/28 7.5
U.S. Treasury Bond,
8.125%, 08/15/19 3.7
FNMA, 6.500%, 01/01/29 3.4
U.S. Treasury Bond,
7.250%, 05/15/16 2.7
FNMA, 5.125%, 02/13/04 2.6
AMEX Centurion,
5.200%, 04/24/00(1) 2.5
Bear Stearns,
5.355%, 01/07/00(1) 2.5
FNMA, 7.500%, 12/01/26 2.1
Green Tree Financial,
6.800%, 01/15/27 1.9
FNMA, 6.000%, 07/01/28 1.8
Past performance is not predictive of future results.
TOP FIVE SECTORS
SECTOR % OF
PORTFOLIO
Corporate Bonds 40.8
Mortgage Backed Securities 32.2
U.S. Treasury / Agency 19.6
International U.S. $ 4.5
Cash/Short Term 2.9
(1) This security purchased with cash collateral held from securities lending.
- ---------------------------------------------------------------------------- 21
www.highmark-funds.com
<PAGE>
HIGHMARK INTERMEDIATE-TERM BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK INTERMEDIATE-TERM BOND FUND SEEKS TOTAL RETURN THROUGH INVESTMENTS
IN FIXED-INCOME SECURITIES.
TOP TEN HOLDINGS
% OF
PORTFOLIO
Bear Stearns(1),
5.355%, 01/07/00 3.6
FNMA, 5.125%, 02/13/04 3.4
U.S. Treasury Note,
7.250%, 05/15/04 2.7
DuPont (E.I.) de Nemours,
6.500%, 09/01/02 2.5
Cable and Wireless
Communications
6.250%, 03/06/05 2.4
J.C. Penny Master Credit Card
Trust, 9.625%, 06/15/00 2.2
Ford Motor Credit,
8.200%, 02/15/02 2.2
Raytheon, 6.750%, 08/15/07 2.1
Lockheed Martin,
7.450%, 06/15/04 2.0
Old Dominion Electric,
7.480%, 12.01/13 2.0
SECTOR
DIVERSIFICATION
SECTOR % OF
PORTFOLIO
Corporate Bonds 67.3
U.S. Treasury / Agency 12.3
Mortgage Backed Securities 10.6
International U.S. $ 6.7
Cash/Short Term 3.0
(1) This security purchased with cash collateral held from securities lending.
[Photo omitted]
TEAM LEADER
JACK MONTGOMERY
HIGHMARK CAPITAL MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
INTERMEDIATE-TERM BOND FUND* VERSUS THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX AND THE LIPPER INTERMEDIATE INVESTMENT-GRADE DEBT
AVERAGE.
[Graph omitted]
Plot points are as follows:
<TABLE>
<CAPTION>
Intermediate-Term Intermediate-Term Lehman Brothers Lipper Intermediate
Bond Fund Bond Fund Synthetic Intermediate Government/ Investment-Grade
Fiduciary Shares Retail Class A Shares Corporate Index Debt Average
<S> <C> <C> <C> <C>
2/91 10,000 9,700 10,000 10,000
7/91 10,427 10,114 10,362 10,411
7/92 12,030 11,658 11,826 12,004
7/93 13,131 12,725 12,843 13,228
7/94 13,071 12,654 12,964 13,189
7/95 14,169 13,718 14,106 14,406
7/96 14,799 14,330 14,853 15,095
7/97 16,146 15,635 16,201 16,648
7/98 17,174 16,633 17,292 17,795
7/99 17,621 17,065 17,936 18,049
</TABLE>
* Fiduciary or Synthetic Retail Class A Shares.
Annualized Annualized Annualized
One Year 3 Year 5 Year Inception to
Return Return Return Date
Fiduciary Shares 2.60% 5.99% 6.16% 7.02%
Retail Class A Shares 2.60% 5.99% 6.16% 7.00%*
Retail Class A Shares
with load** -0.49% 4.92% 5.51% 6.62%*
**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 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
[Logo omitted]
MONEY MARKET
FUNDS
HIGHMARK TAXABLE MONEY MARKET FUNDS*
PERFORMANCE
The HighMark Taxable Money Market Funds (Fiduciary Shares)** produced the
following one-month effective yields as of July 31, 1999: 100% U.S. Treasury
Money Market Fund, 4.38%; U.S. Government Money Market Fund, 4.62%; Diversified
Money Market Fund, 4.70%.
FACTORS AFFECTING PERFORMANCE
In early 1999, investors sought the safety of Treasury bills, driven by
uncertainties such as the impeachment trial, Brazil's currency devaluation and
the NATO bombing in Kosovo. By the second quarter of 1999, many of these
uncertainties were resolved, and yields rose along with renewed inflation
expectations and a shift by the Fed to a tightening bias culminating in an
increase in short-term rates from 4.75% to 5%. As new supply of Treasury
securities came to market in the second half of the fiscal year, yields rose
temporarily, creating a buying opportunity for the 100% U.S. Treasury Money
Market Fund, and that was a positive factor in performance. Regarding the U.S.
Government Money Market Fund and Diversified Money Market Fund, after using
market dips as buying opportunities during the fiscal year, we began building
cash positions in May of 1999, and were well-positioned to take advantage of the
move to higher yields as the fiscal year came to a close.
CURRENT STRATEGY & OUTLOOK
The upcoming Y2K computer transition should create stronger than normal demand
for Treasury and Agency notes maturing in this time frame, and thus, lower
yields than otherwise would be the case. Early on, we recognized the need to
purchase such securities maturing near year-end and began doing so in July, so
as to secure reasonable yield levels. Although the Federal Reserve Board may
further increase short-term interest rates in 1999, we believe that an
additional focus of the Fed will be providing liquidity over the crucial
December/January timeframe.
HIGHMARK CALIFORNIA TAX-FREE MONEY MARKET FUND*
PERFORMANCE
The Fund's one-month effective yield as of July 31, 1999 (Fiduciary Shares) was
2.38%.** Using a combined federal and California state income tax rate of
41.95%, the one-month effective yield is equivalent to a 4.07% taxable yield.
FACTORS AFFECTING PERFORMANCE
Tax-free yields generally mirrored the movements of the taxable market, although
with less volatility. Yields in the first quarter of 1999 were lower than much
of 1998 due to the reinvestment of seasonally higher cash flows and the flight
to quality in Treasury securities. The Fund extended maturities in the second
quarter as investors redeemed shares to pay income taxes and yields rose in
anticipation of Federal Reserve Board action to raise interest rates.
CURRENT STRATEGY & OUTLOOK
Between now and year-end, yields are likely to increase for two reasons. First,
recent economic data indicate that the Fed may need to continue raising interest
rates to ward off inflation. Secondly, investors may redeem shares, reducing
demand for securities, and hold cash until the Y2K period passes.
* An investment in the HighMark Money Market Funds is neither insured nor
guaranteed by the U.S. government. Although these Funds seek to maintain a
stable net asset value of $1.00, there can be no assurance that they will
be able to do so. Some or all of the income you receive for the California
Tax-Free Money Market Fund may be subject to certain state and local taxes,
and in some cases, to the federal alternative minimum tax.
** 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 July 31, 1999 was 4.11%, 4.36% and 4.44%, respectively. The
one-month effective yield for U.S. Government Money Market Fund's Retail
Class B Shares was 3.59% for the same period. The one-month effective yield
as of July 31, 1999 for the Retail Class A Shares of the California
Tax-Free Money Market Fund was 2.12%.
- ---------------------------------------------------------------------------- 23
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
GROWTH FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 98.7%
- -------------------------------------------------------------
AIR TRANSPORTATION -- 0.4%
Southwest Airlines 176,872 $ 3,272
--------
APPAREL/TEXTILES -- 0.7%
Nike, Cl B 105,552 5,489
--------
BANKS -- 4.4%
Bank America 139,286 9,245
Comerica 58,800 3,263
Firstar (A) 166,140 4,330
Northern Trust 33,610 2,924
State Street Bank 46,510 3,296
U.S. Bancorp 158,481 4,933
Wells Fargo 148,500 5,791
--------
33,782
--------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 4.5%
Comcast, Cl A 292,800 11,273
Gannett 73,070 5,279
Infinity Broadcasting, Cl A* (A) 74,360 2,050
Interpublic Group 149,380 6,274
Mediaone Group* 32,660 2,364
Univision Communications* (A) 111,700 7,735
--------
34,975
--------
COMMUNICATIONS EQUIPMENT -- 5.6%
Cisco Systems* 261,610 16,253
JDS Uniphase* 14,200 1,283
Lucent Technologies (A) 286,592 18,646
Nokia, ADR, Cl A (A) 82,940 7,055
--------
43,237
--------
COMPUTERS & SERVICES -- 1.5%
Computer Sciences* 98,150 6,318
Electronic Data Systems 92,800 5,597
--------
11,915
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
COMPUTERS & SOFTWARE SERVICES -- 8.2%
America Online* 116,440 $ 11,076
Citrix Systems* 20,870 1,087
Dell Computer* 42,044 1,719
EMC* 135,940 8,233
Hewlett Packard (A) 50,505 5,287
IBM 103,180 12,968
Microsoft* 267,320 22,939
--------
63,309
--------
DIVERSIFIED OPERATIONS -- 3.8%
General Electric 231,720 25,257
Tyco International 41,000 4,005
--------
29,262
--------
DRUGS -- 7.0%
Alza* 85,185 4,142
American Home Products 138,610 7,069
Amgen* 11,592 891
Bristol-Myers Squibb 110,320 7,336
Eli Lilly 76,874 5,045
Johnson & Johnson 91,760 8,453
Merck 108,410 7,338
Pfizer 160,290 5,440
Schering Plough 77,210 3,783
Warner Lambert 68,700 4,534
--------
54,031
--------
ENTERTAINMENT -- 1.9%
Mirage Resorts* 297,560 4,184
Pixar* (A) 91,800 3,546
Walt Disney 241,294 6,666
--------
14,396
--------
FINANCIAL SERVICES -- 7.8%
American Express 83,165 10,957
Associates First Capital 202,420 7,755
Citigroup 336,652 15,002
Fannie Mae 194,495 13,420
The accompanying notes are an integral part of the financial statements.
24 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
GROWTH FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
FINANCIAL SERVICES -- (CONTINUED)
Franklin Resources (A) 193,540 $ 7,379
Merrill Lynch 90,660 6,171
--------
60,684
--------
FOOD, BEVERAGE & TOBACCO -- 5.7%
Bestfoods 39,600 1,931
Coca-Cola Company 284,646 17,168
Hershey Foods (A) 60,610 3,515
Pepsi Bottling Group 182,520 4,312
PepsiCo 191,170 7,480
Ralston-Ralston Purina Group 126,280 3,781
Tootsie Roll Industries 22,515 780
Wrigley, Wm. Jr. (A) 65,690 5,235
--------
44,202
--------
HOUSEHOLD PRODUCTS -- 1.3%
Clorox 7,500 840
Colgate-Palmolive 58,340 2,881
Gillette 120,634 5,285
Proctor & Gamble 16,050 1,453
--------
10,459
--------
INSURANCE -- 6.4%
Allstate 53,816 1,910
American International Group 99,124 11,511
Berkshire Hathaway, Cl B* 12,712 27,077
Hartford Financial
Services Group (A) 67,510 3,646
Marsh & McLennan 25,575 1,944
Mutual Risk Management (A) 124,142 3,701
--------
49,789
--------
LEISURE -- 2.8%
Carnival, Cl A 123,630 5,741
Harley-Davidson 158,420 8,773
Mattel (A) 295,482 6,944
--------
21,458
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
MACHINERY -- 1.7%
Danaher (A) 91,780 $ 5,237
Illinois Tool Works 106,310 7,900
--------
13,137
--------
MEDICAL PRODUCTS & SERVICES -- 4.9%
IMS HEALTH 808,760 22,544
Medtronic 27,930 2,013
Pe Biosystems Group 235,560 13,206
--------
37,763
--------
MISCELLANEOUS BUSINESS SERVICES -- 2.4%
Automatic Data Processing 68,630 2,749
Cintas (A) 127,600 8,182
Fiserv* 140,568 4,191
Paychex 53,220 1,493
Robert Half International* 66,334 1,754
--------
18,369
--------
PETROLEUM & FUEL PRODUCTS -- 1.2%
Halliburton 207,800 9,585
--------
PRINTING & PUBLISHING -- 3.5%
McGraw-Hill 111,800 5,688
Meredith 129,600 4,658
New York Times, Cl A (A) 69,350 2,726
Time Warner 110,000 7,920
Washington Post, Cl B 10,327 5,835
--------
26,827
--------
PROFESSIONAL SERVICES -- 1.3%
Devry* (A) 373,530 7,751
Gartner Group, Cl B* 102,900 2,225
--------
9,976
--------
RETAIL -- 11.1%
Bed Bath & Beyond* (A) 106,420 3,612
Costco* 169,045 12,636
CVS 136,200 6,776
Dayton-Hudson 112,870 7,301
Home Depot 170,094 10,854
Kohl's* 163,890 12,466
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 25
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
GROWTH FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
RETAIL -- (CONTINUED)
Lowe's 135,610 $ 7,153
McDonald's 213,756 8,911
Safeway* 184,040 9,915
Staples* 45,000 1,299
Tricon Global Restaurants* 119,700 4,870
--------
85,793
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 8.7%
Applied Materials* 121,290 8,725
Intel 382,036 26,360
National Semiconductor* (A) 293,400 7,262
Texas Instruments 98,200 14,141
Xilinx* 169,860 10,595
--------
67,083
--------
SPECIALTY MACHINERY -- 1.4%
Solectron* 168,520 10,859
--------
TELEPHONES & TELECOMMUNICATION -- 0.5%
Vodafone Group PLC ADR (A) 20,155 4,243
--------
TOTAL COMMON STOCKS
(Cost $556,484) 763,895
--------
- -------------------------------------------------------------
COMMERCIAL PAPER -- 2.2%
- -------------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 7,000 7,000
Corporate Receivables (B)
5.202%, 08/02/99 10,000 9,996
--------
TOTAL COMMERCIAL PAPER
(Cost $16,996) 16,996
--------
- -------------------------------------------------------------
CORPORATE BONDS -- 5.5%
- -------------------------------------------------------------
Household CCMT ABT Ser A4 (B) (C)
5.240%, 01/18/00 $12,500 12,500
Merrill Lynch MTN (B) (C)
5.285%, 09/29/99 10,000 10,000
5.395%, 02/28/00 10,000 10,000
Salomon Smith Barney (B) (C)
5.250%, 10/28/99 10,000 10,000
--------
TOTAL CORPORATE BONDS
(Cost $42,500) 42,500
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.9%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price $11,663,389
(collateralized by U.S. Treasury Note, par
value $11,815,000, 5.625%, 12/31/99;
market value $11,892,348) $11,659 $ 11,659
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99, matures
08/02/99, repurchase price $10,852,702
(collateralized by various corporate
obligations, par value $16,677,526,
0.000%--13.250%, 08/15/99--12/27/18;
market value $11,065,244) 10,848 10,848
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $22,507) 22,507
--------
TOTAL INVESTMENTS -- 109.3%
(Cost $638,487) 845,898
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (9.1%) (70,344)
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.2%) (1,316)
--------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par value)
based on 40,163,408 outstanding shares
of beneficial interest 476,803
Fund Shares of Retail Class A
(unlimited authorization -- no par value)
based on 1,339,675 outstanding shares
of beneficial interest 20,993
Fund Shares of Retail Class B
(unlimited authorization -- no par value)
based on 612,241 outstanding shares
of beneficial interest 10,562
Accumulated net realized gain on investments 58,469
Net unrealized appreciation on investments 207,411
--------
TOTAL NET ASSETS -- 100.0% $774,238
========
The accompanying notes are an integral part of the financial statements.
26 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
GROWTH FUND (CONCLUDED)
- -------------------------------------------------------------
Description Value
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS: (CONTINUED)
- -------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $18.39
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $18.35
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($18.35 / 95.5%) $19.21
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS B $18.15
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $68,334,034.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
MTN -- MEDIUM TERM NOTE
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 27
WWW.HIGHMARK-FUNDS.COM
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
VALUE MOMENTUM FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 98.3%
- -------------------------------------------------------------
AIRCRAFT -- 0.7%
United Technologies 86,490 $ 5,768
--------
AUTOMOTIVE -- 1.9%
Arvin Industries 146,800 5,487
Ford Motor 101,000 4,911
TRW 115,300 6,161
--------
16,559
--------
BANKS -- 3.8%
Bank of America 161,847 10,743
Bank One 101,447 5,535
Bank United, Cl A (A) 160,000 6,160
Chase Manhattan Bank 90,000 6,919
J.P. Morgan 35,400 4,527
--------
33,884
--------
BUILDING -- 2.2%
Fleetwood Enterprises 147,800 3,409
Lafarge (A) 165,300 5,114
Masco 240,000 7,140
Southdown 65,775 3,881
--------
19,544
--------
CHEMICALS -- 3.1%
Avery Dennison (A) 211,000 12,950
Cabot 246,000 5,904
Du Pont (E.I.) de Nemours (A) 114,600 8,258
--------
27,112
--------
COMMUNICATIONS EQUIPMENT -- 2.7%
CTS 215,000 17,657
Lucent Technologies (A) 100,516 6,540
--------
24,197
--------
COMPUTERS & SERVICES -- 7.5%
American Power Conversion* 288,000 5,976
Cisco Systems* 251,200 15,606
Compaq Computer 99,000 2,376
Equifax 185,000 6,082
Hewlett Packard 154,000 16,122
IBM 158,000 19,859
--------
66,021
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 2.6%
General Electric 173,600 $ 18,922
Textron 50,000 4,112
--------
23,034
--------
DRUGS -- 7.5%
American Home Products 167,000 8,517
Amgen* 215,400 16,559
Bristol Myers Squibb 180,000 11,970
Merck 185,000 12,522
Monsanto 100,000 3,912
SmithKline Beecham ADR (A) 115,300 6,925
Watson Pharmaceuticals* 191,500 6,595
--------
67,000
--------
ELECTRICAL UTILITIES -- 0.8%
Sempra Energy (A) 312,544 6,935
--------
FINANCIAL SERVICES -- 5.2%
Associates First Capital 52,940 2,028
Bear Stearns 122,329 5,176
Fannie Mae 200,300 13,821
Morgan Stanley, Dean Witter,
Discover 135,000 12,167
Providian Financial 109,300 9,946
Waddell & Reed Financial, Cl B 104,714 2,618
--------
45,756
--------
FOOD, BEVERAGE & TOBACCO -- 4.2%
Dole Food 145,000 3,824
IBP 120,000 2,932
Philip Morris Companies 215,000 8,009
Ralston-Ralston Purina Group 110,700 3,314
Sara Lee 334,000 7,348
Universal (A) 155,000 4,660
Universal Foods (A) 315,000 6,871
--------
36,958
--------
GAS/NATURAL GAS -- 4.9%
Coastal 280,000 11,077
Eastern Enterprises (A) 168,100 6,545
MCN Energy Group (A) 150,000 3,197
Oneok* 150,000 4,772
The accompanying notes are an integral part of the financial statements.
28 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
VALUE MOMENTUM FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
GAS/NATURAL GAS -- (CONTINUED)
Questar 473,000 $ 8,898
Sonat (A) 50,000 1,759
Williams Companies (A) 180,000 7,571
--------
43,819
--------
HOUSEHOLD FURNITURE & FIXTURES -- 1.1%
Leggett & Platt (A) 376,000 9,635
--------
INSURANCE -- 5.1%
Allstate 146,952 5,217
Citigroup 306,751 13,670
Marsh & McLennan 156,950 11,928
Torchmark 213,000 7,002
UnumProvident 150,088 7,767
--------
45,584
--------
LEASING & RENTING -- 3.7%
Comdisco 549,503 13,257
GATX 176,000 7,018
Rollins Truck Leasing 802,500 9,128
Xtra 70,000 3,119
--------
32,522
--------
LEISURE PRODUCTS -- 1.4%
Hasbro 367,500 9,555
Mattel (A) 118,350 2,781
--------
12,336
--------
MACHINERY -- 1.9%
Caterpillar (A) 60,000 3,517
Deere 51,000 1,951
Kennametal 141,500 3,414
Parker-Hannifin 178,000 8,399
--------
17,281
--------
MEASURING DEVICES -- 0.6%
Tektronix (A) 182,500 5,783
--------
MEDICAL PRODUCTS & SERVICES -- 3.4%
Baxter International 206,000 14,150
Becton Dickinson 125,000 3,430
Mallinckrodt 130,000 4,404
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES -- (CONTINUED)
NovaCare* 180,000 $ 259
Pe Biosystems Group 86,000 4,821
Tenet Healthcare* (A) 165,000 2,960
--------
30,024
--------
MISCELLANEOUS BUSINESS SERVICES -- 1.8%
Cendant* (A) 352,479 7,094
Manpower 128,100 2,962
Wallace Computer Services 240,000 5,835
--------
15,891
--------
OFFICE FURNITURE & FIXTURES -- 0.6%
Hon Industries 240,000 5,580
--------
PAPER & PAPER PRODUCTS -- 2.9%
Kimberly-Clark 199,920 12,195
Weyerhaeuser 106,800 6,909
Willamette Industries 145,500 6,548
--------
25,652
--------
PETROLEUM & FUEL PRODUCTS -- 2.8%
Atlantic Richfield 45,000 4,053
Chevron 88,000 8,030
Exxon 19,000 1,508
Halliburton 246,700 11,379
--------
24,970
--------
PETROLEUM REFINING -- 3.0%
Ashland (A) 30,000 1,140
Mobil 162,000 16,565
Royal Dutch Petroleum, ADR 122,000 7,442
Valero Energy 50,000 1,069
--------
26,216
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 1.2%
Xerox 217,400 10,598
--------
PRINTING & PUBLISHING -- 1.8%
Houghton Mifflin 140,000 6,921
McGraw-Hill 170,000 8,649
--------
15,570
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 29
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
VALUE MOMENTUM FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
PROFESSIONAL SERVICES -- 0.4%
ServiceMaster 210,000 $ 3,780
--------
RAILROADS -- 1.5%
Burlington Northern Santa Fe 213,300 6,826
Florida East Coast Railway 150,000 6,103
--------
12,929
--------
REAL ESTATE -- 3.8%
BRE Properties, Cl A 268,262 6,740
CBL & Associates Properties 260,000 6,532
First Industrial Realty Trust 200,000 5,175
JP Realty 208,000 4,108
Kimco Realty 90,000 3,375
Meditrust (A) 20,700 225
Post Properties 195,000 7,800
--------
33,955
--------
RETAIL -- 3.5%
Dayton-Hudson 258,000 16,689
Federated Department Stores* (A) 216,700 11,119
Kroger* 120,000 3,158
--------
30,966
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 3.2%
Applied Materials* 108,600 7,812
Avnet 60,000 2,940
Intel 250,500 17,285
--------
28,037
--------
STEEL & STEEL WORKS -- 1.3%
Alcoa 109,000 6,526
Engelhard 226,000 5,043
--------
11,569
--------
- -------------------------------------------------------------
Description Shares/Par Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
TELEPHONES & TELECOMMUNICATION -- 6.2%
AT&T 185,400 $ 9,629
Bell Atlantic 193,000 12,304
Centurytel 243,750 10,420
GTE 134,800 9,933
SBC Communications 228,034 13,041
--------
55,327
--------
TOTAL COMMON STOCKS
(Cost $478,248) 870,792
--------
- -------------------------------------------------------------
PREFERRED STOCKS -- 0.8%
- -------------------------------------------------------------
RUBBER & PLASTIC -- 0.8%
Sealed Air Convertible, Ser A 109,400 6,728
--------
TOTAL PREFERRED STOCKS
(Cost $4,198) 6,728
--------
- ----------------------------------------------------------
COMMERCIAL PAPER -- 0.8%
- ----------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 7,000 7,000
--------
TOTAL COMMERCIAL PAPER
(Cost $7,000) 7,000
--------
- ----------------------------------------------------------
CORPORATE BONDS -- 7.3%
- ----------------------------------------------------------
AMEX Centurion (B) (C)
5.200, 04/24./00 $ 5,000 5,000
Bankers Trust (B) (C)
5.280%, 08/06/99 15,000 14,999
Household CCMT ABT Ser A4 (B) (C)
5.240%, 01/18/00 10,000 10,000
Merrill Lynch (B) (C)
5.300%, 10/04.99 10,000 10,000
5.270%, 09/23/99 10,000 10,000
Salomon Smith Barney (B) (C)
5.250%, 10/28/99 15,000 15,000
--------
TOTAL CORPORATE BONDS
(Cost $64,999) 64,999
--------
The accompanying notes are an integral part of the financial statements.
30 ----------------------------------------------------------------------------
1.800.433.6884
STATEMENT OF NET ASSETS
JULY 31, 1999
VALUE MOMENTUM FUND (CONCLUDED)
- -------------------------------------------------------------
Description Par (000)/Contracts Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.0%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$9,169,564 (collateralized
by U.S. Treasury Note,
par value $9,289,000,
5.625%, 12/31/99; market
value $9,349,811) 9,166 $ 9,166
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99, matures
08/02/99, repurchase price
$17,852,462 (collateralized by
various corporate obligations,
par value $27,434,173,
0.000%--13.250%,
08/15/99--12/27/18;
market value $18,202,090) 17,845 17,845
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $27,011) 27,011
--------
- -------------------------------------------------------------
EQUITY OPTIONS -- 0.0%
- -------------------------------------------------------------
Applied Materials August 80 Calls* (100) (13)
Applied Materials August 90 Calls* (100) (2)
Applied Materials Sept 90 Calls* (100) (12)
Atlantic Richfield August 90 Calls* (50) (15)
Atlantic Richfield August 95 Calls* (300) (26)
CTS Aug 75 Calls* (50) (46)
Lucent Technology August 80 Calls* (50) (1)
Providian Financial Aug 110 Calls* (50) (1)
Williams Companies August 45 Calls* (10) (1)
--------
TOTAL EQUITY OPTIONS
(Cost $-165) (117)
--------
TOTAL INVESTMENTS -- 110.2%
(Cost $581,291) 976,413
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED-- (10.2%) (89,844)
--------
OTHER ASSETS AND LIABILITIES, NET-- (0.0%) (252)
--------
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class (unlimited
authorization-- no par value) based on
28,528,276 outstanding shares
of beneficial interest $434,812
Fund Shares of Retail Class A (unlimited
authorization -- no par value)
based on 1,234,911 outstanding shares
of beneficial interest 23,320
Fund Shares of Retail Class B (unlimited
authorization -- no par value)
based on 220,813 outstanding shares of
beneficial interest 6,257
Undistributed net investment income 315
Accumulated net realized gain on investments 26,491
Net unrealized appreciation on investments 395,122
--------
TOTAL NET ASSETS-- 100.0% $886,317
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $29.56
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE-- RETAIL CLASS A $29.55
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($29.55 / 95.5%) $30.94
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS B $29.46
========
- ----------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF THE SECURITIES ON LOAN AT JULY 31,
1999 WAS $86,749,781.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
FMTN -- FEDERAL MEDIUM TERM NOTE
MTN -- MEDIUM TERM NOTE
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 31
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
INCOME EQUITY FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 98.7%
- -------------------------------------------------------------
AEROSPACE & DEFENSE -- 1.7%
B.F. Goodrich 212,200 $ 8,806
Boeing 59,200 2,686
--------
11,492
--------
ALUMINUM -- 1.1%
Alcoa 117,875 7,058
--------
AUTOMOTIVE -- 1.7%
Dana 124,975 5,218
Ford Motor 125,775 6,116
--------
11,334
--------
BANKS -- 10.5%
Bank of America 197,550 13,112
Bank One 212,248 11,581
Chase Manhattan Bank 90,050 6,923
First Union 138,750 6,382
Fleet Financial Group 332,825 13,479
National City 126,150 3,753
SunTrust Banks 19,750 1,274
U.S. Bancorp 142,525 4,436
Washington Mutual (A) 226,650 7,777
--------
68,717
--------
BUILDING & CONSTRUCTION -- 2.4%
Armstrong World Industries 150,900 8,299
Fluor (A) 191,675 7,679
--------
15,978
--------
CHEMICALS -- 5.7%
Dow Chemical 26,575 3,295
Du Pont (E. I.) de Nemours (A) 119,100 8,583
Engelhard 338,625 7,556
Hercules 282,750 9,861
International Flavors &
Fragrances (A) 121,175 5,491
Praxair 54,925 2,533
--------
37,319
--------
COMMUNICATIONS EQUIPMENT -- 1.6%
Motorola 115,250 10,517
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
COMPUTERS & SERVICES -- 9.2%
Autodesk 48,325 $ 1,281
Automatic Data Processing 62,950 2,522
Compaq Computer 156,350 3,752
Diebold 164,325 4,642
Electronic Data Systems (A) 74,475 4,492
Equifax (A) 171,575 5,641
Hewlett Packard 145,850 15,269
IBM 130,950 16,459
Shared Medical Systems (A) 103,475 6,196
--------
60,254
--------
CONTAINERS & PACKAGING -- 0.5%
Crown Cork & Seal 122,025 3,577
--------
DIVERSIFIED OPERATIONS -- 1.5%
General Electric 87,525 9,540
--------
DRUGS -- 5.6%
Abbott Labs (A) 104,625 4,492
Baxter International 115,850 7,957
Bristol-Myers Squibb 120,350 8,003
Merck 96,675 6,544
Pharmacia & Upjohn 175,800 9,460
--------
36,456
--------
ELECTRICAL UTILITIES -- 4.7%
Central & South West (A) 135,950 2,897
Constellation Energy Group* 152,400 4,467
Duke Energy 86,925 4,602
FPL Group 107,300 5,787
Potomac Electric Power 53,000 1,520
Southern 241,900 6,395
Texas Utilities 121,450 5,154
--------
30,822
--------
FINANCIAL SERVICES -- 3.8%
Citigroup 184,760 8,233
Fannie Mae 140,850 9,719
Merrill Lynch 106,450 7,245
--------
25,197
--------
The accompanying notes are an integral part of the financial statements.
32 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
INCOME EQUITY FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.2%
Campbell Soup (A) 92,600 $ 4,074
General Mills 39,225 3,248
H.J. Heinz 28,250 1,331
Hershey Foods 47,100 2,732
Kellogg (A) 62,925 2,191
Philip Morris 229,450 8,547
Sara Lee 233,450 5,136
--------
27,259
--------
GAS/NATURAL GAS -- 3.4%
El Paso Energy (A) 145,200 5,200
Enron Corporation 112,025 9,543
Sempra Energy (A) 232,950 5,169
Williams Companies (A) 60,425 2,542
--------
22,454
--------
HOUSEHOLD PRODUCTS -- 1.8%
Kimberly-Clark 141,100 8,607
Newell Rubbermaid (A) 79,250 3,428
--------
12,035
--------
INSURANCE -- 5.9%
American General (A) 140,075 10,838
HSB Group 16,250 661
Jefferson Pilot 50,487 3,689
Lincoln National 138,025 6,901
Marsh & McLennan 157,212 11,948
St. Paul Companies 150,875 4,696
--------
38,733
--------
MACHINERY -- 0.2%
Minnesota Mining & Manufacturing 15,500 1,363
--------
OFFICE EQUIPMENT -- 0.6%
Pitney Bowes 59,000 3,754
--------
PAPER & PAPER PRODUCTS -- 0.2%
Willamette Industries 28,175 1,268
--------
PERSONAL CARE -- 1.1%
Avon Products 153,925 7,004
--------
PETROLEUM & FUEL PRODUCTS -- 12.1%
Baker Hughes 220,525 7,677
BP Amoco PLC-Spons ADR 96,911 11,230
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS (CONTINUED)
Chevron 83,450 $ 7,615
Exxon 180,900 14,359
Halliburton 156,140 7,202
Mobil 111,500 11,401
Royal Dutch Petroleum, ADR 176,975 10,795
Texaco 145,200 9,048
--------
79,327
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.9%
Eastman Kodak 81,600 5,641
--------
PRINTING & PUBLISHING -- 3.2%
Deluxe 36,375 1,364
McGraw-Hill 166,905 8,491
R.R. Donnelley & Sons 317,700 11,119
--------
20,974
--------
REAL ESTATE -- 1.9%
Apartment Investment &
Management Co. 96,950 3,957
Kimco Realty 96,900 3,634
Simon Property Group 188,875 5,017
--------
12,608
--------
RETAIL -- 2.3%
J.C. Penney 88,223 3,860
May Department Stores 96,462 3,732
Sears Roebuck & Company 180,250 7,300
--------
14,892
--------
RETAIL BUILDING SUPPLIES -- 0.7%
Sherwin Williams (A) 170,050 4,591
--------
STEEL & STEEL WORKS -- 0.8%
Worthington Industries 352,200 5,151
--------
TELEPHONES & TELECOMMUNICATION -- 8.6%
Alltel 93,600 6,722
Ameritech 50,125 3,672
AT&T 223,637 11,615
Bell Atlantic 104,915 6,688
GTE 185,000 13,632
SBC Communications 46,025 2,632
U.S. West 195,779 11,221
--------
56,182
--------
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 33
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
INCOME EQUITY FUND (CONCLUDED)
- -------------------------------------------------------------
Description Shares/Par Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
TRANSPORTATION -- 0.5%
Ryder System 135,900 $ 3,202
--------
WASTE MANAGEMENT -- 0.3%
Browning-Ferris Industries 47,075 2,112
--------
TOTAL COMMON STOCKS
(Cost $556,998) 646,811
--------
- -------------------------------------------------------------
COMMERCIAL PAPER -- 1.0%
- -------------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 7,000 7,000
--------
TOTAL COMMERCIAL PAPER
(Cost $7,000) 7,000
--------
- -------------------------------------------------------------
CORPORATE BONDS -- 4.6%
- -------------------------------------------------------------
AMEX Centurion (B) (C)
5.200%, 04/24/00 $10,000 10,000
Bankers Trust (B) (C)
5.260%, 08/06/99 10,000 9,999
Merrill Lynch (B) (C)
5.270%, 09/23/99 10,000 10,000
--------
TOTAL CORPORATE BONDS
(Cost $29,999) 29,999
--------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.1%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$8,626,485 (collateralized by
U.S. Treasury Note, par value
$8,739,000, 5.625%, 12/31/99;
market value $8,796,211) 8,623 8,623
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99, matures
08/02/99, repurchase price
$24,746,466 (collateralized by
various corporate obligations,
par value $38,028,301,
0.000%--13.250%,
08/15/99--12/27/18;
market value $25,231,107) 24,736 24,736
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $33,359) 33,359
--------
TOTAL INVESTMENTS -- 109.4%
(Cost $627,356) 717,169
--------
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (9.4%) $(61,735)
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.0%) 277
--------
- ----------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par value)
based on 35,360,379 outstanding
shares of beneficial interest 428,787
Fund Shares of Retail Class A
(unlimited authorization -- no par value)
based on 1,253,713 outstanding shares
of beneficial interest 19,112
Fund Shares of Retail Class B
(unlimited authorization -- no par value)
based on 256,049 outstanding shares
of beneficial interest 4,511
Undistributed net investment income 61
Accumulated net realized gain on investments 113,427
Net unrealized appreciation on investments 89,813
--------
TOTAL NET ASSETS -- 100.0% $655,711
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $17.78
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $17.81
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($17.81 / 95.5%) $18.65
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS B $17.74
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999. (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $59,831,307.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
FMTN -- FEDERAL MEDIUM TERM NOTE
MTN -- MEDIUM TERM NOTE
The accompanying notes are an integral part of the financial statements.
34 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 61.9%
- -------------------------------------------------------------
AEROSPACE & DEFENSE -- 0.5%
Lockheed Martin 71,300 $ 2,482
--------
AIR TRANSPORTATION -- 0.4%
KLM Royal Dutch Air 75,945 2,003
--------
AIRCRAFT -- 0.7%
Allied Signal 46,500 3,008
--------
BANKS -- 3.8%
Bank of America 25,000 1,659
Bank of New York 96,000 3,546
BankBoston 80,000 3,755
Chase Manhattan Bank 28,400 2,183
First Union 44,200 2,033
Washington Mutual (A) 69,700 2,392
Wells Fargo 50,600 1,973
--------
17,541
--------
BEAUTY PRODUCTS -- 2.4%
Avon Products 53,600 2,439
Colgate-Palmolive (A) 63,550 3,138
Gillette 55,000 2,410
Procter & Gamble (A) 35,250 3,190
--------
11,177
--------
CHEMICALS -- 1.7%
Avery Dennison 40,000 2,455
Du Pont (E. I.) de Nemours (A) 38,600 2,782
Monsanto 71,000 2,778
--------
8,015
--------
COMMUNICATIONS EQUIPMENT -- 1.5%
Lucent Technologies 60,400 3,930
Motorola 34,100 3,112
--------
7,042
--------
COMPUTERS & SERVICES -- 0.8%
Cisco Systems* 59,200 3,678
--------
COMPUTERS & SOFTWARE SERVICES -- 4.9%
America Online* 7,800 742
Compaq Computer (A) 82,500 1,980
Computer Associates
International (A) 54,437 2,497
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
COMPUTERS & SOFTWARE SERVICES (CONTINUED)
Computer Sciences* 25,250 $ 1,625
Electronic Data Systems 27,500 1,659
Hewlett Packard 36,000 3,769
IBM 50,000 6,284
Microsoft* 22,400 1,922
Sap AG ADR (A) 70,350 2,229
--------
22,707
--------
DIVERSIFIED OPERATIONS -- 1.6%
Berkshire Hathaway, Cl B* 795 1,693
General Electric 52,600 5,733
--------
7,426
--------
DRUGS -- 6.0%
Alza* 53,750 2,614
American Home Products 60,000 3,060
Amgen* 30,000 2,306
Bristol-Myers Squibb 52,800 3,511
Eli Lilly 11,250 738
Merck 49,600 3,357
Pfizer 79,800 2,708
Schering Plough 63,100 3,092
SmithKline Beecham 56,000 3,363
Warner Lambert 46,600 3,076
--------
27,825
--------
ELECTRICAL UTILITIES -- 1.0%
Duke Energy 26,000 1,376
FirstEnergy 50,700 1,448
PacifiCorp 109,100 1,991
--------
4,815
--------
ENTERTAINMENT -- 1.0%
Mirage Resorts* 103,550 1,456
Walt Disney 107,850 2,979
--------
4,435
--------
FINANCIAL SERVICES -- 3.2%
American Express 30,000 3,952
Citigroup 96,295 4,291
Fannie Mae 69,700 4,809
Franklin Resources 49,850 1,901
--------
14,953
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 35
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 2.4%
Archer-Daniels-Midland 121,476 $ 1,701
Bestfoods 31,800 1,550
Coca-Cola Company 29,200 1,761
Hershey Foods 26,000 1,508
PepsiCo 70,700 2,766
Ralston-Ralston Purina Group 66,150 1,980
--------
11,266
--------
GAS/NATURAL GAS -- 1.6%
Coastal 70,000 2,769
Sempra Energy (A) 101,558 2,253
Williams Companies (A) 56,400 2,372
--------
7,394
--------
HOTELS & LODGING -- 0.3%
Hilton Hotels 111,500 1,456
--------
INSURANCE -- 3.6%
AFLAC 55,000 2,551
Allstate 65,722 2,333
Equitable Companies 36,000 2,313
Hartford Financial Services
Group (A) 55,200 2,981
HSB Group 49,350 2,008
Marsh & McLennan 33,350 2,535
UnumProvident 43,070 2,229
--------
16,950
--------
LEISURE PRODUCTS -- 0.7%
Hasbro 67,500 1,755
Mattel 65,800 1,546
--------
3,301
--------
MACHINERY -- 1.8%
Applied Materials* 42,000 3,021
Ingersoll Rand 45,250 2,910
Parker-Hannifin (A) 52,500 2,477
--------
8,408
--------
MEDICAL PRODUCTS & SERVICES -- 2.2%
Baxter International 46,500 3,194
IMS HEALTH 63,900 1,781
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES (CONTINUED)
Medtronic 21,100 $ 1,521
Pe Biosystems Group 39,200 2,198
Tenet Healthcare* (A) 90,000 1,614
--------
10,308
--------
MISCELLANEOUS BUSINESS SERVICES -- 0.3%
Robert Half International* 57,400 1,518
--------
MISCELLANEOUS CONSUMER CYCLICALS -- 0.3%
Fleetwood Enterprises 65,000 1,499
--------
PAPER & PAPER PRODUCTS -- 0.9%
Kimberly-Clark 43,800 2,672
Weyerhaeuser 20,000 1,294
--------
3,966
--------
PETROLEUM & FUEL PRODUCTS -- 1.8%
Halliburton 71,500 3,298
Phillips Petroleum 41,300 2,119
Union Pacific Resources Group (A) 173,504 3,091
--------
8,508
--------
PETROLEUM REFINING -- 3.4%
Chevron 35,300 3,221
Mobil 35,200 3,599
Royal Dutch Petroleum, ADR 47,200 2,879
Ultramar Diamond Shamrock 79,200 1,871
Unocal 60,000 2,381
USX-Marathon Group (A) 62,000 1,883
--------
15,834
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.6%
Xerox 59,450 2,898
--------
PRECIOUS METALS -- 0.4%
Barrick Gold 94,636 1,757
--------
PRINTING & PUBLISHING -- 1.1%
McGraw-Hill 14,700 748
Time Warner 11,250 810
Viacom, Cl B* 47,350 1,986
Washington Post, Cl B 2,600 1,469
--------
5,013
--------
The accompanying notes are an integral part of the financial statements.
36 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares/Par Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
PROFESSIONAL SERVICES -- 0.0%
Gartner Group, Cl B* 8,320 $ 180
--------
RAILROADS -- 0.5%
Burlington Northern Santa Fe 71,100 2,275
--------
REAL ESTATE -- 2.8%
BRE Properties, Cl A 79,850 2,006
CBL & Associates Properties 77,350 1,943
First Industrial Realty Trust 90,000 2,329
JP Realty 79,100 1,562
Kimco Realty Corp. 49,300 1,849
Post Properties 81,700 3,268
--------
12,957
--------
RETAIL -- 3.2%
Albertson's 52,920 2,629
Costco* 25,000 1,869
Federated Department Stores* (A) 52,000 2,668
McDonald's 83,000 3,460
Safeway* 38,800 2,090
Sears Roebuck 58,600 2,373
--------
15,089
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.1%
Intel 75,000 5,175
--------
TELEPHONES & TELECOMMUNICATION -- 3.4%
AT&T 67,125 3,486
Bell Atlantic 84,800 5,406
MCI WorldCom* 38,450 3,172
SBC Communications 64,000 3,660
--------
15,724
--------
TOTAL COMMON STOCKS
(Cost $182,485) 288,583
--------
- -------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 1.6%
- -------------------------------------------------------------
U.S. Treasury Notes
6.625%, 06/30/01 $1,000 1,017
5.875%, 11/30/01 2,000 2,008
6.500%, 05/15/05 4,500 4,605
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $7,540) 7,630
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED BONDS -- 13.2%
- -------------------------------------------------------------
FHLMC
5.750%, 03/15/09 $2,000 $ 1,862
6.000%, 02/01/28 2,788 2,585
FNMA
7.500%, 08/01/01 882 890
5.125%, 02/13/04 5,012 4,760
6.850%, 09/12/05 1,400 1,402
6.375%, 06/15/09 2,000 1,949
6.500%, 05/01/14 2,489 2,431
6.500%, 03/01/24 292 278
8.000%, 08/01/24 338 345
8.000%, 05/01/25 981 1,001
7.000%, 09/01/25 1,134 1,109
8.000%, 07/01/26 384 392
7.000%, 09/01/26 823 810
7.500%, 09/01/26 598 598
7.000%, 12/01/26 1,111 1,085
7.500%, 03/01/27 553 553
6.500%, 10/01/27 1,186 1,129
6.500%, 12/01/27 2,217 2,111
7.000%, 12/01/27 1,994 1,949
6.000%, 03/01/28 3,668 3,396
6.000%, 05/01/28 946 876
6.500%, 05/01/29 2,951 2,810
GNMA
6.500%, 09/15/08 2,183 2,133
6.000%, 11/15/08 1,495 1,431
6.500%, 06/15/23 204 194
6.500%, 02/15/24 84 79
7.500%, 05/15/24 301 301
7.500%, 09/15/25 533 533
7.000%, 02/15/26 713 695
6.500%, 04/15/26 780 740
7.000%, 08/15/26 1,983 1,933
7.500%, 09/15/26 2,004 2,002
7.500%, 01/15/27 1,416 1,415
7.000%, 10/15/27 1,478 1,441
6.500%, 05/15/28 947 899
6.000%, 12/15/28 2,452 2,259
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 37
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED BONDS (CONTINUED)
- -------------------------------------------------------------
GNMA (continued)
6.500%, 01/15/29 $2,973 $ 2,822
6.000%, 02/15/29 2,463 2,269
7.000%, 03/15/29 2,467 2,404
6.000%, 04/15/29 3,950 3,639
--------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED BONDS
(Cost $63,360) 61,510
--------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS -- 20.0%
- -------------------------------------------------------------
Airtouch Communications
6.650%, 05/01/08 2,000 1,933
Allied-Signal
6.200%, 02/01/08 4,000 3,715
American General
6.250%, 12/18/02 2,000 1,973
6.750%, 06/15/05 2,000 1,975
Associates of North America
7.875%, 09/30/01 2,000 2,053
6.950%, 11/01/18 3,000 2,820
AT&T
7.500%, 06/01/06 2,000 2,050
Avco Financial Services
7.375%, 08/15/01 2,000 2,035
Bankers Trust NY
7.500%, 11/15/15 2,000 1,928
Bass America
6.750%, 08/01/99 595 595
Bell Atlantic
6.500%, 04/15/28 3,000 2,678
8.000%, 10/15/29 175 184
Caterpillar Tractor
6.000%, 05/01/07 605 569
Chemical Banking
6.700%, 08/15/08 1,500 1,457
Chesapeake & Potomac
Telephone of Maryland
6.000%, 05/01/03 1,500 1,472
Citicorp
6.750%, 08/15/05 450 444
Dow Chemical
6.850%, 08/15/13 2,000 1,928
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
Du Pont (E.I.) de Nemours
6.750%, 09/01/07 $3,000 $ 3,004
Duke Energy
7.875%, 08/15/04 1,000 1,049
Fannie Mae MTN
Callable 09/03/99 @ 100
6.375%, 06/29/05 2,000 1,959
First Bank System
6.875%, 09/15/07 500 494
First Chicago
6.125%, 02/15/06 1,000 950
First National Bank of Boston
8.000%, 09/15/04 2,000 2,078
Ford Motor
6.500%, 08/01/18 2,000 1,795
Ford Motor Credit
6.850%, 08/15/00 250 252
6.500%, 02/28/02 500 499
6.125%, 01/09/06 3,250 3,083
General Mills
5.400%, 12/08/08 2,500 2,256
General Motors Acceptance
8.000%, 10/01/99 555 557
5.750%, 11/10/03 2,600 2,480
6.125%, 01/22/08 3,000 2,813
Golden West Financial
6.700%, 07/01/02 150 150
GTE
6.840%, 04/15/18 3,000 2,831
Hydro Quebec
8.050%, 07/07/24 150 161
IBM
5.370%, 09/22/03 2,500 2,397
8.375%, 11/01/19 200 225
JC Penney
6.000%, 05/01/06 2,250 2,084
JCI
6.300%, 02/01/08 2,000 1,895
Joseph E. Seagram & Sons
7.000%, 04/15/08 1,500 1,449
The accompanying notes are an integral part of the financial statements.
38 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
Lehman Brothers
8.500%, 05/01/07 $2,000 $ 2,108
Litton Industries
6.750%, 04/15/18 2,500 2,256
Lockheed Martin
7.700%, 06/15/08 2,000 2,035
Lucent Technologies
6.450%, 03/15/29 500 449
Monsanto Company (D)
5.875%, 12/01/08 2,500 2,278
New England Telephone & Telegraph
7.875%, 11/15/29 250 259
Pepsi Bottling Holdings (D)
5.375%, 02/17/04 3,000 2,839
Phillips Petroleum
6.650%, 07/15/18 1,000 913
Province of British Columbia
7.000%, 01/15/03 1,500 1,517
Ralston-Ralston Purina
7.750%, 10/01/15 2,000 2,045
Raytheon
6.550%, 03/15/10 2,000 1,910
Royal Bank of Scotland
6.375%, 02/01/11 2,500 2,309
Sears Roebuck Acceptance
6.900%, 08/01/03 2,000 2,000
US West Capital Funding
6.375%, 07/15/08 2,000 1,875
Wal-Mart
6.375%, 03/01/03 450 448
5.875%, 10/15/05 2,000 1,908
Worldcom
6.125%, 08/15/01 2,000 1,983
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $96,606) 93,402
--------
- -------------------------------------------------------------
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 $ 100
Contimortgage Home Equity
Loan Trust, Ser 1995-3, Cl A4
7.440%, 09/15/12 180 181
Equity Capital Home Equity
Loan Trust, Ser 1996-3, Cl A6
7.400%, 12/15/19 450 450
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 1,040
--------
TOTAL ASSET BACKED SECURITIES
(Cost $2,083) 2,124
--------
- -------------------------------------------------------------
COMMERCIAL PAPER -- 1.5%
- -------------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 7,000 7,000
--------
TOTAL COMMERCIAL PAPER
(Cost $7,000) 7,000
--------
- -------------------------------------------------------------
CORPORATE BONDS -- 3.2%
- -------------------------------------------------------------
AMEX Centurion (B) (C)
5.200%, 04/19/00 5,000 5,000
5.270%, 09/23/99 10,000 10,000
--------
TOTAL CORPORATE BONDS
(Cost $15,000) 15,000
--------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.5%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$6,045,287 (collateralized by
U.S. Treasury Note, par value
$6,124,000, 5.625%, 12/31/99;
market value $6,164,091) 6,043 6,043
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 39
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
BALANCED FUND (CONCLUDED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
- -------------------------------------------------------------
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99,
matures 08/02/99, repurchase
price $10,233,850 (collateralized
by various corporate
obligations, par value
$15,726,525, 0.000%--13.250%,
08/15/99--12/27/18:
market value $10,434,272) $10,229 $ 10,229
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $16,272) 16,272
--------
TOTAL INVESTMENTS -- 105.4%
(Cost $390,346) 491,521
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (6.9%) (32,229)
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.5% 6,949
--------
- ----------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par
value) based on 26,232,654 outstanding
shares of beneficial interest 319,777
Fund Shares of Retail Class A (unlimited
authorization -- no par value)
based on 653,393 outstanding shares
of beneficial interest 7,984
Fund Shares of Retail Class B (unlimited
authorization -- no par value)
based on 209,227 outstanding shares
of beneficial interest 3,536
Undistributed net investment income 326
Accumulated net realized gain on investments 33,443
Net unrealized appreciation on investments 101,175
--------
TOTAL NET ASSETS -- 100.0% $466,241
========
- ----------------------------------------------------------
Description Value
- ----------------------------------------------------------
- --------------------------------------------------
NET ASSETS: (CONTINUED)
- --------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $17.21
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $17.20
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($17.20 / 95.5%) $18.01
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE -- RETAIL CLASS B $17.18
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $31,097,325.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
(D) SECURITIES SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
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."
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
40 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
EMERGING GROWTH FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 92.2%
- -------------------------------------------------------------
BANKS -- 7.6%
Commercial Federal 30,000 $ 697
Cullen/Frost Bankers 40,000 1,027
Downey Financial 20,000 466
FirstFed Financial* 40,000 640
Provident Bankshares 40,000 965
Reliance Bancorp 20,000 554
--------
4,349
--------
BUILDING & CONSTRUCTION -- 2.8%
Insituform Technologies, Cl B* 35,000 761
Morrison Knudsen* 30,000 302
Ryland Group 20,000 557
--------
1,620
--------
BUILDING & CONSTRUCTION SUPPLIES-- 2.2%
Mobile Mini* 40,000 900
Texas Industries 10,000 352
--------
1,252
--------
CHEMICALS -- 1.1%
Geon 20,000 612
--------
COMMUNICATIONS EQUIPMENT -- 7.4%
Advanced Fibre Communication* 50,000 831
Advanced Radio Telecom* (A) 50,000 594
Broadcom, Cl A* 5,000 602
Omnipoint* (A) 35,000 1,501
Polycom* 10,000 335
Scientific-Atlanta 10,000 365
--------
4,228
--------
COMPUTERS & SERVICES -- 9.3%
Adaptec* 80,000 3,110
Encad* 30,000 231
PSC* 18,000 178
U.S. Internetworking Inc* 10,000 274
Visual Networks* (A) 20,000 721
Xircom* 25,000 798
--------
5,312
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
COMPUTERS & SOFTWARE SERVICES -- 12.6%
Art Technology* (A) 3,000 $ 52
Aware* (A) 12,000 554
Daisytek International* 30,000 431
Gasonics International* (A) 50,000 694
I2 Technologies* 20,000 615
Micromuse* 15,000 697
Networks Associates* (A) 30,000 525
Peregrine Systems* 25,000 747
S3* (A) 70,000 787
Symantec* 40,000 1,210
Timberline Software 55,000 932
--------
7,244
--------
DRUGS -- 2.7%
Columbia Laboratories* 50,000 359
MedImmune* 15,000 1,198
--------
1,557
--------
ELECTRICAL TECHNOLOGY -- 1.0%
Electro Scientific Industries* 15,000 572
--------
ELECTRICAL UTILITIES -- 0.9%
Montana Power 5,000 338
Sierra Pacific Resources* 7,200 187
--------
525
--------
ENERGY - OIL & GAS -- 1.1%
Barrett Resources* 15,000 603
--------
ENTERTAINMENT -- 5.0%
Cinar Films, Cl B* 65,000 1,844
Univision Communications* (A) 15,000 1,039
--------
2,883
--------
FINANCIAL SERVICES -- 0.9%
Waddell & Reed Financial, Cl A 20,000 508
--------
LEISURE PRODUCTS -- 0.9%
Metromedia International Group* 75,000 544
--------
MEASURING DEVICES -- 0.3%
Input/Output* 20,000 149
--------
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 41
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
EMERGING GROWTH FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
MEDICAL PRODUCTS & SERVICES -- 4.0%
ATS Medical* 70,000 $ 687
Cambridge Heart* (A) 80,000 380
LCA-Vision Inc* 50,000 522
Novoste* (A) 30,000 692
--------
2,281
--------
MISCELLANEOUS BUSINESS SERVICES -- 3.8%
G & K Services 16,000 850
Safety-Kleen* 45,000 537
Sapiens International* (A) 80,000 810
--------
2,197
--------
MISCELLANEOUS CONSUMER CYCLICALS -- 1.7%
Nielsen Media Research* 30,000 975
--------
MISCELLANEOUS CONSUMER SERVICES -- 1.6%
Carriage Services* 20,000 330
Rock of Ages* 50,000 481
Stewart Enterprises, Cl A 10,000 124
--------
935
--------
PETROLEUM & FUEL PRODUCTS -- 1.5%
Diamond Offshore Drilling 10,000 320
Oceaneering International* 20,000 353
Vintage Petroleum 15,000 178
--------
851
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.5%
Pinnacle Systems* 10,000 291
--------
PRINTING & PUBLISHING -- 0.8%
Topps* 50,000 447
--------
PROFESSIONAL SERVICES -- 1.0%
Bowne 30,000 398
Caliber Learning Network* (A) 41,000 200
--------
598
--------
RETAIL -- 5.0%
Action Performance* (A) 15,000 519
Linens N Things* 15,000 694
Spiegel, Cl A 110,000 997
Whole Foods Market* (A) 15,000 660
--------
2,870
--------
- -------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS -- 8.2%
Alliance Semiconductor* 70,000 $ 731
DuPont Photomasks* 17,500 838
Lattice Semiconductor* 15,000 861
Memc Electronic Materials* 30,000 388
PRI Automation* (A) 20,000 619
Read-Rite* 60,000 300
Sanmina* (A) 5,000 327
Vitesse Semiconductor* 10,000 639
--------
4,703
--------
TELEPHONES & TELECOMMUNICATION -- 4.1%
GST Telecommunications* 102,500 1,538
Metro One Telecommunications* 25,000 344
Net2Phone Inc* 16,500 452
--------
2,334
--------
TRANSPORTATION -- 0.4%
Fritz* 20,000 236
--------
WHOLESALE -- 3.8%
Horizon Organic Holding* 30,000 371
Winstar Communications* (A) 35,000 1,837
--------
2,208
--------
TOTAL COMMON STOCKS
(Cost $44,568) 52,884
--------
- ----------------------------------------------------------
COMMERCIAL PAPER -- 4.3%
- ----------------------------------------------------------
AGA Capital (B) (C)
5.230%, 08/10.99 $2,500 2,495
--------
TOTAL COMMERCIAL PAPER
(Cost $2,495) 2,495
--------
- ----------------------------------------------------------
CORPORATE BOND -- 4.4%
- ----------------------------------------------------------
Household CCMT ABT Ser A4 (B) (C)
5,240%, 01/18/00 2,500 2,500
--------
TOTAL CORPORATE BOND
(Cost $2,500) 2,500
--------
The accompanying notes are an integral part of the financial statements.
42 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
EMERGING GROWTH FUND (CONCLUDED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 17.2%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$4,653,195 (collateralized by
U.S. Treasury Note, par value
$4,714,000, 5.625%, 12/31/99:
market value $4,744,861) $4,651 $ 4,651
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99, matures
08/02/99, repurchase price
$5,216,481 (collateralized by
various corporate obligations
par value $8,016,252,
0.000%--13.250%, 08/15/99--12/27/18;
market value $5,318,642) 5,214 5,214
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $9,865) 9,865
--------
TOTAL INVESTMENTS -- 118.1%
(Cost $59,428) 67,744
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (17.8%) (10,209)
--------
OTHER ASSETS AND LIABILITIES, NET -- (0.3%) (149)
--------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class (unlimited
authorization -- no par value)
based on 4,999,786 outstanding shares
of beneficial interest 54,322
Accumulated net realized loss on investments (5,252)
Net unrealized appreciation on investments 8,316
--------
TOTAL NET ASSETS -- 100.0% $ 57,386
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $11.48
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $9,864,269.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
CL -- CLASS
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 43
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
SCHEDULE OF INVESTMENTS
JULY 31, 1999
SMALL CAP VALUE FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS -- 66.4%
- -------------------------------------------------------------
ADVERTISING/MARKETING -- 1.0%
Direct Focus Com* 50,000 $ 834
--------
APPAREL/TEXTILES -- 1.8%
Delta Woodside Industries 150,000 759
Kellwood 32,500 737
--------
1,496
--------
AUTOMOTIVE -- 3.0%
Copart* 62,000 1,488
Dollar Thrifty Automotive* 44,000 946
--------
2,434
--------
BANKS -- 2.1%
Bank United, Cl A 20,000 770
Eldorado Bancshares* 90,000 922
--------
1,692
--------
BUILDING & CONSTRUCTION -- 0.9%
Granite Construction 30,000 759
--------
CEMENT -- 1.1%
Southdown 15,500 914
--------
COMMUNICATIONS EQUIPMENT -- 8.0%
Adtran* 30,000 1,134
Advanced Fibre Communication* 60,000 997
Antec* 36,800 1,543
Ciena* 30,000 1,012
CTS 15,000 1,232
Teltrend* 35,000 700
--------
6,618
--------
COMPUTER PROGRAMING & SOFTWARE -- 2.1%
Progress Software* 40,000 1,065
Reynolds & Reynolds, Cl A 30,000 705
--------
1,770
--------
COMPUTERS & SERVICES -- 2.1%
In Focus Systems* 50,000 809
Neomagic* 100,000 938
--------
1,747
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
DRUGS -- 3.3%
Cambrex 30,000 $ 793
Dura Pharmaceuticals* 62,000 647
Roberts Pharmaceutical* 46,000 1,262
--------
2,702
--------
FINANCIAL SERVICES -- 3.5%
Liberty Financial Companies 35,500 976
Medallion Financial 50,000 981
Mutual Risk Management 30,000 894
--------
2,851
--------
FOOD -- 2.0%
Earthgrains 31,000 810
J & J Snack Foods* 36,500 876
--------
1,686
--------
INDUSTRIAL -- 3.4%
Insituform Technologies, Cl B* 48,000 1,044
Quixote 60,000 780
Teleflex 20,000 1,007
--------
2,831
--------
INSURANCE -- 0.9%
Fremont General 44,000 748
--------
MACHINERY -- 3.0%
Applied Power, Cl A 24,500 698
Aptar Group 31,500 912
Pentair 20,000 869
--------
2,479
--------
MARINE TRANSPORTATION -- 0.3%
Kirby* 12,000 246
--------
MEDICAL PRODUCTS & SERVICES -- 0.9%
Adac Laboratories* 100,000 706
--------
MISCELLANEOUS BUSINESS SERVICES -- 1.1%
Innotrac* 50,000 894
--------
OFFICE FURNITURE & FIXTURES -- 0.9%
Hon Industries 30,000 698
--------
PAPER MILLS -- 0.7%
PH Glatfelter 40,000 558
--------
The accompanying notes are an integral part of the financial statements.
44 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
SCHEDULE OF INVESTMENTS
JULY 31, 1999
SMALL CAP VALUE FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 3.9%
Enron Oil and Gas 45,000 $ 962
Equitable Resources 30,000 1,112
Evergreen Resources* 44,000 1,150
--------
3,224
--------
PETROLEUM REFINING -- 1.1%
Pennzoil-Quaker State 61,020 904
--------
RAILROAD EQUIPMENT -- 1.2%
Harmon Industries 53,000 947
--------
REAL ESTATE -- 5.2%
Bluegreen Corporation* 135,000 861
First Industrial Realty Trust 30,000 776
Glenborough Realty Trust 45,000 788
Kennedy-Wilson* 80,000 785
Leucadia National 25,000 542
Reckson Associates Realty 24,500 547
--------
4,299
--------
RESTAURANT -- 1.2%
Ruby Tuesday 47,500 998
--------
RETAIL -- 4.0%
Casey's General Stores 53,000 815
Lithia Motors, Cl A* 40,000 868
Pier 1 Imports 60,000 563
Sonic Automotive* 80,000 1,050
--------
3,296
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 6.6%
3DFX Interactive* 100,000 1,338
Cypress Semiconductor* 78,700 1,574
Ibis Technology* 84,000 2,552
--------
5,464
--------
STEEL & STEEL WORKS -- 0.2%
Intermet 12,100 138
--------
TRUCKING -- 0.9%
Landstar System* 18,500 747
--------
TOTAL COMMON STOCKS
(Cost $46,419) 54,680
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS -- 25.4%
- -------------------------------------------------------------
ARGENTINA -- 0.2%
Nobleza Piccardo 62,720 $ 176
--------
AUSTRALIA -- 0.3%
Reinsurance Australia 248,980 211
--------
AUSTRIA -- 1.1%
Bau Holding 13,060 402
Bohler Uddeholm ADR 35,080 539
--------
941
--------
BRAZIL -- 0.8%
Centrais Eletricas ADR* 6,060 176
Centrais Geradoras do Sul ADR* 30,260 98
Copene Petroquimica ADR 46,620 379
--------
653
--------
CANADA -- 0.6%
Hudson's Bay 39,980 478
--------
CAYMAN ISLANDS -- 0.5%
Anangel American Shipholdings ADR* 75,200 395
--------
CHILE -- 0.5%
Quinenco ADR 39,683 392
--------
CHINA -- 0.4%
Shandong Huaneng Power ADR 80,500 332
--------
FRANCE -- 0.4%
Fonclere Financiere et Participations 4,450 294
--------
GERMANY -- 0.5%
Dyckerhoff 1,301 414
--------
HONG KONG -- 5.2%
First Pacific ADR* 209,110 855
Guoco 214,000 674
Harbour Ring International 1,200,000 66
Mandarin Oriental International 98,660 779
Oriental Press 1,642,000 252
Sing Tao* 2,156,000 453
Smartone Telecommunications* 147,500 491
South China Morning ADR* 203,390 694
--------
4,264
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 45
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
SCHEDULE OF INVESTMENTS
JULY 31, 1999
SMALL CAP VALUE FUND (CONCLUDED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
ITALY -- 0.5%
Ansaldo Trasporti* 324,170 $ 399
--------
JAPAN -- 6.2%
Akita Bank 54,000 213
Azwell 80,900 370
Bank of Iwate 10,500 477
Chofu Seisakusho 65,000 1,203
Daicel Chemical 186,000 699
Fuji Oil 78,000 596
Higo Bank 83,000 366
Osaka Steel 102,800 593
Yamanashi Chuo Bank 54,000 203
Yokogawa Bridge 97,000 351
--------
5,071
--------
NETHERLANDS -- 0.8%
European Vinyls 29,290 219
Hollandsche Beton Groep 38,152 453
--------
672
--------
PERU -- 0.1%
Banco Wiese ADR* 97,030 103
--------
PHILIPPINES -- 0.4%
RFM 2,863,000 351
--------
SINGAPORE -- 0.5%
Time Publishing 200,000 452
--------
SOUTH AFRICA -- 0.4%
Toyota South Africa 116,420 330
--------
SPAIN -- 1.1%
Construcciones y Auxiliar
Ferrocariles 19,260 515
Endesa 23,322 459
--------
974
--------
SWITZERLAND -- 1.5%
Barry Callebaut 1,510 233
Daetwyler 365 539
Edipresse 1,421 476
--------
1,248
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
UNITED KINGDOM -- 3.4%
Coats Viyella ADR 207,350 $ 428
Elementis 299,225 534
Greencore Group 118,920 357
Heywood Williams 179,460 838
Lambert Fenchurch 296,850 400
United Biscuits* 75,360 226
--------
2,783
--------
TOTAL FOREIGN COMMON STOCKS
(Cost $17,572) 20,933
--------
- ----------------------------------------------------------
REPURCHASE AGREEMENT -- 4.8%
- ----------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price $3,959,900
(collateralized by U.S. Treasury Note,
par value $4,012,000, 5.625%,
due 12/31/99, market value
$4,038,265) $3,958 3,958
--------
TOTAL REPURCHASE AGREEMENT
(Cost $3,958) 3,958
--------
TOTAL INVESTMENTS -- 96.6%
(Cost $67,949) $ 79,571
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
PERCENTAGES INDICATED ARE BASED ON NET ASSETS.
The accompanying notes are an integral part of the financial statements.
46 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS -- 92.4%
- -------------------------------------------------------------
AUSTRALIA -- 1.5%
Australia & New Zealand Bank Group 14,000 $ 98
Brambles Industries 5,500 145
Cable and Wireless Optus* 46,000 106
Commonwealth Bank of Australia 8,000 126
Fosters Brewing Group 86,000 251
National Australia Bank 9,000 137
News Corporation 19,300 171
Smith Howard 8,000 62
Southcorp Holdings 57,000 221
Telstra 33,000 180
Westfield Holdings 14,000 86
--------
1,583
--------
BELGIUM -- 0.6%
Fortis, Cl B 19,930 648
--------
DENMARK -- 0.5%
ISS International Service
System, Cl B* 9,070 508
--------
FINLAND -- 0.9%
Nokia Oyj, Cl A 11,080 960
--------
FRANCE -- 10.3%
Accor 3,330 793
Air Liquide 2,090 340
Alcatel Alsthom 4,070 626
Cap Gemini 1,870 318
Carrefour Supermarche 2,520 346
Compagnie de Saint-Gobain 2,930 531
Elf Aquitaine 4,900 839
Groupe Danone 2,680 680
Groupe GTM 2,530 270
Hachette Filipacchi Medias 2,180 508
L'Oreal 560 364
Lafarge 190 21
Legrand 1,650 336
Louis Vuitton-Moet Hennessy 1,760 500
Peugeot 4,050 697
Sanofi-Synthelabo* 14,350 596
STMicroelectronics ADR 11,880 838
Suez Lyonnaise des Eaux 3,290 581
Television Francaise 2,610 628
Total, Ser B 5,750 732
Vivendi 8,534 670
--------
11,214
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
GERMANY -- 8.2%
Allianz 2,160 $ 575
BASF 14,040 635
Bayerische Vereinsbank 18,920 1,077
DaimlerChrysler 14,870 1,131
Deutsche Bank 20,020 1,268
Hoechst 15,300 645
Lufthansa Reg 21,860 401
Mannesmann 9,190 1,397
SAP* 1,210 458
Veba 20,790 1,277
--------
8,864
--------
HONG KONG -- 1.8%
Cable & Wireless 68,000 160
Cheung Kong Holdings 34,000 298
China Telecom (Hong Kong)* 66,000 197
CLP Holdings 31,500 143
Hang Seng Bank 22,800 250
HSBC Holdings 7,200 85
Hutchison Whampoa 52,000 494
Sun Hung Kai Properties 38,000 328
--------
1,955
--------
IRELAND -- 1.3%
Bank of Ireland 61,100 575
CRH 25,630 515
Irish Life & Permanent - Dublin 35,785 381
--------
1,471
--------
ITALY -- 5.1%
Autogrill 53,220 616
Banca Di Roma 408,040 526
Benetton Group 289,260 606
Italcementi 48,570 649
Mediolanium 71,830 560
Saipem 103,320 433
San Paolo-IMI 44,990 571
Seat-Pagine Gialle 842,410 761
Telecom Italia 83,490 826
--------
5,548
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 47
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERNATIONAL EQUITY FUND (CONTINUED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
JAPAN -- 25.2%
Asahi Bank 175,000 $ 902
Bridgestone 25,000 771
Daifuku 56,000 394
Fujitsu 49,000 1,472
Fujitsu Support & Service 3,000 664
Hitachi 47,000 474
Honda Motor 19,000 825
Ito-Yokado 6,000 409
Japan Tobacco 70 844
Kao 38,000 1,059
Kirin Brewery 54,000 669
Minebea 58,000 704
Mitsubishi Chemical 273,000 889
Mitsubishi Estate 42,000 436
Mitsubishi Heavy Industries 140,000 620
Mitsukoshi* 200,000 997
Nippon Express 100,000 677
Nippon Paper Industries 107,000 595
Nippon Telegraph & Telephone 199 2,537
NTT Data 150 1,362
NTT Mobile Communication Network* 19 295
NTT Mobile* 76 1,175
Osaka Gas 148,000 535
Rohm Company 7,000 1,313
Sony 9,800 1,249
Sumitomo Metal Industries* 250,000 314
Takeda Chemical 36,000 1,956
Tokio Marine & Fire Insurance 56,000 650
Tokyo Electronics 15,000 1,074
Toyota Motor 42,000 1,482
--------
27,343
--------
MALAYSIA -- 0.1%
Petronas Gas 33,000 76
--------
NETHERLANDS -- 4.1%
Akzo Nobel 16,590 709
Elsevier 5,950 75
Fortis 2,500 79
Heineken 12,310 666
ING Groep 19,230 983
Koninklijke Ahold 30,320 1,057
Philips Electronics 8,330 851
--------
4,420
--------
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
PORTUGAL -- 1.1%
Banco Pinto & Sotto Mayor 29,550 $ 585
Portugal Telecom 14,498 642
--------
1,227
--------
SINGAPORE -- 0.5%
City Developments 11,000 77
Development Bank Singapore F 8,000 104
Natsteel Electronics 9,000 44
Overseas Chinese Bank 10,000 84
Singapore International Airlines F 9,000 85
Singapore Press Holdings 3,038 54
Singapore Tech Engineering 50,000 62
Singapore Telecommunications 46,000 78
--------
588
--------
SPAIN -- 4.3%
Agroman Empresa Constructora* 38,070 298
Banco Popular Espanol 9,670 674
Banco Santander Central Hispano 64,780 642
Endesa 31,500 619
Grupo Dragados 86,370 1,051
Telefonica de Espana* 84,870 1,360
--------
4,644
--------
SWEDEN -- 1.8%
Electrolux, Ser B 29,200 607
Ericsson, Cl B 25,830 843
Nordbanken Holding AB 91,270 538
--------
1,988
--------
SWITZERLAND -- 6.8%
ABB, Reg* 6,890 669
Alusuisse Lonza Group, Reg 470 560
Nestle SA, Reg 740 1,456
Novartis, Reg 1,090 1,576
Roche Holdings 80 885
Schindler Holding 270 417
UBS AG, Reg 3,430 1,046
Zurich Allied, Reg 1,400 813
--------
7,422
--------
The accompanying notes are an integral part of the financial statements.
48 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERNATIONAL EQUITY FUND (CONCLUDED)
- -------------------------------------------------------------
Description Shares Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
FOREIGN COMMON STOCKS (CONTINUED)
- -------------------------------------------------------------
UNITED KINGDOM -- 18.3%
Allied Domecq 61,680 $ 558
BAA 53,780 549
Bank of Scotland 49,970 635
Barclays 31,650 936
BP Amoco 139,620 2,734
British Aerospace 89,940 594
British Telecom 54,140 944
Cable & Wireless 37,690 460
Carlton Communications 50,710 413
Compass Group 54,200 561
Glaxo Wellcome 53,110 1,371
HSBC Holdings 93,870 1,124
Kingfisher 79,670 894
Misys 98,580 875
National Westminster Bank 31,920 631
Prudential 35,560 529
Reed International 76,520 584
Royal & Sun Alliance 68,700 565
Scottish & Southern Energy 50,360 487
Shell Transportation & Trading 186,090 1,520
SmithKline Beecham 74,520 919
Tesco 355,060 934
Vodafone Group 47,760 1,019
--------
19,836
--------
TOTAL FOREIGN COMMON STOCKS
(Cost $86,897) 100,295
--------
- -------------------------------------------------------------
CASH EQUIVALENTS -- 6.4%
- -------------------------------------------------------------
SEI Daily Income Money Market $3,400 3,400
SEI Prime Obligation 3,500 3,500
--------
TOTAL CASH EQUIVALENTS
(Cost $6,900) 6,900
--------
TOTAL INVESTMENTS -- 98.8%
(Cost $93,797) 107,195
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.2% 1,342
--------
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares (unlimited authorization --
no par value) based on 2,756,365
outstanding shares of beneficial interest $ 93,828
Undistributed net investment income 516
Accumulated net realized gain on investments 793
Net unrealized appreciation on forward foreign
currency contracts, foreign currency and
translation of other assets and liabilities
in foreign currency 2
Net unrealized appreciation on investments 13,398
--------
TOTAL NET ASSETS -- 100.0% $108,537
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE -
INSTITUTIONAL CLASS $39.38
========
- --------------------------------------------------------------------------------
*NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
F -- FOREIGN
REG -- REGISTERED
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 49
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- 98.8%
- -------------------------------------------------------------
Alameda County, Santa Rita
Jail Project,
COP, MBIA Insured
5.250%, 12/01/04 $ 500 $ 524
Anaheim Public Financing
Authority, Electric
Utility Projects, RB,
MBIA Insured,
Callable 04/01/03 @ 102
5.500%, 10/01/10 1,750 1,811
Anaheim, Water, RB,
Callable 09/09/99 @ 100
5.750%, 04/01/04 250 250
Antioch Public Finance
Authority, Police
Facilities Project,
Lease RB, MBIA Insured
4.550%, 01/01/03 500 504
Atascadero, School District,
Measure B, Ser A, COP,
MBIA Insured,
Callable 08/01/06 @ 102
5.200%, 08/01/08 1,000 1,044
Bakersfield, Convention
Center Expansion
Project, COP, MBIA Insured
5.000%, 04/01/03 335 345
5.300%, 04/01/06 500 526
Berkeley, Unified School District
Ser D, GO, FGIC Insured
8.250%, 08/01/04 295 348
8.250%, 08/01/05 345 416
Calleguas, Municipal Water District,
Systems Improvement Project,
COP, AMBAC Insured,
Pre-refunded 07/01/01 @ 102
6.250%, 07/01/05 1,000 1,062
Central Coast, Water Authority, RB,
Ser A, AMBAC Insured,
Callable 10/01/06 @ 102
5.000%, 10/01/07 2,000 2,070
- -------------------------------------------------------------
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 $ 1,053
Coast Community College,
Coastline Community College
Center Project, COP,
MBIA Insured,
Callable 02/01/06 @ 102
5.200%, 02/01/08 500 517
Coast Community College, Coastline
Community College Center
Project, MBIA Insured,
Callable 02/01/06 @ 102
5.500%, 02/01/11 640 662
Contra Costa Water District,
Ser G, RB, MBIA
Insured, Callable 10/01/04
@ 102
5.700%, 10/01/06 2,500 2,697
Contra Costa, Merrithew
Memorial Hospital
Project, COP, MBIA Insured,
Callable 11/01/07 @ 102
5.200%, 11/01/09 2,000 2,065
Contra Costa, Merrithew
Memorial Hospital
Project, COP, MBIA Insured,
Callable 11/01/07 @ 102
5.500%, 11/01/12 2,160 2,230
Contra Costa, Transportation
Authority, Sales Tax, Ser A,
RB, FGIC Insured
5.500%, 03/01/03 1,220 1,276
6.875%, 03/01/07 500 551
Contra Costa, Transportation
Authority, Sales Tax, Ser A,
RB, FGIC Insured,
Callable 03/01/05 @ 100
5.300%, 03/01/06 600 628
Cupertino, Ser A, COP,
Callable 01/01/03 @ 102
5.500%, 01/01/05 500 525
Desert Sands, School District,
COP, FSA Insured,
Callable 03/01/05 @ 102
5.400%, 03/01/08 660 689
5.500%, 03/01/09 565 590
The accompanying notes are an integral part of the financial statements.
50 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Downey, Civic Center Project, COP,
MBIA Insured
5.300%, 02/01/06 $ 600 $ 629
East Bay, Municipal Utility
District Wastewater
Treatment System, RB,
FGIC Insured
6.000%, 06/01/06 750 821
East Bay, Regal Park District,
Ser C, GO, FGIC Insured
6.500%, 09/01/01 685 719
Eastern Municipal Water District,
Waste & Sewer, RB, COP,
FGIC Insured
5.000%, 07/01/03 1,395 1,440
5.000%, 07/01/04 1,000 1,036
Eastern Municipal Water
District, PN,
Pre-refunded 11/01/02 @ 100
6.900%, 11/01/03 1,755 1,909
Educational Facilities
Authority, Pooled
College & University Project,
Ser C, RB, MBIA Insured
5.000%, 03/01/05 560 580
Educational Facilities
Authority, Pooled
College & University Project C,
RB, MBIA Insured
5.000%, 03/01/06 655 678
Educational Facilities Authority,
Santa Clara
University, RB, MBIA Insured,
Callable 09/01/06 @102
5.000%, 09/01/07 305 321
5.100%, 09/01/08 390 412
Escondido, High School District,
GO, MBIA Insured
5.200%, 11/01/06 1,000 1,050
Escondido, High School District,
GO, MBIA Insured, Pre-refunded
11/06/06 @ 102
5.600%, 11/01/09 1,000 1,064
<PAGE>
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Gilroy, School District,
COP, FSA Insured,
Callable 09/01/04 @ 102
5.750%, 09/01/05 $ 1,235 $ 1,328
Glendale School District,
Ser B, GO, FSA
Insured, Callable 09/01/08 @ 101
4.625%, 09/01/09 670 664
Glendale, School District,
Ser A, GO,
FGIC Insured
5.500%, 09/01/05 600 639
Hawthorne, School District,
Ser A, GO, FGIC Insured
4.650%, 11/01/06 1,000 1,016
Health Facilities Finance
Authority, Catholic
Health Care West, Ser A, RB, AMBAC
Insured Callable 07/01/05 @ 102
5.750%, 07/01/07 925 999
Hollister, Community Development
Project, GO, AMBAC Insured,
Callable 10/01/07 @102,
5.000%, 10/01/08 740 759
Industry, GO, FGIC Insured,
Callable 07/01/05 @100.625,
5.500%, 07/01/10 670 693
Joshua Basin, Desert
Financing Authority,
RB, AMBAC Insured
4.800%, 05/01/08 445 452
4.900%, 05/01/09 465 470
Las Virgenes, School District,
GO, Ser A, MBIA Insured
5.000%, 11/01/05 1,000 1,040
Los Angeles County Public
Works Financing Authority,
Regal Park & Open Space
District, Ser A, RB, GO
5.250%, 10/01/05 1,700 1,789
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Los Angeles, Airport Revenue Bond,
Ser A, FGIC Insured,
Callable 05/15/05 @101,
5.500%, 05/15/08 $ 1,000 $ 1,052
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 3,000 3,199
Los Angeles, Department
of Water & Power,
Callable 04/01/01 @ 102
6.750%, 04/01/06 1,460 1,544
Los Angeles, Department of
Airports, RB, Ser A,
FGIC Insured
6.000%, 05/15/05 1,000 1,087
Los Angeles, Department of
Airports, RB, Ser B,
FGIC Insured
6.500%, 05/15/04 1,840 2,019
Los Angeles, GO, Ser A,
FGIC Insured,
Pre-refunded 09/01/03 @ 101,
5.400%, 09/01/06 300 317
5.800%, 09/01/09 1,000 1,071
Los Angeles, GO, Ser A,
MBIA Insured
5.500%, 09/01/04 700 742
Los Angeles, Regal Park & Open
Space District, GO
6.000%, 10/01/03 900 965
Los Angeles, School District,
Ser A GO, FGIC Insured
6.000%, 07/01/07 1,000 1,100
Los Angeles School District,
Ser A, GO, FGIC Insured
6.000%, 07/01/10 750 821
6.000%, 07/01/11 1,110 1,213
Los Angeles, Unified School
District, GO, Ser A
FGIC Insured
4.600%, 07/01/06 1,050 1,063
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Los Angeles, Wastewater Systems, RB,
Ser B, FGIC Insured
5.250%, 06/01/07 $ 1,000 $ 1,050
Merced County Construction
& Equipment Project, COP,
CSAC Lease, FSA Insured,
Callable 10/01/02 @ 101
6.000%, 10/01/05 610 647
Merced County, Csac Lease,
COP, FSA Insured
6.000%, 10/01/05 640 684
Metropolitan Water District
of Southern California
Waterworks, RB,
Callable 07/01/02 @ 102
5.400%, 07/01/04 1,000 1,049
Metropolitan Water District
of Southern California
Waterworks, Ser B, RB,
MBIA Insured, Callable
07/01/06 @ 102
5.250%, 07/01/07 1,820 1,918
Metropolitan Water District
of Southern California,
Waterworks, RB, Ser C,
Callable 01/01/07 @ 102
6.000%, 07/01/07 1,900 2,090
Milpitas Redevelopment Agency, Tax
Allocation, Redevelopment Project
Area # 1, MBIA Insured
4.600%, 01/15/06 1,040 1,053
Modesto, Community Center
Refinancing Project, COP,
AMBAC Insured, Pre-refunded
11/01/01 @ 102
6.500%, 11/01/07 1,000 1,075
Mojave Water Agency,
Supplemental Water Entitlement,
COP, MBIA Insured,
Callable 09/01/07 @ 102
5.100%, 09/01/08 500 517
Monrovia, Redevelopment Agency
Tax Allocation Project, GO,
Area #1-B AMBAC Insured
4.300%, 05/01/03 500 504
Mountain View, Los Altos High School
District, Ser B, GO,
Callable 05/01/07 @ 102
5.250%, 05/01/08 500 523
The accompanying notes are an integral part of the financial statements.
52 ------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Mountain View, Los Altos Unified
School District, Ser B, GO,
Callable 05/01/07 @ 102
5.350%, 05/01/09 $ 755 $ 790
Mountain View, Los Altos Unified
School District, Ser B, GO,
Callable 05/01/07 @ 102;
5.650%, 05/01/12 585 612
Mountain View, Shoreline Regal Park,
Community Tax Allocation Project,
Ser A, MBIA Insured,
Callable 08/01/06 @ 102
5.400%, 08/01/08 700 738
Mountain View, Tax Allocation,
Ser A, MBIA Insured,
Callable 08/01/06 @ 102
5.600%, 08/01/10 500 526
Northern California Power Agency,
Multiple Capital Facilities,
Ser A, RB, MBIA Insured,
Pre-refunded 08/01/02 @ 102
6.400%, 08/01/07 1,420 1,528
6.400%, 08/01/07 1,080 1,172
Oak Park, School District,
GO, MBIA Insured
5.250%, 05/01/08 1,015 1,063
Orange County, Local Transportation
Authority Sales Tax, RB, 2nd
Ser A-Measure M, MBIA Insured
5.500%, 02/15/08 2,300 2,444
Orange County, Municipal Water
District, Allen-McColloch Pipeline,
COP, MBIA Insured
5.500%, 07/01/05 2,000 2,122
Orange County, Transportation
Authority, Sales Tax, Measure
M, RB, 2nd Ser
FGIC Insured
5.800%, 02/15/05 1,000 1,075
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Orange County, Transportation Authority,
Measure M, RB, FGIC Insured
6.000%, 02/15/07 $ 2,460 $ 2,692
Orange County, Water District,
Ser A, RB, COP, MBIA Insured,
Callable 08/15/07 @ 101
4.875%, 08/15/10 2,000 1,990
Port Oakland, Ser D, RB,
MBIA Insured
6.500%, 11/01/03 500 546
Redding, Electric System, Ser A,
RB, COP, MBIA Insured
6.150%, 07/01/02 1,000 1,057
Redwood City, Elementary
School District,
GO, FGIC Insured
5.500%, 08/01/10 1,140 1,201
Riverside, Water, RB,
Callable 10/01/99 @ 101
5.750%, 04/01/03 250 254
Sacramento Municipal
Utility District
Electric, Ser C,
RB, FGIC Insured,
5.750%, 11/15/08 570 600
Sacramento Municipal Utility
District, Ser C, RB, FGIC Insured,
Unrefunded Balance,
Callable 11/15/02 @ 102
5.750%, 11/15/08 380 402
Sacramento, County
Sanitation District
Financing Authority, RB, GO
5.000%, 08/01/03 1,000 1,034
Sacramento, County
Sanitation District
Financing Authority, RB
5.500%, 12/01/03 1,000 1,056
5.000%, 08/01/04 870 902
San Bernardino, County
Transportation Authority, Sales
Tax, RB, Ser A, FSA Insured
5.250%, 03/01/07 2,000 2,098
San Bernardino, County
Transportation Authority, Sales
Tax, Ser A, RB, FGIC Insured
6.000%, 03/01/06 1,000 1,063
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 53
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
San Bernardino, County Transportation
Authority, Sales Tax, Ser A,
RB, MBIA Insured
6.000%, 03/01/06 $ 1,735 $ 1,893
San Bernardino, Municipal Water
Department, RB, COP, FGIC Insured
4.500%, 02/01/09 875 856
San Bernardino, Municipal Water
Department, RB, FGIC Insured
4.050%, 02/01/03 425 425
San Diego County Regional
Transportation Commission,
Sales Tax RB, 2nd Ser,
Ser A, FGIC Insured
5.250%, 04/01/06 2,100 2,205
San Diego County Regional
Transportation Commission,
Sales Tax, RB, Ser A,
AMBAC Insured
6.000%, 04/01/06 3,000 3,278
San Diego County Water
Authority, RB, COP, Ser A
5.000%, 05/01/04 2,445 2,531
San Diego County, Regional
Transportation Commission,
Sales Tax, RB, Ser A, AMBAC
Insured, Callable 04/01/06 @ 102
5.000%, 04/01/08 1,995 2,052
San Diego County, Water
Authority, Ser A, RB, COP,
Pre-refunded 05/01/01 @ 102
6.400%, 05/01/08 2,000 2,123
San Diego Lease Revenue, RB,
Callable 09/01/04 @ 102,
5.500%, 09/01/07 450 475
San Diego, COP, Water Utility
System, RB, FGIC Insured
4.400%, 08/01/08 1,000 984
San Diego, COP, Water Utility System,
RB, FGIC Insured
4.400%, 08/01/07 600 595
San Diego, Public Facility
Financing Authority,
Sewer, RB, FGIC Insured
6.000%, 05/15/06 2,800 3,063
6.000%, 05/15/07 2,000 2,198
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
San Francisco City & County
Airport, Community International
Airport, 2nd Ser, RB, MBIA Insured
Callable 05/01/08 @
101 4.250%, 05/01/09 $ 1,000 $ 959
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 1,048
San Francisco, Bay Area
Rapid Transportation
District, Sales Tax RB,
Pre-refunded 07/01/01 @ 102
6.500%, 07/01/07 2,000 2,135
San Francisco, Bay Area
Rapid Transportation
District, Sales Tax RB,
5.500%, 07/01/05 2,200 2,340
San Francisco, New Public
Housing Authority,
Callable 02/01/00 @ 102
5.000%, 08/01/03 350 359
San Joaquin County, Capital
Facilities Project,
COP, MBIA Insured
4.625%, 11/15/05 1,035 1,052
San Joaquin County,
COP, MBIA Insured
4.800%, 11/15/07 1,000 1,019
San Jose, Redevelopment
Agency, Merged Area
Redevelopment Project,
RB, MBIA Insured
6.000%, 08/01/08 2,000 2,205
San Jose, Redevelopment
Agency, Tax Allocation,
Merged Area Redevelopment
Project, MBIA Insured
6.000%, 08/01/09 1,500 1,648
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 1,530
San Jose, Redevelopment
Agency, Tax Allocation,
Merged Area Redevelopment
Project, RB, MBIA Insured
6.000%, 08/01/07 1,100 1,211
The accompanying notes are an integral part of the financial statements.
54 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
San Jose, School District, Santa Clara,
Ser B, GO, MBIA Insured,
Callable 08/01/08 @ 102
4.000%, 08/01/09 $ 800 $ 754
San Jose, Redevelopment Agency
Tax Allocation, Merged Area
Redevelopment Project,
MBIA Insured
6.000%, 08/01/06 1,000 1,096
San Juan, School Distict,
GO, FSA Insured
5.250%, 08/01/08 500 524
Santa Ana, Community Redevelopment
Agency, Tax Allocation, Ser E
6.400%, 12/15/10 780 807
Santa Barbara County, Transportation
Authority, RB, FGIC Insured,
Callable 04/01/04 @ 101,
5.000%, 04/01/07 1,000 1,029
Santa Clara County,
Multiple Facilities
Project, COP, AMBAC Insured
Pre-refunded 05/15/02 @ 102
6.000%, 05/15/12 400 428
Santa Clara County, Financing
Authority Lease, Ser A
RB, AMBAC Insured
4.600%, 11/15/06 1,350 1,369
Santa Clara, Electric RB,
Ser A, MBIA Insured,
Pre-refunded 07/01/01 @ 102
6.000%, 07/01/05 1,000 1,058
Santa Cruz County, Public
Financing Authority, Tax
Allocation, RB, Ser A,
MBIA Insured,
Callable 09/01/03 @ 102
5.100%, 09/01/05 500 522
Saratoga School District,
Ser A, GO, FGIC Insured,
Pre-refunded 09/01/07 @ 102
4.800%, 09/01/08 825 853
South Orange County,
Public Financing
Authority, Special Tax RB,
Foothill Area,
Ser C, GO, FGIC Insured
7.500%, 08/15/07 1,000 1,195
Southern California,
Public Power Authority, Special
Obligation, Crossover,
Ser B, AMBAC Insured,
Callable 07/01/02 @ 102
5.900%, 07/01/04 1,000 1,065
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
State Department of Water,
Ser J-2, RB
6.000%, 12/01/06 $ 1,400 $ 1,540
State Department of Water Central
Valley Project, Ser Q
6.000%, 12/01/07 755 834
State, GO,
6.000%, 10/01/05 1,300 1,417
6.250%, 04/01/08 1,000 1,114
5.000%, 10/01/08 1,000 1,030
State, GO, AMBAC Insured
7.000%, 08/01/02 1,500 1,624
6.500%, 09/01/06 1,000 1,126
State Public Works Board,
Department of
Corrections-Del Norte,
Ser C, RB,
4.750%, 12/01/05 500 510
State Public Works Board,
various University
of California Projects, Ser A, RB,
Pre-refunded 12/01/02 @ 102
6.600%, 12/01/22 800 879
State Public Works Board,
various University California
Project, Ser A, AMBAC Insured,
Callable 12/01/07 @ 102
5.100%, 12/01/10 1,000 1,018
Tulare County, Capital
Improvement Project,
Ser A, COP, MBIA Insured
5.250%, 02/15/05 1,000 1,045
5.375%, 02/15/06 500 526
Turlock, District RB,
Ser A, MBIA Insured
6.000%, 01/01/07 1,000 1,095
University of California,
Multiple Purpose Projects,
Ser B, RB, MBIA Insured,
Callable 09/01/03 @ 102
4.800%, 09/01/07 1,500 1,524
University of California,
UCLA Center, RB,
COP, Callable 11/01/03 @ 102
5.000%, 11/01/04 1,000 1,035
Upland, Community Redevelopment
Agency, Tax Allocation,
AMBAC Insured,
Callable 09/01/08 @ 102
4.200%, 09/01/09 860 822
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
West Basin Municipal Water District,
Ser A, COP, AMBAC Insured,
Callable 08/01/07 @ 101
5.000%, 08/01/08 $ 425 $ 436
West Hollywood, COP, MBIA Insured,
Callable 02/01/08 @ 102
4.550%, 02/01/09 665 653
Yorba Linda, Tax Allocation
Redevelopment Project, RB
Ser A, MBIA Insured
4.250%, 09/01/04 800 802
--------
TOTAL CALIFORNIA MUNICIPAL BONDS
(Cost $160,671) 165,073
--------
- -------------------------------------------------------------
CASH EQUIVALENT -- 0.5%
- -------------------------------------------------------------
Provident California
Tax Free Money Market 877 877
--------
TOTAL CASH EQUIVALENT
(Cost $877) 877
--------
TOTAL INVESTMENTS -- 99.3%
(Cost $161,548) 165,950
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.7% 1,174
--------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par value)
based on 15,001,991 outstanding shares
of beneficial interest 145,080
Fund Shares of Retail Class A
(unlimited authorization -- no par value)
based on 1,789,240 outstanding shares
of beneficial interest 17,742
Undistributed net investment income 165
Accumulated net realized loss on investments (265)
Net unrealized appreciation on investments 4,402
--------
TOTAL NET ASSETS -- 100.0% $167,124
========
- -------------------------------------------------------------
Description Value
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS: (CONTINUED)
- -------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $9.96
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.93
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.93 / 97%) $10.24
========
- --------------------------------------------------------------------------------
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
COP -- CERTIFICATES OF PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
CSAC -- CALIFORNIA STATE ASSOCIATION OF COUNTIES
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
PN -- PROMISSORY NOTE
RB -- REVENUE BOND
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
56 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BOND FUND
- --------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------
- --------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 13.1%
- --------------------------------------------------------------
U.S. Treasury Notes
7.750%, 01/31/00 $ 1,500 $ 1,519
6.750%, 04/30/00 1,000 1,011
5.500%, 01/31/03 (A) 1,500 1,484
U.S. Treasury Bonds
10.375%, 11/15/12 (A) 3,000 3,786
7.250%, 05/15/16 (A) 9,850 10,728
8.125%, 08/15/19 (A) 12,500 14,939
8.750%, 08/15/20 (A) 4,860 6,180
7.250%, 08/15/22 (A) 1,500 1,661
7.125%, 02/15/23 2,800 3,065
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $43,205) 44,373
--------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 37.5%
- -------------------------------------------------------------
Aid-Israel
7.125%, 08/15/99 2,000 2,001
FHLMC
7.000%, 02/20/18 974 979
6.250%, 01/15/24 2,000 1,890
FNMA
5.625%, 03/15/01 (A) 5,000 4,975
6.200%, 09/25/02 2,000 1,985
5.125%, 02/13/04 (A) 11,000 10,447
6.850%, 09/12/05 2,000 2,003
6.700%, 11/10/05 1,000 1,000
6.500%, 03/25/13 1,500 1,478
6.500%, 03/01/24 1,051 1,000
8.000%, 08/01/24 80 82
8.000%, 09/01/24 23 23
8.000%, 10/01/24 94 96
8.500%, 05/01/25 479 497
6.500%, 01/01/26 715 680
6.500%, 05/01/26 634 603
8.000%, 07/01/26 767 783
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
FNMA(continued)
7.500%, 12/01/26 $ 8,220 $ 8,218
6.000%, 12/01/27 1,802 1,668
6.500%, 01/01/28 924 880
6.500%, 02/01/28 1,428 1,360
6.500%, 03/01/28 1,713 1,631
6.500%, 04/01/28 4,733 4,505
6.000%, 07/01/28 7,864 7,287
6.000%, 08/01/28 978 907
6.000%, 10/01/28 4,882 4,522
6.000%, 12/01/28 32,401 30,001
6.500%, 01/01/29 14,315 13,626
GNMA
8.000%, 04/15/17 257 263
8.000%, 05/15/17 124 127
6.500%, 06/15/23 1,908 1,811
6.500%, 12/15/23 1,115 1,059
6.500%, 01/15/24 420 399
7.000%, 01/15/24 569 555
7.500%, 01/15/24 789 788
6.500%, 02/15/24 737 700
7.500%, 02/15/24 1,010 1,008
7.000%, 04/15/24 1,159 1,130
7.500%, 09/15/25 619 619
6.500%, 10/15/25 766 728
6.500%, 04/15/26 1,725 1,639
8.000%, 11/15/26 5,000 5,108
7.500%, 02/15/27 610 609
7.500%, 06/15/27 331 331
7.500%, 07/15/27 961 960
7.500%, 08/15/27 823 822
6.000%, 09/15/28 2,999 2,763
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $131,189) 126,546
--------
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEE -- 1.5%
- -------------------------------------------------------------
Asian Development Bank
5.750%, 05/19/03 $ 5,000 $ 4,912
--------
TOTAL CERTIFICATES OF DEPOSIT - YANKEE
(Cost $4,970) 4,912
--------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS -- 36.2%
- -------------------------------------------------------------
AEROSPACE & DEFENSE -- 1.1%
Lockheed Martin
7.700%, 06/15/08 1,500 1,526
Ratheon
6.150%, 11/01/08 2,500 2,334
--------
3,860
--------
AUTOMOTIVE -- 3.7%
Ford Motor Credit
6.500%, 02/28/02 (A) 6,500 6,484
7.750%, 11/15/02 1,000 1,027
General Motors Acceptance Medium Term Note
5.350%, 12/07/01 5,000 4,869
--------
12,380
--------
BANKS -- 4.7% BankBoston, N.A.
8.375%, 12/15/02 1,250 1,306
Citicorp (A)
6.750%, 08/15/05 4,100 4,044
Golden West Financial (A)
6.700%, 07/01/02 4,500 4,500
Mercantile Bancorp
7.050%, 06/15/04 1,500 1,502
U.S. Bancorp
6.875%, 09/15/07 4,500 4,444
--------
15,796
--------
BEAUTY PRODUCTS -- 0.2%
Procter & Gamble
8.500%, 08/10/09 500 560
--------
COMPUTERS & SERVICES -- 1.4%
IBM (A)
6.500%, 01/15/28 5,000 4,562
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
ELECTRICAL UTILITIES -- 1.4%
Nevada Power
6.200%, 04/15/04 $ 4,700 $ 4,553
--------
ENTERTAINMENT -- 0.4%
Walt Disney
6.375%, 03/30/01 1,500 1,506
--------
FINANCIAL SERVICES -- 4.9%
American General Finance
5.370%, 12/10/01 2,000 1,952
Associates Corporation of N.A.
6.500%, 07/15/02 1,000 994
6.000%, 04/15/03 5,000 4,856
General Electric Capital Services
6.500%, 11/01/06 3,500 3,434
Merrill Lynch MTN
6.330%, 08/25/00 3,000 3,025
Morgan Stanley Dean Witter
6.125%, 10/01/03 1,300 1,261
Salomon Brothers
7.300%, 05/15/02 1,000 1,015
--------
16,537
--------
FOOD, BEVERAGE & TOBACCO -- 0.4%
Bass America
6.750%, 08/01/99 200 200
Philip Morris
7.750%, 01/15/27 1,000 1,001
--------
1,201
--------
FOREIGN GOVERNMENTS -- 1.3%
Hydro Quebec
8.050%, 07/07/24 1,125 1,207
Province of British Columbia
7.000%, 01/15/03 1,500 1,517
Province of Ontario
7.375%, 01/27/03 1,500 1,536
--------
4,260
--------
The accompanying notes are an integral part of the financial statements.
58 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
GAS/NATURAL GAS -- 1.3%
KN Energy
7.250%, 03/01/28 $ 5,000 $ 4,550
--------
INSURANCE -- 1.8%
Travelers Property Casualty
6.750%, 04/15/01 6,000 6,022
--------
MACHINERY -- 0.9%
Caterpillar Tractor
6.000%, 05/01/07 3,360 3,158
--------
METALS & MINING -- 0.4%
Potash
7.125%, 06/15/07 1,500 1,470
--------
PETROLEUM REFINING -- 0.5%
Phillips Petroleum
7.125%, 03/15/28 2,000 1,815
--------
PRINTING & PUBLISHING -- 2.7%
E.W. Scripps
6.375%, 10/15/02 4,000 3,985
Time Warner
7.480%, 01/15/08 5,000 5,056
--------
9,041
--------
RETAIL -- 4.4%
JC Penney
6.000%, 05/01/06 1,230 1,139
Safeway
5.750%, 11/15/00 7,000 6,965
Sears Finance
7.000%, 06/15/07 1,500 1,491
Staples
7.125%, 08/15/07 2,500 2,466
Wal-Mart Stores (A)
6.375%, 03/01/03 2,850 2,836
--------
14,897
--------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
TELEPHONES & TELECOMMUNICATION -- 4.7%
Bell Atlantic
8.000%, 10/15/29 $ 2,980 $ 3,133
Cable and Wireless Communications
6.625%, 03/06/05 4,500 4,371
New England Telephone & Telegraph
6.250%, 03/15/03 1,500 1,481
7.875%, 11/15/29 1,000 1,037
WorldCom
6.400%, 08/15/05 6,000 5,842
--------
15,864
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $125,225) 122,032
--------
- -------------------------------------------------------------
ASSET BACKED SECURITIES -- 7.0%
- -------------------------------------------------------------
American Express Master Trust 1998-1
5.900%, 04/15/04 4,000 3,931
Chase Manhattan Auto Grantor Trust
6.610%, 09/15/02 319 321
Citibank Credit Card Master Trust
1997-3 Cl A
6.839%, 02/10/04 2,700 2,705
Citibank Credit Card Master Trust
1998-3 Cl A
5.800%, 02/07/05 2,000 1,966
Contimortgage Home Equity Loan Trust
1995-2 Cl A4
8.050%, 07/15/12 544 542
Contimortgage Home Equity Loan Trust,
1995-3 Cl A4
7.440%, 09/15/12 899 905
EQCC Home Equity Loan Trust
1995-2 Cl A4
7.800%, 12/15/10 1,580 1,623
The accompanying notes are an integral part of the financial statements.
- ----------------------------------------------------------------------------- 59
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
ASSET BACKED SECURITIES (CONTINUED)
- -------------------------------------------------------------
EQCC Home Equity Loan Trust
1996-3 Cl A6
7.400%, 12/15/19 $ 2,500 $ 2,497
Green Tree Financial 1995-9 Cl A
6.800%, 01/15/27 7,500 7,562
J.C. Penney Master Credit Card Trust
9.625%, 06/15/00 1,500 1,560
--------
TOTAL ASSET BACKED SECURITIES
(Cost $23,718) 23,612
--------
- -------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.6%
- -------------------------------------------------------------
GE Capital Mortgage Service 1994-1 Cl A6
6.500%, 01/25/24 1,598 1,597
Residential Funding Mortgage
1992-S36 Cl A4
6.750%, 11/25/07 599 597
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $2,001) 2,194
--------
- -------------------------------------------------------------
COMMERCIAL PAPER -- 4.4%
- -------------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 10,000 10,000
Federal Signal (B)
5.305%, 08/05/99 5,000 4,995
--------
TOTAL COMMERCIAL PAPER
(Cost $14,995) 14,995
--------
- -------------------------------------------------------------
CORPORATE BOND -- 3.0%
- -------------------------------------------------------------
AMEX Centurion (B) (C)
5.200%, 04/24/00 10,000 10,000
--------
TOTAL CORPORATE BOND
(Cost $10,000) 10,000
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 15.1%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$7,811,140 (collateralized by
U.S. Treasury Note, par value
$7,913,000, 5.625%, 12/31/99;
market value $7,964,803) $ 7,808 $ 7,808
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99,
matures 08/02/99, repurchase
price $21,150,195 (collateralized
by various corporate obligations
par value $32,501,852
0.000%--13.250%, 08/15/99- 12/27/18;
market value $21,564,405) 21,141 21,141
Lehman Brothers, Inc. (B) (C)
5.205%, dated 07/30/99, matures
08/02/99, repurchase price $22,088,546
(collateralized by Structured Asset
Securities, Corp., par value $56,020,000,
4.129%, 09/25/26; market value
$23,164,850) 22,079 22,079
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $51,028) 51,028
--------
TOTAL INVESTMENTS -- 118.4%
(Cost $406,331) 399,692
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (20.2%) (68,215)
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.8% 6,061
--------
The accompanying notes are an integral part of the financial statements.
60 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
BOND FUND (CONCLUDED)
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par value)
based on 32,224,970 outstanding shares
of beneficial interest $342,359
Fund Shares of Retail Class A
(unlimited authorization -- no par value)
based on 256,052 outstanding shares
of beneficial interest 2,743
Undistributed net investment income 444
Accumulated net realized loss on investments (1,369)
Net unrealized depreciation on investments (6,639)
--------
TOTAL NET ASSETS -- 100.0% $337,538
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $10.39
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $10.30
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($10.30 / 97%) $10.62
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $66,509,805.
(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
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 61
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERMEDIATE-TERM BOND FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 5.1%
- -------------------------------------------------------------
U.S. Treasury Notes
6.250%, 05/31/00 $ 2,000 $ 2,015
6.125%, 09/30/00 2,000 2,015
7.250%, 05/15/04 (A) 7,000 7,378
5.875%, 11/15/05 (A) 2,000 1,985
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $13,689) 13,393
--------
- ----------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 17.3%
- ----------------------------------------------------------
FHLMC
8.000%, 05/15/00 220 221
7.000%, 09/01/01 3,281 3,293
FNMA
6.200%, 09/25/02 1,000 992
5.125%, 02/13/04 (A) 10,000 9,497
6.850%, 09/12/05 (A) 2,000 2,003
6.700%, 11/10/05 3,750 3,750
6.500%, 12/01/07 1,162 1,135
6.000%, 05/01/09 635 608
6.375%, 06/15/09 (A) 3,500 3,411
6.000%, 09/01/10 1,338 1,280
6.000%, 05/01/11 2,000 1,913
6.000%, 01/01/12 1,598 1,529
6.000%, 03/01/13 2,607 2,494
GNMA
8.000%, 11/15/26 4,000 4,086
6.000%, 07/15/28 1,998 1,840
6.000%, 08/15/28 999 921
6.000%, 09/15/28 1,999 1,841
6.500%, 01/15/29 4,852 4,605
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $46,693) 45,419
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS -- 65.1%
- -------------------------------------------------------------
AEROSPACE & DEFENSE -- 4.8%
Lockheed Martin
7.450%, 06/15/04 $ 5,500 $ 5,569
McDonnell Douglas
6.875%, 11/01/06 1,000 1,000
Raytheon
6.750%, 08/15/07 6,000 5,865
--------
12,434
--------
AUTOMOTIVE -- 7.7%
Ford Motor Credit
8.200%, 02/15/02 6,000 6,225
6.500%, 02/28/02 4,500 4,489
General Motors
8.950%, 07/02/09 4,455 4,595
General Motors Acceptance
5.350%, 12/07/01 5,000 4,869
--------
20,178
--------
AUTO RENTAL & LEASING -- 1.5%
Hertz
6.625%, 05/15/08 4,000 3,825
--------
BANKS -- 9.5%
Bank of Boston
8.375%, 12/15/02 2,500 2,612
Bankers Trust
7.250%, 01/15/03 3,500 3,513
Banponce
6.750%, 12/15/05 2,000 1,965
Citicorp
6.750%, 08/15/05 4,075 4,019
Fleet Financial
7.125%, 04/15/06 5,000 4,962
Golden West Financial
6.700%, 07/01/02 1,000 1,000
Mellon Bank N.A.
7.000%, 03/15/06 1,500 1,491
Mercantile Bancorp
7.050%, 06/15/04 2,500 2,503
U.S. Bancorp
6.875%, 09/15/07 3,000 2,962
--------
25,027
--------
The accompanying notes are an integral part of the financial statements.
62 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERMEDIATE-TERM BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.5%
TCI Communications
6.875%, 02/15/06 $ 4,000 $ 3,960
--------
CHEMICALS -- 2.7%
Du Pont (E.I.) de Nemours
6.500%, 09/01/02 7,000 7,017
--------
ELECTRICAL UTILITIES -- 6.6%
Arkansas Electric Cooperative
7.330%, 06/30/08 2,125 2,178
Baltimore Gas & Electric
5.780%, 10/01/08 4,000 3,685
Oklahoma Gas & Electric
6.650%, 07/15/27 2,500 2,512
Old Dominion Electric
7.480%, 12/01/13 5,550 5,557
Pacific Gas & Electric
8.750%, 01/01/01 3,280 3,387
--------
17,319
--------
ENTERTAINMENT -- 1.8%
Walt Disney
6.375%, 03/30/01 2,000 2,007
5.620%, 12/01/08 3,000 2,752
--------
4,759
--------
FINANCIAL SERVICES -- 10.0%
Associates Corporation N.A.
6.000%, 04/15/03 2,000 1,943
Avco Financial Services
7.375%, 08/15/01 3,500 3,561
Bear Stearns
6.500%, 06/15/00 4,000 4,024
Commercial Credit
6.200%, 11/15/01 2,000 1,990
General Electric Capital Services
6.500%, 11/01/06 2,000 1,963
Lehman Brothers
8.750%, 05/15/02 4,000 4,170
Merrill Lynch MTN
6.330%, 08/25/00 1,500 1,512
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
Morgan Stanley Dean Witter
6.125%, 10/01/03 $ 3,000 $ 2,910
Salomon
7.300%, 05/15/02 4,000 4,060
--------
26,133
--------
FOOD, BEVERAGE & TOBACCO -- 3.1%
Bass America
6.750%, 08/01/99 4,000 4,000
Grand Metro Investment
8.625%, 08/15/01 1,000 1,041
Safeway
5.750%, 11/15/00 3,000 2,985
--------
8,026
--------
FOREIGN GOVERNMENTS -- 3.6%
Province of British Columbia
7.000%, 01/15/03 1,500 1,517
Province of Manitoba
6.125%, 01/19/04 4,000 3,910
Province of Ontario
7.375%, 01/27/03 4,000 4,095
--------
9,522
--------
GAS/NATURAL GAS -- 1.2%
Duke Energy
7.875%, 08/15/04 3,000 3,146
--------
INSURANCE -- 2.8%
American General Finance
5.370%, 12/10/01 2,500 2,441
Travelers Property Casualty
6.750%, 04/15/01 5,000 5,019
--------
7,460
--------
MACHINERY -- 1.0%
Caterpillar Tractor
6.000%, 05/01/07 1,000 940
Tyco International Limited
6.500%, 11/01/01 1,800 1,798
--------
2,738
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 63
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERMEDIATE-TERM BOND FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
RETAIL -- 3.0%
Sears Finance (A)
7.000%, 06/15/07 $ 5,000 $ 4,969
Wal-Mart
6.375%, 03/01/03 3,000 2,985
--------
7,954
--------
TELEPHONES & TELECOMMUNICATION -- 4.3%
Cable and Wireless Communications
6.625%, 03/06/05 7,000 6,799
New England Telephone & Telegraph
6.250%, 03/15/03 2,000 1,975
WorldCom
7.750%, 04/01/07 2,500 2,594
--------
11,368
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $172,691) 170,866
--------
- -------------------------------------------------------------
ASSET BACKED SECURITIES -- 8.9%
- -------------------------------------------------------------
Chase Manhattan Auto Grantor Trust
6.610%, 09/15/02 1,913 1,925
Citibank Credit Card Master
Trust 1997-3 Cl A
6.839%, 02/10/04 3,000 3,006
Citibank Credit Card Master
Trust 1998-3 Cl A
5.800%, 02/07/05 3,400 3,342
Contimortgage Home Equity Loan
Trust, Ser 1995-3 Cl A4,
7.440%, 09/15/12 2,796 2,815
EQCC 1996-3 Cl A6
7.400%, 12/15/19 2,500 2,497
Green Tree Financial
6.750%, 06/15/25 1,718 1,724
J.C. Penney Master Credit
Card Trust
9.625%, 06/15/00 6,000 6,239
J.C. Penney Master Credit
Card Trust Ser B Cl A
8.950%, 10/15/01 658 690
Residential Funding Mortgage
1992-S36 Cl A4
6.750%, 11/25/07 966 963
--------
TOTAL ASSET BACKED SECURITIES
(Cost $22,942) 23,201
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.5%
- -------------------------------------------------------------
Residential Funding Mortgage
1992-S36 Cl A4
7.000%, 01/15/04 $ 1,354 $ 1,364
--------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $1,353) 1,364
--------
- -------------------------------------------------------------
COMMERCIAL PAPER -- 3.8%
- -------------------------------------------------------------
Bear Stearns (B) (C)
5.355%, 01/07/00 10,000 10,000
--------
TOTAL COMMERCIAL PAPER
(Cost $10,000) 10,000
--------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.3%
- -------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price $3,798,173
(collateralized by U.S. Treasury Note,
par value $3,848,000, 5.625%, 12/31/99;
market value $3,873,191) 3,797 3,797
HSBC Securities, Inc. (B) (C)
5.220%, dated 07/30/99, matures
08/02/99, repurchase price $9,991,344
(collateralized by various corporate
obligations par value $15,353,863,
0.000%-13.250%, 08/15/99-12/27/18;
market value $10,187,017) 9,987 9,987
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $13,784) 13,784
--------
TOTAL INVESTMENTS -- 106.0%
(Cost $281,152) 278,027
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (7.6%) (19,987)
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.6% 4,326
--------
The accompanying notes are an integral part of the financial statements.
64 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
INTERMEDIATE-TERM BOND FUND (CONCLUDED)
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par value)
based on 25,783,110 outstanding shares
of beneficial interest $262,511
Fund Shares of Retail Class A
(unlimited authorization -- no par value)
based on 459,324 outstanding shares
of beneficial interest 5,322
Undistributed net investment income 232
Accumulated net realized loss on investments (2,574)
Net unrealized depreciation on investments (3,125)
--------
TOTAL NET ASSETS -- 100.0% $262,366
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY CLASS $10.00
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- RETAIL CLASS A $9.99
========
MAXIMUM OFFERING PRICE PER SHARE --
RETAIL CLASS A ($9.99 / 97%) $10.30
========
- --------------------------------------------------------------------------------
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
1999 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
1999 WAS $19,534,027.
(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
MTN -- MEDIUM TERM NOTE
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 65
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<PAGE>
[Logo omitted]
SCHEDULE OF INVESTMENTS
JULY 31, 1999
100% U.S. TREASURY MONEY MARKET FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
TREASURY BILLS* -- 42.7%
- -------------------------------------------------------------
U.S. Treasury Bills
4.594%, 08/05/99 $ 5,925 $ 5,922
4.649%, 08/12/99 80,000 79,889
4.688%, 09/02/99 40,000 39,838
4.748%, 09/09/99 64,656 64,332
4.771%, 09/23/99 70,000 69,520
4.729%, 10/07/99 17,219 17,072
4.693%, 10/14/99 69,749 69,092
4.679%, 10/21/99 22,000 21,774
4.866%, 11/12/99 75,000 73,989
4.932%, 11/18/99 90,000 88,700
----------
TOTAL TREASURY BILLS*
(Cost $530,128) 530,128
----------
- -------------------------------------------------------------
TREASURY NOTES -- 46.6%
- -------------------------------------------------------------
U.S. Treasury Notes
5.875%, 08/31/99 68,143 68,200
6.875%, 08/31/99 40,000 40,064
5.750%, 09/30/99 50,172 50,242
5.625%, 10/31/99 182,206 182,489
5.875%, 11/15/99 130,000 130,312
5.625%, 11/30/99 25,734 25,785
5.625%, 12/31/99 30,000 30,063
5.875%, 02/15/00 50,000 50,216
----------
TOTAL TREASURY NOTES
(Cost $577,371) 577,371
----------
TOTAL INVESTMENTS -- 89.3%
(Cost $1,107,499) $1,107,499
----------
* REPRESENTS THE YIELD TO MATURITY AT DATE OF PURCHASE
PERCENTAGE INDICATED ARE BASED ON NET ASSETS.
The accompanying notes are an integral part of the financial statements.
66 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
U.S. GOVERNMENT MONEY MARKET FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S.GOVERNMENT AGENCY OBLIGATIONS-DISCOUNTED* -- 24.8%
- -------------------------------------------------------------
FHLMC
4.901%, 08/05/99 $10,000 $ 9,995
4.867%, 08/24/99 10,000 9,969
5.164%, 09/23/99 8,422 8,359
4.985%, 09/30/99 15,000 14,877
5.036%, 12/07/99 10,000 9,825
5.342%, 01/19/00 10,000 9,753
5.241%, 01/21/00 10,000 9,755
5.251%, 01/21/00 6,600 6,438
5.342%, 01/27/00 15,000 14,612
FNMA
4.838%, 08/06/99 10,000 9,993
4.866%, 08/13/99 5,984 5,974
4.864%, 08/19/99 20,000 19,952
--------
TOTAL U.S.GOVERNMENT AGENCY
OBLIGATIONS-DISCOUNTED*
(Cost $129,502) 129,502
--------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 42.7%
- -------------------------------------------------------------
FFCB
5.123%, 04/12/00 (A) 50,000 49,986
FHLB
5.120%, 10/13/99 (A) 15,000 15,000
5.030%, 10/29/99 30,000 29,999
5.000%, 01/05/00
Callable 10/15/99 @100 15,000 14,999
4.790%, 02/04/00 15,000 14,995
4.910%, 02/09/00 16,120 16,108
5.125%, 03/08/00
Callable 09/08/99 @100 10,000 9,965
5.113%, 03/24/00 (A) 20,000 20,000
5.123%, 04/12/00 (A) 13,000 12,993
FNMA
5.880%, 11/03/99 13,625 13,667
4.830%, 01/11/00 10,326 10,309
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (CONTINUED)
- -------------------------------------------------------------
SLMA
5.313%, 02/14/00 (A) $15,000 $ 14,995
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $223,016) 223,016
--------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 32.4%
- -------------------------------------------------------------
Barclays Capital, Inc.
5.000%, dated 07/30/99, matures
08/02/99, repurchase price $16,019,596
(collateralized by U.S. Treasury Note,
par value $15,893,000, 6.000%, 08/15/99;
market value $16,333,237) 16,013 16,013
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price $59,889,920
(collateralized by U.S. Treasury Note,
par value $60,666,000, 5.625%, 12/31/99;
market value $61,063,156) 59,865 59,865
JP Morgan Securities, Inc.
5.000%, dated 07/30/99, matures
08/02/99, repurchase price $23,125,188
(collateralized by U.S. Treasury Bond,
par value $18,560,000, 8.750%, 05/15/17;
market value $23,578,079) 23,116 23,116
Warburg, Dillon, Read, LLC 5.000%, dated
07/30/99, matures 08/02/99, repurchase
price $70,069,718 (collateralized by
U.S. Treasury Note, par value
$70,390,000, 5.750%, 11/15/00;
market value $71,446,204) 70,041 70,041
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $169,035) 169,035
--------
TOTAL INVESTMENTS -- 99.9%
(Cost $521,553) 521,553
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.1% 779
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 67
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
- -------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND (CONCLUDED)
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class (unlimited
authorization-- no par value) based
on 351,271,598 outstanding shares
of beneficial interest $351,272
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based
on 170,956,680 outstanding shares
of beneficial interest 170,957
Fund Shares of Retail Class B (unlimited
authorization-- no par value) based
on 217,881 outstanding shares
of beneficial interest 217
Undistributed net investment income 3
Accumulated net realized loss on investments (117)
--------
TOTAL NET ASSETS -- 100.0% $522,332
========
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 MATURITY AT DATE OF PURCHASE
(A) ADJUSTABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON JULY 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.
68 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
DIVERSIFIED MONEY MARKET FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CERTIFICATE OF DEPOSIT -- DOMESTIC -- 1.7%
- -------------------------------------------------------------
Huntington National Bank
4.900%, 10/22/99 $50,000 $ 50,000
--------
TOTAL CERTIFICATE OF DEPOSIT -- DOMESTIc
(Cost $50,000) 50,000
--------
- -------------------------------------------------------------
CERTIFICATES OF DEPOSIT -- YANKEE -- 9.3%
- -------------------------------------------------------------
ABN AMRO Bank, N.V. Chicago
4.990%, 11/18/99 48,000 47,998
4.940%, 12/02/99 25,000 25,005
Bank Austria A.G., New York
5.195%, 02/29/00 30,000 29,997
Banque Nationale de Paris, San Francisco
5.220%, 12/06/99 25,000 25,001
5.235%, 12/06/99 25,000 25,001
Bayerische Hypo-Und Vereinsbank, New York
4.990%, 09/07/99 47,000 47,003
5.084%, 04/25/00 (A) 25,000 24,991
Westdeutsche Landesbank Girozentrale,
New York
5.210%, 09/22/99 50,000 50,010
--------
TOTAL CERTIFICATES OF DEPOSIT -- YANKEE
(Cost $275,006) 275,006
--------
- -------------------------------------------------------------
EURODOLLAR CERTIFICATES OF DEPOSIT -- 4.2%
- -------------------------------------------------------------
ABN AMRO Bank N.V. London
4.925%, 10/18/99 35,000 34,999
Bank Austria A.G., London
5.030%, 12/20/99 40,000 40,002
Citibank N.A., London
5.200%, 09/09/99 50,000 50,001
--------
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT
(Cost $125,002) 125,002
--------
- -------------------------------------------------------------
ASSET BACKED SECURITY -- 1.7%
- -------------------------------------------------------------
Ford Credit Auto Owner Trust
1999 -- B, Cl A-2 Note
5.114%, 05/15/00 50,000 50,000
--------
TOTAL ASSET BACKED SECURITY
(Cost $50,000) 50,000
--------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
BANK NOTES -- 3.5%
- -------------------------------------------------------------
American Express Centurion Bank (A)
5.144%, 05/05/00 $30,000 $ 30,000
First Union Bank N.A. (A)
5.180%, 03/10/00 50,000 50,000
Keybank N.A.
5.125%, 03/24/00 25,000 24,987
--------
TOTAL BANK NOTES
(Cost $104,987) 104,987
--------
- -------------------------------------------------------------
COMMERCIAL PAPER DISCOUNTED* -- 44.0%
- -------------------------------------------------------------
ABS-DIVERSIFIED FINANCIAL ASSETS -- 6.4%
Beta Finance, Inc. (B)
4.992%, 08/24/99 16,000 15,950
5.190%, 09/20/99 39,500 39,218
4.951%, 10/08/99 30,000 29,726
CC (USA), Inc. (B)
4.963%, 11/17/99 20,000 19,711
Sigma Finance, Inc. (B)
5.104%, 08/16/99 50,000 49,895
5.284%, 10/14/99 35,000 34,625
--------
189,125
ABS-TRADE RECEIVABLES -- 20.7%
Asset Securitization Cooperative
Corp. (A) (B)
5.185%, 03/17/00 50,000 50,000
Concord Minutemen Capital Co.,
Ser. B (B)
5.156%, 08/04/99 50,000 49,979
5.154%, 08/11/99 50,000 49,929
Corporate Asset Funding Corp. (B)
5.018%, 09/08/99 50,000 49,739
Corporate Receivables Corp. (B)
5.152%, 08/02/99 40,000 39,994
Crown Point Capital Co.,
Ser. A (B)
5.151%, 08/11/99 27,017 26,978
CXC, Inc. (B)
5.007%, 09/08/99 50,000 49,739
4.972%, 09/15/99 20,000 19,879
5.285%, 12/13/99 40,000 39,233
International Securitization
Corp. (B)
5.013%, 08/31/99 25,000 24,897
Lexington Parker Capital (A) (B)
5.230%, 01/25/00 50,000 50,000
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 69
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMERCIAL PAPER DISCOUNTED* (CONTINUED)
- -------------------------------------------------------------
ABS-TRADE RECEIVABLES (CONTINUED)
Park Avenue Receivables Corp (B)
5.150%, 08/02/99 $ 50,000 $ 49,993
WCP Funding Inc. (B)
5.171%, 09/08/99 38,750 38,540
Windmill Funding Corp. (B)
4.982%, 08/05/99 25,087 25,073
5.019%, 09/10/99 25,000 24,862
5.589%, 01/13/00 25,000 24,378
----------
613,213
BANKING -- 5.9% BankAmerica Corp.
4.992%, 08/25/99 50,000 49,838
Bavaria Trr Corp. (B)
5.260%, 10/15/99 25,000 24,730
5.262%, 10/18/99 25,000 24,719
Nationwide Building Society
4.981%, 08/16/99 25,000 24,949
4.890%, 08/17/99 50,000 49,893
----------
174,129
BROKERAGE -- 3.4%
Goldman Sachs Group LP (A)
5.225%, 12/16/99 100,000 100,000
----------
DIVERSIFIED OPERATIONS -- 3.5%
CIT Group, Inc.
5.132%, 08/02/99 50,000 49,993
General Electric Capital Corp.
5.132%, 08/02/99 25,000 24,996
4.961%, 08/25/99 30,000 29,903
----------
104,892
----------
ELECTRONIC AND ELECTRICAL -- 0.8%
Panasonic Finance (America) (B)
5.152%, 08/02/99 25,000 24,996
----------
FINANCIAL SERVICES -- 1.6%
Associates First Capital Corp.
5.259%, 10/20/99 50,000 49,424
----------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
COMMERCIAL PAPER DISCOUNTED* (CONTINUED)
- -------------------------------------------------------------
PETROLEUM REFINING -- 1.7%
BP Amoco Capital PLC
5.122%, 08/02/99 $ 50,000 $ 49,993
----------
TOTAL COMMERCIAL PAPER DISCOUNTED
(Cost $1,305,772) 1,305,772
-------------
- -------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) -- 18.5%
- -------------------------------------------------------------
Bear Stearns Co. (A)
5.335%, 01/10/00 45,000 45,022
CIT Group Inc.
6.250%, 10/25/99 31,000 31,081
Daimler Chrysler N.A. Holdings Corp. (A)
5.062%, 07/06/00 50,000 49,944
General Electric Capital Corp. Ser. A (A)
5.049%, 09/09/99 50,000 50,000
5.260%, 04/13/00 25,000 25,000
General Motors Acceptance Corp.
8.375%, 02/03/00 59,500 60,467
7.875%, 03/16/00 25,000 25,414
Goldman Sachs Group LP (A) (B)
5.410%, 07/17/00 25,000 25,027
IBM Credit Corp.
5.150%, 04/14/00 25,000 24,992
Liberty Lighthouse US Capital (A) (B)
5.310%, 04/10/00 50,000 50,000
Merrill Lynch & Co. Inc. Ser. B
6.070%, 09/27/99 12,800 12,819
Merrill Lynch & Co. Inc. Ser. B (A)
5.463%, 10/04/99 48,000 48,023
5.340%, 02/04/00 50,000 50,000
5.380%, 04/17/00 10,000 10,009
Sigma Finance, Inc. (A) (B)
5.184%, 02/22/00 40,000 40,000
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $547,798) 547,798
----------
The accompanying notes are an integral part of the financial statements.
70 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS-DISCOUNTED* -- 6.7%
- -------------------------------------------------------------
FHLB
5.210%, 02/28/00 $50,000 $ 48,532
FHLMC
5.340%, 01/18/00 25,000 24,386
5.340%, 01/20/00 25,000 24,379
5.350%, 01/21/00 25,000 24,374
5.380%, 01/21/00 28,000 27,295
5.380%, 01/27/00 50,000 48,697
----------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS-DISCOUNTED*
(Cost $197,663) 197,663
----------
- -------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.5%
- -------------------------------------------------------------
FFCB
4.800%, 02/01/00 15,000 14,963
FHLB
5.125%, 03/08/00
Callable 09/08/99 @ 100, 40,000 39,860
5.113%, 03/24/00 (A) 30,000 30,000
FNMA
4.830%, 01/11/00 50,000 49,918
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $134,741) 134,741
----------
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.7%
- -------------------------------------------------------------
Barclays Capital, Inc.
5.000%, dated 07/30/99, matures
08/02/99, repurchase price $38,882,427
(collateralized by U.S. Treasury Bond,
par value $32,673,000, 7.875%,
02/15/21; market value
$39,643,926) $38,866 $ 38,866
Deutsche Bank Securities, Inc.
5.010%, dated 07/30/99, matures
08/02/99, repurchase price
$39,908,535 (collateralized by
U.S. Treasury Note, par value
$40,426,000, 5.625%, 12/31/99;
market value $40,690,653) 39,892 39,892
J.P. Morgan Securities, Inc.
5.000%, dated 07/30/99, matures
08/02/99, repurchase price
$30,748,014 (collateralized by
U.S. Treasury Bond, par value
$24,678,000, 8.750%, 05/15/17;
market value $31,350,207) 30,735 30,735
Warburg, Dillon, Read, LLC.
5.000%, dated 07/30/99, matures
08/02/99, repurchase price
$60,104,477 (collateralized by
U.S. Treasury Note, par value
$59,950,000, 5.875%, 09/30/02;
market value $61,282,856) 60,079 60,079
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $169,572) 169,572
----------
TOTAL INVESTMENTS -- 99.8%
(Cost $2,960,541) 2,960,541
----------
OTHER ASSETS AND LIABILITIES, NET -- 0.2% 5,917
----------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 71
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
DIVERSIFIED MONEY MARKET FUND (CONTCLUDED)
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class
(unlimited authorization -- no par
value) based on 1,326,114,864
outstanding shares of beneficial
interest $1,326,114
Fund Shares of Retail Class A
(unlimited authorization -- no par
value) based on 1,642,240,380
outstanding shares of beneficial
interest 1,642,241
Accumulated net realized loss on
investments (1,897)
----------
TOTAL NET ASSETS -- 100.0% $2,966,458
==========
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 JULY 31, 1999.
(B) SECURITIES SOLD WITHIN THE TERMS OF A PRIVATE PLACEMENT MEMORANDUM, EXEMPT
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."
CL -- CLASS
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
72 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- 97.6%
- -------------------------------------------------------------
ABAG, California Financial
Authority For Nonprofit Corps.
American Baptist Homes West
Project, Ser C (A) (B) (C)
3.300%, 10/01/27 $ 4,585 $ 4,585
Alternative Energy Source
Finance Authority, GE Capital
Corporation - Arroyo
Energy Project, VRDN,
AMT (A) (B)
2.700%, 12/01/20 1,100 1,100
Anaheim, Housing Authority,
Bel Page Project, VRDN,
AMT (A) (B) (C)
2.650%, 08/01/20 6,000 6,000
Anaheim Public Improvement
Corporation, 1995 Police
Facilities Refinancing Project,
COP, VRDN, AMBAC
Insured (A) (B) (C)
2.500%, 08/01/08 3,100 3,100
Camarillo, Multi-Family
Housing Revenue, Heritage
Park Apartments, VRDN,
AMT (A) (B) (C)
2.650%, 07/15/19 1,800 1,800
Camarillo, Public Finance
Authority- Lease, RB
MBIA Insured
3.500%, 12/01/99 1,120 1,122
Carlsbad, Housing & Revenue,
Ser A, VRDN, RB (A) (B) (C)
2.600%, 12/01/05 2,700 2,700
Central Coastal Water Authority,
Ser A, RB, AMBAC Insured
4.000%, 10/01/99 500 501
Contra Costa, Multi-Family
Housing Authority, Lakeshore
Project, Series C, VRDN (B) (C)
2.500%, 11/15/17 1,000 1,000
Contra Costa, Water District,
TECP (C)
2.950%, 08/11/99 5,000 5,000
Contra Costa Water District,
TECP (C)
3.050%, 10/12/99 5,000 5,000
Culver City, Finance Authority,
RB, Pre-refunded 11/01/99 @102
7.100%, 11/01/10 1,000 1,030
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Dublin, Housing Finance Authority,
Multi-Family, VRDN,
RB (A) (B) (C)
2.650%, 06/01/28 $ 2,500 $ 2,500
East Bay, Waste Water,
TECP (C)
2.950%, 10/21/99 1,000 1,000
East Bay, Waste Water,
RB, FGIC Insured
6.000%, 06/01/00 3,000 3,063
Education Facilities Authority,
Carnegie Institute, TECP
3.200%, 09/08/99 5,000 5,000
3.000%, 11/18/99 1,000 1,000
Encina, Wastewater Management,
RB, Pre-refunded 08/01/99 @ 102
6.875%, 08/01/11 3,400 3,468
Escondido, Community Development,
VRDN, AMT (A) (B) (C)
2.700%, 10/12/16 2,800 2,800
Fresno, City, GO, TRAN
4.000%, 06/30/00 5,000 5,029
Health Facilities Finance Authority,
Pooled Loan Program,
Ser B, VRDN, RB, FGIC
Insured (A) (B)
2.500%, 10/01/10 6,175 6,175
Health Facilities Finance Authority,
Santa Barbara Cottage, Ser B,
VRDN, RB (A) (B) (C)
2.600%, 09/01/05 3,555 3,555
Health Facilities Finance Authority,
Santa Barbara Cottage,
Ser C, VRDN, RB (A) (B) (C)
2.600%, 09/01/15 6,000 6,000
Health Facilities Finance Authority,
Scripps Health Project,
Ser B, VRDN, RB (A) (B)
MBIA Insured
2.550%, 10/01/22 11,000 11,000
Jurupa County, Service District,
RB, FSA Insured
3.750%, 09/01/99 1,000 1,001
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 73
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
La Mirada, Redevelopment Agency,
Industrial Commercial Development,
Ser B, TA, Pre-refunded
08/15/00 @102
6.750%, 08/15/11 $ 1,915 $ 2,017
Livermore, Portola Meadows
Apartments Project, VRDN,
RB, AMT (A) (B) (C)
2.700%, 05/01/19 5,100 5,100
Los Angeles County, GO, TRAN
4.000%, 06/30/00 6,100 6,137
Los Angeles County, Pension
Obligation, Ser C, RB, VRDN,
AMBAC Insured (A) (B)
2.500%, 06/30/07 10,400 10,400
Los Angeles County,
Ser A, VRDN, RB,
FGIC Insured (A) (B)
2.500%, 07/01/12 5,700 5,700
Los Angeles County, California
Pension Obligation,
Ser A, VRDN (A) (B) AMBAC Insured
2.500%, 06/30/07 2,300 2,300
Los Angeles County,
Metropolitan Transportation
Authority, Ser A, VRDN, RB
MBIA Insured (A) (B)
2.600%, 07/01/20 25,500 25,500
Los Angeles County, Pension
Obligation, Ser B, RB,
VRDN (A) (B) AMBAC Insured
2.500%, 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 2,004
Los Angeles, Capital Asset
Lease, TECP (C)
3.000%, 08/10/99 5,000 5,000
Los Angeles, City Waste
Water, TECP (C)
2.850%, 08/09/99 1,500 1,500
2.800%, 10/07/99 5,000 5,000
Los Angeles, Water and
Power, TECP (C)
2.800%, 10/07/99 2,000 2,000
Los Angeles, Transportation,
TECP (C)
2.750%, 10/14/99 7,000 7,000
Los Angeles, Meadowridge,
Multi-Family Housing,
VRDN (A) (B) (C)
2.750%, 09/01/18 4,600 4,600
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Los Angeles, Multi-Family Housing,
Ser K, VRDN, RB (A) (B) (C)
2.600%, 07/01/10 $23,540 $ 23,540
Los Angeles, Municipal
Improvement Lease,
Ser E, RB, AMBAC Insured
4.000%, 09/01/99 2,420 2,422
Los Angeles, Ser A, GO,
FSA Insured
3.000%, 09/01/99 525 525
Los Angeles, Unified School
District Authority, Belmont
Learning Complex Project,
Ser A, VRDN (A) (B) (C)
2.550%, 12/01/17 17,500 17,500
Modesto Irrigation District, TECP
3.150%, 08/05/99 5,500 5,500
3.300%, 09/10/99 3,000 3,000
Modesto Multi-Family Housing,
Live Oak Project, VRDN,
RB, AMT (A) (B) (C)
2.650%, 09/01/24 7,275 7,275
Mt. Diablo School District,
Community Facility, RB,
Pre-refunded 08/01/00 @ 102
7.050%, 08/01/20 5,000 5,267
Northern California,
Power-Combustion,
RB, MBIA Insured
4.000%, 08/15/99 4,310 4,312
Northern California,
Power-Transmission,
RB, MBIA Insured
4.000%, 08/15/99 1,100 1,100
Ontario Industrial Development
Authority, Winsford Partners
Project, Ser A, VRDN, RB,
AMT (A) (B) (C)
2.700%, 09/01/08 1,900 1,900
Orange County Transit District,
COP, FSA Insured
4.000%, 12/01/99 1,075 1,078
Orange County, Transportation
Authority, TECP (C)
2.600%, 08/23/99 7,600 7,600
The accompanying notes are an integral part of the financial statements.
74 ----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Orange County, Apartment Development
Authority, Wood Canyon Villas,
AMT (A) (B) (C)
2.800%, 12/01/21 $ 6,900 $ 6,900
Orange County, Water District,
TECP (C)
3.100%, 08/17/99 4,200 4,200
Oxnard Housing Authority,
Seawind Apartment Projects,
Ser A, VRDN, RB, AMT (A) (B) (C)
3.100%, 12/01/20 2,725 2,725
Pasadena, Electric, RB,
MBIA Insured
4.750%, 08/01/99 1,590 1,590
Pleasanton, GO, FGIC Insured
3.500%, 08/01/99 1,130 1,130
Pollution Control Finance Authority,
Burney Forest, VRDN, RB,
AMT (A) (B) (C)
3.000%, 09/01/20 14,100 14,100
Pollution Control Finance Authority,
Chevron USA Project,
Ser B, VRDN, RB (A) (B)
3.100%, 06/15/05 3,100 3,101
Pollution Control Finance Authority,
Chevron Project, VRDN,
RB (A) (B)
3.100%, 05/15/02 2,585 2,585
Pollution Control Finance Authority,
Delano Project 1989, VRDN,
RB, AMT (A) (B) (C)
3.350%, 08/01/19 4,300 4,300
Pollution Control Finance Authority,
Delano Project 1990,
VRDN, RB, AMT (A) (B) (C)
3.350%, 08/01/19 1,700 1,700
Pollution Control Finance Authority,
Delano Project 1991,
VRDN, RB, AMT (A) (B) (C)
3.350%, 08/01/19 500 500
Pollution Control Finance Authority,
Exxon Project, VRDN, RB (A) (B)
3.250%, 12/01/12 5,000 5,000
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Pollution Control Finance Authority,
Honey Lake Power Project,
VRDN, RB, AMT (A) (B) (C)
3.350%, 09/01/18 $ 4,200 $ 4,200
Pollution Control Finance Authority,
Pacific Gas and Electric,
AMT, VRDN, RB (A) (B) (C)
3.400%, 11/01/26 5,000 5,000
Pollution Control Finance Authority,
Shell Oil, Ser A, VRDN,
RB (A) (B)
3.250%, 11/01/00 5,950 5,950
Pollution Control Finance Authority,
Shell Oil, Ser A, VRDN,
RB, (A) (B)
3.250%, 10/01/10 1,100 1,100
3.250%, 10/01/11 9,200 9,200
Pollution Control Financing Authority,
Pacific Gas and Electric,
VRDN, RB (A) (B) (C)
3.400%, 11/01/26 13,005 13,005
Rancho Mirage, Eisenhower Medical
Center, VRDN (A) (B)
MBIA Insured
2.550%, 07/01/22 6,800 6,800
Riverside County, COP,
MBIA Insured
4.750%, 11/01/99 4,210 4,229
Riverside County, Riverside County
Public Facilities, COP,
Ser 1985 A, VRDN (A) (B) (C)
2.600%, 12/01/15 21,700 21,700
Riverside County, TECP (C)
3.100%, 09/03/99 1,000 1,000
Roseville, Finance Authority,
Ser A, FSA Insured
4.000%, 09/01/99 1,000 1,000
San Bernadino County, Housing Authority,
Victoria Terrace, Project A,
VRDN, RB (A) (B) (C)
2.700%, 06/01/15 2,450 2,450
San Bernardino, Medical Center
Financing Project, COP, MBIA, (A) (B)
2.550%, 08/01/26 12,000 12,000
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 75
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
San Diego, Transportation,
Ser A, TECP
3.050%, 08/06/99 $ 5,900 $ 5,900
2.700%, 09/17/99 7,700 7,700
2.850%, 10/13/99 2,200 2,200
San Diego County, COP,
AMBAC Insured
4.000%, 05/01/00 2,345 2,364
San Diego School District,
Phase XIII Capital Project,
Ser A, COP
5.000%, 07/01/00 1,000 1,013
San Diego, Multi-Family Housing,
VRDN (A) (B) (C)
2.600%, 08/15/13 4,390 4,390
San Diego, Multi-Family Housing,
VRDN, (A) (B) (C)
2.600%, 08/01/14 2,400 2,400
San Francisco, BART, TECP (C)
2.850%, 08/11/99 9,400 9,400
3.150%, 10/08/99 2,900 2,900
San Francisco, City & County Public
Utility Department, TECP (C)
2.900%, 09/07/99 2,000 2,000
San Francisco, City & County Sewer, RB,
Pre-refunded 10/01/99 @ 102
6.500%, 10/01/21 1,000 1,025
San Francisco, Multi-Family Housing,
AMT (A) (B) (C)
2.800%, 06/15/25 4,000 4,000
San Joaquin County, Transportation,
TECP (C)
2.900%, 11/10/99 13,000 13,000
San Jose, Multi-Family Housing,
AMT, (A) (B) (C)
2.600%, 12/01/28 2,000 2,000
San Jose, Multi-Family Housing,
VRDN, RB, FGIC Insured (A) (B)
2.650%, 11/01/07 8,700 8,700
San Mateo County, Transportation
District, RB, FSA Insured
4.250%, 06/01/00 2,300 2,316
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
Santa Ana, Multi-Family Housing,
RB (A) (B) (C)
2.700%, 12/01/22 $ 1,100 $ 1,100
Santa Clara, Electric,
RB, (A) (B) (C)
2.600%, 07/01/10 1,700 1,700
School Cash Reserve Program
Authority, Ser A, AMBAC Insured
4.000%, 07/03/00 7,500 7,560
School Facilities Finance
Authority, COP, Ser B,
VRDN (A) (B) (C)
2.650%, 07/01/24 2,700 2,700
School Facility Financing,
Capital Improvement Projects VRDN,
RB (A) (B) (C)
2.650%, 07/01/22 9,200 9,200
School Facility Financing,
Capital Improvement Projects,
Ser D, VRDN, COP (A) (B)
2.550%, 07/01/24 6,000 6,000
South Gate, Tax Allocation, RB,
Pre-refunded 02/01/99 @ 102
7.375%, 09/01/09 1,000 1,024
Southern California Metro Water
District, Ser A, VRDN, RB,
AMBAC Insured (A) (B)
2.600%, 06/01/23 7,000 7,000
Southern California Public
Power Authority, Sub-Palo Verde
Project, Ser A, RB, FSA
Insured (A) (B)
5.000%, 07/01/00 3,300 3,348
Southern California, Metro Water
District, Water Revenue
Authorization, Ser B, VRDN,
RB (A) (B)
2.600%, 07/01/28 1,000 1,000
Southern California, Metro Water
District, Water Revenue
Authorization, Ser C, VRDN,
RB (A) (B)
2.950%, 07/01/28 2,500 2,500
State Department of Water, RB
4.250%, 12/01/99 5,080 5,103
The accompanying notes are an integral part of the financial statements.
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
State Department of Water, Central Valley
Project, Ser H, RB,
Pre-refunded 06/01/00 @101.5
6.900%, 12/01/25 $ 8,200 $ 8,554
State of California, GO, TECP
9.000%, 04/01/00 10,600 11,020
2.550%, 08/05/99 5,000 5,000
2.950%, 08/18/99 4,200 4,200
2.800%, 10/06/99 5,000 5,000
Statewide Communities Development
Authority, North California
Retirement, VRDN, RB (A) (B) (C)
3.250%, 06/01/26 3,400 3,400
Transportation Finance Authority,
VRDN, RB, FSA Insured (A) (B)
2.700%, 10/01/27 20,200 20,200
Turlock Irrigation District,
Transmission Projects, COP,
Ser A, VRDN (A) (B) (C)
2.650%, 01/01/26 3,950 3,950
University of California Regents,
TECP
2.850%, 09/07/99 4,500 4,500
2.950%, 10/21/99 2,000 2,000
University of California,
Irvine Pkg System,
Ser A, Pre-refunded 09/01/99
@ 102
7.000%, 09/01/21 2,000 2,046
University of California,
Multi-Purpose, RB Pre-refunded
09/01/99 @ 102
6.900%, 09/01/12 1,000 1,023
University of California, RB,
Pre-refunded 09/01/99 @ 102
6.750%, 09/01/23 3,500 3,580
Ventura County, Finance Authority,
TECP (C)
2.950%, 11/18/99 2,000 2,000
West Basin Municipal Water District,
Phase II Recycled Water Project,
Ser B, COP, VRDN (A) (B) (C)
2.500%, 08/01/27 2,200 2,200
- -------------------------------------------------------------
Description Par (000) Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
- -------------------------------------------------------------
West Basin Municipal Water District,
Phase II Recycled Water Project,
Ser C, COP, VRDN (A) (B) (C)
2.450%, 08/01/27 $ 2,000 $ 2,000
West Basin Municipal Water District,
Phase III Recycled Water Project,
Ser A, COP, (A) (B) (C)
2.500%, 08/01/29 1,500 1,500
West Basin Municipal Water District,
Phase III Recycled Water Project,
Ser B, VRDN, COP (A) (B) (C)
2.200%, 08/01/29 2,000 2,000
West Covina Redevelopment Agency,
Lakes Public Parking Project,
VRDN, RB (A) (B) (C)
2.500%, 08/01/18 2,455 2,455
--------
TOTAL CALIFORNIA MUNICIPAL BONDS
(Cost $593,442) 593,442
--------
- -------------------------------------------------------------
PUERTO RICO MUNICIPAL BOND-- 2.1%
- -------------------------------------------------------------
Puerto Rico, Commonwealth
Highway & Transportation, RB,
Series A, AMBAC Insured (A) (B)
2.850%, 07/01/28 12,760 12,760
--------
TOTAL PUERTO RICO MUNICIPAL BOND
(Cost $12,760) 12,760
--------
- -------------------------------------------------------------
CASH EQUIVALENTS -- 0.0%
- -------------------------------------------------------------
Goldman Sachs Tax Free Money Market 46 46
Provident California Tax Free
Money Market 182 182
--------
TOTAL CASH EQUIVALENTS
(Cost $228) 228
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $606,430) 606,430
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.3% 1,958
--------
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 77
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<PAGE>
[Logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 1999
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONCLUDED)
- -------------------------------------------------------------
Description Value (000)
- -------------------------------------------------------------
- -------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------
Fund Shares of Fiduciary Class (unlimited
authorization-- no par value) based
on 235,737,390 outstanding shares
of beneficial interest $235,737
Fund Shares of Retail Class A (unlimited
authorization -- no par value) based
on 372,724,275. outstanding shares
of beneficial interest 372,724
Distribution in excess of net investment
income (8)
Accumulated net realized loss on investments (65)
--------
TOTAL NET ASSETS -- 100.0% $608,388
========
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
ID THE RATE IN EFFECT ON JULY 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
TA -- TAX ALLOCATION
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.
78 ----------------------------------------------------------------------------
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<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (000)
AS OF JULY 31, 1999
<TABLE>
<CAPTION>
100% U.S.
SMALL CAP VALUE TREASURY MONEY
FUND MARKET FUND
--------------- --------------
ASSETS:
<S> <C> <C>
Investment Securities (Cost $67,949 and $1,107,499, respectively) ............ $79,571 $1,107,499
Foreign Currency (Cost $1) ................................................... 1 --
Income/Dividend Receivable ................................................... 55 13,388
Investment Securities Sold ................................................... 2,492 --
Receivable for Security Matured* ............................................. -- 124,587
Capital Shares Sold Receivable ............................................... 2,066 --
Other Receivables ............................................................ 10 --
------- ----------
TOTAL ASSETS ............................................................ 84,195 1,245,474
------- ----------
LIABILITIES:
Income Distribution Payable ..................................................... -- 4,314
Investment Securities Purchased .............................................. 1,642 --
Accrued Expenses Payable ..................................................... 196 628
Other Liabilities ............................................................ 10 --
------- ----------
TOTAL LIABILITIES ....................................................... 1,848 4,942
------- ----------
TOTAL NET ASSETS ................................................ 82,347 1,240,532
======= ==========
NET ASSETS:
FundShares of Fiduciary Class (unlimited authorization -- no par value)
based on 6,410,700 and 263,518,268, respectively of outstanding shares
of beneficial interest ................................................... 63,933 263,518
Fund Shares of Retail Class A (unlimited authorization -- no par value)
based on 71,492 and 976,998,344, respectively of outstanding shares of
beneficial interest ...................................................... 810 976,998
Fund Shares of Retail Class B (unlimited authorization -- no par value)
based on 79,782 outstanding shares of beneficial interest ................ 930 --
Undistributed net investment income .......................................... 84 68
Accumulated net realized gain (loss) on investments .......................... 4,967 (52)
Net unrealized appreciation on investments ................................... 11,622 --
Net unrealized appreciation on forward foreign currency contracts, foreign
currencies and translations of other assets and liabilities denominated
in foreign currencies .................................................... 1 --
------- ----------
TOTAL NET ASSETS ................................................ $82,347 $1,240,532
======= ==========
Net Asset Value, Offering and Redemption Price Per Share -- Fiduciary Class ... $ 12.55 $1.00
------- ----------
Net Asset Value, Offering and Redemption Price Per Share -- Retail Class A .... $ 12.52 $1.00
------- ----------
Maximum Offering Price Per Share -- Retail Class A ($12.52 / 95.5%) ........... $ 13.11 --
------- ----------
Net Asset Value, Offering and Redemption Price Per Share -- Retail Class B ..... $ 12.46 --
------- ----------
</TABLE>
*SECURITY MATURED ON 07/31/99, PAYABLE ON 08/02/99.
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Logo omitted]
STATEMENTS OF OPERATIONS (000)
FOR THE FISCAL YEAR ENDED JULY 31, 1999
<TABLE>
<CAPTION>
VALUE
GROWTH MOMENTUM
FUND FUND
-------- --------
<S> <C> <C>
Interest Income ............................................................ $ 995 $ 1,090
Dividend Income ............................................................ 3,907 15,863
Less: Foreign Taxes withheld, net of reclaims .............................. -- --
-------- --------
Total Investment Income ......................................... 4,902 $ 16,953
-------- --------
Expenses:
Administrative Fees ..................................................... 1,303 1,733
Administration Fees Waived .............................................. (130) (174)
Investment Adviser Fees ................................................. 3,909 5,198
Investment Adviser Fees Waived .......................................... (163) (83)
Shareholder Servicing Fees Fiduciary .................................... 1,567 2,066
Shareholder Servicing Fees Retail Class A ............................... 47 86
Shareholder Servicing Fees Retail Class B ............................... 15 14
Shareholder Servicing Fees Waived ....................................... (968) (2,152)
Custodian Fees .......................................................... 65 87
Professional Fees ....................................................... 36 62
Registration Fees ....................................................... 60 40
Transfer Agency Fees .................................................... 48 71
Distribution Fees Retail Class A ........................................ 47 86
Distribution Fees Retail Class B ........................................ 45 43
Distribution Fees Waived ................................................ -- --
Insurance Fees .......................................................... 4 9
Trustees Fees ........................................................... 13 21
Printing Fees ........................................................... 40 70
Miscellaneous Fees ...................................................... 8 7
-------- --------
Total Expenses .................................................. 5,946 7,184
Reduction of Expenses (1) ....................................... (14) (19)
-------- --------
Total Net Expenses .............................................. 5,932 7,165
-------- --------
Net Investment Income (Loss) ............................................ (1,030) 9,788
-------- --------
Net Realized Gain (Loss) on Investments .................................... 67,282 37,461
-------- --------
Net Realized Gain (Loss) on Option Contracts ............................... -- 71
-------- --------
Net Realized Gain (Loss) on Foreign Currency Transactions .................. -- --
-------- --------
Change in Unrealized Appreciation (Depreciation) on Investments ............ 59,868 55,738
-------- --------
Change in Unrealized Appreciation on Foreign Currency ...................... -- --
-------- --------
Net Realized and Unrealized Gain on Investments ............................ 127,150 93,270
-------- --------
Increase in Net Assets Resulting from Operations ........................... $126,120 $103,058
======== ========
</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.
80 ----------------------------------------------------------------------------
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<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>
Interest Income .................................................. $ 354 $10,863 $ 326 $ 157 $ 72
Dividend Income .................................................. 14,937 5,283 217 1,027 1,774
Less: Foreign Taxes withheld, net of reclaims .................... -- -- -- (23) (145)
-------- ------- ------ ------- ------
Total Investment Income ............................... 15,291 $16,146 $ 543 1,161 1,701
-------- ------- ------ ------- ------
Expenses:
Administrative Fees ........................................... 1,324 917 118 128 190
Administration Fees Waived .................................... (347) (92) (12) (13) (19)
Investment Adviser Fees ....................................... 3,972 2,752 472 638 903
Investment Adviser Fees Waived ................................ -- -- -- -- --
Shareholder Servicing Fees Fiduciary .......................... 1,593 1,114 148 158 238
Shareholder Servicing Fees Retail Class A ..................... 55 27 -- 1 --
Shareholder Servicing Fees Retail Class B ..................... 7 5 -- -- --
Shareholder Servicing Fees Waived ............................. (989) (685) (148) (95) (238)
Custodian Fees ................................................ 66 46 6 68 184
Professional Fees ............................................. 35 31 7 8 7
Registration Fees ............................................. 41 21 3 31 9
Transfer Agency Fees .......................................... 46 37 1 12 2
Distribution Fees Retail Class A .............................. 54 28 -- 1 --
Distribution Fees Retail Class B .............................. 22 16 -- 2 --
Distribution Fees Waived ...................................... -- -- -- -- --
Insurance Fees ................................................ 2 4 1 -- --
Trustees Fees ................................................. 9 14 2 3 2
Printing Fees ................................................. 41 37 9 37 6
Miscellaneous Fees ............................................ 10 5 2 11 15
-------- ------- ------ ------- ------
Total Expenses ........................................ 5,941 4,277 609 990 1,299
Reduction of Expenses (1) ............................. (14) (10) (1) (2) (2)
-------- ------- ------ ------- ------
Total Net Expenses .................................... 5,927 4,267 608 988 1,297
-------- ------- ------ ------- ------
Net Investment Income (Loss) .................................. 9,364 11,879 (65) 173 404
-------- ------- ------ ------- ------
Net Realized Gain (Loss) on Investments .......................... 125,499 35,906 (5,029) 4,967 7,856
-------- ------- ------ ------- ------
Net Realized Gain (Loss) on Option Contracts ..................... -- 19 -- -- --
-------- ------- ------ ------- ------
Net Realized Gain (Loss) on Foreign Currency Transactions ........ -- -- -- (63) 130
-------- ------- ------ ------- ------
Change in Unrealized Appreciation (Depreciation) on Investments .. (47,639) (4,521) 8,473 11,622 (1,586)
-------- ------- ------ ------- ------
Change in Unrealized Appreciation on Foreign Currency ............ -- -- -- 1 15
-------- ------- ------ ------- ------
Net Realized and Unrealized Gain on Investments .................. 77,860 31,404 3,444 16,527 6,415
-------- ------- ------ ------- ------
Increase in Net Assets Resulting from Operations ................. $ 87,224 $43,283 $3,379 $16,700 $6,819
======== ======= ====== ======= ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 81
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<PAGE>
[Logo omitted]
STATEMENTS OF OPERATIONS (000)
FOR THE FISCAL YEAR ENDED JULY 31, 1999
<TABLE>
<CAPTION>
CALIFORNIA
INTERMEDIATE
TAX-FREE BOND
BOND FUND FUND
------------ --------
<S> <C> <C>
Interest Income ..................................................... $ 8,073 $18,323
Dividend Income ..................................................... -- --
Less: Foreign Taxes withheld, net of reclaims ....................... -- --
------- -------
Total Investment Income .................................. 8,073 18,323
------- -------
Expenses:
Administrative Fees .............................................. 341 574
Administration Fees Waived ....................................... (34) (57)
Investment Adviser Fees .......................................... 851 1,435
Investment Adviser Fees Waived ................................... (511) --
Shareholder Servicing Fees Fiduciary ............................. 385 710
Shareholder Servicing Fees Retail Class A ........................ 41 7
Shareholder Servicing Fees Retail Class B ........................ -- --
Shareholder Servicing Fees Waived ................................ (426) (689)
Custodian Fees ................................................... 17 29
Professional Fees ................................................ 23 35
Registration Fees ................................................ 22 40
Transfer Agent Fees .............................................. 23 30
Distribution Fees Retail Class A ................................. 41 7
Distribution Fees Retail Class B ................................. -- --
Distribution Fees Waived ......................................... (41) (7)
Insurance Fees ................................................... 5 5
Trustees Fees .................................................... 8 12
Printing Fees .................................................... 20 30
Miscellaneous Fees ............................................... 4 2
------- -------
Total Expenses ........................................... 769 2,163
Reduction of Expenses (1) ................................ (3) (6)
------- -------
Total Net Expenses ....................................... 766 2,157
------- -------
Net Investment Income ............................................ 7,307 16,166
------- -------
Net Realized Gain (Loss) on Investments ............................. 736 2,681
------- -------
Change in Unrealized Appreciation (Depreciation) on Investments ..... (2,207) (14,801)
------- -------
Net Realized and Unrealized Gain (Loss) on Investments .............. (1,471) (12,120)
------- -------
Increase in Net Assets Resulting from Operations .................... $ 5,836 $ 4,046
======= =======
</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.
82 ----------------------------------------------------------------------------
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<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>
Interest Income ............................... $17,203 $55,227 $23,211 $135,603 $17,941
Dividend Income ............................... -- -- -- -- --
Less: Foreign Taxes withheld,
net of reclaims ........................... -- -- -- -- --
------- ------- ------- -------- -------
Total Investment Income ............ 17,203 55,227 23,211 135,603 17,941
------- ------- ------- -------- -------
Expenses:
Administrative Fees ........................ 531 2,302 920 5,223 1,246
Administration Fees Waived ................. (53) (230) (92) (522) (125)
Investment Adviser Fees .................... 1,328 3,454 1,380 7,835 1,869
Investment Adviser Fees Waived ............. -- (576) -- -- (1,194)
Shareholder Servicing Fees Fiduciary ....... 650 622 800 3,086 637
Shareholder Servicing Fees Retail Class A .. 14 2,256 350 3,443 920
Shareholder Servicing Fees Retail Class B .. -- -- -- -- --
Shareholder Servicing Fees Waived .......... (584) (2,878) (1,150) (6,529) (1,557)
Custodian Fees ............................. 27 115 46 261 62
Professional Fees .......................... 20 73 22 139 35
Registration Fees .......................... 16 88 40 177 57
Transfer Agent Fees ........................ 21 92 31 211 47
Distribution Fees Retail Class A ........... 13 2,256 350 3,443 920
Distribution Fees Retail Class B ........... -- -- 1 -- --
Distribution Fees Waived ................... (13) -- -- -- --
Insurance Fees ............................. 2 10 2 22 3
Trustees Fees .............................. 5 25 14 65 16
Printing Fees .............................. 16 81 36 160 40
Miscellaneous Fees ......................... 5 2 3 3 2
------- ------- ------- -------- -------
Total Expenses ..................... 1,998 7,692 2,753 17,017 2,978
Reduction of Expenses (1) .......... (6) (25) (10) (56) (13)
------- ------- ------- -------- -------
Total Net Expenses ................. 1,992 7,667 2,743 16,961 2,965
------- ------- ------- -------- -------
Net Investment Income ...................... 15,211 47,560 20,468 118,642 14,976
------- ------- ------- -------- -------
Net Realized Gain (Loss) on Investments ....... 693 (39) 34 (477) 1
------- ------- ------- -------- -------
Change in Unrealized Appreciation
(Depreciation) on Investments ............. (9,244) -- -- -- --
------- ------- ------- -------- -------
Net Realized and Unrealized Gain
(Loss) on Investments ..................... (8,551) (39) 34 (477) 1
------- ------- ------- -------- -------
Increase in Net Assets Resulting from
Operations ................................ $ 6,660 $47,521 $20,502 $118,165 $14,977
======= ======= ======= ======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Logo omitted]
<TABLE>
<CAPTION>
GROWTH VALUE MOMENTUM
FUND FUND
----------- ----------- ----------- -----------
08/01/98 08/01/97 08/01/98 08/01/97
TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) ........................................... $ (1,030) $ 286 $ 9,788 $ 8,150
Net Realized Gain (Loss) on Investments ................................ 67,282 58,251 37,461 16,588
Net Realized Gain (Loss) on Option Contracts ........................... -- -- 71 --
Net Realized Gain (Loss) on Foreign Currency Transactions .............. -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments ........ 59,868 16,670 55,738 7,625
Change in Unrealized Appreciation on Foreign Currency .................. -- -- -- --
-------- -------- -------- --------
Net Increase in Net Assets Resulting From Operations ..................... 126,120 75,207 103,058 32,363
-------- -------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ..................................................... -- (497) (9,557) (7,844)
Retail Class A Shares ................................................ -- (4) (316) (296)
Retail Class B Shares ................................................ -- -- (19) (6)
Distributions in Excess of Net Investment Income ..................... -- -- -- --
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) (37,186) (11,550)
-------- -------- -------- --------
Change in Net Assets ..................................................... 85,988 9,493 65,872 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 .......................................... 152,940 113,184 167,107 200,308
Reinvestment of Distributions ........................................ 37,499 44,542 30,723 8,410
Cost of Shares Redeemed .............................................. (169,282) (76,109) (280,911) (126,506)
-------- -------- -------- --------
Total Fiduciary Share Transactions ................................. 155,287 191,658 (83,081) 380,740
-------- -------- -------- --------
Retail Class A Shares:
Proceeds from Shares Issued .......................................... 87,981 9,352 64,059 16,308
Reinvestment of Distributions ........................................ 1,057 1,763 1,320 442
Cost of Shares Redeemed .............................................. (82,900) (1,696) (66,804) (3,772)
-------- -------- -------- --------
Total Retail Class A Share Transactions ............................ 6,138 9,419 (1,425) 12,978
-------- -------- -------- --------
Retail Class B Shares:
Proceeds from Shares Issued .......................................... 9,353 1,949 2,059 5,561
Reinvestment of Distributions ........................................ 303 -- 195 5
Cost of Shares Redeemed .............................................. (1,012) (33) (1,457) (127)
-------- -------- -------- --------
Total Retail Class B Share Transactions ............................ 8,644 1,916 797 5,439
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets From Share Transactions ............ 170,069 202,993 (83,709) 399,157
-------- -------- -------- --------
Total Increase (Decrease) in Net Assets ............................ 256,057 212,486 (17,837) 419,970
======== ======== ======== ========
Net Assets:
Beginning of Period 518,181 305,695 904,154 484,184
-------- -------- -------- --------
End of Period $774,238 $518,181 $886,317 $904,154
-------- -------- -------- --------
</TABLE>
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.
84 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME EQUITY BALANCED
FUND FUND
------------------------ --------------------------
08/01/98 08/01/97 08/01/98 08/01/97
TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) ..................................... $ 9,364 $ 7,614 $ 11,879 $ 11,562
Net Realized Gain (Loss) on Investments .......................... 125,499 75,433 35,906 21,780
Net Realized Gain (Loss) on Option Contracts ..................... -- -- 19 --
Net Realized Gain (Loss) on Foreign Currency Transactions ........ -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments .. (47,639) (50,106) (4,521) (4,261)
Change in Unrealized Appreciation on Foreign Currency ............ -- -- -- --
-------- -------- -------- --------
Net Increase in Net Assets Resulting From Operations ............... 87,224 32,941 43,283 29,081
-------- -------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................... (9,191) (7,261) (11,557) (11,577)
Retail Class A Shares .......................................... (261) (263) (259) (248)
Retail Class B Shares .......................................... (19) (3) (40) (4)
Distributions in Excess of Net Investment Income ............... -- -- -- --
Capital Gains:
Fiduciary Shares ............................................... (77,000) (34,725) (17,872) (10,762)
Retail Class A Shares .......................................... (2,647) (1,703) (439) (250)
Retail Class B Shares .......................................... (298) -- (73) --
-------- -------- -------- --------
Total Distributions .......................................... (89,416) (43,955) (30,240) (22,841)
-------- -------- -------- --------
Change in Net Assets ............................................... (2,192) (11,014) 13,043 6,240
-------- -------- -------- --------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Blue Chip Growth Fund .. -- -- -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ..................................... -- 344,504 -- 15,276
Proceeds from Shares Issued .................................... 59,638 70,835 70,832 96,493
Reinvestment of Distributions .................................. 77,041 34,479 28,648 22,162
Cost of Shares Redeemed ........................................ (176,019) (121,446) (109,494) (91,701)
-------- -------- -------- --------
Total Fiduciary Share Transactions ........................... (39,340) 328,372 (10,014) 42,230
-------- -------- -------- --------
Retail Class A Shares:
Proceeds from Shares Issued .................................... 9,523 9,577 2,676 2,541
Reinvestment of Distributions .................................. 2,622 1,938 674 479
Cost of Shares Redeemed ........................................ (12,704) (2,461) (3,057) (1,763)
-------- -------- -------- --------
Total Retail Class A Share Transactions ...................... (559) 9,054 293 1,257
-------- -------- -------- --------
Retail Class B Shares:
Proceeds from Shares Issued .................................... 2,874 1,881 2,867 1,008
Reinvestment of Distributions .................................. 307 3 105 4
Cost of Shares Redeemed ........................................ (517) (35) (432) (16)
-------- -------- -------- --------
Total Retail Class B Share Transactions ...................... 2,664 1,849 2,540 996
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets From Share Transactions ...... (37,235) 339,275 (7,181) 44,483
-------- -------- -------- --------
Total Increase (Decrease) in Net Assets ...................... (39,427) 328,261 5,862 50,723
-------- -------- -------- --------
Net Assets:
Beginning of Period .............................................. 695,138 366,877 460,379 409,656
-------- -------- -------- --------
End of Period .................................................... $655,711 $695,138 $466,241 $460,379
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
EMERGING GROWTH SMALL CAP VALUE
FUND FUND
-------------------------- ---------------
08/01/98 08/01/97 09/17/98 (1)
TO 07/31/99 TO 07/31/98 TO 07/31/99
----------- ----------- ------------
<S> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) ..................................... $ (65) $ 34 $ 173
Net Realized Gain (Loss) on Investments .......................... (5,029) 14,448 4,967
Net Realized Gain (Loss) on Option Contracts ..................... -- (410) --
Net Realized Gain (Loss) on Foreign Currency Transactions ........ -- -- (63)
Change in Unrealized Appreciation (Depreciation) on Investments .. 8,472 (12,019) 11,622
Change in Unrealized Appreciation on Foreign Currency ............ -- -- 1
-------- ------ --------
Net Increase in Net Assets Resulting From Operations ............... 3,378 2,053 16,700
-------- ------ --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................... -- (43) (26)
Retail Class A Shares .......................................... -- -- --
Retail Class B Shares .......................................... -- -- --
Distributions in Excess of Net Investment Income ............... (30) -- --
Capital Gains:
Fiduciary Shares ............................................... (9,420) (9,793) --
Retail Class A Shares .......................................... -- -- --
Retail Class B Shares .......................................... -- -- --
-------- ------ --------
Total Distributions .......................................... (9,450) (9,836) (26)
-------- ------ --------
Change in Net Assets ............................................... (6,072) (7,783) 16,674
-------- ------ --------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Blue Chip Growth Fund .. -- -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ..................................... -- -- --
Proceeds from Shares Issued .................................... 18,443 32,520 72,571
Reinvestment of Distributions .................................. 9,450 9,757 --
Cost of Shares Redeemed ........................................ (33,014) (32,251) (8,638)
-------- ------ --------
Total Fiduciary Share Transactions ........................... (5,121) 10,026 63,933
-------- ------ --------
Retail Class A Shares:
Proceeds from Shares Issued .................................... -- -- 843
Reinvestment of Distributions .................................. -- -- --
Cost of Shares Redeemed ........................................ -- -- (33)
-------- ------ --------
Total Retail Class A Share Transactions ...................... -- -- 810
-------- ------ --------
Retail Class B Shares:
Proceeds from Shares Issued .................................... -- -- 1,011
Reinvestment of Distributions .................................. -- -- --
Cost of Shares Redeemed ........................................ -- -- (81)
-------- ------ --------
Total Retail Class B Share Transactions ...................... -- -- 930
-------- ------ --------
Net Increase (Decrease) in Net Assets From Share Transactions ...... (5,121) 10,026 65,673
-------- ------ --------
Total Increase (Decrease) in Net Assets ...................... (11,193) 2,243 82,347
-------- ------ --------
Net Assets:
Beginning of Period .............................................. 68,579 66,336 --
-------- ------ --------
End of Period .................................................... $ 57,386 $68,579 $ 82,347
======== ======= ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
FUND
--------------------------
08/01/98 08/01/97
TO 07/31/99 TO 07/31/98
----------- -----------
<S> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) ..................................... $ 404 $ 471
Net Realized Gain (Loss) on Investments .......................... 7,856 (6,100)
Net Realized Gain (Loss) on Option Contracts ..................... -- --
Net Realized Gain (Loss) on Foreign Currency Transactions ........ 130 (142)
Change in Unrealized Appreciation (Depreciation) on Investments .. (1,586) 9,175
Change in Unrealized Appreciation on Foreign Currency ............ 15 28
--------- ------
Net Increase in Net Assets Resulting From Operations ............... 6,819 3,432
--------- ------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................... (343) (789)
Retail Class A Shares .......................................... -- --
Retail Class B Shares .......................................... -- --
Distributions in Excess of Net Investment Income ............... -- --
Capital Gains:
Fiduciary Shares ............................................... -- (484)
Retail Class A Shares .......................................... -- --
Retail Class B Shares .......................................... -- --
--------- ------
Total Distributions .......................................... (343) (1,273)
--------- ------
Change in Net Assets ............................................... 6,476 2,159
--------- ------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Blue Chip Growth Fund .. -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ..................................... -- --
Proceeds from Shares Issued .................................... 27,052 46,760
Reinvestment of Distributions .................................. 103 709
Cost of Shares Redeemed ........................................ (17,064) (10,125)
--------- ------
Total Fiduciary Share Transactions ........................... 10,091 37,344
--------- ------
Retail Class A Shares:
Proceeds from Shares Issued .................................... -- --
Reinvestment of Distributions .................................. -- --
Cost of Shares Redeemed ........................................ -- --
--------- ------
Total Retail Class A Share Transactions ...................... -- --
--------- ------
Retail Class B Shares:
Proceeds from Shares Issued .................................... -- --
Reinvestment of Distributions .................................. -- --
Cost of Shares Redeemed ........................................ -- --
--------- ------
Total Retail Class B Share Transactions ...................... -- --
--------- ------
Net Increase (Decrease) in Net Assets From Share Transactions ...... 10,091 37,344
--------- ------
Total Increase (Decrease) in Net Assets ...................... 16,567 39,503
--------- ------
Net Assets:
Beginning of Period .............................................. 91,970 52,467
--------- ------
End of Period .................................................... $ 108,537 $91,970
========= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 85
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
STATEMENT OF CHANGES IN NET ASSETS (000)
FOR THE YEARS ENDED JULY 31
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE
TAX-FREE BOND BOND
FUND FUND
------------------------- -------------------------
08/01/98 08/01/97 08/01/98 08/01/97
TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income .................................................. $ 7,307 $ 2,957 $ 16,166 $ 6,958
Net Realized Gain (Loss) on Investments ................................ 736 305 2,681 122
Change in Unrealized Appreciation (Depreciation) on Investments ........ (2,207) 1,305 (14,801) 1,732
-------- -------- -------- --------
Net Increase in Net Assets Resulting From Operations ................... 5,836 4,567 4,046 8,812
-------- -------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ..................................................... (6,586) (2,294) (15,821) (6,823)
Retail Class A Shares ................................................ (702) (555) (146) (58)
Retail Class B Shares ................................................ -- -- -- --
Capital Gains:
Fiduciary Shares ..................................................... -- -- -- --
Retail Class A Shares ................................................ -- -- -- --
Retail Class B Shares ................................................ -- -- -- --
-------- -------- -------- --------
Total Distributions ................................................ (7,288) (2,849) (15,967) (6,881)
-------- -------- -------- --------
Change in Net Assets ..................................................... (1,452) 1,718 (11,921) 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 .......................................... 21,402 21,826 78,647 57,404
Reinvestment of Distributions ........................................ 400 300 8,719 3,832
Cost of Shares Redeemed .............................................. (28,326) (15,638) (59,820) (29,230)
-------- -------- -------- --------
Total Fiduciary Share Transactions ................................. (6,524) 144,116 140,572 132,632
-------- -------- -------- --------
Retail Class A Shares:
Proceeds from Shares Issued .......................................... 9,687 8,581 2,585 1,333
Reinvestment of Distributions ........................................ 479 425 102 44
Cost of Shares Redeemed .............................................. (5,053) (7,359) (1,837) (80)
-------- -------- -------- --------
Total Retail Class A Share Transactions ............................ 5,113 1,647 850 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 (Decrease) in Net Assets From Share Transactions ............ (1,411) 145,763 141,422 133,929
-------- -------- -------- --------
Total Increase (Decrease) in Net Assets ............................ (2,863) 147,481 129,501 135,860
-------- -------- -------- --------
Net Assets:
Beginning of Period .................................................... 169,987 22,506 208,037 72,177
-------- -------- -------- --------
End of Period .......................................................... $167,124 $169,987 $337,538 $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.
86 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
<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 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
----------- ----------- ----------- -----------
Investment Activities From Operations:
<S> <C> <C> <C> <C>
Net Investment Income ................................................... $ 15,211 $ 10,120 $ 47,560 $ 45,028
Net Realized Gain (Loss) on Investments ................................. 693 768 (39) 2
Change in Unrealized Appreciation (Depreciation) on Investments ......... (9,244) (25) -- --
-------- -------- ----------- -----------
Net Increase in Net Assets Resulting From Operations .................... 6,660 10,863 47,521 45,030
-------- -------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................................... (14,860) (9,859) (10,806) (13,003)
Retail Class A Shares ................................................. (303) (296) (36,749) (32,025)
Retail Class B Shares ................................................. -- -- -- --
Capital Gains:
Fiduciary Shares ...................................................... -- -- -- --
Retail Class A Shares ................................................. -- -- -- --
Retail Class B Shares ................................................. -- -- -- --
-------- -------- ----------- -----------
Total Distributions ................................................. (15,163) (10,155) (47,555) (45,028)
-------- -------- ----------- ----------
Change in Net Assets ...................................................... (8,503) 708 (34) 2
-------- -------- ----------- -----------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Government Securities Fund .... -- -- -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ............................................ -- 153,900 -- --
Proceeds from Shares Issued ........................................... 63,567 33,011 756,800 678,448
Reinvestment of Distributions ......................................... 5,130 5,544 563 635
Cost of Shares Redeemed ............................................... (52,096) (96,305) (721,529) (694,817)
-------- -------- ----------- -----------
Total Fiduciary Share Transactions .................................. 16,601 96,150 35,834 (15,734)
-------- -------- ----------- -----------
Retail Class A Shares:
Proceeds from Shares Issued ........................................... 2,217 414 1,656,137 1,308,435
Reinvestment of Distributions ......................................... 295 295 36,234 31,361
Cost of Shares Redeemed ............................................... (2,884) (727) (1,442,459) (1,171,680)
-------- -------- ----------- -----------
Total Retail Class A Share Transactions ............................. (372) (18) 249,912 168,116
-------- -------- ----------- -----------
Retail Class B Shares:
Proceeds from Shares Issued ........................................... -- -- -- --
Reinvestment of Distributions ......................................... -- -- -- --
Cost of Shares Redeemed ............................................... -- -- -- --
-------- -------- ----------- -----------
Total Retail Class B Share Transactions ............................. -- -- -- --
-------- -------- ----------- -----------
Net Increase (Decrease) in Net Assets From Share Transactions ............. 16,229 96,132 285,746 152,382
-------- -------- ----------- -----------
Total Increase (Decrease) in Net Assets ............................. 7,726 96,840 285,712 152,384
-------- -------- ----------- -----------
Net Assets:
Beginning of Period ..................................................... 254,640 157,800 954,820 802,436
-------- -------- ----------- -----------
End of Period ........................................................... $262,366 $254,640 $ 1,240,532 $ 954,820
======== ======== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT DIVERSIFIED
MONEY MARKET MONEY MARKET
FUND FUND
-------------------------- --------------------------
08/01/98 08/01/97 08/01/98 08/01/97
TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
----------- ----------- ----------- -----------
Investment Activities From Operations:
<S> <C> <C> <C> <C>
Net Investment Income ................................................... $ 20,468 $ 15,070 $ 118,642 $ 104,781
Net Realized Gain (Loss) on Investments ................................. 34 7 (477) 2
Change in Unrealized Appreciation (Depreciation) on Investments ......... -- -- -- --
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting From Operations .................... 20,502 15,077 118,165 104,783
----------- ----------- ----------- -----------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................................... (14,467) (11,796) (57,819) (56,174)
Retail Class A Shares ................................................. (5,995) (3,274) (60,823) (48,607)
Retail Class B Shares ................................................. (3) -- -- --
Capital Gains:
Fiduciary Shares ...................................................... -- -- -- --
Retail Class A Shares ................................................. -- -- -- --
Retail Class B Shares ................................................. -- -- -- --
----------- ----------- ----------- -----------
Total Distributions ................................................. (20,465) (15,070) (118,642) (104,781)
----------- ----------- ----------- -----------
Change in Net Assets ...................................................... 37 7 (477) 2
----------- ----------- ----------- -----------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Government Securities Fund .... -- -- -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ............................................ -- -- -- 33,913
Proceeds from Shares Issued ........................................... 2,136,746 1,374,048 2,543,551 2,317,898
Reinvestment of Distributions ......................................... 358 256 11,220 9,864
Cost of Shares Redeemed ............................................... (2,069,085) (1,344,194) (2,410,010) (2,153,396)
----------- ----------- ----------- -----------
Total Fiduciary Share Transactions .................................. 68,019 30,110 144,761 208,279
----------- ----------- ----------- -----------
Retail Class A Shares:
Proceeds from Shares Issued ........................................... 490,708 369,119 2,638,461 1,900,298
Reinvestment of Distributions ......................................... 5,809 2,968 59,674 47,070
Cost of Shares Redeemed ............................................... (447,628) (292,826) (2,180,382) (1,622,743)
----------- ----------- ----------- -----------
Total Retail Class A Share Transactions ............................. 48,889 79,261 517,753 324,625
----------- ----------- ----------- -----------
Retail Class B Shares:
Proceeds from Shares Issued ........................................... 235 -- -- --
Reinvestment of Distributions ......................................... 2 -- -- --
Cost of Shares Redeemed ............................................... (20) -- -- --
----------- ----------- ---------- -----------
Total Retail Class B Share Transactions ............................. 217 -- -- --
----------- ----------- ---------- -----------
Net Increase (Decrease) in Net Assets From Share Transactions ............. 117,125 109,371 662,514 532,904
----------- ----------- ---------- -----------
Total Increase (Decrease) in Net Assets ............................. 117,162 109,378 662,037 532,906
----------- ----------- ---------- -----------
Net Assets:
Beginning of Period ..................................................... 405,170 295,792 2,304,421 1,771,515
----------- ----------- ---------- -----------
End of Period ........................................................... $ 522,332 $ 405,170 $2,966,458 $ 2,304,421
=========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA TAX-FREE
MONEY MARKET
FUND
--------------------------
08/01/98 08/01/97
TO 07/31/99 TO 07/31/98
----------- -----------
Investment Activities From Operations:
<S> <C> <C>
Net Investment Income ................................................... $ 14,976 $ 13,617
Net Realized Gain (Loss) on Investments ................................. 1 (2)
Change in Unrealized Appreciation (Depreciation) on Investments ......... -- --
--------- ---------
Net Increase in Net Assets Resulting From Operations .................... 14,977 13,615
--------- ---------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................................... (6,516) (6,202)
Retail Class A Shares ................................................. (8,468) (7,416)
Retail Class B Shares ................................................. -- --
Capital Gains:
Fiduciary Shares ...................................................... -- --
Retail Class A Shares ................................................. -- --
Retail Class B Shares ................................................. -- --
--------- ---------
Total Distributions ................................................. (14,984) (13,618)
--------- ---------
Change in Net Assets ...................................................... (7) (3)
--------- ---------
Share Transactions:
Fiduciary Shares:
Proceeds from the reorganization of the Government Securities Fund .... -- --
Proceeds in connection with the acquisition of
Common Trust Fund Assets ............................................ -- --
Proceeds from Shares Issued ........................................... 446,341 455,192
Reinvestment of Distributions ......................................... 10 16
Cost of Shares Redeemed ............................................... (452,148) (373,015)
--------- ---------
Total Fiduciary Share Transactions .................................. (5,797) 82,193
--------- ---------
Retail Class A Shares:
Proceeds from Shares Issued ........................................... 565,071 512,922
Reinvestment of Distributions ......................................... 8,412 7,326
Cost of Shares Redeemed ............................................... (506,038) (432,217)
--------- ---------
Total Retail Class A Share Transactions ............................. 67,445 88,031
--------- ---------
Retail Class B Shares:
Proceeds from Shares Issued ........................................... -- --
Reinvestment of Distributions ......................................... -- --
Cost of Shares Redeemed ............................................... -- --
--------- ---------
Total Retail Class B Share Transactions ............................. -- --
--------- ---------
Net Increase (Decrease) in Net Assets From Share Transactions ............. 61,648 170,224
--------- ---------
Total Increase (Decrease) in Net Assets ............................. 61,641 170,221
--------- ---------
Net Assets:
Beginning of Period ..................................................... 546,747 376,526
--------- ---------
End of Period ........................................................... $ 608,388 $ 546,747
========= =========
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- ---------------------------------------------------------------------------- 87
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ----------------------------- ---------------------------
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------
GROWTH FUND
- -----------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 $16.92 (0.018) 2.759 -- (1.271) $18.39 17.24%
1998 17.36 0.017 3.108 (0.033) (3.532) 16.92 22.59%
1997 12.58 0.057 5.773 (0.053) (0.996) 17.36 48.54%
1996 11.87 0.120 1.350 (0.120) (0.640) 12.58 12.72%
1995 9.76 0.150 2.260 (0.150) (0.150) 11.87 25.23%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $16.93 (0.055) 2.746 -- (1.271) $18.35 16.92%
1998 17.39 (0.018) 3.100 (0.015) (3.532) 16.93 22.26%
1997 12.60 0.049 5.784 (0.048) (0.996) 17.39 48.49%
1996 11.87 0.110 1.380 (0.120) (0.640) 12.60 12.88%
1995 9.77 0.150 2.250 (0.150) (0.150) 11.87 25.10%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $16.85 (0.103) 2.674 -- (1.271) $18.15 16.26%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $14.76 (0.035) 2.125 -- -- $16.85 28.71%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------
- -----------
GROWTH FUND
- -----------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 $738,548 0.90% 1.09% (0.14)% (0.33)% 52%
1998 499,060 0.91% 1.08% 0.08% (0.09)% 67%
1997 297,879 0.92% 1.24% 0.39% 0.07% 118%
1996 41,495 0.93% 1.67% 0.98% 0.23% 79%
1995 25,096 0.79% 1.92% 1.40% 0.26% 68%
RETAIL CLASS
FOR THE YEARS ENDED JULY 31,:
1999 $ 24,579 1.14% 1.34% (0.38)% (0.58)% 52%
1998 17,173 1.16% 1.34% (0.17)% (0.35)% 67%
1997 7,816 1.04% 1.49% 0.28% (0.18)% 118%
1996 2,843 0.93% 1.91% 0.96% (0.02)% 79%
1995 1,218 0.84% 2.11% 1.17% (0.10)% 68%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $ 11,111 1.79% 1.84% (1.04)% (1.09)% 52%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $ 1,948 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.
88 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ---------------------------------------------------------------------------------------------------------------------------------
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $27.31 0.315 3.117 (0.318) (0.866) $29.56 13.08%
1998 25.48 0.332 2.003 (0.341) (0.164) 27.31 9.22%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $21.57 0.132 3.955 (0.176) -- $25.48 19.06%
FOR THE YEARS ENDED JANUARY 31,:
1997 $18.05 0.436 4.371 (0.438) (0.848) $21.57 27.33%
1996 13.40 0.331 5.063 (0.337) (0.408) 18.05 40.88%
1995 14.27 0.318 (0.817) (0.317) (0.054) 13.40 (3.48)%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $27.31 0.245 3.119 (0.255) (0.866) $29.55 12.79%
1998 25.48 0.262 2.007 (0.275) (0.164) 27.31 8.96%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $21.57 0.106 3.953 (0.147) -- $25.48 18.90%
FOR THE YEARS ENDED JANUARY 31,:
1997 $18.05 0.389 4.368 (0.393) (0.848) $21.57 27.04%
1996 13.40 0.320 5.060 (0.323) (0.408) 18.05 40.77%
1995 14.27 0.321 (0.820) (0.317) (0.054) 13.40 (3.48)%
RETAIL CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $27.28 0.024 3.113 (0.088) (0.866) $29.46 11.89%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $26.82 0.046 0.479 (0.064) -- $27.28 3.94%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $843,316 0.81% 1.09% 1.15% 0.87% 9%
1998 863,627 0.81% 1.08% 1.25% 0.98% 7%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $463,434 0.78%* 0.94%* 1.65%* 1.49%* 1%
FOR THE YEARS ENDED JANUARY 31,:
1997 $317,482 0.79% 0.79% 2.26% 2.26% 9%
1996 222,065 0.80% 0.80% 2.07% 2.07% 20%
1995 150,138 0.81% 0.81% 2.36% 2.36% 6%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 36,495 1.06% 1.34% 0.90% 0.62% 9%
1998 35,325 1.06% 1.33% 0.99% 0.72% 7%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 20,750 1.03%* 1.25%* 1.40%* 1.17%* 1%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 15,963 1.04% 1.19% 2.01% 1.86% 9%
1996 11,801 0.89% 1.20% 2.00% 1.69% 20%
1995 9,777 0.81% 1.21% 2.37% 1.97% 6%
RETAIL CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 6,506 1.81% 1.84% 0.14% 0.11% 9%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $ 5,202 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.
- ---------------------------------------------------------------------------- 89
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<PAGE>
[Logo omitted]
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- ---------------------------
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ----------------------------------------------------------------------------------------------------------------------------------
- ------------------
INCOME EQUITY FUND
- ------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $17.92 0.247 2.072 (0.249) (2.206) $17.78 14.23%
1998 18.21 0.305 1.486 (0.302) (1.776) 17.92 10.79%
1997 14.27 0.372 5.019 (0.368) (1.083) 18.21 40.13%
1996 13.00 0.420 1.930 (0.420) (0.660) 14.27 18.25%
1995 11.92 0.440 1.500 (0.440) (0.420) 13.00 17.26%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $17.95 0.189 2.087 (0.208) (2.206) $17.81 13.94%
1998 18.24 0.262 1.486 (0.258) (1.776) 17.95 10.50%
1997 14.29 0.363 5.028 (0.358) (1.083) 18.24 39.97%
1996 13.03 0.420 1.920 (0.420) (0.660) 14.29 18.21%
1995 11.92 0.420 1.550 (0.440) (0.420) 13.03 17.52%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $17.90 0.089 2.071 (0.115) (2.206) $17.74 13.25%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $16.88 0.057 1.034 (0.072) -- $17.90 13.10%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------
- ------------------
INCOME EQUITY FUND
- ------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 $628,839 0.88% 1.09% 1.43% 1.22% 71%
1998 670,298 0.92% 1.09% 1.63% 1.45% 69%
1997 352,725 0.99% 1.21% 2.39% 2.17% 46%
1996 262,660 1.03% 1.27% 2.95% 2.71% 42%
1995 221,325 1.06% 1.30% 3.59% 3.34% 37%
RETAIL CLASS
FOR THE YEARS ENDED JULY 31,:
1999 $ 22,329 1.13% 1.34% 1.17% 0.96% 71%
1998 23,024 1.17% 1.34% 1.39% 1.22% 69%
1997 14,152 1.06% 1.46% 2.32% 1.92% 46%
1996 10,143 1.03% 1.51% 2.89% 2.41% 42%
1995 3,881 1.06% 1.55% 3.06% 2.57% 37%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $ 4,543 1.78% 1.84% 0.50% 0.44% 71%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $ 1,816 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 FEBRUARY 2, 1998.
The accompanying notes are an integral part of the financial statements.
90 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- --------------------------------------------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $16.73 0.428 1.172 (0.436) (0.684) $17.21 9.96%
1998 16.46 0.446 0.724 (0.458) (0.442) 16.73 7.31%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $15.04 0.228 1.712 (0.228) (0.290) $16.46 13.35%
FOR THE YEARS ENDED JANUARY 31,:
1997 $13.92 0.422 1.699 (0.409) (0.595) $15.04 16.30%
1996 11.45 0.415 2.831 (0.417) (0.362) 13.92 28.93%
1995 12.21 0.390 (0.756) (0.391) (0.003) 11.45 (2.95)%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $16.73 0.383 1.167 (0.396) (0.684) $17.20 9.64%
1998 16.45 0.402 0.736 (0.416) (0.442) 16.73 7.12%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $15.03 0.209 1.712 (0.209) (0.290) $16.45 13.22%
FOR THE YEARS ENDED JANUARY 31,:
1997 $13.91 0.464 1.706 (0.455) (0.595) $15.03 16.04%
1996 11.45 0.406 2.825 (0.406) (0.362) 13.91 28.73%
1995 12.21 0.393 (0.758) (0.392) (0.003) 11.45 (2.95)%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $16.73 0.278 1.161 (0.301) (0.684) $17.18 8.91%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $16.55 0.155 0.197 (0.175) -- $16.73 4.32%*
- --------------------
EMERGING GROWTH FUND
- --------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $12.79 (0.012) 0.499 (0.006) (1.791) $11.48 6.83%
1998 14.39 0.006 0.432 (0.008) (2.033) 12.79 3.37%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $13.50 0.014 0.888 (0.012) -- $14.39 6.70%
FOR THE YEARS ENDED JANUARY 31,:
1997 $11.94 0.008 2.556 (0.009) (0.991) $13.50 21.79%
1996 9.42 0.026 2.807 (0.033) (0.277) 11.94 30.24%
1995 (2) 10.00 0.086 (0.535) (0.080) (0.051) 9.42 (4.48)%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $451,411 0.92% 1.09% 2.60% 2.43% 34%
1998 448,783 0.91% 1.08% 2.67% 2.50% 22%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $400,442 0.83%* 0.98%* 2.99%* 2.85%* 10%
FOR THE YEARS ENDED JANUARY 31,:
1997 $307,531 0.79% 0.79% 3.48% 3.48% 27%
1996 233,878 0.80% 0.80% 3.20% 3.20% 26%
1995 167,434 0.80% 0.80% 3.41% 3.41% 48%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 11,236 1.17% 1.34% 2.35% 2.18% 34%
1998 10,629 1.16% 1.33% 2.42% 2.24% 22%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 9,214 1.07%* 1.30%* 2.75%* 2.53%* 10%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 8,833 1.04% 1.19% 3.22% 3.07% 27%
1996 8,422 0.89% 1.20% 3.12% 2.81% 26%
1995 7,128 0.79% 1.19% 3.41% 3.01% 48%
RETAIL CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 3,594 1.82% 1.84% 1.68% 1.66% 34%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $ 967 1.80%* 1.83%* 1.77%* 1.74%* 22%
- ---------------
EMERGING GROWTH
- ---------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 57,386 1.03% 1.30% (0.11)% (0.38)% 201%
1998 68,579 1.03% 1.37% 0.46% (0.73)% 289%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 66,336 1.01%* 1.16%* 0.26%* 0.10%* 116%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 57,156 1.04% 1.04% 0.06% 0.06% 134%
1996 41,770 1.05% 1.05% 0.22% 0.22% 131%
1995 (2) 23,928 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.
- ---------------------------------------------------------------------------- 91
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- ----------------------------------------------------------------------------------------------------------------------------------
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
FOR THE PERIOD ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 (1) $10.00 0.018 2.536 (0.004) -- $12.55 25.54%
RETAIL CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
1999 (1) $10.00 (0.003) 2.526 (0.003) -- $12.52 25.24%
RETAIL CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
1999 (1) $10.00 (0.041) 2.501 -- -- $12.46 24.60%
- -------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $37.32 0.210 1.982 (0.132) -- $39.38 5.90%
1998 38.69 0.767 (1.178) (0.592) (0.367) 37.32 (0.82)%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $34.52 0.212 3.958 -- -- $38.69 12.08%
FOR THE YEARS ENDED JANUARY 31,:
1997 $37.49 0.220 (0.965) (0.812) (1.416) $34.52 (2.14)%
1996 (2) 33.51 0.447 4.084 (0.446) (0.105) 37.49 13.56%
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $10.04 0.438 (0.086) (0.436) -- $ 9.96 3.54%
1998 10.01 0.457 0.008 (0.435) -- 10.04 4.75%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 9.76 0.206 0.256 (0.215) -- $10.01 4.84%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 9.85 0.430 (0.078) (0.442) -- $ 9.76 3.72%
1996 8.95 0.518 0.873 (0.487) -- 9.85 15.83%
1995 10.04 0.460 (1.098) (0.452) -- 8.95 (6.33)%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $10.01 0.429 (0.078) (0.436) -- $ 9.93 3.55%
1998 9.99 0.423 0.032 (0.435) -- 10.01 4.66%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 9.74 0.222 0.240 (0.215) -- $ 9.99 4.85%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 9.84 0.458 (0.112) (0.442) -- $ 9.74 3.62%
1996 8.94 0.470 0.918 (0.487) -- 9.84 15.84%
1995 10.03 0.439 (1.077) (0.452) -- 8.94 (6.33)%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
FOR THE PERIOD ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 (1) $ 80,423 1.54% 1.71% 0.28% 0.11% 74%
RETAIL CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
1999 (1) $ 912 1.77% 1.94% (0.11)% (0.28)% 74%
RETAIL CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
1999 (1) $ 1,012 2.39% 2.42% (1.40)% (1.43)% 74%
- -------------------------
INTERNATIONAL EQUITY FUND
- -------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $108,537 1.36% 1.63% 0.42% 0.15% 87%
1998 91,970 1.34% 1.61% 0.71% 0.44% 72%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 52,467 1.22%* 1.41%* 1.16%* 0.97%* 18%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 46,373 1.18% 1.28% 0.60% 0.50% 29%
1996 (2) 44,188 1.16% 1.36% 1.31% 1.11% 21%
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $149,365 0.45% 1.02% 4.29% 3.72% 11%
1998 157,062 0.42% 1.04% 4.46% 3.84% 23%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 11,292 0.21%* 0.91%* 4.56%* 3.85%* 5%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 7,435 0.20% 0.85% 4.69% 4.04% 6%
1996 4,196 0.24% 0.71% 4.97% 4.50% 30%
1995 12,793 0.50% 0.72% 4.84% 4.62% 22%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 17,759 0.45% 1.27% 4.30% 3.48% 11%
1998 12,925 0.31% 1.29% 4.37% 3.39% 23%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 11,214 0.21%* 1.22%* 4.55%* 3.54%* 5%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 5,791 0.20% 1.25% 4.69% 3.64% 6%
1996 4,266 0.23% 1.12% 4.93% 4.04% 30%
1995 4,882 0.50% 1.12% 4.92% 4.30% 22%
</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.
The accompanying notes are an integral part of the financial statements.
92 ----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL**
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- -----------------------------------------------------------------------------------------------------------------------------------
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 $10.81 0.605 (0.426) (0.600) -- $10.39 1.60%
1998 10.67 0.615 0.150 (0.627) -- 10.81 7.41%
1997 10.23 0.628 0.421 (0.609) -- 10.67 10.59%
1996 10.38 0.660 (0.160) (0.650) -- 10.23 4.81%
1995 10.11 0.640 0.270 (0.640) -- 10.38 9.43%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $10.73 0.610 (0.440) (0.600) -- $10.30 1.52%
1998 10.59 0.605 0.162 (0.627) -- 10.73 7.47%
1997 10.15 0.642 0.403 (0.609) -- 10.59 10.68%
1996 10.29 0.690 (0.180) (0.650) -- 10.15 4.95%
1995 10.04 0.660 0.230 (0.640) -- 10.29 9.29%
- ---------------------------
INTERMEDIATE-TERM BOND FUND
- ---------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $10.32 0.591 (0.319) (0.590) -- $10.00 2.60%
1998 10.30 0.613 0.021 (0.616) -- 10.32 6.37%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $10.16 0.309 0.138 (0.310) -- $10.30 4.54%
FOR THE YEARS ENDED JANUARY 31,:
1997 $10.62 0.599 (0.460) (0.595) -- $10.16 1.43%
1996 9.67 0.609 0.951 (0.609) -- 10.62 16.58%
1995 10.72 0.589 (1.034) (0.590) (0.015) 9.67 (4.11)%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $10.31 0.598 (0.325) (0.590) -- $ 9.99 2.60%
1998 10.29 0.609 0.031 (0.616) -- 10.31 6.38%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $10.16 0.309 0.128 (0.310) -- $10.29 4.44%
FOR THE YEARS ENDED JANUARY 31,:
1997 $10.61 0.602 (0.462) (0.595) -- $10.16 1.54%
1996 9.67 0.609 0.940 (0.609) -- 10.61 16.48%
1995 10.72 0.589 (1.034) (0.590) (0.015) 9.67 (4.11)%
</TABLE>
<TABLE>
<CAPTION>
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS PORTFOLIO
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING TURNOVER
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS RATE
- --------------------------------------------------------------------------------------------------------------------
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C>
1999 $334,900 0.75% 1.01% 5.69% 5.43% 39%
1998 206,125 0.75% 1.02% 5.86% 5.60% 16%
1997 71,571 0.85% 1.42% 6.11% 5.54% 14%
1996 60,374 0.89% 1.61% 6.10% 5.38% 21%
1995 59,758 0.92% 1.64% 6.35% 5.62% 36%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 2,638 0.75% 1.26% 5.67% 5.16% 39%
1998 1,912 0.75% 1.26% 5.85% 5.33% 16%
1997 606 0.85% 1.68% 6.10% 5.27% 14%
1996 1,157 0.89% 1.85% 6.10% 5.14% 21%
1995 558 0.92% 1.89% 6.29% 5.32% 36%
- ---------------------------
INTERMEDIATE-TERM BOND FUND
- ---------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $257,775 0.75% 0.99% 5.73% 5.49% 19%
1998 249,520 0.75% 0.99% 5.86% 5.61% 51%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $152,676 0.69%* 0.82%* 6.17%* 6.04%* 58%
FOR THE YEARS ENDED JANUARY 31,:
1997 $150,411 0.67% 0.68% 5.93% 5.92% 106%
1996 132,942 0.68% 0.68% 5.97% 5.97% 147%
1995 109,848 0.71% 0.71% 5.89% 5.89% 95%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $ 4,591 0.75% 1.24% 5.72% 5.23% 19%
1998 5,120 0.75% 1.24% 5.83% 5.34% 51%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 5,124 0.69%* 1.14%* 6.17%* 5.71%* 58%
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 5,213 0.67% 1.08% 5.91% 5.50% 106%
1996 6,417 0.68% 1.09% 5.99% 5.58% 147%
1995 6,645 0.71% 1.11% 5.87% 5.47% 95%
</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.
- ---------------------------------------------------------------------------- 93
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL END TOTAL
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS OF PERIOD RETURN
- -----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C>
1999 $1.00 0.043 -- (0.043) -- $1.00 4.43%
1998 1.00 0.049 -- (0.049) -- 1.00 5.02%
1997 1.00 0.046 -- (0.046) -- 1.00 4.65%
1996 1.00 0.046 -- (0.046) -- 1.00 4.74%
1995 1.00 0.046 -- (0.046) -- 1.00 4.69%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.041 -- (0.041) -- $1.00 4.17%
1998 1.00 0.047 -- (0.047) -- 1.00 4.75%
1997 1.00 0.045 -- (0.045) -- 1.00 4.58%
1996 1.00 0.046 -- (0.046) -- 1.00 4.74%
1995 1.00 0.046 -- (0.046) -- 1.00 4.69%
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.046 -- (0.046) -- $1.00 4.64%
1998 1.00 0.050 -- (0.050) -- 1.00 5.16%
1997 1.00 0.047 -- (0.047) -- 1.00 4.78%
1996 1.00 0.048 -- (0.048) -- 1.00 4.88%
1995 1.00 0.048 -- (0.048) -- 1.00 4.87%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.043 -- (0.043) -- $1.00 4.39%
1998 1.00 0.048 -- (0.048) -- 1.00 4.90%
1997 1.00 0.046 -- (0.046) -- 1.00 4.70%
1996 1.00 0.048 -- (0.048) -- 1.00 4.86%
1995 1.00 0.048 -- (0.048) -- 1.00 4.86%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $1.00 0.036 -- (0.036) -- $1.00 3.62%
FOR THE PERIOD ENDED JULY 31,:
1998 (1) $1.00 0.021 -- (0.021) -- $1.00 4.25%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS
OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING
(000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS
- ----------------------------------------------------------------------------------------------------
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C>
1999 $263,561 0.47% 0.79% 4.35% 4.03%
1998 227,733 0.46% 0.78% 4.91% 4.59%
1997 243,464 0.64% 0.92% 4.61% 4.33%
1996 173,340 0.74% 0.97% 4.64% 4.41%
1995 190,604 0.73% 0.97% 4.60% 4.36%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $976,971 0.72% 1.04% 4.07% 3.75%
1998 727,087 0.71% 1.03% 4.65% 4.33%
1997 558,972 0.72% 1.10% 4.55% 4.17%
1996 100,623 0.74% 1.23% 4.64% 4.15%
1995 88,660 0.73% 1.22% 4.68% 4.19%
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $351,140 0.52% 0.79% 4.52% 4.25%
1998 283,096 0.51% 0.79% 5.05% 4.77%
1997 252,995 0.70% 0.95% 4.69% 4.44%
1996 151,483 0.77% 1.00% 4.76% 4.53%
1995 159,747 0.78% 1.02% 4.76% 4.52%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $170,974 0.77% 1.04% 4.28% 4.01%
1998 122,074 0.76% 1.04% 4.80% 4.52%
1997 42,797 0.78% 1.22% 4.60% 4.16%
1996 75,714 0.79% 1.26% 4.77% 4.30%
1995 48,474 0.78% 1.27% 4.82% 4.33%
RETAIL CLASS B SHARES
FOR THE YEAR ENDED JULY 31,:
1999 $ 218 1.52% 1.54% 3.46% 3.44%
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.
94 ----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS
NET ------------------------------- --------------------------- NET
ASSET NET REALIZED ASSET
VALUE, NET AND UNREALIZED NET CONTRIBUTION VALUE,
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT CAPITAL OF END
OF PERIOD INCOME ON INVESTMENTS INCOME GAINS CAPITAL OF PERIOD
- ------------------------------------------------------------------------------------------------------------------------------------
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C>
1999 $1.00 0.047 -- (0.047) -- -- $1.00
1998 1.00 0.051 -- (0.051) -- -- 1.00
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.025 -- (0.025) -- -- $1.00
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.049 -- (0.049) -- -- $1.00
1996 1.00 0.054 -- (0.054) -- -- 1.00
1995 1.00 0.039 (0.001) (0.039) -- 0.001 1.00
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.044 -- (0.044) -- -- $1.00
1998 1.00 0.049 -- (0.049) -- -- 1.00
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.024 -- (0.024) -- -- $1.00
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.047 -- (0.047) -- -- $1.00
1996 1.00 0.052 -- (0.052) -- -- 1.00
1995 1.00 0.037 -- (0.037) -- -- 1.00
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.026 -- (0.026) -- -- $1.00
1998 1.00 0.031 -- (0.031) -- -- 1.00
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.016 -- (0.016) -- -- $1.00
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.031 -- (0.031) -- -- $1.00
1996 1.00 0.034 -- (0.034) -- -- 1.00
1995 1.00 0.026 -- (0.026) -- -- 1.00
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 0.023 -- (0.023) -- -- $1.00
1998 1.00 0.028 -- (0.028) -- -- 1.00
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.015 -- (0.015) -- -- $1.00
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.027 -- (0.027) -- -- $1.00
1996 1.00 0.031 -- (0.031) -- -- 1.00
1995 1.00 0.023 -- (0.023) -- -- 1.00
</TABLE>
<TABLE>
<CAPTION>
RATIO NET INVESTMENT
NET OF EXPENSES RATIO OF INCOME TO
ASSETS, RATIO TO AVERAGE NET INVESTMENT AVERAGE
END OF EXPENSES NET ASSETS INCOME NET ASSETS
TOTAL OF PERIOD TO AVERAGE EXCLUDING TO AVERAGE EXCLUDING
RETURN (000) NET ASSETS FEE WAIVERS NET ASSETS FEE WAIVERS
- -------------------------------------------------------------------------------------------------------------------------- --------
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
<S> <C>
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 4.78% $1,324,659 0.52% 0.79% 4.68% 4.41%
1998 1.00 5.27% 1,180,141 0.50% 0.77% 5.15% 4.88%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 5.11%* $ 971,858 0.48%* 0.64%* 5.07%* 4.90%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 5.03% $ 523,571 0.49% 0.49% 4.93% 4.93%
1996 1.00 5.57% 503,080 0.50% 0.50% 5.43% 5.43%
1995 1.00 3.99% 536,754 0.50% 0.50% 3.93% 3.93%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 4.52% $1,641,799 0.77% 1.04% 4.42% 4.15%
1998 1.00 5.01% 1,124,280 0.75% 1.02% 4.90% 4.63%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 4.86%* $ 799,657 0.72%* 0.95%* 4.82%* 4.59%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 4.78% $ 576,566 0.73% 0.88% 4.69% 4.54%
1996 1.00 5.31% 259,608 0.75% 0.90% 5.16% 5.01%
1995 1.00 3.78% 111,267 0.70% 0.90% 3.79% 3.59%
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 2.59% $ 235,687 0.33% 0.79% 2.55% 2.09%
1998 1.00 3.14% 241,487 0.31% 0.78% 3.07% 2.60%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 3.28%* $ 159,297 0.28%* 0.69%* 3.36%* 2.96%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 3.12% $ 36,207 0.27% 0.49% 3.08% 2.86%
1996 1.00 3.48% 42,923 0.28% 0.49% 3.43% 3.22%
1995 1.00 2.67% 52,050 0.29% 0.50% 2.66% 2.45%
RETAIL CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
1999 $1.00 2.34% $ 372,701 0.58% 1.04% 2.30% 1.84%
1998 1.00 2.89% 305,260 0.56% 1.03% 2.84% 2.37%
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 2.99%* $ 217,229 0.55%* 0.97%* 3.02%* 2.59%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 2.78% $ 150,688 0.60% 0.88% 2.75% 2.47%
1996 1.00 3.14% 81,177 0.61% 0.88% 3.09% 2.82%
1995 1.00 2.33% 49,494 0.62% 0.90% 2.33% 2.05%
</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.
- ---------------------------------------------------------------------------- 95
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<PAGE>
[Logo omitted]
NOTES TO FINANCIAL STATEMENTS
JULY 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, (collectively 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
(collectively 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.
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 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 CURRENT 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.
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
96 -----------------------------------------------------------------------------
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<PAGE>
- --------------------------------------------------------------------------------
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 Class. It is computed by dividing the assets of each
Class, less its liabilities, by the number of outstanding shares of each Class.
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 purchased call) or falls (in case of a purchased 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-Money Market Funds except the International Equity and the Small Cap Value
Funds declare and make distributions from net investment income monthly. The
International Equity and the Small Cap Value Funds declare and make
distributions from net investment income periodically. Any net realized capital
gains will be distributed at least annually for all Funds.
- ---------------------------------------------------------------------------- 97
WWW.HIGHMARK-FUNDS.COM
<PAGE>
[Logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1999
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, 1999, 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 July 31, 1999 the
Administrator voluntarily agreed to waive a portion of its fee for all 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 July 31, 1999, HighMark Capital Management, Inc. received
sub-administration fees from the Funds in the amount of $4,270,000.
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., Bank of Tokyo-Mitsubishi Trust Company, 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 0.25% of each Fund's average daily net assets. The service
provider 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 July 31, 1999,
Union Bank of California, N.A. received shareholder servicing fees from the
Funds in the amount of approximately $1,974,000.
98 ----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
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. (the "Adviser") a subsidiary of
UnionBanCal Corporation, are parties to an Advisory Agreement. For its services,
the Adviser 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 twelve months ended July 31, 1999 the Adviser voluntarily waived
a portion of its fee in certain funds 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 Adviser 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 Adviser 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 Adviser 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.
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 ....................................... $457,678 $326,309
Value Momentum ............................... 77,408 155,690
Income Equity ................................ 465,777 578,362
Balanced ..................................... 153,353 179,618
Emerging Growth .............................. 108,447 122,461
Small Cap Value .............................. 111,556 52,518
International Equity ......................... 85,320 80,428
California Intermediate
Tax-Free Bond ............................... 18,502 18,578
Bond ......................................... 239,895 106,672
Intermediate-Term Bond ....................... 63,680 48,656
- ---------------------------------------------------------------------------- 99
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<PAGE>
[Logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED
JULY 31, 1999
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
July 31, 1999 for each portfolio was as follows:
APPRECIATION DEPRECIATION TOTAL
(000'S) (000'S) (000'S)
------------ ------------ ---------
Growth .............. $226,798 $(19,387) $207,411
Value Momentum ...... 420,360 (25,238) 395,122
Income Equity ....... 109,694 (19,881) 89,813
Balanced ............ 113,614 (12,439) 101,175
Emerging Growth ..... 12,066 (3,750) 8,316
Small Cap Value ..... 15,644 (4,022) 11,622
International Equity 15,524 (2,126) 13,398
California Intermediate
Tax-Free Bond ..... 4,886 (484) 4,402
Bond 2,983 (9,622) (6,639)
Intermediate-Term Bond 1,474 (4,599) (3,125)
The Funds have capital loss carryforwards at July 31, 1999, to the extent
provided in the regulations for federal income tax as follows:
<TABLE>
<CAPTION>
EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES
2001 2002 2003 2004 2005 2006 2007
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Emerging Growth -- -- -- -- -- -- 3,141,788
Cal. Int. Tax-Free Bond -- -- -- 254,972 10,099 -- --
Bond -- 137,375 -- 800,387 430,407 -- --
Int.-Term Bond -- -- 610,202 -- 1,963,907 -- --
U.S. Government
Money Market 115,159 -- -- -- -- -- --
Diversified
Money Market 300,452 29,246 1,078,029 13,202 -- -- 476,441
Cal. Tax-Free
Money Market -- 24,049 24,115 -- -- 15,746 --
</TABLE>
The Emerging Growth and the Small Cap Value Funds had post 10/31 loss deferrals
of $1,634,651 and $5,616, respectively that can be used to offset future capital
gains.
<PAGE>
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.
100 ---------------------------------------------------------------------------
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<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 year ended July 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 ..................................... -- $ --
========== ==========
VALUE MOMENTUM
----------------------------
NUMBER OF
WRITTEN OPTION TRANSACTION CONTRACTS PREMIUM
- ------------------------------- ---------- -----------
Option written and outstanding at
beginning of period ............................... -- $ --
Call option written during period ................. 1,590 172,468
Call option exercised during period ............... (100) (21,099)
Call option expired during period ................. (465) (55,036)
Call option closed during period .................. (215) (49,098)
---------- ----------
Option written and outstanding at
end of period ..................................... 810 $ 47,235
========== ==========
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<PAGE>
[Logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1999
9. SHARES ISSUED AND REDEEMED (000):
Transactions in Fund Shares were as follows:
<TABLE>
<CAPTION>
GROWTH VALUE MOMENTUM
FUND FUND
--------------------------- --------------------------
08/01/98 08/01/97 08/01/98 08/01/97
TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
--------------------------- --------------------------
Fiduciary Shares:
<S> <C> <C> <C> <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 .............................................................. 10,481 7,071 6,116 7,388
Issued in Lieu of Cash Distributions ................................ 2,322 3,216 1,153 315
Redeemed ............................................................ (9,701) (4,643) (10,360) (4,589)
------ ------ ------- ------
Total Fiduciary Share Transactions ................................ 10,671 12,333 (3,091) 13,433
------ ------ ------- ------
Retail A Shares:
Issued .............................................................. 4,787 543 2,188 600
Issued in Lieu of Cash Distributions ................................ 65 127 49 16
Redeemed ............................................................ (4,527) (105) (2,296) (136)
------ ------ ------- ------
Total Retail A Share Transactions ................................. 325 565 (59) 480
------ ------ ------- ------
Retail B Shares:
Issued .............................................................. 535 118 75 194
Issued in Lieu of Cash Distributions ................................ 19 -- 7 --
Redeemed ............................................................ (57) (2) (52) (4)
------ ------ ------- ------
Total Retail B Share Transactions ................................. 497 116 30 190
------ ------ ------- ------
Net Increase (Decrease) in Share Transactions ....................... 11,493 13,014 (3,120) 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 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
--------------------------- --------------------------
Shares Issued and Redeemed:
<S> <C> <C> <C> <C>
Fiduciary Shares:
Issued from the reorganization of the Government Securities Fund .... -- -- 10,341 --
Issued in connection with the acquisition of
Common Trust Fund Assets .......................................... -- 13,818 -- 9,361
Issued .............................................................. 2,101 2,217 7,534 5,348
Issued in Lieu of Cash Distributions ................................ 39 30 813 357
Redeemed ............................................................ (2,774) (1,557) (5,524) (2,711)
------ ------ ------- ------
Total Fiduciary Share Transactions ................................ (634) 14,508 13,164 12,355
------ ------ ------- ------
Retail A Shares:
Issued .............................................................. 952 860 238 124
Issued in Lieu of Cash Distributions 47 43 10 4
Redeemed ............................................................ (501) (735) (170) (7)
------ ------ ------- ------
Total Retail A Share Transactions ................................. 498 168 78 (121)
------ ------ ------- ------
Retail B Shares:
Issued .............................................................. -- -- -- --
Issued in Lieu of Cash Distributions ................................ -- -- -- --
Redeemed ............................................................ -- -- -- --
------ ------ ------- ------
Total Retail B Share Transactions ................................. -- -- -- --
------ ------ ------- ------
Net Increase (Decrease) in Share Transactions ....................... (136) 14,676 13,242 12,476
====== ====== ======= ======
</TABLE>
102 ---------------------------------------------------------------------------
1.800.433.6884
<PAGE>
<TABLE>
<CAPTION>
<S>
INCOME EQUITY BALANCED EMERGING GROWTH SMALL CAP VALUE INTERNATIONAL EQUITY
FUND FUND FUND FUND 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 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/99 TO 07/31/98
- ------------------------ ----------------------- ----------------------- ---------------------- -------------------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
-- -- -- -- -- -- -- -- --
-- 18,743 -- 881 -- -- -- -- --
3,476 3,942 4,210 5,729 1,734 2,362 7,104 747 1,372
4,694 2,054 1,728 1,346 1,000 760 -- 3 20
(10,215) (6,700) (6,523) (5,471) (3,097) (2,369) (693) (458) (284)
------- ------ ------ ------ ------ ------ ----- ---- ------
(2,045) 18,039 (585) 2,485 (363) 753 6,411 292 1,108
------- ------ ------ ------ ------ ------ ----- ---- ------
557 527 160 151 -- -- 74 -- --
159 115 41 29 -- -- -- -- --
(745) (135) (183) (105) -- -- (3) -- --
------- ------ ------ ------ ------ ------ ----- ---- ------
(29) 507 18 75 -- -- 71 -- --
------- ------ ------ ------ ------ ------ ----- ---- ------
165 103 170 59 -- -- 88 -- --
19 -- 6 -- -- -- -- -- --
(29) (2) (25) (1) -- -- (8) -- --
------- ------ ------ ------ ------ ------ ----- ---- ------
155 101 151 58 -- -- 80 -- --
------- ------ ------ ------ ------ ------ ----- ---- ------
(1,919) 18,647 (416) 2,618 (363) 753 6,562 292 1,108
======= ====== ====== ====== ====== ====== ===== ==== ======
</TABLE>
<TABLE>
<CAPTION>
<S>
INTERMEDIATE- 100% U.S. TREASURY DIVERSIFIED CALIFORNIA TAX-FREE
TERM BOND MONEY MARKET U.S. GOVERNMENT MONEY MARKET MONEY MARKET
FUND FUND MONEY MARKET 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 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98 TO 07/31/99 TO 07/31/98
- ----------------------- ----------------------- ----------------------- ----------------------- -----------------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-- -- -- -- -- -- -- -- -- --
-- 14,956 -- -- -- -- -- 33,913 -- --
6,129 3,217 756,800 678,448 2,136,746 1,374,048 2,543,551 2,317,898 446,341 455,192
498 540 563 635 358 256 11,220 9,864 10 16
(5,033) (9,352) (721,529) (694,817) (2,069,085) (1,344,194) (2,410,010) (2,153,396) (452,148) (373,015)
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
1,594 9,361 35,834 (15,734) 68,019 30,110 144,761 208,279 (5,797) 82,193
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
213 42 1,656,137 1,308,434 490,708 369,119 2,638,461 1,900,298 565,071 512,922
29 29 36,234 31,361 5,809 2,968 59,674 47,070 8,412 7,326
(279) (70) (1,442,459) (1,171,680) (447,628) (292,826) (2,180,382) (1,622,743) (506,038) (432,217)
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
(37) 1 249,912 168,115 48,889 (79,261) 517,753 324,625 67,445 88,031
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
-- -- -- -- 235 -- -- -- -- --
-- -- -- -- 2 -- -- -- -- --
-- -- -- -- (20) -- -- -- -- --
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
-- -- -- -- 217 -- -- -- -- --
------ ------ --------- --------- --------- --------- --------- --------- ------- -------
1,557 9,362 285,746 152,381 117,125 109,371 662,514 532,904 61,648 170,224
====== ====== ========= ========= ========= ========= ========= ========= ======= =======
</TABLE>
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<PAGE>
[Logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
JULY 31, 1999
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:
HIGHMARK BLUE CHIP GROWTH FUND
- ------------------------------
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 0.00% of shares outstanding
HIGHMARK GOVERNMENT SECURITIES FUND
- -----------------------------------
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
12. SYNTHETIC RETURN (UNAUDITED)
The synthetic returns calculated represent the joining of the
NAV, income, capital gains and returns history of the oldest
class of the fund to the NAV, income, capital gains and
return history of all subsequent classes of the fund prior to
their inception date.
104 ---------------------------------------------------------------------------
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<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
HIGHMARK FUNDS:
We have audited the accompanying statements of net assets of HighMark Funds (the
"Funds"), including Growth Fund, Value Momentum Fund, Income Equity Fund,
Balanced Fund, Emerging Growth Fund, International Equity Fund, California
Intermediate Tax-Free Bond Fund, Bond Fund, Intermediate-Term Bond Fund, U.S.
Government Money Market Fund, Diversified Money Market Fund, and California
Tax-Free Money Market Fund as of July 31, 1999, the statements of assets and
liabilities, including the schedules of investments, of Small Cap Value Fund and
100% U.S. Treasury Money Market Fund as of July 31, 1999, and the related
statements of operations for the periods then ended, statements of changes in
net assets for the periods ended July 31, 1999 and July 31, 1998, and financial
highlights for the periods ended July 31, 1999, July 31, 1998, July 31, 1997,
and July 31, 1996. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the fiscal periods ended July 31, 1995 were
audited by other auditors whose report, dated September 22, 1995, expressed an
unqualified opinion on those statements. The financial highlights for the fiscal
periods ended January 31, 1997 and prior were audited by other auditors whose
report, dated March 15, 1997, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1999 by correspondence with the Funds' custodians and brokers, and where
replies were not received, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Funds as of July
31, 1999, the results of their operations, the changes in their net assets, and
the financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
San Francisco, CA
September 10, 1999
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<PAGE>
[Logo omitted]
NOTICE TO SHAREHOLDERS OF THE
HIGHMARK FUNDS (UNAUDITED)
- --------------------------------------------------------------------------------
For shareholders that do not have a July 31, 1999 tax year end, this notice is
for informational purposes only. For shareholders with a July 31, 1999 tax year
end, please consult your tax adviser as to the pertinence of this notice.
For the fiscal year ended July 31, 1999, each Portfolio is designating the
following items with regard to distributions paid during the year.
<TABLE>
<CAPTION>
LONG TERM
(20% RATE) ORDINARY
CAPITAL GAINS INCOME TAX EXEMPT QUALIFYING FOREIGN
DISTRIBUTIONS DISTRIBUTION INCOME DIVIDENDS TAX
FUND (TAX BASIS) (TAX BASIS) DISTRIBUTION TOTAL (1) CREDIT (2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Growth ...................................... 89% 11% 0% 100% 100% 0%
Value Momentum .............................. 73% 27% 0% 100% 98% 0%
Income Equity ............................... 86% 14% 0% 100% 56% 0%
Balanced .................................... 60% 40% 0% 100% 40% 0%
Emerging Growth ............................. 72% 28% 0% 100% 0% 0%
Small Cap Value ............................. 0% 100% 0% 100% 0% 0%
International Equity ........................ 0% 100% 0% 100% 0% 30%
California Intermediate Tax-Free Bond ....... 0% 100% 100% 0%
Bond ........................................ 0% 100% 0% 100% 0% 0%
Intermediate-Term Bond ...................... 0% 100% 0% 100% 0% 0%
100% U.S. Treasury Money Market ............. 0% 100% 0% 100% 0% 0%
U.S. Government Money Market ................ 0% 100% 0% 100% 0% 0%
Diversified Money Market .................... 0% 100% 0% 100% 0% 0%
California Tax-Free Money Market ............ 0% 0% 100% 100% 0% 0%
- ---------------
<FN>
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE DIVIDENDS RECEIVED DEDUCTION.
(2) THE FOREIGN TAX CREDIT IS BASED ON THE PERCENTAGE OF ORDINARY INCOME OF EACH FUND.
(3) FOR RESIDENTS OF CALIFORNIA, CONNECTICUT AND NEW YORK: THE 100% U.S. TREASURY MONEY MARKET MET THE
QUARTERLY DIVERSIFICATION TEST FOR THE FISCAL YEAR ENDED DURING JULY 31, 1999. ALL INCOME EARNED
BY 100% U.S. TREASURY MONEY MARKET IS DESIGNED TAX EXEMPT INCOME FOR STATE INCOME TAX PURPOSES.
(4) FOR RESIDENTS OF CALIFORNIA, THE CALIFORNIA INTERMEDIATE TAX-FREE BOND AND CALIFORNIA TAX-FREE
MONEY MARKET MET THE QUARTERLY DIVERSIFICATION TEST FOR THE FISCAL YEAR ENDED JULY 31, 1999.
</FN>
</TABLE>
106 ---------------------------------------------------------------------------
1.800.433.6884
<PAGE>
SERVICE PROVIDER &
BOARD OF TRUSTEES
- --------------------------------------------------------------------------------
INVESTMENT ADVISER BOARD OF TRUSTEES
HighMark Capital Management, Inc. David A. Goldfarb, Chariman
475 Sansome Street Thomas L. Braje, Vice Chairman
San Francisco, CA 94104 Joseph C. Jaeger
Frederick J. Long
SUB-ADVISER (Emerging Growth Fund) Michael L. Noel
Bank of Tokyo-Mitsubishi Trust Company Robert M. Whitler
1251 Avenue of the Americas
New York, NY 10116
SUB-ADVISER (International Equity Fund) ADVISORY BOARD
AXA Asset Management Partenaires William R. Howell
46, Avenue de la Grande Armee Paul Smith
Paris, 75017, France
SUB-ADVISER (International Portion of the
Small Cap Value Fund)
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.
1 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
- --------------------------------------------------------------------------- 107
www.highmark-funds.com
<PAGE>
THANK YOU FOR
YOUR INVESTMENT.
[logo omitted] HIGHMARK[SM]
FUNDS
Mutual Funds:
[Bullet] are not FDIC insured
[Bullet] have no bank guarantee
[Bullet] may lose value
- --------------------------------------------------------------------------------
<PAGE>
