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ANNUAL
REPORT
July 31, 2000
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<PAGE>
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<PAGE>
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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 .............................................. 24
statements of operations .............................................. 78
statements of changes in net assets ................................... 82
financial highlights .................................................. 86
notes to financial statements ......................................... 94
independent auditors' report .......................................... 104
notice to shareholders ................................................ 105
fund information ...................................................... 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 risks, 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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[Highmark Funds logo omitted]
[photo graphic omitted]
GREG KNOPF
LETTER TO SHAREHOLDERS
MY FELLOW SHAREHOLDERS:
We are pleased to provide your HighMark Funds Annual Report for the year ended
July 31, 2000. During this period of time, the popular market averages reached
record highs, but during April and May entered into what appeared to be a
corrective phase, often displaying extreme volatility. This was particularly
evident in the NASDAQ, which is heavily weighted toward technology stocks.
However, over the past twelve months a number of the HighMark Funds have
performed well versus their benchmarks. Of particular note was the HighMark
Small Cap Value Fund, which had a total return of 16.43% (Fiduciary Shares)
versus 3.11% for the S&P 600 Small Cap/BARRA Value Index for the one-year period
ended July 31. We congratulate fund manager, Elizabeth Pearce, and the
HighMark Value team for their outstanding performance.
HIGHMARK INTRODUCES THE CORE EQUITY FUND
On May 31, we rolled out our newest product offering, the HighMark Core Equity
Fund. Managed by HighMark Capital Management, Inc., the Core Equity Fund invests
in stocks of companies that make up the S&P 500 Composite Index. However, unlike
an S&P 500 Index fund, a core equity fund is actively managed and carries
increased weightings in companies that the fund's management team believes are
particularly attractive at a given time. At the same time, any companies with
limited upside potential are eliminated. In this way, a core equity fund seeks
to outperform the S&P 500 Composite Index with no greater risk. We believe that
the Core Equity Fund can provide a strong foundation on which to build other
investment choices. To obtain further information on this attractive new fund
from HighMark, including a prospectus, please consult your financial advisor, or
call HighMark Funds directly at 1-800-433-6884.
ASSET ALLOCATION MORE IMPORTANT THAN EVER
Given the recent volatility in the financial markets, it is important that you
maintain a well-diversified asset allocation strategy. By diversifying your
portfolio among different asset classes using a variety of mutual funds, you can
lower the volatility of your portfolio and reduce the risk that can be
associated with overexposure to one type of investment. Though the financial
markets can be challenging at times, we believe the long-term outlook remains
quite positive. A portfolio made up of quality mutual funds should produce
attractive returns for investors over time.
As always, we wish you continued success throughout the year and thank you for
your investment in HighMark Funds.
Sincerely,
/SIGNATURE/ Greg Knopf
Gregory Knopf
Managing Director -- Mutual Funds
HighMark Capital Management, Inc.
August 2000
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[photo graphic omitted]
LUKE MAZUR
MESSAGE FROM
THE INVESTMENT ADVISER
MY FELLOW SHAREHOLDERS:
For the first time in several years, the stock market did not advance at a
double-digit rate, as the rising interest rate environment took its toll. A
sharp sell-off in technology stocks during March and April reminded investors
that a track record of profits is still a key determinant of stock prices over
the long term. Meanwhile, the federal budget surplus buoyed the bond market, as
an aggressive government buyback program shrank the supply of Treasury bonds.
THE ECONOMY: UNPRECEDENTED PROSPERITY
The fiscal year ended July 31, 2000 was one of extremely strong economic growth.
Indeed, the period featured a 7.3% pace during the fourth quarter of 1999 and a
5.5% rate in the first quarter of 2000. Despite these figures, the inflation
rate did not rise alarmingly, generally remaining in the 3% to 3.5% range.
Nevertheless, the Federal Reserve Board elected not to wait until inflation
became out of control. Between August 1, 1999 and July 31, 2000, it raised
short-term rates from 5% to 6.5%. The key question for investors is whether the
Fed can negotiate a soft landing for the economy, or whether it will overshoot
its target and create a recession in 2001. Five years ago, the Fed was
successful in slowing down the economy without creating a recession. We are
optimistic that the Fed can be successful again.
STOCKS: A RETURN TO REALITY
In recent months, investors have shifted back and forth a number of times
between new economy and old economy stocks. While they do not question the
growth opportunities of companies in such fields as wireless communications and
Internet infrastructure, they have begun to question the high valuations of more
than 100 times earnings often accorded these stocks. Meanwhile, other sectors of
the stock market, notably economically cyclical areas, continue to sell at less
than ten times earnings. The tug of war between growth and value continued as
the fiscal year drew to a close.
BONDS: TREASURY SECURITIES RALLY
Despite the Fed's tightening posture, Treasury bonds have
rallied in recent months as the federal government, flush with a budget surplus,
retired debt. As a result, Treasury bonds, particularly 30-year bonds, produced
healthy returns amid shrinking supply. In contrast, corporate bonds did not
perform nearly as well, as investors became concerned that a slowing economy
might impair credit quality. As of July 31, 2000, the yield spread on corporate
bonds over comparably maturing Treasury securities had widened to 1.50
percentage points, more than twice the normal yield differential. With
high-grade corporate bond yields at roughly 7.5%, we believe that these bonds
offer good value, although we are concerned that corporate managements are
increasingly bolstering stock prices by incurring additional debt to repurchase
shares.
Meanwhile, our view of the stock market remains positive over the long term.
Inflation remains subdued, Corporate America continues to produce healthy
profits and the U.S. remains the world leader in productivity, innovation and
technology.
Sincerely,
/SIGNATURE/Luck Mazur
Luke Mazur
Managing Director, Chief Investment Officer
HighMark Capital Management, Inc.
August 2000
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GROWTH
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
CISCO SYSTEMS 5.9
EMC 4.5
INTEL 4.5
NORTEL NETWORKS 3.8
SUN MICROSYSTEMS 3.6
GENERAL ELECTRIC 3.6
CORNING 3.3
ORACLE 3.0
TEXAS INSTRUMENTS 2.6
XILINX 2.5
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
TECHNOLOGY 55.9
CONSUMER STAPLES 10.0
HEALTHCARE 8.6
CAPITAL GOODS 7.2
CONSUMER CYCLICALS 5.7
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ended July 31, 2000, the HighMark Growth Fund returned
11.13% (Fiduciary Shares). In comparison, the Lipper Growth Funds Objective rose
20.80% while the Standard & Poor's 500 Composite Index was up 8.97% and the S&P
500/ BARRA Growth Index rose 16.97%.
FACTORS AFFECTING PERFORMANCE
During the fiscal year, the Fund outperformed the S&P 500 Composite Index but
underperformed the S&P 500 BARRA/Growth Index and its Lipper peer group. The
reason for that result was the Fund's broad diversification strategy beyond
technology into other growth segments. Meanwhile, despite a massive sell-off in
March and April, technology continued to dominate the growth sector, our Lipper
peers and the S&P 500 BARRA/Growth Index.
The Fund has since increased its technology weighting to reflect our view that
areas such as semi-conductors, optics, data storage and other fields related to
the build-out of the Internet are likely to provide the greatest growth. Our
concentration will tend to favor blue-chip companies such as Cisco Systems, EMC,
Intel and JDS Uniphase, all of which provided excellent results for the Fund
during the fiscal year.
Other areas of strength included diversified financial services such as
Citigroup, Morgan Stanley Dean Witter and Charles Schwab. We de-emphasized banks
because the investment community views them negatively in a period of rising
interest rates. In addition, recent consolidation in the banking industry has
proven to be disappointing from an earnings standpoint.
Traditionally, consumer products companies have helped the Fund's performance.
However, these companies have generally disappointed investors in recent
quarters. One exception is Starbucks, which has continued to produce strong
growth, most recently in foreign regions.
CURRENT STRATEGY & OUTLOOK
Corporations no longer view technology spending as a necessary but non-revenue
generating part of their business. Increasingly, it is viewed as a strategic
focus in growing revenues and profits, a dramatic shift that has taken place in
the past few years. As a result, the technology sector deserves a larger
allocation of the Fund's investment dollars.
At the same time, investors are shifting away from concept companies such as the
"dot-coms" with no profits to tangible technology companies with current
profits. That shift bodes well for this Fund, because we concentrate on leading
companies that have already demonstrated strong profit growth.
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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 graphic 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/BARRA GROWTH INDEX, THE S&P 500 COMPOSITE INDEX AND THE
LIPPER GROWTH FUNDS OBJECTIVE.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark S&P 500 Lipper Growth S&P 500/
Growth Syn Growth Synth Growth Synth Growth Synth Funds Barra Growth
Fiduciary Cl A Cl B Cl C Index Objective Index
<S> <C> <C> <C> <C> <C> <C> <C>
11/30/93 10,000 9,450 10,000 10,000 10,000 10,000 10,000
7/94 9,650 9,129 9,650 9,650 10,100 9,973 9,933
7/95 12,085 11,420 12,085 12,085 12,733 12,527 12,985
7/96 13,622 12,891 13,622 13,622 14,841 13,806 15,277
7/97 20,234 19,142 20,234 20,234 22,574 19,903 23,908
7/98 24,805 23,403 24,698 24,805 26,926 22,681 29,864
7/99 29,082 27,363 28,714 29,082 32,374 27,058 37,094
7/00 32,319 30,337 31,637 32,144 35,278 32,686 43,388
</TABLE>
* Fiduciary, Synthetic Class A, Synthetic Class B or Synthetic Class C Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR INCEPTION TO
RETURN RETURN RETURN DATE
Fiduciary Shares 11.13% 16.89% 21.74% 19.42%
-------------------------------------------------------------------------------
Class A Shares 10.87% 16.59% 21.58% 21.78%
-------------------------------------------------------------------------------
Class A Shares with load* 4.76% 14.42% 20.21% 20.65%
-------------------------------------------------------------------------------
Class B Shares 10.18% 16.07%++ 21.22%++ 16.47%
-------------------------------------------------------------------------------
Class B Shares with load** 5.18% 15.32%++ 21.04%++ 15.50%
-------------------------------------------------------------------------------
Class C Shares 10.53%++ 16.68%++ 21.61%++ 2.92%+
-------------------------------------------------------------------------------
Class C Shares with load*** 9.54%++ 16.68%++ 21.61%++ 1.98%+
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+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on November 18, 1993 with the performance of Class B Shares on
February 2, 1998 or Class C Shares on November 30, 1999. Fiduciary Share
performance has been adjusted for the maximum sales charge applicable to
Class B or Class C Shares, but does not reflect the higher Rule 12b-1 fees
and expenses applicable to these Classes. With those adjustments, performance
would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
***Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results.
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VALUE
MOMENTUM
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
GENERAL ELECTRIC 3.2
INTEL 3.1
MORGAN STANLEY DEAN WITTER 3.1
AMGEN 2.9
CITIGROUP 2.8
CISCO SYSTEMS 2.5
MARSH & MCLENNAN 2.4
EXXON MOBIL 2.3
CTS 2.2
IBM 2.2
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
FINANCIAL 21.2
TECHNOLOGY 14.9
HEALTHCARE 13.0
CAPITAL GOODS 12.2
CONSUMER CYCLICALS 9.6
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ending July 31, 2000, the HighMark Value Momentum Fund
returned 4.47% (Fiduciary Shares). In comparison, the Lipper Multi-Cap Value
Funds Classification posted a return of -1.11% during the fiscal year while the
unmanaged Standard & Poor's 500 Composite Index rose 8.97%.
FACTORS AFFECTING PERFORMANCE
The Fund outperformed its Lipper peer group because its blue-chip technology
holdings such as Intel and Cisco Systems were purchased during periods of price
declines, and provided support to the portfolio when value was trailing the
market. These leading tech stocks were safe havens for the Fund, particularly
during the NASDAQ bear market in the spring of 2000.
Other areas of strength in the Fund included natural gas and health care. As the
price of oil rose from $12 to $30 per barrel, the demand for natural gas also
doubled in price, while supply remained constrained. The pharmaceutical sector
benefited from the improved climate towards the industry on Capitol Hill. Drug
stocks also benefited from the sell-off in technology.
The S&P 500 Composite Index is a mixture of growth as well as value, while the
Fund focuses on the value investment style. For this reason, the Fund lagged the
S&P 500 Composite Index for the period. While value was strong in March and
April, it generally lagged growth during the year, although not as badly as the
prior fiscal year. Many value sectors, such as financial services and economic
cyclicals, are particularly sensitive to rising interest rates, and that was the
environment for most of the fiscal year. In addition, companies that failed to
meet earnings expectations, many of which were economic cyclicals, saw their
stocks fall sharply.
CURRENT STRATEGY AND OUTLOOK
Because financial services and consumer sectors bear the brunt of the Federal
Reserve Board's actions, we remain underweighted in those areas relative to most
value investors. Our technology weighting, while lower than the S&P 500
Composite Index, remains higher than the average value fund. We continue to
search for moderately valued companies with strong growth rates, and
occasionally, we find technology companies that sell at reasonable prices.
Meanwhile, the Fund's price/earnings ratio is about 30% below the S&P 500
Composite Index, suggesting that we hold attractively valued stocks compared to
the overall market.
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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 graphic 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 MULTI-CAP VALUE
FUNDS CLASSIFICATION.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark HighMark Lipper
Value Value Value Value Value Multi-Cap
Momentum Momentum Synth Momentum Momentum Momentum S&P 500 Value Funds
Fiduciary Class I Class A Class B Class C Comp. Index Classification
<S> <C> <C> <C> <C> <C> <C> <C>
2/28/91 10,000 10,000 9,450 10,000 10,000 10,000 10,000
7/91 10,637 10,637 10,052 10,637 10,637 10,694 10,633
7/92 11,869 11,869 11,216 11,869 11,869 12,065 12,028
7/93 13,344 13,344 12,611 13,344 13,344 13,116 13,631
7/94 13,914 13,914 13,150 13,914 13,914 13,788 14,446
7/95 17,450 17,450 16,491 17,450 17,450 17,383 17,440
7/96 20,383 20,383 19,226 20,383 20,383 20,260 19,626
7/97 30,065 30,065 28,289 30,065 30,065 30,817 28,292
7/98 32,837 32,837 30,823 32,689 32,837 36,759 30,587
7/99 37,132 37,132 34,765 36,576 37,132 44,195 33,942
7/00 38,792 38,825 36,236 37,856 38,561 48,159 33,449
</TABLE>
* Fiduciary, Synthetic Class I, Synthetic Class A, Synthetic Class B or
Synthetic Class C Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR INCEPTION TO
RETURN RETURN RETURN DATE
Fiduciary Shares 4.47% 8.87% 17.33% 16.05%
----------------------------------------------------------------------------
Class I Shares 4.56%++ 8.90%++ 17.35%++ 10.72%+
----------------------------------------------------------------------------
Class A Shares 4.23% 8.60% 17.05% 15.87%
----------------------------------------------------------------------------
Class A Shares with load* -1.50% 6.58% 15.73% 15.08%
----------------------------------------------------------------------------
Class B Shares 3.50% 7.98%++ 16.75%++ 6.90%
----------------------------------------------------------------------------
Class B Shares with load** -1.41% 7.12%++ 16.54%++ 5.80%
----------------------------------------------------------------------------
Class C Shares 3.85%++ 8.65%++ 17.19%++ 3.37%+
----------------------------------------------------------------------------
Class C Shares with load*** 2.87%++ 8.65%++ 17.19%++ 2.39%+
----------------------------------------------------------------------------
+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on February 1, 1991 with the performance of Class I Shares on
September 30, 1999, Class B Shares on February 2, 1998 or Class C Shares on
November 30, 1999. Fiduciary Share performance has been adjusted for the
maximum sales charge applicable to Class B or Class C Shares, but does not
reflect the higher Rule 12b-1 fees and expenses applicable to these Classes.
With those adjustments, performance would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
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 Class A Shares) to April 25,
1997 reflects the performance of the Stepstone Value Momentum Fund.
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INCOME
EQUITY
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
EXXON MOBIL 4.9
CITIGROUP 4.6
AMERICAN INTERNATIONAL GROUP 3.6
AT&T 2.1
WORLDCOM 2.1
ROYAL DUTCH PETROLEUM, ADR 2.1
VERIZON COMMUNICATIONS 2.1
HEWLET-PACKARD 1.8
VIACOM, CL B 1.6
MORGAN STANLEY DEAN WITTER 1.5
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
FINANCIAL 30.3
ENERGY 12.7
CONSUMER STAPLES 9.4
COMMUNICATION SERVICES 8.9
TECHNOLOGY 8.7
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ending July 31, 2000, the HighMark Income Equity Fund
returned -9.67% (Fiduciary Shares). In comparison, the Lipper Equity Income
Funds Classification posted a return of -3.68% during the period while the
Standard & Poor's 500 Composite Index rose 8.97%.
FACTORS AFFECTING PERFORMANCE
The Fund's underperformance versus its Lipper peer group was due to the Fund's
emphasis on cyclical stocks in such industries as chemicals, metals and papers.
Many of these companies, which often pay dividends above 5%, perform poorly when
the economy begins to slow. Indeed, the Federal Reserve Board has been on a
campaign to slow the U.S. economy for the entire fiscal year. In addition, many
of these companies failed to meet earnings expectations.
In recent months, financial services stocks began to perform better as long-term
interest rates began to fall. The Fund's second largest holding, Citigroup, was
a particularly good stock in the second half of the fiscal year. The company's
diversified holdings in banking, stock brokerage and insurance made it less
vulnerable to weakening corporate loan demand, a problem for pure bank stocks in
a slowing economy.
Meanwhile, the Fund's emphasis on energy stocks, while rewarding in the first
half of the period, produced modest results in the second half as OPEC announced
its intention to step up production, thus easing pressure on the price of oil.
In addition, the Fund lagged the S&P 500 Composite Index because the S&P 500 is
dominated by growth stocks, while the Fund emphasizes the value investment
style.
CURRENT STRATEGY AND OUTLOOK
The Fund's outlook depends in large part on the actions of the Federal Reserve
Board. If the Fed continues to raise short-term interest rates, then
economically cyclical stocks will continue to suffer. However, if the Fed is
able to engineer a soft landing, allowing the economy to slow but maintain
enough strength to allow cyclical companies to expand their businesses, then
these stocks will likely perform better. Meanwhile, these companies continue to
pay high dividends. Our strategy is to continue to search for companies with
attractive valuations, that pay high dividends and that offer opportunities for
capital appreciation.
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HIGHMARK INCOME EQUITY FUND
INVESTMENT OBJECTIVE
THE HIGHMARK INCOME EQUITY FUND SEEKS TOTAL RETURN ON INVESTMENT, WITH DIVIDEND
INCOME AS AN IMPORTANT COMPONENT OF THAT RETURN. A SECONDARY GOAL IS TO MAINTAIN
A LOW LEVEL OF PRICE VOLATILITY.
[photo graphic 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 CLASSIFICATION.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark Lipper Equity
Income Equity Income Equity Income Equity Income Equity S&P 500 Income Funds
Fiduciary Synth Class A Synth Class B Synth Class C Comp. Index Classification
<S> <C> <C> <C> <C> <C> <C> <C>
7/31/90 10,000 9,450 10,000 10,000 10,000 10,000
7/91 11,261 10,642 11,261 11,261 11,273 11,112
7/92 13,066 12,348 13,066 13,066 12,718 12,799
7/93 14,340 13,552 14,340 14,340 13,826 14,373
7/94 14,947 14,125 14,947 14,947 14,535 15,133
7/95 17,526 16,600 17,526 17,526 18,325 17,702
7/96 20,727 19,623 20,727 20,727 21,357 20,336
7/97 29,044 27,466 29,044 29,044 32,487 28,378
7/98 32,178 30,350 32,039 32,178 38,750 31,330
7/99 36,757 34,581 36,284 36,757 46,589 34,795
7/00 33,203 31,171 32,474 33,034 50,768 33,514
</TABLE>
* Fiduciary, Synthetic Class A, Synthetic Class B or Synthetic Class C Shares.
<TABLE>
<CAPTION>
ANNUALIZED 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 -9.67% 4.56% 13.63% 12.75% 14.07%
-------------------------------------------------------------------------------------------
Class A Shares -9.86% 4.31% 13.43% 12.68%++ 14.00%
-------------------------------------------------------------------------------------------
Class A Shares with load* -14.84% 2.36% 12.15% 12.04%++ 12.95%
-------------------------------------------------------------------------------------------
Class B Shares -10.50% 3.79%++ 13.13%++ 12.50%++ 3.10%
-------------------------------------------------------------------------------------------
Class B Shares with load** -13.97% 3.16%++ 12.90%++ 12.50%++ 2.26%
-------------------------------------------------------------------------------------------
Class C Shares -10.13%++ 4.38%++ 13.51%++ 12.69%++ -4.10%+
-------------------------------------------------------------------------------------------
Class C Shares with load*** -10.82%++ 4.38%++ 13.51%++ 12.69%++ -4.84%+
-------------------------------------------------------------------------------------------
<FN>
+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on February 9, 1984 with the performance of Class A Shares on June
20, 1994, Class B Shares on February 2, 1998 or Class C Shares on November
30, 1999. Fiduciary Share performance has been adjusted for the maximum
sales charge applicable to Class A, Class B or Class C Shares, but does not
reflect the higher Rule 12b-1 fees and expenses applicable to these Classes.
With those adjustments, performance would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results.
</FN>
</TABLE>
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CORE EQUITY
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
GENERAL ELECTRIC 3.0
CISCO SYSTEMS 2.3
INTEL 2.2
MICROSOFT 2.1
PFIZER 1.6
IBM 1.4
CITIGROUP 1.3
SAP, ADR 1.3
EXXON MOBIL 1.2
APPLIED MATERIALS 1.2
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
TECHNOLOGY 28.3
FINANCIAL 15.4
HEALTHCARE 12.0
CONSUMER STAPLES 9.6
CAPITAL GOODS 8.1
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
The Fund commenced operations on May 31, 2000 (Fiduciary Shares) and as of July
31, 2000, the HighMark Core Equity Fund had $34 million in assets.
ABOUT THE HIGHMARK CORE EQUITY FUND
Traditionally, the HighMark approach to equity management has been to divide the
investment world into two segments: growth versus value. In contrast, the
HighMark Core Equity Fund takes a different approach. Our mandate is to try to
outperform the market while maintaining a risk profile that matches the market.
Instead of categorizing investments according to investment style, the HighMark
Core Equity Fund selects stocks using three categories. The first category is
represented by core positions, essentially, the largest 50-75 companies within
the S&P 500 Composite Index. These stocks, which could represent 60% to 75% of
the total market value of the portfolio, are long-term positions that are not
likely to be sold out completely, even if the valuations of the stocks become
stretched. The second category is represented by 10-25 stocks that are purchased
to shore up industry or sector weightings relative to our benchmark. The third
category is up to 10 stocks that are purchased as a result of internal research
efforts. This is a bottom-up process driven by an important change such as
management, markets or technology that signals for us that the prospects for the
company are going to improve.
From a portfolio perspective, we are working to stay within a band of 90% to
110% of the S&P 500 Composite Index's broad economic sector weightings while
more closely matching that benchmark's narrow industry weightings. In addition,
the portfolio's "beta," or relative stock market variability, should not deviate
by more than 10%. Our objective is to invest for the long term and not be
concerned about volatility brought about by external factors such as the Federal
Reserve Board. Instead, we seek to find stocks that are attractively priced with
good managements and good prospects for growth.
10 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
HIGHMARK CORE EQUITY FUND
INVESTMENT OBJECTIVE
THE HIGHMARK CORE EQUITY FUND SEEKS LONG-TERM CAPITAL APPRECIATION.
[photo graphic omitted]
TEAM LEADER
CARL COLOMBO
HIGHMARK CAPITAL MANAGEMENT, INC.
THIS SECTION WOULD NORMALLY INCLUDE A TOTAL RETURN TABLE AND COMPARISON CHART
OF THE CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK CORE EQUITY
FUND VERSUS ITS BENCHMARK, THE S&P 500 COMPOSITE INDEX. BECAUSE THE FUND HAD
BEEN IN OPERATION FOR ONLY TWO MONTHS PRIOR TO THE DATE OF THIS ANNUAL REPORT,
NO PERFORMANCE INFORMATION FOR THAT PERIOD IS PROVIDED.
----------------------------------------------------------------------------- 11
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<PAGE>
[Highmark Funds logo omitted]
BALANCED
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
GENERAL ELECTRIC 2.8
INTEL 2.2
MICROSOFT 2.0
CISCO SYSTEMS 1.8
PFIZER 1.5
CITIGROUP 1.3
IBM 1.3
SAP, ADR 1.3
APPLIED MATERIALS 1.2
FNMA, 6.500%, 08/15/04 1.2
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
TECHNOLOGY 27.6
FINANCIAL 18.6
HEALTHCARE 12.5
CONSUMER STAPLES 10.4
CAPITAL GOODS 8.2
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ending July 31, 2000, the HighMark Balanced Fund produced a
return of 2.28% (Fiduciary Shares). In comparison, the Lipper Balanced Funds
Objective, the Fund's peer group, rose 6.07% during the period. Meanwhile, the
Standard & Poor's 500 Composite Index was up 8.97% and the Lehman Brothers U.S.
Aggregate Bond Index reflected a return of 5.96%.
FACTORS AFFECTING PERFORMANCE
The Fund's bond portfolio was heavily weighted towards corporates, which lagged
U.S. Treasury bonds. The Treasury market was influenced by the government's
decision to buy back securities in response to the federal budget surplus. As a
result, Treasury bonds rallied for much of the second half of the fiscal year.
In contrast, corporate bonds responded negatively to the Federal Reserve Board's
efforts to slow the U.S. economy. By the end of the period, high-grade corporate
bonds were offering nearly 2 percentage points more in yield than U.S. Treasury
bonds, more than twice the normal yield spread.
The equity portfolio was positively affected by its investments in semiconductor
and telecommunications stocks, which continue to benefit from advances in
technology and improving global economies. Examples of strong performers include
Intel, Cisco Systems and Applied Materials. In addition, a number of corporate
buyouts were beneficial to the equity portfolio's results. Warner Lambert, Best
Foods and Union Pacific Resources were acquired during the period. On the other
hand, the portfolio was hampered by the performance of economically cyclical
stocks, many of which failed to meet their profit targets.
CURRENT STRATEGY & OUTLOOK
The Fund can invest up to 70% in equities, and the current allocation is about
66%. We continue to favor equities over bonds, reflecting positive demographic
factors such as the nearly 80 million baby boomers who are actively investing
for their retirement. In addition, the U.S. is enjoying its best economy in
decades, a federal budget surplus, corporate profits at historically high levels
and shareholder-friendly corporate managements. Tempering our enthusiasm are the
high valuations in the stock market. Nevertheless, we continue to see good
opportunities, purchasing stocks on a bottom-up basis with a mandate to
outperform the market while maintaining a risk profile that is similar to the
market.
12 -----------------------------------------------------------------------------
1.800.433.6884
<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 graphic 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 S&P 500 COMPOSITE INDEX, THE LEHMAN BROTHERS U.S.
AGGREGATE BOND INDEX, AND THE LIPPER BALANCED FUNDS OBJECTIVE.
[line graph omitted]
plot points as follows:
Funds Average
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark Lehman Bros Lipper
Balanced Bal Synth Bal Synth Bal Synth S&P 500 U.S Aggregate Balanced
Fiduciary Class A Class B Class C Comp.Index Bond index Funds Objective
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2/28/91 10,000 9,450 10,000 10,000 10,000 10,000 10,000
7/91 10,437 9,863 10,437 10,437 10,694 10,374 10,562
7/92 11,603 10,965 11,603 11,603 12,065 11,907 11,939
7/93 12,812 12,097 12,812 12,812 13,116 13,119 13,206
7/94 13,186 12,451 13,186 13,186 13,788 13,131 13,527
7/95 15,705 14,829 15,705 15,705 17,383 14,459 15,773
7/96 17,423 16,419 17,423 17,423 20,260 15,258 17,328
7/97 22,732 21,358 22,732 22,732 30,817 16,903 22,529
7/98 24,394 22,879 24,321 24,394 36,759 18,232 24,771
7/99 26,823 25,084 26,488 26,823 44,195 18,684 27,184
7/00 27,435 25,593 26,840 27,274 48,159 19,797 28,939
</TABLE>
* Fiduciary, Synthetic Class A, Synthetic Class B or Synthetic Class C Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR INCEPTION TO
RETURN RETURN RETURN DATE
Fiduciary Shares 2.28% 6.47% 11.80% 11.66%
--------------------------------------------------------------------------------
Class A Shares 2.03% 6.22% 11.53% 11.38%
--------------------------------------------------------------------------------
Class A Shares with load* -3.57% 4.23% 10.28% 10.56%
--------------------------------------------------------------------------------
Class B Shares 1.33% 5.69%++ 11.31%++ 4.91%
--------------------------------------------------------------------------------
Class B Shares with load** -3.24% 4.83%++ 11.05%++ 3.84%
--------------------------------------------------------------------------------
Class C Shares 1.68%++ 6.26%++ 11.67%++ 1.29%+
--------------------------------------------------------------------------------
Class C Shares with load*** 0.77%++ 6.26%++ 11.67%++ 0.37%+
--------------------------------------------------------------------------------
+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on February 1, 1991 with the performance of Class B Shares on
February 2, 1998 or Class C Shares on November 30, 1999. Fiduciary Share
performance has been adjusted for the maximum sales charge applicable to
Class B or Class C Shares, but does not reflect the higher Rule 12b-1 fees
and expenses applicable to these Classes. With those adjustments,
performance would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
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 Class A Shares) to April
25, 1997 reflects the performance of the Stepstone Balanced Fund.
----------------------------------------------------------------------------- 13
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<PAGE>
[Highmark Funds logo omitted]
SMALL
CAP VALUE
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
EQUITABLE RESOURCES 2.4
VENATOR GROUP 2.3
ADAC LABORATORIES 2.1
DURA PHARMACEUTICALS 2.0
IBIS TECHNOLOGY 1.7
RECKSON ASSOCIATES REALTY 1.7
DIRECT FOCUS 1.6
SPEEDFAM-IPEC 1.6
INSITUFORM TECHNOLOGIES, CL A 1.5
FIRST INDUSTRIAL REALTY TRUST 1.5
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
TECHNOLOGY 20.5
CAPITAL GOODS 17.7
FINANCIAL 12.0
CONSUMER CYCLICALS 11.5
HEALTHCARE 10.8
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ended July 31, 2000, the HighMark Small Cap Value Fund
returned 16.43% (Fiduciary Shares). In comparison, Lipper Small Cap Value Funds
Classification reflected a return of 7.36% while the Standard & Poor's 600 Small
Cap/BARRA Value Index returned 3.11%. Meanwhile, the FT/S&P World Excluding U.S.
Medium/Small Cap Index, a measurement that reflects the Fund's international
component, returned 4.85%.
FACTORS AFFECTING PERFORMANCE
We are gratified that the Fund outperformed its benchmarks and peer group during
the fiscal year. In part, we believe that our performance reflects our view that
intellectual capital is sometimes a major determinant of a company's value.
Indeed, a number of big winners in the portfolio rely primarily on intellectual
capital for their advancing profits. For instance, ADAC Laboratories, whose
medical imaging machinery is gaining acceptance in hospitals, was a big gainer
during the fiscal year. The company's products, which help doctors diagnose
cancer more effectively, have garnered higher reimbursement from the federal
government than other types of scanners. Another company, Summit Autonomous,
provides the laser technology for corrective eye surgery that has become
increasingly popular in the last year. The company received a buyout offer
during the second quarter, a period that saw the stock double in price.
Besides these health care stocks, other strong sectors for the Fund included
natural gas and semiconductors. It was also advantageous to underweight
economically cyclical stocks, which performed poorly due to the Federal Reserve
Board's aggressive actions to slow the U.S. economy.
Because international economies are increasingly sensitive to Fed policy, the
international small cap portion of the Fund did not perform as well as the rest
of the Fund. However, we continue to appreciate the diversification benefits of
having an international portfolio, which tend to dampen the Fund's volatility.
CURRENT STRATEGY & OUTLOOK
Since April 1999, the small-cap sector has outperformed the larger firms that
comprise the S&P 500 Composite Index. While we cannot predict whether this trend
will continue, it is worth noting that the major small cap indexes continue to
have lower price/earnings multiples and faster earnings growth than their
larger-cap counterparts.
14 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
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.
[photo graphic omitted]
PORTFOLIO MANAGER
ELIZABETH PEARCE
HIGHMARK CAPITAL MANAGEMENT, INC.
SUB-ADVISER OF THE INTERNATIONAL PORTION: BRANDES INVESTMENT PARTNERS, LP
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK SMALL
CAP VALUE FUND* VERSUS THE S&P 600 SMALL CAP/BARRA VALUE INDEX, THE FT/S&PWORLD
EXCLUDING U.S. MEDIUM/SMALL CAP INDEX, AND THE LIPPER SMALL CAP VALUE FUNDS
CLASSIFICATION.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark S&P 600 Lipper FT/S&P
Small Cap Small Cap Small Cap Small Cap Small Cap/ Small Cap Excl. U.S. Med/
Value Fid Value Cl A Value Cl B Value Cl C BARRA Value Value Small Cap Index
<S> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/98 10,000 9,450 10,000 10,000 10,000 10,000 10,000
7/99 12,479 11,778 12,398 12,479 12,076 11,858 12,730
7/00 14,529 13,670 13,936 14,488 12,451 12,731 13,348
</TABLE>
* Fiduciary, Class A, Class B or Synthetic Class C Shares.
ANNUALIZED
ONE YEAR INCEPTION TO
RETURN DATE
Fiduciary Shares 16.43% 22.49%
-------------------------------------------------------------------------------
Class A Shares 16.06% 22.12%
-------------------------------------------------------------------------------
Class A Shares with load* 9.66% 18.50%
-------------------------------------------------------------------------------
Class B Shares 15.63% 21.55%
-------------------------------------------------------------------------------
Class B Shares with load** 10.63% 19.73%
-------------------------------------------------------------------------------
Class C Shares 16.10%++ 15.64%+
-------------------------------------------------------------------------------
Class C Shares with load*** 15.10%++ 14.64%+
-------------------------------------------------------------------------------
+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on September 17, 1998 with the performance of Class C Shares on
November 30, 1999. Fiduciary Share performance has been adjusted for the
maximum sales charge applicable to Class C Shares, but does not reflect the
higher Rule 12b-1 fees and expenses applicable to this Class. With those
adjustments, performance would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results.
----------------------------------------------------------------------------- 15
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<PAGE>
[Highmark Funds logo omitted]
INTERNATIONAL
EQUITY
FUND
TOP TEN HOLDINGS*
% OF
PORTFOLIO
VODAFONE AIRTOUCH 2.6
NOKIA OYJ 2.1
TOTAL FINA ELF 2.0
SHELL TRANSPORT & TRADING 2.0
NIPPON TELEGRAPH & TELEPHONE 1.9
TAKEDA CHEMICAL INDUSTRIES 1.7
ERICSSON, CL B 1.7
ING GROEP 1.7
ROHM 1.5
SONY 1.5
TOP FIVE COUNTRIES
% OF
SECTOR PORTFOLIO
JAPAN 20.0
UNITED KINGDOM 18.6
FRANCE 12.2
ITALY 6.7
SWITZERLAND 5.8
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
PERFORMANCE
For the fiscal year ending July 31, 2000, the HighMark International Equity Fund
produced a total return of 11.21% (Fiduciary Shares). In comparison, the Lipper
International Funds Objective posted a gain of 16.85% during the period while
the Morgan Stanley Capital International EAFE Index, a benchmark made up of
companies in 20 nations, reflected a return of 9.01%. The Fund's sub-adviser is
AXA Investment Managers GS Ltd., a unit of the AXA Group, one of the world's
largest money management firms.
FACTORS AFFECTING PERFORMANCE
The Fund outperformed its benchmark because it significantly reduced its
allocation to Japan, using the proceeds to invest more fully in Europe and in
emerging markets. Consumer spending in Japan has not grown as fast as expected,
while Japanese technology stocks, which performed so well in the first half of
the fiscal year, were the subject of profit taking in the second half.
In contrast, European companies offer stronger growth prospects. The low level
of the euro has made them very competitive. Our overweights in energy and the
Italian banking sectors have been very beneficial. The oil industry has
consolidated in Europe, while the Italian financial services industry has been
very aggressive in adopting Internet banking.
Another major advantage for the Fund versus the benchmark is its ability to
invest in emerging markets. We are permitted to invest up to 10% of the
portfolio in these developing areas. Our emerging market investments include a
heavy concentration of technology companies in Eastern Europe, the Middle East,
Africa, Latin America and Asia excluding Hong Kong, Singapore and Japan.
The Fund's performance was hurt by its investments in economically cyclical
companies in Europe such as chemicals and other "old economy" manufacturing
industries. For this reason, the Fund lagged its Lipper peer group.
CURRENT STRATEGY & OUTLOOK
We believe that Europe's prospects are extremely bright, as European companies
have emerged from a long period of austerity to post excellent productivity
gains. Economic growth is moderate, corporate profits are improving while
inflation is still contained. In Japan, we remain cautious as corporate
restructuring is still in its early stages. However, we continue to be positive
on Asia excluding Japan, and believe that it is a very important growth area.
16 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
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.
[photo graphic omitted]
PORTFOLIO MANAGER
ROBERT DE GUIGNE
AXA INVESTMENT MANAGERS GS LTD.
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 OBJECTIVE.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark HighMark HighMark Lipper Inter
Inter Equity Inter Equity Inter Equity Inter Equity Funds
Fiduciary Class A Syn Class B Syn Cl C MSCI EAFE Objective
<S> <C> <C> <C> <C> <C> <C> <C>
2/28/95 10,000 9,450 10,000 10,000 10,000 10,000
7/95 11,143 10,530 11,143 11,143 11,368 11,346
7/96 11,650 11,009 11,650 11,650 11,770 12,021
7/97 12,585 11,893 12,585 12,585 13,902 14,993
7/98 12,482 11,796 12,482 12,482 14,663 16,057
7/99 13,218 12,492 13,218 13,218 16,085 17,146
7/00 14,700 13,858 14,515 14,614 17,534 20,035
</TABLE>
* Fiduciary, Synthetic Class A, Synthetic Class B or Synthetic Class C Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR INCEPTION TO
RETURN RETURN RETURN DATE
------------------------------------------------------------------------------
Fiduciary Shares 11.21% 5.32% 5.70% 7.06%
------------------------------------------------------------------------------
Class A Shares 10.94%++ 5.23%++ 5.65%++ -0.84%+
------------------------------------------------------------------------------
Class A Shares with load* 4.84%++ 3.27%++ 4.46%++ -6.29%+
------------------------------------------------------------------------------
Class B Shares 10.57%++ 5.11%++ 5.58%++ -1.17%+
------------------------------------------------------------------------------
Class B Shares with load** 5.57%++ 4.20%++ 5.25%++ -6.05%+
------------------------------------------------------------------------------
Class C Shares 10.56%++ 5.11%++ 5.58%++ -1.19%+
------------------------------------------------------------------------------
Class C Shares with load*** 9.56%++ 5.11%++ 5.58%++ -2.16%+
------------------------------------------------------------------------------
+ Cumulative inception to date.
++ The performance presented links the performance of Fiduciary Shares from its
inception on February 1, 1995 with the performance of Class A Shares, Class
B Shares, or Class C Shares on November 30, 1999. Fiduciary Share
performance has been adjusted for the maximum sales charge applicable to
Class A, Class B or Class C Shares, but does not reflect the higher Rule
12b-1 fees and expenses applicable to these Classes. With those adjustments,
performance would be lower than that shown.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results. Performance presented
from February 1, 1995 (commencement of operations of Fiduciary Shares) to
April 25, 1997 reflects the performance of the Stepstone International
Equity Fund.
----------------------------------------------------------------------------- 17
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<PAGE>
[Highmark Funds logo omitted]
CALIFORNIA
INTERMEDIATE
TAX-FREE BOND
FUND
TOP TEN HOLDINGS
% OF
PORTFOLIO
LOS ANGELES, DEPARTMENT OF
AIRPORTS, SER B,
6.500%, 05/15/04 2.1
SAN DIEGO COUNTY,
REGIONAL TRANSPORTATION
COMMISSION, SER A,
6.000%, 04/01/06 1.9
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
SAN FRANCISCO, BAY AREA
RAPID TRANSIT, 5.500%, 07/01/05 1.8
CONTRA COSTA, WATER DISTRICT,
SER G, 5.700%, 10/01/06 1.6
NORTHERN CALIFORNIA, POWER AGENCY,
MULTIPLE CAPITAL FACILITIES,
SER A, 6.400%, 08/01/02 1.6
ORANGE COUNTY, LOCAL TRANSPORTATION
AUTHORITY, MEASURE M,
6.000%, 02/15/07 1.5
SAN DIEGO COUNTY,
WATER AUTHORITY, SER A,
5.000%, 05/01/04 1.5
ORANGE COUNTY, LOCAL TRANSPORTATION
AUTHORITY, MEASURE M,
5.500%, 02/15/08 1.4
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
REVENUE BONDS 57.4
GENERAL OBLIGATIONS 17.8
PARTICIPATION NOTES 16.7
PREREFUNDED SECURITIES 6.3
CASH EQUIVALENTS/MONEY MARKETS 1.8
PERFORMANCE
For the fiscal year ended July 31, 2000, the HighMark California Intermediate
Tax-Free Bond Fund returned 4.68% (Fiduciary Shares). In comparison, the Lipper
California Intermediate Municipal Debt Funds Objective returned 4.40%, while the
unmanaged Lehman Brothers 7-Year Municipal Bond Index reflected a return of
4.59%.
FACTORS AFFECTING PERFORMANCE
One reason that the Fund outperformed its benchmark and peer group was its
shorter-than-average duration, particularly in the first half of the fiscal year
when bond yields rose steadily. In addition, we have largely avoided the one
area of the municipal bond market, health care, where credit downgrades have
been prevalent. As a result, the Fund was able to produce superior returns while
continuing to focus on high credit quality.
Municipal bond prices have firmed partly because of a shortage of issuance
brought about by higher interest rates as well as budget surpluses at the state
and local level. Even so, California continues to be the nation's largest issuer
of municipal debt, followed by New York and Texas.
Intermediate-term municipal bond yields have remained at about 77%-78% of U.S.
Treasury securities throughout the fiscal year, suggesting that intermediate
tax-exempt bonds have performed in line with their Treasury counterparts. That
is not the case with longer-term municipal bonds, which have lagged 30-year
Treasury bonds due to the federal government's aggressive plans to buy back
those bonds in light of the budget surplus.
CURRENT STRATEGY AND OUTLOOK
Through the second quarter of 2000, the market has seen 19 consecutive quarters
in which credit upgrades exceeded credit downgrades. Nevertheless, we continue
to emphasize high-quality securities. If the Federal Reserve Board is successful
in slowing the U.S. economy, then credit downgrades could once again become a
factor. In addition, we continue to focus on non-callable bonds to protect the
portfolio against falling interest rates that would also take place in a
slowdown. While recent economic data indicate that such a slowdown is not
imminent, it is unlikely that the Federal Reserve Board will allow the U.S.
economy to continue to grow at a rate of 5% per year because of concerns about
inflation.
18 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
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.
[photo graphic omitted]
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
OBJECTIVE.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark CA/Inter HighMark CA/Inter Lehman Bros Lipper
CA/Inter Tax Tax-Free Bond Tax-Free Bond 7-Year Inter Muni Debt
Fiduciary Class A Class B Muni Bond Funds Objective
<S> <C> <C> <C> <C> <C>
10/31/93 10,000 9,575 10,000 10,000 10,000
7/94 9,702 9,280 9,702 9,953 9,905
7/95 10,407 9,956 10,407 10,760 10,519
7/96 11,102 10,610 11,102 11,307 11,142
7/97 12,079 11,546 12,079 12,284 12,068
7/98 12,652 12,084 12,652 12,930 12,605
7/99 13,100 12,513 13,100 13,355 12,940
7/00 13,713 13,100 13,615 13,968 13,509
</TABLE>
* Fiduciary, Class A, Synthetic Class B Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
One Year 3 Year 5 Year Inception to
RETURN RETURN RETURN DATE
-------------------------------------------------------------------------------
Fiduciary Shares 4.68% 4.32% 5.67% 4.62%
-------------------------------------------------------------------------------
Class A Shares 4.69% 4.30% 5.64% 4.58%
-------------------------------------------------------------------------------
Class A Shares with load* 0.25% 2.81% 4.73% 3.92%
-------------------------------------------------------------------------------
Class B Shares 3.93%++ 4.07%++ 5.52%++ 3.65%+
-------------------------------------------------------------------------------
Class B Shares with load** -1.07%++ 3.15%++ 5.20%++ -1.35%+
-------------------------------------------------------------------------------
+ Cumulative inception to date
++ The performance presented links the performance of Fiduciary Shares from its
inception on October 15, 1993 with the performance of Class B Shares on
November 30, 1999. Fiduciary Share performance has been adjusted for the
maximum sales charge applicable to Class B, but does not reflect the higher
Rule 12b-1 fees and expenses applicable to this Class. With those
adjustments, performance would be lower than that shown.
* Reflects 4.25% sales charge.
** Reflects maximum CDSC of 5.00%.
Past performance is not predictive of future results. Performance presented
from October 15, 1993 (commencement of operations of Fiduciary and Class A
Shares) to April 25, 1997 reflects the performance of the Stepstone
California Intermediate Tax-Free Bond Fund.
----------------------------------------------------------------------------- 19
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<PAGE>
[Highmark Funds logo omitted]
BOND &
INTERMEDIATE-
TERM BOND
FUNDS
TOP TEN HOLDINGS
% OF
PORTFOLIO
FNMA, 6.000%, 12/01/08 8.1
U.S. TREASURY BOND,
8.125%, 08/15/19 4.4
GNMA, 6.500%, 05/15/29 4.1
FNMA, 6.500%, 01/01/29 3.6
U.S. TREASURY BOND,
10.375%, 11/15/12 3.3
GREEN TREE FINANCIAL,
6.800%, 01/15/27 2.2
SAFEWAY, 5.750%, 11/15/00 2.0
FNMA, 7.500%, 12/01/26 2.0
FORD MOTOR CREDIT,
6.500%, 02/28/02 1.9
U.S. TREASURY BOND,
8.750%, 08/15/20 1.9
FNMA, 7.125%, 02/15/05 1.8
TOP FIVE SECTORS
% OF
SECTOR PORTFOLIO
CORPORATE BONDS 37.1
MORTGAGE BACKED SECURITIES 43.1
U.S. TREASURY/AGENCIES 16.4
CASH/SHORT TERM 3.0
INTERNATIONAL US $ 0.4
PERFORMANCE
For the fiscal year ended July 31, 2000, the HighMark Bond Fund returned 4.86%
(Fiduciary Shares). In comparison, the Lipper Corporate A-Rated Debt Funds
Objective produced a 4.11% return, while the unmanaged Lehman Brothers U.S.
Aggregate Bond Index reflected a return of 5.96%.
For the same period, the HighMark Intermediate-Term Bond Fund returned 4.92%
(Fiduciary Shares). In comparison, the Lipper Intermediate Investment-Grade Debt
Objective reflected a 4.59% return, while the unmanaged Lehman Brothers
Intermediate Government/Credit Bond Index rose 5.09%.
FACTORS AFFECTING PERFORMANCE
Because of their emphasis on high-quality corporate bonds, each fund's
performance was significantly impacted by an unusual development in the Treasury
market during the fiscal year. Corporate bonds underperformed due to an unusual
demand for Treasury bonds brought on by the federal budget surplus, which led
the U.S. Treasury to announce that they would retire bonds early as well as
issue fewer new bonds in the future. Because of the demand from the government
as well as the prospect of lower supply, most Treasury notes and bonds
appreciated during the period, driving down yields and significantly widening
the yield spread between government and corporate bonds.
Another reason that corporate bonds underperformed Treasury securities was
investor concerns about the Federal Reserve Board's activities. With the U.S.
economy growing at a 7.3% annual rate in the fourth quarter of 1999 and 5.5% in
the first quarter of 2000, the Fed began an aggressive campaign to raise
short-term interest rates in order to slow the economy and keep inflation at
bay. In doing so, there was a fear among some investors that the Fed would
overshoot the mark and throw the economy into a recession. This "hard landing"
scenario would make corporate bonds more risky from a credit standpoint.
CURRENT STRATEGY & OUTLOOK
Corporate bond yield spreads will likely stay wide due to the continuing
Treasury buyback program. However, we believe that the Federal Reserve Board is
approaching the end of its tightening campaign. With a slower economy, long-term
yields should stabilize or decline between now and the end of the year. In the
meantime, investment-grade corporate bonds routinely offer investors about 7.5%
in yield, roughly 1.5 percentage points more than U.S. Treasury bonds.
20 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
HIGHMARK BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK BOND FUND SEEKS TOTAL RETURN THROUGH INVESTMENTS IN FIXED-INCOME
SECURITIES.
[photo graphic omitted]
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 U.S. AGGREGATE BOND INDEX AND THE LIPPER
CORPORATE A-RATED DEBT FUNDS OBJECTIVE.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark Lehman Bros. Lipper Corp.
Bond Bond Synthetic U.S. Aggregate A-Rated debt
Fiduciary Class A Bond Index Funds Objective
<S> <C> <C> <C> <C> <C>
7/31/90 10,000 9,575 10,000 10,000
7/91 10,898 10,435 11,070 10,977
7/92 12,472 11,942 12,706 12,768
7/93 13,726 13,143 14,000 14,153
7/94 13,295 12,642 14,012 13,997
7/95 14,549 13,817 15,429 15,360
7/96 15,249 14,501 16,282 16,094
7/97 16,864 16,049 18,037 17,863
7/98 18,113 17,248 19,455 19,117
7/99 18,403 17,510 19,938 19,255
7/00 19,298 18,368 21,216 20,046
</TABLE>
* Fiduciary or Synthetic Class A Shares.
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR INCEPTION TO
RETURN RETURN RETURN RETURN DATE
-----------------------------------------------------------------------------
Fiduciary Shares 4.86% 4.59% 5.81% 6.79% 8.60%
-----------------------------------------------------------------------------
Class A Shares 4.90% 4.60% 5.86% 6.73%+ 6.34%
-----------------------------------------------------------------------------
Class A Shares with load* 0.42% 3.10% 4.94% 6.27%+ 5.58%
-----------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from its
inception on February 15, 1984 with the performance of Class A Shares on June
20, 1994. Fiduciary Share performance has been adjusted for the maximum sales
charge applicable to Class A, but does not reflect the higher Rule 12b-1 fees
and expenses applicable to this Class. With those adjustments, performance
would be lower than that shown.
* Reflects 4.25% sales charge.
Past performance is not predictive of future results.
----------------------------------------------------------------------------- 21
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<PAGE>
[Highmark Funds logo omitted]
HIGHMARK INTERMEDIATE-TERM BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK INTERMEDIATE-TERM BOND FUND SEEKS TOTAL RETURN THROUGH INVESTMENTS
IN FIXED-INCOME SECURITIES.
[photo graphic omitted]
TEAM LEADER
JACK MONTGOMERY
HIGHMARK CAPITAL MANAGEMENT, INC.
TOP TEN HOLDINGS
% OF
PORTFOLIO
FNMA, 6.500%, 06/01/29 7.8
U.S. TREASURY BOND,
7.250%, 05/15/16 3.1
FNMA, 6.500%, 05/01/30 3.0
WALT DISNEY, 5.620%, 12/01/08 2.6
LOCKHEED MARTIN,
7.450%, 06/15/04 2.5
OLD DOMINION ELECTRIC,
7.480%, 12/01/13 2.5
RAYTHEON, 6.150%, 11/01/08 2.5
GEORGIA-PACIFIC,
9.875%, 11/01/21 2.4
GE GLOBAL INSURANCE,
7.750%, 06/15/30 2.3
FLEETBOSTON FINANCIAL,
7.125%, 04/15/06 2.2
SECTOR
DIVERSIFICATION
% OF
SECTOR PORTFOLIO
CORPORATE BONDS 62.0
MORTGAGE-BACKED SECURITIES 27.8
U.S. TREASURY/AGENCIES 9.5
CASH/SHORT TERM 0.7
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT
IN THE HIGHMARK INTERMEDIATE-TERM BOND FUND* VERSUS THE LEHMAN BROTHERS
INTERMEDIATE GOVERNMENT/CREDIT BOND INDEX, AND THE LIPPER INTERMEDIATE
INVESTMENT-GRADE DEBT OBJECTIVE.
[line graph omitted]
plot points as follows:
<TABLE>
<CAPTION>
HighMark HighMark Lehman Bros Lipper Intermediate
Inter-Term Bond, Inter-Term Intermed Gov't Invest. Grade
Fiduciary Synthetic Class A Credit Bond Index Objective
<S> <C> <C> <C> <C> <C>
2/28/91 10,000 9,575 10,000 10,000
7/91 10,427 9,984 10,362 10,406
7/92 12,030 11,508 11,826 11,978
7/93 13,131 12,561 12,843 13,186
7/94 13,071 12,491 12,964 13,141
7/95 14,169 13,541 14,106 14,355
7/96 14,799 14,145 14,853 15,047
7/97 16,146 15,434 16,201 16,606
7/98 17,174 16,419 17,292 17,758
7/99 17,621 16,845 17,936 18,057
1/00 18,488 17,674 18,849 18,885
</TABLE>
* Fiduciary or Synthetic Class A Shares.
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR INCEPTION TO
RETURN RETURN RETURN DATE
--------------------------------------------------------------------------------
Fiduciary Shares 4.92% 4.62% 5.47% 6.80%
--------------------------------------------------------------------------------
Class A Shares 4.92% 4.62% 5.47% 5.99%
--------------------------------------------------------------------------------
Class A Shares
with load* 0.49% 3.10% 4.56% 5.44%
--------------------------------------------------------------------------------
* Reflects 4.25% sales charge.
Past performance is not predictive of future results. Performance presented
from February 1, 1991 (commencement of operations of Fiduciary Shares) and
February 3, 1992 (commencement of operations of the Class A Shares) to April
25, 1997 reflects the performance of the Stepstone Intermediate-Term Bond
Fund.
22 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
[Highmark Funds 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, 2000: 100% U.S. Treasury
Money Market Fund, 5.70%; U.S. Government Money Market Fund, 6.20%; and
Diversified Money Market Fund, 6.35%.**
FACTORS AFFECTING PERFORMANCE
The Diversified and U.S. Government Money Market Funds maintained a
shorter-to-neutral weighted average maturity strategy for most of the period as
interest rates were rising and liquidity needs took priority. In mid-May 2000,
we began extending these portfolios as money market yields rose in anticipation
of another rate hike. Policymakers delivered a 1/2 percent increase on May 16th,
taking short-term rates to their current 6.50% target level. Fears of another
tightening at the June 28th Federal Open Market Committee meeting, plus the
usual quarter-end funding pressures, provided yet another opportunity to lock in
attractive yields.
The 100% U.S. Treasury Money Market Fund has been successful in capitalizing on
supply distortions over the year, such as the $65 billion in tax-related cash
management bills issued toward the end of the first quarter, as the Treasury
Department continues to aggressively pay down long-term securities and
reallocate debt issuance.
CURRENT STRATEGY AND OUTLOOK
The Diversified and U.S. Government Money Market Funds intend to maintain
average lives in the 55-day area through September, before building cash
balances for quarter end. The 100% U.S. Treasury Money Market Fund will maintain
a shorter average maturity to take advantage of increasing three- and six-month
T-bill issuance in the latter half of the calendar year.
HIGHMARK CALIFORNIA TAX-FREE MONEY MARKET FUND PERFORMANCE
The Fund's one-month effective yield as of July 31, 2000 (Fiduciary Shares) was
3.36%***. Using a combined federal and California state income tax rate of
41.95%, the one-month effective yield is equivalent to a 5.79% taxable yield.
FACTORS AFFECTING PERFORMANCE
Municipal note yields rose in tandem with the Federal Reserve Board's actions,
which raised short-term interest rates from 5% to 6.50% between August 1, 1999
and July 31, 2000. During the period of rising interest rates, the Fund
maintained a slightly shorter maturity, extending the portfolio toward the end
of the period when it appeared that the Fed was nearing the end of its campaign
to slow the U.S. economy. In addition, the Fund's average maturity lengthened in
June and July to coincide with the seasonal issuance of longer-maturing
tax-exempt notes.
CURRENT STRATEGY AND OUTLOOK
With the economy showing signals of a slowdown, the stock market's continuing
volatility and a presidential election this year, the Federal Reserve Board will
probably maintain a low profile until after the November elections. Thus, the
Fund will continue to extend its weighted average maturity while pursuing
additional opportunities to add value to the portfolio.
* 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 the 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, 2000 was 5.43%, 5.93% and 6.09%, respectively. The one-month
effective yield for the U.S. Government Money Market Fund's Class B Shares
was 5.15% for the same period. For the Class S 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, 2000 was 5.12%, 5.62% and 5.78%,
respectively.
*** The one-month effective yield as of July 31, 2000 for the California
Tax-Free Money Market Fund's Class A Shares and Class S Shares was 3.10%
and 2.80% respectively.
----------------------------------------------------------------------------- 23
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
GROWTH FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 96.9%
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.5%
Southwest Airlines 176,872 $ 4,179
--------
BANKS -- 0.7%
Northern Trust 72,560 5,433
--------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 6.8%
Clear Channel Communications* (A) 74,650 5,687
Comcast, Special Cl A* 293,700 9,990
Gannett 30,550 1,646
Hispanic Broadcasting* 189,600 7,217
Infinity Broadcasting, Cl A* 74,360 2,621
Interpublic Group (A) 108,950 4,365
Time Warner 110,000 8,436
TMP Worldwide* 34,200 2,462
Univision Communications, Cl A* 94,440 11,734
--------
54,158
--------
CHEMICALS -- 0.5%
Avery Dennison 70,190 3,808
--------
COMMUNICATIONS EQUIPMENT -- 19.9%
Cisco Systems* 720,420 47,142
Comverse Technology* (A) 24,600 2,159
Corning 111,703 26,132
JDS Uniphase* (A) 123,780 14,622
Juniper Networks* (A) 20,340 2,897
Lucent Technologies 240,992 10,543
Nokia, ADR 336,090 14,893
Nortel Networks (A) 404,600 30,092
Sawtek* 158,700 8,451
SDL* (A) 3,020 1,048
Sycamore Networks* (A) 16,180 1,995
--------
159,974
--------
COMMUNICATIONS SERVICES -- 0.3%
Tycom Ltd* 2,500 85
Williams Communications Group*(A) 74,180 2,003
--------
2,088
--------
COMPUTERS & SERVICES -- 18.6%
America Online* 146,080 7,788
Brocade Communications System* 9,540 1,704
Check Point Software
Technologies* (A) 67,300 7,807
EMC* 419,000 35,667
Microsoft* 254,280 17,752
Network Appliance* 18,390 1,585
Oracle* 319,140 23,995
Palm* (A) 120,240 4,689
Sun Microsystems* 271,030 28,577
VeriSign* 39,530 6,273
Veritas Software* (A) 58,080 5,921
Yahoo* 60,230 7,751
--------
149,509
--------
DIVERSIFIED OPERATIONS -- 5.4%
General Electric 550,370 28,310
Tyco International 275,890 14,760
--------
43,070
--------
DRUGS -- 6.2%
American Home Products 84,660 4,492
Amgen* 110,764 7,193
Bristol-Myers Squibb 79,860 3,963
Eli Lilly 68,394 7,104
Genentech* (A) 68,560 10,430
Johnson & Johnson 27,080 2,520
Pfizer 260,727 11,244
Schering-Plough 56,170 2,426
--------
49,372
--------
ENTERTAINMENT -- 0.5%
AT&T - Liberty Media, Cl A* 156,820 3,489
Walt Disney 23,114 894
--------
4,383
--------
FINANCIAL SERVICES -- 3.0%
American Express 79,995 4,535
Charles Schwab 188,940 6,825
Citigroup 96,112 6,782
Morgan Stanley Dean Witter 60,880 5,555
--------
23,697
--------
FOOD, BEVERAGE & TOBACCO -- 1.2%
Anheuser-Busch 65,900 5,305
Coca-Cola (A) 25,986 1,593
Pepsico 64,810 2,969
--------
9,867
--------
GAS/NATURAL GAS -- 0.8%
Enron 86,700 6,383
The accompanying notes are an integral part of the financial statements.
24 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
GROWTH FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
INSURANCE -- 1.6%
American International Group 86,708 $ 7,603
Berkshire Hathaway, Cl B* 2,242 4,092
Marsh & McLennan 6,660 813
--------
12,508
--------
LEISURE -- 1.4%
Carnival 65,030 1,215
Harley-Davidson 216,870 9,732
--------
10,947
--------
MEDICAL PRODUCTS & SERVICES -- 2.9%
Guidant* 50,640 2,855
Medtronic 84,710 4,325
PE Biosystems Group 119,950 10,458
Waters* 49,830 5,911
--------
23,549
--------
MISCELLANEOUS BUSINESS SERVICES -- 1.1%
Automatic Data Processing 45,230 2,242
Devry* (A) 193,090 6,541
--------
8,783
--------
PRINTING & PUBLISHING -- 0.3%
McGraw-Hill 44,100 2,621
--------
RETAIL -- 4.6%
Costco Wholesale* 169,260 5,512
Home Depot 92,321 4,778
Kohl's* 64,040 3,634
Safeway* 206,040 9,285
Starbucks* 288,200 10,807
Walgreen 34,220 1,067
Wal-Mart Stores 35,700 1,961
--------
37,044
--------
SEMI-CONDUCTORS/INSTRUMENTS-- 16.5%
Applied Materials* 174,380 13,231
Applied Micro Circuits* 52,040 7,767
Intel 538,972 35,976
International Rectifier* 69,760 3,859
National Semiconductor* 307,100 11,113
PMC - Sierra* 24,700 4,787
Qualcomm* 102,970 6,687
Rambus* (A) 52,700 3,864
Texas Instruments 349,400 20,505
Vitesse Semiconductor* (A) 74,320 4,431
Xilinx* (A) 269,940 20,262
--------
132,482
--------
SPECIALTY MACHINERY -- 1.1%
Solectron* (A) 221,490 8,929
--------
TELEPHONES & TELECOMMUNICATIONS -- 3.0%
Level 3 Communications* (A) 119,270 8,163
Nextel Communications, Cl A* 59,580 3,333
Qwest Communications
International* 100,300 4,708
Vodafone Group PLC, ADR (A) 190,775 8,227
--------
24,431
--------
TOTAL COMMON STOCKS
(Cost $548,272) 777,215
--------
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.5%
--------------------------------------------------------------------------------
Federal Signal (B)
6.709%, 08/02/00 $ 20,000 19,993
--------
TOTAL COMMERCIAL PAPER
(Cost $19,993) 19,993
--------
--------------------------------------------------------------------------------
CORPORATE BONDS -- 5.0%
--------------------------------------------------------------------------------
Bear Stearns, MTN (B) (C)
6.968%, 01/08/01 10,000 10,000
First USA Bank (B) (C)
6.651%, 03/16/01 10,000 10,000
First Union National Bank (B) (C)
7.038%, 10/27/00 10,000 10,000
Goldman Sachs Group, MTN (B) (C)
7.058%, 10/16/00 10,000 10,000
--------
TOTAL CORPORATE BONDS
(Cost $40,000) 40,000
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 25
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
GROWTH FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES -- 1.9%
--------------------------------------------------------------------------------
Nasdaq 100 Share Index* (A) 84,250 $ 7,540
Standard and Poor's 500 Index (A) 54,550 7,796
--------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $16,017) 15,336
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 6.8%
--------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price $3,621,270
(collateralized by various U.S. Treasury
obligations, par value $7,837,000,
0.000%-6.250%, 08/31/00-02/15/23;
market value $3,693,079) $ 3,621 3,621
Greenwich Capital (B)
6.750%, dated 07/31/00,
matures 08/01/00, repurchase
price $35,006,563
(collateralized by various
corporate obligations, par
value $69,518,077,
0.000%-6.200%, 03/15/02-02/17/09;
market value $36,752,103) 35,000 35,000
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$15,941,220 (collateralized
by various corporate
obligations, par value
$16,768,617, 7.750%-8.000%,
07/25/30; market value
$16,735,225) 15,938 15,938
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $54,559) 54,559
--------
TOTAL INVESTMENTS -- 113.1%
(Cost $678,841) 907,103
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (13.8%) (110,931)
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.7% 5,627
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 38,786,360 outstanding shares of
beneficial interest $ 444,569
Paid-in-Capital of Class A Shares (unlimited
authorization -- no par value) based on
2,924,786 outstanding shares of beneficial
interest 51,045
Paid-in-Capital of Class B Shares (unlimited
authorization -- no par value) based on
1,342,018 outstanding shares of beneficial
interest 23,910
Paid-in-Capital of Class C Shares (unlimited
authorization -- no par value) based on
44,908 outstanding shares of beneficial
interest 851
Accumulated net realized gain on investments 53,162
Net unrealized appreciation on investments 228,262
--------
TOTAL NET ASSETS -- 100.0% $801,799
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $18.62
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $18.53
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($18.53 / 94.5%) $19.61
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $18.19
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $18.19
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $111,069,550.
(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
PLC -- PUBLIC LIMITED COMPANY
The accompanying notes are an integral part of the financial statements.
26 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
VALUE MOMENTUM FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 99.1%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 0.6%
United Technologies 86,490 $ 5,049
--------
AUTOMOTIVE -- 1.5%
ArvinMeritor* 116,800 1,825
Ford Motor 101,000 4,703
TRW 115,300 5,181
Visteon* 13,224 185
--------
11,894
--------
BANKS -- 2.9%
Bank of America 156,847 7,431
Bank United, Cl A (A) 160,000 5,830
Chase Manhattan 187,500 9,316
--------
22,577
--------
BUILDING -- 0.7%
Fleetwood Enterprises 37,400 484
Masco 240,000 4,740
--------
5,224
--------
CHEMICALS -- 3.3%
Avery Dennison 211,000 11,447
Cabot 246,000 7,872
EI du Pont de Nemours 66,879 3,030
Engelhard 226,000 4,082
--------
26,431
--------
COMMUNICATIONS EQUIPMENT -- 5.3%
Cisco Systems* (A) 304,500 19,926
CTS 375,000 17,203
Lucent Technologies 100,516 4,398
--------
41,527
--------
COMPUTERS & SERVICES -- 5.5%
American Power Conversion* 298,000 7,580
Computer Associates International 65,000 1,613
Hewlett-Packard 135,000 14,740
IBM 153,000 17,203
Wallace Computer Services 220,000 1,966
--------
43,102
--------
DIVERSIFIED OPERATIONS -- 3.9%
General Electric 480,000 24,690
Textron 30,000 1,712
Tyco International 87,000 4,655
--------
31,057
--------
DRUGS -- 8.0%
American Home Products 155,000 8,225
Amgen* 355,000 23,053
Bristol-Myers Squibb 115,000 5,707
Merck 185,000 13,262
Pharmacia 100,000 5,475
Watson Pharmaceutical* (A) 130,000 7,182
--------
62,904
--------
FINANCIAL SERVICES -- 9.9%
Associates First Capital, Cl A 65,000 1,702
Bear Stearns 128,445 6,920
Citigroup 306,751 21,645
Fannie Mae 75,000 3,741
JP Morgan 41,900 5,594
Morgan Stanley Dean Witter 264,500 24,136
Providian Financial 94,000 9,582
Waddell & Reed Financial, Cl B 157,071 4,928
--------
78,248
--------
FOOD, BEVERAGE & TOBACCO -- 2.5%
IBP 120,000 1,732
Philip Morris 209,000 5,277
Sara Lee 200,000 3,688
Universal 155,000 3,439
Universal Foods 281,500 5,489
--------
19,625
--------
GAS/NATURAL GAS -- 5.3%
Coastal 280,000 16,170
Oneok 150,000 4,003
Questar 473,000 9,224
Sempra Energy 300,000 5,625
Williams (A) 170,000 7,098
--------
42,120
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 27
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<PAGE>
[Highmark Funds graphic omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
VALUE MOMENTUM FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
HOUSEHOLD FURNITURE & FIXTURES -- 0.8%
Leggett & Platt (A) 376,000 $ 6,580
--------
INSURANCE -- 3.9%
Allstate 131,952 3,637
Marsh & McLennan 156,950 19,148
Torchmark 208,000 5,174
UnumProvident 120,088 2,762
--------
30,721
--------
LEASING & RENTING -- 3.7%
Comdisco 549,503 14,218
Gatx 185,000 7,388
Rollins Truck Leasing 698,000 4,973
Xtra* 70,000 2,809
--------
29,388
--------
LEISURE PRODUCTS -- 0.4%
Hasbro (A) 294,800 3,353
--------
MACHINERY -- 1.4%
Caterpillar 60,000 2,044
Parker-Hannifin 250,000 8,891
--------
10,935
--------
MEASURING DEVICES -- 1.4%
Agilent Technologies* 51,489 2,098
Tektronix 149,500 9,194
--------
11,292
--------
MEDICAL PRODUCTS & SERVICES -- 5.0%
Baxter International 206,000 16,017
Mallinckrodt 130,000 5,948
PE Biosystems Group 140,000 12,206
Tenet Healthcare* 165,000 5,022
--------
39,193
--------
MISCELLANEOUS BUSINESS SERVICES -- 1.8%
Cendant* 352,479 4,516
Equifax (A) 185,000 4,371
Manpower 128,100 4,956
--------
13,843
--------
OFFICE FURNITURE & FIXTURES -- 0.8%
HON Industries 230,000 6,138
--------
PAPER & PAPER PRODUCTS -- 2.7%
Kimberly-Clark 199,920 11,483
Weyerhaeuser 116,800 5,336
Willamette Industries 145,500 4,410
--------
21,229
--------
PETROLEUM & FUEL PRODUCTS -- 5.8%
Chevron 88,000 6,952
Conoco, Cl B 195,776 4,515
Exxon Mobil 222,864 17,829
Halliburton 216,500 9,986
Royal Dutch Petroleum, ADR (A) 110,000 6,408
--------
45,690
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.4%
Xerox 217,400 3,234
--------
PRINTING & PUBLISHING -- 2.0%
Houghton Mifflin (A) 118,700 5,623
McGraw-Hill 170,000 10,104
--------
15,727
--------
RAILROADS -- 1.3%
Burlington Northern Santa Fe 158,000 3,861
Florida East Coast Industries 149,000 6,258
--------
10,119
--------
REAL ESTATE INVESTMENT TRUSTS -- 4.3%
BRE Properties, Cl A 268,262 8,702
CBL & Associates Properties 260,000 6,500
First Industrial Realty Trust 120,000 3,840
JP Realty 60,000 1,133
Kimco Realty (A) 125,000 5,156
Post Properties 195,000 9,043
--------
34,374
--------
RETAIL -- 3.1%
Federated Department Stores* 246,700 5,936
Kroger* 100,000 2,069
Lowe's 45,000 1,898
Target 516,000 14,964
--------
24,867
--------
The accompanying notes are an integral part of the financial statements.
28 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
VALUE MOMENTUM FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS -- 4.8%
Applied Materials* (A) 150,000 $ 11,381
Avnet 45,000 2,562
Intel 361,000 24,097
---------
38,040
---------
STEEL & STEEL WORKS -- 0.8%
Alcoa 218,000 6,595
---------
TELEPHONES & TELECOMMUNICATIONS -- 5.3%
AT&T 185,400 5,736
AT&T Wireless Group* 30,500 839
CenturyTel (A) 243,750 7,145
SBC Communications 228,034 9,706
Sprint (FON Group) 65,000 2,316
Verizon Communications* (A) 344,456 16,189
---------
41,931
---------
TOTAL COMMON STOCKS
(Cost $414,419) 783,007
---------
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.3%
--------------------------------------------------------------------------------
Federal Signal (B)
6.709%, 08/02/00 $10,000 9,996
---------
TOTAL COMMERCIAL PAPER
(Cost $9,996) 9,996
---------
--------------------------------------------------------------------------------
CORPORATE BONDS -- 6.3%
--------------------------------------------------------------------------------
Bear Stearns, MTN (B) (C)
6.898%, 07/20/01 25,000 25,000
First Union National Bank (B) (C)
7.038%, 10/27/00 10,000 10,000
Goldman Sachs Group, MTN (B) (C)
7.058%, 10/16/00 15,000 15,000
---------
TOTAL CORPORATE BONDS
(Cost $50,000) 50,000
---------
--------------------------------------------------------------------------------
Description Par (000)/Contracts Value (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 0.9%
--------------------------------------------------------------------------------
JP Morgan Securities, Inc.
6.500%, dated 07/31/00, matures 08/01/00,
repurchase price $456,668
(collateralized by a U.S. Treasury
Bond, par value $332,000, 12.000%,
08/15/13; market value
$466,335) $ 457 $ 457
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$6,746,536 (collateralized by
various corporate obligations,
par value $7,096,701,
7.750%-8.000%, 07/25/30;
market value $7,082,569) 6,745 6,745
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $7,202) 7,202
---------
--------------------------------------------------------------------------------
EQUITY OPTIONS -- 0.0%
--------------------------------------------------------------------------------
American Home Products August
65 Calls* (200) (4)
Cisco Systems August 70 Calls* (100) (18)
Hewlett Packard August 130 Calls* (50) (4)
Hewlett Packard August 140 Calls* (100) (3)
Intel August 75 Calls* (100) (3)
Intel August 80 Calls* (200) (1)
Providian Financial August
105 Calls* (100) (31)
---------
TOTAL EQUITY OPTIONS
(Cost $-108) (64)
---------
TOTAL INVESTMENTS -- 107.6%
(Cost $481,509) 850,141
---------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (8.4%) (66,741)
---------
OTHER ASSETS AND LIABILITIES, NET -- 0.8% 6,621
---------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 29
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<PAGE>
[Highmark Funds graphic omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
VALUE MOMENTUM FUND (CONCLUDED)
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par
value) based on 21,295,314 outstanding
shares of beneficial interest $229,776
Paid-in-Capital of Class I Shares
(unlimited authorization -- no par
value) based on 4,142,978 outstanding
shares of beneficial interest 115,149
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 1,406,923 outstanding
shares of beneficial interest 28,218
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 287,929 outstanding
shares of beneficial interest 8,186
Paid-in-Capital of Class C Shares
(unlimited authorization -- no par
value) based on 19,626 outstanding
shares of beneficial interest 575
Undistributed net investment income 213
Accumulated net realized gain on investments 39,272
Net unrealized appreciation on investments 368,632
--------
TOTAL NET ASSETS -- 100.0% $790,021
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $29.10
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS I SHARES $29.10
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $29.09
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($29.09 / 94.5%) $30.78
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $28.95
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $28.94
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $65,340,083.
(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
The accompanying notes are an integral part of the financial statements.
30 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
INCOME EQUITY FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 99.7%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 2.6%
BF Goodrich (A) 91,350 $ 3,260
Boeing 61,400 3,009
Raytheon, Cl B 62,675 1,520
United Technologies 25,125 1,467
--------
9,256
--------
AIR TRANSPORTATION -- 0.4%
Southwest Airlines 56,300 1,330
--------
AUTOMOTIVE -- 1.7%
Ford Motor 79,350 3,695
General Motors 29,780 1,696
TRW 17,350 780
--------
6,171
--------
BANKS -- 9.1%
Bank of America 109,750 5,199
Bank of New York 63,450 2,970
Bank One (A) 59,798 1,902
Chase Manhattan 83,350 4,141
Comerica 48,875 2,493
Fifth Third Bancorp 34,937 1,443
First Union 55,650 1,436
Firstar 29,150 576
FleetBoston Financial 79,975 2,864
State Street 13,575 1,363
Washington Mutual 111,400 3,579
Wells Fargo (A) 111,750 4,617
--------
32,583
--------
BEAUTY PRODUCTS -- 1.2%
Procter & Gamble 75,550 4,297
--------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.6%
Clear Channel Communications* (A) 21,375 1,628
Comcast, Special Cl A* 19,700 670
--------
2,298
--------
BUILDING -- 0.2%
Masco 29,225 577
--------
CHEMICALS -- 2.3%
Dow Chemical (A) 56,875 1,635
EI du Pont de Nemours 85,985 3,896
Engelhard 72,950 1,318
Hercules 62,200 929
Rohm & Haas 15,075 392
--------
8,170
--------
COMMUNICATIONS EQUIPMENT -- 1.8%
Andrew* 44,050 1,242
Motorola 161,075 5,325
--------
6,567
--------
COMPUTERS & SERVICES -- 4.7%
3Com* 25,125 341
Apple Computer* (A) 25,575 1,299
Autodesk 9,750 211
Compaq Computer (A) 145,025 4,070
Diebold 39,025 1,105
Electronic Data Systems 21,025 904
Hewlett-Packard 59,200 6,464
Palm* 37,285 1,454
Peoplesoft* 37,575 820
--------
16,668
--------
DIVERSIFIED OPERATIONS -- 2.1%
Honeywell International 49,525 1,665
Illinois Tool Works 18,825 1,078
Tyco International 89,750 4,802
--------
7,545
--------
DRUGS -- 2.3%
American Home Products 28,550 1,515
Pharmacia 80,651 4,416
Watson Pharmaceutical* 44,375 2,452
--------
8,383
--------
ELECTRICAL EQUIPMENT -- 0.8%
Emerson Electric 38,325 2,340
WW Grainger 17,750 564
--------
2,904
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 31
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INCOME EQUITY FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
ELECTRICAL UTILITIES -- 4.4%
AES* (A) 23,500 $ 1,256
Ameren (A) 98,125 3,551
Constellation Energy Group 98,475 3,280
Duke Energy (A) 22,650 1,397
Edison International 41,400 815
PG&E 98,325 2,544
Southern 37,525 917
TXU 58,550 1,830
--------
15,590
--------
ENTERTAINMENT -- 3.8%
Harrah's Entertainment* (A) 88,275 2,212
Seagram 14,800 830
Viacom, Cl B* 85,012 5,637
Walt Disney 128,925 4,988
--------
13,667
--------
FINANCIAL SERVICES -- 11.6%
American Express 73,125 4,145
Associates First Capital, Cl A 87,000 2,278
Citigroup 235,460 16,615
Fannie Mae 69,225 3,453
H & R Block 21 1
Household International 67,200 2,995
Lehman Brothers Holdings 18,550 2,085
Merrill Lynch 29,975 3,874
Morgan Stanley Dean Witter 59,800 5,457
T. Rowe Price Associates 17,950 734
--------
41,637
--------
FOOD, BEVERAGE & TOBACCO -- 1.4%
Coca-Cola Enterprises 43,250 830
Hershey Foods 9,500 439
Philip Morris (A) 142,275 3,592
--------
4,861
--------
GAS/NATURAL GAS -- 2.7%
EL Paso Energy (A) 52,800 2,554
Enron 57,300 4,219
Sempra Energy 79,750 1,495
Williams (A) 37,600 1,570
--------
9,838
--------
HOUSEHOLD PRODUCTS -- 0.3%
Newell Rubbermaid 28,800 776
Whirlpool 8,125 351
--------
1,127
--------
INSURANCE -- 7.6%
Aetna 20,950 1,163
American General 33,950 2,264
American International Group 148,725 13,041
Hartford Financial Services 47,000 3,020
Jefferson-Pilot 15,062 919
Marsh & McLennan 25,112 3,064
MBIA (A) 22,500 1,253
St. Paul 54,850 2,437
--------
27,161
--------
LEISURE PRODUCTS -- 0.4%
Mattel 122,550 1,356
--------
MACHINERY -- 0.2%
Ingersoll-Rand 16,050 630
--------
MANUFACTURING -- 1.4%
Danaher 35,550 1,811
Minnesota Mining & Manufacturing 36,725 3,307
--------
5,118
--------
MEDICAL PRODUCTS & SERVICES -- 1.6%
Baxter International 23,625 1,837
Boston Scientific* (A) 38,375 636
Mallinckrodt 11,000 503
Tenet Healthcare* (A) 87,125 2,652
--------
5,628
--------
METALS -- 1.3%
Alcan Aluminium 26,500 869
Alcoa 68,725 2,079
Barrick Gold 52,975 844
Worthington Industries 66,625 704
--------
4,496
--------
MISCELLANEOUS BUSINESS SERVICES-- 0.2%
First Data 17,625 812
--------
The accompanying notes are an integral part of the financial statements.
32 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
INCOME EQUITY FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
PAPER & PAPER PRODUCTS -- 1.4%
Kimberly-Clark 35,953 $ 2,065
Weyerhaeuser 42,075 1,922
Willamette Industries 31,925 968
--------
4,955
--------
PETROLEUM & FUEL PRODUCTS -- 12.6%
Anadarko Petroleum (A) 15,850 758
Ashland 20,850 687
Baker Hughes 52,450 1,816
BP Amoco PLC, ADR 10,122 529
Burlington Resources 59,475 1,940
Chevron 43,650 3,448
Conoco, Cl B 46,530 1,073
Exxon Mobil 217,973 17,438
Halliburton (A) 34,950 1,612
Phillips Petroleum 37,050 1,883
Royal Dutch Petroleum, ADR 127,475 7,425
Schlumberger 14,250 1,054
Texaco 32,975 1,630
Tosco 37,000 980
Transocean Sedco Forex 24,150 1,195
Unocal 50,725 1,534
--------
45,002
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.6%
Eastman Kodak 17,925 984
Xerox 70,525 1,049
--------
2,033
--------
PRINTING & PUBLISHING -- 1.0%
Harcourt General 7,155 395
Knight Ridder (A) 33,525 1,747
McGraw-Hill 11,780 700
Tribune 19,500 634
--------
3,476
--------
RAILROADS -- 0.3%
Burlington Northern Santa Fe 37,100 907
--------
REAL ESTATE INVESTMENT TRUSTS -- 3.2%
Apartment Investment & Management,
Cl A (A) 54,375 2,630
Kimco Realty (A) 76,375 3,150
Post Properties 51,472 2,387
Simon Property Group 131,875 3,445
--------
11,612
--------
RETAIL -- 3.9%
Albertson's 22,425 677
Costco Wholesale* 27,050 881
CVS 35,725 1,409
Federated Department Stores* 20,375 490
Limited (A) 43,575 891
Lowe's 27,875 1,176
May Department Stores 16,137 383
McDonald's 72,500 2,284
Safeway* 47,975 2,162
Sears Roebuck 26,075 779
Staples* 23,950 331
Supervalu 58,800 1,040
Target 45,825 1,329
--------
13,832
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 1.1%
Advanced Micro Devices* (A) 17,700 1,273
Kla-Tencor* 13,300 708
National Semiconductor* 8,325 301
PerkinElmer 23,675 1,514
--------
3,796
--------
TELEPHONES & TELECOMMUNICATIONS -- 8.8%
Alltel 21,200 1,306
AT&T 244,162 7,554
BellSouth 121,675 4,844
Global Crossing (A) 58,850 1,431
SBC Communications 32,650 1,390
Verizon Communications* 157,442 7,400
WorldCom* 192,650 7,525
--------
31,450
--------
TRANSPORTATION -- 0.1%
Ryder System 25,100 524
--------
TOTAL COMMON STOCKS
(Cost $343,168) 356,257
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 33
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INCOME EQUITY FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE BONDS -- 7.0%
--------------------------------------------------------------------------------
Bear Stearns, MTN (B) (C)
6.968%, 01/08/01 $10,000 $ 10,000
Goldman Sachs Group, MTN (B) (C)
7.058%, 10/16/00 15,000 15,000
--------
TOTAL CORPORATE BONDS
(Cost $25,000) 25,000
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 5.9%
--------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$2,900,841 (collateralized by
various U.S. Treasury
obligations, par value
$5,818,000, 0.000%-6.625%,
02/15/01-02/15/26;
market value $2,959,066) 2,900 2,900
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$18,166,018 (collateralized
by various corporate
obligations, par value
$19,108,889, 7.750%-8.000%,
07/25/30; market
value $19,070,837) 18,163 18,163
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $21,063) 21,063
--------
TOTAL INVESTMENTS -- 112.6%
(Cost $389,231) 402,320
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED-- (12.1%) (43,163)
--------
OTHER ASSETS AND LIABILITIES-- (0.5%) (1,826)
--------
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 23,503,890 outstanding shares
of beneficial interest $267,217
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 5,103,854 outstanding
shares of beneficial interest 67,569
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 307,937 outstanding
shares of beneficial interest 5,361
Paid-in-Capital of Class C Shares
(unlimited authorization -- no par
value) based on 3,124 outstanding
shares of beneficial interest 39
Accumulated net realized gain on investments 4,056
Net unrealized appreciation on investments 13,089
--------
TOTAL NET ASSETS -- 100.0% $357,331
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $12.35
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $12.38
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($12.38 / 94.5%) $13.10
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $12.30
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $12.29
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $41,750,740.
(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
PLC -- PUBLIC LIMITED COMPANY
The accompanying notes are an integral part of the financial statements.
34 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CORE EQUITY FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 94.3%
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.3%
Delta Air Lines 1,660 $ 89
--------
AUTOMOTIVE -- 0.3%
Ford Motor 1,780 83
Visteon 243 3
--------
86
--------
BANKS -- 4.5%
Bank of New York 11,215 525
Chase Manhattan 7,665 381
FleetBoston Financial 10,165 364
Wells Fargo 6,985 289
--------
1,559
--------
BEAUTY PRODUCTS -- 1.7%
Colgate-Palmolive 6,190 345
Gillette 3,100 90
Procter & Gamble 2,895 165
--------
600
--------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 1.3%
Comcast, Special Cl A* 5,910 201
Gannett 1,265 68
Time Warner 2,355 181
--------
450
--------
CHEMICALS -- 1.4%
Avery Dennison 4,925 267
EI du Pont de Nemours 3,833 174
PPG Industries 1,320 54
--------
495
--------
COMMUNICATIONS EQUIPMENT -- 6.2%
Cisco Systems* 16,625 1,088
Lucent Technologies 8,220 360
Motorola 6,770 224
Nortel Networks 5,165 384
Sawtek* 1,590 85
--------
2,141
--------
COMPUTERS & SERVICES -- 15.0%
America Online* 6,575 350
Computer Associates International 4,955 123
Computer Sciences* 2,635 165
Dell Computer* 4,195 184
Electronic Data Systems 3,805 164
EMC* 3,200 272
Factset Research Systems 100 3
Hewlett-Packard 4,155 454
IBM 5,840 657
Microsoft* 14,735 1,029
Oracle* 6,365 479
SAP, ADR 11,145 621
Sun Microsystems* 3,200 337
VeriSign* 665 105
Yahoo* 1,570 202
--------
5,145
--------
DIVERSIFIED OPERATIONS -- 5.3%
General Electric 27,645 1,422
Honeywell International 5,775 194
Tyco International 3,620 194
--------
1,810
--------
DRUGS -- 9.2%
American Home Products 3,450 183
Amgen* 4,705 305
Bristol-Myers Squibb 5,850 290
Eli Lilly 2,950 306
Johnson & Johnson 2,025 188
Merck 5,715 410
Pfizer 18,152 783
Pharmacia 7,160 392
Schering-Plough 6,885 297
--------
3,154
--------
ELECTRICAL UTILITIES -- 0.5%
FirstEnergy 6,370 162
--------
ENTERTAINMENT -- 1.8%
Viacom, Cl B* 3,715 246
Walt Disney 9,500 367
--------
613
--------
FINANCIAL SERVICES -- 5.1%
American Express 8,740 495
AXA Financial 9,200 352
Citigroup 9,110 643
Fannie Mae 3,560 177
Morgan Stanley Dean Witter 1,000 91
--------
1,758
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 35
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CORE EQUITY FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 2.3%
Bestfoods 1,345 $ 94
Coca-Cola 6,145 377
PepsiCo 7,225 331
--------
802
--------
GAS/NATURAL GAS -- 0.8%
Williams 6,765 282
--------
HOTELS & LODGING -- 0.4%
Hilton Hotels 14,765 151
--------
HOUSEHOLD PRODUCTS -- 0.5%
Fortune Brands 7,504 169
--------
INSURANCE -- 4.1%
Aflac 5,735 298
American International Group 1,005 88
Berkshire Hathaway, Cl B* 135 246
Hartford Financial Services 5,225 336
Marsh & McLennan 3,635 443
--------
1,411
--------
LEISURE -- 0.2%
Carnival 4,195 78
--------
MACHINERY -- 1.4%
Ingersoll-Rand 6,765 265
Parker Hannifin 6,520 232
--------
497
--------
MEASURING DEVICES -- 0.2%
Agilent Technologies* 1,588 65
--------
MEDICAL PRODUCTS & SERVICES -- 2.7%
Baxter International 2,825 220
Medtronic 3,135 160
PE Biosystems Group 6,305 550
--------
930
--------
MISCELLANEOUS BUSINESS SERVICES -- 0.7%
Automatic Data Processing 1,050 52
Pitney Bowes 5,405 187
--------
239
--------
PAPER & PAPER PRODUCTS -- 1.2%
Kimberly-Clark 4,785 275
Weyerhaeuser 2,690 123
--------
398
--------
PETROLEUM REFINING -- 6.9%
Chevron 3,785 299
Conoco, Cl A 2,025 45
Conoco, Cl B 1,228 28
Exxon Mobil 7,184 575
Halliburton 8,225 379
Phillips Petroleum 2,595 132
Royal Dutch Petroleum, ADR 5,700 332
Ultramar Diamond Shamrock 7,035 161
Unocal 7,420 224
USX-Marathon Group 7,555 184
--------
2,359
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.3%
Xerox 6,675 99
--------
PRINTING & PUBLISHING -- 0.8%
McGraw-Hill 3,015 179
Washington Post, Cl B 230 110
--------
289
--------
RAILROADS -- 0.6%
Burlington Northern Santa Fe 7,680 188
--------
REAL ESTATE INVESTMENT TRUSTS -- 1.4%
BRE Properties, Cl A 2,225 72
CBL & Associates Properties 4,125 103
First Industrial Realty Trust 2,050 66
JP Realty 4,300 81
Kimco Realty 2,040 84
Post Properties 1,945 90
--------
496
--------
RETAIL -- 4.2%
Albertson's 6,320 191
Costco Wholesale* 9,460 308
Federated Department Stores* 5,600 135
Home Depot 2,950 153
McDonald's 6,895 217
Nordstrom 3,135 55
Target 6,505 189
Wal-Mart Stores 3,690 203
--------
1,451
--------
The accompanying notes are an integral part of the financial statements.
36 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CORE EQUITY FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS -- 6.8%
Applied Materials* 7,365 $ 559
Intel 16,030 1,070
Qualcomm* 2,920 190
Teradyne* 3,055 194
Texas Instruments 4,135 243
Xilinx* 1,180 89
--------
2,345
--------
STEEL & STEEL WORKS -- 0.5%
Alcoa 5,150 156
--------
TELEPHONES & TELECOMMUNICATIONS -- 5.7%
AT&T 7,725 239
AT&T Wireless Group* 35 1
Level 3 Communications* 1,075 74
Nextel Communications, Cl A* 2,210 124
Qwest Communications
International* 1,945 91
SBC Communications 9,835 419
Sprint (FON Group) 3,505 125
Sprint (PCS Group)* 1,425 79
Verizon Communications* 11,060 520
WorldCom* 7,075 276
--------
1,948
--------
TOTAL COMMON STOCKS
(Cost $31,968) 32,415
--------
--------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES -- 1.5%
--------------------------------------------------------------------------------
Standard and Poor's 500 Index 3,550 507
--------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $522) 507
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 43.8%
--------------------------------------------------------------------------------
JP Morgan Securities, Inc.
6.500%, dated 07/31/00,
matures 08/01/00, repurchase
price $7,554,082 (collateralized
by a SLMA obligation, par value
$7,710,000, 0.000%, 08/01/00;
market value $7,704,541) $7,553 7,553
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$7,501,354 (collateralized by
various U.S. Treasury
obligations, par value
$13,653,000, 0.000%-5.625%,
11/30/00-05/15/20;
market value $7,650,253) $7,500 $ 7,500
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $15,053) 15,053
--------
TOTAL INVESTMENTS -- 139.6%
(Cost $47,543) 47,975
--------
SECURITIES PURCHASED PAYABLE -- (40.0%) (13,741)
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.4% 143
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 3,505,099 outstanding shares
of beneficial interest 33,754
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 2,730 outstanding
shares of beneficial interest 27
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 14,386 outstanding
shares of beneficial interest 144
Undistributed net investment income 11
Accumulated net realized gain on investments 9
Net unrealized appreciation on investments 432
--------
TOTAL NET ASSETS -- 100.0% $ 34,377
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $9.76
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE-- CLASS A SHARES $9.76
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($9.76 / 94.5%) $10.33
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $9.75
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 37
WWW.HIGHMARK FUNDS.COM
<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 66.3%
--------------------------------------------------------------------------------
AIR TRANSPORTATION -- 0.2%
Delta Air Lines 13,525 $ 726
--------
AUTOMOTIVE -- 0.2%
Ford Motor 14,015 653
Visteon* 1,835 26
--------
679
--------
BANKS -- 2.9%
Bank of New York 88,575 4,146
Chase Manhattan 45,485 2,260
Fleet Boston Financial 94,102 3,370
Wells Fargo (A) 54,825 2,265
--------
12,041
--------
BEAUTY PRODUCTS -- 1.3%
Colgate-Palmolive 47,625 2,652
Gillette 24,750 722
Procter & Gamble 32,825 1,867
--------
5,241
--------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 0.9%
Comcast, Special Cl A* 47,870 1,628
Gannett 10,400 560
Time Warner 22,450 1,722
--------
3,910
--------
CHEMICALS -- 0.9%
Avery Dennison 39,725 2,155
EI du Pont de Nemours 22,376 1,014
PPG Industries 11,600 472
--------
3,641
--------
COMMUNICATIONS EQUIPMENT -- 4.0%
Cisco Systems* (A) 117,575 7,694
Lucent Technologies 70,350 3,078
Motorola 51,670 1,708
Nortel Networks 44,320 3,296
Sawtek* (A) 14,240 758
--------
16,534
--------
COMMUNICATIONS SERVICES -- 0.0%
Tycom* 2,500 85
--------
COMPUTERS & SERVICES -- 10.0%
America Online* (A) 35,615 1,899
Computer Associates International 40,057 994
Computer Sciences* 25,075 1,567
Dell Computer* 34,510 1,516
Electronic Data Systems 32,105 1,381
EMC* 25,965 2,210
Hewlett-Packard 35,750 3,903
IBM 49,650 5,583
Microsoft* 117,625 8,212
Oracle* 53,020 3,986
SAP, ADR 94,020 5,242
Sun Microsystems* 26,285 2,771
VeriSign* 5,360 851
Yahoo* 12,800 1,647
--------
41,762
--------
DIVERSIFIED OPERATIONS -- 3.5%
General Electric 223,540 11,498
Honeywell International 46,175 1,553
Tyco International 30,270 1,619
--------
14,670
--------
DRUGS -- 6.1%
American Home Products 28,600 1,518
Amgen* 38,540 2,503
Bristol-Myers Squibb 48,760 2,420
Eli Lilly 23,000 2,389
Johnson & Johnson 16,090 1,497
Merck 45,860 3,288
Pfizer 142,762 6,157
Pharmacia 54,600 2,989
Schering-Plough 62,650 2,706
--------
25,467
--------
ELECTRICAL UTILITIES -- 0.3%
FirstEnergy 50,350 1,284
--------
ENTERTAINMENT -- 1.1%
Viacom, Cl B* 26,115 1,732
Walt Disney 77,180 2,986
--------
4,718
--------
FINANCIAL SERVICES -- 4.1%
American Express 71,275 4,040
AXA Financial 82,125 3,141
Citigroup 79,775 5,629
Fannie Mae 69,225 3,453
Morgan Stanley Dean Witter 8,000 730
--------
16,993
--------
The accompanying notes are an integral part of the financial statements.
38 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 1.8%
Bestfoods 20,365 $ 1,418
Coca-Cola (A) 49,650 3,044
PepsiCo 70,200 3,216
--------
7,678
--------
GAS/NATURAL GAS -- 0.6%
Williams (A) 61,475 2,567
--------
HOTELS & LODGING -- 0.3%
Hilton Hotels 118,200 1,212
--------
HOUSEHOLD PRODUCTS -- 0.3%
Fortune Brands 60,982 1,372
--------
INSURANCE -- 3.0%
Aflac (A) 54,625 2,837
American International Group 9,022 791
Berkshire Hathaway, Cl B* 1,035 1,889
Hartford Financial Services 54,825 3,523
Marsh & McLennan 29,105 3,551
--------
12,591
--------
LEISURE -- 0.2%
Carnival 32,790 613
--------
MACHINERY -- 1.0%
Ingersoll-Rand 56,750 2,227
Parker-Hannifin 52,125 1,854
--------
4,081
--------
MEASURING DEVICES -- 0.1%
Agilent Technologies* 13,730 559
--------
MEDICAL PRODUCTS & SERVICES -- 2.2%
Baxter International 46,175 3,590
Medtronic 26,930 1,375
PE Biosystems Group 47,275 4,122
--------
9,087
--------
MISCELLANEOUS BUSINESS SERVICES -- 0.5%
Automatic Data Processing 8,100 401
Pitney Bowes 45,190 1,565
--------
1,966
--------
PAPER & PAPER PRODUCTS -- 0.8%
Kimberly-Clark 39,675 2,279
Weyerhaeuser 25,125 1,148
--------
3,427
--------
PETROLEUM & FUEL PRODUCTS -- 4.4%
Chevron 29,370 2,320
Conoco, Cl B 47,093 1,086
Exxon Mobil 42,439 3,395
Halliburton (A) 71,000 3,275
Phillips Petroleum 20,240 1,028
Royal Dutch Petroleum, ADR 46,875 2,730
Ultramar Diamond Shamrock 55,310 1,265
Unocal 59,575 1,802
USX-Marathon Group 61,575 1,497
--------
18,398
--------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.2%
Xerox 59,025 878
--------
PRINTING & PUBLISHING -- 0.6%
McGraw-Hill 28,100 1,670
Washington Post, Cl B 1,780 854
--------
2,524
--------
RAILROADS -- 0.4%
Burlington Northern Santa Fe 74,775 1,827
--------
REAL ESTATE INVESTMENT TRUSTS -- 2.3%
BRE Properties, Cl A 45,725 1,483
CBL & Associates Properties 68,515 1,713
First Industrial Realty Trust 45,360 1,452
JP Realty 75,125 1,418
Kimco Realty (A) 41,100 1,695
Post Properties 37,875 1,756
--------
9,517
--------
RETAIL -- 3.0%
Albertson's 61,945 1,870
Costco Wholesale* 62,275 2,028
Federated Department Stores* 49,075 1,181
Home Depot 23,805 1,232
McDonald's 70,210 2,212
Nordstrom 57,455 1,005
Target 46,240 1,341
Wal-Mart Stores 29,475 1,619
--------
12,488
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 39
WWW.HIGHMARKFUNDS.COM
<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS -- 4.9%
Applied Materials* 65,140 $ 4,942
Intel 134,850 9,001
Qualcomm* 24,680 1,603
Teradyne* 26,890 1,704
Texas Instruments 40,045 2,350
Xilinx* (A) 10,645 799
--------
20,399
--------
STEEL & STEEL WORKS -- 0.3%
Alcoa 40,220 1,217
--------
TELEPHONES & TELECOMMUNICATIONS-- 3.9%
AT&T 69,050 2,136
AT&T Wireless Group* 4,175 115
Level 3 Communications* 9,725 666
Nextel Communications, Cl A* 19,000 1,063
Qwest Communications
International* 16,095 755
SBC Communications 79,880 3,400
Sprint (PCS Group)* (A) 11,925 659
Sprint (FON Group) 30,390 1,083
Verizon Communications* 84,200 3,957
WorldCom* 65,330 2,552
--------
16,386
--------
TOTAL COMMON STOCKS
(Cost $183,596) 276,538
--------
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 1.7%
--------------------------------------------------------------------------------
U.S. Treasury Note
6.125%, 08/15/07 $ 2,000 1,993
U.S. Treasury Bonds
7.250%, 05/15/16 1,000 1,112
8.125%, 08/15/19 2,000 2,443
7.125%, 02/15/23 1,500 1,687
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $7,068) 7,235
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 2.5%
--------------------------------------------------------------------------------
FHLMC
5.750%, 03/15/09 $2,000 $ 1,822
FNMA
6.500%, 08/15/04 5,000 4,915
6.375%, 06/29/05 2,000 1,929
6.375%, 06/15/09 2000 1,899
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $11,004) 10,565
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS -- 11.0%
--------------------------------------------------------------------------------
FHLMC
6.000%, 02/01/28 2,576 2,368
FNMA
7.500%, 08/01/01 569 568
6.500%, 05/01/14 2,221 2,144
6.500%, 03/01/24 249 235
8.000%, 08/01/24 273 274
8.000%, 05/01/25 788 791
7.000%, 09/01/25 969 939
8.000%, 07/01/26 318 319
7.000%, 09/01/26 749 732
7.500%, 09/01/26 517 510
7.000%, 12/01/26 952 920
7.500%, 03/01/27 294 289
6.500%, 10/01/27 1,104 1,043
6.500%, 12/01/27 2,027 1,915
7.000%, 12/01/27 1,795 1,734
6.000%, 03/01/28 3,462 3,177
6.000%, 05/01/28 876 804
6.500%, 05/01/29 2,792 2,639
GNMA
6.500%, 09/15/08 1,675 1,628
6.000%, 11/15/08 1,268 1,207
6.500%, 06/15/23 179 170
6.500%, 02/15/24 82 78
7.500%, 05/15/24 237 235
7.500%, 09/15/25 477 474
7.000%, 02/15/26 625 608
6.500%, 04/15/26 671 637
7.000%, 08/15/26 1,785 1,736
7.500%, 09/15/26 1,734 1,720
7.500%, 01/15/27 1,237 1,230
7.000%, 10/15/27 1,322 1,285
6.500%, 05/15/28 847 804
The accompanying notes are an integral part of the financial statements.
40 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS (CONTINUED)
--------------------------------------------------------------------------------
GNMA -- (continued)
6.000%, 12/15/28 $2,327 $ 2,144
6.500%, 01/15/29 2,698 2,560
6.000%, 02/15/29 2,242 2,066
7.000%, 03/15/29 2,301 2,237
6.000%, 04/15/29 3,789 3,491
--------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS
(Cost $47,363) 45,711
--------
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 16.8%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 1.4%
Litton Industries
6.750%, 04/15/18 2,500 2,178
Lockheed Martin
7.700%, 06/15/08 2,000 1,970
Raytheon
6.550%, 03/15/10 2,000 1,818
--------
5,966
--------
AUTOMOTIVE -- 1.1%
Ford Motor Credit
6.500%, 02/28/02 2,000 1,975
General Motors Acceptance
5.750%, 11/10/03 2,600 2,473
--------
4,448
--------
BANKS -- 2.3%
Bankers Trust
7.500%, 11/15/15 2,000 1,900
Bank One
6.125%, 02/15/06 1,000 926
Chase Manhattan Bank
6.700%, 08/15/08 1,500 1,408
Citicorp
6.750%, 08/15/05 450 436
Fleet Boston
8.000%, 09/15/04 2,000 2,025
Golden West Financial
6.700%, 07/01/02 150 147
Royal Bank of Scotland Group
6.375%, 02/01/11 2,500 2,216
U.S. Bancorp
6.875%, 09/15/07 500 477
--------
9,535
--------
CHEMICALS -- 1.2%
Dow Chemical
6.850%, 08/15/13 $2,000 1,892
EI DuPont de Nemours
6.750%, 09/01/07 3,000 2,917
--------
4,809
--------
COMPUTERS & SERVICES -- 0.6%
IBM
5.370%, 09/22/03 2,500 2,372
8.375%, 11/01/19 200 221
--------
2,593
--------
DIVERSIFIED OPERATIONS -- 0.9%
Honeywell International
6.200%, 02/01/08 4,000 3,715
--------
ELECTRICAL UTILITITES -- 0.2%
Panhandle Eastern Pipe Line
7.875%, 08/15/04 1,000 1,006
--------
FINANCIAL SERVICES -- 1.8%
American General Finance
6.250%, 12/18/02 2,000 1,952
Associates of N.A.
7.875%, 09/30/01 2,000 2,010
John Deere Capital
7.000%, 10/15/02 1,500 1,491
Lehman Brothers Holding
8.500%, 05/01/07 2,000 2,050
--------
7,503
--------
FOOD, BEVERAGE & TOBACCO -- 2.0%
General Mills
5.400%, 12/08/08 2,500 2,200
Joseph E. Seagram & Sons
7.000%, 04/15/08 1,500 1,433
Pepsi Bottling Holdings
5.375%, 02/17/04 3,000 2,839
Ralston Purina
7.750%, 10/01/15 2,000 1,978
--------
8,450
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 41
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- (CONTINUED)
--------------------------------------------------------------------------------
FOREIGN GOVERNMENTS -- 0.4%
Hydro Quebec
8.050%, 07/07/24 $ 150 $ 161
Province of British Columbia
7.000%, 01/15/03 1,500 1,496
--------
1,657
--------
INDUSTRIAL -- 1.0%
Johnson Controls
6.300%, 02/01/08 2,000 1,863
Pharmacia
5.875%, 12/01/08 2,500 2,275
--------
4,138
--------
INSURANCE -- 0.5%
American General
6.750%, 06/15/05 2,000 1,917
--------
MACHINERY -- 0.1%
Caterpillar Tractor
6.000%, 05/01/07 605 561
--------
RETAIL -- 2.0%
JC Penney
6.000%, 05/01/06 2,250 1,851
Sears Roebuck Acceptance
6.900%, 08/01/03 2,000 1,958
Wal-Mart Stores
6.375%, 03/01/03 450 444
6.550%, 08/10/04 2,000 1,973
5.875%, 10/15/05 2,000 1,905
--------
8,131
--------
TELEPHONES & TELECOMMUNICATIONS -- 1.3%
Chesapeake & Potomac Telephone of Maryland
6.000%, 05/01/03 1,500 1,449
8.000%, 10/15/29 175 178
New England Telephone & Telegraph
7.875%, 11/15/29 250 250
Qwest Capital Funding
6.375%, 07/15/08 2,000 1,818
Vodafone Group PLC
6.650%, 05/01/08 2,000 1,865
--------
5,560
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $73,559) 69,989
--------
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 0.9%
--------------------------------------------------------------------------------
Citibank Credit Card Master Trust,
Ser 1997-3, Cl A
6.839%, 02/10/04 100 99
Citibank Credit Card Master Trust,
Ser 1998-3, Cl A
5.800%, 02/07/05 3,000 2,910
Contimortgage Home Equity Loan Trust,
Ser 1995-3, Cl A4
7.440%, 09/15/12 71 71
EQCC Home Equity Loan Trust,
Ser 1996-3, Cl A6
7.400%, 12/15/19 450 450
Green Tree Financial, Ser 1995-9, Cl A
6.800%, 01/15/27 350 347
--------
TOTAL ASSET BACKED SECURITIES
(Cost $3,880) 3,877
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 6.0%
--------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price $3,930,987
(collateralized by various
U.S. Treasury obligations par
value $9,778,000, 0.000%-5.750%,
01/31/03-05/15/23;
market value $4,009,649) 3,930 3,930
Greenwich Capital (B)
6.750%, dated 07/31/00,
matures 08/01/00, repurchase
price $15,002,813 (collateralized
by various corporate obligations,
par value $29,793,462,
0.000%-6.200%, 03/15/02-02/17/09;
market value $15,750,901) 15,000 15,000
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$5,879,425 (collateralized
by various corporate obligations,
par value $6,184,585, 7.750%-8.000%,
07/25/30; market value
$6,172,269) 5,878 5,878
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $24,808) 24,808
--------
The accompanying notes are an integral part of the financial statements.
42 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
BALANCED FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Value (000)
--------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 105.2%
(Cost $351,278) $438,723
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (5.0%) (20,878)
--------
OTHER ASSETS AND LIABILITIES -- (0.2%) (788)
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 25,530,119 outstanding shares
of beneficial interest 306,951
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 673,281 outstanding
shares of beneficial interest 8,292
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 298,117 outstanding
shares of beneficial interest 4,965
Paid-in-Capital of Class C Shares
(unlimited authorization -- no par
value) based on 2,913 outstanding
shares of beneficial interest 47
Undistributed net investment income 462
Accumulated net realized gain on investments 8,895
Net unrealized appreciation on investments 87,445
--------
TOTAL NET ASSETS -- 100.0% $417,057
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $15.74
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $15.73
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($15.73 / 94.5%) $16.65
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $15.70
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $15.71
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $20,573,280.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE CORPORATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE CORPORATION
PLC -- PUBLIC LIMITED COMPANY
----------------------------------------------------------------------------- 43
The accompanying notes are an integral part of the financial statements.
WWW.HIGHMARKFUNDS.COM
<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
U.S. COMMON STOCKS -- 73.8%
--------------------------------------------------------------------------------
AIRLINES -- 1.5%
America West Holdings, Cl B* 64,300 $ 1,033
Mesaba Holdings* 114,900 1,142
--------
2,175
--------
AIRCRAFT -- 1.3%
Heico 5,000 100
Heico, Cl A 116,440 1,863
--------
1,963
--------
ATHLETIC EQUIPMENT -- 1.7%
Direct Focus* 50,000 2,475
--------
AUTOMOTIVE -- 2.4%
Copart* 108,000 1,431
Dollar Thrifty Automotive Group* 111,200 2,092
--------
3,523
--------
BANKS -- 1.6%
Bank United, Cl A 30,000 1,093
Eldorado Bancshares* 180,000 1,294
--------
2,387
--------
BUILDING & CONSTRUCTION -- 1.1%
Granite Construction 67,000 1,616
--------
COMMUNICATIONS EQUIPMENT -- 4.1%
Adtran* 33,800 2,034
Advanced Fibre Communication* 30,000 1,286
Antec* (A) 36,800 1,391
CTS 29,100 1,335
--------
6,046
--------
COMPUTER PROGRAMING & SOFTWARE -- 2.0%
Progress Software* 107,000 1,612
Take-Two Interactive Software* 129,100 1,283
--------
2,895
--------
COMPUTERS & SERVICES -- 4.7%
Infocus* 40,000 1,400
S3* 198,600 2,036
Tidel Technologies* 200,100 1,663
Xircom* 53,500 1,829
--------
6,928
--------
CONTAINERS & PACKAGING -- 2.3%
Bemis 51,500 1,770
Pactiv* 180,000 1,665
--------
3,435
--------
DRUGS -- 4.2%
Cambrex 30,000 1,356
Dura Pharmaceuticals* 130,000 2,941
Mylan Laboratories 86,500 1,838
--------
6,135
--------
ELECTRICAL SERVICES -- 1.8%
CMS Energy 43,200 1,104
Woodhead Industries 74,000 1,605
--------
2,709
--------
ENTERTAINMENT -- 1.4%
World Wrestling Federation
Entertainment* 99,000 2,104
--------
FINANCIAL SERVICES -- 1.5%
American Capital Strategies 83,700 2,145
--------
FOOD -- 1.0%
J & J Snack Foods* 103,400 1,538
--------
GAS/NATURAL GAS -- 1.5%
Unit* 175,000 2,187
--------
HOUSEHOLD PRODUCTS -- 0.9%
RPM Ohio (A) 150,000 1,397
--------
INDUSTRIAL -- 3.9%
Insituform Technologies, Cl A* 92,900 2,241
Pentair 65,000 1,991
Quixote 105,000 1,509
--------
5,741
--------
INSURANCE -- 1.9%
Fremont General 227,800 925
Liberty Financial 85,500 1,881
--------
2,806
--------
LEASING & RENTING -- 1.1%
Rent-Way* 54,000 1,674
--------
The accompanying notes are an integral part of the financial statements.
44 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
SMALL CAP VALUE FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
U.S. COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
MACHINERY -- 2.9%
Applied Power, Cl A 49,000 $ 1,939
Aptargroup 76,500 1,908
Metals USA 115,000 496
--------
4,343
--------
MEDICAL PRODUCTS & SERVICES -- 5.1%
Adac Laboratories* 156,000 3,091
Isolyser* 325,000 914
Lasersight* (A) 231,350 839
Organogenesis* (A) 64,115 777
Sola International* 310,000 1,841
--------
7,462
--------
METALS -- 1.0%
Ryerson Tull 50,000 441
Ucar International* 75,000 1,055
--------
1,496
--------
PETROLEUM & FUEL PRODUCTS -- 4.5%
Equitable Resources 70,000 3,644
Evergreen Resources* 65,000 1,779
Newpark Resources* 151,000 1,255
--------
6,678
--------
PETROLEUM REFINING -- 1.2%
Pennzoil-Quaker State 140,020 1,750
--------
REAL ESTATE INVESTMENT TRUSTS -- 3.7%
Bluegreen* 250,100 688
First Industrial Realty Trust 70,000 2,240
Reckson Associates Realty (A) 99,500 2,612
--------
5,540
--------
RETAIL -- 4.4%
Casey's General Stores 160,000 1,890
Cash America International 102,700 745
Rite Aid (A) 100,400 433
Venator Group* 242,900 3,431
--------
6,499
--------
SEMI-CONDUCTORS/INSTRUMENTS -- 7.0%
3DFX Interactive* (A) 172,500 $ 1,304
Brooks Automation* 38,370 1,904
Cypress Semiconductor* (A) 60,000 2,239
Ibis Technology* (A) 60,000 2,490
SpeedFam-IPEC* 120,000 2,377
--------
10,314
--------
SPECIALTY MACHINERY -- 1.5%
York International 80,000 2,225
--------
TRUCKING -- 0.6%
Landstar System* 16,500 898
--------
TOTAL U.S. COMMON STOCKS
(Cost $89,798) 109,084
--------
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 19.2%
--------------------------------------------------------------------------------
AUSTRALIA -- 0.5%
Pacific Dunlop, ADR 78,570 260
PMP Communications 386,510 450
--------
710
--------
AUSTRIA -- 2.1%
Austria Tabakwerke 22,560 779
BAU Holding 22,420 910
BBAG Oesterreichische
Brau-Beteiligungs 16,000 726
Boehler-Uddeholm, ADR 66,170 735
--------
3,150
--------
BRAZIL -- 0.7%
Centrais Geradoras do Sul do
Brasil, ADR* 71,690 516
Copene-Petroquimica do
Nordeste, ADR 23,620 521
--------
1,037
--------
CANADA -- 1.0%
Hudson's Bay 57,620 601
Manitoba Telecom Services 50,370 949
--------
1,550
--------
CAYMAN ISLANDS -- 0.3%
Anangel American
Shipholdings, ADR 75,200 404
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 45
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
SMALL CAP VALUE FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- (CONTINUED)
CHILE -- 0.3%
Quinenco, ADR 39,683 $ 335
Sociedad Quimica y Minera de
Chile, ADR 1,740 35
--------
370
--------
CHINA -- 0.6%
Beijing Yanhua Petrochemical, ADR 47,460 338
Shandong Huaneng Power, ADR 80,500 604
--------
942
--------
ESTONIA -- 0.4%
Eesti Telekom, GDR* 30,990 621
--------
HONG KONG -- 2.8%
Dairy Farm International Holdings,
ADR 138,350 367
First Pacific, ADR 209,110 308
Guoco Group 214,000 466
Liu Chong Hing Bank 733,110 644
Mandarin Oriental, ADR 98,660 523
Oriental Press Group 770,400 108
Sing Tao 2,156,000 329
SmarTone Telecommunications
Holding 318,000 638
South China Morning Post, ADR 208,890 737
--------
4,120
--------
IRELAND -- 0.5%
Greencore Group 280,440 745
--------
ITALY -- 0.4%
Ansaldo Trasporti 511,670 531
--------
JAPAN -- 4.2%
Akita Bank (A) 150,000 580
Bank of Iwate (A) 18,200 648
Chofu Seisakusho 43,000 499
Daicel Chemical Industries 88,000 224
Fuji Oil 93,000 758
Higo Bank 162,000 590
Osaka Steel 135,600 553
Taikisha 86,000 848
Yamanashi Chuo Bank 122,000 409
Yokogawa Bridge 263,000 1,030
--------
6,139
--------
NETHERLANDS -- 1.5%
Ahrend 32,750 410
Hollandsche Beton Groep 59,682 625
Hunter Douglas 26,584 690
Internatio-Muller (A) 33,890 549
--------
2,274
--------
PHILIPPINES -- 0.6%
JG Summit Holdings 3,863,000 249
Manila Electric, ADR 303,540 392
RFM 5,656,567 239
--------
880
--------
SPAIN -- 0.3%
Construcciones y Auxiliar de
Ferrocarriles 19,260 375
--------
SWITZERLAND -- 0.8%
Barry Callebaut 1,510 225
Daetwyler Holding 658 891
Edipresse 321 137
--------
1,253
--------
UNITED KINGDOM -- 2.2%
Arriva 163,480 502
Coats Viyella, ADR* 286,880 625
Elementis 349,115 416
Greene King 30,310 222
Hazlewood Foods 486,410 667
Heywood Williams Group 179,460 614
Somerfield 158,080 172
--------
3,218
--------
TOTAL FOREIGN COMMON STOCKS
(Cost $28,360) 28,319
--------
--------------------------------------------------------------------------------
FOREIGN PREFERRED STOCKS -- 1.0%
--------------------------------------------------------------------------------
BRAZIL -- 0.3%
Centrais Eletricas de Santa
Catarina, ADR 10,980 445
--------
GERMANY -- 0.7%
Dyckerhoff 20,690 466
KSB 6,236 492
--------
958
--------
TOTAL FOREIGN PREFERRED STOCKS
(Cost $1,695) 1,403
--------
The accompanying notes are an integral part of the financial statements.
46 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
SMALL CAP VALUE FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 15.1%
--------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00,
matures 08/01/00, repurchase
price $11,521,634 (collateralized
by various U.S. Treasury obligations,
par value $15,142,000, 0.000%-7.250%,
01/31/02-02/15/21, market value
$11,750,846) $11,520 $ 11,520
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$10,830,046 (collateralized
by various corporate obligations,
par value $11,392,158,
7.750%-8.000%, 07/25/30,
market value $11,369,472) 10,828 10,828
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $22,348) 22,348
--------
TOTAL INVESTMENTS -- 109.1%
(Cost $142,201) 161,154
--------
PAYABLE UPON RETURN OF
SECURITIES LOANED -- (7.3%) (10,828)
--------
OTHER ASSETS AND LIABILITIES -- (1.8%) (2,591)
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 9,886,582 outstanding shares
of beneficial interest 108,263
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 611,864 outstanding
shares of beneficial interest 7,633
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 332,754 outstanding
shares of beneficial interest 4,149
Paid-in-Capital of Class C Shares
(unlimited authorization -- no par
value) based on 26,967 outstanding
shares of beneficial interest 363
Distribution in excess of net investment income (400)
Accumulated net realized gain on investments 8,775
Net unrealized depreciation on forward
foreign currency contracts, foreign
currency and translation of other
assets and liabilities in foreign
currency (1)
Net unrealized appreciation on investments 18,953
--------
TOTAL NET ASSETS -- 100.0% $147,735
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $13.61
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $13.53
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($13.53 / 94.5%) $14.32
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $13.45
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $13.43
========
--------------------------------------------------------------------------------
*NON-INCOME PRODUCING SECURITIES
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000. (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $10,499,646.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
GDR -- GLOBAL DEPOSITORY RECEIPT
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 47
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- 98.0%
--------------------------------------------------------------------------------
AUSTRALIA -- 2.8%
Australia & New Zealand Bank
Group 19,000 $ 143
Brambles Industries 8,800 255
Broken Hill Proprietary 28,000 296
Cable & Wireless Optus* 65,000 189
Commonwealth Bank of Australia 23,500 378
Foster's Brewing Group 120,000 329
National Australia Bank (A) 15,000 215
News Corporation 43,000 520
Rio Tinto 22,000 329
Southcorp 57,000 161
Telstra (A) 103,200 425
Westpac Banking (A) 18,000 128
Woodside Petroleum (A) 10,000 73
--------
3,441
--------
BELGIUM -- 1.8%
Dexia 10,261 1,502
Fortis, Cl B 23,797 732
--------
2,234
--------
BRAZIL -- 1.2%
Petro Brasileiro, ADR 29,200 781
Vale do Rio Doce, ADR 26,900 750
--------
1,531
--------
DENMARK -- 0.4%
Tele Danmark 8,500 523
--------
FINLAND -- 2.1%
Nokia OYJ 58,000 2,569
--------
FRANCE -- 13.3%
Accor 16,000 682
Air Liquide 4,838 616
Alcatel 20,350 1,501
Aventis (A) 21,177 1,631
Cap Gemini 3,594 706
Carrefour Supermarche 7,508 552
Groupe Danone 6,590 990
Lafarge 19,247 1,491
Louis Vuitton Moet-Hennessy 8,000 696
Pinault-Printemps-Redoute 3,400 706
Rhodia 20,730 312
Societe Television Francaise 12,730 946
STMicroelectronics, NY Shares 21,000 1,196
Suez Lyonnaise des Eaux 4,300 703
Total Fina Elf 17,000 2,519
Vivendi (A) 16,088 1,285
--------
16,532
--------
GERMANY -- 4.1%
Allianz, Reg (A) 3,806 1,428
BASF (A) 19,800 815
Deutsche Bank, Reg 6,500 585
Deutsche Lufthansa, Reg (A) 21,860 543
Deutsche Telekom, Reg (A) 23,200 1,019
HypoVereinsbank (A) 11,300 667
--------
5,057
--------
HONG KONG -- 4.4%
Asiainfo Holding* 1,000 36
Cable & Wireless 231,000 527
Cheung Kong 51,000 602
China Mobile* 72,000 575
China Unicom* 50,000 116
Citic Pacific 49,000 262
CLP Holdings 32,000 144
Hang Seng Bank 19,800 205
Hong Kong Electric Holdings 30,000 93
HSBC Holdings, Reg 47,000 618
Hutchison Whampoa 82,000 1,146
Johnson Electric Holdings 36,000 350
Legend Holdings 30,000 34
Li & Fung 20,000 100
Skyworth Digital Holdings* 100,000 14
Sun Hung Kai Properties 80,000 636
Sunevision Holdings* 250 --
--------
5,458
--------
INDIA -- 0.4%
Infosys Technologies, ADR 4,000 532
--------
IRELAND -- 0.4%
Bank of Ireland 80,100 492
--------
ITALY -- 6.8%
Autogrill (A) 58,648 690
Banca Nazionale del Lavoro 165,000 581
ENI 125,136 700
Italcementi 67,837 621
Saipem 230,000 1,338
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
48 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERNATIONAL EQUITY FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
ITALY -- (CONTINUED)
San Paolo (A) 105,854 $ 1,795
Seat-Pagine Gialle RNC (A) 368,000 907
Telecom Italia 140,000 1,801
--------
8,433
--------
JAPAN -- 18.8%
Asahi Bank 175,000 613
Bridgestone 25,000 574
Canon 18,000 802
Daiwa Securities Group (A) 30,000 327
Fujitsu 49,000 1,377
Fujitsu Support and Service (A) 6,000 542
Hitachi 47,000 562
Honda Motor 19,000 694
Ito En 8,000 625
Ito-Yokado 6,000 358
Japan Tobacco 70 530
KAO (A) 38,000 1,124
Minebea (A) 58,000 651
Mitsubishi Chemical 123,000 449
NEC (A) 28,000 746
Nintendo 2,200 361
Nippon Express (A) 100,000 569
Nippon Paper 107,000 781
Nippon Telegraph & Telephone 199 2,379
NTT Docomo 40 1,004
Rohm 7,000 1,837
Sony (A) 19,600 1,801
Sumitomo Bakelite (A) 50,000 598
Takeda Chemical Industries 36,000 2,135
Toyota Motor 42,000 1,778
World (A) 4,500 144
--------
23,361
--------
MALAYSIA -- 0.5%
Genting Berhad 187,200 586
--------
MEXICO -- 1.3%
Coca-Cola Femsa, ADR 45,800 910
Telefonos de Mexico, ADR 13,600 716
--------
1,626
--------
NETHERLANDS -- 4.7%
Heineken 18,280 1,045
ING Groep 31,194 2,085
Philips Electronics 33,320 1,509
VNU 20,700 1,132
--------
5,771
--------
PORTUGAL -- 1.0%
Banco Pinto & Sotto Mayor* 24,563 552
Portugal Telecom, Reg 64,955 707
--------
1,259
--------
SINGAPORE -- 1.2%
Chartered Semiconductor
Manufacturing* 17,000 123
City Developments 30,000 128
DBS Group Holdings 25,119 303
Overseas Union Bank 25,982 109
Singapore Airlines 25,000 252
Singapore Press Holdings 10,038 171
Singapore Telecommunications 100,000 138
ST Assembly Test Services* 25,000 54
United Overseas Bank 22,000 157
Venture Manufacturing 3,000 34
--------
1,469
--------
SOUTH AFRICA -- 0.8%
Dimension Data Holdings* 120,000 1,029
--------
SOUTH KOREA -- 1.1%
Korea Electric Power, ADR 44,300 734
Samsung Electronics, GDR 4,100 590
--------
1,324
--------
SPAIN -- 2.8%
Banco Santander Central Hispano 98,000 1,012
Endesa 33,600 697
Grupo Dragados 103,854 792
Telefonica* 48,813 1,027
--------
3,528
--------
SWEDEN -- 2.6%
Ericsson, Cl B 108,400 2,116
Nordic Baltic Holdings 91,270 642
Tele1 Europe Holdings* 32,912 418
--------
3,176
--------
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 49
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERNATIONAL EQUITY FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
FOREIGN COMMON STOCKS -- (CONTINUED)
--------------------------------------------------------------------------------
SWITZERLAND -- 6.1%
Givaudan, Reg* 80 $ 23
Nestle, Reg 755 1,573
Novartis, Reg 960 1,482
Roche Holding (A) 80 752
Schindler Holdings 420 679
UBS, Reg (A) 9,356 1,348
Zurich Allied 3,091 1,667
--------
7,524
--------
TAIWAN -- 0.5%
Taiwan Semiconductor
Manufacturing* ADR 18,900 574
--------
TURKEY -- 0.5%
Yapi Ve Kredi Bankasi* 60,800,729 641
--------
UNITED KINGDOM -- 18.4%
AstraZeneca 12,399 534
BAE Systems 132,380 892
Bank of Scotland 50,795 398
Barclays 52,300 1,183
BG Group 103,000 678
BP Amoco, ADR 193,444 1,692
British Telecom 86,995 1,149
Cable & Wireless 36,621 637
Carlton Communications 682 8
CGNU 30,000 471
Emap 23,000 407
Energis* 115,000 825
Glaxo Wellcome 55,451 1,596
Invensys 346,600 1,242
Kingfisher 91,133 764
Prudential 48,560 663
Reed International 154,000 1,231
Royal Bank of Scotland Group 91,368 1,440
Sema Group, PLC 30,536 461
Shell Transport & Trading 310,150 2,490
SmithKline Beecham 38,681 498
Tesco 121,003 399
Vodafone AirTouch 726,000 3,208
--------
22,866
--------
TOTAL FOREIGN COMMON STOCKS
(Cost $105,139) 121,536
--------
--------------------------------------------------------------------------------
FOREIGN PREFERRED STOCK -- 0.9%
--------------------------------------------------------------------------------
GERMANY -- 0.9%
SAP 4,830 $ 1,083
--------
TOTAL FOREIGN PREFERRED STOCK
(Cost $813) 1,083
--------
--------------------------------------------------------------------------------
CORPORATE BOND -- 4.0%
--------------------------------------------------------------------------------
Bear Stearns, MTN (B) (C)
6.888%, 05/08/01 $5,000 5,000
--------
TOTAL CORPORATE BOND
(Cost $5,000) 5,000
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 8.0%
--------------------------------------------------------------------------------
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price $9,971,613
(collateralized by various corporate
obligations, par value $10,489,170,
7.750%-8.000%, 07/25/30;
market value $10,468,171) 9,970 9,970
--------
TOTAL REPURCHASE AGREEMENT
(Cost $9,970) 9,970
--------
--------------------------------------------------------------------------------
CASH EQUIVALENT -- 0.4%
--------------------------------------------------------------------------------
SEI Daily Income Trust Money
Market Fund 500,000 500
--------
TOTAL CASH EQUIVALENT
(Cost $500) 500
--------
TOTAL INVESTMENTS -- 111.3%
(Cost $121,422) 138,089
--------
PAYABLE UPON RETURN OF SECURITIES
LOANED -- (12.1%) (14,970)
--------
OTHER ASSETS AND LIABILITIES -- 0.8% 979
--------
The accompanying notes are an integral part of the financial statements.
50 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERNATIONAL EQUITY FUND (CONCLUDED)
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization-- no par value)
based on 2,811,231 outstanding shares
of beneficial interest $ 96,105
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 35,874 outstanding
shares of beneficial interest 1,371
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 22,328 outstanding
shares of beneficial interest 998
Paid-in Capital of Class C Shares
(unlimited authorization-- no par
value) based on 205 outstanding shares
of beneficial interest 9
Undistributed net investment income 176
Accumulated net realized gain on investments 8,784
Net unrealized depreciation on forward
foreign currency contracts, foreign
currency and translation of other
assets and liabilities in foreign
currency (12)
Net unrealized appreciation on investments 16,667
--------
TOTAL NET ASSETS -- 100.0% $124,098
========
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $43.25
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $43.15
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($43.15 / 94.5%) $45.66
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $43.02
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS C SHARES $43.02
========
--------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000. (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $14,161,393.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
ADR -- AMERICAN DEPOSITORY RECEIPT
CL -- CLASS
GDR -- GLOBAL DEPOSITORY RECEIPT
MTN -- MEDIUM TERM NOTE
PLC -- PUBLIC LIMITED COMPANY
REG -- REGISTERED
RNC -- RISPARMIO NON-CONVERTIBLE
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 51
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- 97.8%
--------------------------------------------------------------------------------
Alameda County, Santa Rita Jail Project,
COP, MBIA Insured
5.250%, 12/01/04 $ 500 $ 521
Anaheim, Public Financing
Authority, Electric
Utility Projects, RB, MBIA
Insured Callable 04/01/03 @ 102
5.500%, 10/01/10 1,750 1,816
Anaheim, Water, RB
Callable 09/07/00 @ 100
5.750%, 04/01/04 250 250
Atascadero, Unified School District,
Measure B Capital Projects,
Ser A, COP, MBIA Insured
Callable 08/01/06 @ 102
5.200%, 08/01/08 1,000 1,051
Bakersfield, Convention
Center Expansion
Project, COP, MBIA Insured
5.300%, 04/01/06 500 525
Berkeley, Unified School District,
Ser D, GO, FGIC Insured
8.250%, 08/01/04 295 337
8.250%, 08/01/05 345 405
California State, GO
7.000%, 08/01/02 1,500 1,579
6.000%, 10/01/05 1,300 1,401
7.000%, 08/01/07 1,000 1,149
6.250%, 04/01/08 1,000 1,116
6.250%, 09/01/08 695 778
5.000%, 10/01/08 1,000 1,038
California State, GO,
AMBAC Insured
6.500%, 09/01/06 1,000 1,113
California State, Department
of Water Resources,
Central Valley Project,
Water System, Ser J-2, RB
6.000%, 12/01/06 1,400 1,531
California State, Department
of Water Resources,
Central Valley Project,
Water System, Ser Q, RB
6.000%, 12/01/07 1,500 1,641
California State, Educational
Facilities Authority, Pooled
College & University
Project, Ser C, RB,
MBIA Insured
5.000%, 03/01/05 560 577
5.000%, 03/01/06 655 678
California State, Health
Facilities Finance
Authority, Catholic Health
Care West,
Ser A, RB, AMBAC Insured
Callable 07/01/05 @ 102
5.750%, 07/01/07 925 991
California State, Public
Works Board, Department
of Corrections,
Del Norte, Ser C, RB
4.750%, 12/01/05 500 509
California State, Public
Works Board,
Various University of
California Projects,
Ser A, RB Prerefunded @ 102 (A)
6.600%, 12/01/02 1,400 1,502
California State, Public
Works Board, Various University
of California Projects,
Ser A, RB, AMBAC Insured
Callable 12/01/07 @ 102
5.100%, 12/01/10 1,000 1,035
Calleguas, Municipal Water
District, Systems
Improvement Project, COP, AMBAC
Insured Prerefunded @ 102 (A)
6.250%, 07/01/01 1,000 1,038
Central Coast, Water
Authority, Regional
Facilities, Ser A, RB,
AMBAC Insured
Callable 10/01/06 @ 102
5.000%, 10/01/07 2,000 2,075
Coachella Valley, Water
District Improvement,
Flood Control Project, COP,
AMBAC Insured
4.500%, 10/01/06 1,045 1,057
Coast Community College, Coastline
Community College
Center Project,
COP, MBIA Insured
Callable 02/01/06 @102
5.200%, 02/01/08 500 524
5.500%, 02/01/11 640 668
The accompanying notes are an integral part of the financial statements.
52 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
--------------------------------------------------------------------------------
Contra Costa County, Merrithew Memorial
Hospital Project, COP, MBIA Insured
Callable 11/01/07 @ 102
5.200%, 11/01/09 $ 2,000 $ 2,085
5.500%, 11/01/12 2,160 2,241
Contra Costa, Transportation
Authority, Sales Tax,
Ser A, ETM, RB
6.875%, 03/01/07 500 553
Contra Costa, Transportation
Authority, Sales Tax,
Ser A, RB, FGIC Insured
5.500%, 03/01/03 1,220 1,260
6.000%, 03/01/09 1,000 1,102
Contra Costa, Transportation
Authority, Sales Tax,
Ser A, RB, FGIC Insured
Callable 03/01/05 @ 100
5.300%, 03/01/06 600 625
Contra Costa, Water
District, Ser G, RB,
MBIA Insured Callable
10/01/04 @ 102
5.700%, 10/01/06 2,500 2,678
Cupertino, Ser A, COP
Callable 01/01/03 @ 102
5.500%, 01/01/05 500 522
Desert Sands, Unified
School District, COP,
FSA Insured Callable
03/01/05 @ 102
5.400%, 03/01/08 660 695
5.500%, 03/01/09 565 595
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%, 06/01/06 750 814
East Bay, Regional Park District,
Ser C, GO, FGIC Insured
6.500%, 09/01/01 685 702
Eastern Municipal Water
District, Water
Treatment Plant, COP,
FGIC Insured
5.000%, 07/01/04 1,000 1,029
Eastern Municipal Water
District, COP
Prerefunded @100 (A)
6.900%, 11/01/02 1,755 1,858
Escondido, Unified High
School District,
ETM, GO, MBIA Insured
5.200%, 11/01/06 1,000 1,049
Escondido, Unified High
School District,
ETM, GO, MBIA Insured
Callable 11/01/06 @ 102
5.600%, 11/01/09 1,000 1,065
Gilroy, Unified School District,
Measure J Capital
Projects, COP, FSA
Insured Callable 09/01/04 @ 102
5.750%, 09/01/05 1,235 1,318
Glendale, Unified
School District,
Ser A, GO, FGIC Insured
5.500%, 09/01/05 600 634
Glendale, Unified School District,
Ser B, GO, FSA Insured
Callable 09/01/08 @ 101
4.625%, 09/01/09 670 674
Hawthorne, School District,
Ser A, GO, FGIC Insured
4.650%, 11/01/06 1,000 1,019
Hollister, Redevelopment
Agency, TA, AMBAC Insured
Callable 10/01/07 @102
5.000%, 10/01/08 740 768
Industry, GO, FGIC Insured
Callable 07/01/05 @100.625
5.500%, 07/01/10 670 698
Joshua Basin-Hi Desert
Financing Authority,
Water District Project,
RB, AMBAC Insured
4.800%, 05/01/08 445 456
4.900%, 05/01/09 465 477
Las Virgenes, Unified
School District,
Ser A, GO, ETM, MBIA Insured
5.000%, 11/01/05 1,000 1,034
Los Angeles County, Public
Works Financing
Authority, Regional Park & Open Space
District, Ser A, RB
6.000%, 10/01/03 1,050 1,104
5.250%, 10/01/05 1,700 1,779
Los Angeles County,
Public Works Financing
Authority, Regional
Park & Open Space
District, Ser A, RB
Callable 10/01/07 @ 101
5.500%, 10/01/08 3,000 3,214
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
--------------------------------------------------------------------------------
Los Angeles, Department of Airports,
Ser A, RB, FGIC Insured
6.000%, 05/15/05 $ 1,000 $ 1,072
Los Angeles, Department
of Airports, Ser A, RB,
FGIC Insured Callable
05/15/05 @101
5.500%, 05/15/08 1,000 1,052
Los Angeles, Department
of Airports,
Ser B, RB, FGIC Insured
6.500%, 05/15/04 3,340 3,595
Los Angeles, Ser A, GO,
FGIC Insured
Prerefunded @ 101 (A)
5.400%, 09/01/03 300 313
5.800%, 09/01/03 1,000 1,055
Los Angeles, Ser A, GO,
MBIA Insured
5.500%, 09/01/04 700 733
Los Angeles, Unified
School District,
Ser A, GO, FGIC Insured
6.000%, 07/01/07 1,300 1,420
6.000%, 07/01/10 750 828
6.000%, 07/01/11 1,110 1,227
Los Angeles, Unified
School District, Ser D, GO,
FGIC Insured Callable 07/01/10 @ 100
5.500%, 07/01/13 2,000 2,080
Los Angeles, Wastewater Systems,
Ser B, RB, FGIC Insured
5.250%, 06/01/07 1,000 1,050
Merced County, Construction
& Equipment Project,
CSAC Lease, COP, FSA Insured
Callable 10/01/02 @ 101
6.000%, 10/01/05 610 639
Merced County, Construction
& Equipment Project,
CSAC Lease, ETM, COP, FSA Insured
Callable 10/01/02 @ 101
6.000%, 10/01/05 640 670
Metropolitan, Water District
of Southern California,
Ser B, RB, MBIA Insured
Callable 07/01/06 @ 102
5.250%, 07/01/07 1,820 1,913
Metropolitan, Water
District of Southern
California, Ser C, RB,
Callable 01/01/07 @102
6.000%, 07/01/07 1,900 2,076
Milpitas, Redevelopment Agency,
Redevelopment Project, Area No. 1,
TA, MBIA Insured
4.600%, 01/15/06 1,040 1,056
Modesto, Community
Center Refinancing
Project, COP, AMBAC Insured
Prerefunded @ 102 (A)
6.500%, 11/01/01 1,000 1,047
Mojave, Water Agency,
Supplemental Water Entitlement,
COP, MBIA Insured
Callable 09/01/07 @ 102
5.100%, 09/01/08 500 522
Mountain View, Los Altos
High School District,
Ser B, GO Callable 05/01/07 @ 102
5.250%, 05/01/08 500 526
5.350%, 05/01/09 755 798
5.650%, 05/01/12 585 616
Mountain View, Shoreline
Regional Park Community,
Ser A, TA, MBIA Insured
Callable 08/01/06 @102
5.400%, 08/01/08 700 745
5.600%, 08/01/10 500 532
Northern California, Power
Agency, Multiple
Capital Facilities, Ser A,
RB, MBIA Insured
Prerefunded @ 102 (A)
6.400%, 08/01/02 2,500 2,646
Oak Park, Unified School District,
GO, MBIA Insured
5.250%, 05/01/08 1,015 1,068
Orange County, Local
Transportation Authority,
Measure M, First Senior, RB
6.000%, 02/15/07 1,865 2,028
Orange County, Local
Transportation Authority,
Measure M, Second
Senior, Ser A, RB,
MBIA Insured
5.500%, 02/15/08 2,300 2,455
Orange County, Local
Transportation
Authority, Measure M,
Second Senior,
RB, FGIC Insured
5.800%, 02/15/05 1,000 1,064
6.000%, 02/15/07 2,345 2,550
The accompanying notes are an integral part of the financial statements.
54 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
--------------------------------------------------------------------------------
Orange County, Municipal
Water District,
Allen-McColloch Pipeline, COP,
MBIA Insured
5.500%, 07/01/05 $ 2,000 $ 2,110
Orange County, Water
District, Ser A, COP,
MBIA Insured Callable
08/15/07 @101
4.875%, 08/15/10 2,000 2,035
Port Oakland, Ser D,
RB, MBIA Insured
6.500%, 11/01/03 500 533
Redding, Electric System,
Ser A, COP,
MBIA Insured
6.150%, 07/01/02 1,000 1,035
Redwood City, Elementary
School District,
GO, FGIC Insured
5.500%, 08/01/10 1,140 1,218
5.500%, 08/01/14 500 526
Riverside, Water, RB
Callable 10/01/00 @100.75
5.750%, 04/01/03 250 253
Sacramento County,
Sanitation District,
ETM, RB
5.500%, 12/01/03 1,000 1,040
Sacramento, Municipal
Utility District,
Electric, Ser C, ETM, RB,
FGIC Insured
Callable 11/15/02 @ 102
5.750%, 11/15/08 570 595
Sacramento, Municipal
Utility District, Electric,
Ser C, RB, FGIC Insured
Callable 11/15/02 @ 102
5.750%, 11/15/08 380 399
Sacramento, Regional
County, Sanitation
District Financing
Authority, GO
5.000%, 08/01/04 870 895
San Bernardino, Municipal Water
Department, COP, FGIC Insured
4.500%, 02/01/09 875 873
San Bernardino County,
Transportation Authority,
ETM, RB, FGIC Insured
Callable 03/01/02 @ 102
6.000%, 03/01/06 1,000 1,046
San Bernardino County,
Transportation
Authority, Ser A, RB,
FSA Insured
5.250%, 03/01/07 2,000 2,097
San Bernardino County,
Transportation Authority,
Ser A, RB, MBIA Insured
6.000%, 03/01/06 1,735 1,876
6.250%, 03/01/10 2,000 2,240
San Diego County,
Regional Transportation
Commission, Second Senior,
Ser A, RB, AMBAC Insured
6.000%, 04/01/06 3,000 3,255
San Diego County,
Regional Transportation
Commission, Second Senior,
Ser A, RB, AMBAC Insured
Callable 04/01/06 @ 102
5.000%, 04/01/08 1,995 2,067
San Diego County, Regional
Transportation Commission,
Second Senior,
Ser A, RB, FGIC Insured
5.250%, 04/01/06 2,100 2,200
San Diego County, Water Authority,
Ser A, COP
5.000%, 05/01/04 2,445 2,512
San Diego, Metropolitan
Transit Development
Board Authority, Lease, RB
Callable 09/01/04 @ 102
5.500%, 09/01/07 450 474
San Diego, Public Facility
Financing Authority, RB,
FGIC Insured
6.000%, 05/15/06 2,800 3,034
6.000%, 05/15/07 2,000 2,180
San Diego, Water Utility System,
RB, FGIC Insured
4.400%, 08/01/08 1,000 997
San Francisco, Bay Area
Rapid Transit, RB
5.500%, 07/01/05 2,850 3,007
San Francisco, Bay Area
Rapid Transit, RB,
FGIC Insured Prerefunded
@ 102 (A)
6.500%, 07/01/01 2,000 2,080
San Francisco, City &
County Airport
Commission, International
Airport, Second
Senior, Issue 20, RB,
MBIA Insured
Callable 05/01/08 @ 101
4.250%, 05/01/09 1,000 979
San Francisco, New Public
Housing Authority,
RB Callable 02/01/01 @ 101
5.000%, 08/01/03 350 354
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS (CONTINUED)
--------------------------------------------------------------------------------
San Joaquin County,
Capital Facilities
Project, COP, MBIA Insured
4.625%, 11/15/05 $ 1,035 $ 1,053
4.800%, 11/15/07 1,000 1,025
San Jose, Redevelopment
Agency, Merged
Area Redevelopment
Project, TA, AMBAC
Insured Callable 08/01/08 @102
5.000%, 08/01/09 1,500 1,551
San Jose, Redevelopment
Agency, Merged
Area Redevelopment Project, TA,
MBIA Insured
6.000%, 08/01/06 1,300 1,412
6.000%, 08/01/07 1,625 1,775
6.000%, 08/01/08 2,000 2,203
6.000%, 08/01/09 1,500 1,661
San Jose, Unified School
District, Ser B, GO,
MBIA Insured Callable 08/01/08 @ 102
4.000%, 08/01/09 800 760
San Juan, Unified
School District, GO,
FSA Insured
5.250%, 08/01/08 500 527
San Mateo County, Transit District,
Ser A, RB, MBIA Insured
5.250%, 06/01/16 2,000 2,018
Santa Ana, Community Redevelopment
Agency, Mainplace Project,
Ser E, ETM, RB
6.400%, 12/15/10 740 782
Santa Barbara County, Local
Transportation Authority,
Limited Tax, RB, FGIC Insured
Callable 4/01/04 @ 101
5.000%, 04/01/07 1,000 1,029
Santa Clara County, Financing
Authority, Ser A, RB,
AMBAC Insured
4.600%, 11/15/06 1,350 1,372
Santa Clara, Electric, Ser A, RB,
MBIA Insured Prerefunded @ 102 (A)
6.000%, 07/01/01 1,000 1,036
Santa Cruz County, Public
Financing Authority, Ser A,
TA, MBIA Insured
Callable 09/01/03 @ 102
5.100%, 09/01/05 500 519
Saratoga, Unified School
District, Ser A, GO,
FGIC Insured Prerefunded @ 102 (A)
4.800%, 09/01/07 825 860
Southern California, Public
Power Authority,
Ser B, RB, AMBAC Insured
Callable 07/01/02 @ 102
5.900%, 07/01/04 1,000 1,050
South Orange County,
Public Financing
Authority, Foothill Area,
Ser C, RB, FGIC Insured
7.500%, 08/15/07 1,000 1,180
Tulare County, Capital
Improvement Project,
Ser A, COP, MBIA Insured
5.250%, 02/15/05 1,000 1,041
5.375%, 02/15/06 500 526
Turlock, Irrigation District,
Ser A, RB, MBIA Insured
6.000%, 01/01/07 1,000 1,086
6.000%, 01/01/08 625 684
University of California,
UCLA Center,
Chiller/Cogen Project, COP
Callable 11/01/03 @ 102
5.000%, 11/01/04 1,000 1,029
Upland, Community Redevelopment
Agency, Merged Project,
Ser A, TA,
AMBAC Insured Callable
09/01/08 @ 102
4.200%, 09/01/09 860 831
West Basin, Municipal Water
District, 1992 Project,
Ser A, COP, AMBAC Insured
Callable 08/01/07 @ 101
5.000%, 08/01/08 425 441
West Hollywood, COP,
MBIA Insured
Callable 02/01/08 @ 102
4.550%, 02/01/09 665 666
--------
TOTAL CALIFORNIA MUNICIPAL BONDS
(Cost $162,489) 166,985
--------
The accompanying notes are an integral part of the financial statements.
56 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Shares Value (000)
--------------------------------------------------------------------------------
CASH EQUIVALENT -- 1.8%
--------------------------------------------------------------------------------
Provident California Tax Free
Money Market 3,046,082 $ 3,046
--------
TOTAL CASH EQUIVALENT
(Cost $3,046) 3,046
--------
TOTAL INVESTMENTS -- 99.6%
(Cost $165,535) 170,031
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.4% 753
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 13,951,861 outstanding shares
of beneficial interest 134,767
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 3,145,670 outstanding
shares of beneficial interest 31,077
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 42,649 outstanding
shares of beneficial interest 417
Undistributed net investment income 147
Accumulated net realized loss on investments (120)
Net unrealized appreciation on investments 4,496
--------
TOTAL NET ASSETS -- 100.0% $170,784
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $9.97
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $9.94
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($9.94 / 95.75%) $10.38
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $9.95
========
--------------------------------------------------------------------------------
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
COP -- CERTIFICATES OF PARTICIPATION
CSAC -- CALIFORNIA STATE ASSOCIATION OF COUNTIES
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
RB -- REVENUE BOND
SA -- SPECIAL ASSESSMENT
SER -- SERIES
TA -- TAX ALLOCATION
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
BOND FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 12.6%
--------------------------------------------------------------------------------
U.S. Treasury Bonds (A)
10.375%, 11/15/12 $ 3,000 $ 3,686
7.250%, 05/15/16 10,100 11,230
8.125%, 08/15/19 12,500 15,269
8.750%, 08/15/20 4,935 6,417
7.250%, 08/15/22 1,500 1,707
7.125%, 02/15/23 1,000 1,125
U.S. Treasury Note (A)
6.125%, 08/15/07 4,500 4,485
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $42,280) 43,919
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.7%
--------------------------------------------------------------------------------
FNMA (A)
7.125%, 02/15/05 6,250 6,281
FNMA
6.850%, 09/12/05 2,000 1,950
6.700%, 11/10/05 1,000 970
6.375%, 06/15/09 4,000 3,797
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $12,962) 12,998
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS -- 36.5%
--------------------------------------------------------------------------------
FHLMC
7.090%, 11/24/06 250 244
FHLMC CMO Remic, Ser 1666, Cl J
6.250%, 01/15/24 2,000 1,791
FHLMC CMO Remic, Ser 1956, Cl A1
7.000%, 02/20/18 102 102
FHLMC CMO Remic, Ser 1993, Cl 140H
6.500%, 03/25/13 1,500 1,457
FNMA
6.500%, 03/01/24 895 845
8.000%, 08/01/24 65 65
8.000%, 09/01/24 18 18
8.000%, 10/01/24 92 93
8.500%, 05/01/25 377 383
6.500%, 01/01/26 704 665
6.500%, 05/01/26 578 546
8.000%, 07/01/26 637 639
7.500%, 12/01/26 7,036 6,934
6.000%, 12/01/27 1,737 1,594
6.500%, 01/01/28 817 772
6.500%, 02/01/28 1,260 1,190
6.500%, 03/01/28 1,600 1,511
6.500%, 04/01/28 4,324 4,084
6.000%, 07/01/28 7,589 6,981
6.000%, 08/01/28 947 872
6.000%, 10/01/28 4,466 4,105
6.000%, 12/01/28 30,613 28,097
6.500%, 01/01/29 13,292 12,557
6.500%, 07/01/29 6,260 5,913
6.500%, 08/01/29 5,000 4,723
6.500%, 05/01/30 5,969 5,639
FNMA CMO Remic, Ser 1993, Cl 137C
6.200%, 09/25/02 1,933 1,912
GNMA
8.000%, 04/15/17 218 220
8.000%, 05/15/17 88 89
6.500%, 06/15/23 1,674 1,588
6.500%, 12/15/23 960 910
6.500%, 01/15/24 372 353
7.000%, 01/15/24 474 461
7.500%, 01/15/24 707 699
6.500%, 02/15/24 626 594
7.500%, 02/15/24 736 730
7.000%, 04/15/24 1,000 972
7.500%, 09/15/25 444 440
6.500%, 10/15/25 751 713
6.500%, 04/15/26 1,415 1,342
8.000%, 11/15/26 4,033 4,068
7.500%, 02/15/27 535 531
7.500%, 06/15/27 328 325
7.500%, 07/15/27 920 912
7.500%, 08/15/27 740 734
6.000%, 09/15/28 2,712 2,498
6.500%, 05/15/29 15,002 14,242
6.500%, 06/15/29 479 455
6.500%, 11/15/29 597 567
--------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS
(Cost $132,101) 127,175
--------
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 41.4%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 1.1%
Lockheed Martin
7.700%, 06/15/08 1,500 1,477
The accompanying notes are an integral part of the financial statements.
58 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
--------------------------------------------------------------------------------
Raytheon
6.150%, 11/01/08 $ 2,500 $ 2,241
--------
3,718
--------
AUTOMOTIVE -- 3.6%
Ford Motor Credit
6.850%, 08/15/00 175 175
6.500%, 02/28/02 6,500 6,419
7.750%, 11/15/02 1,000 1,009
General Motors Acceptance, MTN
5.350%, 12/07/01 5,000 4,863
--------
12,466
--------
AUTO RENTAL & LEASING -- 1.1%
Hertz
6.625%, 05/15/08 4,100 3,787
--------
BANKS -- 6.1%
First Union National Bank (B) (C)
7.038%, 11/01/00 5,000 5,000
Fleet Boston
8.375%, 12/15/02 1,250 1,273
Golden West Financial
6.700%, 07/01/02 4,500 4,421
Korea Development Bank
7.125%, 04/22/04 5,000 4,850
Mercantile Bancorp
7.050%, 06/15/04 1,500 1,470
U.S. Bancorp
6.875%, 09/15/07 4,500 4,292
Wachovia
6.375%, 02/01/09 125 115
--------
21,421
--------
BEAUTY PRODUCTS -- 0.2%
Procter & Gamble
8.500%, 08/10/09 500 541
--------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 1.2%
Continental Cablevision
9.500%, 08/01/13 4,000 4,335
--------
COMPUTERS & SERVICES -- 1.3%
IBM
6.500%, 01/15/28 5,000 4,538
--------
ELECTRICAL UTILITIES -- 3.1%
Cleveland Electric, Ser B
7.670%, 07/01/04 5,900 5,863
Sierra Pacific Resources, Ser B
6.200%, 04/15/04 5,000 4,688
WPS Resources
7.000%, 11/01/09 100 96
--------
10,647
--------
ENTERTAINMENT -- 0.4%
Walt Disney, Ser A
6.375%, 03/30/01 1,500 1,496
--------
FINANCIAL SERVICES -- 6.1%
American Express Credit
6.500%, 08/01/00 1,000 1,000
American General Finance, MTN
5.370%, 12/10/01 2,000 1,945
Associates of N.A.
6.000%, 04/15/03 6,000 5,775
Bear Stearns, MTN (B) (C)
6.968%, 01/08/01 10,000 10,000
Citifinancial
6.250%, 01/01/08 250 228
Morgan Stanley Dean Witter
6.125%, 10/01/03 1,300 1,253
Travelers Group
7.300%, 05/15/02 1,000 1,000
--------
21,201
--------
FOOD, BEVERAGE & TOBACCO -- 1.9%
J Seagram & Sons
6.400%, 12/15/03 6,000 5,805
Philip Morris
7.750%, 01/15/27 1,000 861
--------
6,666
--------
FOREIGN GOVERNMENTS -- 0.3%
Hydro Quebec
8.050%, 07/07/24 1,125 1,207
--------
GAS/NATURAL GAS -- 1.2%
Kinder Morgan
7.250%, 03/01/28 4,600 4,238
--------
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
--------------------------------------------------------------------------------
INSURANCE -- 2.5%
Conseco
9.000%, 10/15/06 $ 4,000 $ 2,680
Travelers Property Casualty
6.750%, 04/15/01 6,000 5,985
--------
8,665
--------
MACHINERY -- 0.9%
Caterpillar Tractor
6.000%, 05/01/07 3,360 3,116
--------
METALS & MINING -- 0.4%
Potash
7.125%, 06/15/07 1,500 1,431
--------
PETROLEUM REFINING -- 0.5%
Phillips Petroleum
7.125%, 03/15/28 2,000 1,708
--------
PRINTING & PUBLISHING -- 2.5%
E.W. Scripps
6.375%, 10/15/02 4,000 3,960
Time Warner
7.480%, 01/15/08 5,000 4,906
--------
8,866
--------
RETAIL -- 5.5%
JC Penney
6.000%, 05/01/06 1,230 1,012
Kmart
8.375%, 12/01/04 5,000 4,669
Safeway
5.750%, 11/15/00 7,000 6,974
Sears Roebuck
7.000%, 06/15/07 1,500 1,421
Staples
7.125%, 08/15/07 2,500 2,334
Wal-Mart Stores
6.375%, 03/01/03 2,850 2,811
--------
19,221
--------
TELEPHONES & TELECOMMUNICATION -- 1.5%
AT&T
6.000%, 03/15/09 100 89
Chesapeake & Potomac Telephone of Maryland
8.000%, 10/15/29 2,980 3,025
New England Telephone & Telegraph
7.875%, 11/15/29 1,000 1,001
Worldcom
6.400%, 08/15/05 1,000 955
--------
5,070
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $150,716) 144,338
--------
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 6.1%
--------------------------------------------------------------------------------
American Express Master Trust,
Ser 1998-1
5.900%, 04/15/04 4,000 3,888
Chase Manhattan Auto Grantor Trust,
Ser 1996-B, Cl A
6.610%, 09/15/02 108 108
Citibank Credit Card Master Trust,
Ser 1997-3, Cl A
6.839%, 02/10/04 2,700 2,684
Citibank Credit Card Master Trust,
Ser 1998-3, Cl A
5.800%, 02/07/05 2,000 1,940
Contimortgage Home Equity Loan Trust,
Ser 1995-2, Cl A4
8.050%, 07/15/12 154 153
Contimortgage Home Equity Loan Trust,
Ser 1995-3, Cl A4
7.440%, 09/15/12 355 354
EQCC Home Equity Loan Trust,
Ser 1995-2, Cl A4
7.800%, 12/15/10 794 796
EQCC Home Equity Loan Trust,
Ser 1996-3, Cl A6
7.400%, 12/15/19 2,500 2,501
GE Capital Mortgage Service,
Ser 1994-1, Cl A6
6.500%, 01/25/24 1,198 1,186
Green Tree Financial,
Ser 1995-9, Cl A
6.800%, 01/15/27 7,500 7,425
Residential Funding Mortgage,
Ser 1992-S36, Cl A4
6.750%, 11/25/07 429 414
--------
TOTAL ASSET BACKED SECURITIES
(Cost $21,706) 21,449
--------
The accompanying notes are an integral part of the financial statements.
60 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
BOND FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.3%
--------------------------------------------------------------------------------
Federal Signal (B)
6.709%, 08/02/00 $ 15,000 $ 14,994
--------
TOTAL COMMERCIAL PAPER
(Cost $14,994) 14,994
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 9.3%
--------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00,
matures 08/01/00, repurchase
price $10,380,183 (collateralized
by various U.S. Treasury
obligations par value $16,562,000,
0.000%, 11/15/05-02/15/21;
market value $10,586,151) 10,378 10,378
Greenwich Capital (B)
6.750%, dated 07/31/00,
matures 08/01/00, repurchase
price $15,002,813 (collateralized
by various corporate obligations,
par value $29,793,462,
0.000%-6.200%, 03/15/02-02/17/09;
market value $15,750,901) 15,000 15,000
Lehman Brothers, Inc. (B)
6.7680%, dated 07/31/00,
matures 08/01/00, repurchase
price $6,879,778(collateralized
by various corporate
obligations, par value $7,236,860,
7.750%-8.000%, 07/25/30;
market value $7,222,449) 6,878 6,878
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $32,256) 32,256
--------
TOTAL INVESTMENTS -- 113.9%
(Cost $407,015) 397,129
--------
PAYABLE UPON RETURN OF SECURITIES
LOANED -- (14.9%) (51,872)
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.0% 3,314
--------
NET ASSETS:
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 33,390,078 outstanding shares
of beneficial interest $ 354,164
Pain-in-Capital of Class A Shares
(unlimited authorization -- no
par value) based on 608,273 outstanding
shares of beneficial interest 6,318
Undistributed net investment income 414
Accumulated net realized loss on investments (2,439)
Net unrealized depreciation on investments (9,886)
--------
TOTAL NET ASSETS -- 100.0% $348,571
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $10.25
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $10.16
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($10.16 / 95.75%) $10.61
========
--------------------------------------------------------------------------------
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $49,778,427.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
(C) FLOATING RATE SECURITY
CL -- CLASS
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE CORPORATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE CORPORATION
MTN -- MEDIUM TERM NOTE
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERMEDIATE-TERM BOND FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 3.7%
--------------------------------------------------------------------------------
U.S. Treasury Bond (A)
7.250%, 05/15/16 $ 6,000 $ 6,671
U.S. Treasury Note (A)
6.125%, 08/15/07 1,500 1,495
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $7,872) 8,166
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 5.6%
--------------------------------------------------------------------------------
FNMA (A)
7.125%, 02/15/05 3,400 3,417
FNMA
6.850%, 09/12/05 2,000 1,950
6.700%, 11/10/05 3,750 3,637
6.375%, 06/15/09 3,500 3,323
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $12,524) 12,327
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE --
BACKED OBLIGATIONS -- 21.9%
--------------------------------------------------------------------------------
FHLMC
7.000%, 09/01/01 2,147 2,127
FNMA CMO Remic, Ser 1993, Cl 137C
6.200%, 09/25/02 966 956
FNMA
6.500%, 12/01/07 1,010 975
6.000%, 05/01/09 574 544
6.000%, 09/01/10 1,126 1,066
6.000%, 05/01/11 1,705 1,614
6.000%, 01/01/12 1,367 1,294
6.000%, 03/01/13 2384 2,257
6.500%, 06/01/29 17,921 16,930
6.500%, 07/01/29 1,926 1,820
6.500%, 05/01/30 6,963 6,578
GNMA
8.000%, 11/15/26 3,226 3,254
6.000%, 07/15/28 1,895 1,745
6.000%, 08/15/28 946 872
6.000%, 09/15/28 1,973 1,817
6.500%, 01/15/29 4,387 4,162
--------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE --
BACKED OBLIGATIONS
(Cost $48,748) 48,011
--------
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS -- 61.0%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE -- 6.7%
Boeing
6.875%, 11/01/06 4,000 3,885
Lockheed Martin
7.450%, 06/15/04 5,500 5,452
Raytheon
6.150%, 11/01/08 6,000 5,378
--------
14,715
--------
AUTO RENTAL & LEASING -- 1.9%
Hertz
6.625%, 05/15/08 4,500 4,157
--------
AUTOMOTIVE -- 4.0%
Ford Motor Credit
6.500%, 02/28/02 4,500 4,444
General Motors
8.950%, 07/02/09 4,138 4,281
--------
8,725
--------
BANKS -- 13.4%
Banponce
6.750%, 12/15/05 2,000 1,875
Citicorp
6.750%, 08/15/05 4,075 3,953
FleetBoston
8.375%, 12/15/02 2,500 2,547
FleetBoston Financial
7.125%, 04/15/06 5,000 4,850
Golden West Financial
6.700%, 07/01/02 1,000 982
HSBC Americas
6.625%, 03/01/09 4,000 3,690
Korea Development Bank
7.125%, 04/22/04 5,000 4,850
Mellon Bank
7.000%, 03/15/06 1,500 1,468
Mercantile Bancorp
7.050%, 06/15/04 2,500 2,450
U.S. Bancorp
6.875%, 09/15/07 3,000 2,861
--------
29,526
--------
The accompanying notes are an integral part of the financial statements.
62 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERMEDIATE-TERM BOND FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (CONTINUED)
--------------------------------------------------------------------------------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 1.8%
TCI Communications
6.875%, 02/15/06 $ 4,000 $ 3,870
--------
ELECTRICAL UTILITIES -- 7.8%
Arkansas Electric Cooperative
7.330%, 06/30/08 1,998 1,971
Baltimore Gas & Electric
5.780%, 10/01/08 4,000 3,580
Oklahoma Gas & Electric
6.650%, 07/15/27 2,500 2,394
Old Dominion Electric
7.480%, 12/01/13 5,550 5,386
Sierra Pacific Resources, Ser B
6.200%, 04/15/04 4,000 3,750
--------
17,081
--------
ENTERTAINMENT -- 2.6%
Walt Disney
5.620%, 12/01/08 6,455 5,713
--------
FINANCIAL SERVICES -- 7.0%
American General Finance, MTN
5.370%, 12/10/01 2,500 2,431
Associates N.A.
6.000%, 04/15/03 2,000 1,925
Lehman Brothers Holdings
8.750%, 05/15/02 4,000 4,075
Morgan Stanley Dean Witter
6.125%, 10/01/03 3,000 2,891
Travelers Group
7.300%, 05/15/02 4,000 4,000
--------
15,322
--------
INSURANCE -- 2.3%
GE Global Insurance
7.750%, 06/15/30 5,000 5,037
--------
LUMBER & WOOD PRODUCTS -- 2.4%
Georgia-Pacific
9.875%, 11/01/21 5,000 5,181
--------
MACHINERY -- 1.2%
Caterpillar Tractor
6.000%, 05/01/07 1,000 927
Tyco International
6.500%, 11/01/01 1,800 1,791
--------
2,718
--------
PRINTING & PUBLISHING -- 0.6%
Time Warner
7.480%, 01/15/08 1,300 1,276
--------
RETAIL -- 5.2%
Kmart
8.375%, 12/01/04 4,000 3,735
Sears Roebuck
7.000%, 06/15/07 5,000 4,738
Wal-Mart Stores
6.375%, 03/01/03 3,000 2,959
--------
11,432
--------
TELEPHONES & TELECOMMUNICATIONS -- 4.1%
New England Telephone & Telegraph
6.250%, 03/15/03 500 491
7.875%, 11/15/29 4,625 4,631
Qwest Communications
7.500%, 11/01/08 4,000 3,905
--------
9,027
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $137,623) 133,780
--------
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES -- 5.5%
--------------------------------------------------------------------------------
Chase Manhattan Auto Grantor Trust,
Ser 1996-B, Cl A
6.610%, 09/15/02 649 648
Citibank Credit Card Master Trust,
Ser 1997-3, Cl A
6.839%, 02/10/04 3,000 2,983
Citibank Credit Card Master Trust,
Ser 1998-3, Cl A
5.800%, 02/07/05 3,400 3,298
Contimortgage Home Equity Loan Trust,
Ser 1995-3, Cl A4
7.440%, 09/15/12 1,103 1,101
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
INTERMEDIATE-TERM BOND FUND (CONCLUDED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES (CONTINUED)
--------------------------------------------------------------------------------
EQCC Home Equity Loan Trust,
Ser 1996-3, Cl A6
7.400%, 12/15/19 $ 2,500 $ 2,501
Green Tree Financial,
Ser 1995-4, Cl A4
6.750%, 06/15/25 778 775
Residential Funding Mortgage,
Ser 1992-S36, Cl A4
6.750%, 11/25/07 691 667
Sears Credit Account Master Master Trust,
Ser 1994-1, Cl A
7.000%, 01/15/04 104 104
--------
TOTAL ASSET BACKED SECURITIES
(Cost $12,193) 12,077
--------
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.3%
--------------------------------------------------------------------------------
Federal Signal (B)
6.709%, 08/02/00 5,000 4,998
--------
TOTAL COMMERCIAL PAPER
(Cost $4,998) 4,998
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 3.9%
--------------------------------------------------------------------------------
JP Morgan Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price $1,509,189
(collateralized by U.S. Treasury Bond,
par value $1,096,000, 12.000%,
08/15/13; market value
$1,539,469) 1,509 1,509
Lehman Brothers, Inc. (B)
6.768%, dated 07/31/00, matures
08/01/00, repurchase price
$6,980,701 (collateralized by
various corporate obligations,
par value $7,343,020, 7.750%-8.000%,
07/25/30; market value
$7,328,398) 6,979 6,979
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $8,488) 8,488
--------
TOTAL INVESTMENTS -- 103.9%
(Cost $232,446) 227,847
--------
PAYABLE UPON RETURN OF SECURITIES
LOANED -- (5.5%) (11,977)
--------
OTHER ASSETS AND LIABILITIES, NET -- 1.6% 3,458
--------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 21,776,727 outstanding shares
of beneficial interest $223,138
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 452,579 outstanding
shares of beneficial interest 5,279
Undistributed net investment income 159
Accumulated net realized loss on investments (4,649)
Net unrealized depreciation on investments (4,599)
--------
TOTAL NET ASSETS -- 100.0% $219,328
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $9.87
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE-- CLASS A SHARES $9.86
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($9.86 / 95.75%) $10.30
========
--------------------------------------------------------------------------------
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2000 (SEE FOOTNOTE 2). THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31,
2000 WAS $11,582,856.
(B) THIS SECURITY PURCHASED WITH CASH COLLATERAL HELD FROM SECURITIES LENDING.
CL -- CLASS
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE CORPORATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE CORPORATION
MTN -- MEDIUM TERM NOTE
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
64 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
100% U.S. TREASURY MONEY MARKET FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
U.S. TREASURY BILLS* -- 54.7%
--------------------------------------------------------------------------------
U. S. Treasury Bills
5.949%, 08/10/00 $ 45,789 $ 45,722
5.930%, 08/17/00 58,821 58,667
5.954%, 08/24/00 40,000 39,852
5.950%, 08/31/00 77,931 77,548
6.001%, 09/07/00 163,678 162,689
6.083%, 09/21/00 14,718 14,592
6.027%, 09/28/00 100,473 99,509
6.041%, 10/12/00 100,546 99,349
6.175%, 11/02/00 25,000 24,616
6.121%, 12/14/00 18,600 18,185
6.110%, 12/28/00 100,000 97,546
--------
TOTAL U.S. TREASURY BILLS*
(Cost $738,275) 738,275
--------
--------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 42.2%
--------------------------------------------------------------------------------
U.S. Treasury Notes
6.000%, 08/15/00 117,454 117,450
5.125%, 08/31/00 182,349 182,197
6.250%, 08/31/00 70,000 70,000
4.500%, 09/30/00 100,000 99,697
5.625%, 11/30/00 100,000 99,791
--------
TOTAL U.S. TREASURY NOTES
(Cost $569,135) 569,135
--------
--------------------------------------------------------------------------------
U.S. TREASURY STRIPS* -- 4.8%
--------------------------------------------------------------------------------
U.S. Treasury STRIPS
6.052%, 08/15/00 30,000 29,931
6.163%, 11/15/00 25,000 24,561
6.480%, 03/31/01 10,602 10,158
---------
TOTAL U.S. TREASURY STRIPS*
(Cost $64,650) 64,650
---------
TOTAL INVESTMENTS -- 101.7%
(Cost $1,372,060) 1,372,060
---------
OTHER ASSETS AND LIABILITIES, NET -- (1.7%) (22,360)
---------
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par
value) based on 380,474,875
outstanding shares of beneficial
interest $ 380,475
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) base on 275,416,156 outstanding
shares of beneficial interest 275,416
Paid-in-Capital of Class S Shares
(unlimited authorization -- no par
value) base on 693,767,687 outstanding
shares of beneficial interest 693,768
Undistributed net investment income 129
Accumulated net realized loss on investments (88)
----------
TOTAL NET ASSETS -- 100.0% $1,349,700
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $1.00
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $1.00
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES $1.00
==========
--------------------------------------------------------------------------------
* REPRESENTS THE YIELD TO MATURITY AT DATE OF PURCHASE.
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
The accompanying notes are an integral part of the financial statements.
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[Highmark logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
U.S. GOVERNMENT MONEY MARKET FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS-DISCOUNT NOTES* -- 37.7%
--------------------------------------------------------------------------------
FHLB
6.551%, 08/01/00 $10,000 $ 10,000
6.217%, 08/16/00 10,000 9,974
FHLMC
6.522%, 08/24/00 10,000 9,959
6.570%, 09/21/00 15,000 14,863
6.609%, 09/28/00 15,000 14,843
6.620%, 09/28/00 10,000 9,895
6.557%, 10/05/00 20,000 19,767
FNMA
6.502%, 08/24/00 10,000 9,959
6.501%, 10/12/00 15,000 14,808
6.613%, 10/18/00 20,000 19,720
6.599%, 11/01/00 20,000 19,668
6.645%, 11/01/00 15,000 14,751
6.708%, 11/16/00 20,000 19,613
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS-
DISCOUNT NOTES*
(Cost $187,820) 187,820
--------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 44.3%
--------------------------------------------------------------------------------
FFCB (A)
6.575%, 12/01/00 20,000 19,996
6.394%, 02/01/01 15,000 15,000
FHLB (A)
6.609%, 10/04/00 10,000 9,999
6.532%, 11/08/00 25,000 25,000
6.687%, 12/01/00 40,000 40,000
FHLB, Callable 09/01/00 @ 100
6.658%, 03/01/01 10,000 10,000
FHLB (A)
6.457%, 03/22/01 15,000 15,000
FHLB, Callable 10/17/00 @ 100
6.674%, 04/17/01 9,250 9,252
FHLB (A)
6.436%, 07/17/01 15,000 14,991
FHLMC, Callable 10/13/00 @ 100
7.060%, 07/13/01 12,730 12,726
FNMA
6.881%, 12/18/00 9,000 9,045
SLMA
5.919%, 12/01/00 15,000 14,995
SLMA (A)
6.717%, 12/21/00 25,000 25,000
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $221,004) 221,004
--------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 22.0%
--------------------------------------------------------------------------------
Barclays Capital, Inc.
6.520%, dated 07/31/00, matures
08/01/00, repurchase price $34,359,866
(collateralized by various U.S. Treasury Notes,
par value $36,013,000, 4.750%-5.500%,
02/15/04-05/15/09; market value
$35,040,905) 34,354 34,354
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00,
matures 08/01/00, repurchase
price $19,964,047 (collateralized
by various U.S. Treasury
obligations, par value
$45,866,000, 0.000%,
09/28/00-05/15/24; market value
$20,359,724) 19,960 19,960
JP Morgan Securities, Inc.
6.500%, dated 07/31/00,
matures 08/01/00, repurchase
price $36,897,726 (collateralized
by various U.S. Treasury
obligations, par value
$35,504,000, 6.500%-7.500%%,
10/15/06-11/15/16;
market value $37,629,107) 36,891 36,891
UBS Warburg, LLC.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$18,292,720 (collateralized by
U.S. Treasury STRIPS,
par value $35,545,000, 0.000%,
02/15/11; market
value $18,655,793) 18,289 18,289
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $109,494) 109,494
--------
TOTAL INVESTMENTS -- 104.0%
(Cost $518,318) 518,318
--------
OTHER ASSETS AND LIABILITIES, NET -- (4.0%) (19,742)
--------
The accompanying notes are an integral part of the financial statements.
66 -----------------------------------------------------------------------------
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STATEMENT OF NET ASSETS
JULY 31, 2000
U.S. GOVERNMENT MONEY MARKET FUND (CONCLUDED)
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par value)
based on 330,034,240 outstanding shares
of beneficial interest $330,034
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 48,149,687 outstanding
shares of beneficial interest 48,150
Paid-in-Capital of Class B Shares
(unlimited authorization -- no par
value) based on 391,205 outstanding
shares of beneficial interest 391
Paid-in-Capital of Class S Shares
(unlimited authorization -- no par
value) based on 120,106,090
outstanding shares of beneficial
interest 120,106
Accumulated net realized loss on investments (105)
--------
TOTAL NET ASSETS -- 100.0% $498,576
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS B SHARES $1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES $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, 2000.
FFCB -- FEDERAL FARM CREDIT BANK
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
LLC -- LIMITED LIABLITY COMPANY
SLMA -- STUDENT LOAN MARKETING ASSOCIATION
STRIPS -- SEPARATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
DIVERSIFIED MONEY MARKET FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - DOMESTIC -- 6.4%
--------------------------------------------------------------------------------
Allfirst Bank (A)
6.630%, 07/13/01 $50,000 $ 50,000
Bank One N.A.
6.840%, 12/29/00 50,000 50,000
Citibank N.A.
7.070%, 12/29/00 50,000 50,000
Wilmington Trust Company
6.885%, 09/05/00 50,000 50,002
7.070%, 11/30/00 50,000 50,030
--------
TOTAL CERTIFICATES OF DEPOSIT - DOMESTIC
(Cost $250,032) 250,032
--------
--------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEE -- 7.1%
--------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce (New York)
6.720%, 09/13/00 50,000 50,000
6.730%, 11/22/00 50,000 50,006
Dresdner Bank A.G. (New York)
7.090%, 05/15/01 30,000 30,022
Lloyds TSB Bank (New York)
6.260%, 08/01/00 100,000 100,000
Societe Generale (New York)
6.750%, 12/29/00 48,500 48,502
--------
TOTAL CERTIFICATES OF DEPOSIT - YANKEE
(Cost $278,530) 278,530
--------
--------------------------------------------------------------------------------
EURODOLLAR CERTIFICATES OF DEPOSIT -- 3.3%
--------------------------------------------------------------------------------
Australia & New Zealand
Banking Group (London)
7.010%, 07/11/01 50,000 50,004
Citibank N.A. (London)
6.770%, 12/19/00 30,000 30,002
Westdeutsche Landesbank
Girozentrale (London)
6.720%, 09/29/00 50,000 50,006
--------
TOTAL EURODOLLAR CERTIFICATES OF DEPOSIT
(Cost $130,012) 130,012
--------
--------------------------------------------------------------------------------
BANK NOTES -- 12.7%
--------------------------------------------------------------------------------
American Express Centurion Bank (A)
6.601%, 05/11/01 50,000 50,000
Bank of America N.A.
6.840%, 12/19/00 50,000 50,000
Bank One N.A.
6.660%,10/10/00 50,000 50,000
Comerica Bank (A)
6.671%, 09/11/00 50,000 50,004
6.590%,06/19/01 50,000 49,987
First Union National Bank N.A. (A)
6.878%, 08/29/00 50,000 50,002
6.628%, 05/18/01 50,000 50,000
6.626%, 07/17/01 50,000 50,000
LaSalle Bank N.A.
7.020%, 11/20/00 50,000 50,000
National City Bank of Cleveland
6.525%, 01/24/01 50,000 49,992
--------
TOTAL BANK NOTES
(Cost $499,985) 499,985
--------
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- DISCOUNTED*--40.0%
--------------------------------------------------------------------------------
ASSET-BACKED SECURITY - CREDIT CARD -- 2.0%
Montauk Funding Corp. (B)
6.599%, 08/25/00 40,000 39,826
6.596%, 09/05/00 40,000 39,746
--------
79,572
--------
ASSET-BACKED SECURITY - DIVERSIFIED FINANCIAL ASSETS -- 13.1%
Bavaria Universal Funding Corp. (B)
6.591%, 08/01/00 39,915 39,915
6.571%, 08/16/00 25,000 24,932
Beta Finance Inc. (B)
6.722%, 09/07/00 50,000 49,660
6.728%, 09/07/00 23,000 22,844
6.701%, 10/13/00 35,000 34,533
6.639%, 10/16/00 21,000 20,710
CC (USA) Inc. (B)
6.795%, 08/17/00 27,000 26,920
6.796%, 08/25/00 35,000 34,844
6.651%, 10/26/00 21,500 21,164
The accompanying notes are an integral part of the financial statements.
68 -----------------------------------------------------------------------------
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STATEMENT OF NET ASSETS
JULY 31, 2000
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
COMMERCIAL PAPER -- DISCOUNTED*-- (CONTINUED)
--------------------------------------------------------------------------------
Galaxy Funding Inc. (B)
6.709%, 08/23/00 $50,000 $ 49,798
6.611%, 08/31/00 40,000 39,782
6.762%, 09/05/00 50,000 49,673
6.860%, 09/13/00 50,000 49,603
Greyhawk Funding LLC (B)
6.314%, 08/01/00 50,000 50,000
----------
514,378
----------
ASSET-BACKED SECURITY - TRADE RECEIVABLES -- 12.1%
Clipper Receivables Corp. (B)
6.671%, 08/01/00 50,000 50,000
6.636%, 09/06/00 30,000 29,803
Concord Minutemen Capital
Co., Ser A (B)
6.687%, 10/23/00 23,788 23,428
Crown Point Capital Co, Ser A (B)
6.587%, 08/14/00 30,000 29,929
6.822%, 09/14/00 34,529 34,245
6.606%, 09/20/00 25,000 24,773
6.852%, 10/18/00 35,000 34,491
Edison Asset Securitization
Corp. LLC (B)
6.848%, 09/07/00 50,000 49,655
International Securitization
Corp. (B)
6.566%, 08/15/00 50,000 49,873
6.647%, 10/06/00 19,519 19,285
Lexington Parker Capital Company
LLC (A) (B)
6.705%, 01/25/01 50,000 50,000
WCP Funding Inc. (B)
6.762%, 08/14/00 48,000 47,885
6.727%, 08/22/00 35,000 34,865
----------
478,232
----------
BANKS -- 4.2%
Banque Nationale de Paris (Canada)
6.743%, 09/29/00 15,000 14,837
Dexia CLF Finance (B)
6.707%, 09/18/00 50,000 49,561
Nationwide Building Society
6.742%, 08/23/00 50,000 49,797
UBS Finance (DE) Inc.
6.711%, 09/06/00 50,000 49,670
----------
163,865
----------
BROKERAGE -- 4.6%
Bear Stearns Companies Inc.
6.700%, 10/11/00 50,000 49,351
Goldman Sachs Group LP
6.761%, 08/14/00 40,000 39,904
Goldman Sachs Group Inc.
6.780%, 09/25/00 40,000 40,000
6.740%, 10/11/00 50,000 50,000
----------
179,255
----------
FINANCIAL SERVICES -- 4.0%
Aegon Funding Corp. (B)
6.856%, 12/12/00 50,000 48,775
6.843%, 12/14/00 40,000 39,007
Louis Dreyfus Corp./
LOC ABN-Amro Bank N.V.
6.600%, 08/04/00 20,000 19,989
Salomon Smith Barney Holdings Inc.
6.712%, 09/21/00 50,000 49,533
----------
157,304
----------
TOTAL COMMERCIAL PAPER--DISCOUNTED*
(Cost $1,572,606) 1,572,606
----------
--------------------------------------------------------------------------------
CORPORATE NOTE -- 0.4%
--------------------------------------------------------------------------------
Bank of America Corporation
6.625%, 05/30/01 17,000 16,939
----------
TOTAL CORPORATE NOTE
(Cost $16,939) 16,939
----------
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) -- 17.1%
--------------------------------------------------------------------------------
Associates Corp. of N.A. (A) (C)
6.770%, 06/15/01 50,000 50,000
Bear Stearns Companies, Inc. (A)
6.670%, 01/25/01 50,000 50,000
7.503%, 02/06/01 35,000 35,146
Beta Finance Inc.(A) (B)
6.757%, 04/17/01 50,000 50,000
Cit Group Inc.
5.350%, 12/15/00 45,000 44,707
Citigroup Inc. (A)
6.600%, 06/06/01 50,000 50,000
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) -- (CONTINUED)
--------------------------------------------------------------------------------
General Motors Acceptance Corp. (A)
6.620%, 09/01/00 $16,000 $ 16,000
6.855%, 08/02/01 25,000 25,054
General Motors Acceptance Corp.
6.750%, 06/05/01 40,860 40,790
Household Finance Corp. (A)
6.780%, 09/14/00 50,000 49,996
6.745%, 02/23/01 80,000 80,055
Liberty Lighthouse U.S.
Capital (A) (B)
6.628%, 02/20/01 70,000 70,000
Morgan Stanley, Dean Witter
& Co., Ser C (A)
6.864%, 01/26/01 10,000 10,008
Sigma Finance, Inc. (A) (B)
6.725%, 02/15/01 50,000 50,000
Strategic Money Market Trust,
Ser A-2 (A) (B)
6.650%, 12/13/00 50,000 50,000
----------
TOTAL CORPORATE OBLIGATIONS
(MEDIUM TERM NOTES)
(Cost $671,756) 671,756
----------
--------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 1.5%
--------------------------------------------------------------------------------
FHLB (A)
6.457%, 03/22/01 35,000 35,000
SLMA (A)
6.867%, 11/17/00 25,000 24,999
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $59,999) 59,999
----------
--------------------------------------------------------------------------------
EURODOLLAR TIME DEPOSIT -- 1.3%
--------------------------------------------------------------------------------
Huntington National Bank
6.656%, 08/01/00 50,000 50,000
----------
TOTAL EURODOLLAR TIME DEPOSIT
(Cost $50,000) 50,000
----------
--------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 10.7%
--------------------------------------------------------------------------------
Barclays Capital, Inc.
6.520%, dated 07/31/00, matures
08/01/00, repurchase price
$92,764,981 (collateralized
by a U.S. Treasury Note,
par value $93,368,000,
5.500%, 08/31/01;
market value $94,603,244) $ 92,748 $ 92,748
Deutsche Bank Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$44,982,128 (collateralized
by various U.S. Treasury STRIPS,
par value $138,993,000, 0.000%,
02/15/03-08/15/27; market value
$45,861,388) 44,974 44,974
JP Morgan Securities, Inc.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$139,340,587 (collateralized
by various U.S. Treasury Bonds,
par value $107,873,000,
8.125%-12.000%, 08/15/13-05/15/21;
market value $142,102,947) 139,315 139,315
Lehman Brothers, Inc.
6.480%, dated 07/31/00, matures
08/01/00, repurchase price
$2,125,738 (collateralized
by a U.S. Treasury Note,
par value $2,190,000,
4.625%, 12/31/00;
market value $2,182,107) 2,125 2,125
UBS Warburg, LLC.
6.500%, dated 07/31/00, matures
08/01/00, repurchase price
$142,339,663 (collateralized
by various U.S. Treasury STRIPS,
par value $418,904,000, 0.000%,
02/15/11-05/15/20; market value
$145,160,356) 142,314 142,314
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $421,476) 421,476
----------
TOTAL INVESTMENTS -- 100.5%
(Cost $3,951,335) 3,951,335
----------
OTHER ASSETS AND LIABILITIES, NET -- (0.5%) (21,277)
----------
The accompanying notes are an integral part of the financial statements.
70 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
DIVERSIFIED MONEY MARKET FUND (CONCLUDED)
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par
value) based on 1,729,799,303
outstanding shares of beneficial
interest $ 1,729,799
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 626,421,659
outstanding shares of beneficial
interest 626,422
Paid-in-Capital of Class S Shares
(unlimited authorization -- no par
value) based on 1,575,634,502
outstanding shares of beneficial
interest 1,575,635
Undistributed net investment income 26
Accumulated net realized loss on investments (1,824)
----------
TOTAL NET ASSETS -- 100.0% $3,930,058
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $1.00
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $1.00
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES $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, 2000.
(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 THE DEALERS IN THAT PROGRAM OR
OTHER "ACCREDITED INVESTORS."
(C) PUTTABLE SECURITY -- MATURITY DATE REFLECTS THE NEXT PUT DATE.
FHLB -- FEDERAL HOME LOAN BANK
N.A. -- NORTH AMERICA
LLC -- LIMITED LIABILITY COMPANY
LP -- LIMITED PARTNERSHIP
SER -- SERIES
SLMA -- STUDENT LOAN MARKETING ASSOCIATION
STRIPS -- SEPERATELY TRADED REGISTERED INTEREST AND PRINCIPAL SECURITIES
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- 99.3%
--------------------------------------------------------------------------------
ABAG, Financial Authority,
Episcopal Homes Foundation, COP (A) (B) (C)
4.150%, 08/07/00 $5,250 $ 5,250
Alameda-Contra Costa Counties,
School Financing Authority,
Capital Improvements
Financing Projects,
Ser I, COP, AMBAC Insured (A) (B) (C)
4.100%, 08/07/00 4,000 4,000
Alameda-Contra Costa Counties,
School Financing Authority,
Capital Improvements
Financing Authority,
Ser E, RB (A) (B) (C)
4.200%, 08/07/00 12,000 12,000
Alameda County, Industrial
Development Authority,
Bat Properties Project,
AMT, RB (A) (B) (C)
4.200%, 08/07/00 3,250 3,250
Alameda County, Industrial
Development Authority,
Meskimen Family Trail Project,
Ser A, AMT, RB (A) (B) (C)
4.200%, 08/07/00 1,000 1,000
Alameda County, Industrial
Development Authority,
Plymouth Properties Project,
Ser A, AMT, RB (A) (B) (C)
4.250%, 08/07/00 1,300 1,300
Alameda County, Industrial
Development Authority,
Tool Family Partnership,
AMT, RB (A) (B) (C)
4.200%, 08/07/00 1,895 1,895
Alameda County, Industrial
Development Authority,
West Coast Pack Project,
Ser A, AMT, RB (A) (B) (C)
4.200%, 08/07/00 5,400 5,400
Alameda County, Multi-Family
Housing, Berkeleyan Project,
Ser A, AMT, RB (A) (B) (C)
4.200%, 08/07/00 5,895 5,895
Anaheim, Electric, TECP (C)
4.300%, 08/25/00 8,850 8,850
Anaheim, Public Improvement,
1995 Police Facilities
Refinancing Project,
COP, AMBAC Insured (A) (B) (C)
3.950%, 08/07/00 2,800 2,800
Burbank, Redevelopment Agency,
Multi-Family Housing,
Issue A, RB (A) (B) (C)
3.950%, 08/07/00 7,600 7,600
California State, Community
College Financing
Authority, Ser A, TRAN,
FSA Insured
5.000%, 06/29/01 5,000 5,033
California State, Department
of Water Resources,
Central Valley Project, Ser J-2, RB
5.400%, 12/01/00 1,225 1,232
California State, Department
of Water Resources,
Central Valley Project, Ser O, RB
8.750%, 12/01/00 4,540 4,616
California State, Economic
Development Authority,
Serra Microchassis Project,
AMT, RB (A) (B) (C)
4.100%, 09/01/00 2,000 2,000
California State,
Economic Development Finance
Authority, Joseph Schmidt Project,
Ser A, AMT, RB (A) (B) (C)
4.200%, 08/07/00 3,100 3,100
California State, Economic
Development Finance Authority,
Serra Mission Project,
Ser A, AMT, RB (A) (B) (C)
4.100%, 09/01/00 2,280 2,280
California State, Educational
Facilities Authority, California
Institute of Technology,
RB (A) (B)
4.100%, 08/07/00 4,200 4,200
California State, Educational
Facilities Authority,
Carnegie Institute,
Ser B, TECP
3.400%, 08/11/00 5,000 5,000
California State, Educational
Facilities Authority,
Foundation For Educational
Achievement,
Ser A, RB (A) (B) (C)
3.950%, 08/07/00 1,350 1,350
California State, Health
Facilities Financing Authority,
Santa Barbara Cottage,
Ser B, RB (A) (B) (C)
4.000%, 08/07/00 3,100 3,100
California State, Pollution
Control Financing Authority,
Burney Forest Products Project,
Ser A, AMT, RB (A) (B) (C)
4.200%, 08/01/00 10,200 10,200
California State, Pollution
Control Financing
Authority, Chevron USA
Project, RB (A) (B)
4.150%, 05/15/01 2,585 2,585
The accompanying notes are an integral part of the financial statements.
72 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- (CONTINUED)
--------------------------------------------------------------------------------
California State, Pollution
Control Financing
Authority, Chevron USA Project,
Ser B, RB (A) (B)
4.250%, 06/15/00 $4,235 $ 4,235
California State, Pollution
Control Financing
Authority, Delano Project 1989,
AMT, RB (A) (B) (C)
4.100%, 08/01/00 5,700 5,700
California State, Pollution
Control Financing
Authority, Delano Project 1990,
AMT, RB (A) (B) (C)
4.100%, 08/01/00 1,475 1,475
California State, Pollution
Control Financing
Authority, Delano Project 1991,
AMT, RB (A) (B) (C)
4.100%, 08/01/00 200 200
California State, Pollution
Control Financing
Authority, Exxon Project,
RB (A) (B)
3.950%, 08/01/00 5,000 5,000
California State, Pollution
Control Financing
Authority, Pacific Gas & Electric,
Ser D, RB (A) (B) (C)
4.000%, 08/01/00 4,800 4,800
California State, Pollution
Control Financing
Authority, Shell Oil
Martinez Project,
Ser A, RB (A) (B)
4.000%, 08/01/00 1,600 1,600
California State, Pollution
Control Financing
Authority, Shell Oil Project,
Ser A, RB (A) (B)
4.000%, 08/01/00 6,100 6,100
California State, Pollution
Control Financing
Authority, Shell Oil Project,
Ser C, RB (A) (B)
4.000%, 08/01/00 2,000 2,000
California State, Pollution
Control Financing
Authority, Southern
California Edison,
Ser A, RB (A) (B)
4.350%, 08/01/00 1,800 1,800
California State, Pollution
Control Financing
Authority, Southern
California Edison,
Ser B, RB (A) (B)
4.350%, 08/01/00 10,600 10,600
California State, Pollution
Control Financing
Authority, Southern
California Edison,
Ser C, RB (A) (B)
4.350%, 08/01/00 5,000 5,000
California State, Pollution
Control Financing
Authority, Southern
California Edison,
Ser D, RB (A) (B)
4.350%, 08/01/00 16,000 16,000
California State, Public
Finance Authority,
Capital Improvements
Financing, RB,
MBIA Insured (A) (B) (C)
4.400%, 08/07/00 23,500 23,500
California State, School
Cash Reserve Program,
Ser A, TRAN, AMBAC Insured
5.250%, 07/03/01 5,600 5,648
California State, School
Facilities Financing,
Capital Improvement
Financing Projects,
Ser A, COP (A) (B) (C)
4.050%, 08/07/00 8,700 8,700
California State, School
Facilities Financing,
Capital Improvement
Financing Projects,
Ser D, COP (A) (B) (C)
3.850%, 08/07/00 5,800 5,800
California State, Transit
Finance Authority,
RB, FSA Insured (A) (B) (C)
4.150%, 08/07/00 6,900 6,900
California State, University
Revenue and Co, Housing System,
Ser A7, RB, AMBAC
Insured (A) (B) (C)
4.400%, 08/07/00 14,200 14,200
California Statewide,
Community Development Authority,
Multi-Family Housing, Aegis
Pleasant Hill, Ser H, AMT,
RB (A) (B) (C)
4.200%, 08/07/00 6,270 6,270
California Statewide,
Community Development
Authority, Northern
California Retirement
Facilities Project,
COP (A) (B) (C)
4.000%, 08/01/03 5,055 5,055
California Statewide,
Community Development
Authority, Ser A,
TRAN, FSA Insured
5.250%, 06/29/01 6,600 6,656
California State, TECP (C)
3.900%, 09/29/00 5,000 5,000
4.000%, 10/12/00 3,065 3,065
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- (CONTINUED)
--------------------------------------------------------------------------------
Covina, Redevelopment Agency,
Multi-Family Housing
Authority, Shadowhills
Apartments, Ser A, RB,
FNMA Collateralized (A) (B) (C)
3.950%, 08/07/00 $ 1,015 $ 1,015
Dublin, Housing Finance Authority,
Multi-Family Housing, Park Sierra,
Ser A, AMT, RB (A) (B) (C)
4.100%, 08/07/00 2,500 2,500
East Bay, Municipal Waste
Water Authority, TECP
3.350%, 08/11/00 2,000 2,000
Fontana, Special Tax,
Community Facilities
District No. 2, Ser A,
RB, MBIA Insured
4.000%, 09/01/00 1,020 1,020
Fresno, Solid Waste Management,
Ser A, RB, MBIA Insured
5.000%, 05/01/01 970 975
Golden Empire, Schools
Financing Authority,
Kern High School District,
Ser B, RB (A) (B) (C)
3.950%, 08/07/00 8,400 8,400
Irvine, Improvement Bond Act,
Assessment District No.
94-13, RB (A) (B) (C)
4.050%, 09/01/00 1,300 1,300
Irvine, Improvement Bond Act,
Assessment District No.
94-15, RB (A) (B) (C)
4.050%, 09/01/00 1,000 1,000
Irvine, Public Facilities &
Infrastructure Authority,
Capital Improvement Project,
RB (A) (B) (C)
4.000%, 08/07/00 3,060 3,060
Irvine Ranch, Water District,
Consolidated Bonds,
Ser B, GO (A) (B) (C)
4.250%, 08/01/00 600 600
Irvine Ranch, Water District,
Consolidated Improvement District,
GO (A) (B) (C)
4.150%, 08/01/00 1,200 1,200
La Mirada, Redevelopment Agency,
Industrial Commercial Redevelopment,
Ser B, TA Prerefunded @102 (D)
6.750%, 08/15/00 1,915 1,956
Lancaster, Redevelopment Agency,
Multi-Family Housing,
Westwood Park Apartments,
Ser K, RB (A) (B) (C)
3.850%, 08/07/00 1,200 1,200
Long Beach, Harbor, Ser A, AMT, RB
5.000%, 05/15/01 2,450 2,466
Los Angeles, Community
Redevelopment Agency,
Baldwin Hills Public Park,
COP (A) (B) (C)
3.950%, 08/07/00 1,000 1,000
Los Angeles County,
Industrial Development
Authority, Tulip Project,
Ser A, AMT,
RB (A) (B) (C)
3.900%, 08/07/00 1,900 1,900
Los Angeles County,
Pension Obligation, Ser A,
RB, AMBAC Insured (A) (B)
3.950%, 08/07/00 7,400 7,400
Los Angeles County, Pension
Obligation, Ser B,
RB, AMBAC Insured (A) (B) (C)
3.950%, 08/07/00 2,000 2,000
Los Angeles County, Pension
Obligation, Ser C,
RB, AMBAC Insured (A) (B) (C)
3.950%, 08/07/00 10,400 10,400
Los Angeles County,
Pooled School Financing
Program, Ser A, RB
5.000%, 07/02/01 6,000 6,039
Los Angeles County, Ser A, TRAN
5.000%, 06/29/01 14,425 14,532
Los Angeles County,
Transportation Sales Tax,
Ser A, RB Prerefunded @ 102 (D)
6.700%, 07/01/01 750 781
Los Angeles, Department of
Water, TECP (C)
3.900%, 09/07/00 3,000 3,000
Los Angeles, Landscaping & Lighting
District No. 96-1, SA
5.250%, 03/01/01 1,460 1,472
Los Angeles, Multi-Family Housing,
Loans To Lender Program,
Ser A, AMT,
RB (A) (B) (C)
4.100%, 08/01/00 5,000 5,000
Los Angeles, Multi-Family Housing,
Ser K, RB (A) (B) (C)
3.650%, 08/07/00 3,700 3,700
Los Angeles, Waste Water
System, Ser D,
RB Prerefunded @ 102 (D)
6.700%, 12/01/00 4,055 4,174
M-S-R Public Power Agency,
San Juan, Sub Lien,
Ser F, RB, MBIA Insured
(A) (B) (C)
4.000%, 08/01/00 2,000 2,000
The accompanying notes are an integral part of the financial statements.
74 -----------------------------------------------------------------------------
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STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- (CONTINUED)
--------------------------------------------------------------------------------
Metropolitan, Water
District Southern
California, Ser A1, GO
5.000%, 03/01/01 $1,500 $ 1,512
Metropolitan, Water
District Southern California,
Ser B, RB (A) (B) (C)
4.000%, 08/07/00 2,000 2,000
Metropolitan, Water
District Southern California,
TECP (C)
3.350%, 08/04/00 3,000 3,000
3.900%, 10/05/00 5,000 5,000
Modesto, Irrigation, TECP (C)
4.500%, 08/09/00 4,000 4,000
Mount Diablo, Unified
School District No. 1,
RB Prerefunded @ 102 (D)
7.050%, 08/01/00 5,000 5,100
Oakland, TRAN
4.250%, 09/29/00 1,810 1,811
Orange County, Apartment
Development Authority,
Lakes Project, Ser A,
RB (A) (B) (C)
4.000%, 08/07/00 8,000 8,000
Orange County, Apartment
Development Authority,
Pointe Niguel Project, Ser C,
RB (A) (B) (C)
3.950%, 08/07/00 5,000 5,000
Orange County, Local
Transportation Authority,
Ser M, RB, AMBAC Insured
5.500%, 02/15/01 1,500 1,515
Orange County, Local
Transportation Authority,
TECP (C)
3.850%, 08/04/00 5,000 5,000
Orange County Multi-Family
Housing Authority,
Lantern Pines Project, Ser CC,
RB (A) (B) (C)
3.750%, 08/07/00 6,500 6,500
Orange County, Special
Financing Authority,
Teeter Plan, Ser B, RB,
AMBAC Insured (A) (B) (C)
4.000%, 08/07/00 5,900 5,900
Orange County, Special
Financing Authority,
Teeter Plan, Ser C, RB,
AMBAC Insured (A) (B) (C)
4.000%, 08/07/00 3,400 3,400
Orange County, Water District,
TECP (C) 4.000%, 11/09/00 2,175 2,175
Oxnard, Multi-Family
Housing Authority,
Seawind Apartments Projects,
Ser A, AMT,
RB (A) (B) (C)
4.000%, 08/07/00 2,700 2,700
Pasadena, Electric, RB
MBIA Insured
4.750%, 08/01/00 1,540 1,540
Rancho Cucamonga, Redevelopment
Agency, Redevelopment
Project, TA, FSA Insured
4.250%, 09/01/00 940 941
Riverside County, 1997
Lease Project, COP,
MBIA Insured
4.750%, 11/01/00 3,015 3,023
Riverside County, Public
Facilities Authority,
Ser A, COP (A) (B) (C)
4.050%, 08/07/00 11,200 11,200
Riverside County, Public
Facilities Authority,
Ser B, COP (A) (B) (C)
3.900%, 08/07/00 7,000 7,000
Riverside County, TECP (C)
4.100%, 08/16/00 700 700
Riverside County,
Transportation Community,
Ser A, RB Prerefunded @ 102 (D)
6.500%, 06/01/01 3,500 3,635
Sacramento, Municipal
Utilities District, Electric,
Ser L, RB, MBIA Insured
5.000%, 07/01/01 1,000 1,007
Sacramento, Redevelopment Agency,
Merged Downtown, Ser A, TA,
Prerefunded @102 (D)
6.500%, 11/01/00 3,985 4,090
San Bernadino County,
Multi-Family Housing
Authority, Mountain
View Apartments,
RB (A) (B) (C)
4.000%, 08/07/00 2,400 2,400
San Bernadino County,
Multi-Family Housing
Authority, Pepperwood,
Ser A, RB (A) (B) (C)
3.850%, 08/01/00 1,100 1,100
San Diego County, Regional
Transportation, Ser A, RB,
FGIC Insured
4.400%, 04/01/01 3,870 3,891
San Diego, Metropolitan
Transportation Development,
COP, FSA Insured
4.000%, 12/01/00 3,005 3,009
San Diego, Multi-Family
Housing Authority,
Issue A, RB (A) (B) (C)
3.850%, 08/07/00 3,000 3,000
San Diego, Multi-Family
Housing Authority,
Nobel Courts, Ser L,
RB (A) (B) (C)
3.950%, 08/07/00 6,600 6,600
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Funds logo omitted]
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
--------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
--------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BONDS -- (CONTINUED)
--------------------------------------------------------------------------------
San Diego, Multi-Family
Housing Authority,
RB, FNMA Collateralized
(A) (B) (C)
3.850%, 08/07/00 $2,350 $ 2,350
San Diego, TRAN
4.250%, 09/29/00 4,000
4,005 San Diego, Unified
School District, Ser A, TRAN
4.250%, 09/29/00 8,000 8,007
San Francisco, Bay Area
Rapid Transit, TECP (C)
4.100%, 10/13/00 3,000 3,000
San Francisco, City & County,
George R. Moscone
Center, ETM, RB,
AMBAC Insured
6.200%, 10/01/00 1,000 1,004
San Francisco, City & County,
Redevelopment Authority,
Educational Facilities,
Community College, Ser A, GO
6.500%, 06/15/01 830 845
San Francisco, City & County,
Redevelopment Authority,
Fillmore Housing Center Project,
Ser A-1, RB (A) (B) (C)
3.950%, 08/07/00 2,550 2,550
San Francisco, City & County,
Redevelopment Authority,
Zoo Facilities,
Ser B, GO
6.500%, 06/15/01 490 499
San Joaquin County, TRAN
4.250%, 01/01/01 1,000 1,001
San Jose Airport, TECP (C)
4.200%, 09/08/00 2,500 2,500
San Jose, Multi-Family
Housing, Foxchase,
Ser B, RB, FGIC Insured
(A) (B) (C)
4.050%, 08/07/00 9,200 9,200
San Jose, Redevelopment Agency,
Multi-Family Housing,
San Fernando Apartments,
Ser A, AMT, RB (A) (B) (C)
3.850%, 08/07/00 1,000 1,000
South Bayside, Waste
Management Authority,
Solid Waste Systems, RB,
AMBAC Insured
4.500%, 03/01/01 615 616
Southeast, Resource Recovery
Facilities Authority,
Ser A, RB (A) (B) (C)
4.050%, 08/07/00 5,600 5,600
Southern California, Public
Power Authority,
Transmission Project, RB,
AMBAC Insured (A) (B) (C)
3.950%, 08/07/00 11,200 11,200
South Orange County,
Public Financing Authority,
SA, FSA Insured
3.700%, 09/02/00 505 505
Stanislaus, Waste-To-Energy
Financing Authority,
Ogden Martin System Project, RB,
MBIA Insured (A) (B) (C)
4.100%, 09/06/00 7,280 7,280
State of California, TECP (C)
3.850%, 08/08/00 6,000 6,000
4.000%, 08/18/00 5,000 5,000
Tracy, Multi-Family
Housing Redevelopment
Authority, Sycamore
Village Apartments,
Ser A, RB (A) (B) (C)
3.850%, 08/07/00 2,000 2,000
Turlock, Irrigation District,
Transmission Projects,
Ser A, COP (A) (B) (C)
4.000%, 08/07/00 3,850 3,850
University of California,
Multi-Purpose Projects,
Ser F, RB, FGIC Insured
7.000%, 09/01/00 3,590 3,601
University of California,
Regents, TECP
3.900%, 08/08/00 3,000 3,000
4.150%, 09/06/00 5,000 5,000
West Covina, Redevelopment Agency,
Lakes Public Parking Project,
RB (A) (B) (C)
3.750%, 08/07/00 2,995 2,995
--------
TOTAL CALIFORNIA MUNICIPAL BONDS
(Cost $559,687) 559,687
--------
--------------------------------------------------------------------------------
CASH EQUIVALENTS -- 0.4%
--------------------------------------------------------------------------------
Goldman Sachs Tax Free
Money Market 1,005,124 1,005
Provident California Tax Free
Money Market 1,077,121 1,077
--------
TOTAL CASH EQUIVALENTS
(Cost $2,082) 2,082
--------
TOTAL INVESTMENTS -- 99.7%
(Cost $561,769) 561,769
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.3% 1,702
The accompanying notes are an integral part of the financial statements.
76 -----------------------------------------------------------------------------
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<PAGE>
STATEMENT OF NET ASSETS
JULY 31, 2000
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONCLUDED)
--------------------------------------------------------------------------------
Value (000)
--------------------------------------------------------------------------------
NET ASSETS:
--------------------------------------------------------------------------------
Paid-in-Capital of Fiduciary Shares
(unlimited authorization -- no par
value) based on 269,160,447
outstanding shares of beneficial
interest $ 269,160
Paid-in-Capital of Class A Shares
(unlimited authorization -- no par
value) based on 206,270,844
outstanding shares of beneficial
interest 206,271
Paid-in-Capital of Class S Shares
(unlimited authorization -- no par
value) based on 88,097,772 outstanding
shares of beneficial interest 88,098
Accumulated net realized loss on investments (58)
--------
TOTAL NET ASSETS -- 100.0% $563,471
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES $1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES $1.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES $1.00
========
--------------------------------------------------------------------------------
(A) FLOATING RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET ASSETS
IS THE RATE IN EFFECT ON JULY 31, 2000.
(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 OR A LIQUIDITY
AGREEMENT BY A MAJOR COMMERCIAL BANK OR FINANCIAL INSTITUTION.
(D) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE COMPANY
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
RB -- REVENUE BOND
SA -- SPECIAL ASSESSMENT
SER -- SERIES
TA -- TAX ALLOCATION
TECP -- TAX EXEMPT COMMERCIAL PAPER
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
The accompanying notes are an integral part of the financial statements.
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<PAGE>
STATEMENTS OF OPERATIONS (000)
FOR THE FISCAL YEAR OR PERIOD ENDED JULY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
GROWTH MOMENTUM
FUND FUND
------- --------
<S> <C> <C>
Interest Income ................................................................. $ 1,362 $ 737
Dividend Income ................................................................. 3,522 14,025
Less: Foreign Taxes Withheld, net of reclaims ................................... (19) (35)
------- -------
Total Investment Income .............................................. 4,865 14,727
------- -------
Expenses:
Administrative Fees .......................................................... 1,608 1,664
Administrative Fees Waived ................................................... (161) (166)
Investment Adviser Fees ...................................................... 4,825 4,991
Investment Adviser Fees Waived ............................................... -- --
Shareholder Servicing Fees Fiduciary Shares .................................. 1,873 1,726
Shareholder Servicing Fees Class A Shares .................................... 93 93
Shareholder Servicing Fees Class B Shares .................................... 44 18
Shareholder Servicing Fees Waived ............................................ (1,180) (1,227)
Custodian Fees ............................................................... 80 83
Professional Fees ............................................................ 46 56
Registration Fees ............................................................ 89 37
Transfer Agency Fees ......................................................... 69 77
Distribution Fees Class A Shares ............................................. 93 93
Distribution Fees Class B Shares ............................................. 133 55
Distribution Fees Class C Shares ............................................. 2 1
Distribution Fees Waived ..................................................... -- --
Insurance Fees ............................................................... 5 9
Trustees Fees ................................................................ 17 20
Printing Fees ................................................................ 51 68
Miscellaneous Fees ........................................................... 6 17
------- -------
Total Expenses ............................................................ 7,693 7,615
Reduction of Expenses (1) ................................................. (26) (27)
------- -------
Total Net Expenses ........................................................ 7,667 7,588
------- -------
Net Investment Income (Loss) ................................................. (2,802) 7,139
------- -------
Net Realized Gain on Investments ............................................. 66,871 52,887
------- -------
Net Realized Gain on Option Contracts ........................................ -- 552
------- -------
Net Realized Loss on Foreign Currency Transactions .............................. -- --
------- -------
Change in Unrealized Appreciation (Depreciation) on Investments ................. 20,851 (26,490)
------- -------
Change in Unrealized Appreciation (Depreciation) on Foreign Currency ............ -- --
------- -------
Net Realized and Unrealized Gain (Loss) on Investments .......................... 87,722 26,949
------- -------
Increase (Decrease) in Net Assets Resulting from Operations ..................... $84,920 $34,088
======= =======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) SEE NOTE 3.
(2) COMMENCED OPERATIONS ON MAY 31, 2000.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
78 -----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
INCOME CORE SMALL CAP INTERNATIONAL
EQUITY EQUITY BALANCED VALUE EQUITY
FUND FUND (2) FUND FUND FUND
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Interest Income ............................................ $ 611 $ 22 $ 10,846 $ 1,109 $ 168
Dividend Income ............................................ 12,131 28 5,038 1,274 2,056
Less: Foreign Taxes Withheld, net of reclaims .............. (61) -- (219) (103) (149)
-------- ---- -------- ------- -------
Total Investment Income ......................... 12,681 50 15,665 2,280 2,075
-------- ---- -------- ------- -------
Expenses:
Administrative Fees ..................................... 1,014 5 876 224 237
Administrative Fees Waived .............................. (280) (1) (88) (22) (24)
Investment Adviser Fees ................................. 3,043 14 2,629 1,122 1,127
Investment Adviser Fees Waived .......................... (10) -- -- -- --
Shareholder Servicing Fees Fiduciary Shares ............. 1,167 6 1,058 263 294
Shareholder Servicing Fees Class A Shares ............... 90 -- 27 10 2
Shareholder Servicing Fees Class B Shares ............... 11 -- 10 7 1
Shareholder Servicing Fees Waived ....................... (754) (3) (651) (164) (214)
Custodian Fees .......................................... 51 -- 44 21 222
Professional Fees ....................................... 35 -- 29 8 14
Registration Fees ....................................... 87 1 22 9 6
Transfer Agency Fees .................................... 56 -- 42 21 4
Distribution Fees Class A Shares ........................ 90 -- 27 10 2
Distribution Fees Class B Shares ........................ 33 -- 31 22 3
Distribution Fees Class C Shares ........................ -- -- -- 1 --
Distribution Fees Waived ................................ -- -- -- -- --
Insurance Fees .......................................... 2 -- 4 -- --
Trustees Fees ........................................... 9 -- 14 4 2
Printing Fees ........................................... 41 -- 36 2 8
Miscellaneous Fees ...................................... 12 1 8 3 17
-------- ---- -------- ------- -------
Total Expenses .................................. 4,697 23 4,118 1,541 1,701
Reduction of Expenses (1) ....................... (16) (1) (14) (4) (4)
-------- ---- -------- ------- -------
Total Net Expenses .............................. 4,681 22 4,104 1,537 1,697
-------- ---- -------- ------- -------
Net Investment Income (Loss) ............................ 8,000 28 11,561 743 378
-------- ---- -------- ------- -------
Net Realized Gain on Investments ........................... 10,416 9 11,739 9,277 8,855
-------- ---- -------- ------- -------
Net Realized Gain on Option Contracts ...................... -- -- -- -- --
-------- ---- -------- ------- -------
Net Realized Loss on Foreign Currency Transactions ......... -- -- -- (14) (75)
-------- ---- -------- ------- -------
Change in Unrealized Appreciation (Depreciation)
on Investments .......................................... (76,724) 432 (13,730) 7,331 3,269
-------- ---- -------- ------- -------
Change in Unrealized Appreciation (Depreciation)
on Foreign Currency ..................................... -- -- -- (2) (14)
-------- ---- -------- ------- -------
Net Realized and Unrealized Gain (Loss) on Investments ..... (66,308) 441 (1,991) 16,592 12,035
-------- ---- -------- ------- -------
Increase (Decrease) in Net Assets Resulting from Operations $(58,308) $469 $ 9,570 $17,335 $12,413
======== ==== ======== ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
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<PAGE>
STATEMENTS OF OPERATIONS (000)
FOR THE FISCAL YEAR ENDED JULY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALIFORNIA 100%
INTERMEDIATE INTERMEDIATE- U.S.TREASURY U.S. GOVERNMENT
TAX-FREE BOND TERM BOND MONEY MARKET MONEY MARKET
BOND FUND FUND FUND FUND FUND
---------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Interest Income .................................................. $8,155 $22,347 $16,966 $68,857 $29,254
------ ------- ------- ------- -------
Total Investment Income ............................... 8,155 22,347 16,966 68,857 29,254
------ ------- ------- ------- -------
Expenses:
Administrative Fees ........................................... 333 654 498 2,534 1,015
Administrative Fees Waived .................................... (33) (65) (50) (253) (101)
Investment Adviser Fees ....................................... 832 1,636 1,244 3,801 1,522
Investment Adviser Fees Waived ................................ (499) -- -- (634) --
Shareholder Servicing Fees Fiduciary Shares ................... 357 808 610 631 854
Shareholder Servicing Fees Class A Shares ..................... 59 10 12 1,054 161
Shareholder Servicing Fees Class B Shares ..................... -- -- -- -- 1
Shareholder Servicing Fees Waived ............................. (415) (785) (547) (1,685) (1,015)
Custodian Fees ................................................ 16 33 25 127 51
Professional Fees ............................................. 19 43 19 87 27
Registration Fees ............................................. 17 42 14 99 48
Transfer Agent Fees ........................................... 21 28 22 125 41
Distribution Fees Class A Shares .............................. 58 10 12 1,054 161
Distribution Fees Class B Shares .............................. 2 -- -- -- 2
Distribution Fees Class S Shares .............................. -- -- -- 3,262 556
Distribution Fees Waived ...................................... (58) (10) (12) -- --
Insurance Fees ................................................ 4 1 2 8 2
Trustees Fees ................................................. 7 14 5 20 11
Printing Fees ................................................. 16 27 16 85 36
Miscellaneous Fees ............................................ 4 16 8 32 14
------ ------- ------- ------- -------
Total Expenses ........................................ 740 2,462 1,878 10,347 3,386
Reduction of Expenses (1) ............................. (5) (10) (8) (44) (17)
------ ------- ------- ------- -------
Total Net Expenses .................................... 735 2,452 1,870 10,303 3,369
------ ------- ------- ------- -------
Net Investment Income ......................................... 7,420 19,895 15,096 58,554 25,885
------ ------- ------- ------- -------
Net Realized Gain (Loss) on Investments .......................... 147 (1,032) (2,004) 30 12
------ ------- ------- ------- -------
Change in Unrealized Appreciation (Depreciation) on Investments .. 94 (3,247) (1,474) -- --
------ ------- ------- ------- -------
Net Realized and Unrealized Gain (Loss) on Investments ........... 241 (4,279) (3,478) 30 12
------ ------- ------- ------- -------
Increase in Net Assets Resulting from Operations ................. $7,661 $15,616 $11,618 $58,584 $25,897
====== ======= ======= ======= =======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) SEE NOTE 3.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
80 -----------------------------------------------------------------------------
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--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED CALIFORNIA TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
-------- -------
<S> <C> <C>
Interest Income ................................................... $207,654 $21,931
-------- -------
Total Investment Income ................................ 207,654 21,931
-------- -------
Expenses:
Administrative Fees ............................................ 7,003 1,314
Administrative Fees Waived ..................................... (700) (131)
Investment Adviser Fees ........................................ 10,504 1,970
Investment Adviser Fees Waived ................................. -- (774)
Shareholder Servicing Fees Fiduciary Shares .................... 4,177 746
Shareholder Servicing Fees Class A Shares ...................... 1,986 714
Shareholder Servicing Fees Class B Shares ...................... -- --
Shareholder Servicing Fees Waived .............................. (6,163) (1,460)
Custodian Fees ................................................. 350 66
Professional Fees .............................................. 172 41
Registration Fees .............................................. 347 29
Transfer Agent Fees ............................................ 312 51
Distribution Fees Class A Shares ............................... 1,986 714
Distribution Fees Class B Shares ............................... -- --
Distribution Fees Class S Shares ............................... 5,699 399
Distribution Fees Waived ....................................... -- --
Insurance Fees ................................................. 27 2
Trustees Fees .................................................. 65 13
Printing Fees .................................................. 196 32
Miscellaneous Fees ............................................. 135 64
-------- -------
Total Expenses ......................................... 26,096 3,790
Reduction of Expenses (1) .............................. (119) (22)
-------- -------
Total Net Expenses ..................................... 25,977 3,768
-------- -------
Net Investment Income .......................................... 181,677 18,163
-------- -------
Net Realized Gain (Loss) on Investments ........................... 73 7
-------- -------
Change in Unrealized Appreciation (Depreciation) on Investments ... -- --
-------- -------
Net Realized and Unrealized Gain (Loss) on Investments ............ 73 7
-------- -------
Increase in Net Assets Resulting from Operations .................. $181,750 $18,170
======== =======
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) SEE NOTE 3.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 81
WWW.HIGHMARKFUNDS.COM
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE FISCAL YEARS OR PERIODS ENDED
<TABLE>
<CAPTION>
GROWTH VALUE MOMENTUM INCOME EQUITY
FUND FUND FUND
------------------------ ----------------------- -----------------------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
------------------------ ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) .................. $ (2,802) $ (1,030) $ 7,139 $ 9,788 $ 8,000 $ 9,364
Net Realized Gain on Investments .............. 66,871 67,282 52,887 37,461 10,416 125,499
Net Realized Gain on Option Contracts ......... -- -- 552 71 -- --
Net Realized Gain (Loss) on Foreign Currency
Transactions ................................ -- -- -- -- -- --
Change in Unrealized Appreciation
(Depreciation) on Investments ............... 20,851 59,868 (26,490) 55,738 (76,724) (47,639)
Change in Unrealized Appreciation
(Depreciation) on Foreign Currency .......... -- -- -- -- -- --
--------- --------- --------- ------- ---------- --------
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................. 84,920 126,120 34,088 103,058 (58,308) 87,224
--------- --------- --------- ------- ---------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................ -- -- (6,096) (9,557) (7,684) (9,191)
Class I Shares .............................. -- -- (900) -- -- --
Class A Shares .............................. -- -- (238) (316) (427) (261)
Class B Shares .............................. -- -- (7) (19) (34) (19)
Class C Shares .............................. -- -- -- -- -- --
Distributions in excess of net investment
income .................................... -- -- -- -- -- --
Capital Gains:
Fiduciary Shares ............................ (67,698) (38,687) (32,731) (26,011) (114,343) (77,000)
Class I Shares .............................. -- -- (5,746) -- -- --
Class A Shares .............................. (3,095) (1,136) (1,827) (1,101) (4,308) (2,647)
Class B Shares .............................. (1,383) (309) (353) (182) (1,052) (298)
Class C Shares .............................. (2) -- (1) -- -- --
--------- --------- --------- ------- ---------- --------
Total Distributions ....................... (72,178) (40,132) (47,899) (37,186) (127,848) (89,416)
--------- --------- --------- ------- ---------- --------
Change in Net Assets ............................ 12,742 85,988 (13,811) 65,872 (186,156) (2,192)
--------- --------- --------- ------- ---------- --------
Share Transactions(2):
Fiduciary Shares:
Proceeds in connection with the acquisition
of Common Trust Fund Assets ............... -- -- -- -- -- 5,877
Proceeds from the reorganization of the
Blue Chip Growth Fund ..................... -- 134,130 -- -- -- --
Proceeds from Shares Issued ................. 193,137 152,940 132,303 167,107 90,475 59,638
Reinvestment of Distributions ............... 66,007 37,499 34,930 30,723 112,073 77,041
Cost of Shares Redeemed ..................... (288,857) (169,282) (372,269) (280,911) (364,118) (176,019)
--------- --------- --------- -------- --------- --------
Total Fiduciary Share Transactions ........ (29,713) 155,287 (205,036) (83,081) (161,570) (39,340)
--------- --------- --------- -------- --------- --------
Class I Shares:
Proceeds from Shares Issued ................. -- -- 124,178 -- -- --
Reinvestment of Distributions ............... -- -- 6,646 -- -- --
Cost of Shares Redeemed ..................... -- -- (15,675) -- -- --
--------- --------- --------- -------- --------- --------
Total Class I Share Transactions .......... -- -- 115,149 -- -- --
--------- --------- --------- -------- --------- --------
Class A Shares:
Proceeds from Shares Issued ................. 448,194 87,981 189,754 64,059 60,185 9,523
Reinvestment of Distributions ............... 2,859 1,057 1,838 1,320 4,539 2,622
Cost of Shares Redeemed ..................... (420,811) (82,900) (186,694) (66,804) (16,267) (12,704)
--------- --------- --------- -------- --------- --------
Total Class A Share Transactions .......... 30,242 6,138 4,898 (1,425) 48,457 (559)
--------- --------- --------- -------- --------- --------
Class B Shares:
Proceeds from Shares Issued ................. 14,908 9,353 3,960 2,059 1,492 2,874
Reinvestment of Distributions ............... 1,356 303 351 195 1,067 307
Cost of Shares Redeemed ..................... (2,828) (1,012) (2,382) (1,457) (1,709) (517)
--------- --------- --------- -------- --------- --------
Total Class B Share Transactions .......... 13,436 8,644 1,929 797 850 2,664
--------- --------- --------- -------- --------- --------
Class C Shares:
Proceeds from Shares Issued ................. 875 -- 591 -- 39 --
Reinvestment of Distributions ............... 2 -- 1 -- -- --
Cost of Shares Redeemed ..................... (23) -- (17) -- -- --
--------- --------- --------- -------- --------- --------
Total Class C Share Transactions .......... 854 -- 575 -- 39 --
--------- --------- --------- -------- --------- --------
Net Increase (Decrease) in Net Assets From
Share Transactions ........................... 14,819 170,069 (82,485) (83,709) (112,224) (37,235)
--------- --------- --------- -------- --------- --------
Total Increase (Decrease) in Net Assets ... 27,561 256,057 (96,296) (17,837) (298,380) (39,427)
--------- --------- --------- -------- --------- --------
Net Assets:
Beginning of Period ........................... 774,238 518,181 886,317 904,154 655,711 695,138
--------- --------- --------- -------- --------- --------
End of Period ................................. $ 801,799 $ 774,238 $ 790,021 $886,317 $ 357,331 $655,711
========= ========= ========= ======== ========= ========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCEMENT OF OPERATIONS.
(2) FOR SHARE TRANSACTIONS, SEE FOOTNOTE 12 IN THE NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
82 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
<TABLE>
<CAPTION>
CORE EQUITY BALANCED SMALL CAP VALUE INTERNATIONAL EQUITY
FUND FUND FUND FUND
----------- ----------------------- ----------------------- ----------------------
05/31/00(1) 08/01/99 08/01/98 08/01/99 09/17/98 (1) 08/01/99 08/01/98
TO 07/31/00 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
----------- ----------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income (Loss) ................... $ 28 $ 11,561 $ 11,879 $ 743 $ 173 $ 378 $ 404
Net Realized Gain on Investments ............... 9 11,739 35,906 9,277 4,967 8,855 7,856
Net Realized Gain on Option Contracts .......... -- -- 19 -- -- -- --
Net Realized Gain (Loss) on Foreign Currency
Transactions ................................. -- -- -- (14) (63) (75) 130
Change in Unrealized Appreciation
(Depreciation) on Investments ................ 432 (13,730) (4,521) 7,331 11,622 3,269 (1,586)
Change in Unrealized Appreciation
(Depreciation) on Foreign Currency ........... -- -- -- (2) 1 (14) 15
------- --------- -------- -------- ------- -------- --------
Net Increase (Decrease) in Net Assets Resulting
From Operations .............................. 469 9,570 43,283 17,335 16,700 12,413 6,819
------- --------- -------- -------- ------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................. (17) (11,097) (11,557) (1,480) (26) (722) (343)
Class I Shares ............................... -- -- -- -- -- -- --
Class A Shares ............................... -- (256) (259) (63) -- -- --
Class B Shares ............................... -- (72) (40) (32) -- (1) --
Class C Shares ............................... -- -- -- -- -- -- --
Distributions in excess of net investment
income ..................................... -- -- -- (400) -- -- --
Capital Gains:
Fiduciary Shares ............................. -- (35,061) (17,872) (4,436) -- (783) --
Class I Shares ............................... -- -- -- -- -- -- --
Class A Shares ............................... -- (890) (439) (147) -- -- --
Class B Shares ............................... -- (333) (73) (124) -- (1) --
Class C Shares ............................... -- -- -- -- -- -- --
------- --------- -------- -------- ------- -------- --------
Total Distributions ........................ (17) (47,709) (30,240) (6,682) (26) (1,507) (343)
------- --------- -------- -------- ------- -------- --------
Change in Net Assets ............................. 452 (38,139) 13,043 10,653 16,674 10,906 6,476
------- --------- -------- -------- ------- -------- --------
Share Transactions(2):
Fiduciary Shares:
Proceeds in connection with the acquisition
of Common Trust Fund Assets ................ -- -- -- -- -- -- --
Proceeds from the reorganization of the
Blue Chip Growth Fund ...................... -- -- -- -- -- -- --
Proceeds from Shares Issued .................. 28,311 63,709 70,832 53,458 72,571 45,794 27,052
Reinvestment of Distributions ................ 3 44,993 28,648 4,577 -- 930 103
Cost of Shares Redeemed ...................... (437) (121,531) (109,494) (13,705) (8,638) (44,447) (17,064)
------- --------- -------- -------- ------- -------- --------
Total Fiduciary Share Transactions ......... 33,754 (12,829) (10,014) 44,330 63,933 2,277 10,091
------- --------- -------- -------- ------- -------- --------
Class I Shares:
Proceeds from Shares Issued .................. -- -- -- -- -- -- --
Reinvestment of Distributions ................ -- -- -- -- -- -- --
Cost of Shares Redeemed ...................... -- -- -- -- -- -- --
------- --------- -------- -------- ------- -------- --------
Total Class I Share Transactions ........... -- -- -- -- -- -- --
------- --------- -------- -------- ------- -------- --------
Class A Shares:
Proceeds from Shares Issued .................. 27 1,974 2,676 75,939 843 32,538 --
Reinvestment of Distributions ................ -- 1,128 674 231 -- -- --
Cost of Shares Redeemed ...................... -- (2,794) (3,057) (69,347) (33) (31,167) --
------- --------- -------- -------- ------- -------- --------
Total Class A Share Transactions ........... 27 308 293 6,823 810 1,371 --
------- --------- -------- -------- ------- -------- --------
Class B Shares:
Proceeds from Shares Issued .................. 144 2,086 2,867 4,187 1,011 1,127 --
Reinvestment of Distributions ................ -- 393 105 166 -- 2 --
Cost of Shares Redeemed ...................... -- (1,050) (432) (1,134) (81) (131) --
------- --------- -------- -------- ------- -------- --------
Total Class B Share Transactions ........... 144 1,429 2,540 3,219 930 998 --
------- --------- -------- -------- ------- -------- --------
Class C Shares:
Proceeds from Shares Issued .................. -- 52 -- 364 -- 10 --
Reinvestment of Distributions ................ -- -- -- -- -- -- --
Cost of Shares Redeemed ...................... -- (5) -- (1) -- (1) --
------- --------- -------- -------- ------- -------- --------
Total Class C Share Transactions ........... -- 47 -- 363 -- 9 --
------- --------- -------- -------- ------- -------- --------
Net Increase (Decrease) in Net Assets From
Share Transactions ............................ 33,925 (11,045) (7,181) 54,735 65,673 4,655 10,091
------- --------- -------- -------- ------- -------- --------
Total Increase (Decrease) in Net Assets .... 34,377 (49,184) 5,862 65,388 82,347 15,561 16,567
------- --------- -------- -------- ------- -------- --------
Net Assets:
Beginning of Period ............................ -- 466,241 460,379 82,347 -- 108,537 91,970
------- --------- -------- -------- ------- -------- --------
End of Period .................................. $34,377 $ 417,057 $466,241 $147,735 $82,347 $124,098 $108,537
======= ========= ======== ======== ======= ======== ========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCEMENT OF OPERATIONS.
(2) FOR SHARE TRANSACTIONS, SEE FOOTNOTE 12 IN THE NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 83
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<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE FISCAL YEARS ENDED
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE INTERMEDIATE- 100% U.S. TREASURY
TAX-FREE BOND BOND TERM BOND MONEY MARKET
FUND FUND FUND FUND
----------------------- ----------------------- ----------------------- -----------------------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income .............. $ 7,420 $ 7,307 $ 19,895 $ 16,166 $ 15,096 $ 15,211 $ 58,554 $ 47,560
Net Realized Gain (Loss) on
Investments .................... 147 736 (1,032) 2,681 (2,004) 693 30 (39)
Change in Unrealized Appreciation
(Depreciation) on Investments ... 94 (2,207) (3,247) (14,801) (1,474) (9,244) -- --
-------- -------- -------- -------- -------- -------- ---------- ----------
Net Increase in Net Assets
Resulting From Operations ........ 7,661 5,836 15,616 4,046 11,618 6,660 58,584 47,521
-------- -------- -------- -------- -------- -------- ---------- ----------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................. (6,354) (6,586) (19,691) (15,821) (14,873) (14,860) (12,568) (10,806)
Class A Shares ................... (1,078) (702) (234) (146) (296) (303) (18,958) (36,749)
Class B Shares ................... (6) -- -- -- -- -- -- --
Class S Shares ................... -- -- -- -- -- -- (27,033) --
Capital Gains:
Fiduciary Shares ................. -- -- -- -- -- -- -- --
Class A Shares ................... -- -- -- -- -- -- -- --
Class B Shares ................... -- -- -- -- -- -- -- --
Class S Shares ................... -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Distributions ............ (7,438) (7,288) (19,925) (15,967) (15,169) (15,163) (58,559) (47,555)
-------- -------- -------- -------- -------- -------- ---------- ----------
Change in Net Assets ................. 223 (1,452) (4,309) (11,921) (3,551) (8,503) 25 (34)
-------- -------- -------- -------- -------- -------- ---------- ----------
Share Transactions(1):
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust
Fund Assets ................... -- -- 3,231 -- -- -- -- --
Proceeds from the
reorganization of the
Government Securities Fund .... -- -- -- 113,026 -- -- -- --
Proceeds from Shares Issued ...... 19,182 21,402 91,004 78,647 38,191 63,567 1,088,153 756,800
Reinvestment of Distributions .... 393 400 12,398 8,719 4,889 5,130 932 563
Cost of Shares Redeemed .......... (29,890) (28,326) (94,865) (59,820) (82,521) (52,096) (972,128) (721,529)
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Fiduciary Share
Transactions ................ (10,315) (6,524) 11,768 140,572 (39,441) 16,601 116,957 35,834
-------- -------- -------- -------- -------- -------- ---------- ----------
Class A Shares:
Proceeds from Shares Issued ...... 26,521 9,687 5,566 2,585 2,524 2,217 670,595 1,656,137
Reinvestment of Distributions .... 807 479 190 102 285 295 20,981 36,234
Cost of Shares Redeemed .......... (13,993) (5,053) (2,182) (1,837) (2,855) (2,884) (1,393,158)(1,442,459)
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Class A Share
Transactions ................ 13,335 5,113 3,574 850 (46) (372) (701,582) 249,912
-------- -------- -------- -------- -------- -------- ---------- ----------
Class B Shares:
Proceeds from Shares Issued ...... 505 -- -- -- -- -- -- --
Reinvestment of Distributions .... 3 -- -- -- -- -- -- --
Cost of Shares Redeemed .......... (91) -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Class B Share
Transactions ................ 417 -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ---------- ----------
Class S Shares:
Proceeds from Shares Issued ...... -- -- -- -- -- -- 2,263,949 --
Reinvestment of Distributions .... -- -- -- -- -- -- 24,122 --
Cost of Shares Redeemed .......... -- -- -- -- -- -- (1,594,303) --
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Class S Share
Transactions ................ -- -- -- -- -- -- 693,768 --
-------- -------- -------- -------- -------- -------- ---------- ----------
Net Increase (Decrease) in Net
Assets From Share Transactions .... 3,437 (1,411) 15,342 141,422 (39,487) 16,229 109,143 285,746
-------- -------- -------- -------- -------- -------- ---------- ----------
Total Increase (Decrease) in
Net Assets .................. 3,660 (2,863) 11,033 129,501 (43,038) 7,726 109,168 285,712
-------- -------- -------- -------- -------- -------- ---------- ----------
Net Assets:
Beginning of Period ................ 167,124 169,987 337,538 208,037 262,366 254,640 1,240,532 954,820
-------- -------- -------- -------- -------- -------- ---------- ----------
End of Period ...................... $170,784 $167,124 $348,571 $337,538 $219,328 $262,366 $1,349,700 $1,240,532
======== ======== ======== ======== ======== ======== ========== ==========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) FOR SHARE TRANSACTIONS, SEE FOOTNOTE 12 IN THE NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
84 -----------------------------------------------------------------------------
1.800.433.6884
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT DIVERSIFIED CALIFORNIA TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
----------------------- ----------------------- -----------------------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Activities From Operations:
Net Investment Income .............. $ 25,885 $ 20,468 $ 181,677 $ 118,642 $18,163 $ 14,976
Net Realized Gain (Loss) on
Investments .................... 12 34 73 (477) 7 1
Change in Unrealized Appreciation
(Depreciation) on Investments ... -- -- -- -- -- --
----------- --------- ---------- ---------- -------- --------
Net Increase in Net Assets
Resulting From Operations ........ 25,897 20,502 181,750 118,165 18,170 14,977
----------- --------- ---------- ---------- -------- --------
Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................. (17,879) (14,467) (90,371) (57,819) (8,865) (6,516)
Class A Shares ................... (3,095) (5,995) (39,181) (60,823) (7,485) (8,468)
Class B Shares ................... (13) (3) -- -- -- --
Class S Shares ................... (4,901) -- (52,099) -- (1,805) --
Capital Gains: .....................
Fiduciary Shares ................. -- -- -- -- -- --
Class A Shares ................... -- -- -- -- -- --
Class B Shares ................... -- -- -- -- -- --
Class S Shares ................... -- -- -- -- -- --
----------- --------- ---------- ---------- -------- --------
Total Distributions ............ (25,888) (20,465) (181,651) (118,642) (18,155) (14,984)
----------- --------- ---------- ---------- -------- --------
Change in Net Assets ................. 9 37 99 (477) 15 (7)
----------- --------- ---------- ---------- -------- --------
Share Transactions(1):
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust
Fund Assets ................... -- -- -- -- -- --
Proceeds from the
reorganization of the
Government Securities Fund .... -- -- -- -- -- --
Proceeds from Shares Issued ...... 1,817,771 2,136,746 4,162,999 2,543,551 777,875 446,341
Reinvestment of Distributions .... 478 358 13,843 11,220 6 10
Cost of Shares Redeemed .......... (1,839,487)(2,069,085) (3,773,157) (2,410,010) (744,458) (452,148)
----------- --------- ---------- ---------- -------- --------
Total Fiduciary Share
Transactions ................ (21,238) 68,019 403,685 144,761 33,423 (5,797)
----------- --------- ---------- ---------- -------- --------
Class A Shares:
Proceeds from Shares Issued ...... 117,813 490,708 1,826,396 2,638,461 400,321 565,071
Reinvestment of Distributions .... 3,461 5,809 41,471 59,674 7,598 8,412
Cost of Shares Redeemed .......... (244,081) (447,628) (2,883,686) (2,180,382) (574,372) (506,038)
----------- --------- ---------- ---------- -------- --------
Total Class A Share
Transactions ................ (122,807) 48,889 (1,015,819) 517,753 (166,453) 67,445
----------- --------- ---------- ---------- -------- --------
Class B Shares:
Proceeds from Shares Issued ...... 421 235 -- -- -- --
Reinvestment of Distributions .... 12 2 -- -- -- --
Cost of Shares Redeemed .......... (259) (20) -- -- -- --
----------- --------- ---------- ---------- -------- --------
Total Class B Share
Transactions ................ 174 217 -- -- -- --
----------- --------- ---------- ---------- -------- --------
Class S Shares:
Proceeds from Shares Issued ...... 575,464 -- 3,534,606 -- 461,164 --
Reinvestment of Distributions .... 4,349 -- 45,062 -- 1,601 --
Cost of Shares Redeemed .......... (459,707) -- (2,004,033) -- (374,667) --
----------- --------- ---------- ---------- -------- --------
Total Class S Share
Transactions ................ 120,106 -- 1,575,635 -- 88,098 --
----------- --------- ---------- ---------- -------- --------
Net Increase (Decrease) in Net
Assets From Share Transactions .... (23,765) 117,125 963,501 662,514 (44,932) 61,648
----------- --------- ---------- ---------- -------- --------
Total Increase (Decrease) in
Net Assets .................. (23,756) 117,162 963,600 662,037 (44,917) 61,641
----------- --------- ---------- ---------- -------- --------
Net Assets:
Beginning of Period ................ 522,332 405,170 2,966,458 2,304,421 608,388 546,747
----------- --------- ---------- ---------- -------- --------
End of Period ...................... $ 498,576 $ 522,332 $3,930,058 $2,966,458 $563,471 $608,388
=========== ========= ========== ========== ======== ========
<FN>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) FOR SHARE TRANSACTIONS, SEE FOOTNOTE 12 IN THE NOTES TO FINANCIAL STATEMENTS.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 85
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<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
-----------
GROWTH FUND
-----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $18.39 -- 2.030 -- (1.800) $18.62 11.13% $722,376 0.92% 1.09%
1999 16.92 (0.018) 2.759 -- (1.271) 18.39 17.24 738,548 0.90 1.09
1998 17.36 0.017 3.108 (0.033) (3.532) 16.92 22.59 499,060 0.91 1.08
1997 12.58 0.057 5.773 (0.053) (0.996) 17.36 48.54 297,879 0.92 1.24
1996 11.87 0.120 1.350 (0.120) (0.640) 12.58 12.72 41,495 0.93 1.67
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $18.35 -- 1.980 -- (1.800) $18.53 10.87% $ 54,199 1.17% 1.34%
1999 16.93 (0.055) 2.746 -- (1.271) 18.35 16.92 24,579 1.14 1.34
1998 17.39 (0.018) 3.100 (0.015) (3.532) 16.93 22.26 17,173 1.16 1.34
1997 12.60 0.049 5.784 (0.048) (0.996) 17.39 48.49 7,816 1.04 1.49
1996 11.87 0.110 1.380 (0.120) (0.640) 12.60 12.88 2,843 0.93 1.91
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $18.15 -- 1.840 -- (1.800) $18.19 10.18% $ 24,407 1.82% 1.84%
1999 16.85 (0.103) 2.674 -- (1.271) 18.15 16.26 11,111 1.79 1.84
1998(1) 14.76 (0.035) 2.125 -- -- 16.85 28.71* 1,948 1.81* 1.84*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(2) $19.43 -- 0.560 -- (1.800) $18.19 2.92%+ $ 817 1.82%* 1.84%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
-----------
GROWTH FUND
-----------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 (0.32)% (0.49)% 67%
1999 (0.14) (0.33) 52
1998 0.08 (0.09) 67
1997 0.39 0.07 118
1996 0.98 0.23 79
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 (0.60)% (0.77)% 67%
1999 (0.38) (0.58) 52
1998 (0.17) (0.35) 67
1997 0.28 (0.18) 118
1996 0.96 (0.02) 79
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 (1.26)% (1.28)% 67%
1999 (1.04) (1.09) 52
1998(1) (0.94)* (0.97)* 67
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(2) (1.46)%* (1.48)%* 67%
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON FEBRUARY 2, 1998.
(2) COMMENCED OPERATIONS ON NOVEMBER 30, 1999.
The accompanying notes are an integral part of the financial statements.
86 -----------------------------------------------------------------------------
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<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
-------------------
VALUE MOMENTUM FUND
-------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $29.56 0.256 1.002 (0.255) (1.463) $29.10 4.47% $619,618 0.90% 1.09%
1999 27.31 0.315 3.117 (0.318) (0.866) 29.56 13.08 843,316 0.81 1.09
1998 25.48 0.332 2.003 (0.341) (0.164) 27.31 9.22 863,627 0.81 1.08
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $21.57 0.132 3.955 (0.176) -- $25.48 19.06 $463,434 0.78%* 0.94%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $18.05 0.436 4.371 (0.438) (0.848) $21.57 27.33% $317,482 0.79% 0.79%
1996 13.40 0.331 5.063 (0.337) (0.408) 18.05 40.88 222,065 0.80 0.80
CLASS I SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(1) $27.86 0.208 2.716 (0.221) (1.463) $29.10 10.72%+ $120,569 0.82%* 0.84%*
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $29.55 0.196 0.993 (0.186) (1.463) $29.09 4.23% $ 40,930 1.15% 1.34%
1999 27.31 0.245 3.119 (0.255) (0.866) 29.55 12.79 36,495 1.06 1.34
1998 25.48 0.262 2.007 (0.275) (0.164) 27.31 8.96 35,325 1.06 1.33
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $21.57 0.106 3.953 (0.147) -- $25.48 18.90% $ 20,750 1.03%* 1.25%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $18.05 0.389 4.368 (0.393) (0.848) $21.57 27.04% $ 15,963 1.04% 1.19%
1996 13.40 0.320 5.060 (0.323) (0.408) 18.05 40.77 11,801 0.89 1.20
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $29.46 0.032 0.950 (0.029) (1.463) $28.95 3.50% $ 8,336 1.82% 1.84%
1999 27.28 0.024 3.113 (0.088) (0.866) 29.46 11.89 6,506 1.81 1.84
1998(2) 26.82 0.046 0.479 (0.064) -- 27.28 3.94* 5,202 1.81* 1.84*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(3) $29.50 0.128 0.819 (0.044) (1.463) $28.94 3.37%+ $ 568 1.82%* 1.84%
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
-------------------
VALUE MOMENTUM FUND
-------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.88% 0.69% 3%
1999 1.15 0.87 9
1998 1.25 0.98 7
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 1.65%* 1.49%* 1%
FOR THE YEARS ENDED JANUARY 31,:
1997 2.26% 2.26% 9%
1996 2.07 2.07 20
CLASS I SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(1) 0.87%* 0.85%* 3%
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.62% 0.43% 3%
1999 0.90 0.62 9
1998 0.99 0.72 7
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 1.40%* 1.17%* 1%
FOR THE YEARS ENDED JANUARY 31,:
1997 2.01% 1.86% 9%
1996 2.00 1.69 20
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 (0.06)% (0.08)% 3%
1999 0.14 0.11 9
1998(2) 0.15* 0.13* 7
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000(3) (0.21)%* (0.23)%* 3%
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON SEPTEMBER 30, 1999.
(2) COMMENCED OPERATIONS ON FEBRUARY 2, 1998.
(3) COMMENCED OPERATIONS ON NOVEMBER 30, 1999.
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 87
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<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
------------------
INCOME EQUITY FUND
------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.78 0.227 (1.864) (0.228) (3.565) $12.35 (9.67)% $290,327 0.89% 1.10%
1999 17.92 0.247 2.072 (0.249) (2.206) 17.78 14.23 628,839 0.88 1.09
1998 18.21 0.305 1.486 (0.302) (1.776) 17.92 10.79 670,298 0.92 1.09
1997 14.27 0.372 5.019 (0.368) (1.083) 18.21 40.13 352,725 0.99 1.21
1996 13.00 0.420 1.930 (0.420) (0.660) 14.27 18.25 262,660 1.03 1.27
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.81 0.210 (1.882) (0.193) (3.565) $12.38 (9.86)% $ 63,180 1.16% 1.37%
1999 17.95 0.189 2.087 (0.208) (2.206) 17.81 13.94 22,329 1.13 1.34
1998 18.24 0.262 1.486 (0.258) (1.776) 17.95 10.50 23,024 1.17 1.34
1997 14.29 0.363 5.028 (0.358) (1.083) 18.24 39.97 14,152 1.06 1.46
1996 13.03 0.420 1.920 (0.420) (0.660) 14.29 18.21 10,143 1.03 1.51
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.74 0.101 (1.864) (0.112) (3.565) $12.30 (10.50)% $ 3,786 1.80% 1.86%
1999 17.90 0.089 2.071 (0.115) (2.206) 17.74 13.25 4,543 1.78 1.84
1998 (1) 16.88 0.057 1.034 (0.072) -- 17.90 13.10* 1,816 1.82* 1.85*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $16.51 0.062 (0.643) (0.074) (3.565) $12.29 (4.10)%+ $ 38 1.80%* 1.86%*
----------------
CORE EQUITY FUND
----------------
FIDUCIARY SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (3) $10.00 0.012 (0.243) (0.009) -- $ 9.76 (2.31)%+ $ 34,210 0.92%* 1.09%*
CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (4) $ 9.88 0.006 (0.119) (0.007) -- $ 9.76 (1.14)%+ $ 27 1.17%* 1.34%*
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (4) $ 9.88 0.004 (0.127) (0.007) -- $ 9.75 (1.24)%+ $ 140 1.82%* 1.84%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
------------------
INCOME EQUITY FUND
------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 1.61% 1.40% 97%
1999 1.43 1.22 71
1998 1.63 1.45 69
1997 2.39 2.17 46
1996 2.95 2.71 42
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 1.17% 0.96% 97%
1999 1.17 0.96 71
1998 1.39 1.22 69
1997 2.32 1.92 46
1996 2.89 2.41 42
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.66% 0.60% 97%
1999 0.50 0.44 71
1998 (1) 0.38* 0.36* 69
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 0.08%* 0.02%* 97%
----------------
CORE EQUITY FUND
----------------
FIDUCIARY SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (3) 1.21%* 1.04%* 3%
CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (4) 0.90%* 0.73%* 3%
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (4) 0.72%* 0.70%* 3%
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON FEBRUARY 2, 1998.
(2) COMMENCED OPERATIONS ON NOVEMBER 30, 1999.
(3) COMMENCED OPERATIONS ON MAY 31, 2000.
(4) COMMENCED OPERATIONS ON JUNE 30, 2000.
The accompanying notes are an integral part of the financial statements.
88 -----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
-------------
BALANCED FUND
-------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.21 0.431 (0.077) (0.426) (1.398) $15.74 2.28% $401,742 0.92% 1.09%
1999 16.73 0.428 1.172 (0.436) (0.684) 17.21 9.96 451,411 0.92 1.09
1998 16.46 0.446 0.724 (0.458) (0.442) 16.73 7.31 448,783 0.91 1.08
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $15.04 0.228 1.712 (0.228) (0.290) $16.46 13.35% $400,442 0.83%* 0.98%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $13.92 0.422 1.699 (0.409) (0.595) $15.04 16.30% $307,531 0.79% 0.79%
1996 11.45 0.415 2.831 (0.417) (0.362) 13.92 28.93 233,878 0.80 0.80
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.20 0.391 (0.077) (0.386) (1.398) $15.73 2.03% $ 10,588 1.17% 1.34%
1999 16.73 0.383 1.167 (0.396) (0.684) 17.20 9.64 11,236 1.17 1.34
1998 16.45 0.402 0.736 (0.416) (0.442) 16.73 7.12 10,629 1.16 1.33
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $15.03 0.209 1.712 (0.209) (0.290) $16.45 13.22% $ 9,214 1.07%* 1.30%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $13.91 0.464 1.706 (0.455) (0.595) $15.03 16.04% $ 8,833 1.04% 1.19%
1996 11.45 0.406 2.825 (0.406) (0.362) 13.91 28.73 8,422 0.89 1.20
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $17.18 0.288 (0.086) (0.284) (1.398) $15.70 1.33% $ 4,681 1.82% 1.84%
1999 16.73 0.278 1.161 (0.301) (0.684) 17.18 8.91 3,594 1.82 1.84
1998 (1) $16.55 0.155 0.197 (0.175) -- 16.73 4.32* 967 1.80* 1.83*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $17.07 0.153 0.042 (0.157) (1.398) $15.71 1.29%+ $ 46 1.82%* 1.84%*
--------------------
SMALL CAP VALUE FUND
--------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $12.55 0.202 1.746 (0.251)++ (0.637) $13.61 16.43% $134,616 1.34% 1.51%
1999 (3) 10.00 0.018 2.536 (0.004) -- 12.55 25.54+ 80,423 1.54* 1.71*
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $12.52 0.222 1.677 (0.252)++ (0.637) $13.53 16.06% $ 8,280 1.55% 1.71%
1999 (3) 10.00 (0.003) 2.526 (0.003) -- 12.52 25.24+ 912 1.77* 1.94*
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $12.46 0.169 1.672 (0.214)++ (0.637) $13.45 15.63% $ 4,477 2.22% 2.24%
1999 (3) $10.00 (0.041) 2.501 -- -- $12.46 24.60+ $ 1,012 2.39* 2.42*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $12.48 0.325 1.516 (0.254)++ (0.637) $13.43 15.64%+ $ 362 2.22%* 2.24%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
-------------
BALANCED FUND
-------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 2.65% 2.48% 25%
1999 2.60 2.43 34
1998 2.67 2.50 22
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 2.99%* 2.85%* 10%
FOR THE YEARS ENDED JANUARY 31,:
1997 3.48% 3.48% 27%
1996 3.20 3.20 26
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 2.39% 2.22% 25%
1999 2.35 2.18 34
1998 2.42 2.24 22
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 2.75%* 2.53%* 10%
FOR THE YEARS ENDED JANUARY 31,:
1997 3.22% 3.07% 27%
1996 3.12 2.81 26
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 1.72% 1.70% 25%
1999 1.68 1.66 34
1998 (1) 1.77* 1.74* 22
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 1.39%* 1.37%* 25%
--------------------
SMALL CAP VALUE FUND
--------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.69% 0.52% 57%
1999 (3) 0.28* 0.11* 74
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.53% 0.37% 57%
1999 (3) (0.11)* (0.28)* 74
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 (0.15)% (0.17)% 57%
1999 (3) (1.40)* (1.43)* 74
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 0.07%* 0.05%* 57%
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
++ INCLUDES A 0.037 DISTRIBUTION IN EXCESS OF NET INVESTMENT INCOME.
(1) COMMENCED OPERATIONS ON FEBRUARY 2, 1998.
(2) COMMENCED OPERATIONS ON NOVEMBER 30, 1999.
(3) COMMENCED OPERATIONS ON SEPTEMBER 17, 1998.
The accompanying notes are an integral part of the financial statements.
----------------------------------------------------------------------------- 89
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<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN (LOSS)ON INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME (LOSS) INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2000 $39.38 0.146 4.298 (0.277) (0.297) $43.25 11.21% $121,581 1.43% 1.63%
1999 37.32 0.210 1.982 (0.132) -- 39.38 5.90 108,537 1.36 1.63
1998 38.69 0.767 (1.178) (0.592) (0.367) 37.32 (0.82) 91,970 1.34 1.61
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $34.52 0.212 3.958 -- -- $38.69 12.08% $ 52,467 1.22%* 1.41%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $37.49 0.220 (0.965) (0.812) (1.416) $34.52 (2.14)% $ 46,373 1.18% 1.28%
1996 (1) 33.51 0.447 4.084 (0.446) (0.105) 37.49 13.56 44,188 1.16 1.36
CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $44.06 0.626 (0.968) (0.271) (0.297) $43.15 (0.84)%+ $ 1,548 1.70%* 1.85%*
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $44.06 0.462 (0.949) (0.256) (0.297) $43.02 (1.17)%+ $ 960 2.36%* 2.39%*
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $44.06 0.322 (0.816) (0.249) (0.297) $43.02 (1.19)%+ $ 9 2.36%* 2.39%*
------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
------------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $ 9.96 0.441 0.008 (0.439) -- $ 9.97 4.68% $139,098 0.44% 1.01%
1999 10.04 0.438 (0.086) (0.436) -- 9.96 3.54 149,365 0.45 1.02
1998 10.01 0.457 0.008 (0.435) -- 10.04 4.75 157,062 0.42 1.04
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 9.76 0.206 0.256 (0.215) -- $10.01 4.84% $ 11,292 0.21%* 0.91%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 9.85 0.430 (0.078) (0.442) -- $ 9.76 3.72% $ 7,435 0.20% 0.85%
1996 8.95 0.518 0.873 (0.487) -- 9.85 15.83 4,196 0.24 0.71
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $ 9.93 0.426 0.023 (0.439) -- $ 9.94 4.69% $ 31,261 0.44% 1.26%
1999 10.01 0.429 (0.078) (0.436) -- 9.93 3.55 17,759 0.45 1.27
1998 9.99 0.423 0.032 (0.435) -- 10.01 4.66 12,925 0.31 1.29
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $ 9.74 0.222 0.240 (0.215) -- $ 9.99 4.85% $ 11,214 0.21%* 1.22%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $ 9.84 0.458 (0.112) (0.442) -- $ 9.74 3.62% $ 5,791 0.20% 1.25%
1996 8.94 0.470 0.918 (0.487) -- 9.84 15.84 4,266 0.23 1.12
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $ 9.84 0.225 0.128 (0.243) -- $ 9.95 3.65%+ $ 425 1.44%* 1.76%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 0.32% 0.12% 49%
1999 0.42 0.15 87
1998 0.71 0.44 72
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 1.16%* 0.97%* 18%
FOR THE YEARS ENDED JANUARY 31,:
1997 0.60% 0.50% 29%
1996 (1) 1.31 1.11 21
CLASS A SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 0.56%* 0.41%* 49%
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) (0.18)%* (0.21)%* 49%
CLASS C SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) (0.33)%* (0.36)%* 49%
------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
------------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.45% 3.88% 10%
1999 4.29 3.72 11
1998 4.46 3.84 23
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 4.56%* 3.85%* 5%
FOR THE YEARS ENDED JANUARY 31,:
1997 4.69% 4.04% 6%
1996 4.97 4.50 30
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.46% 3.64% 10%
1999 4.30 3.48 11
1998 4.37 3.39 23
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 4.55%* 3.54%* 5%
FOR THE YEARS ENDED JANUARY 31,:
1997 4.69% 3.64% 6%
1996 4.93 4.04 30
CLASS B SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 3.50%* 3.18%* 10%
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON FEBRUARY 1, 1995.
(2) COMMENCED OPERATIONS ON NOVEMBER 30, 1999.
The accompanying notes are an integral part of the financial statements.
90 -----------------------------------------------------------------------------
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<PAGE>
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON (LOSS) INVESTMENT CAPITAL END TOTAL** OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
---------
BOND FUND
---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $10.39 0.625 (0.139) (0.626) -- $10.25 4.86% $342,388 0.75% 1.01%
1999 10.81 0.605 (0.426) (0.600) -- 10.39 1.60 334,900 0.75 1.01
1998 10.67 0.615 0.150 (0.627) -- 10.81 7.41 206,125 0.75 1.02
1997 10.23 0.628 0.421 (0.609) -- 10.67 10.59 71,571 0.85 1.42
1996 10.38 0.660 (0.160) (0.650) -- 10.23 4.81 60,374 0.89 1.61
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $10.30 0.630 (0.144) (0.626) -- $10.16 4.90% $ 6,183 0.75% 1.26%
1999 10.73 0.610 (0.440) (0.600) -- 10.30 1.52 492,638 0.75 1.26
1998 10.59 0.605 0.162 (0.627) -- 10.73 7.47 1,912 0.75 1.26
1997 10.15 0.642 0.403 (0.609) -- 10.59 10.68 606 0.85 1.68
1996 10.29 0.690 (0.180) (0.650) -- 10.15 4.95 1,157 0.89 1.85
---------------------------
INTERMEDIATE-TERM BOND FUND
---------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $10.00 0.518 (0.045) (0.603) -- $ 9.87 4.92% $214,864 0.75% 0.99%
1999 10.32 0.591 (0.319) (0.590) -- 10.00 2.60 257,775 0.75 0.99
1998 10.30 0.613 0.021 (0.616) -- 10.32 6.37 249,520 0.75 0.99
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $10.16 0.309 0.138 (0.310) -- $10.30 4.54% $152,676 0.69%* 0.82%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $10.62 0.599 (0.460) (0.595) -- $10.16 1.43% $150,411 0.67% 0.68%
1996 9.67 0.609 0.951 (0.609) -- 10.62 16.58 132,942 0.68 0.68
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $ 9.99 0.601 (0.128) (0.603) -- $ 9.86 4.92% $ 4,464 0.75% 1.24%
1999 10.31 0.598 (0.325) (0.590) -- 9.99 2.60 494,591 0.75 1.24
1998 10.29 0.609 0.031 (0.616) -- 10.31 6.38 5,120 0.75 1.24
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $10.16 0.309 0.128 (0.310) -- $10.29 4.44% $ 5,124 0.69%* 1.14%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $10.61 0.602 (0.462) (0.595) -- $10.16 1.54% $ 5,213 0.67% 1.08%
1996 9.67 0.609 0.940 (0.609) -- 10.61 16.48 6,417 0.68 1.09
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS PORTFOLIO
TO AVERAGE EXCLUDING TURNOVER
NET ASSETS FEE WAIVERS RATE
---------------------------------------------------
---------
BOND FUND
---------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 6.06% 5.80% 27%
1999 5.69 5.43 39
1998 5.86 5.60 16
1997 6.11 5.54 14
1996 6.10 5.38 21
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 6.11% 5.60% 27%
1999 5.67 5.16 39
1998 5.85 5.33 16
1997 6.10 5.27 14
1996 6.10 5.14 21
---------------------------
INTERMEDIATE-TERM BOND FUND
---------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 6.05% 5.81% 47%
1999 5.73 5.49 19
1998 5.86 5.61 51
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 6.17%* 6.04%* 58%
FOR THE YEARS ENDED JANUARY 31,:
1997 5.93% 5.92% 106%
1996 5.97 5.97 147
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 6.05% 5.56% 47%
1999 5.72 5.23 19
1998 5.83 5.34 51
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 6.17%* 5.71%* 58%
FOR THE YEARS ENDED JANUARY 31,:
1997 5.91% 5.50% 106%
1996 5.99 5.58 147
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT ANY APPLICABLE SALES CHARGE.
The accompanying notes are an integral part of the financial statements.
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<PAGE>
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON (LOSS)INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.049 -- (0.049) -- $1.00 5.05% $380,496 0.47% 0.79%
1999 1.00 0.043 -- (0.043) -- 1.00 4.43 263,561 0.47 0.79
1998 1.00 0.049 -- (0.049) -- 1.00 5.02 227,733 0.46 0.78
1997 1.00 0.046 -- (0.046) -- 1.00 4.65 243,464 0.64 0.92
1996 1.00 0.046 -- (0.046) -- 1.00 4.74 173,340 0.74 0.97
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.047 -- (0.047) -- $1.00 4.79% $275,433 0.72% 1.04%
1999 1.00 0.041 -- (0.041) -- 1.00 4.17 976,971 0.72 1.04
1998 1.00 0.047 -- (0.047) -- 1.00 4.75 727,087 0.71 1.03
1997 1.00 0.045 -- (0.045) -- 1.00 4.58 558,972 0.72 1.10
1996 1.00 0.046 -- (0.046) -- 1.00 4.74 100,623 0.74 1.23
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $1.00 0.037 -- (0.037) -- $1.00 3.81%+ $693,771 1.02%* 1.09%*
---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.053 -- (0.053) -- $1.00 5.38% $329,922 0.52% 0.79%
1999 1.00 0.046 -- (0.046) -- 1.00 4.64 351,140 0.52 0.79
1998 1.00 0.050 -- (0.050) -- 1.00 5.16 283,096 0.51 0.79
1997 1.00 0.047 -- (0.047) -- 1.00 4.78 252,995 0.70 0.95
1996 1.00 0.048 -- (0.048) -- 1.00 4.88 151,483 0.77 1.00
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.050 -- (0.050) -- $1.00 5.12% $ 48,138 0.77% 1.04%
1999 1.00 0.043 -- (0.043) -- 1.00 4.39 170,974 0.77 1.04
1998 1.00 0.048 -- (0.048) -- 1.00 4.90 122,074 0.76 1.04
1997 1.00 0.046 -- (0.046) -- 1.00 4.70 42,797 0.78 1.22
1996 1.00 0.048 -- (0.048) -- 1.00 4.86 75,714 0.79 1.26
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.043 -- (0.043) -- $1.00 4.34% $ 391 1.52% 1.54%
1999 1.00 0.036 -- (0.036) -- 1.00 3.62 218 1.52 1.54
1998 (1) 1.00 0.021 -- (0.021) -- 1.00 4.25+ -- 1.26* 1.54*
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) $1.00 0.040 -- (0.040) -- $1.00 4.09%+ $120,125 1.07%* 1.09%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS
TO AVERAGE EXCLUDING
NET ASSETS FEE WAIVERS
---------------------------------------------------
------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.95% 4.63%
1999 4.35 4.03
1998 4.91 4.59
1997 4.61 4.33
1996 4.64 4.41
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.49% 4.17%
1999 4.07 3.75
1998 4.65 4.33
1997 4.55 4.17
1996 4.64 4.15
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 4.55%* 4.48%*
---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 5.22% 4.95%
1999 4.52 4.25
1998 5.05 4.77
1997 4.69 4.44
1996 4.76 4.53
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.74% 4.47%
1999 4.28 4.01
1998 4.80 4.52
1997 4.60 4.16
1996 4.77 4.30
CLASS B SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.31% 4.29%
1999 3.46 3.44
1998 (1) 4.30* 4.02*
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (2) 4.85%* 4.83%*
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON FEBRUARY 2, 1998.
(2) COMMENCED OPERATIONS ON SEPTEMBER 30, 1999.
The accompanying notes are an integral part of the financial statements.
92 -----------------------------------------------------------------------------
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<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS RATIO
NET --------------------------- ---------------- NET NET OF EXPENSES
ASSET NET REALIZED ASSET ASSETS, RATIO TO AVERAGE
VALUE, NET AND UNREALIZED NET VALUE, END OF EXPENSES NET ASSETS
BEGINNING INVESTMENT GAIN ON (LOSS) INVESTMENT CAPITAL END TOTAL OF PERIOD TO AVERAGE EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS OF PERIOD RETURN (000) NET ASSETS FEE WAIVERS
-----------------------------------------------------------------------------------------------------------------------
-----------------------------
DIVERSIFIED MONEY MARKET FUND
-----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.054 -- (0.054) -- $1.00 5.51% $1,728,388 0.52% 0.79%
1999 1.00 0.047 -- (0.047) -- 1.00 4.78 1,324,659 0.52 0.79
1998 1.00 0.051 -- (0.051) -- 1.00 5.27 1,180,141 0.50 0.77
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.025 -- (0.025) -- $1.00 5.11%* $ 971,858 0.48%* 0.64%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.049 -- (0.049) -- $1.00 5.03% $ 523,571 0.49% 0.49%
1996 1.00 0.054 -- (0.054) -- 1.00 5.57 503,080 0.50 0.50
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.051 -- (0.051) -- $1.00 5.24% $ 626,011 0.77% 1.04%
1999 1.00 0.044 -- (0.044) -- 1.00 4.52 1,641,799 0.77 1.04
1998 1.00 0.049 -- (0.049) -- 1.00 5.01 1,124,280 0.75 1.02
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.024 -- (0.024) -- $1.00 4.86%* $ 799,657 0.72%* 0.95%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.047 -- (0.047) -- $1.00 4.78% $ 576,566 0.73% 0.88%
1996 1.00 0.052 -- (0.052) -- 1.00 5.31 259,608 0.75 0.90
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,: (UNAUDITED)
2000 (1) $1.00 0.041 -- (0.041) -- $1.00 4.21%+ $ 1,575,659 1.07%* 1.09%*
-------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
-------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.030 -- (0.030) -- $1.00 3.00% $ 269,121 0.40% 0.79%
1999 1.00 0.026 -- (0.026) -- 1.00 2.59 235,687 0.33 0.79
1998 1.00 0.031 -- (0.031) -- 1.00 3.14 241,487 0.31 0.78
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.016 -- (0.016) -- $1.00 3.28%* $ 159,297 0.28%* 0.69%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.031 -- (0.031) -- $1.00 3.12% $ 36,207 0.27% 0.49%
1996 1.00 0.034 -- (0.034) -- 1.00 3.48 42,923 0.28 0.49
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 $1.00 0.027 -- (0.027) -- $1.00 2.74% $ 206,252 0.65% 1.04%
1999 1.00 0.023 -- (0.023) -- 1.00 2.34 372,701 0.58 1.04
1998 1.00 0.028 -- (0.028) -- 1.00 2.89 305,260 0.56 1.03
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 $1.00 0.015 -- (0.015) -- $1.00 2.99%* $ 217,229 0.55%* 0.97%*
FOR THE YEARS ENDED JANUARY 31,:
1997 $1.00 0.027 -- (0.027) -- $1.00 2.78% $ 150,688 0.60% 0.88%
1996 1.00 0.031 -- (0.031) -- 1.00 3.14 81,177 0.61 0.88
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (1) $1.00 0.021 -- (0.021) -- $1.00 2.09%+ $ 88,098 0.96%* 1.09%*
</TABLE>
[table continued]
RATIO OF
NET INVESTMENT
RATIO OF INCOME TO
NET INVESTMENT AVERAGE
INCOME NET ASSETS
TO AVERAGE EXCLUDING
NET ASSETS FEE WAIVERS
---------------------------------------------------
-----------------------------
DIVERSIFIED MONEY MARKET FUND
-----------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 5.39% 5.12%
1999 4.68 4.41
1998 5.15 4.88
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 5.07%* 4.90%*
FOR THE YEARS ENDED JANUARY 31,:
1997 4.93% 4.93%
1996 5.43 5.43
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 4.92% 4.65%
1999 4.42 4.15
1998 4.90 4.63
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 4.82%* 4.59%*
FOR THE YEARS ENDED JANUARY 31,:
1997 4.69% 4.54%
1996 5.16 5.01
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,: (UNAUDITED)
2000 (1) 5.02%* 5.00%*
-------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
-------------------------------------
FIDUCIARY SHARES
FOR THE YEARS ENDED JULY 31,:
2000 2.96% 2.57%
1999 2.55 2.09
1998 3.07 2.60
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 3.36%* 2.96%*
FOR THE YEARS ENDED JANUARY 31,:
1997 3.08% 2.86%
1996 3.43 3.22
CLASS A SHARES
FOR THE YEARS ENDED JULY 31,:
2000 2.61% 2.22%
1999 2.30% 1.84
1998 2.84 2.37
FOR THE SIX MONTH PERIOD ENDED JULY 31,:
1997 3.02%* 2.59%*
FOR THE YEARS ENDED JANUARY 31,:
1997 2.75% 2.47%
1996 3.09 2.82
CLASS S SHARES
FOR THE PERIOD ENDED JULY 31,:
2000 (1) 2.48%* 2.35%*
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* ANNUALIZED.
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) COMMENCED OPERATIONS ON SEPTEMBER 30, 1999.
The accompanying notes are an integral part of the financial statements.
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<PAGE>
[Highmark Logo Omitted]
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
--------------------------------------------------------------------------------
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 Core Equity Fund, the
Balanced 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 six
classes of shares, Class A, Class B and Class C shares (collectively called the
"Retail Shares"), Fiduciary Shares, Class I Shares and Class S 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 in April 1997. While each
Fund now exists legally as a HighMark Fund, a number of the surviving funds have
kept the past performance of the Stepstone Funds. In accordance with generally
accepted accounting principles, the financial highlights presented reflect prior
periods beginning on the first day of the accounting survivor's fiscal year
(August 1, 1995 and February 1, 1995, 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. Foreign
securities are valued based upon quotations from the primary market in which
they are traded. Option contracts are valued at the last quoted bid price as
quoted on the primary exchange or board of trade on which such option contracts
are traded. Debt obligations exceeding sixty days to maturity for which market
quotations are readily available are valued at the most recently quoted bid
price. Debt obligations with sixty days or less remaining until maturity may be
valued at their amortized cost. Restricted securities for which quotations are
not readily available are valued at fair value using methods determined in good
faith under general Trustee supervision.
FOREIGN CURRENCY TRANSLATION -- The books and records of the Small Cap Value
Fund and 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 Small Cap Value Fund and the International Equity Fund do 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 Small Cap Value Fund and the International Equity Fund report gains and
losses on foreign currency related transactions as realized and unrealized gains
and losses for financial reporting purposes, whereas such gains and losses are
treated as ordinary income or loss for U.S. Federal income tax purposes.
FEDERAL INCOME TAXES -- It is each Fund's intention to continue to qualify as a
regulated investment company for Federal income tax purposes and distribute all
of its taxable income and net capital gains. Accordingly, no provision for
Federal income taxes is required.
94 -----------------------------------------------------------------------------
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--------------------------------------------------------------------------------
The Small Cap Value Fund and the International Equity Fund may be subject to
taxes imposed by countries in which they invest with respect to their
investments in issuers existing or operating in such countries. Such taxes are
generally based on either income earned or repatriated. The Small Cap Value Fund
and 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 accounting principles generally
accepted in the United States of America 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 covered call options. A risk in writing a covered
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.
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
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<PAGE>
[Highmark Logo Omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2000
--------------------------------------------------------------------------------
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, 2000, have
been reclassified between accumulated net realized gains/losses and
undistributed net income, as appropriate. These reclassifications have 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, 1999 to July 31, 2000 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 0.10% of the average daily net assets of the Funds. For the period from
August 1, 1999 to July 31, 2000, HighMark Capital Management, Inc. received
sub-administration fees from the Funds in the amount of $4,744,000.
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 12b-1 Plans (the "Plans") with respect to
Class A, Class B, Class C and Class S Shares that allow each Fund to pay
distribution and service fees. 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
Class A Shares, 0.75% of the average daily net assets attributable to each
Fund's Class B Shares, 1.00% of the average daily net assets attributable to
each Fund's Class C Shares and 0.55% of the average daily net assets
attributable to each Fund's Class S Shares, which may be used by the Distributor
to provide compensation for sales support and distribution activities. The
California Intermediate Tax-Free Bond, Bond and Intermediate-Term Bond Funds are
currently waiving all Class A 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, 1999 to July 31, 2000,
Union Bank of California, N.A. received shareholder servicing fees from the
Funds in the amount of approximately $2,710,000.
96 -----------------------------------------------------------------------------
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<PAGE>
--------------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on certain redemptions of
Class B Shares. The CDSC varies depending on the number of years from the time
of payment for the purchase of Class 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
A contingent deferred sales charge (CDSC) of 1% is imposed on certain
redemptions of Class C Shares.
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, based on the average daily nets assets, at an annual rate of 0.60% of
the Growth Fund, the Value Momentum Fund, the Income Equity Fund, the Core
Equity Fund, and the Balanced Fund, 1.00% of the Small Cap Value Fund, 0.95% of
the International Equity Fund, 0.50% of the California Intermediate Tax-Free
Bond Fund, the Bond Fund, the Intermediate-Term Bond Fund, 0.30% 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.
For the twelve months ended July 31, 2000 the Adviser voluntarily waived a
portion of its fee in certain funds in order to limit the operating expenses of
the Funds.
On December 29, 1997, the Adviser and AXA Asset Management Partenaires ("AXA")
entered into an investment sub-advisory agreement for the International Equity
Fund. On October 1, 1999, Investment Asset Managers GS Ltd. succeeded AXA as
sub-adviser. AXA is entitled to a fee of 0.50% of the average daily net assets
of the Fund. The sub-adviser is paid by the Adviser.
On August 26, 1998 the Adviser and Brandes Investment Partners, LP ("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. The sub-adviser is paid by the
Adviser.
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 ............................. $525,211 $584,271
Value Momentum ..................... 28,025 148,703
Income Equity ...................... 479,748 703,995
Core Equity ........................ 33,055 574
Balanced ........................... 106,657 144,118
Small Cap Value .................... 107,369 60,820
International Equity ............... 65,998 56,301
California Intermediate
Tax-Free Bond ..................... 18,155 15,856
Bond ............................... 98,689 84,200
Intermediate-Term Bond ............. 104,243 140,421
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<PAGE>
[Highmark Logo Omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2000
--------------------------------------------------------------------------------
As of July 31, 2000, cost for financial statement purposes was not materially
different from cost for Federal income tax purposes. The aggregate gross
unrealized appreciation and depreciation at July 31, 2000 for each portfolio was
as follows:
APPRECIATION DEPRECIATION TOTAL
(000'S) (000'S) (000'S)
------------ ------------ ---------
Growth .............. $265,821 $(37,559) $228,262
Value Momentum ...... 410,980 (42,348) 368,632
Income Equity ....... 44,585 (31,496) 13,089
Core Equity ......... 2,061 (1,629) 432
Balanced ............ 109,617 (22,172) 87,445
Small Cap Value ..... 27,438 (8,485) 18,953
International Equity 23,807 (7,140) 16,667
California Intermediate
Tax-Free Bond ..... 4,753 (257) 4,496
Bond ................ 2,597 (12,483) (9,886)
Intermediate-Term Bond 999 (5,598) (4,599)
The Funds have capital loss carryforwards at July 31, 2000, to the extent
provided in the regulations for federal income tax as follows:
<TABLE>
<CAPTION>
EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES EXPIRES
2001 2002 2003 2004 2005 2006 2007 2008
------- ------- ------- ------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cal. Int. Tax-Free Bond -- -- -- 109,308 10,099 -- -- --
Bond ................. -- 137,375 -- 800,387 430,407 -- -- 1,070,581
Int.-Term Bond ....... -- -- 610,201 -- 1,963,907 -- -- 2,074,394
100% U.S. Treasury
Money Market ....... -- -- -- -- -- -- -- 66,633
U.S. Government
Money Market ....... 104,279 -- -- -- -- -- -- --
Diversified Money
Market ............. 226,666 29,246 1,078,029 13,202 -- -- 476,441 --
Cal. Tax-Free
Money Market ....... -- 16,979 24,115 -- -- 15,746 -- --
</TABLE>
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.
7. OPTION CONTRACTS
Transactions in covered call and put options during the period ended July 31,
2000 are summarized as follows:
VALUE MOMENTUM
-------------------------
NUMBER OF
WRITTEN OPTIONS TRANSACTION CONTRACTS PREMIUM
----------------------------- --------- -------
Options written and outstanding at
beginning of period ...................... 810 $ 47,235
Call options written during period ....... 5,150 904,310
Call options exercised during period ..... (1,115) (229,148)
Call options expired during period ....... (2,760) (444,235)
Call options closed during period ........ (1,235) (169,658)
------- ---------
Option written and outstanding at
end of period ............................ 850 $ 108,503
======= =========
VALUE MOMENTUM
-------------------------
NUMBER OF
PURCHASE OPTIONS TRANSACTION CONTRACTS PREMIUM
----------------------------------- --------- -------
Purchase put options outstanding at
beginning of period ...................... -- $ --
Put options purchased during period ...... 100 2,803
Put options expired during period ........ (100) (2,803)
------- --------
Purchased put option written and
outstanding at end of period ............. -- $ --
======= ========
98 -----------------------------------------------------------------------------
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<PAGE>
--------------------------------------------------------------------------------
8. LINE OF CREDIT
Each Fund may borrow, an amount up to its prospectus defined limitations, from
an $81 million committed line of credit available to the HighMark Funds.
Borrowings from the line of credit will bear interest at the Federal Funds Rate
plus 0.625%. As of July 31, 2000, the Value Momentum Fund had an outstanding
borrowing of $6,000,000. Listed below are the Funds which had outstanding
balances during the year ended July 31, 2000.
MAXIMUM AVERAGE DAILY WEIGHTED NUMBER
AMOUNT OUTSTANDING AVERAGE OF DAYS
BORROWED BALANCE RATE BORROWED
----------- ----------- -------------- --------
Income Equity .$14,000,000 $12,500,000 6.58% 4
Small Cap
Value ........ 600,000 600,000 5.83% 5
International
Equity ....... 2,400,000 1,916,667 6.05% 12
Value
Momentum ..... 6,000,000 6,000,000 7.31% 1
9. 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 Shares of
the HighMark Blue Chip Growth Fund were exchanged for 7,569,480 Fiduciary Shares
of the HighMark Growth Fund and 11,336,718 Fiduciary Shares of the HighMark
Government Securities Fund were exchanged for 10,341,234 Fiduciary 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.
10. COMMON TRUST FUND CONVERSIONS
On July 24, 2000, certain common trust funds of Union Bank of California were
converted into the HighMark Funds pursuant to a plan of reorganization approved
by Union Bank of California shareholders on March 16, 2000. The Funds involved
in the conversion were as follows:
COMMON TRUST FUND HIGHMARK FUND
-------------------------- ---------------------
ITC Personal B Equity Core Equity Fund
ITC Personal A Fixed Income Bond Fund
The assets, which consisted of securities and related receivables less
liabilities, were converted on a tax-free basis. The number of shares issued by
each Fund and the net assets (including unrealized appreciation (depreciation))
of each Common Trust Fund immediately before the conversion were as follows:
COMMON TRUST
UNREALIZED FUND SHARES HIGHMARK
COMMON TRUST NET ASSET APPRECIATION PRIOR TO SHARES
FUND VALUE (DEPRECIATION) CONVERSION ISSUED
--------------- --------- -------------- ----------- ----------
ITC Personal
B Equity $5,877,110 $ (962,753) 141,788 589,462
ITC Personal
A Fixed Income 3,230,826 (62,979) 340,464 313,399
11. SUBSEQUENT EVENTS
On August 21, 2000, the assets of the HighMark Intermediate-Term Bond Fund were
reorganized into the HighMark Bond Fund. Under the Plan of Reorganization,
21,469,654 Fiduciary Shares and 454,455 Class A Shares of the HighMark
Intermediate-Term Bond Fund were exchanged for 20,616,686 Fiduciary Shares and
440,239 Class A Shares of the Bond Fund in a tax free exchange. Upon the
business combination of such Funds on August 21, 2000, the value of the HighMark
Bond Fund's net assets combined with those of the HighMark Intermediate-Term
Bond Fund was $568,093,052 before the open of business.
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<PAGE>
[Highmark Funds logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2000
--------------------------------------------------------------------------------
12. SHARES ISSUED AND REDEEMED (000):
For the years ended July 31, 2000 and July 31, 1999 Transactions in Fund Shares
were as follows:
<TABLE>
<CAPTION>
GROWTH VALUE MOMENTUM INCOME EQUITY CORE EQUITY
FUND FUND FUND FUND
------------------------ ----------------------- ----------------------- -----------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98 05/31/00(1)
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00
------------------------ ----------------------- ----------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares Issued and Redeemed:
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust Fund Assets . -- -- -- -- -- -- 589
Issued from the reorganization of the
Blue Chip Growth Fund ................... -- 7,569 -- -- -- -- --
Issued .................................... 10,261 10,481 4,556 6,116 6,393 3,476 2,960
Issued in Lieu of Cash Distributions ...... 3,578 2,322 1,237 1,153 8,760 4,694 --
Redeemed .................................. (15,216) (9,701) (13,026) (10,360) (27,009) (10,215) (44
-------- ------- -------- -------- -------- -------- ------
Total Fiduciary Share Transactions ...... (1,377) 10,671 (7,233) (3,091) (11,856) (2,045) 3,505
-------- ------- -------- -------- -------- -------- ------
Class I Shares:
Issued .................................... -- -- 4,452 -- -- -- --
Issued in Lieu of Cash Distributions ...... -- -- 235 -- -- -- --
Redeemed .................................. -- -- (544) -- -- -- --
-------- ------- -------- -------- -------- -------- ------
Total Class I Share Transactions ........ -- -- 4,143 -- -- -- --
-------- ------- -------- -------- -------- -------- ------
Class A Shares:
Issued .................................... 23,798 4,787 6,535 2,188 4,728 557 3
Issued in Lieu of Cash Distributions ...... 155 65 65 49 354 159 --
Redeemed .................................. (22,368) (4,527) (6,428) (2,296) (1,232) (745) --
-------- ------- -------- -------- -------- -------- ------
Total Class A Share Transactions ........ 1,585 325 172 (59) 3,850 (29) 3
-------- ------- -------- -------- -------- -------- ------
Class B Shares:
Issued .................................... 807 535 138 75 99 165 6
Issued in Lieu of Cash Distributions ...... 75 19 12 7 84 19 8
Redeemed .................................. (152) (57) (83) (52) (131) (29) --
-------- ------- -------- -------- -------- -------- ------
Total Class B Share Transactions ........ 730 497 67 30 52 155 14
-------- ------- -------- -------- -------- -------- ------
Class C Shares:
Issued .................................... 46 -- 21 -- 3 -- --
Issued in Lieu of Cash Distributions ...... -- -- -- -- -- -- --
Redeemed .................................. (1) -- (1) -- -- -- --
-------- ------- -------- -------- -------- -------- ------
Total Class C Share Transactions ........ 45 -- 20 -- 3 -- --
-------- ------- -------- -------- -------- -------- ------
Net Increase (Decrease) in Share
Transactions ............................ 983 11,493 (2,831) (3,120) (7,951) (1,919) 3,522
======== ======= ======== ======== ======== ======== ======
</TABLE>
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE INTERMEDIATE- 100% U.S. TREASURY
TAX-FREE BOND BOND TERM BOND MONEY MARKET
FUND FUND FUND FUND
-------------------- -------------------- -------------------- --------------------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98
TO 07/31/00T07/31/99 TO07/31/00TO07/31/99 TO07/31/00TO07/31/99 TO07/31/00TO07/31/99
-------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares Issued and Redeemed:
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust Fund Assets -- -- 313 -- -- -- -- --
Issued from the reorganization of the
Government Securities Fund ........... -- -- -- 10,341 -- -- -- --
Issued ................................. 1,951 2,101 8,885 7,534 3,871 6,129 1,088,153 756,800
Issued in Lieu of Cash Distributions ... 40 39 1,210 813 497 498 932 563
Redeemed ............................... (3,041) (2,774) (9,243) (5,524) (8,374) (5,033) (972,128) (721,529
------- ------- ------- ------- ------- ------- ---------- ----------
Total Fiduciary Share Transactions ... (1,050) (634) 1,165 13,164 (4,006) 1,594 116,957 35,834
------- ------- ------- ------- ------- ------- ---------- ----------
Class A Shares:
Issued ................................. 2,710 952 548 238 255 213 670,595 1,656,137
Issued in Lieu of Cash Distributions ... 83 47 19 10 29 29 20,981 36,234
Redeemed ............................... (1,436) (501) (215) (170) (290) (279) (1,393,158)(1,442,459
------- ------- ------- ------- ------- ------- ---------- ----------
Total Class A Share Transactions ..... 1,357 498 352 78 (6) (37) (701,582) 249,912
------- ------- ------- ------- ------- ------- ---------- ----------
Class B Shares:
Issued ................................. 52 -- -- -- -- -- -- --
Issued in Lieu of Cash Distributions ... -- -- -- -- -- -- -- --
Redeemed ............................... (9) -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ---------- ----------
Total Class B Share Transactions ..... 43 -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ---------- ----------
Class S Shares:
Issued ................................. -- -- -- -- -- -- 2,263,949 --
Issued in Lieu of Cash Distributions ... -- -- -- -- -- -- 24,122 --
Redeemed ............................... -- -- -- -- -- -- (1,594,303) --
------- ------- ------- ------- ------- ------- ---------- ----------
Total Class S Share Transactions ..... -- -- -- -- -- -- 693,768 --
------- ------- ------- ------- ------- ------- ---------- ----------
Net Increase (Decrease) in Share
Transactions ......................... 350 (136) 1,517 13,242 (4,012) 1,557 109,143 285,746
======= ======= ======= ======= ======= ======= ========== ==========
<FN>
(1) COMMENCEMENT OF OPERATIONS.
(2) COMMENCEMENT OF OPERATIONS.
</FN>
</TABLE>
100 ----------------------------------------------------------------------------
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<PAGE>
[table continued]
<TABLE>
<CAPTION>
BALANCED SMALL CAP VALUE INTERNATIONAL EQUITY
FUND FUND FUND
----------------------- ----------------------- ---------------------
08/01/99 08/01/98 08/01/99 09/17/98(2) 08/01/99 08/01/98
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Issued and Redeemed:
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust Fund Assets -- -- -- -- -- --
Issued from the reorganization of the
Blue Chip Growth Fund .................. -- -- -- -- -- --
Issued ................................... 3,939 4,210 4,126 7,104 1,033 747
Issued in Lieu of Cash Distributions ..... 2,853 1,728 375 -- 21 3
Redeemed ................................. (7,495) (6,523) (1,025) (693) (999) (458)
------- ------- ------- ------ ------ -----
Total Fiduciary Share Transactions ..... (703) (585) 3,476 6,411 55 292
------- ------- ------- ------ ------ -----
Class I Shares:
Issued ................................... -- -- -- -- -- --
Issued in Lieu of Cash Distributions ..... -- -- -- -- -- --
Redeemed ................................. -- -- -- -- -- --
------- ------- ------- ------ ------ -----
Total Class I Share Transactions ....... -- -- -- -- -- --
------- ------- ------- ------ ------ -----
Class A Shares:
Issued ................................... 121 160 5,825 74 728 --
Issued in Lieu of Cash Distributions ..... 71 41 19 -- -- --
Redeemed ................................. (172) (183) (5,303) (3) (692) --
------- ------- ------- ------ ------ -----
Total Class A Share Transactions ....... 20 18 541 71 36 --
------- ------- ------- ------ ------ -----
Class B Shares:
Issued ................................... 130 170 328 88 25 --
Issued in Lieu of Cash Distributions ..... 25 6 14 -- -- --
Redeemed ................................. (66) (25) (89) (8) (3) --
------- ------- ------- ------ ------ -----
Total Class B Share Transactions ....... 89 151 253 80 22 --
------- ------- ------- ------ ------ -----
Class C Shares:
Issued ................................... 3 -- 27 -- -- --
Issued in Lieu of Cash Distributions ..... -- -- -- -- -- --
Redeemed ................................. -- -- -- -- -- --
------- ------- ------- ------ ------ -----
Total Class C Share Transactions ....... 3 -- 27 -- -- --
------- ------- ------- ------ ------ -----
Net Increase (Decrease) in Share
Transactions ........................... (591) (416) 4,297 6,562 113 292
======= ======= ======= ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED CALIFORNIA TAX-FREE
U.S. GOVERNMENT MONEY MARKET MONEY MARKET
MONEY MARKET FUND FUND FUND
----------------------- ----------------------- -----------------------
08/01/99 08/01/98 08/01/99 08/01/98 08/01/99 08/01/98
TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99 TO 07/31/00 TO 07/31/99
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Shares Issued and Redeemed:
Fiduciary Shares:
Proceeds in connection with the
acquisition of Common Trust Fund Assets -- -- -- -- -- --
Issued from the reorganization of the
Government Securities Fund ............. -- -- -- -- -- --
Issued ................................... 1,817,771 2,136,746 4,162,999 2,543,551 777,875 446,341
Issued in Lieu of Cash Distributions ..... 478 358 13,843 11,220 6 10
Redeemed ................................. (1,839,487) (2,069,085) (3,773,157) (2,410,010) (744,458) (452,148)
----------- ----------- ----------- ----------- --------- --------
Total Fiduciary Share Transactions ..... (21,238) 68,019 403,685 144,761 33,423 (5,797)
----------- ----------- ----------- ----------- --------- --------
Class A Shares:
Issued ................................... 117,813 490,708 1,826,396 2,638,461 400,321 565,071
Issued in Lieu of Cash Distributions ..... 3,461 5,809 41,471 59,674 7,598 8,412
Redeemed ................................. (244,081) (447,628) (2,883,686) (2,180,382) (574,372) (506,038)
----------- ----------- ----------- ----------- --------- --------
Total Class A Share Transactions ....... (122,807) 48,889 (1.015,819) 517,753 (166,453) 67,445
----------- ----------- ----------- ----------- --------- --------
Class B Shares:
Issued ................................... 421 235 -- -- -- --
Issued in Lieu of Cash Distributions ..... 12 2 -- -- -- --
Redeemed ................................. (259) (20) -- -- -- --
----------- ----------- ----------- ----------- --------- --------
Total Class B Share Transactions ....... 174 217 -- -- -- --
----------- ----------- ----------- ----------- --------- --------
Class S Shares:
Issued ................................... 575,464 -- 3,534,606 -- 461,164 --
Issued in Lieu of Cash Distributions ..... 4,349 -- 45,062 -- 1,601 --
Redeemed ................................. (459,707) -- (2,004,033) -- (374,667) --
----------- ----------- ----------- ----------- --------- --------
Total Class S Share Transactions ....... 120,106 -- 1,575,635 -- 88,098 --
----------- ----------- ----------- ----------- --------- --------
Net Increase (Decrease) in Share
Transactions ........................... (23,765) 117,125 963,501 662,514 (44,932) 61,648
=========== =========== =========== =========== ========= ========
<FN>
(1) COMMENCEMENT OF OPERATIONS.
(2) COMMENCEMENT OF OPERATIONS.
</FN>
</TABLE>
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<PAGE>
[Highmark Funds logo omitted]
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
JULY 31, 2000
--------------------------------------------------------------------------------
13. SHAREHOLDER VOTING RESULTS (UNAUDITED)
At a shareholder meeting held on October 29, 1999, the shareholders of the
HighMark Emerging Growth Fund voted to approve the liquidation of the Fund's
assets. The results of the voting were as follows:
EMERGING GROWTH FUND
--------------------
FOR 3,096,408 96.51% of shares voted 62.92% of shares outstanding
AGAINST 26,060 0.81% of shares voted 0.53% of shares outstanding
ABSTAIN 85,896 2.68% of shares voted 1.75% of shares outstanding
At a shareholder meeting held on October 29, 1999 the shareholders of the
HighMark Balanced Fund, HighMark Growth Fund, HighMark Income Equity Fund,
HighMark Bond Fund, HighMark 100% U.S. Treasury Money Market Fund, HighMark
California Tax-Free Money Market Fund, HighMark Diversified Money Market Fund,
and HighMark U.S. Government Money Market Fund were asked to vote on the
following proposals: (1) to consider the amendment of the Income Equity Fund's
investment objective; (2) to consider the amendment of the Bond Fund's
investment objective; (3) to consider the amendment of the Balanced Fund, Income
Equity Fund, Growth Fund, Bond Fund, 100% U.S. Treasury Money Market Fund,
California Tax-Free Money Market Fund, Diversified Money Market Fund and U.S.
Government Money Market Fund's fundamental investment restriction(s) regarding
investment in shares of other investment companies; and (4) to consider
eliminating the 100% U.S. Treasury Money Market Fund, California Tax-Free Money
Market Fund, Diversified Money Market Fund and U.S. Government Money Market
Fund's fundamental investment restriction regarding investment in securities
issued by "unseasoned issuers". The results of each proposal were as follows:
PROPOSAL 1. TO CONSIDER THE AMENDMENT OF THE INCOME EQUITY FUND'S INVESTMENT
OBJECTIVE.
INCOME EQUITY FUND
------------------
FOR 25,697,319 98.69% of shares voted 70.49% of shares outstanding
AGAINST 168,440 0.65% of shares voted 0.46% of shares outstanding
ABSTAIN 173,357 0.67% of shares voted 0.48% of shares outstanding
PROPOSAL 2. TO CONSIDER THE AMENDMENT OF THE BOND FUND'S INVESTMENT OBJECTIVE.
BOND FUND
---------
FOR 16,307,612 99.71% of shares voted 50.72% of shares outstanding
AGAINST 15,422 0.09% of shares voted 0.05% of shares outstanding
ABSTAIN 31,508 0.19% of shares voted 0.10% of shares outstanding
PROPOSAL 3. TO CONSIDER THE AMENDMENT OF THE BALANCED FUND, INCOME EQUITY FUND,
GROWTH FUND, BOND FUND, 100% U.S. TREASURY MONEY MARKET FUND, CALIFORNIA
TAX-FREE MONEY MARKET FUND, DIVERSIFIED MONEY MARKET FUND AND U.S. GOVERNMENT
MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT RESTRICTION(S) REGARDING INVESTMENT
IN SHARES OF OTHER INVESTMENT COMPANIES.
BALANCED FUND
-------------
FOR 16,112,916 98.45% of shares voted 59.79% of shares outstanding
AGAINST 102,498 0.63% of shares voted 0.38% of shares outstanding
ABSTAIN 151,194 0.92% of shares voted 0.56% of shares outstanding
INCOME EQUITY FUND
------------------
FOR: 25,638,907 98.46% of shares voted 70.33% of shares outstanding
AGAINST: 200,947 0.77% of shares voted 0.55% of shares outstanding
ABSTAIN: 199,262 0.77% of shares voted 0.55% of shares outstanding
GROWTH FUND
-----------
FOR: 22,844,097 99.24% of shares voted 53.56% of shares outstanding
AGAINST: 87,058 0.38% of shares voted 0.20% of shares outstanding
ABSTAIN: 86,793 0.38% of shares voted 0.20% of shares outstanding
BOND FUND
---------
FOR: 16,303,650 99.69% of shares voted 50.27% of shares outstanding
AGAINST: 11,966 0.07% of shares voted 0.04% of shares outstanding
ABSTAIN: 38,926 0.24% of shares voted 0.12% of shares outstanding
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--------------------------------------------------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
--------------------------------------------------------------------------------
FOR: 579,048,101 81.98% of shares voted 45.92% of shares outstanding
AGAINST: 43,476,530 6.16% of shares voted 3.45% of shares outstanding
ABSTAIN: 83,824,058 11.87% of shares voted 6.65% of shares outstanding
CALIFORNIA TAX-FREE MONEY MARKET FUND
--------------------------------------------------------------------------------
FOR: 328,389,932 95.69% of shares voted 48.11% of shares outstanding
AGAINST: 10,609,165 3.09% of shares voted 1.55% of shares outstanding
ABSTAIN: 4,171,560 1.22% of shares voted 0.61% of shares outstanding
DIVERSIFIED MONEY MARKET FUND
--------------------------------------------------------------------------------
FOR: 1,458,046,773 91.00% of shares voted 47.96% of shares outstanding
AGAINST: 77,180,144 4.82% of shares voted 2.54% of shares outstanding
ABSTAIN: 66,497,033 4.18% of shares voted 2.20% of shares outstanding
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------
FOR: 313,628,537 94.87% of shares voted 60.75% of shares outstanding
AGAINST: 15,379,401 4.65% of shares voted 2.98% of shares outstanding
ABSTAIN: 1,596,862 0.48% of shares voted 0.31% of shares outstanding
PROPOSAL 4. TO CONSIDER ELIMINATING THE 100% U.S. TREASURY MONEY MARKET FUND,
CALIFORNIA TAX-FREE MONEY MARKET FUND, DIVERSIFIED MONEY MARKET FUND AND U.S.
GOVERNMENT MONEY MARKET FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
INVESTMENT IN SECURITIES ISSUED BY "UNSEASONED ISSUERS".
100% U.S. TREASURY MONEY MARKET FUND
------------------------------------
FOR: 549,800,487 77.84% of shares voted 43.60% of shares outstanding
AGAINST: 71,080,778 10.06% of shares voted 5.64% of shares outstanding
ABSTAIN: 85,467,424 12.10% of shares voted 6.78% of shares outstanding
CALIFORNIA TAX-FREE MONEY MARKET FUND
-------------------------------------
FOR: 312,617,007 91.10% of shares voted 45.80% of shares outstanding
AGAINST: 24,390,294 7.11% of shares voted 3.57% of shares outstanding
ABSTAIN: 6,163,356 1.80% of shares voted 0.90% of shares outstanding
DIVERSIFIED MONEY MARKET FUND
-----------------------------
FOR: 1,410,192,914 88.02% of shares voted 46.39% of shares outstanding
AGAINST: 130,116,047 8.12% of shares voted 4.28% of shares outstanding
ABSTAIN: 61,864,989 3.86% of shares voted 2.04% of shares outstanding
U.S. GOVERNMENT MONEY MARKET FUND
---------------------------------
FOR: 280,615,041 84.88% of shares voted 54.36% of shares outstanding
AGAINST: 17,590,763 5.32% of shares voted 3.41% of shares outstanding
ABSTAIN: 32,398,996 9.80% of shares voted 6.28% of shares outstanding
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<PAGE>
[Highmark Funds logo omitted]
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, Core
Equity Fund, Balanced Fund, Small Cap Value Fund, International Equity Fund,
California Intermediate Tax-Free Bond Fund, Bond Fund, Intermediate-Term Bond
Fund, 100% U.S. Treasury Money Market Fund, U.S. Government Money Market Fund,
Diversified Money Market Fund, and California Tax-Free Money Market Fund as of
July 31, 2000, and the related statements of operations for the periods then
ended, the statements of changes in net assets for the periods ended July 31,
2000 and July 31, 1999 and the financial highlights for the periods ended July
31, 2000, 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 January 31, 1997 and January 31, 1996
were audited by other auditors whose report, dated March 15, 1997, expressed an
unqualified opinion on those financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, 2000, by correspondence with the Funds'
custodians and brokers; where replies were not received from brokers, 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 referred to
above present fairly, in all material respects, the financial position of the
Funds as of July 31, 2000, the results of their operations, the changes in their
net assets and the financial highlights for the respective periods stated above,
in conformity with accounting principles generally accepted in the United States
of America.
As discussed in Note 11 to the financial statements, on August 21, 2000, the
assets of the HighMark Intermediate-Term Bond Fund were reorganized into the
HighMark Bond Fund.
DELOITTE & TOUCHE LLP
San Francisco, CA
September 11, 2000
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<PAGE>
NOTICE TO SHAREHOLDERS OF THE
HIGHMARK FUNDS (UNAUDITED)
--------------------------------------------------------------------------------
For shareholders that do not have a July 31, 2000 tax year end, this notice is
for informational purposes only. For shareholders with a July 31, 2000 tax year
end, please consult your tax adviser as to the pertinence of this notice.
For the fiscal year ended July 31, 2000, 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 ....................................... 83% 17% 0% 100% 100% 0%
Value Momentum ............................... 81% 19% 0% 100% 100% 0%
Income Equity ................................ 76% 24% 0% 100% 67% 0%
Core Equity .................................. 0% 100% 0% 100% 0% 0%
Balanced ..................................... 74% 26% 0% 100% 34% 0%
Small Cap Value .............................. 0% 100% 0% 100% 0% 0%
International Equity ......................... 47% 53% 0% 100% 0% 10%
California Intermediate Tax-Free Bond ........ 0% 0% 100% 100% 0% 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>
FOR THE SHORT FISCAL YEAR ENDED AUGUST 20, 2000, THE INTERMEDIATE-TERM BOND FUND
HEREBY DESIGNATES ALL OF ITS DISTRIBUTIONS MADE DURING THIS YEAR AS ORDINARY
INCOME DIVIDENDS FOR THE PURPOSE OF DIVIDEND PAID DEDUCTION ON ITS 2000 FEDERAL
INCOME TAX RETURN.
(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
DISTRIBUTION 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, 2000. 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, 2000.
</FN>
</TABLE>
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<PAGE>
[Highmark Funds logo omitted]
HIGHMARK FUND INFORMATION
--------------------------------------------------------------------------------
FIDUCIARY SHARES INFORMATION
FUND CUSIP TICKER FUND #
Growth 431114818 HMGRX 492
Value Momentum 431114677 HMVMX 871
Income Equity 431114206 HMIEX 490
Core Equity 431112788 HMCFX 1627
Balanced 431114792 HMBAX 491
Small Cap Value 431112101 HMSCX 148
International Equity 431114594 HMIQX 876
CA Intermediate Tax-Free Bond 431114644 HMITX 847
Bond 431114305 HMBDX 489
Intermediate-Term Bond 431114560 HMIBX 845
100% U.S. Treasury Money Market 431114503 HMTXX 486
U.S. Government Money Market 431114701 HMGXX 485
Diversified Money Market 431114883 HMDXX 484
CA Tax-Free Money Market 431114842 HMCXX 487
--------------------------------------------------------------------------------
CLASS I SHARES INFORMATION
Value Momentum 431112804 HMVIX 1731
--------------------------------------------------------------------------------
RETAIL SHARES INFORMATION
Growth
Class A Shares 431114768 HMRGX 481
Class B Shares 431114511 HMGBX 455
Class C Shares 431112879 N/A 1755
Value Momentum
Class A Shares 431114628 HMVLX 870
Class B Shares 431114529 HVMBX 456
Class C Shares 431112812 N/A 1753
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<PAGE>
--------------------------------------------------------------------------------
RETAIL SHARES INFORMATION (CONTINUED)
FUND CUSIP TICKER FUND #
Income Equity
Class A Shares 431114784 HMERX 479
Class B Shares 431114537 HIEBX 457
Class C Shares 431112861 N/A 1754
Core Equity
Class A Shares 431112770 N/A 1626
Class B Shares 431112762 N/A 1628
Balanced
Class A Shares 431114776 HMBRX 480
Class B Shares 431114545 HMBBX 452
Class C Shares 431112887 N/A 1760
Small Cap Value
Class A Shares 431112200 N/A 41
Class B Shares 431112309 N/A 123
Class C Shares 431112820 N/A 1756
International Equity
Class A Shares 431112853 N/A 1759
Class B Shares 431112846 N/A 1758
Class C Shares 431112838 N/A 1757
CA Intermediate Tax-FreeBond
Class A Shares 431114578 HMCIX 846
Class B Shares 431112796 N/A 1761
Bond
Class A Shares 431114743 HMRBX 478
Intermediate-Term Bond
Class A Shares 431114586 HMBTX 874
100% U.S. Treasury Money Market
Class A Shares 431114404 HMRXX 475
Class S Shares 431112606 HUSXX 1730
U.S. Government Money Market
Class AShares 431114602 HMUXX 474
Class B Shares 431114495 HGBXX 450
Class S Shares 431112507 HGSXX 1729
Diversified Money Market
Class A Shares 431114800 HMVXX 473
Class S Shares 431112408 HDSXX 1728
CA Tax-Free Money Market
Class A Shares 431114859 HMAXX 476
Class S Shares 431112705 HCSXX 1727
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<PAGE>
[Highmark Funds logo omitted]
SERVICE PROVIDERS &
BOARD OF TRUSTEES
--------------------------------------------------------------------------------
INVESTMENT ADVISER BOARD OF TRUSTEES
HighMark Capital Management, Inc. Thomas L. Braje, Chairman
475 Sansome Street Robert M. Whitler, Vice Chairman
San Francisco, CA 94104 David A. Goldfarb
Joseph C. Jaeger
SUB-ADVISER (International Equity Fund) Frederick J. Long
AXA Investment Managers GS Ltd. Michael L. Noel
60 Greenchurch Street
London, England
SUB-ADVISER (International Portion of the
Small Cap Value Fund)
Brandes Investment Partners, LP
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
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<PAGE>
Thank you for your investment.
[Highmark Funds logo omitted]
Not FDIC insured May lose value No bank guarantee
<PAGE>
[Highmark Funds logo omitted]
445 South Figueroa Street, Suite 306
Los Angeles, CA 90071
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.HIGHMARKFUNDS.COM
84806-07/00
