UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM N-CSR
--------
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-05059
HIGHMARK FUNDS
(Exact name of registrant as specified in charter)
--------
One Freedom Valley Drive
Oaks, Pennsylvania 19456
(Address of principal executive offices) (Zip code)
John M. Loder, Esq.
Ropes & Gray LLP
One Embarcadero Center, Suite 2200
San Francisco, CA 94111
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-800-433-6884
DATE OF FISCAL YEAR END: JULY 31, 2005
DATE OF REPORTING PERIOD: JULY 31, 2005
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------------------------------------------------------
JULY 31, 2005
- --------------------------------------------------------------------------------
HIGHMARK
The smarter approach to investing.
ANNUAL
---------------------------------
REPORT
[MOUNTAIN RANGE GRAPHIC OMITTED]
[HIGHMARK FUNDS LOGO OMITTED]
TABLE OF CONTENTS
management's discussion of fund performance
large cap growth fund ................................................. 2
value momentum fund ................................................... 4
large cap value fund .................................................. 6
core equity fund ...................................................... 8
balanced fund ......................................................... 10
small cap growth fund ................................................. 12
small cap value fund .................................................. 14
california intermediate tax-free bond fund ............................ 16
national intermediate tax-free bond fund .............................. 18
bond fund ............................................................. 20
short term bond fund .................................................. 22
taxable money market funds ............................................ 24
california tax-free money market fund ................................. 25
capital growth allocation fund ........................................ 26
growth & income allocation fund ....................................... 28
income plus allocation fund ........................................... 30
disclosure of fund expenses .............................................. 32
statements of net assets/schedules of investments ........................ 35
statements of assets and liabilities ..................................... 84
statements of operations ................................................. 86
statements of changes in net assets ...................................... 90
financial highlights ..................................................... 96
notes to financial statements ............................................ 104
report of independent registered public accounting firm .................. 117
notice to shareholders ................................................... 118
trustees and officers .................................................... 119
board approval of the existing advisory and
sub-advisory agreements .................................................. 121
fund information ......................................................... 124
[HIGHMARK FUNDS LOGO OMITTED]
This report and the financial statements contained herein are submitted for the
general information of HighMark(R) Funds' shareholders. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus.
Shares of HighMark Funds are not deposits or obligations of, or guaranteed by
Union Bank of California, N.A., or any of its subsidiaries or affiliates. Such
shares are also not federally insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board, or any other agency. Investments in
shares of mutual funds involve risk, including the possible loss of principal.
SEI Investments Distribution Co., serves as Distributor for HighMark Funds and
is not affiliated with the Adviser of HighMark Funds, HighMark Capital
Management, Inc., or with Union Bank of California, N.A.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
MICROSOFT 3.8
UNITEDHEALTH GROUP 3.8
JOHNSON & JOHNSON 3.7
SLM 3.6
WALGREEN 3.6
GENERAL ELECTRIC 3.5
SMITH INTERNATIONAL 3.3
SCHLUMBERGER 3.1
DELL 3.0
PROCTER & GAMBLE 3.0
FUND SECTORS
SECTOR % OF
PORTFOLIO*
INFORMATION TECHNOLOGY 24.7
HEALTH CARE 22.9
FINANCIALS 15.8
CONSUMER DISCRETIONARY 10.5
INDUSTRIALS 9.9
ENERGY 7.5
CONSUMER STAPLES 6.6
MATERIALS 2.1
REPURCHASE AGREEMENT 0.0
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
LARGE CAP
GROWTH FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Large Cap Growth Fund
produced a total return of 15.16% (Fiduciary Shares). In comparison, the
unmanaged Standard & Poor's 500/BARRA Growth Index returned 11.17% for the
same period.
FACTORS AFFECTING PERFORMANCE
The fiscal year commenced against a backdrop of slowing corporate profit
momentum and growing concern about the sustainability of the economic
recovery. Despite significant headwinds in the form of high energy prices,
ongoing geopolitical concerns, rising short-term interest rates, and the
fading impact of fiscal and monetary stimuli, positive market forces
prevailed during the year. Most classes of equities performed well, with
small capitalization stocks leading the charge. Within the universe of
large capitalization companies, growth stocks again underperformed value
stocks, though this five-year trend showed signs of reversing itself late
in the fiscal year.
For the year, the Fund outpaced its benchmark, the Standard & Poor's
500/BARRA Growth Index by 3.99%. We believe strong stock selection was the
primary driver of Fund performance. Holdings in the Financial Services,
Healthcare, and Technology sectors were particularly rewarding. Within
Financial Services, the Fund benefited from limited exposure in
interest-rate sensitive areas such as banking. Rather, we focused on what
proved to be relatively strong performing asset managers, including Legg
Mason and Franklin Resources. Chicago Mercantile Exchange Holdings was
another positive contributor. With respect to the Healthcare sector, Alcon
and Genentech were among the Fund's top performers for the year. Fund
performance also benefited from Technology holdings Google and Apple
Computer, which has since been sold.
Although the Fund did face slight disappointment in the Consumer
Discretionary sector, with holdings such as Carnival and Harman
International Industries detracting from results, overall we remain
pleased with the Fund's relatively strong performance for the fiscal year.
- --------------------------------------------------------------------------------
2 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK LARGE CAP GROWTH FUND
INVESTMENT OBJECTIVE
THE HIGHMARK LARGE CAP GROWTH FUND SEEKS LONG-TERM CAPITAL APPRECIATION THROUGH
INVESTMENTS IN EQUITY SECURITIES. THE PRODUCTION OF CURRENT INCOME IS AN
INCIDENTAL OBJECTIVE.
[PHOTO OMITTED]
PORTFOLIO MANAGER
DANIEL BECKER
WADDELL & REED INVESTMENT
MANAGEMENT CO.
[PHOTO OMITTED]
PORTFOLIO MANAGER
PHILIP SANDERS
WADDELL & REED INVESTMENT
MANAGEMENT CO.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK LARGE
CAP GROWTH FUND VERSUS THE S&P 500/ BARRA GROWTH INDEX AND THE MORNINGSTAR LARGE
GROWTH CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Large HighMark Large HighMark Large HighMark Large Morningstar
Cap Growth Fund, Cap Growth Fund, Cap Growth Fund, Cap Growth Fund, S&P 500/BARRA Large Growth
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Growth Index Category
7/31/95 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/96 11,272 10,667 11,272 11,272 11,765 11,086
7/97 16,743 15,840 16,743 16,743 18,412 16,054
7/98 20,526 19,366 20,437 20,526 22,999 18,985
7/99 24,064 22,642 23,760 24,064 28,567 23,644
7/00 26,743 25,103 26,179 26,598 33,414 30,056
7/01 14,519 13,599 14,076 14,318 23,567 21,196
7/02 10,922 10,219 10,507 10,674 18,333 15,159
7/03 12,136 11,293 11,551 11,752 19,963 16,868
7/04 12,555 11,673 11,854 12,060 21,781 18,023
7/05 14,458 13,407 13,520 13,753 24,214 20,699
- ------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------------------
Fiduciary Shares 15.16% 9.80% -11.57% 3.76% 5.03%
- ------------------------------------------------------------------------------------------------
Class A Shares 14.86% 9.47% -11.79% 3.56% 4.87%+
- ------------------------------------------------------------------------------------------------
Class A Shares with load* 8.54% 7.41% -12.78% 2.98% 4.36%+
- ------------------------------------------------------------------------------------------------
Class B Shares 14.06% 8.77% -12.38% 3.06%+ 4.43%+
- ------------------------------------------------------------------------------------------------
Class B Shares with load** 9.06% 7.92% -12.68% 3.06%+ 4.43%+
- ------------------------------------------------------------------------------------------------
Class C Shares 14.04% 8.82% -12.36% 3.24%+ 4.59%+
- ------------------------------------------------------------------------------------------------
Class C Shares with load*** 13.04% 8.82% -12.36% 3.24%+ 4.59%+
- ------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
its inception on November 18, 1993 with the performance of Class A Shares
on June 20, 1994, Class B Shares on February 2, 1998 and Class C Shares on
November 30, 1999. Fiduciary Share performance has been adjusted for the
maximum sales charge/CDSC applicable to Class A, Class B and Class C
Shares, as applicable, 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% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 3
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
EXXON MOBIL 3.5
QUESTAR 3.3
CITIGROUP 3.1
GENERAL ELECTRIC 3.0
ALTRIA GROUP 2.8
WASHINGTON MUTUAL 2.2
JPMORGAN CHASE 2.0
AVERY DENNISON 1.9
BANK OF AMERICA 1.8
PARKER HANNIFIN 1.7
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 23.7
INDUSTRIALS 14.8
ENERGY 12.7
INFORMATION TECHNOLOGY 8.8
CONSUMER DISCRETIONARY 8.1
HEALTH CARE 7.8
MATERIALS 7.3
CONSUMER STAPLES 7.0
UTILITIES 3.8
TELECOMMUNICATIONS 3.1
REPURCHASE AGREEMENT 2.5
REGULATED INVESTMENT COMPANY 0.4
EQUITY OPTIONS 0.0
RIGHTS 0.0
*EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
**EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
VALUE MOMENTUM FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Value Momentum Fund
produced a total return of 16.96% (Fiduciary Shares). In comparison, the
unmanaged Standard & Poor's 500 Composite Index returned 14.05% for the
same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained generally healthy throughout the year. Higher
gasoline prices, rising healthcare costs, heavy debt loads, and higher
interest rates, seemed to have little or no impact on consumer spending.
In the industrial economy, companies devoted the past few years to cutting
costs and improving cash flow. This devotion paid off, leading to balance
sheets flush with cash and strong levels of free cash flow. Much of that
cash flow has been directed toward further balance sheet repair and
dividend increases.
In the equity markets, most classes of stocks performed well for the year.
As has been the case for several years, small capitalization companies
again outperformed large capitalization companies, and value stocks again
outperformed their growth counterparts. It has become increasingly
difficult for value-seeking investors to find average businesses at very
low valuations. However, another form of value investing is seeking above
average businesses at average valuations, and this is the area in which we
were able to find value during the year.
We are pleased to report that the Fund outpaced its benchmark, the
Standard & Poor's 500 Composite Index. The primary driver of Fund
performance during the past year was our overweight position relative to
the index in the strongest performing Energy sector. Oil companies had a
particularly strong year. Evidence suggests that demand exceeded
production. Additionally, it has become more difficult to find oil
reserves, and the new reserves that have been found tend to be located in
politically unstable regions. These factors combined to drive record high
crude oil prices during the year. Detracting slightly from Fund
performance during the year was a relative underweight in the Technology
sector, which experienced a late-year rally after a largely disappointing
year.
Overall characteristics of the Fund during the year remained in line with
its history and with traditional value parameters. The weighted average
dividend yield of the stocks in the Fund was higher than the Standard &
Poor's 500 Composite Index. Meanwhile, the Fund's price-to-earnings ratio
and weighted average market capitalization continued to be below the
benchmark.
- --------------------------------------------------------------------------------
4 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK VALUE MOMENTUM FUND
INVESTMENT OBJECTIVE
THE HIGHMARK VALUE MOMENTUM FUND SEEKS LONG-TERM CAPITAL GROWTH WITH A SECONDARY
OBJECTIVE OF CURRENT INCOME.
[PHOTO OMITTED]
TEAM LEADER
RICHARD EARNEST
HIGHMARK CAPITAL MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
KEITH STRIBLING
HIGHMARK CAPITAL MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
TODD LOWENSTEIN
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 MORNINGSTAR LARGE VALUE
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Value HighMark Value HighMark Value HighMark Value Morningstar
Momentum Fund, Momentum Fund, Momentum Fund, Momentum Fund, S&P 500 Large Value
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Composite Index Category
7/31/95 $10,000 $9,450 $10,000 $10,000 $10,000 $10,000
7/96 11,681 11,016 11,681 11,681 11,657 11,471
7/97 17,229 16,210 17,229 17,229 17,735 16,463
7/98 18,818 17,662 18,734 18,818 21,156 18,060
7/99 21,279 19,921 20,961 21,279 25,430 20,282
7/00 22,231 20,764 21,695 22,099 27,711 19,655
7/01 22,108 20,597 21,374 21,774 23,740 21,654
7/02 17,673 16,426 16,947 17,247 18,130 17,544
7/03 19,441 18,026 18,472 18,801 20,061 19,033
7/04 22,491 20,795 21,167 21,550 22,703 21,943
7/05 26,305 24,256 24,544 24,976 25,893 25,411
- ------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------------------
Fiduciary Shares 16.96% 14.17% 3.42% 10.16% 11.54%
- ------------------------------------------------------------------------------------------------
Class A Shares 16.64% 13.87% 3.16% 9.88% 11.35%+
- ------------------------------------------------------------------------------------------------
Class A Shares with load* 10.24% 11.74% 2.00% 9.26% 10.92%+
- ------------------------------------------------------------------------------------------------
Class B Shares 15.95% 13.14% 2.50% 9.39%+ 11.01%+
- ------------------------------------------------------------------------------------------------
Class B Shares with load** 10.95% 12.35% 2.20% 9.39%+ 11.01%+
- ------------------------------------------------------------------------------------------------
Class C Shares 15.90% 13.13% 2.48% 9.59%+ 11.14%+
- ------------------------------------------------------------------------------------------------
Class C Shares with load*** 14.90% 13.13% 2.48% 9.59%+ 11.14%+
- ------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
February 1, 1991 with the performance of Class A Shares on April 2, 1992,
Class B Shares on February 2, 1998 and Class C Shares on November 30,
1999. Fiduciary Share performance has been adjusted for the maximum sales
charge/CDSC applicable to Class A, Class B and Class C Shares, as
applicable, 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% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower. 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.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 5
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
PFIZER 4.1
EXXON MOBIL 3.8
VERIZON COMMUNICATIONS 2.5
CHEVRON 2.5
CONOCOPHILLIPS 2.4
WELLS FARGO 2.3
CITIGROUP 2.2
WACHOVIA 2.0
BANK OF AMERICA 2.0
US BANCORP 1.7
FUND SECTORS
SECTOR % OF
PORTFOLIO*
FINANCIALS 34.8
ENERGY 14.7
CONSUMER DISCRETIONARY 11.9
HEALTH CARE 7.5
UTILITIES 6.5
CONSUMER STAPLES 5.5
INFORMATION TECHNOLOGY 4.9
INDUSTRIALS 4.9
TELECOMMUNICATIONS 4.7
MATERIALS 3.2
REPURCHASE AGREEMENT 1.4
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
LARGE CAP VALUE FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Large Cap Value Fund
produced a total return of 21.35% (Fiduciary Shares). In comparison, the
unmanaged Russell 1000 Value Index returned 19.04% for the same period.
FACTORS AFFECTING PERFORMANCE
The first quarter of 2005 marked the fifth anniversary of both the
bursting of the Internet bubble and the beginning of a strong performing
period with respect to value investing. Value stocks once again
outperformed growth stocks during the past fiscal year. Small- and mid-cap
companies continued to be the clear standouts. Even within the universe of
large capitalization companies, stocks on the smaller end of the spectrum
generally outperformed their larger counterparts.
In this positive environment for investing, the Fund outperformed its
benchmark, the Russell 1000 Value Index. The measures that we use to pick
stocks, identifying value companies we believe to have strong management
and positive momentum, worked in the Fund's favor. The Fund remained fully
invested, sector neutral, and well diversified. As a result, our
performance is explained almost exclusively by bottom-up stock selection.
Strong stock selection within the Capital Goods sector, specifically the
underlying construction industry, was the single largest contributor to
performance. Toll Brothers, which has since been sold, and KB Home were
especially rewarding. Additionally, the Fund's performance benefited
within the Consumer Discretionary sector, where retailer Abercrombie &
Fitch performed particularly well. A relative underweight to several
benchmark-held names in the poor performing media segment was another
positive contributing factor to the Fund's relative performance. The Fund
also benefited from the strong performance of Valero Energy and Sunoco.
The Fund did face some minor disappointments during the year in the
Financial sector. For example, lack of exposure to MBNA, which experienced
strong stock price appreciation following the announcement of the bank's
merger with Bank of America, was the most notable Financial sector
detractor. Overall, however, we are quite proud of the performance results
delivered to Fund shareholders during the fiscal year.
- --------------------------------------------------------------------------------
6 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK LARGE CAP VALUE FUND INVESTMENT OBJECTIVE
THE HIGHMARK LARGE CAP VALUE FUND SEEKS TO PROVIDE LONG-TERM CAPITAL
APPRECIATION.
[PHOTO OMITTED]
PORTFOLIO MANAGER
TED ARONSON
ARONSON+JOHNSON+ORTIZ, LP
[PHOTO OMITTED]
PORTFOLIO MANAGER
KEVIN JOHNSON
ARONSON+JOHNSON+ORTIZ, LP
[PHOTO OMITTED]
PORTFOLIO MANAGER
MARTHA ORTIZ
ARONSON+JOHNSON+ORTIZ, LP
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK LARGE
CAP VALUE FUND VERSUS THE RUSSELL 1000 VALUE INDEX AND THE MORNINGSTAR LARGE
VALUE CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Large HighMark Large HighMark Large HighMark Large Morningstar
Cap Value Fund, Cap Value Fund, Cap Value Fund, Cap Value Fund, Russell 1000 Large Value
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Value Index Category
7/31/95 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/96 11,826 11,171 11,826 11,826 11,588 11,471
7/97 16,572 15,636 16,572 16,572 17,246 16,463
7/98 18,360 17,278 18,280 18,360 20,301 18,060
7/99 20,972 19,686 20,702 20,972 23,344 20,282
7/00 18,944 17,745 18,529 18,848 22,177 19,655
7/01 18,395 17,174 17,817 18,120 24,115 21,654
7/02 13,923 12,958 13,368 13,596 19,957 17,544
7/03 14,934 13,880 14,225 14,460 22,103 19,033
7/04 17,969 16,653 16,956 17,237 26,011 21,943
7/05 21,805 20,171 20,385 20,738 30,961 25,411
- ------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------------------
Fiduciary Shares 21.35% 16.13% 2.85% 8.11% 11.33%
- ------------------------------------------------------------------------------------------------
Class A Shares 21.12% 15.89% 2.60% 7.88% 11.23%+
- ------------------------------------------------------------------------------------------------
Class A Shares with load* 14.42% 13.73% 1.44% 7.27% 10.94%+
- ------------------------------------------------------------------------------------------------
Class B Shares 20.22% 15.10% 1.92% 7.38%+ 10.98%+
- ------------------------------------------------------------------------------------------------
Class B Shares with load** 15.22% 14.34% 1.55% 7.38%+ 10.98%+
- ------------------------------------------------------------------------------------------------
Class C Shares 20.31% 15.11% 1.93% 7.57%+ 11.07%+
- ------------------------------------------------------------------------------------------------
Class C Shares with load*** 19.31% 15.11% 1.93% 7.57%+ 11.07%+
- ------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
February 9, 1984 with the performance of Class A Shares on June 20, 1994,
Class B Shares on February 2, 1998 and Class C Shares on November 30,
1999. Fiduciary Share performance has been adjusted for the maximum sales
charge/CDSC applicable to Class A, Class B and Class C Shares, as
applicable, 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% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 7
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
GENERAL ELECTRIC 4.3
BANK OF AMERICA 3.4
CHEVRON 3.0
PFIZER 3.0
CITIGROUP 2.8
HOME DEPOT 2.6
NATIONAL CITY 2.3
GOLDMAN SACHS GROUP 2.2
BP ADR 2.2
JOHNSON & JOHNSON 2.1
FUND SECTORS
SECTOR % OF
PORTFOLIO*
FINANCIALS 19.6
INFORMATION TECHNOLOGY 16.2
HEALTH CARE 12.6
INDUSTRIALS 11.9
CONSUMER DISCRETIONARY 11.9
CONSUMER STAPLES 9.5
ENERGY 8.2
UTILITIES 3.5
MATERIALS 3.4
TELECOMMUNICATIONS 2.8
REPURCHASE AGREEMENT 0.4
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
CORE EQUITY FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Core Equity Fund produced a
total return of 11.47% (Fiduciary Shares). In comparison, the unmanaged
Standard & Poor's 500 Composite Index returned 14.05% for the same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained on firm footing throughout the fiscal year.
Higher gasoline prices and rising interest rates seemed to have little
impact on consumer spending, which continued to grow in excess of 9%. In
addition to the surprising durability of the consumer, the industrial
economy also showed welcome signs of strength. American corporations
benefiting from years of restructuring have been experiencing strong
profitability and sustained productivity improvements. Operating profits
have now surged well ahead of peak levels observed in 2001, driving
price-to-earnings ratios lower.
Under these constructive economic conditions, equity markets fared well
during the year relative to both bonds and cash. Smaller-cap and
value-oriented companies tended to outperform larger and growth-oriented
stocks. Energy, Utilities and Healthcare were the strongest performing
sectors, while Basic Materials, Industrials and Consumer Discretionary
lagged over the last 12 months.
For the year-ended July 31, 2005, the Fund underperformed its benchmark,
the Standard & Poor's 500 Composite Index. Event-driven, stock-specific
issues were the largest contributors during the first half of the fiscal
year. Investigations into market timing at Putnam (Marsh McLennan
Companies), bid rigging at American International Group, and the recall of
Vioxx at Merck & Co., which have all since been sold, were the largest
contributors to underperformance. Holdings in Constellation Energy Group,
Shire Pharmaceuticals, which has since been sold, BHP Billiton and
ConocoPhillips contributed positively to performance.
The Fund started to show signs of improved relative performance in the
second half of the fiscal year under a new portfolio management team led
by David Goerz and Richard Rocke. We narrowed the Fund's sector exposures
during the second quarter of 2005. Transaction costs during the transition
were more than offset by strong stock selection in 2005. During the second
half, Suncor Energy, which has since been sold, Texas Instruments and CVS,
which has since been sold, were among the strongest contributors to
outperformance. New holdings in Cigna, Whirlpool, Metlife and King
Pharmaceuticals proved timely as well.
- --------------------------------------------------------------------------------
8 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK CORE EQUITY FUND
INVESTMENT OBJECTIVE
THE HIGHMARK CORE EQUITY FUND SEEKS LONG-TERM CAPITAL APPRECIATION.
[PHOTO OMITTED]
PORTFOLIO MANAGER
DAVID GOERZ
HIGHMARK CAPITAL
MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
RICHARD ROCKE
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK CORE
EQUITY FUND VERSUS THE S&P 500 COMPOSITE INDEX AND THE MORNINGSTAR LARGE BLEND
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Core HighMark Core HighMark Core HighMark Core S&P 500 Morningstar
Equity Fund, Equity Fund, Equity Fund, Equity Fund, Composite Large Blend
Fiduciary Shares Class A Shares+ Class B Shares+ Class C Shares+ Index Category
5/31/00 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/00 9,768 9,231 9,758 9,768 10,087 10,125
7/01 8,312 7,829 8,230 8,312 8,642 8,879
7/02 6,296 5,914 6,178 6,296 6,600 6,877
7/03 6,872 6,441 6,685 6,872 7,302 7,495
7/04 7,546 7,051 7,260 7,503 8,264 8,356
7/05 8,411 7,849 7,950 8,298 9,425 9,570
- ------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------
Fiduciary Shares 11.47% 10.13% -2.95% -3.29%
- ------------------------------------------------------------------------------------
Class A Shares 11.32% 9.90% -3.19% -3.53%+
- ------------------------------------------------------------------------------------
Class A Shares with load* 5.16% 7.85% -4.28% -4.58%+
- ------------------------------------------------------------------------------------
Class B Shares 10.60% 9.13% -3.83% -4.16%+
- ------------------------------------------------------------------------------------
Class B Shares with load** 5.60% 8.28% -4.21% -4.34%+
- ------------------------------------------------------------------------------------
Class C Shares 10.59% 9.64%+ -3.21%+ -3.55%+
- ------------------------------------------------------------------------------------
Class C Shares with load*** 9.59% 9.64%+ -3.21%+ -3.55%+
- ------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
its inception on May 31, 2000 with the performance of Class A and Class B
Shares on June 30, 2000 and Class C Shares on November 28, 2003. Fiduciary
Share performance has been adjusted for the maximum sales charge/CDSC
applicable to Class A, Class B and Class C Shares, as applicable, 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% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 9
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
GENERAL ELECTRIC 3.2
EXXON MOBIL 2.1
CVS 1.7
TYCO INTERNATIONAL 1.7
MICROSOFT 1.6
U.S. TREASURY BOND,
8.125%, 08/15/19 1.5
CITIGROUP 1.5
JOHNSON & JOHNSON 1.4
U.S. TREASURY BOND,
7.250%, 05/15/16 1.4
BANK OF AMERICA 1.3
FUND SECTORS
SECTOR % OF
PORTFOLIO**
CORPORATE OBLIGATIONS 14.0
FINANCIALS 12.7
INFORMATION TECHNOLOGY 11.7
U.S. GOVERNMENT OBLIGATIONS 10.5
HEALTH CARE 8.5
INDUSTRIALS 8.3
CONSUMER DISCRETIONARY 8.2
CONSUMER STAPLES 7.2
ENERGY 6.4
U.S. TREASURY OBLIGATIONS 4.6
UTILITIES 2.6
ASSET-BACKED SECURITIES 1.7
TELECOMMUNICATIONS 1.5
MATERIALS 1.3
REPURCHASE AGREEMENT 0.8
*EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
**EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
BALANCED FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Balanced Fund produced a
total return of 9.32% (Fiduciary Shares). In comparison, the unmanaged
Standard & Poor's 500 Composite Index returned 14.05%, and the Lehman
Brothers U.S. Aggregate Bond Index returned 4.80% for the same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained on firm footing throughout the fiscal year.
Higher gasoline prices and rising interest rates seemed to have little
impact on consumer spending, which continued to grow in excess of 9%. In
addition to the surprising durability of the consumer, the industrial
economy also showed welcome signs of strength. American corporations
benefiting from years of restructuring have been experiencing strong
profitability and sustained productivity improvements. Operating profits
have now surged well ahead of peak levels observed in 2001, driving
price-to-earnings ratios lower.
Under these constructive economic conditions, equity markets fared well
during the year relative to both bonds and cash. Smaller-cap and
value-oriented companies tended to outperform larger and growth-oriented
stocks. Energy, Utilities and Healthcare were the strongest performing
sectors, while Basic Materials, Industrials and Consumer Discretionary
lagged over the last 12 months.
The Federal Reserve boosted interest rates at each meeting during the year
to 3.25%, two percentage points higher than a year ago. Credit spreads
also tightened, giving a boost to corporate bond returns versus other
sectors. What has been most surprising for fixed investors is that bond
yields generally have not increased as expected, and the benchmark
Treasury bond actually declined from 4.48% to 4.28%.
For the year-ended July 31, 2005, the Fund's equity portfolio benefited
from strong performers such as Shire Pharmaceutical, which has since been
sold, drug retailer CVS, and Canadian oil producer Suncor Energy, while
poor performance of Tyco International detracted from results. With
respect to fixed income holdings, the Fund's relatively short duration
dragged performance slightly lower as longer-term bonds outperformed
shorter-term bonds during the period.
- --------------------------------------------------------------------------------
10 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK BALANCED FUND
INVESTMENT OBJECTIVE
THE HIGHMARK BALANCED FUND SEEKS CAPITAL APPRECIATION AND INCOME, WITH A
SECONDARY INVESTMENT OBJECTIVE OF CONSERVATION OF CAPITAL.
[PHOTO OMITTED]
PORTFOLIO MANAGER
DAVID GOERZ
HIGHMARK CAPITAL MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
KENNETH WEMER
HIGHMARK CAPITAL MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
JACK MONTGOMERY
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 MORNINGSTAR MODERATE ALLOCATION CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark HighMark HighMark HighMark S&P 500 Lehman Brothers Morningstar
Balanced Fund, Balanced Fund, Balanced Fund, Balanced Fund, Composite U.S. Aggregate Moderate Allocation
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Index Bond Index Category
7/31/95 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000 $10,000
7/96 11,094 10,463 11,094 11,094 11,657 10,553 10,971
7/97 14,474 13,610 14,474 14,474 17,735 11,691 14,183
7/98 15,532 14,579 15,486 15,532 21,156 12,609 15,570
7/99 17,079 15,985 16,866 17,079 25,430 12,922 17,115
7/00 17,469 16,309 17,090 17,366 27,711 13,692 18,257
7/01 16,447 15,306 15,947 16,199 23,740 15,430 18,098
7/02 14,105 13,091 13,552 13,769 18,130 16,593 15,917
7/03 15,135 14,028 14,418 14,649 20,061 17,491 17,227
7/04 16,347 15,102 15,430 15,673 22,703 18,338 18,786
7/05 17,870 16,472 16,712 16,965 25,893 19,218 21,061
- --------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- --------------------------------------------------------------------------------------------------
Fiduciary Shares 9.32% 8.20% 0.45% 5.98% 7.66%
- --------------------------------------------------------------------------------------------------
Class A Shares 9.07% 7.96% 0.20% 5.71% 7.48%+
- --------------------------------------------------------------------------------------------------
Class A Shares with load* 3.07% 5.94% -0.93% 5.12% 7.06%+
- --------------------------------------------------------------------------------------------------
Class B Shares 8.31% 7.24% -0.45% 5.27%+ 7.17%+
- --------------------------------------------------------------------------------------------------
Class B Shares with load** 3.31% 6.36% -0.80% 5.27%+ 7.17%+
- --------------------------------------------------------------------------------------------------
Class C Shares 8.24% 7.20% -0.47% 5.43%+ 7.28%+
- --------------------------------------------------------------------------------------------------
Class C Shares with load*** 7.24% 7.20% -0.47% 5.43%+ 7.28%+
- --------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
February 1, 1991 with the performance of Class A Shares on November 13,
1992, Class B Shares on February 2, 1998 and Class C Shares on November
30, 1999. Fiduciary Share performance has been adjusted for the CDSC
applicable to Class A, Class B and Class C Shares, as applicable, 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% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower. Performance presented
from February 1, 1991 (commencement of operations of Fiduciary Shares) to
November 13, 1992 (commencement of Class A Shares) to April 25, 1997
reflects the performance of the Stepstone Balanced Fund.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 11
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
COVANCE 2.8
IMMUCOR 2.1
AFFILIATED MANAGERS GROUP 2.1
CHEMED 2.1
LIFEPOINT HOSPITALS 1.9
SYMMETRY MEDICAL 1.8
KANBAY INTERNATIONAL 1.7
CENTRAL GARDEN AND PET 1.6
MOMENTA PHARMACEUTICALS 1.5
ADVISORY BOARD 1.5
FUND SECTORS
SECTOR % OF
PORTFOLIO*
INFORMATION TECHNOLOGY 25.2
HEALTH CARE 21.4
CONSUMER DISCRETIONARY 14.1
INDUSTRIALS 13.4
FINANCIALS 12.3
ENERGY 7.5
CONSUMER STAPLES 2.5
UTILITITES 1.3
REPURCHASE AGREEMENT 0.9
TELECOMMUNICATIONS 0.8
MATERIALS 0.6
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
SMALL CAP GROWTH FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Small Cap Growth Fund
produced a total return of 24.31% (Fiduciary Shares). In comparison, the
unmanaged Russell 2000 Growth Index returned 22.58% for the same period.
FACTORS AFFECTING PERFORMANCE
Following a slow start to the fiscal year, stock markets experienced a
significant rally following the November elections. Although equities gave
back some gains in the first quarter of 2005, a surge to end the fiscal
year resulted in strong absolute returns for most asset classes during the
period. Size continued to be a significant factor, with small
capitalization companies outpacing their larger counterparts. Within the
small cap universe, value stocks once again outperformed growth stocks.
With this as the backdrop for investing, we were pleased that the Fund
outperformed its benchmark, the Russell 2000 Growth Index, during the
fiscal year. Stock selection continued to be the primary driver of Fund
performance. The biggest contributor to Fund results during the year was
the Healthcare sector. Specifically, Kindred Healthcare, which has since
been sold, proved to be a strong performer. Eon Labs, which has since been
sold, Chemed and Renal Care Group were other Healthcare stocks that
performed well during the period. In addition, web designer a Quantive,
payment processor Global Payments, and Anteon International were
contributors. Fund performance also benefited in the Energy sector. The
overall strength of Energy stocks, coupled with the strong results of
several holdings in the sector, rewarded shareholders.
Detracting from the Fund's performance during the year were First
Marblehead, ACE Cash Express and Advance America, which has since been
sold, as well as certain holdings in the Technology sector. Despite these
minor setbacks, overall we remain pleased with the Fund's strong
performance for the year.
- --------------------------------------------------------------------------------
12 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK SMALL CAP GROWTH FUND
INVESTMENT OBJECTIVE
THE HIGHMARK SMALL CAP GROWTH FUND SEEKS TO PROVIDE LONG TERM CAPITAL
APPRECIATION.
[PHOTO OMITTED]
PORTFOLIO MANAGER
EDWARD ANTOIAN
CHARTWELL INVESTMENT
PARTNERS, L.P.
[PHOTO OMITTED]
PORTFOLIO MANAGER
MICHAEL JONES
CHARTWELL INVESTMENT
PARTNERS, L.P.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK SMALL
CAP GROWTH FUND VERSUS THE RUSSELL 2000 GROWTH INDEX AND THE MORNINGSTAR SMALL
GROWTH CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Small HighMark Small HighMark Small HighMark Large Morningstar
Cap Growth Fund, Cap Growth Fund, Cap Growth Fund, Cap Growth Fund, Russell 2000 Small Growth
Fiduciary Shares Class A Shares Class B Shares Class C Shares Growth Index Category
4/30/03 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/03 11,659 11,017 11,650 11,649 12,199 11,930
7/04 11,901 11,217 11,781 11,780 13,580 13,306
7/05 14,794 13,913 14,224 14,523 16,647 16,261
- -----------------------------------------------------------
ANNUALIZED
ONE YEAR SINCE
RETURN INCEPTION+
- -----------------------------------------------------------
Fiduciary Shares 24.31% 19.33%
- -----------------------------------------------------------
Class A Shares 24.03% 19.08%
- -----------------------------------------------------------
Class A Shares with load* 17.17% 16.14%
- -----------------------------------------------------------
Class B Shares 23.28% 18.35%
- -----------------------------------------------------------
Class B Shares with load** 18.28% 17.27%
- -----------------------------------------------------------
Class C Shares 23.28% 18.35%
- -----------------------------------------------------------
Class C Shares with load*** 22.28% 18.35%
- -----------------------------------------------------------
+ Commenced operations on April 28, 2003.
* Reflects 5.50% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 13
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
RYLAND GROUP 1.7
FMC 1.5
MDC HOLDINGS 1.5
PHOTRONICS 1.4
HOLLY 1.4
TESORO PETROLEUM 1.4
NS GROUP 1.4
GREIF, CL A 1.3
LONGS DRUG STORES 1.3
GATX 1.3
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 26.2
INDUSTRIALS 17.8
CONSUMER DISCRETIONARY 14.8
INFORMATION TECHNOLOGY 9.8
MATERIALS 7.2
ENERGY 7.1
CONSUMER STAPLES 5.8
REPURCHASE AGREEMENT 4.6
UTILITIES 4.0
HEALTH CARE 2.3
TELECOMMUNICATIONS 0.4
*EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
**EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
SMALL CAP VALUE FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Small Cap Value Fund
produced a total return of 29.10% (Fiduciary Shares). In comparison, the
unmanaged Russell 2000 Value Index returned 26.72% for the same period.
FACTORS AFFECTING PERFORMANCE
Following a slow start to the fiscal year, stock markets experienced a
significant rally following the November elections. Although equities gave
back some gains in the first quarter of 2005, a surge to end the fiscal
year resulted in strong absolute returns for most asset classes during the
period. Size continued to be a significant factor, with small
capitalization companies outpacing their larger counterparts. Within the
small cap universe, value stocks once again outperformed growth stocks. In
fact, small cap value proved to be the best performing segment of the
market during the fiscal year.
During the year-ended July 31, 2005, we were pleased that the Fund
outpaced its benchmark, the Russell 2000 Value Index. The Fund benefited
during the year from strong stock selection. Energy holdings Holly and
Tesoro Petroleum were among the Fund's top performers. Also contributing
to performance were holdings in the Consumer Discretionary and Technology
sectors. The Fund's defensive, value-oriented investment strategy also
worked in favor of shareholders, particularly during the falling market
experienced during the first quarter of 2005 when the Fund gave up less
ground than the overall market and the benchmark.
Although a substantial underweight in relatively strong performing Real
Estate Investment Trusts (REITs) did detract from performance, overall we
remain pleased with the Fund's ability to reward shareholders with strong
results for the year.
- --------------------------------------------------------------------------------
14 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK SMALL CAP VALUE FUND
INVESTMENT OBJECTIVE
THE HIGHMARK SMALL CAP VALUE FUND SEEKS TO PROVIDE LONG TERM CAPITAL
APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
JOSEF LAKONISHOK
LSV ASSET MANAGEMENT
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK SMALL
CAP VALUE FUND VERSUS THE RUSSELL 2000 VALUE INDEX AND THE MORNINGSTAR SMALL
VALUE CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark Small HighMark Small HighMark Small HighMark Large Morningstar
Cap Value Fund, Cap Value Fund, Cap Value Fund, Cap Value Fund, Russell 2000 Small Value
Fiduciary Shares Class A Shares Class B Shares Class C Shares+ Value Index Category
9/30/98 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/99 12,479 11,778 12,398 12,479 11,208 11,990
7/00 14,529 13,670 14,336 14,488 11,752 12,493
7/01 14,122 13,246 13,804 13,950 14,543 15,797
7/02 14,136 13,225 13,695 13,840 13,742 14,984
7/03 17,033 15,891 16,325 16,493 16,300 17,502
7/04 20,562 19,137 19,538 19,743 20,022 21,467
7/05 26,546 24,645 25,009 25,249 25,371 26,724
- -----------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------
Fiduciary Shares 29.10% 23.38% 12.81% 15.37%
- -----------------------------------------------------------------------------------
Class A Shares 28.78% 23.06% 12.51% 15.05%
- -----------------------------------------------------------------------------------
Class A Shares with load* 21.70% 20.75% 11.24% 14.11%
- -----------------------------------------------------------------------------------
Class B Shares 28.00% 22.23% 11.77% 14.36%
- -----------------------------------------------------------------------------------
Class B Shares with load** 23.00% 21.56% 11.52% 14.36%
- -----------------------------------------------------------------------------------
Class C Shares 27.89% 22.19% 11.75% 14.54%+
- -----------------------------------------------------------------------------------
Class C Shares with load*** 26.89% 22.19% 11.75% 14.54%+
- -----------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
its inception September 17, 1998 with the performance of Class C Shares on
November 30, 1999. Fiduciary Shares performance has been adjusted for the
CDSC applicable to Class C Shares but does not reflect the higher Rule
12b-1 fees and expenses applicable to this Class. With these adjustments,
performance would be lower than that shown.
* Reflects 5.50% front-end sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects a sales charge of 1.00%. The Class C front-end sales charge was
discontinued February 25, 2004. Class C shares continue to be subject to a
CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 15
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
HOLDING % OF
PORTFOLIO
LOS ANGELES, DEPARTMENT OF
WATER & POWER, SER A-A-1,
RB, MBIA INSURED
5.250%, 07/01/11 2.4
EASTERN MUNICIPAL WATER DISTRICT,
SER A, COP, FGIC INSURED
CALLABLE 07/01/11 @ 100
5.375%, 07/01/16 1.7
EASTERN MUNICIPAL WATER DISTRICT,
SER A, COP, FGIC INSURED
CALLABLE 07/01/11 @ 100
5.375%, 07/01/17 1.6
M-S-R PUBLIC POWER AUTHORITY,
SAN JUAN PROJECT, SER I,
RB, MBIA INSURED
CALLABLE 07/01/11 @ 100
5.000%, 07/01/14 1.6
SAN MATEO, UNIFIED HIGH SCHOOL
DISTRICT, SER A, GO, FGIC INSURED
PREREFUNDED @ 100
5.375%, 09/01/11 1.5
METROPOLITAN, WATER DISTRICT OF
SOUTHERN CALIFORNIA, SER A,
RB CALLABLE 07/01/11 @ 101
5.375%, 07/01/12 1.5
CENTRAL COAST, WATER AUTHORITY,
WATER PROJECT REGIONAL FACILITIES,
SER A, RB, AMBAC INSURED
CALLABLE 10/01/06 @ 102
5.000%, 10/01/07 1.5
CONTRA COSTA COUNTY, MERRITHEW
MEMORIAL HOSPITAL PROJECT,
COP, MBIA INSURED
CALLABLE 11/01/07 @ 102
5.500%, 11/01/12 1.4
SAN BERNARDINO COUNTY,
TRANSPORTATION AUTHORITY,
SER A, RB, MBIA INSURED
6.250%, 03/01/10 1.4
SAN MATEO COUNTY, TRANSIT DISTRICT,
SER A, RB, MBIA INSURED
5.250%, 06/01/16 1.4
FUND SECTORS
SECTOR % OF
PORTFOLIO
REVENUE BONDS 52.1
GENERAL OBLIGATION 29.0
CERTIFICATE OF PARTICIPATION 12.2
TAX ALLOCATION 6.3
REGULATED INVESTMENT COMPANY 0.4
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark California Intermediate
Tax-Free Bond Fund produced a total return of 2.74% (Fiduciary Shares). In
comparison, the unmanaged Lehman Brothers 7-Year Municipal Bond Index
returned 3.96% for the same period.
FACTORS AFFECTING PERFORMANCE
The story of the year in bond markets was the changing relationship
between short-term and long-term interest rates. The Federal Reserve
raised its target for the federal funds rate, the rate at which banks lend
to one another, eight times during the fiscal year. The Fed's last move
during the year brought the target rate to 3.25%, a substantial two
percentage points higher than where it started the year. However, despite
the numerous short-term rate hikes, yields on longer-term bonds actually
declined during the year as a result of continued strong demand for longer
issues. This flattening of the yield curve, described as a "conundrum" by
Federal Reserve chairman Alan Greenspan, created a challenging environment
for fixed income investors. Still, municipal bonds held up relatively
well, with all maturities across the curve experiencing positive results.
In California, municipal bond issuance declined as higher tax receipts
reduced borrowing needs. California did remain the largest issuer of
municipal bonds in the country. The period saw an increase in refunding
activity, which was driven largely by the decline in long-term rates.
Households continue to be the largest holders of municipal bonds, followed
by money market funds and mutual funds. The percentage of bonds that are
credit enhanced increased, as did the percentage of bonds with traditional
insurance.
With short-term rates rising and long-term rates at historic lows, we
continued to position the Fund defensively with shorter-term,
higher-quality bonds. The Fund's shorter duration relative to its
benchmark, the Lehman Brothers 7-Year Municipal Bond Index, was the
primary factor causing relative underperformance, as longer-term bonds
generally outperformed shorter-term issues. To a lesser extent, our focus
on high-quality bonds also detracted from performance, as lower-quality,
higher-yielding bonds were generally the stronger performers.
- --------------------------------------------------------------------------------
16 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE LOGO OMITTED]
HIGHMARK CALIFORNIA INTERMEDIATE
TAX-FREE BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND SEEKS TO PROVIDE HIGH
CURRENT INCOME THAT IS EXEMPT FROM FEDERAL AND STATE OF CALIFORNIA INCOME TAXES.
[PHOTO 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 MORNINGSTAR MUNICIPAL CALIFORNIA INTERMEDIATE/SHORT
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark HighMark HighMark HighMark
California California California California Lehman Morningstar
Intermediate Intermediate Intermediate Intermediate Brothers Municipal
Tax-Free Tax-Free Tax-Free Tax-Free 7-Year California
Bond Fund, Bond Fund, Bond Fund, Bond Fund, Municipal Intermediate/Short
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Bond Index Category
7/31/95 $10,000 $ 9,775 $10,000 $10,000 $10,000 $10,000
7/96 10,667 10,417 10,667 10,667 10,508 10,566
7/97 11,606 11,336 11,606 11,606 11,416 11,366
7/98 12,157 11,864 12,157 12,157 12,016 11,874
7/99 12,587 12,285 12,587 12,587 12,412 12,198
7/00 13,176 12,862 13,082 13,176 12,981 12,735
7/01 14,220 13,871 13,981 14,220 14,174 13,687
7/02 15,058 14,691 14,657 15,058 15,185 14,457
7/03 15,442 15,045 14,889 15,442 15,770 14,738
7/04 16,010 15,563 15,287 15,943 16,583 15,334
7/05 16,448 15,952 15,554 16,249 17,240 15,920
- ------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------------------
Fiduciary Shares 2.74% 2.99% 4.54% 5.10% 4.59%
- ------------------------------------------------------------------------------------------------
Class A Shares 2.50% 2.78% 4.40% 5.02% 4.51%
- ------------------------------------------------------------------------------------------------
Class A Shares with load* 0.16% 2.01% 3.92% 4.78% 4.31%
- ------------------------------------------------------------------------------------------------
Class B Shares 1.75% 2.00% 3.52% 4.52%+ 4.09%+
- ------------------------------------------------------------------------------------------------
Class B Shares with load** -3.15% 1.06% 3.17% 4.52%+ 4.09%+
- ------------------------------------------------------------------------------------------------
Class C Shares 1.92% 2.57%+ 4.28%+ 4.98%+ 4.48%+
- ------------------------------------------------------------------------------------------------
Class C Shares with load*** 0.94% 2.57%+ 4.28%+ 4.98%+ 4.48%+
- ------------------------------------------------------------------------------------------------
+ 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 and Class C Shares on November 28, 2003. Fiduciary
Share performance has been adjusted for the CDSC applicable to Class B
Shares and Class C Shares, as applicable, 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 2.25% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower. 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.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 17
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
HOLDING % OF
PORTFOLIO
DU PAGE & WILL COUNTIES,
COMMUNITY SCHOOL DISTRICT,
SER B, GO, FGIC INSURED
5.000%, 12/30/07 3.0
GEORGIA STATE, SER E, GO
5.250%, 02/01/09 2.8
PHOENIX, GO,
PREREFUNDED @ 101
5.000%, 07/01/09 2.7
SEATTLE, LIMITED TAX,
SER B, GO
5.500%, 03/01/11 2.3
CALIFORNIA STATE, GO,
AMBAC INSURED
5.500%, 10/01/09 2.3
MILWAUKEE, METROPOLITAN
SEWAGE DISTRICT, SER A, GO
5.500%, 10/01/08 2.2
PORTLAND, SEWER SYSTEMS,
SER A, RB, FGIC INSURED
CALLABLE 06/01/07 @ 100
5.000%, 06/01/08 2.2
UNIVERSITY OF TEXAS, REVENUE
FINANCING SYSTEM, SER B, RB
5.250%, 08/15/06 2.1
SAN RAMON VALLEY, UNIFIED SCHOOL
DISTRICT, GO, FSA INSURED,
CALLABLE 08/01/14 @ 100
5.250%, 08/01/18 1.9
MCMINNVILLE, SCHOOL DISTRICT
NO. 40, GO, FSA INSURED
5.000%, 06/15/11 1.8
FUND SECTORS
SECTOR % OF
PORTFOLIO
GENERAL OBLIGATIONS 62.2
REVENUE BONDS 34.4
CERTIFICATE OF PARTICIPATION 1.3
TAX ALLOCATION 1.2
REGULATED INVESTMENT COMPANY 0.9
NATIONAL INTERMEDIATE
TAX-FREE BOND FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark National Intermediate
Tax-Free Bond Fund produced a total return of 2.42% (Fiduciary Shares). In
comparison, the unmanaged Lehman Brothers 7-Year Municipal Bond Index
returned 3.96% for the same period.
FACTORS AFFECTING PERFORMANCE
The story of the year in bond markets was the changing relationship
between short-term and long-term interest rates. The Federal Reserve
raised its target for the federal funds rate, the rate at which banks lend
to one another, eight times during the fiscal year. The Fed's last move
during the year brought the target rate to 3.25%, a substantial two
percentage points higher than where it started the year. However, despite
the numerous short-term rate hikes, yields on longer-term bonds actually
declined during the year as a result of continued strong demand for longer
issues. This flattening of the yield curve, described as a "conundrum" by
Federal Reserve chairman Alan Greenspan, created a challenging environment
for fixed income investors. Still, municipal bonds held up relatively
well, with all maturities across the curve experiencing positive results.
With the notable exception of California, municipal bond issuance
increased during the year. As for issuance by state, California remained
the largest issuer, followed by Texas and New York. The period saw an
increase in refunding activity, which was driven largely by the decline in
long-term rates. Households continue to be the largest holders of
municipal bonds, followed by money market funds and mutual funds. The
percentage of bonds that are credit enhanced increased, as did the
percentage of bonds with traditional insurance.
With short-term rates rising and long-term rates at historic lows, we
continued to position the Fund defensively with shorter-term,
higher-quality bonds. The Fund's shorter duration relative to its
benchmark, the Lehman Brothers 7-Year Municipal Bond Index, was the
primary factor causing relative underperformance, as longer-term bonds
generally outperformed shorter-term issues. To a lesser extent, our focus
on high-quality bonds also detracted from performance, as lower-quality,
higher-yielding bonds were generally the stronger performers.
- --------------------------------------------------------------------------------
18 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK NATIONAL INTERMEDIATE
TAX-FREE BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK NATIONAL INTERMEDIATE TAX-FREE BOND FUND SEEKS TO PROVIDE HIGH
CURRENT INCOME THAT IS EXEMPT FROM FEDERAL INCOME TAX.
[PHOTO OMITTED]
TEAM LEADER
ROBERT BIGELOW
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
NATIONAL INTERMEDIATE TAX-FREE BOND FUND VERSUS THE LEHMAN BROTHERS 7-YEAR
MUNICIPAL BOND INDEX AND THE MORNINGSTAR MUNICIPAL NATIONAL INTERMEDIATE
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark HighMark HighMark Morningstar
National National National Lehman Municipal
Intermediate Intermediate Intermediate Brothers National
Tax-Free Tax-Free Tax-Free 7-Year Intermediate
Bond Fund, Bond Fund, Bond Fund, Municipal Category
Fiduciary Shares+ Class A Shares+ Class C Shares++ Bond Index
7/31/95 $10,000 $ 9,775 $10,000 $10,000 $10,000
7/96 10,375 10,111 10,344 10,508 10,522
7/97 11,126 10,822 11,071 11,416 11,414
7/98 11,577 11,224 11,482 12,016 11,969
7/99 11,820 11,432 11,695 12,412 12,204
7/00 12,204 11,774 12,045 12,981 12,572
7/01 13,201 12,713 13,005 14,174 13,678
7/02 13,917 13,356 13,663 15,185 14,388
7/03 14,292 13,686 14,001 15,770 14,705
7/04 14,747 14,087 14,391 16,583 15,352
7/05 15,104 14,392 14,845 17,240 15,932
- -------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -------------------------------------------------------------------------------------------------
Fiduciary Shares 2.42% 2.77%+ 4.36%+ 4.21%+ 5.09%+
- -------------------------------------------------------------------------------------------------
Class A Shares 2.17% 2.53%+ 4.10%+ 3.95%+ 4.83%+
- -------------------------------------------------------------------------------------------------
Class A Shares with load* -0.17% 1.75%+ 3.62%+ 3.71%+ 4.68%+
- -------------------------------------------------------------------------------------------------
Class C Shares 3.15% 2.80%++ 4.27%++ 4.03%++ 4.88%++
- -------------------------------------------------------------------------------------------------
Class C Shares with load** 2.16% 2.80%++ 4.27%++ 4.03%++ 4.88%++
- -------------------------------------------------------------------------------------------------
+ The performance presented links the performance of the UBOC Intermediate
Municipal Bond Fund, a common trust fund (the "Common Trust Fund"), for
the period prior to its consolidation with the HighMark National
Intermediate Tax-Free Bond Fund on October 18, 2002, as adjusted to
reflect the fees and expenses associated with the HighMark National
Intermediate Tax-Free Bond Fund. The Common Trust Fund was not registered
under the Investment Company Act of 1940, as amended, and therefore was
not subject to the investment restrictions, limitations, and
diversification requirements imposed by such Act and the Internal Revenue
Code of 1986, as amended. If the Common Trust Fund had been registered,
its performance may have been lower.
++ The performance presented links the performance of the Fiduciary Shares
from its inception on October 18, 2002 with the performance of Class C
Shares on November 28, 2003. Fiduciary Share performance has been adjusted
for the CDSC 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 2.25% sales charge.
** Reflects maximum CDSC of 1.00%
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower. Performance presented
from February 17, 1989 to October 18, 2002 (commencement of operations of
Fiduciary and Class A Shares) reflects the performance of the UBOC
Intermediate Municipal Bond Fund, a common trust fund.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 19
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
HOLDING % OF
PORTFOLIO*
FNMA
4.500%, 04/01/18 6.5
U.S. TREASURY BONDS
7.250%, 05/15/16 4.2
U.S. TREASURY INFLATION
INDEX NOTE
3.000%, 07/15/12 4.2
U.S. TREASURY BONDS
8.125%, 08/15/19 3.6
BANK ONE ISSUANCE TRUST,
SER 2002-A4, CL A4
2.940%, 06/16/08 3.1
FHLMC
4.000%, 06/01/19 2.7
TYCO INTERNATIONAL
7.200%, 10/15/08 2.0
FNMA
6.375%, 06/15/09 1.8
HERTZ
6.625%, 05/15/08 1.7
WASTE MANAGEMENT
7.000%, 10/15/06 1.7
FUND SECTORS
SECTOR % OF
PORTFOLIO*
U.S. GOVERNMENT OBLIGATIONS 32.7
U.S. TREASURY OBLIGATIONS 14.1
FINANCIALS 12.2
CONSUMER DISCRETIONARY 9.2
INDUSTRIALS 7.6
ASSET-BACKED SECURITIES 6.5
UTILITIES 5.7
ENERGY 2.6
REAL ESTATE INVESTMENT TRUST 2.4
TELECOMMUNICATIONS 2.2
INFORMATION TECHNOLOGY 1.2
HEALTH CARE 1.1
REPURCHASE AGREEMENT 1.0
FOREIGN GOVERNMENTS 0.6
CONSUMER STAPLES 0.6
MATERIALS 0.3
COMMON STOCK 0.0
*EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
BOND FUND
PERFORMANCE
For the year-ended July 31, 2005, the HighMark Bond Fund produced a total
return of 4.35% (Fiduciary Shares). In comparison, the unmanaged Lehman
Brothers U.S. Aggregate Bond Index returned 4.80% for the same period.
FACTORS AFFECTING PERFORMANCE
The story of the year in bond markets was the changing relationship
between short-term and long-term interest rates. The Federal Reserve
raised its target for the federal funds rate, the rate at which banks lend
to one another, eight times during the fiscal year. The Fed's last move
during the year brought the target rate to 3.25%, a substantial two
percentage points higher than where it started the year. However, despite
the numerous short-term rate hikes, yields on longer-term bonds actually
declined during the year as a result of continued strong demand for longer
issues. This flattening of the yield curve, described as a "conundrum" by
Federal Reserve chairman Alan Greenspan, created a challenging environment
for fixed income investors.
After performing well in the first half of the year, corporate bonds
underperformed in the second half of the year. March was the worst month
for corporate bonds relative to Treasuries, largely the result of the
announcement from General Motors that the automobile manufacturer would
miss earnings expectations. Both General Motors and Ford Motor were
downgraded below investment grade by Standard & Poor's in May, the largest
corporate downgrades in history. Mortgage-backed securities experienced
higher returns compared to previous periods. Declining interest rate
volatility contributed to the performance of mortgage-backed securities
relative to Treasuries during the period.
During the year, the Fund's performance slightly lagged the performance of
its benchmark, the Lehman Brothers U.S. Aggregate Bond Index. The Fund's
overweight in the Corporate sector, after contributing to performance
early in the year, detracted from overall results. The Fund's shorter
effective duration also detracted from relative performance, as long-term
bonds significantly outpaced their shorter-term counterparts.
As of July 31, 2005, the Fund's average credit quality was AA, compared to
AA+ for the index. The Fund's average weighted maturity was 6.0 years and
average duration was 3.9 years, compared to 6.6 and 4.4, respectively, for
the index.
- --------------------------------------------------------------------------------
20 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK BOND FUND SEEKS TOTAL RETURN THROUGH INVESTMENTS IN FIXED-INCOME
SECURITIES.
[PHOTO 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 MORNINGSTAR
INTERMEDIATE-TERM BOND CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
Lehman
HighMark HighMark HighMark HighMark Brothers Morningstar
Bond Fund, Bond Fund, Bond Fund, Bond Fund, U.S. Aggregate Intermediate-Term
Fiduciary Shares Class A Shares Class B Shares Class C Shares Bond Index Bond Category
7/31/95 $10,000 $ 9,675 $10,000 $10,000 $10,000 $10,000
7/96 10,481 10,154 10,481 10,481 10,553 10,502
7/97 11,591 11,238 11,591 11,591 11,691 11,628
7/98 12,450 12,078 12,450 12,450 12,609 12,432
7/99 12,649 12,261 12,649 12,649 12,922 12,603
7/00 13,264 12,862 13,264 13,264 13,692 13,171
7/01 14,952 14,502 14,851 14,952 15,430 14,731
7/02 15,564 15,087 15,301 15,564 16,593 15,441
7/03 16,577 16,040 16,141 16,577 17,491 16,369
7/04 17,353 16,757 16,740 17,278 18,338 17,107
7/05 18,108 17,453 17,296 17,902 19,218 17,853
- -------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -------------------------------------------------------------------------------------------------
Fiduciary Shares 4.35% 5.18% 6.43% 6.12% 8.07%
- -------------------------------------------------------------------------------------------------
Class A Shares 4.15% 4.98% 6.29% 6.08% 8.01%+
- -------------------------------------------------------------------------------------------------
Class A Shares with load* 0.75% 3.81% 5.60% 5.72% 7.85%+
- -------------------------------------------------------------------------------------------------
Class B Shares 3.32% 4.17% 5.45%+ 5.63%+ 7.84%+
- -------------------------------------------------------------------------------------------------
Class B Shares with load** -1.65% 3.24% 5.13%+ 5.63%+ 7.84%+
- -------------------------------------------------------------------------------------------------
Class C Shares 3.61% 4.78%+ 6.18%+ 6.00%+ 8.01%+
- -------------------------------------------------------------------------------------------------
Class C Shares with load*** 2.61% 4.78%+ 6.18%+ 6.00%+ 8.01%+
- -------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
February 15, 1984 with the performance of Class A Shares on June 20, 1994,
Class B Shares on November 30, 2000 and Class C Shares on November 28,
2003. Fiduciary Share performance has been adjusted for the maximum sales
charge/CDSC applicable to Class A, Class B and Class C Shares, as
applicable, 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 3.25% sales charge.
** Reflects maximum CDSC of 5.00%.
*** Reflects maximum CDSC of 1.00%.
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 21
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO
U.S. TREASURY INFLATION
INDEX NOTE
3.875%, 01/15/09 4.9
FHLMC
3.500%, 09/15/07 3.8
U.S. TREASURY NOTES
2.375%, 08/31/06 3.8
U.S. TREASURY NOTES
2.625%, 11/15/06 3.8
FNMA
5.000%, 01/15/07 3.7
FHLMC CMO REMIC,
SER 2743, CL NL
3.000%, 05/15/23 3.0
FHLMC
5.500%, 07/15/06 2.9
FNMA
2.125%, 04/15/06 2.8
U.S. TREASURY NOTES
3.000%, 11/15/07 2.4
FHLMC CMO REMIC,
SER 2722, CL PA
4.000%, 02/15/21 2.2
FUND SECTORS
SECTOR % OF
PORTFOLIO
U.S. GOVERNMENT OBLIGATIONS 37.8
U.S. TREASURY OBLIGATIONS 16.9
ASSET-BACKED SECURITIES 15.0
FINANCIALS 13.9
CONSUMER DISCRETIONARY 3.4
INDUSTRIALS 3.1
REPURCHASE AGREEMENT 2.8
INFORMATION TECHNOLOGY 2.0
UTILITIES 1.5
CONSUMER STAPLES 1.3
REAL ESTATE INVESTMENT TRUST 1.0
TELECOMMUNICATIONS 0.7
HEALTH CARE 0.6
*EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
SHORT TERM BOND FUND
PERFORMANCE
The HighMark Short Term Bond Fund commenced operations on November 2,
2004. For the period from the Fund's inception through July 31, 2005, the
HighMark Short Term Bond Fund produced a total return of 0.34% (Fiduciary
Shares). In comparison, the unmanaged Lehman Brothers 1-3 Year U.S.
Government/Credit Index returned 0.45% for the same period.
FACTORS AFFECTING PERFORMANCE
Since the Fund's inception, the story in bond markets has been the
changing relationship between short-term and long-term interest rates. The
Federal Reserve raised its target for federal funds rate, the rate at
which banks lend to one another, six times during the period. The Fed's
last move during the period brought the target rate to 3.25%, a full 1.50%
higher than where it stood when the Fund commenced operations. However,
despite the numerous short-term rate hikes, yields on longer-term bonds
actually declined as a result of continued strong demand for longer
issues. This flattening of the yield curve, described as a "conundrum" by
Federal Reserve chairman Alan Greenspan, created a challenging environment
for fixed income investors.
After performing well early in the period, corporate bonds underperformed
in the second half of the year. March was the worst month for corporate
bonds relative to Treasuries, largely the result of the announcement from
General Motors that the automobile manufacturer would miss earnings
expectations. Both General Motors and Ford Motor were downgraded below
investment grade by Standard & Poor's in May, the largest corporate
downgrades in history. Mortgage-backed securities experienced higher
returns compared to previous periods. Declining interest rate volatility
contributed to the performance of mortgage-backed securities relative to
Treasuries during the period.
During the period, the Fund's performance slightly lagged the performance
of its benchmark, the Lehman Brothers 1-3 Year U.S. Government/Credit
Index. The Fund's overweight in the Corporate sector, after contributing
to performance early in the year, detracted from overall results. The
Fund's shorter effective duration also detracted from relative
performance, as long-term bonds significantly outpaced their shorter-term
counterparts.
As of July 31, 2005, the Fund's average credit quality was AA+, compared
to AAA for the index. The Fund's average weighted maturity was 1.9 years
and average duration was 1.5 years, compared to 1.9 and 1.7, respectively,
for the index.
- --------------------------------------------------------------------------------
22 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK SHORT TERM BOND FUND
INVESTMENT OBJECTIVE
THE HIGHMARK SHORT TERM BOND FUND SEEKS TOTAL RETURN THROUGH INVESTMENTS IN
FIXED-INCOME SECURITIES.
[PHOTO OMITTED]
TEAM LEADER
JACK MONTGOMERY
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK SHORT
TERM BOND FUND VERSUS THE LEHMAN BROTHERS 1-3 YEAR U.S. GOVERNMENT/CREDIT INDEX
AND THE MORNINGSTAR SHORT BOND CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
Lehman
HighMark HighMark HighMark Brothers
Short Term Short Term Short Term 1-3 Year Morningstar
Bond Fund, Bond Fund, Bond Fund, U.S. Government/ Short Bond
Fiduciary Shares Class A Shares Class C Shares++ Credit Index Category
11/30/04 $10,000 $9,675 $10,000 $10,000 $10,000
7/05 10,067 9,715 10,061 10,091 10,095
- ----------------------------------------------------------
CUMULATIVE
SINCE
INCEPTION+
- ----------------------------------------------------------
Fiduciary Shares 0.34%
- ----------------------------------------------------------
Class A Shares 0.17%
- ----------------------------------------------------------
Class A Shares with load* -3.13%
- ----------------------------------------------------------
Class C Shares 0.28%++
- ----------------------------------------------------------
Class C Shares with load** -0.72%++
- ----------------------------------------------------------
+ Commenced operations on November 2, 2004.
++ The performance presented links the performance of the Fiduciary Shares
from November 2, 2004 with the performance of Class C Shares on November
29, 2004. Fiduciary Share performance has been adjusted for the C maximum
sales charge/CDSC applicable to Class A Shares, as applicable, 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 3.25% sales charge.
** Reflects maximum CDSC of 1.00%
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 23
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
100% U.S. TREASURY MONEY
MARKET FUND
U.S. TREASURY BILLS 100.0
U.S. GOVERNMENT MONEY
MARKET FUND
U.S. GOVERNMENT OBLIGATIONS 50.3
REPURCHASE AGREEMENTS 41.8
VARIABLE RATE DEMAND NOTES 7.9
DIVERSIFIED MONEY
MARKET FUND
COMMERCIAL PAPER 65.5
CORPORATE OBLIGATIONS 14.5
CERTIFICATES OF DEPOSIT 9.6
VARIABLE RATE DEMAND NOTES 6.2
BANK NOTES 2.4
U.S. GOVERNMENT OBLIGATION 1.4
REPURCHASE AGREEMENT 0.4
CALIFORNIA TAX-FREE
MONEY MARKET FUND
REVENUE BONDS 83.1
TAX AND REVENUE ANTICIPATION NOTES 6.5
CERTIFICATE OF PARTICIPATION 6.4
GENERAL OBLIGATION 3.3
SPECIAL ASSESSMENT 0.7
REGULATED INVESTMENT COMPANIES 0.0
HIGHMARK TAXABLE MONEY
MARKET FUNDS*
PERFORMANCE
The HighMark Taxable Money Market Funds (Fiduciary Shares)** produced the
following seven-day effective yields as of July 31, 2005: HighMark 100%
U.S. Treasury Money Market Fund, 2.55%; HighMark U.S. Government Money
Market Fund, 2.80%; and HighMark Diversified Money Market Fund, 2.92%.
FACTORS AFFECTING PERFORMANCE
It is just over a year since the Federal Reserve Bank began raising
short-term interest rates from the historic low of 1%. As promised, they
moved deliberately, hiking the target federal funds rate 0.25% at each
Federal Reserve Open Market Committee meeting since June 2004. Currently,
the federal funds rate stands at 3.25%.
Early in the fiscal year the average maturity of the 100% U.S. Treasury
Fund was shorter than its peer group as the Treasury bill sector was
buoyed by strong demand ahead of each rate increase. In November 2004, we
extended maturities to lock in higher yields ahead of year end demand
pressures. Thereafter, we allowed the average life of the Fund to decline.
In March 2005, we extended again by reinvesting in the three- and
six-month areas to capture attractive yields due to a supply bulge of tax
date related cash management bills.
Trading levels on money market securities generally tracked expectations
for rate hikes throughout the year. Consequently, for the U.S. Government
and Diversified Funds we offset longer maturity adjustable rate issues
tied to market responsive indices with laddered investments in the one- to
three-month area of the yield curve. With each investment, we sought to
ensure the Funds were being adequately compensated relative to the
breakeven analysis for the expected rate hikes. This strategy facilitated
competitive performance for both Funds.
- --------------------------------------------------------------------------------
24 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK CALIFORNIA TAX-FREE
MONEY MARKET FUND*
PERFORMANCE
The HighMark California Tax-Free Money Market Fund's seven-day effective yield
as of July 31, 2005 (Fiduciary Shares)*** was 1.84%. Using a combined Federal
and California state income tax rate of 28.3%, the seven-day effective yield is
equivalent to a 2.57% taxable yield.
FACTORS AFFECTING PERFORMANCE
The Federal Reserve Board raised short-term interest rates from 3.00% to 3.25%
on June 30, 2005, its eighth rate hike of 0.25% during the fiscal year. Despite
rising energy prices, productivity growth remains robust, expansion remains
firm, and labor markets continue to improve. The Federal Open Market Committee
still considers monetary policy accommodative, with long term inflation well
contained. Municipal note yields increased from 2.20% to 2.78%, reflecting the
new supply of annual cash flow from municipal issuers. Moodys and Fitch both
raised California's long-term credit rating in July; Moodys from "A3" to "A2
keeping a positive outlook", and Fitch from "A-" to "A" reflecting improving
economic activity and tax revenues.
As the Fed raised rates, the Fund increased it maturity profile. As of July 31,
2005, the Fund's weighted average maturity was 43 days, up from 31 days in
January.
* 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 from 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 seven-day effective yield as of
July 31, 2005 was 2.29%, 2.55% and 2.67%, respectively. As of July 31,
2005, seven-day effective yield for the U.S. Government Money Market
Fund's Class B Shares was 1.78%. For the Class S Shares of the HighMark
100% U.S. Treasury, U.S. Government and Diversified Money Market Funds,
the seven-day effective yield as of July 31, 2005 was 1.99%, 2.24% and
2.36%, respectively. The yields reflect voluntary waivers in place with
the Distributor, without such waivers yields would be lower (see Note 3 in
notes to financial statements).
*** The seven-day effective yield as of July 31, 2005 for the California
Tax-Free Money Market Fund's Class A Shares and Class S Shares was 1.58%
and 1.28%, respectively.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 25
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
EQUITY FUNDS 88.1
FIXED INCOME FUNDS 9.5
MONEY MARKET FUND 2.4
CAPITAL GROWTH
ALLOCATION FUND
PERFORMANCE
The HighMark Capital Growth Allocation Fund commenced operations on
October 12, 2004. From its inception through July 31, 2005, the Fund
produced a total return of 11.21% (Class A without load). In comparison,
the Fund's unmanaged blended benchmark, 80% S&P 500 Composite Index/15%
Lehman Brothers U.S. Aggregate Bond Index/5% Citigroup Bond 3-Month
Treasury Bill Index, returned 9.71% for the same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained on firm footing throughout the period. Higher
gasoline prices and rising interest rates seemed to have little impact on
consumer spending, which continued to grow in excess of 9%. In addition to
the surprising durability of the consumer, the industrial economy also
showed welcome signs of strength. American corporations benefiting from
years of restructuring have been experiencing strong profitability and
sustained productivity improvements. Operating profits have now surged
well ahead of peak levels observed in 2001, driving price-to-earnings
ratios lower.
Under these constructive economic conditions, equity markets fared well
relative to both bonds and cash. Smaller-cap and value-oriented companies
tended to outperform larger and growth-oriented stocks. Energy, Utilities
and Healthcare were the strongest performing sectors, while Basic
Materials, Industrials and Consumer Discretionary lagged over the period.
The Federal Reserve boosted interest rates at each meeting during the
period to 3.25%, 1.50% higher than where it stood when the Fund commenced
operations. Credit spreads also tightened, giving a boost to corporate
bond returns versus other sectors. What has been most surprising for fixed
investors is that bond yields generally have not increased as expected,
and the benchmark Treasury bond actually declined from 4.48% to 4.28%.
We are pleased to report that the Fund outperformed its benchmark during
the period. Positive security selection within the underlying equity funds
was the primary contributor to Fund performance. A tilt towards small-cap
funds, and a timely shift to increase the Fund's growth equity exposure
late in the period, also contributed to overall results. The Fund's
relative overweight in equities and underweight in bonds also added value
over the period since inception.
- --------------------------------------------------------------------------------
26 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK CAPITAL GROWTH ALLOCATION FUND
INVESTMENT OBJECTIVE
THE HIGHMARK CAPITAL GROWTH ALLOCATION FUND SEEKS PRIMARILY CAPITAL
APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
DAVID GOERZ
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
CAPITAL GROWTH ALLOCATION FUND VERSUS AN UNMANAGED BLENDED BENCHMARK OF 80% S&P
500 COMPOSITE INDEX, 15% LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND 5%
CITIGROUP BOND 3-MONTH TREASURY BILL INDEX AND THE MORNINGSTAR LARGE BLEND
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark HighMark 80/15/5 Lehman Citigroup Bond
Capital Growth Capital Growth Hybrid of S&P 500 Brothers 3-Month Morningstar
Allocation Fund, Allocation Fund, the following Composite U.S. Aggregate Treasury Large Blend
Class A Shares Class C Shares indexes: Index Bond Index Bill Index Category
10/31/04 $ 9,450 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
7/05 10,505 11,053 10,890 11,067 10,170 10,183 11,113
- --------------------------------------------------------------------------------
CUMULATIVE
SINCE
INCEPTION+
- --------------------------------------------------------------------------------
Class A Shares 11.21%
- --------------------------------------------------------------------------------
Class A Shares with load* 5.12%
- --------------------------------------------------------------------------------
Class C Shares 10.58%
- --------------------------------------------------------------------------------
Class C Shares with load** 9.58%
- --------------------------------------------------------------------------------
+ Commenced operations on October 12, 2004.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 1.00%
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 27
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
EQUITY FUNDS 67.7
FIXED INCOME FUNDS 29.1
MONEY MARKET FUND 3.2
GROWTH & INCOME
ALLOCATION FUND
PERFORMANCE
The HighMark Growth & Income Allocation Fund commenced operations on
October 12, 2004. From its inception through July 31, 2005, the Fund
produced a total return of 8.84% (Class A without load). In comparison,
the Fund's unmanaged blended benchmark, 60% S&P 500 Composite Index/35%
Lehman Brothers U.S. Aggregate Bond Index/5% Citigroup Bond 3-Month
Treasury Bill Index, returned 7.85% for the same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained on firm footing throughout the period. Higher
gasoline prices and rising interest rates seemed to have little impact on
consumer spending, which continued to grow in excess of 9%. In addition to
the surprising durability of the consumer, the industrial economy also
showed welcome signs of strength. American corporations benefiting from
years of restructuring have been experiencing strong profitability and
sustained productivity improvements. Operating profits have now surged
well ahead of peak levels observed in 2001, driving price-to-earnings
ratios lower.
Under these constructive economic conditions, equity markets fared well
relative to both bonds and cash. Smaller-cap and value-oriented companies
tended to outperform larger and growth-oriented stocks. Energy, Utilities
and Healthcare were the strongest performing sectors, while Basic
Materials, Industrials and Consumer Discretionary lagged over the period.
The Federal Reserve boosted interest rates at each meeting during the
period to 3.25%, 1.50% higher than where it stood when the Fund commenced
operations. Credit spreads also tightened, giving a boost to corporate
bond returns versus other sectors. What has been most surprising for fixed
investors is that bond yields generally have not increased as expected,
and the benchmark Treasury bond actually declined from 4.48% to 4.28%.
We are pleased to report that the Fund outperformed its benchmark during
the period. Positive security selection within the underlying equity funds
was the primary contributor to Fund performance. A tilt towards small-cap
funds, and a timely shift to increase the Fund's growth equity exposure
late in the period, also contributed to overall results. The Fund's
relative overweight in equities and underweight in bonds also added value
over the period since inception.
- --------------------------------------------------------------------------------
28 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK GROWTH & INCOME
ALLOCATION FUND
INVESTMENT OBJECTIVE
THE HIGHMARK GROWTH & INCOME ALLOCATION FUND SEEKS CAPITAL APPRECIATION AND
INCOME.
[PHOTO OMITTED]
TEAM LEADER
DAVID GOERZ
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK GROWTH
& INCOME ALLOCATION FUND VERSUS AN UNMANAGED BLENDED BENCHMARK OF 60% S&P 500
COMPOSITE INDEX, 35% LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND 5% CITIGROUP
BOND 3-MONTH TREASURY BILL INDEX AND THE MORNINGSTAR MODERATE ALLOCATION
CATEGORY.
[CHART OMITTED]
PLOT POINTS ARE AS FOLLOWS:
HighMark HighMark 60/35/5 Lehman Citigroup
Growth & Income Growth & Income Hybrid of S&P 500 Brothers Bond 3-Month Morningstar
Allocation Fund, Allocation Fund, the following Composite U.S. Aggregate Treasury Moderate Allocation
Class A Shares Class C Shares indexes: Index Bond Index Bill Index Category
10/31/04 $ 9,450 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
7/05 10,256 10,793 10,710 11,067 10,170 10,183 10,861
- --------------------------------------------------------------------------------
CUMULATIVE
SINCE
INCEPTION+
- --------------------------------------------------------------------------------
Class A Shares 8.84%
- --------------------------------------------------------------------------------
Class A Shares with load* 2.88%
- --------------------------------------------------------------------------------
Class C Shares 8.21%
- --------------------------------------------------------------------------------
Class C Shares with load** 7.21%
- --------------------------------------------------------------------------------
+ Commenced operations on October 12, 2004.
* Reflects 5.50% sales charge.
** Reflects maximum CDSC of 1.00%
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 29
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
FIXED INCOME FUNDS 57.3
EQUITY FUNDS 38.2
MONEY MARKET FUND 4.5
INCOME PLUS
ALLOCATION FUND
PERFORMANCE
The HighMark Income Plus Allocation Fund commenced operations on October
12, 2004. From its inception through July 31, 2005, the Fund produced a
total return of 4.70% (Class A without load). In comparison, the Fund's
unmanaged blended benchmark, 30% S&P 500 Composite Index/65% Lehman
Brothers U.S. Aggregate Bond Index/5% Citigroup Bond 3-Month Treasury Bill
Index returned 5.05% for the same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy remained on firm footing throughout the period. Higher
gasoline prices and rising interest rates seemed to have little impact on
consumer spending, which continued to grow in excess of 9%. In addition to
the surprising durability of the consumer, the industrial economy also
showed welcome signs of strength. American corporations benefiting from
years of restructuring have been experiencing strong profitability and
sustained productivity improvements. Operating profits have now surged
well ahead of peak levels observed in 2001, driving price-to-earnings
ratios lower.
Under these constructive economic conditions, equity markets fared well
relative to both bonds and cash. Smaller-cap and value-oriented companies
tended to outperform larger and growth-oriented stocks. Energy, Utilities
and Healthcare were the strongest performing sectors, while Basic
Materials, Industrials and Consumer Discretionary lagged over the period.
The Federal Reserve boosted interest rates at each meeting during the
period to 3.25%, 1.50% higher than where it stood when the Fund commenced
operations. Credit spreads also tightened, giving a boost to corporate
bond returns versus other sectors. What has been most surprising for fixed
investors is that bond yields generally have not increased as expected,
and the benchmark Treasury bond actually declined from 4.48% to 4.28%.
Positive security selection within the underlying funds was a contributor
to Fund performance. The Fund's relative overweight in equities and
underweight in bonds added value, as did a tilt towards small-cap funds
and a timely shift to increase the Fund's growth equity exposure late in
the period. However, these positive contributions were not quite enough to
overcome the relative underperformance of the underlying fixed income
funds. As a result, the Fund modestly lagged its benchmark for the period.
- --------------------------------------------------------------------------------
30 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK INCOME PLUS ALLOCATION FUND
INVESTMENT OBJECTIVE
THE HIGHMARK INCOME PLUS ALLOCATION FUND SEEKS INCOME AND SECONDARILY CAPITAL
APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
DAVID GOERZ
HIGHMARK CAPITAL
MANAGEMENT, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK INCOME
PLUS ALLOCATION FUND VERSUS AN UNMANAGED BLENDED BENCHMARK OF 30% S&P 500
COMPOSITE INDEX, 65% LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND 5% CITIGROUP
BOND 3-MONTH TREASURY BILL INDEX AND THE MORNINGSTAR CONSERVATIVE ALLOCATION
CATEGORY.
[CHART OMITTED]
PLOT POINTS FOLLOWS:
HighMark HighMark 30/65/5 Lehman Citigroup Morningstar
Income Plus Income Plus Hybrid of S&P 500 Brothers Bond 3-Month Conservative
Allocation Fund, Allocation Fund, the following Composite U.S. Aggregate Treasury Allocation
Class A Shares Class C Shares indexes: Index Bond Index Bill Index Category
10/31/04 $ 9,550 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
7/05 10,009 10,421 10,443 11,067 10,170 10,183 10,479
- --------------------------------------------------------------------------------
CUMULATIVE
SINCE
INCEPTION+
- --------------------------------------------------------------------------------
Class A Shares 4.70%
- --------------------------------------------------------------------------------
Class A Shares with load* 0.00%
- --------------------------------------------------------------------------------
Class C Shares 4.12%
- --------------------------------------------------------------------------------
Class C Shares with load** 3.12%
- --------------------------------------------------------------------------------
+ Commenced operations on October 12, 2004.
* Reflects 4.50% sales charge.
** Reflects maximum CDSC of 1.00%
Past performance is not predictive of future results. Returns shown in the
graph and the table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The returns for certain periods reflect fee waivers and/or
reimbursements in effect for that period; absent fee waivers and
reimbursements, performance would have been lower.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 31
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
DISCLOSURE OF FUND EXPENSES (UNAUDITED)
We believe it is important for you to understand the impact of fees regarding
your investment. All mutual funds have operating expenses. As a shareholder of a
mutual fund, you incur ongoing costs, which include costs for portfolio
management, administrative services, and shareholder reports (like this one),
among others. Operating expenses, which are deducted from a mutual fund's gross
income, directly reduce the investment return of the mutual fund. A mutual
fund's expenses are expressed as a percentage of its average net assets. This
figure is known as the expense ratio. The following examples are intended to
help you understand the ongoing fees (in dollars) of investing in your Fund and
to compare these costs with those of other mutual funds. The examples are based
on an investment of $1,000 made at the beginning of the period shown and held
for the entire period.
The table below illustrates your Fund's costs in two ways.
o ACTUAL FUND RETURN. This section helps you to estimate the actual expenses
after fee waivers that you paid over the period. The "Ending Account
Value" shown is derived from the Fund's actual return, and the fourth
column shows the dollar amount that would have been paid by an investor
who started with $1,000 in the Fund. You may use the information here,
together with the amount you invested, to estimate the expenses that you
paid over the period.
To do so, simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number given for your Fund under the heading "Expenses Paid During
Period."
o HYPOTHETICAL 5% RETURN. This section is intended to help you compare your
Fund's costs with those of other mutual funds. It assumes that the Fund
had a return of 5% before expenses during the year, but that the expense
ratio is unchanged. In this case, because the return used is not the
Fund's actual return, the results do not apply to your investment. The
example is useful in making comparisons because the Securities and
Exchange Commission requires all mutual funds to calculate expenses based
on a 5% return. You can assess your Fund's costs by comparing this
hypothetical example with the hypothetical examples that appear in
shareholder reports of other mutual funds.
Please note that the expenses shown in the table are meant to highlight and help
you compare ONGOING costs only and do not reflect any transactional costs such
as sales charges (loads), and redemption fees, which are described in your
Fund's Prospectus. If these fees were applied to your account, your costs would
be higher.
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ $ 1,000.00 $ 1,071.41 0.95% $ 4.89
Class A Shares .............. 1,000.00 1,068.63 1.20 6.17
Class B Shares .............. 1,000.00 1,061.20 1.85 9.50
Class C Shares .............. 1,000.00 1,062.50 1.85 9.50
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,020.03 0.95 4.77
Class A Shares .............. 1,000.00 1,018.77 1.20 6.02
Class B Shares .............. 1,000.00 1,015.51 1.85 9.29
Class C Shares .............. 1,000.00 1,015.51 1.85 9.29
- --------------------------------------------------------------------------------
VALUE MOMENTUM FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,062.73 0.95 4.87
Class A Shares .............. 1,000.00 1,060.25 1.20 6.15
Class B Shares .............. 1,000.00 1,053.94 1.85 9.46
Class C Shares .............. 1,000.00 1,053.14 1.85 9.46
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,020.03 0.95 4.77
Class A Shares .............. 1,000.00 1,018.77 1.20 6.02
Class B Shares .............. 1,000.00 1,015.51 1.85 9.29
Class C Shares .............. 1,000.00 1,015.51 1.85 9.29
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ $ 1,000.00 $ 1,075.25 0.94% $ 4.85
Class A Shares .............. 1,000.00 1,072.37 1.19 6.13
Class B Shares .............. 1,000.00 1,065.33 1.84 9.47
Class C Shares .............. 1,000.00 1,065.53 1.84 9.47
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,020.08 0.94 4.72
Class A Shares .............. 1,000.00 1,018.82 1.19 5.97
Class B Shares .............. 1,000.00 1,015.56 1.84 9.24
Class C Shares .............. 1,000.00 1,015.56 1.84 9.24
- --------------------------------------------------------------------------------
CORE EQUITY FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,038.94 0.94 4.76
Class A Shares .............. 1,000.00 1,037.77 1.19 6.03
Class B Shares .............. 1,000.00 1,029.20 1.84 9.30
Class C Shares .............. 1,000.00 1,030.49 1.84 9.31
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,020.08 0.94 4.72
Class A Shares .............. 1,000.00 1,018.82 1.19 5.97
Class B Shares .............. 1,000.00 1,015.56 1.84 9.24
Class C Shares .............. 1,000.00 1,015.56 1.84 9.24
- --------------------------------------------------------------------------------
32 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
BALANCED FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ $ 1,000.00 $ 1,031.30 0.97% $ 4.90
Class A Shares .............. 1,000.00 1,028.74 1.24 6.26
Class B Shares .............. 1,000.00 1,021.48 1.89 9.52
Class C Shares .............. 1,000.00 1,021.48 1.89 9.52
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,019.92 0.97 4.87
Class A Shares .............. 1,000.00 1,018.57 1.24 6.23
Class B Shares .............. 1,000.00 1,015.31 1.89 9.49
Class C Shares .............. 1,000.00 1,015.31 1.89 9.49
- --------------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,069.22 1.53 7.88
Class A Shares .............. 1,000.00 1,066.84 1.78 9.16
Class B Shares .............. 1,000.00 1,059.81 2.43 12.49
Class C Shares .............. 1,000.00 1,059.81 2.43 12.49
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,017.11 1.53 7.68
Class A Shares .............. 1,000.00 1,015.86 1.78 8.94
Class B Shares .............. 1,000.00 1,012.59 2.43 12.20
Class C Shares .............. 1,000.00 1,012.59 2.43 12.20
- --------------------------------------------------------------------------------
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,121.03 1.34 7.07
Class A Shares .............. 1,000.00 1,118.32 1.59 8.38
Class B Shares .............. 1,000.00 1,112.10 2.24 11.80
Class C Shares .............. 1,000.00 1,111.31 2.24 11.79
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,018.07 1.34 6.73
Class A Shares .............. 1,000.00 1,016.81 1.59 7.98
Class B Shares .............. 1,000.00 1,013.55 2.24 11.25
Class C Shares .............. 1,000.00 1,013.55 2.24 11.25
- --------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 996.32 0.50 2.48
Class A Shares .............. 1,000.00 993.79 0.75 3.71
Class B Shares .............. 1,000.00 986.38 1.50 7.42
Class C Shares .............. 1,000.00 989.02 1.25 6.18
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,022.28 0.50 2.51
Class A Shares .............. 1,000.00 1,021.03 0.75 3.77
Class B Shares .............. 1,000.00 1,017.26 1.50 7.53
Class C Shares .............. 1,000.00 1,018.52 1.25 6.28
- --------------------------------------------------------------------------------
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,001.71 0.28 1.39
Class A Shares .............. 1,000.00 999.17 0.53 2.63
Class C Shares .............. 1,000.00 994.59 1.03 5.11
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,023.39 0.28 1.41
Class A Shares .............. 1,000.00 1,022.13 0.53 2.66
Class C Shares .............. 1,000.00 1,019.62 1.03 5.17
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ $ 1,000.00 $ 1,002.97 0.75% $ 3.73
Class A Shares .............. 1,000.00 1,001.52 1.00 4.98
Class B Shares .............. 1,000.00 994.31 1.73 8.59
Class C Shares .............. 1,000.00 995.95 1.48 7.35
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,021.03 0.75 3.77
Class A Shares .............. 1,000.00 1,019.77 1.00 5.02
Class B Shares .............. 1,000.00 1,016.11 1.73 8.69
Class C Shares .............. 1,000.00 1,017.36 1.48 7.43
- --------------------------------------------------------------------------------
SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,002.27 0.65 3.23
Class A Shares .............. 1,000.00 998.73 0.90 4.47
Class C Shares .............. 1,000.00 996.10 1.39 6.90
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,021.53 0.65 3.26
Class A Shares .............. 1,000.00 1,020.28 0.90 4.52
Class C Shares .............. 1,000.00 1,017.82 1.39 6.98
- --------------------------------------------------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,007.91 0.54 2.69
Class A Shares .............. 1,000.00 1,005.46 0.79 3.94
Class S Shares .............. 1,000.00 1,002.47 1.09 5.43
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,022.08 0.54 2.71
Class A Shares .............. 1,000.00 1,020.83 0.79 3.97
Class S Shares .............. 1,000.00 1,019.32 1.09 5.47
- --------------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,009.26 0.53 2.64
Class A Shares .............. 1,000.00 1,006.71 0.78 3.89
Class B Shares .............. 1,000.00 999.29 1.53 7.61
Class S Shares .............. 1,000.00 1,003.72 1.08 5.38
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,022.13 0.53 2.66
Class A Shares .............. 1,000.00 1,020.88 0.78 3.92
Class B Shares .............. 1,000.00 1,017.11 1.53 7.68
Class S Shares .............. 1,000.00 1,019.37 1.08 5.42
- --------------------------------------------------------------------------------
DIVERSIFIED MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ 1,000.00 1,009.41 0.54 2.69
Class A Shares .............. 1,000.00 1,006.96 0.79 3.94
Class S Shares .............. 1,000.00 1,003.97 1.09 5.43
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,022.08 0.54 2.71
Class A Shares .............. 1,000.00 1,020.83 0.79 3.97
Class S Shares .............. 1,000.00 1,019.32 1.09 5.47
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 33
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONCLUDED)
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ............ $ 1,000.00 $ 1,006.51 0.48% $ 2.39
Class A Shares .............. 1,000.00 1,003.97 0.73 3.63
Class S Shares .............. 1,000.00 1,000.98 1.03 5.12
HYPOTHETICAL 5% RETURN
Fiduciary Shares ............ 1,000.00 1,022.38 0.48 2.41
Class A Shares .............. 1,000.00 1,021.13 0.73 3.66
Class S Shares .............. 1,000.00 1,019.62 1.03 5.17
- --------------------------------------------------------------------------------
CAPITAL GROWTH ALLOCATION FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares .............. 1,000.00 1,054.86 0.81 4.14
Class C Shares .............. 1,000.00 1,047.05 1.56 7.95
HYPOTHETICAL 5% RETURN
Class A Shares .............. 1,000.00 1,020.73 0.81 4.07
Class C Shares .............. 1,000.00 1,016.96 1.56 7.83
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/05 7/31/05 RATIOS PERIOD*
- --------------------------------------------------------------------------------
GROWTH & INCOME ALLOCATION FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares .............. $1,000.00 $1,042.59 0.79% $ 4.01
Class C Shares .............. 1,000.00 1,035.20 1.54 7.80
HYPOTHETICAL 5% RETURN
Class A Shares .............. 1,000.00 1,020.83 0.79 3.97
Class C Shares .............. 1,000.00 1,017.06 1.54 7.73
- --------------------------------------------------------------------------------
INCOME PLUS ALLOCATION FUND
- --------------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares .............. 1,000.00 1,023.63 0.81 4.07
Class C Shares .............. 1,000.00 1,015.77 1.56 7.83
HYPOTHETICAL 5% RETURN
Class A Shares .............. 1,000.00 1,020.73 0.81 4.07
Class C Shares .............. 1,000.00 1,016.96 1.56 7.83
* Expenses are equal to the Fund's annualized expense ratio multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the one
half year period).
- --------------------------------------------------------------------------------
34 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
LARGE CAP GROWTH FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - 97.8%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 10.3%
Advance Auto Parts (A)* 27,850 $ 1,920
Best Buy 14,600 1,118
Carnival (A) 27,600 1,446
eBay* 37,300 1,558
Harman International Industries 12,900 1,109
Home Depot 65,450 2,848
Kohl's* 15,600 879
Las Vegas Sands (A)* 21,100 849
Staples 71,925 1,638
Starwood Hotels & Resorts Worldwide 46,000 2,913
---------
16,278
---------
CONSUMER STAPLES - 6.4%
Procter & Gamble 82,600 4,595
Walgreen 116,146 5,559
---------
10,154
---------
ENERGY - 7.4%
Baker Hughes 30,600 1,730
Schlumberger 56,250 4,710
Smith International (A) 76,000 5,164
---------
11,604
---------
FINANCIALS - 15.5%
American Express 28,200 1,551
Chicago Mercantile Exchange Holdings (A) 14,000 4,215
Franklin Resources 50,850 4,110
Goldman Sachs Group (A) 28,250 3,036
Legg Mason 41,850 4,275
Moody's (A) 34,800 1,646
SLM (A) 109,250 5,625
---------
24,458
---------
HEALTH CARE - 22.4%
Alcon 23,600 2,703
Allergan (A) 13,800 1,233
Amgen* 28,250 2,253
Dentsply International 22,500 1,254
Genentech* 48,044 4,292
Gilead Sciences* 36,600 1,640
Johnson & Johnson 90,100 5,763
Medtronic 65,250 3,520
Pfizer 43,577 1,155
Stryker (A) 46,900 2,537
UnitedHealth Group 110,850 5,797
Zimmer Holdings (A)* 38,500 3,171
---------
35,318
---------
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
INDUSTRIALS - 9.7%
Danaher 36,150 $ 2,005
Expeditors International Washington (A) 29,800 1,640
General Dynamics 33,550 3,865
General Electric 158,054 5,453
Robert Half International (A) 67,400 2,284
---------
15,247
---------
INFORMATION TECHNOLOGY - 24.1%
Automatic Data Processing 79,800 3,544
Cisco Systems* 110,250 2,111
Dell* 116,150 4,701
EMC* 105,900 1,450
Google, Cl A* 15,100 4,345
Linear Technology 36,800 1,430
Maxim Integrated Products 27,250 1,141
Microchip Technology 119,100 3,701
Microsoft 226,800 5,808
Oracle* 132,750 1,803
Paychex 78,150 2,728
Qualcomm 29,200 1,153
Research In Motion* 20,400 1,442
SAP ADR (A) 33,750 1,445
Yahoo!* 39,150 1,305
---------
38,107
---------
MATERIALS - 2.0%
Monsanto 47,550 3,203
---------
TOTAL COMMON STOCK
(Cost $130,568) 154,369
---------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (B)(C) - 3.8%
- --------------------------------------------------------------------------------
Morgan Stanley
3.383%, 08/19/05 $ 1,000 1,000
Sigman Finance
3.330%, 07/07/06 5,000 5,000
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $6,000) 6,000
---------
- --------------------------------------------------------------------------------
MASTER NOTES (B)- 3.1%
- --------------------------------------------------------------------------------
Bank of America
3.393%, 08/01/05 2,500 2,500
Bear Stearns
3.463%, 08/03/05 2,500 2,500
---------
TOTAL MASTER NOTES
(Cost $5,000) 5,000
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARK FUNDS.COM 35
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
LARGE CAP GROWTH FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 9.6%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $13,081,755
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $13,731,998) (B) $ 13,078 $ 13,078
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $2,000,569
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $2,100,000) (B) 2,000 2,000
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $67,981
(collateralized by a U.S. Government
obligation, par value $63,000, 5.75%,
08/15/10, total market value $69,474) 68 68
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $15,146) 15,146
---------
TOTAL INVESTMENTS - 114.3%
(Cost $156,714) 180,515
---------
PAYABLE UPON RETURN OF SECURITIES LOANED -- (16.5)% (26,078)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED -- (0.0)% (34)
PAYABLE FOR FUND SHARES REDEEMED -- (0.2)% (268)
OTHER ASSETS AND LIABILITIES, NET -- 2.4%@ 3,747
---------
OTHER ASSETS AND LIABILITIES - (14.3)% (22,633)
---------
NET ASSETS -- 100.0% $ 157,882
=========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 292,966
Undistributed net investment income 263
Accumulated net realized loss on investments (159,148)
Net unrealized appreciation on investments 23,801
---------
NET ASSETS $ 157,882
=========
- --------------------------------------------------------------------------------
Description
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($129,824,441 / 15,074,566 SHARES) $8.61
=========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($17,377,001 / 2,049,252 SHARES) $8.48
=========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($8.48 / 94.5%) $8.97
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($9,259,205 / 1,152,505 SHARES) $8.03
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($1,421,629 / 176,847 SHARES) $8.04
=========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY
31, 2005 THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 WAS
$25,373,879.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
36 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
VALUE MOMENTUM FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - 97.1%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 8.1%
Comcast, Cl A* 175,500 $ 5,265
Federated Department Stores (A) 65,000 4,932
Harrah's Entertainment 20,000 1,575
Leggett & Platt 143,000 3,616
Lennar, Cl A (A) 38,500 2,590
McGraw-Hill (D) 110,000 5,061
News, Cl A 270,000 4,423
Pulte Homes 37,500 3,511
Target (D) 50,000 2,937
Time Warner 255,000 4,340
---------
38,250
---------
CONSUMER STAPLES - 7.0%
Altria Group 195,900 13,117
Archer-Daniels-Midland 120,000 2,753
Cadbury Schweppes ADR 155,000 5,989
Kimberly-Clark 53,000 3,379
Nestle ADR 82,500 5,673
Universal 38,000 1,813
---------
32,724
---------
ENERGY - 12.7%
BG Group ADR (A) 62,000 2,584
BP ADR (D) 100,000 6,588
Chevron 120,000 6,961
ConocoPhillips 92,000 5,758
Exxon Mobil (D) 280,000 16,450
Halliburton 130,000 7,286
Marathon Oil 74,593 4,353
Peabody Energy 36,000 2,367
Suncor Energy (D) 100,000 4,890
Williams 120,000 2,549
---------
59,786
---------
FINANCIALS - 23.7%
Allstate 100,000 6,126
AMB Property (A) 160,000 7,358
American International Group 85,000 5,117
Bank of America 190,000 8,284
Bank of New York (A) 93,000 2,863
Citigroup 335,800 14,607
Countrywide Financial 64,700 2,329
Fannie Mae 65,000 3,631
Freddie Mac 56,000 3,544
Goldman Sachs Group (A) 44,400 4,772
JPMorgan Chase 272,070 9,561
Marsh & McLennan 120,000 3,476
Metlife (A) 90,000 4,423
Morgan Stanley 100,000 5,305
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
Principal Financial Group 65,000 $ 2,857
Prudential Financial (A) 75,000 5,017
St Paul Travelers (A) 120,000 5,282
Washington Mutual (A) 247,705 10,523
Wells Fargo 39,500 2,423
XL Capital, Cl A 56,100 4,029
---------
111,527
---------
HEALTH CARE - 7.8%
Abbott Laboratories 110,000 5,129
Applera Corp - Applied Biosystems Group 115,000 2,394
Baxter International 100,000 3,927
Bristol-Myers Squibb 175,000 4,371
GlaxoSmithKline ADR (A) 97,000 4,602
HCA 50,000 2,463
Merck 75,000 2,330
Pfizer 257,540 6,825
Wyeth 100,000 4,575
---------
36,616
---------
INDUSTRIALS - 14.8%
Avery Dennison (A) 157,600 8,931
Boeing 47,500 3,136
Burlington Northern Santa Fe 30,000 1,628
Cendant 374,779 8,005
General Electric 408,700 14,100
Honeywell International 100,000 3,928
Manpower 48,000 2,294
Masco (A) 155,000 5,256
Parker Hannifin 125,000 8,215
Pitney Bowes 40,000 1,783
Tyco International (A) 183,300 5,585
United Technologies 40,000 2,028
Waste Management 168,000 4,724
---------
69,613
---------
INFORMATION TECHNOLOGY - 8.8%
Accenture, Cl A* 140,000 3,506
Agilent Technologies* 88,100 2,312
CTS (A) 18,200 225
Diebold 71,500 3,552
Electronic Data Systems 142,000 2,921
First Data 109,200 4,492
Hewlett-Packard 125,900 3,100
International Business Machines 70,000 5,842
Lucent Technologies* 625,000 1,831
Microsoft 300,000 7,683
Nokia ADR 200,000 3,190
Tektronix 100,700 2,523
---------
41,177
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 37
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
VALUE MOMENTUM FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
MATERIALS - 7.3%
Alcoa 173,100 $ 4,856
Ashland 57,500 3,533
BHP Billiton ADR (A) (D) 135,000 3,999
Cabot 178,500 6,174
Engelhard 195,400 5,606
Monsanto 65,000 4,379
Weyerhaeuser 82,200 5,670
---------
34,217
---------
TELECOMMUNICATIONS - 3.1%
SBC Communications (A) 190,000 4,646
Verizon Communications 235,000 8,044
Vodafone Group ADR (A) 70,500 1,821
---------
14,511
---------
UTILITIES - 3.8%
Oneok (A) 70,000 2,446
Questar (D) 220,000 15,440
---------
17,886
---------
TOTAL COMMON STOCK
(Cost $310,910) 456,307
---------
- --------------------------------------------------------------------------------
RIGHTS - 0.0%
- --------------------------------------------------------------------------------
Bank United*+ 118,300 --
---------
TOTAL RIGHTS
(Cost $19) --
---------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (B) (C) - 5.3%
- --------------------------------------------------------------------------------
Bear Stearns, MTN
3.411%, 01/12/06 $ 5,000 5,005
First Tennessee
3.330%, 03/21/06 5,000 5,000
General Electric Capital, MTN
3.364%, 03/29/06 5,000 5,003
Morgan Stanley
3.383%, 08/19/05 5,000 5,000
3.370%, 07/03/06 2,500 2,500
Sigma Finance
3.330%, 07/07/06 2,500 2,500
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $25,008) 25,008
---------
- --------------------------------------------------------------------------------
Description Par (000)/Shares/Contracts Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MASTER NOTES (B) - 4.3%
- --------------------------------------------------------------------------------
Bank of America
3.393%, 08/01/05 $ 10,000 $ 10,000
Bear Stearns
3.463%, 08/03/05 10,000 10,000
---------
TOTAL MASTER NOTES
(Cost $20,000) 20,000
---------
- --------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY - 0.4%
- --------------------------------------------------------------------------------
Templeton Dragon Fund 105,000 1,991
---------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $935) 1,991
---------
- --------------------------------------------------------------------------------
PURCHASED OPTIONS - 0.0%
- --------------------------------------------------------------------------------
BP, August 2005, 60 Put* 100 --
Exxon Mobil, August 2005, 55 Put* 100 1
McGraw-Hill, August 2005, 47.50 Calls* 100 2
McGraw-Hill, August 2005, 42.50 Put* 200 3
Questar, January 2006, 60 Put* 800 92
Target, January 2006, 47.50 Put* 250 10
Target, January 2006, 50 Put* 250 19
---------
TOTAL PURCHASED OPTIONS
(Cost $304) 127
---------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 9.5%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $18,720,195
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $19,650,703) (B) $ 18,715 18,715
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $4,001,138
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $4,200,000) (B) 4,000 4,000
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $12,029,808
(collateralized by a U.S. Government
obligation, par value $11,532,000,
6.25%, 02/15/07, total market
value $12,267,106) 12,027 12,027
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
38 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
VALUE MOMENTUM FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000)/Contracts Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Lehman Brothers
3.383%, dated 07/29/05, matures on
08/01/05, repurchase price $10,002,819
(collateralized by various mortgage
obligations, ranging in par value
$52,355,000-$650,000,000, 0.00%-
0.25%, 03/17/28-04/15/33, total
market $10,492,832) (B) $ 10,000 $ 10,000
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $44,742) 44,742
---------
TOTAL INVESTMENTS - 116.6%
(Cost $401,918) 548,175
---------
- --------------------------------------------------------------------------------
WRITTEN OPTIONS - (0.1)%
- --------------------------------------------------------------------------------
BHP Billiton, August 2005, 30 Calls* 350 (19)
BP, October 2005, 70 Calls* 100 (8)
Exxon Mobil, October 2005, 65 Calls* 100 (6)
McGraw-Hill, August 2005, 50 Calls* 200 (3)
Questar, January 2006, 65 Calls* 225 (187)
Questar, January 2006, 70 Calls* 300 (168)
Suncor Energy, December 2005, 55 Calls* 100 (26)
Target, January 2006, 55 Calls* 140 (88)
Target, January 2006, 60 Calls* 60 (19)
---------
TOTAL WRITTEN OPTIONS
(Premiums Received $372) (524)
---------
PAYABLE UPON RETURN OF SECURITIES LOANED -- (16.5)% (77,723)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED
-- (0.2)% (671)
PAYABLE FOR FUND SHARES REDEEMED -- (0.0)% (183)
OTHER ASSETS AND LIABILITIES, NET -- 0.2%@ 1,080
---------
TOTAL OTHER ASSETS AND LIABILITIES - (16.5)% (77,497)
---------
NET ASSETS -- 100.0% $ 470,154
=========
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 285,140
Accumulated net realized gain on investments
and options 38,909
Net unrealized appreciation on investments
and options 146,105
---------
NET ASSETS $ 470,154
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($430,755,197 / 17,898,359 SHARES) $24.07
=========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (E)
($28,798,702 / 1,197,832 SHARES) $24.04
=========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($24.04 / 94.5%) $25.44
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (E)
($9,396,100 / 395,030 SHARES) $23.79
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (E)
($1,204,201 / 50,734 SHARES) $23.74
=========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
+ THESE RIGHTS DO NOT HAVE AN EXPIRATION DATE.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY
31, 2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 WAS
$75,211,230.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) SECURITY HAS BEEN PLEDGED AS COLLATERAL FOR OPEN WRITTEN OPTIONS CONTRACTS.
(E) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
MTN -- MEDIUM TERM NOTE
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 39
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - 98.6%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 11.9%
Abercrombie & Fitch, Cl A 23,900 $ 1,722
American Eagle Outfitters 35,500 1,170
Autoliv 38,200 1,702
Brinker International* 39,100 1,599
Clear Channel Communications (A) 34,800 1,136
Darden Restaurants (A) 47,300 1,641
Federated Department Stores 26,300 1,995
Ford Motor (A) 72,200 775
Gannett (A) 8,400 613
GTECH Holdings 42,900 1,285
H&R Block (A) 28,800 1,640
Hovnanian Enterprises, Cl A (A)* 1,400 99
KB Home (A) 24,400 1,999
MDC Holdings 15,730 1,344
Standard-Pacific 14,500 1,383
Timberland, Cl A* 23,000 768
Time Warner* 28,500 485
VF 1,500 89
Viacom, Cl B 33,100 1,108
Yum! Brands 13,000 681
--------
23,234
--------
CONSUMER STAPLES - 5.4%
7-Eleven* 25,300 856
Albertson's (A) 32,400 690
Clorox (A) 10,100 564
Dean Foods* 26,600 950
Energizer Holdings (A)* 15,800 1,010
Kroger* 113,400 2,251
Pepsi Bottling Group 52,300 1,525
Reynolds American (A) 20,000 1,666
Supervalu 27,000 956
--------
10,468
--------
ENERGY - 14.7%
Anadarko Petroleum 14,600 1,290
Chevron 83,300 4,832
ConocoPhillips 76,000 4,757
Devon Energy 15,000 841
Exxon Mobil 127,200 7,473
Marathon Oil 13,200 771
Petro Canada 21,500 1,544
Petrokazakhstan, Cl A (A) 46,200 1,948
Sunoco 13,000 1,635
Teekay Shipping (A) 28,600 1,316
Valero Energy (A) 26,000 2,152
--------
28,559
--------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - 34.9%
AG Edwards 36,100 $ 1,599
Allstate 51,800 3,173
Bank of America 88,000 3,837
Bear Stearns 18,100 1,848
Brascan, Cl A 44,900 1,678
CB Richard Ellis Group, Cl A* 26,700 1,229
CIT Group 28,900 1,276
Citigroup 98,967 4,305
Comerica 30,100 1,839
Countrywide Financial 20,100 724
Downey Financial 17,100 1,324
Endurance Specialty Holdings 30,400 1,186
First American 31,100 1,367
Freddie Mac 6,200 392
Goldman Sachs Group (A) 15,300 1,644
IndyMac Bancorp (A) 35,400 1,544
JPMorgan Chase 26,900 945
KeyCorp 46,900 1,606
Lehman Brothers Holdings 23,500 2,471
Loews 9,400 786
Merrill Lynch 54,000 3,174
Morgan Stanley 13,200 700
National City 67,400 2,488
PMI Group 38,500 1,577
PNC Financial Services Group 25,300 1,387
Principal Financial Group 49,500 2,175
Progressive 17,000 1,695
Providian Financial (A)* 44,200 835
Radian Group 32,800 1,692
Safeco 31,000 1,703
US Bancorp 111,400 3,349
Wachovia 78,600 3,960
Washington Mutual (A) 66,400 2,821
Webster Financial 20,700 998
Wells Fargo 72,700 4,459
--------
67,786
--------
HEALTH CARE - 7.5%
Aetna 25,300 1,958
Amgen* 11,100 885
Cardinal Health 10,600 632
Dade Behring Holdings 21,300 1,614
Humana* 13,300 530
King Pharmaceuticals* 91,900 1,025
Pfizer 299,700 7,942
--------
14,586
--------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
40 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
LARGE CAP VALUE FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
INDUSTRIALS - 4.9%
Burlington Northern Santa Fe 14,100 $ 765
Cendant 46,500 993
Cummins (A) 19,500 1,666
Deluxe (A) 23,200 928
HNI 5,800 337
Lockheed Martin 100 6
Northrop Grumman 28,900 1,603
Ryder System 40,800 1,591
Terex* 7,800 378
Timken 46,500 1,231
--------
9,498
--------
INFORMATION TECHNOLOGY - 4.9%
Amdocs* 38,000 1,128
Avnet (A)* 36,100 945
Fair Isaac 19,000 715
Fiserv* 18,000 799
Hewlett-Packard 108,500 2,671
Ingram Micro, Cl A* 54,500 1,016
Intel 25,000 679
Microsoft 62,900 1,611
--------
9,564
--------
MATERIALS - 3.2%
Agrium 56,400 1,290
Dow Chemical 38,900 1,865
NOVA Chemicals (A) 13,900 486
Nucor 26,600 1,475
Phelps Dodge (A) 9,900 1,054
Southern Peru Copper (A) 2,500 128
--------
6,298
--------
TELECOMMUNICATIONS - 4.7%
BellSouth 74,100 2,045
CenturyTel 32,100 1,103
SBC Communications (A) 44,000 1,076
Verizon Communications 143,900 4,926
--------
9,150
--------
UTILITIES - 6.5%
Constellation Energy Group 13,200 795
Edison International 53,100 2,171
Entergy 20,500 1,598
FirstEnergy 42,200 2,101
NRG Energy* 21,300 817
Pepco Holdings (A) 57,200 1,365
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
UTILITIES - (CONTINUED)
Sempra Energy 18,200 $ 773
TXU 22,800 1,975
UGI 36,800 1,080
--------
12,675
--------
TOTAL COMMON STOCK
(Cost $160,855) 191,818
--------
- --------------------------------------------------------------------------------
MASTER NOTES (B) - 2.6%
- --------------------------------------------------------------------------------
Bank of America
3.393%, 08/01/05 $ 2,500 2,500
Bear Stearns
3.463%, 08/03/05 2,500 2,500
--------
TOTAL MASTER NOTES
(Cost $5,000) 5,000
--------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (B) (C) - 2.6%
- --------------------------------------------------------------------------------
Morgan Stanley
3.383%, 08/19/05 2,500 2,500
Sigma Finance
3.330%, 07/07/06 2,500 2,500
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $5,000) 5,000
--------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 11.5%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $15,833,628
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $16,620,656) (B) 15,829 15,829
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $2,500,711
(collateralized by a commercial
mortgage obligation, par value
$2,625,000, 3.84%, 09/25/45,
total market value, $2,625,000) (B) 2,500 2,500
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $2,794,350
(collateralized by a U.S. Government
obligation, par value $2,881,000,
2.625%, 11/15/06, total market
value $2,850,375) 2,794 2,794
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 41
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
LARGE CAP VALUE FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
Lehman Brothers
3.383%, dated 07/29/05, matures on
08/01/05, repurchase price $1,352,237
(collateralized by various mortgage
obligations, ranging in par value
$52,355,000-$650,000,000, 0.00%-
0.25%, 03/17/28-04/15/33, total
market value $1,418,480) (B) $ 1,352 $ 1,352
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $22,475) 22,475
--------
TOTAL INVESTMENTS - 115.3%
(Cost $193,330) 224,293
--------
PAYABLE UPON RETURN OF SECURITIES
LOANED -- (15.3)% (29,681)
PAYABLE FOR INVESTMENT SECURITIES
PURCHASED -- (0.1)% (192)
PAYABLE FOR FUND SHARES REDEEMED -- (0.1)% (187)
OTHER ASSETS AND LIABILITIES, NET -- 0.2%@ 221
--------
TOTAL OTHER ASSETS AND LIABILITIES - (15.3)% (29,839)
--------
NET ASSETS -- 100.0% $194,454
========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $200,247
Undistributed net investment income 69
Accumulated net realized loss on investments (36,825)
Net unrealized appreciation on investments 30,963
--------
NET ASSETS $194,454
========
- --------------------------------------------------------------------------------
Description
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($123,343,003 / 9,873,562 SHARES) $12.49
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($62,536,804 / 4,995,922 SHARES) $12.52
========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($12.52 / 94.5%) $13.25
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($3,995,712 / 323,546 SHARES) $12.35
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($4,578,448 / 371,597 SHARES) $12.32
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY
31, 2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 WAS
$28,765,915.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
42 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CORE EQUITY FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - 99.3%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 11.8%
Comcast, Cl A (A)* 21,903 $ 673
Darden Restaurants (A) 17,900 621
Federated Department Stores 10,900 827
Gannett (A) 11,900 868
Harrah's Entertainment 12,770 1,006
Home Depot 67,795 2,950
Jones Apparel Group 10,600 324
Lennar, Cl A (A) 10,925 735
Limited Brands 27,600 673
McDonald's 17,430 543
Nike, Cl B 6,055 507
Target 17,550 1,031
Time Warner* 31,985 544
VF 7,600 449
Viacom, Cl B 18,480 619
Whirlpool 12,000 960
--------
13,330
--------
CONSUMER STAPLES - 9.5%
Altria Group 20,040 1,342
Kimberly-Clark 14,505 925
Kraft Foods 14,400 440
Pepsi Bottling Group 61,100 1,782
PepsiCo 10,000 545
Procter & Gamble 24,665 1,372
Safeway (A) 71,400 1,735
Smithfield Foods* 18,200 475
Wal-Mart Stores 42,190 2,082
--------
10,698
--------
ENERGY - 8.2%
Amerada Hess 6,200 731
BP ADR 37,605 2,478
Chevron 58,800 3,411
ConocoPhillips 22,230 1,391
Exxon Mobil 14,523 853
Kerr-McGee 4,800 385
--------
9,249
--------
FINANCIALS - 19.5%
Allstate 34,050 2,086
AON 17,900 455
Bank of America 87,480 3,814
Citigroup 71,148 3,095
Goldman Sachs Group (A) 23,110 2,484
JPMorgan Chase 16,220 570
KeyCorp 24,795 849
Merrill Lynch 32,380 1,903
Metlife (A) 27,500 1,351
MGIC Investment 6,000 412
National City 68,500 2,528
Principal Financial Group 19,100 840
Washington Mutual (A) 10,600 450
XL Capital, Cl A 16,500 1,185
--------
22,022
--------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
HEALTH CARE - 12.5%
Abbott Laboratories 15,530 $ 724
Applera Corp - Applied Biosystems Group 86,600 1,803
Baxter International 23,900 939
Cigna 15,800 1,687
HCA 29,100 1,433
Johnson & Johnson 37,105 2,373
King Pharmaceuticals* 106,000 1,182
Pfizer 126,909 3,363
Thermo Electron* 20,400 609
--------
14,113
--------
INDUSTRIALS - 11.9%
CSX 26,100 1,189
Dover 27,000 1,114
General Electric 141,455 4,880
Honeywell International 29,840 1,172
Manpower 7,800 373
Navistar International* 13,000 444
Northrop Grumman 40,060 2,221
RR Donnelley & Sons 13,300 479
Ryder System 39,000 1,521
--------
13,393
--------
INFORMATION TECHNOLOGY - 16.2%
Automatic Data Processing 12,415 551
BMC Software* 25,600 489
Cadence Design Systems* 29,200 470
Citrix Systems* 4,365 104
Hewlett-Packard 95,200 2,344
Ingram Micro, Cl A* 35,700 665
Intel 84,740 2,300
International Business Machines 19,460 1,624
Intuit (A)* 12,500 600
Lexmark International, Cl A* 10,100 633
Microsoft 33,325 853
Nokia ADR (A) 139,275 2,221
Oracle* 59,695 811
QLogic* 13,400 416
Sabre Holdings, Cl A (A) 27,800 534
Synopsys* 73,900 1,368
Texas Instruments 69,795 2,217
--------
18,200
--------
MATERIALS - 3.4%
Alcoa 19,940 559
BHP Billiton ADR (A) 35,880 1,063
Dow Chemical 11,525 552
Engelhard 58,200 1,670
--------
3,844
--------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 43
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CORE EQUITY FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS - 2.8%
CenturyTel 21,500 $ 739
Telefonos de Mexico ADR (A) 94,400 1,819
Verizon Communications 17,400 596
--------
3,154
--------
UTILITIES - 3.5%
American Electric Power 42,300 1,637
Constellation Energy Group 19,020 1,145
Duke Energy (A) 23,300 689
PG&E 11,800 444
--------
3,915
--------
TOTAL COMMON STOCK
(Cost $104,618) 111,918
--------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (B) (C) - 1.8%
- --------------------------------------------------------------------------------
Morgan Stanley
3.383%, 08/19/05 $ 1,000 1,000
Sigma Finance
3.330%, 07/07/06 1,000 1,000
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $2,000) 2,000
--------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 9.2%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $8,628,167
collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $9,057,040) (B) 8,626 8,626
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $1,500,427
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $1,575,000) (B) 1,500 1,500
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $392,169
(collateralized by various U.S. Government
obligations, ranging in par value
$13,000-$395,000, 3.25%-5.75%,
01/15/09-08/15/10, total market
value $400,088) 392 392
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $10,518) 10,518
--------
TOTAL INVESTMENTS - 110.3%
(Cost $117,136) 124,436
--------
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
PAYABLE UPON RETURN OF SECURITIES LOANED -- (10.8)% $(12,126)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED -- (3.2)% (3,697)
PAYABLE FOR FUND SHARES REDEEMED -- (0.0)% (10)
OTHER ASSETS AND LIABILITIES, NET -- 3.7%@ 4,165
--------
TOTAL OTHER ASSETS AND LIABILITIES - (10.3)% (11,668)
--------
NET ASSETS -- 100.0% $112,768
========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $126,903
Undistributed net investment income 6
Accumulated net realized loss on investments (21,441)
Net unrealized appreciation on investments 7,300
--------
NET ASSETS $112,768
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($106,413,346 / 13,131,516 SHARES) $8.10
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($3,031,059 / 374,892 SHARES) $8.09
========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($8.09 / 94.5%) $8.56
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($3,043,573 / 382,627 SHARES) $7.95
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($279,882 / 35,180 SHARES) $7.96
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 IS $11,687,724.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE NOTE
2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE CONTINGENT
DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
44 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BALANCED FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - 68.3%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 8.1%
Bed Bath & Beyond* 5,090 $ 234
Comcast, Cl A (A)* 19,764 607
Dollar General 12,110 246
Harrah's Entertainment 6,920 545
Hilton Hotels 10,710 265
Home Depot 16,825 732
Kohl's* 9,190 518
Lennar, Cl A (A) 4,570 307
News (A) 20,625 358
Nike, Cl B 3,835 321
Target 12,275 721
Tiffany 7,650 260
Time Warner* 25,355 432
Walt Disney 8,715 224
--------
5,770
--------
CONSUMER STAPLES - 7.2%
Altria Group 9,430 632
CVS (A) 38,970 1,209
Kellogg 7,995 362
Kimberly-Clark 5,885 375
PepsiCo 14,280 779
Procter & Gamble 14,855 826
Wal-Mart Stores 18,545 915
--------
5,098
--------
ENERGY - 6.4%
BP ADR 8,425 555
ConocoPhillips 9,370 586
Exxon Mobil 25,173 1,479
Halliburton 13,615 763
Occidental Petroleum 3,580 295
Suncor Energy (A) 17,030 833
--------
4,511
--------
FINANCIALS - 12.7%
Allstate 14,375 881
American Express 12,005 660
American International Group 6,812 410
Bank of America 21,675 945
Citigroup 23,851 1,037
Countrywide Financial 7,710 278
Goldman Sachs Group 7,900 849
JPMorgan Chase 26,388 927
KeyCorp 10,710 367
Lehman Brothers Holdings (A) 2,720 286
Merrill Lynch 13,655 803
National City 9,670 357
SLM (A) 14,185 730
Wells Fargo 7,600 466
--------
8,996
--------
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
HEALTH CARE - 8.5%
Abbott Laboratories 18,505 $ 863
Bristol-Myers Squibb 18,445 461
Gilead Sciences* 6,865 308
GlaxoSmithKline ADR (A) 4,500 213
Johnson & Johnson 15,650 1,001
Medtronic 13,520 729
Novartis ADR (A) 6,265 305
Pfizer 32,314 856
UnitedHealth Group 5,650 296
WellPoint* 7,170 507
Wyeth 11,055 506
--------
6,045
--------
INDUSTRIALS - 8.3%
3M 6,795 510
Danaher 13,520 750
Emerson Electric 3,360 221
General Electric 65,825 2,271
Honeywell International 12,290 483
Northrop Grumman 7,870 436
Tyco International (A) 38,960 1,187
--------
5,858
--------
INFORMATION TECHNOLOGY - 11.7%
Accenture, Cl A* 25,200 631
Cisco Systems* 44,425 851
Citrix Systems* 20,360 485
Corning* 38,175 727
Dell* 19,675 796
EMC* 25,530 350
Intel 20,550 558
International Business Machines 6,120 511
Maxim Integrated Products 5,910 247
Microsoft 44,105 1,130
Nokia ADR 21,900 349
Oracle* 46,550 632
Symantec* 18,920 416
Texas Instruments 17,945 570
--------
8,253
--------
MATERIALS - 1.3%
Alcoa 8,810 247
BHP Billiton ADR (A) 15,075 446
Dow Chemical 4,875 234
--------
927
--------
TELECOMMUNICATIONS - 1.5%
SBC Communications (A) 14,675 359
Verizon Communications 9,765 334
Vodafone Group ADR (A) 13,250 342
--------
1,035
--------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 45
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BALANCED FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- --------------------------------------------------------------------------------
UTILITIES - 2.6%
Constellation Energy Group 14,640 $ 882
Exelon (A) 10,375 555
PG&E 10,875 409
--------
1,846
--------
TOTAL COMMON STOCK
(Cost $42,987) 48,339
--------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 18.9%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 1.6%
TCI Communications
6.875%, 02/15/06 $ 230 233
Time Warner
7.480%, 01/15/08 300 319
Time Warner Entertainment (A)
8.375%, 03/15/23 275 345
Walt Disney, MTN
5.620%, 12/01/08 230 230
--------
1,127
--------
CONSUMER STAPLES - 0.4%
Safeway
7.500%, 09/15/09 100 109
Wal-Mart Stores
5.875%, 10/15/05 200 201
--------
310
--------
ENERGY - 0.4%
Pemex Project Funding Master Trust
9.125%, 10/13/10 250 292
--------
FINANCIALS - 9.2%
Associates (A)
6.950%, 11/01/18 175 204
Bank of America
5.250%, 02/01/07 300 304
CIT Group
4.000%, 05/08/08 300 295
GE Global Insurance
7.750%, 06/15/30 200 227
Golden West Financial
4.125%, 08/15/07 300 299
HSBC Bank USA
3.875%, 09/15/09 200 194
Mellon Bank
7.000%, 03/15/06 300 305
Morgan Stanley
6.750%, 04/15/11 300 327
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
Morgan Stanley (B) (C)
3.383%, 08/19/05 $2,500 $ 2,500
Sigma Finance (B) (C)
3.330%, 07/07/06 1,000 1,000
U.S. Bancorp
6.875%, 09/15/07 400 419
Wells Fargo Bank
6.450%, 02/01/11 100 109
Wells Fargo, MTN, Ser J
6.550%, 12/01/06 300 309
--------
6,492
--------
FOREIGN GOVERNMENTS - 1.1%
Hydro Quebec, Ser HY
8.400%, 01/15/22 250 346
Province of Ontario
5.500%, 10/01/08 400 415
--------
761
--------
HEALTH CARE - 0.7%
HCA
7.875%, 02/01/11 200 219
Pharmacia
5.875%, 12/01/08 225 235
--------
454
--------
INDUSTRIALS - 2.6%
DaimlerChrysler Holdings (A)
4.050%, 06/04/08 300 294
General Electric (A)
5.000%, 02/01/13 300 304
General Motors, Ser 91-A2
8.950%, 07/02/09 14 15
McDonnell Douglas
6.875%, 11/01/06 200 206
Raytheon (A)
6.550%, 03/15/10 400 427
Tyco International
7.200%, 10/15/08 225 241
Waste Management
7.000%, 10/15/06 350 360
--------
1,847
--------
INFORMATION TECHNOLOGY - 0.6%
International Business Machines
8.375%, 11/01/19 100 132
International Business Machines (Unsecured)
6.500%, 01/15/28 275 318
--------
450
--------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
46 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BALANCED FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - 0.8%
Boston Properties
5.000%, 06/01/15 $ 250 $ 244
EOP Operating (A)
6.800%, 01/15/09 300 317
--------
561
--------
TELECOMMUNICATION - 0.2%
Bell Atlantic of Maryland
8.000%, 10/15/29 75 93
New England Telephone & Telegraph
7.875%, 11/15/29 50 61
--------
154
--------
UTILITIES - 1.3%
FPL Group Capital
7.625%, 09/15/06 300 310
Kinder Morgan (A)
7.250%, 03/01/28 275 323
Virginia Electric & Power, Ser A
4.750%, 03/01/13 300 296
--------
929
--------
TOTAL CORPORATE OBLIGATIONS
(Cost $13,268) 13,377
--------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 9.3%
- --------------------------------------------------------------------------------
FHLMC
6.500%, 11/01/09 139 143
6.000%, 09/01/17 233 241
6.000%, 02/01/28 115 118
FHLMC, CMO REMIC, Ser 1626, Cl PT
6.000%, 12/15/08 159 162
FHLMC, CMO REMIC, Ser 2663, Cl QK
3.500%, 04/15/17 318 316
FNMA
8.000%, 08/01/24 8 8
8.000%, 05/01/25 33 36
8.000%, 07/01/26 11 12
7.500%, 09/01/26 11 11
7.000%, 09/01/25 21 22
7.000%, 07/01/26 50 53
7.000%, 09/01/26 16 17
7.000%, 12/01/27 43 45
6.500%, 05/01/14 118 123
6.500%, 03/01/24 9 10
6.500%, 01/01/28 51 52
6.500%, 05/01/29 36 37
6.000%, 08/01/14 251 259
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
FNMA -- (continued)
6.000%, 02/01/17 $ 226 $ 233
6.000%, 03/01/28 140 143
6.000%, 05/01/28 45 46
5.500%, 12/01/17 213 217
5.000%, 04/01/18 322 323
5.000%, 05/01/18 365 366
4.500%, 09/01/18 787 775
4.500%, 02/01/19 212 209
4.500%, 05/01/19 530 522
4.000%, 05/01/19 551 532
FNMA, CMO REMIC, Ser 25, Cl CD
3.500%, 03/25/17 371 361
GNMA
7.500%, 05/15/24 14 15
7.500%, 09/15/25 17 18
7.500%, 09/15/26 30 32
7.500%, 01/15/27 11 12
7.000%, 02/15/26 47 50
7.000%, 08/15/26 23 25
7.000%, 10/15/27 58 62
7.000%, 03/15/29 69 74
6.500%, 09/15/08 60 62
6.500%, 06/15/23 8 9
6.500%, 02/15/24 2 2
6.500%, 04/15/26 29 30
6.500%, 05/15/28 35 36
6.500%, 01/15/29 69 72
6.000%, 11/15/08 74 75
6.000%, 12/15/28 177 182
6.000%, 02/15/29 205 212
6.000%, 04/15/29 216 222
--------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $6,546) 6,582
--------
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 4.6%
- --------------------------------------------------------------------------------
U.S. Treasury Bonds (A)
8.125%, 08/15/19 760 1,045
7.250%, 05/15/16 800 997
7.125%, 02/15/23 200 262
U.S. Treasury Inflation Index Note (A)
3.000%, 07/15/12 865 932
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $2,999) 3,236
--------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 47
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BALANCED FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 1.6%
- --------------------------------------------------------------------------------
Bank One Issuance Trust,
Ser 2002-A4, Cl A4
2.940%, 06/16/08 $ 600 $ 599
Capital Auto Receivables Asset Trust,
Ser 2002-3, Cl A3
3.580%, 10/16/06 157 157
Pacific Gas, Ser 1997-1, Cl A7
6.420%, 09/25/08 169 171
USAA Auto Owner Trust,
Ser 2004-1, Cl A3
2.060%, 04/15/08 250 247
--------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,184) 1,174
--------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 1.2%
- --------------------------------------------------------------------------------
FNMA
6.375%, 06/15/09 400 428
5.000%, 01/15/07 100 101
3.250%, 11/15/07 325 318
--------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $870) 847
--------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 14.0%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $7,842,870
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%- 5.00%,
06/25/20-07/25/35, total
market value $8,232,709) (B) 7,841 7,841
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $1,500,427
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $1,575,000) (B) 1,500 1,500
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $575,021
(collateralized by a U.S. Government
obligation, par value $601,000, 3.25%,
01/15/09, total market value $586,923) 575 575
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $9,916) 9,916
--------
TOTAL INVESTMENTS - 117.9%
(Cost $77,770) 83,471
--------
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
PAYABLE UPON RETURN OF SECURITIES LOANED -- (18.1)% $(12,841)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED -- (0.5)% (313)
PAYABLE FOR FUND SHARES REDEEMED -- (0.1)% (98)
OTHER ASSETS AND LIABILITIES, NET -- 0.8%@ 560
--------
TOTAL OTHER ASSETS AND LIABILITIES - (17.9)% (12,692)
--------
NET ASSETS -- 100.0% $ 70,779
========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 66,908
Distributions in excess of net investment income (3)
Accumulated net realized loss on investments (1,827)
Net unrealized appreciation on investments 5,701
--------
NET ASSETS $ 70,779
========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($59,277,643 / 4,291,622 SHARES) $13.81
========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($7,408,169 / 537,333 SHARES) $13.79
========
MAXIMUM OFFERING PRICE PER SHARE --
CLASS A SHARES ($13.79 / 94.5%) $14.59
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($3,759,343 / 273,411 SHARES) $13.75
========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($333,556 / 24,289 SHARES) $13.73
========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 IS $12,467,502.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE NOTE
2 IN NOTES TO FINANCIAL STATEMENTS. CLASS B AND CLASS C HAVE CONTINGENT
DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
ADR -- AMERICAN DEPOSITARY RECEIPT
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
CL -- CLASS
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
48 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SMALL CAP GROWTH FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - 98.1%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 13.9%
Champion Enterprises* 24,575 $ 296
Coldwater Creek* 4,650 129
Design Within Reach* 16,125 301
Gaylord Entertainment* 7,775 373
Guitar Center* 4,450 287
HOT Topic (A)* 12,575 214
Insight Enterprises* 14,600 298
Jarden (A)* 9,037 347
La Quinta* 48,600 437
MarineMax* 15,100 502
Morningstar* 15,450 420
Priceline.com (A)* 20,300 504
Texas Roadhouse, Cl A* 10,175 383
WMS Industries (A)* 7,875 257
-----------
4,748
-----------
CONSUMER STAPLES - 2.4%
Central Garden and Pet* 10,713 537
Diamond Foods* 13,250 294
-----------
831
-----------
ENERGY - 7.5%
Alpha Natural Resources* 8,500 238
Hornbeck Offshore Services* 12,480 373
Parallel Petroleum* 28,845 319
Pioneer Drilling* 21,450 323
Range Resources 16,225 496
Spinnaker Exploration* 8,685 341
Superior Energy Services* 19,100 408
Superior Well Services* 2,575 47
-----------
2,545
-----------
FINANCIALS - 12.2%
ACE Cash Express* 14,825 349
Affiliated Managers Group (A)* 9,785 698
Apollo Investment 24,875 447
Boston Private Financial Holdings 15,660 449
CapitalSource (A)* 19,800 388
CB Richard Ellis Group, Cl A* 9,400 433
Conseco* 15,175 331
First Marblehead (A)* 8,865 308
Greenhill 8,956 343
Net 1 UEPS Technologies* 1,400 34
Signature Bank* 12,700 381
-----------
4,161
-----------
HEALTH CARE - 21.2%
Alexion Pharmaceuticals* 7,900 206
American Retirement* 29,750 421
Chemed 16,175 695
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
HEALTH CARE - (CONTINUED)
Covance* 18,860 $ 934
Immucor* 26,100 717
Impax Laboratories (A)* 12,850 204
Intuitive Surgical* 2,375 165
LifePoint Hospitals* 13,525 632
MGI Pharma* 13,070 357
Momenta Pharmaceuticals (A)* 20,405 512
Pediatrix Medical Group* 4,875 382
Renal Care Group* 7,025 330
SeraCare Life Sciences* 13,145 213
Symmetry Medical* 24,900 621
Telik* 19,450 331
WellCare Health Plans* 13,020 499
-----------
7,219
-----------
INDUSTRIALS - 13.2%
Advisory Board* 9,725 507
BE Aerospace* 16,700 293
Commercial Vehicle Group* 19,750 466
Corporate Executive Board 5,135 414
Gardner Denver* 9,925 408
Harsco 7,825 471
Hexcel* 16,605 287
HUB Group, Cl A* 2,075 64
IDEX 8,500 371
McDermott International* 12,800 303
Resources Connection* 7,250 218
TBS International, Cl A (A)* 18,625 193
UTI Worldwide 7,075 505
-----------
4,500
-----------
INFORMATION TECHNOLOGY - 25.0%
Advanced Energy Industries* 12,150 117
Anteon International (A)* 7,770 365
aQuantive* 8,255 156
Arris Group* 29,900 330
ATMI (A)* 5,200 166
Bankrate (A)* 8,640 217
Benchmark Electronics* 7,450 238
Cypress Semiconductor* 20,161 290
Digital Insight* 20,650 506
Digital River* 2,975 119
Entegris* 15,900 187
F5 Networks* 4,225 178
Formfactor* 14,050 367
Genesis Microchip* 10,825 269
Global Payments 5,140 340
Hyperion Solutions* 5,505 259
Informatica* 27,010 285
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 49
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SMALL CAP GROWTH FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
Ixia* 13,250 $ 262
Kanbay International* 25,375 562
MEMC Electronic Materials* 9,825 167
Microsemi* 22,900 489
Nice Systems ADR* 10,405 438
Openwave Systems (A)* 22,450 416
Salesforce.com* 7,825 184
Skyworks Solutions* 21,875 160
Trident Microsystems* 10,800 353
Trimble Navigation* 3,400 132
Websense* 4,650 232
Wind River Systems* 20,925 358
Witness Systems* 18,125 354
-----------
8,496
-----------
MATERIALS - 0.6%
Calgon Carbon 22,675 199
-----------
TELECOMMUNICATIONS - 0.8%
NeuStar* 10,125 283
-----------
UTILITIES - 1.3%
Pike Electric* 29,825 430
-----------
TOTAL COMMON STOCK
(Cost $28,145) 33,412
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 15.9%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on 08/01/05,
repurchase price $5,107,929 (collateralized by
various mortgage obligations, ranging in par
value $625,004-$10,121,000, 0.00%- 5.00%,
06/25/20-07/25/35, total market value $5,361,
824) (B) $5,106 5,106
Deutsche Bank
3.270%, dated 07/29/05, matures on 08/01/05,
repurchase price $304,600 (collateralized by a
U.S.Government obligation, par value $282,000,
5.75%, 08/15/10, total market value $310,981) 305 305
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $5,411) 5,411
-----------
TOTAL INVESTMENTS - 114.0%
(Cost $33,556) 38,823
-----------
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
RECEIVABLE FOR INVESTMENT SECURITIES SOLD -- 6.0% $ 2,050
PAYABLE UPON RETURN OF SECURITIES LOANED -- (15.0)% (5,106)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED -- (4.9)% (1,677)
OTHER ASSETS AND LIABILITIES, NET -- (0.1)%@ (43)
-----------
Total Other Assets and Liabilities - (14.0)% (4,776)
-----------
Net Assets -- 100.0% $ 34,047
===========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 27,529
Accumulated net realized gain on investments 1,251
Net unrealized appreciation on investments 5,267
-----------
NET ASSETS $ 34,047
==========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($27,941,371 / 1,905,831 SHARES) $14.66
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (C)
($4,534,609 / 310,867 SHARES) $14.59
===========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($14.59 / 94.5%) $15.44
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (C)
($526,401 / 36,589 SHARES) $14.39
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (C)
($1,044,612 / 72,606 SHARES) $14.39
===========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 IS
$4,925,335.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
50 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - 95.1%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 14.7%
American Axle & Manufacturing Holdings 36,100 $ 994
American Greetings, Cl A (A) 61,500 1,565
BorgWarner (A) 41,000 2,385
Brown Shoe 44,800 1,767
Burlington Coat Factory Warehouse 56,300 2,310
Culp* 65,400 298
Dave & Buster's* 48,100 908
Electronics Boutique Holdings (A)* 27,200 1,759
Handleman (A) 46,000 815
Landry's Restaurants 26,900 838
Lone Star Steakhouse & Saloon 45,300 1,362
M/I Homes (A) 20,000 1,192
MDC Holdings 39,276 3,355
Rent-A-Center* 47,750 1,007
Rex Stores* 65,200 1,013
Ryland Group 46,400 3,749
Sonic Automotive 35,800 834
Stage Stores* 40,600 1,793
Stride Rite 70,400 986
Trans World Entertainment* 82,000 861
Tupperware 59,700 1,273
Zale* 70,400 2,394
-----------
33,458
-----------
CONSUMER STAPLES - 5.8%
Alliance One International (A) 200,000 1,212
BJ's Wholesale Club (A)* 73,000 2,328
Chiquita Brands International (A) 62,600 1,889
Longs Drug Stores (A) 69,200 3,003
Nash Finch (A) 26,400 1,089
Ruddick (A) 65,900 1,816
Seaboard 400 688
Universal 22,900 1,092
-----------
13,117
-----------
ENERGY - 7.1%
Holly 67,600 3,165
NS Group* 73,300 3,111
Offshore Logistics* 29,600 1,066
Stone Energy* 35,100 1,868
Swift Energy* 56,300 2,296
Tesoro Petroleum* 64,900 3,129
Transmontaigne* 119,400 1,470
-----------
16,105
-----------
FINANCIALS - 26.1%
Advanta, Cl B 29,581 885
Agree Realty 24,500 751
American Home Mortgage Investment 34,400 1,321
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
AmerUs Group (A) 54,024 $ 2,787
Banner 9,800 287
Boykin Lodging* 147,000 2,203
Ceres Group* 211,100 1,330
City Holding 26,000 997
Commerce Group 44,600 2,781
Commercial Federal 43,900 1,488
Community Bank System 87,200 2,097
Community Trust Bancorp 21,592 724
Corus Bankshares 13,400 841
Crescent Real Estate Equity 110,600 2,159
Dime Community Bancshares 45,225 734
Federal Agricultural Mortgage, Cl C 7,200 183
First Charter (A) 47,375 1,173
First Indiana 37,300 1,206
Flagstar Bancorp (A) 82,600 1,522
Fremont General 85,300 2,085
Greater Bay Bancorp (A) 69,600 1,826
Highwoods Properties (A) 48,000 1,519
Horace Mann Educators 108,200 2,162
HRPT Properties Trust 217,900 2,809
Independent Bank 53,361 1,648
IndyMac Bancorp (A) 53,300 2,324
LandAmerica Financial Group (A) 43,100 2,701
Mission West Properties 41,400 432
NBT Bancorp 55,200 1,373
Novastar Financial (A) 22,800 924
Oriental Financial Group (A) 35,816 571
Presidential Life 23,900 440
Provident Bankshares (A) 49,200 1,673
RAIT Investment Trust 31,300 992
Republic Bancorp (A) 87,925 1,301
Scottish Re Group 73,200 1,760
Stancorp Financial Group 22,900 1,977
United Bankshares 71,600 2,707
Webster Financial 28,100 1,354
Westcorp 21,000 1,217
-----------
59,264
-----------
HEALTH CARE - 2.3%
Alpharma, Cl A 86,400 1,213
Kindred Healthcare* 51,100 1,878
Lumenis Limited (A)* 13 --
PerkinElmer 103,100 2,163
-----------
5,254
-----------
INDUSTRIALS - 17.8%
Alaska Air Group* 36,900 1,291
Albany International, Cl A 37,700 1,321
Ameron International 22,900 875
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 51
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SMALL CAP VALUE FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
INDUSTRIALS - (CONTINUED)
AO Smith 32,400 $ 875
Applied Industrial Technologies 66,150 2,363
Banta 31,000 1,480
Brink's 36,000 1,302
Dollar Thrifty Automotive Group* 53,800 1,684
EnPro Industries* 39,500 1,201
GATX 77,900 2,945
Griffon (A)* 68,300 1,765
Harsco 30,400 1,832
IKON Office Solutions 119,300 1,145
John H Harland 47,500 1,835
NACCO Industries, Cl A 13,100 1,514
Ryder System 45,100 1,758
Sourcecorp* 72,600 1,596
Standex International 27,400 814
Stewart & Stevenson Services 44,700 1,035
Timken 47,100 1,247
Toro (A) 70,000 2,817
United Rentals* 111,900 2,081
Walter Industries (A) 61,800 2,751
Woodward Governor 13,700 1,229
Yellow Roadway* 6,727 356
York International (A) 28,700 1,226
-----------
40,338
-----------
INFORMATION TECHNOLOGY - 9.7%
Advanced Energy Industries* 195,100 1,873
Arris Group* 131,500 1,452
Aspect Communications* 79,100 904
Aspen Technology (A)* 157,800 841
Atari* 403,900 1,078
Black Box 25,220 1,105
Brightpoint* 50,300 1,220
BroadVision (A)* 67,810 58
DocuCorp International* 108,200 745
Earthlink* 239,400 2,281
Gerber Scientific* 73,200 441
Methode Electronics 59,500 752
Photronics* 118,500 3,181
Storage Technology* 55,400 2,035
Sybase (A)* 113,900 2,424
Western Digital (A)* 114,200 1,712
-----------
22,102
-----------
MATERIALS - 7.2%
Albemarle 39,200 1,494
FMC (A)* 57,200 3,459
Glatfelter 69,800 890
Greif, Cl A (A) 47,900 3,018
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMON STOCK+ - (CONTINUED)
- --------------------------------------------------------------------------------
MATERIALS - (CONTINUED)
HB Fuller 42,600 $ 1,471
OM Group* 59,000 1,382
Quanex 43,950 2,681
Schulman A 63,000 1,189
Wellman 84,300 703
-----------
16,287
-----------
TELECOMMUNICATIONS - 0.4%
Commonwealth Telephone Enterprises* 9,991 427
Talk America Holdings* 62,200 544
-----------
971
-----------
UTILITIES - 4.0%
Avista 61,900 1,179
Duquesne Light Holdings (A) 103,200 2,002
Nicor (A) 42,900 1,751
PNM Resources 46,050 1,354
UIL Holdings 17,900 975
Unisource Energy 52,600 1,696
-----------
8,957
-----------
TOTAL COMMON STOCK
(Cost $150,337) 215,853
-----------
- --------------------------------------------------------------------------------
MASTER NOTES (B) - 7.7%
- --------------------------------------------------------------------------------
Bank of America
3.393%, 08/01/05 $ 7,500 7,500
Bear Stearns
3.463%, 08/03/05 10,000 10,000
-----------
TOTAL MASTER NOTES
(Cost $17,500) 17,500
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (B) (C) - 6.7%
- --------------------------------------------------------------------------------
First Tennessee Bank, MTN
3.330%, 03/21/06 2,500 2,500
General Electric, MTN
3.364%, 03/29/06 5,000 5,003
Morgan Stanley
3.383%, 08/19/05 2,500 2,500
3.370%, 07/03/06 2,500 2,500
Sigma Finance
3.330%, 07/07/06 2,500 2,500
-----------
TOTAL CORPORATE OBLIGATIONS
(Cost $15,003) 15,003
-----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
52 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SMALL CAP VALUE FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 11.2%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $9,361,105
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $9,826,409) (B) $ 9,358 $ 9,358
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $6,001,707
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $6,300,000) (B) 6,000 6,000
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $10,274,535
(collateralized by a U.S. Government
obligation, par value $10,634,000,
3.00%, 11/15/07, total market
value $10,477,618) 10,272 10,272
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost $25,630) 25,630
-----------
TOTAL INVESTMENTS - 120.7%
(Cost $208,470) 273,986
-----------
PAYABLE UPON RETURN OF SECURITIES LOANED --
(21.1)% (47,861)
PAYABLE FOR INVESTMENT SECURITIES PURCHASED
-- (0.3)% (615)
PAYABLE FOR FUND SHARES REDEEMED -- (0.0)% (78)
OTHER ASSETS AND LIABILITIES, NET -- 0.7%@ 1,594
-----------
TOTAL OTHER ASSETS AND LIABILITIES -- (20.7)% (46,960)
-----------
NET ASSETS -- 100.0% $ 227,026
===========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital (unlimited authorized -
no par value) $ 149,028
Undistributed net investment income 292
Accumulated net realized gain on investments 12,190
Net unrealized appreciation on investments 65,516
-----------
NET ASSETS $ 227,026
===========
- --------------------------------------------------------------------------------
Description
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($135,230,751 / 6,915,638 SHARES) $19.55
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($54,885,043 / 2,856,399 SHARES) $19.21
===========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($19.21 / 94.5%) $20.33
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($15,753,109 / 851,208 SHARES) $18.51
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($21,157,025 / 1,147,666 SHARES) $18.43
===========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 IS
$46,151,828.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
CL -- CLASS
MTN -- MEDIUM TERM NOTE
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 53
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.5%
- --------------------------------------------------------------------------------
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 $ 1,043
Berryessa, Unified School District,
GO, MBIA Insured
5.375%, 03/01/12 460 511
Brentwood, Unified School District,
Ser B, GO, FGIC Insured
Callable 08/01/10 @ 101
4.850%, 08/01/14 410 437
Burlingame, Elementary School District,
GO, FSA Insured
5.250%, 07/15/16 795 896
California State, Department of
Transportation, Federal Highway
Grant Anticipation Bonds, Ser A,
RB, FGIC Insured
5.000%, 02/01/14 2,000 2,197
California State, Department of Water
Resources Power Supply, Ser A,
RB, AMBAC Insured
Callable 05/01/12 @ 101
5.500%, 05/01/15 1,225 1,367
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser J-2, RB
6.000%, 12/01/06 1,400 1,460
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Q, ETM, RB
6.000%, 12/01/09 215 240
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Q, RB
6.000%, 12/01/07 1,500 1,603
6.000%, 12/01/09 285 317
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser W, RB, FSA Insured
5.500%, 12/01/14 1,315 1,507
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Z, RB, FGIC Insured
5.000%, 12/01/12 1,000 1,095
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
California State, Educational Facilities
Authority, Loyola-Marymount University,
Ser A, RB, MBIA Insured
Callable 10/01/11 @ 101
4.500%, 10/01/12 $1,560 $ 1,652
California State, Educational Facilities
Authority, Stanford University,
Ser P, RB
5.250%, 12/01/13 800 899
California State, Educational Facilities
Authority, Stanford University,
Ser R, RB
5.000%, 11/01/11 610 667
California State, GO
7.000%, 08/01/07 1,000 1,078
6.250%, 04/01/08 1,000 1,078
6.250%, 09/01/08 695 758
California State, GO, AMBAC Insured
6.500%, 09/01/06 1,000 1,040
California State, GO, FGIC Insured
4.500%, 09/01/10 1,000 1,060
California State, Public Works Board
Lease, Various University of California
Projects, Ser A, RB, AMBAC Insured
Callable 12/01/07 @ 102
5.100%, 12/01/10 1,000 1,065
Central Coast, Water Authority,
Water Project Regional Facilities,
Ser A, RB, AMBAC Insured
Callable 10/01/06 @ 102
5.000%, 10/01/07 2,250 2,351
Chaffey, Unified High School District,
GO, FGIC Insured
5.000%, 08/01/15 1,000 1,104
Coast Community College, Coastline
Community College Center Project,
COP, MBIA Insured
Callable 02/01/06 @ 102
5.500%, 02/01/11 640 661
5.200%, 02/01/08 500 516
Coast Community College, GO, MBIA Insured
5.250%, 08/01/15 1,000 1,125
Conejo Valley, Unified School District, GO
5.000%, 08/01/09 1,250 1,333
Contra Costa County, Merrithew
Memorial Hospital Project,
COP, MBIA Insured
Callable 11/01/07 @ 102
5.500%, 11/01/12 2,160 2,306
5.200%, 11/01/09 2,000 2,132
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
54 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Contra Costa, Transportation Authority,
Sales Tax, Ser A, ETM, RB
Callable 09/06/05 @ 100
6.875%, 03/01/07 $ 340 $ 354
Contra Costa, Transportation Authority,
Sales Tax, Ser A, RB, FGIC Insured
6.000%, 03/01/09 1,000 1,099
Cupertino, Unified School District,
GO, FSA Insured
Callable 08/01/11 @ 100
5.250%, 08/01/13 595 653
East Bay, Municipal Utility District,
Water System Project, RB, MBIA Insured
Callable 06/01/11 @ 100
5.250%, 06/01/13 500 550
5.250%, 06/01/14 1,250 1,372
Eastern Municipal Water District,
Ser A, COP, FGIC Insured
Callable 07/01/11 @ 100
5.375%, 07/01/16 2,500 2,745
5.375%, 07/01/17 2,410 2,639
5.250%, 07/01/12 300 328
5.250%, 07/01/13 1,000 1,095
Escondido, Unified High School District,
ETM, GO, MBIA Insured
Callable 11/01/06 @ 102
5.600%, 11/01/09 1,000 1,052
Escondido, Unified School District,
Ser A, GO, FGIC Insured
Callable 09/01/07 @ 102
5.000%, 09/01/08 500 530
Fallbrook, Unified High School District,
GO, FGIC Insured
5.375%, 09/01/12 250 280
Fremont, Unified High School District,
Ser B, ETM, GO
5.000%, 09/01/10 600 651
Fresno, Joint Powers Financing Authority,
Fresno City Hall, RB, AMBAC Insured
Callable 08/01/10 @ 100
4.600%, 08/01/11 500 527
Glendale, Unified School District,
Ser B, GO, FSA Insured
Callable 09/01/08 @ 101
4.625%, 09/01/09 670 706
Hollister, Redevelopment Agency,
Community Development Project,
TA, AMBAC Insured
Callable 10/01/07 @ 102
5.000%, 10/01/08 740 785
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Joshua Basin-Hi Desert Financing Authority,
Water District Project, RB, AMBAC Insured
4.900%, 05/01/09 $ 465 $ 498
Kings River, Conservation District,
Pine Flat Power, Ser F, RB
4.625%, 01/01/11 500 528
Livermore-Amador Valley, Water
Management Authority,
Ser A, RB, AMBAC Insured
Callable 08/01/11 @ 100
5.250%, 08/01/14 750 819
5.000%, 08/01/13 400 432
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax Project,
A-1st Ser, Ser B, RB, FSA Insured
5.250%, 07/01/11 1,550 1,709
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax Project,
C-2nd Ser, Ser A, RB, AMBAC Insured
5.500%, 07/01/10 1,050 1,161
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax Project,
C-2nd Ser, Ser A, RB, FGIC Insured
5.000%, 07/01/10 2,000 2,166
Los Angeles, Department of Water & Power,
Ser A-A-1, RB, MBIA Insured
5.250%, 07/01/10 1,710 1,871
5.250%, 07/01/11 3,485 3,843
Los Angeles, Department of Water & Power,
Ser A-A-1, RB, MBIA Insured
Callable 07/01/11 @ 100
5.250%, 07/01/13 2,025 2,218
Los Angeles, Department of Water & Power,
Ser B, RB, MBIA Insured
5.000%, 07/01/13 430 473
Los Angeles, Los Angeles County Public
Works, RB, Ser A
Callable 10/01/07 @ 101
5.500%, 10/01/08 1,225 1,302
Los Angeles, Ser A, GO, FGIC Insured
5.250%, 09/01/09 600 651
Los Angeles, Ser A, GO, MBIA Insured
5.250%, 09/01/11 250 276
Los Angeles, Unified School District,
GO, MBIA Insured
5.500%, 07/01/12 755 849
Los Angeles, Unified School District,
Ser A, GO, FGIC Insured
6.000%, 07/01/07 1,300 1,377
6.000%, 07/01/10 850 957
6.000%, 07/01/11 1,385 1,579
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 55
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Los Angeles, Unified School District,
Ser D, GO, FGIC Insured
Prerefunded @ 100 (A)
5.500%, 07/01/10 $2,000 $ 2,210
Los Angeles, Unified School District,
Ser E, GO, MBIA Insured
Prerefunded @ 100 (A)
5.500%, 07/01/12 1,390 1,570
Los Angeles, Waste Water Systems,
Ser C, RB, MBIA Insured
5.375%, 06/01/12 1,145 1,274
Los Gatos-Saratoga, Joint Unified High
School, Ser B, GO
Prerefunded @ 101 (A)
4.750%, 12/01/10 365 396
4.600%, 12/01/10 875 942
M-S-R Public Power Authority,
San Juan Project, Ser I, RB, MBIA Insured
Callable 07/01/11 @ 100
5.000%, 07/01/14 2,440 2,615
Menlo Park, Community Development
Agency, Las Pulgas Community
Development Project, TA, AMBAC Insured
Callable 06/01/10 @ 102
4.650%, 06/01/11 520 553
Merced County, Construction & Equipment
Project, CSAC Lease, ETM, COP, FSA Insured
Callable 09/02/05 @ 100
6.000%, 10/01/05 640 644
Metropolitan, Water District of
Southern California, Ser A, ETM, RB
5.250%, 07/01/11 380 420
Metropolitan, Water District of
Southern California, Ser A, RB
5.250%, 07/01/11 1,045 1,147
Metropolitan, Water District of
Southern California, Ser A, RB
Callable 07/01/11 @ 101
5.375%, 07/01/12 2,185 2,425
Metropolitan, Water District of
Southern California, Ser B,
RB, MBIA Insured
Callable 07/01/06 @ 102
5.250%, 07/01/07 1,080 1,126
Metropolitan, Water District of
Southern California, Ser C, RB
Callable 01/01/07 @ 102
6.000%, 07/01/07 1,900 2,010
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Metropolitan, Water District of
Southern California, Waterworks Project,
Ser B, GO
4.000%, 03/01/11 $1,000 $ 1,034
Mountain View, Shoreline Regional Park
Community, Ser A, TA, MBIA Insured
Callable 08/01/06 @ 102
5.600%, 08/01/10 500 523
5.400%, 08/01/08 700 731
North Orange County, Community
College District, GO, MBIA Insured
5.000%, 08/01/15 1,000 1,104
Norwalk, La Mirada Unified School District,
Ser A, GO, FGIC Insured
Prerefunded @ 100 (A)
5.000%, 08/01/13 1,800 1,991
Oak Park, Unified School District,
GO, MBIA Insured
5.250%, 05/01/08 1,250 1,328
Orange County, Local Transportation
Authority, Measure M, Second Senior,
Ser A, RB, MBIA Insured
5.500%, 02/15/08 2,000 2,127
5.500%, 02/15/10 1,200 1,318
5.500%, 02/15/11 250 277
Orange County, Water District,
Ser A, COP, MBIA Insured
Callable 08/15/07 @ 101
4.875%, 08/15/10 1,000 1,045
Paramount, Unified School District,
GO, FSA Insured
5.000%, 09/01/15 1,000 1,105
Port Oakland, Ser M, RB, FGIC Insured
Callable 11/01/12 @ 100
5.250%, 11/01/13 1,000 1,104
Redwood City, Elementary School District,
GO, FGIC Insured
5.500%, 08/01/10 1,140 1,262
5.500%, 08/01/14 900 1,027
Riverside County, Transportation
Commission, Sales Tax Revenue,
Ser A, RB, AMBAC Insured
5.750%, 06/01/09 740 813
Sacramento, Municipal Utility District,
Electric, Ser C, ETM, RB, FGIC Insured
Callable 09/02/05 @ 100
5.750%, 11/15/08 570 573
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
56 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Sacramento, Municipal Utility District,
Ser O, RB, MBIA Insured
5.250%, 08/15/10 $ 500 $ 548
Sacramento, Municipal Utility District,
Ser P, RB, FSA Insured
Callable 08/15/11 @ 100
5.250%, 08/15/13 1,585 1,739
Sacramento, Municipal Utility District,
Ser R, RB, MBIA Insured
Callable 08/15/13 @ 100
5.000%, 08/15/16 1,000 1,081
San Bernardino County, Community
College District, GO, FSA Insured
5.000%, 08/01/15 1,000 1,104
San Bernardino County, Transportation
Authority, Ser A, ETM, RB, FGIC Insured
Callable 09/02/05 @ 100
6.000%, 03/01/06 355 362
San Bernardino County, Transportation
Authority, Ser A, RB, FSA Insured
Callable 03/01/08 @ 101
5.000%, 03/01/09 1,000 1,060
San Bernardino County, Transportation
Authority, Ser A, RB, MBIA Insured
6.250%, 03/01/10 2,000 2,257
San Bernardino, Municipal Water Department,
Sewer Authority, COP, FGIC Insured
4.500%, 02/01/09 1,025 1,075
San Bernardino, Municipal Water Department,
Sewer Authority, COP, FGIC Insured
Callable 02/01/09 @ 101
5.000%, 02/01/11 1,130 1,208
San Diego County, Regional Transportation
Commission, Second Senior,
Ser A, RB, AMBAC Insured
Callable 04/01/06 @ 102
5.000%, 04/01/08 1,500 1,551
San Diego, Public Facilities Financing
Authority, RB, FGIC Insured
6.000%, 05/15/06 800 821
6.000%, 05/15/07 2,000 2,113
San Diego, Public Facilities Financing
Authority, RB, MBIA Insured
Callable 08/01/12 @ 100
5.000%, 08/01/14 1,000 1,083
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
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 $ 1,042
San Francisco City & County, Public
Utilities Commission, Water Revenue,
Ser A, RB, FSA Insured
5.000%, 11/01/10 1,000 1,088
5.000%, 11/01/11 1,500 1,641
San Francisco City & County, Public
Utilities Commission, Water Revenue,
Ser B, RB, MBIA Insured
Callable 11/01/12 @ 100
5.000%, 11/01/15 1,250 1,349
San Francisco, Bay Area Rapid Transit
District, RB, AMBAC Insured
Callable 07/01/11 @ 100
5.250%, 07/01/14 1,150 1,260
San Joaquin County, Capital Facilities
Project, COP, MBIA Insured
4.800%, 11/15/07 1,000 1,045
San Joaquin County, Delta Community
College District, Election 2004,
Ser A, GO, FSA Insured
4.500%, 08/01/15 1,000 1,062
San Jose, Financing Authority,
Convention Center Project, Ser F, RB,
MBIA Insured
4.250%, 09/01/11 1,765 1,855
San Jose, Libraries & Parks Project, GO
4.750%, 09/01/09 1,000 1,062
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
ETM, TA, MBIA Insured
6.000%, 08/01/08 690 751
6.000%, 08/01/09 500 555
6.000%, 08/01/10 330 373
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
TA, AMBAC Insured
Callable 08/01/08 @ 102
5.000%, 08/01/09 1,500 1,603
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
TA, MBIA Insured
6.000%, 08/01/08 1,410 1,529
6.000%, 08/01/09 1,000 1,106
6.000%, 08/01/10 670 752
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 57
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
San Jose, Unified School District,
Ser B, GO, MBIA Insured
Callable 08/01/08 @ 102
4.000%, 08/01/09 $ 800 $ 828
San Juan, Unified School District,
GO, FSA Insured
5.250%, 08/01/08 500 534
5.250%, 08/01/10 1,150 1,260
San Mateo County, Transit District,
Ser A, RB, MBIA Insured
5.250%, 06/01/16 2,000 2,252
San Mateo, Unified High School District,
Ser A, GO, FGIC Insured
Prerefunded @100 (A)
5.375%, 09/01/11 2,195 2,446
San Ramon Valley, Unified School District,
GO, FSA Insured
Callable 08/01/14 @ 100
5.250%, 08/01/18 1,000 1,099
Santa Ana, Community Redevelopment
Agency, Mainplace Project,
Ser E, ETM, RB
6.400%, 12/15/10 465 511
Santa Maria, JT. Unified High School District,
Ser A, GO, FSA Insured
5.500%, 08/01/15 510 584
Solano County, Community College,
Ser A, GO, MBIA Insured
Prerefunded @ 100 (A)
5.000%, 08/01/13 1,865 2,063
South Orange County, Public Financing
Authority, Foothill Area,
Ser C, RB, FGIC Insured
7.500%, 08/15/07 1,000 1,090
South Placer, Waste Water Authority,
Ser A, RB, FGIC Insured
4.500%, 11/01/10 1,000 1,064
Southern California, Public Power Authority,
Ser A, RB, FSA Insured
5.375%, 01/01/09 1,610 1,730
Turlock, Irrigation District, Ser A, RB,
MBIA Insured
6.000%, 01/01/08 1,425 1,526
6.000%, 01/01/11 500 565
- --------------------------------------------------------------------------------
Description Par (000)/Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Upland, Community Redevelopment Agency,
Merged Project, Ser A, TA, AMBAC Insured
Callable 09/01/08 @ 102
4.200%, 09/01/09 $ 860 $ 896
West Basin, Municipal Water District,
1992 Project, Ser A, COP, AMBAC Insured
Callable 08/01/07 @ 101
5.000%, 08/01/08 425 447
West Hollywood, COP, MBIA Insured
Callable 02/01/08 @ 102
4.550%, 02/01/09 665 698
Wiseburn, School District,
Ser A, GO, FGIC Insured
Prerefunded @ 100 (A)
4.900%, 08/01/10 500 540
4.500%, 08/01/10 330 350
-----------
TOTAL MUNICIPAL BONDS
(Cost $155,241) 160,825
-----------
- --------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY - 0.4%
- --------------------------------------------------------------------------------
BlackRock Provident California Tax Free
Money Market 709,906 710
-----------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $710) 710
-----------
TOTAL INVESTMENTS - 98.9%
(Cost $155,951) 161,535
-----------
PAYABLE FOR FUND SHARES REDEEMED -- (0.2)% (357)
OTHER ASSETS AND LIABILITIES, NET -- 1.3%@ 2,196
-----------
OTHER ASSETS AND LIABILITIES -- 1.1% 1,839
-----------
NET ASSETS -- 100.0% $ 163,374
===========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 156,341
Undistributed net investment income 186
Accumulated net realized gain on investments 1,263
Net unrealized appreciation on investments 5,584
-----------
NET ASSETS $ 163,374
===========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
58 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description
- --------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($102,058,622 / 10,082,731 SHARES) $10.12
===========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (B)
($54,029,892 / 5,359,398 SHARES) $10.08
===========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($10.08 / 97.75%) $10.31
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (B)
($6,356,911 / 630,837 SHARES) $10.08
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (B)
($928,082 / 92,239 SHARES) $10.06
===========
- --------------------------------------------------------------------------------
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
(B) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE
CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL
STATEMENTS).
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
SER -- SERIES
TA -- TAX ALLOCATION
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 59
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 100.8%
- --------------------------------------------------------------------------------
ARIZONA - 7.2%
Arizona State, Transportation Board
& Highway Revenue, Ser A, RB
Callable 07/01/12 @ 102
5.250%, 07/01/17 $1,000 $ 1,109
Mesa, Street & Highway Authority, RB,
FSA Insured
6.500%, 07/01/10 750 841
Phoenix, GO, Prerefunded @ 101 (A)
5.000%, 07/01/09 2,370 2,551
Phoenix, Ser A, GO
6.250%, 07/01/17 1,000 1,226
Tempe, Unified High School District,
Ser B, GO, FGIC Insured
5.125%, 07/01/07 1,000 1,041
---------
6,768
---------
CALIFORNIA - 14.7%
California State, Department of
Transportation, Federal Highway
Grant Anticipation Bonds,
Ser A, RB, FGIC Insured
5.000%, 02/01/14 1,000 1,099
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Z, RB, FGIC Insured
5.000%, 12/01/12 500 548
California State, Department of Water
Resources, Ser X, RB, FGIC Insured
5.500%, 12/01/15 600 690
California State, Educational Facilities
Authority, Loyola-Marymount University,
Ser A, RB, MBIA Insured
Callable 10/01/11 @ 101
4.500%, 10/01/12 1,000 1,059
California State, GO, AMBAC Insured
5.500%, 10/01/09 2,000 2,189
California State, GO, FGIC Insured
5.750%, 02/01/11 1,100 1,230
Contra Costa, Water District, Ser E, RB,
AMBAC Insured
6.250%, 10/01/12 1,000 1,124
East Bay, Municipal Utility District, Water
System Project, RB, MBIA Insured
Callable 06/01/11 @ 100
5.250%, 06/01/13 800 880
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
CALIFORNIA - (CONTINUED)
Eastern Municipal Water District,
Ser A, COP, FGIC Insured
Callable 07/01/11 @ 100
5.375%, 07/01/16 $ 620 $ 681
Elsinore Valley, Municipal Water District,
COP, FGIC Insured
5.375%, 07/01/18 500 569
Los Angeles, Ser A, GO, MBIA Insured
5.250%, 09/01/12 375 417
San Jose, Redevelopment Agency, ETM,
TA, MBIA Insured
6.000%, 08/01/15 330 395
San Jose, Redeveopment Agency, TA,
MBIA Insured
6.000%, 08/01/15 670 789
San Ramon Valley, Unified School District,
GO, FSA Insured
Callable 08/01/14 @ 100
5.250%, 08/01/18 1,670 1,835
Southern California Public Power
Authority, Hydroelectric Power,
Ser A, RB, FSA Insured
Callable 10/01/11 @ 100
5.250%, 10/01/12 245 268
---------
13,773
---------
COLORADO - 1.5%
Denver City & County, Ser A, GO
5.250%, 08/01/06 1,000 1,024
Regional Transportation District, Sales Tax,
Ser B, RB, AMBAC Insured
5.250%, 11/01/12 350 387
---------
1,411
---------
DELAWARE - 1.5%
Delaware River & Bay Authority,
RB, FGIC Insured
Callable 01/01/06 @ 102
5.000%, 01/01/07 1,340 1,379
---------
FLORIDA - 2.1%
Florida State, Board of Education, Public
Education Capital Outlay, Ser A, GO
5.000%, 06/01/08 1,300 1,369
Jacksonville, Local Government, Sales Tax
Revenue, RB, FGIC Insured
5.500%, 10/01/13 500 565
---------
1,934
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
60 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
GEORGIA - 4.1%
Atlanta, Water & Wastewater Revenue,
Ser A, RB, FGIC Insured
5.500%, 11/01/13 $1,000 $ 1,131
Georgia State, Ser E, GO
5.250%, 02/01/09 2,525 2,704
---------
3,835
---------
HAWAII - 5.8%
Hawaii County, Ser A, GO, FGIC Insured
Callable 07/15/11 @ 100
5.500%, 07/15/13 635 701
Hawaii State, Highway Revenue,
Ser B, RB, FSA Insured
5.000%, 07/01/15 1,000 1,101
Hawaii State, Ser CS, GO, MBIA Insured
5.000%, 04/01/08 1,000 1,049
Honolulu City & County, Ser A, GO,
FSA Insured
Prerefunded @ 100 (A) (C)
5.375%, 09/01/11 1,000 1,109
Kauai County, Ser A, GO, MBIA Insured
Callable 08/01/11 @ 100
5.625%, 08/01/13 500 557
Maui County, Ser A, GO, FGIC Insured
5.250%, 03/01/07 950 984
---------
5,501
---------
ILLINOIS - 6.4%
Chicago, O'Hare International Airport,
2nd Lien, Ser C, RB, MBIA Insured
5.000%, 01/01/08 1,000 1,043
5.000%, 01/01/10 1,000 1,066
Cook County, Ser A, GO, FGIC Insured
Callable 11/15/08 @ 101
4.500%, 11/15/09 1,000 1,047
Du Page & Will Counties, Community
School District, Ser B, GO, FGIC Insured
5.000%, 12/30/07 2,700 2,820
---------
5,976
---------
MASSACHUSETTS - 4.6%
Massachusetts State, Consolidated Loan,
Ser A, GO, AMBAC Insured
Prerefunded @ 101 (A)
5.000%, 03/01/07 1,000 1,043
Massachusetts State, Consolidated Loan,
Ser C, GO
5.250%, 08/01/08 1,000 1,059
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
MASSACHUSETTS - (CONTINUED)
Massachusetts State, School Building
Authority, Ser A, RB, FSA Insured (B)
5.000%, 08/15/14 $1,000 $ 1,100
Massachusetts State, Water Resources
Authority, Ser A, RB, MBIA Insured
5.250%, 08/01/16 1,000 1,125
---------
4,327
---------
MICHIGAN - 2.2%
Huron Valley, School District, GO,
FGIC Insured
4.350%, 05/01/08 1,000 1,034
Michigan State, GO
Callable 12/01/05 @ 102
5.125%, 12/01/06 1,000 1,027
---------
2,061
---------
MINNESOTA - 1.1%
Minneapolis, Ser B, GO
Callable 09/01/05 @ 100
5.050%, 09/01/06 1,000 1,002
---------
MISSOURI - 0.8%
Kansas City, Streetlight Project, Ser B, GO
Callable 02/01/07 @ 101
6.000%, 02/01/08 750 790
---------
NEBRASKA - 1.1%
Omaha Public Power District,
Electric Revenue, Ser D, RB
5.000%, 02/01/07 1,000 1,029
---------
NEVADA - 1.5%
Clark County, School District,
Ser A, GO, FSA Insured
Callable 12/15/12 @ 103
5.500%, 06/15/16 500 570
Las Vegas, Water District Revenue,
Ser B, GO, MBIA Insured
Callable 12/01/12 @ 100
5.250%, 06/01/14 300 331
Nevada State, Capital Improvements,
Ser A, GO, MBIA Insured
Callable 05/01/12 @ 100
5.000%, 11/01/16 500 536
---------
1,437
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 61
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
NEW JERSEY - 2.4%
New Jersey State, Ser L, GO,
AMBAC Insured
5.250%, 07/15/16 $1,000 $ 1,124
New Jersey State, Transportation Trust
Fund Authority, Ser C, RB, MBIA Insured
5.250%, 06/15/15 1,000 1,112
---------
2,236
---------
NEW YORK - 2.3%
New York State Thruway Authority,
Highway & Board, Ser B, RB,
FGIC Insured
5.000%, 04/01/08 1,000 1,050
New York State, Ser M, GO, FSA Insured
5.000%, 04/01/15 1,000 1,093
---------
2,143
---------
OREGON - 10.0%
Chemeketa, Community College
District, ETM, GO, FGIC Insured
5.500%, 06/01/12 1,060 1,192
Jackson County, Juvenile Services Center,
GO, FSA Insured
5.000%, 06/01/10 1,000 1,077
McMinnville, School District No. 40,
GO, FSA Insured
5.000%, 06/15/11 1,620 1,759
Portland, Sewer Systems,
Ser A, RB, FGIC Insured
Callable 06/01/07 @ 100
5.000%, 06/01/08 2,000 2,073
Washington County, School District
Authority, No. 15, GO, FSA Insured
5.000%, 06/15/14 1,000 1,100
Washington, Multnomah & Yamill Counties,
School District Authority, GO, MBIA Insured
5.000%, 06/01/11 1,000 1,085
Yamhill County, School District Authority,
No. 29J, GO, FGIC Insured
5.250%, 06/15/16 1,000 1,120
---------
9,406
---------
PENNSYLVANIA - 2.6%
Pennsylvania State, First Ser, GO,
MBIA Insured
5.000%, 06/01/09 1,100 1,173
Pennsylvania State, Second Ser, GO
5.250%, 10/01/09 1,155 1,246
---------
2,419
---------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
TENNESSEE - 1.1%
Johnson City, Water & Sewer System, GO,
FGIC Insured
5.250%, 06/01/08 $1,000 $ 1,059
---------
TEXAS - 5.6%
Houston, Water & Sewer System Revenue,
Ser A, RB, FSA Insured
Prerefunded @ 100 (A)
5.250%, 12/01/11 680 751
Texas State, University Systems, Revenue
Financing System, RB, FSA Insured
Callable 03/15/10 @ 100
4.800%, 03/15/11 1,170 1,233
University of Texas, Revenue Financing
System, Ser B, RB
5.250%, 08/15/06 2,000 2,050
University of Texas, Revenue Financing
System, Ser B, RB
Prerefunded @ 102 (A)
4.800%, 08/15/06 1,200 1,248
---------
5,282
---------
UTAH - 1.7%
Utah State, Board Regents Auxiliary
& Campus Facilities Revenue,
Ser A, RB, MBIA Insured
Callable 04/01/15 @ 100 (B)
5.000%, 04/01/17 1,500 1,627
---------
VIRGINIA - 1.1%
Virginia State, Northern Virginia
Transportation Board, Ser A, RB
Callable 05/15/06 @ 101
5.000%, 05/15/08 1,000 1,026
---------
WASHINGTON - 15.9%
CDP--King County III, Lease Revenue
Authority, King Street Center Project,
RB, MBIA Insured
Callable 06/01/07 @ 101
5.000%, 06/01/09 1,000 1,046
King & Snohomish Counties, School District
Authority, GO, FGIC Insured
Callable 12/01/07 @ 100
5.250%, 12/01/09 1,125 1,180
King & Snohomish Counties, School District
Authority, GO, FGIC Insured
Prerefunded @ 100 (A)
5.250%, 12/01/07 1,610 1,694
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
62 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000)/Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
WASHINGTON - (CONTINUED)
King County, School District No. 408,
GO, AMBAC Insured
6.000%, 12/01/08 $1,000 $ 1,088
King County, School District No. 410,
GO, FGIC Insured
5.500%, 12/01/10 1,285 1,352
Pierce County, GO, AMBAC Insured
Callable 08/01/15 @ 100
5.125%, 08/01/16 1,000 1,102
Port of Seattle, Ser A, RB, FGIC Insured
6.000%, 10/01/06 1,000 1,036
Seattle, Limited Tax, Ser B, GO
5.500%, 03/01/11 2,000 2,205
Seattle, Municipal Light & Power Revenue
Authority, Ser B, RB, MBIA Insured
Callable 06/01/08 @ 101
4.750%, 06/01/09 1,000 1,048
Skagit County, School District No. 103,
GO, FGIC Insured
6.250%, 12/01/06 1,000 1,044
6.250%, 12/01/07 1,000 1,072
Washington State, Ser A, GO
Prerefunded @ 100 (A)
5.750%, 07/01/06 1,000 1,027
---------
14,894
---------
WISCONSIN - 3.5%
Milwaukee, Metropolitan Sewage District,
Ser A, GO
5.500%, 10/01/08 2,000 2,140
Wisconsin State, Ser 2, GO
5.125%, 11/01/08 1,125 1,193
---------
3,333
---------
TOTAL MUNICIPAL BONDS
(Cost $91,524) 94,648
---------
- --------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY - 0.9%
- --------------------------------------------------------------------------------
BlackRock Provident California
Tax Free Money Market 831,161 831
---------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $831) 831
---------
TOTAL INVESTMENTS - 101.7%
(Cost $92,355) 95,479
---------
- --------------------------------------------------------------------------------
Description Value (000)*
- --------------------------------------------------------------------------------
PAYABLE FOR WHEN-ISSUED INVESTMENT SECURITIES
PURCHASED -- (2.9)% $ (2,730)
OTHER ASSETS AND LIABILITIES, NET - 1.2%@ 1,157
---------
TOTAL OTHER ASSETS AND LIABILITIES - (1.7)% (1,573)
---------
NET ASSETS -- 100.0% $ 93,906
=========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 90,146
Undistributed net investment income 178
Accumulated net realized gain on investments 458
Net unrealized appreciation on investments 3,124
---------
NET ASSETS $ 93,906
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($90,137,520 / 8,008,753 SHARES) $11.25
=========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($3,718,979 / 330,535 SHARES) $11.25
=========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($11.25 / 97.75%) $11.51
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($49,799 / 4,351 SHARES) $11.44
=========
- --------------------------------------------------------------------------------
* VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
(B) SECURITIES PURCHASED ON A WHEN-ISSUED BASIS.
(C) SECURITY HAS BEEN PLEDGED AS COLLATERAL FOR WHEN-ISSUED SECURITIES.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE
(SEE NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS C HAS A CONTINGENT
DEFERRED SALES CHARGE (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CDP -- CENSUS DESIGNATED PLACE
COP -- CERTIFICATE OF PARTICIPATION
ETM -- ESCROWED TO MATURITY
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
RB -- REVENUE BOND
SER -- SERIES
TA -- TAX ALLOCATION
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 63
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BOND FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 50.4%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 9.1%
Continental Cablevision
9.500%, 08/01/13 $ 4,500 $ 4,713
Hertz
6.625%, 05/15/08 8,200 8,169
News America Holdings
7.750%, 02/01/24 1,000 1,179
Staples
7.125%, 08/15/07 4,000 4,200
TCI Communications
6.875%, 02/15/06 5,000 5,069
Time Warner
7.480%, 01/15/08 7,100 7,544
Time Warner Entertainment (A)
8.375%, 03/15/23 5,000 6,265
Walt Disney, MTN
5.620%, 12/01/08 6,500 6,508
---------
43,647
---------
CONSUMER STAPLES - 0.6%
Safeway
7.500%, 09/15/09 2,468 2,678
---------
ENERGY - 2.6%
ConocoPhillips
7.125%, 03/15/28 3,000 3,206
El Paso CGP
9.625%, 05/15/12 2,000 2,230
Pemex Project
9.125%, 10/13/10 5,000 5,835
Union Oil of California
9.125%, 02/15/06 1,000 1,023
---------
12,294
---------
FINANCIALS - 17.2%
Associates
6.950%, 11/01/18 4,000 4,670
Bank of America
5.250%, 02/01/07 5,600 5,681
Bank One
6.000%, 08/01/08 500 520
Bear Stearns, MTN (B) (C)
3.411%, 01/12/06 5,000 5,005
Citicorp
6.750%, 08/15/05 4,075 4,080
First Tennessee Bank, MTN (B) (C)
3.330%, 03/21/06 5,000 5,000
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
FleetBoston Financial
7.125%, 04/15/06 $ 500 $ 510
GE Global Insurance
7.750%, 06/15/30 5,000 5,686
HSBC Bank USA
3.875%, 09/15/09 4,200 4,082
John Hancock Financial Services
5.625%, 12/01/08 5,000 5,159
Mellon Bank
7.000%, 03/15/06 4,945 5,025
Morgan Stanley
6.750%, 04/15/11 5,500 5,987
Morgan Stanley (B) (C)
3.393%, 08/19/05 5,000 5,000
3.383%, 08/19/05 5,000 5,000
Popular
6.750%, 12/15/05 2,000 2,017
Sigma Finance (B) (C)
3.330%, 07/07/06 5,000 5,000
U.S. Bancorp
6.875%, 09/15/07 7,500 7,866
Wells Fargo Capital I
7.960%, 12/15/26 1,000 1,076
Wells Fargo, MTN, Ser J
6.550%, 12/01/06 5,600 5,761
---------
83,125
---------
FOREIGN GOVERNMENTS - 0.6%
Hydro Quebec, Ser IO
8.050%, 07/07/24 1,125 1,550
Province of Saskatchewan
9.375%, 12/15/20 1,000 1,471
---------
3,021
---------
HEALTH CARE - 1.1%
HCA
7.875%, 02/01/11 5,000 5,475
---------
INDUSTRIALS - 7.5%
AMR
10.000%, 04/15/21 250 170
Continental Airlines, Ser 98-1B
6.748%, 03/15/17 2,827 2,296
General Electric (A)
5.000%, 02/01/13 5,000 5,059
General Motors, Ser 91-A2
8.950%, 07/02/09 1,389 1,448
McDonnell Douglas
6.875%, 11/01/06 4,125 4,249
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
64 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
INDUSTRIALS - (CONTINUED)
Raytheon
6.150%, 11/01/08 $ 4,950 $ 5,160
Tyco International
7.200%, 10/15/08 9,000 9,641
Waste Management
7.000%, 10/15/06 7,800 8,027
---------
36,050
---------
INFORMATION TECHNOLOGY - 1.2%
International Business Machines
6.500%, 01/15/28 5,000 5,775
---------
MATERIALS - 0.3%
Potash
7.125%, 06/15/07 1,500 1,566
---------
REAL ESTATE INVESTMENT TRUST - 2.3%
Boston Properties
5.000%, 06/01/15 5,500 5,368
EOP Operating (A)
6.800%, 01/15/09 5,500 5,816
---------
11,184
---------
TELECOMMUNICATIONS - 2.2%
Bell Atlantic of Maryland
8.000%, 10/15/29 2,980 3,688
New England Telephone & Telegraph
7.875%, 11/15/29 5,625 6,894
---------
10,582
---------
UTILITIES - 5.7%
Arkansas Electric Cooperative
7.330%, 06/30/08 2,224 2,313
Baltimore Gas & Electric, MTN, Ser G
5.780%, 10/01/08 4,000 4,115
Consolidated Edison of New York, Ser G
7.000%, 03/01/29 1,250 1,333
FPL Group Capital
7.625%, 09/15/06 5,000 5,175
Kinder Morgan (A)
7.250%, 03/01/28 5,600 6,573
Oklahoma Gas & Electric
6.650%, 07/15/27 2,500 2,853
Virginia Electric & Power, Ser A
4.750%, 03/01/13 5,000 4,936
---------
27,298
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $233,286) 242,695
---------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 30.2%
- --------------------------------------------------------------------------------
FHLMC
6.500%, 11/01/09 $ 1,730 $ 1,783
6.000%, 10/01/09 2,252 2,309
6.000%, 06/01/13 2,417 2,496
6.000%, 09/01/13 2,152 2,222
6.000%, 09/01/17 5,268 5,440
6.000%, 11/01/17 1,490 1,539
5.500%, 03/01/17 1,379 1,407
4.000%, 04/01/18 6,244 6,028
4.000%, 06/01/19 13,456 12,980
FHLMC CMO REMIC, Ser 1531, Cl H
6.000%, 04/15/08 743 745
FHLMC CMO REMIC, Ser 1666, Cl J
6.250%, 01/15/24 2,000 2,095
FHLMC CMO REMIC, Ser 2663, Cl QK
3.500%, 04/15/17 7,253 7,209
FNMA
8.500%, 05/01/25 50 55
8.000%, 08/01/24 8 9
8.000%, 09/01/24 1 1
8.000%, 07/01/26 61 66
8.000%, 06/01/30 45 48
7.500%, 12/01/26 387 413
7.000%, 02/01/09 846 868
7.000%, 12/01/10 1,886 1,952
7.000%, 05/01/30 106 112
6.500%, 12/01/07 143 146
6.500%, 04/01/14 1,343 1,397
6.500%, 03/01/24 89 92
6.500%, 01/01/26 166 173
6.500%, 05/01/26 73 76
6.500%, 01/01/28 41 43
6.500%, 03/01/28 65 68
6.500%, 04/01/28 356 369
6.500%, 01/01/29 1,426 1,480
6.500%, 06/01/29 1,677 1,739
6.500%, 07/01/29 795 825
6.500%, 08/01/29 379 394
6.500%, 05/01/30 1,066 1,106
6.000%, 05/01/09 62 64
6.000%, 09/01/10 182 186
6.000%, 05/01/11 150 155
6.000%, 01/01/12 109 113
6.000%, 03/01/13 265 274
6.000%, 08/01/14 6,240 6,450
6.000%, 10/01/16 1,792 1,851
6.000%, 11/01/17 4,130 4,268
6.000%, 12/01/27 138 142
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 65
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS -
(CONTINUED)
- --------------------------------------------------------------------------------
FNMA - (continued)
6.000%, 07/01/28 $ 714 $ 731
6.000%, 08/01/28 184 188
6.000%, 10/01/28 535 548
6.000%, 12/01/28 3,628 3,716
5.500%, 01/01/17 935 955
5.500%, 02/01/17 622 635
5.500%, 12/01/17 4,564 4,657
5.500%, 04/01/35 4,898 4,925
5.000%, 01/01/09 1,665 1,674
5.000%, 11/01/17 5,662 5,681
5.000%, 02/01/18 5,870 5,888
4.500%, 04/01/18 31,222 30,753
FNMA CMO REMIC, Ser 1993-140, Cl H
6.500%, 03/25/13 313 315
FNMA CMO REMIC, Ser 2003-25, Cl CD
3.500%, 03/25/17 8,161 7,945
GNMA
8.000%, 04/15/17 43 46
8.000%, 05/15/17 21 22
8.000%, 11/15/26 550 594
8.000%, 12/15/26 168 181
7.500%, 05/15/23 180 194
7.500%, 01/15/24 132 141
7.500%, 02/15/24 122 130
7.500%, 09/15/25 45 49
7.500%, 02/15/27 32 34
7.500%, 06/15/27 58 62
7.500%, 07/15/27 18 19
7.500%, 08/15/27 100 106
7.000%, 01/15/24 61 65
7.000%, 04/15/24 87 92
6.500%, 06/15/23 197 206
6.500%, 12/15/23 155 163
6.500%, 01/15/24 37 39
6.500%, 02/15/24 142 149
6.500%, 10/15/25 64 67
6.500%, 04/15/26 125 131
6.500%, 01/15/29 491 513
6.500%, 05/15/29 1,448 1,515
6.500%, 06/15/29 122 128
6.500%, 11/15/29 22 23
6.000%, 07/15/28 304 313
6.000%, 08/15/28 197 203
6.000%, 09/15/28 767 791
---------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $145,670) 145,775
---------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 13.9%
- --------------------------------------------------------------------------------
U.S. Treasury Bonds (A)
8.750%, 08/15/20 $ 3,300 $ 4,818
8.125%, 08/15/19 12,500 17,192
7.250%, 05/15/16 16,100 20,062
7.125%, 02/15/23 4,000 5,236
U.S. Treasury Inflation Index Note (A)
3.000%, 07/15/12 18,382 19,811
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $59,458) 67,119
---------
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 6.4%
- --------------------------------------------------------------------------------
Bank One Issuance Trust,
Ser 2002-A4, Cl A4
2.940%, 06/16/08 15,000 14,972
MBNA Master Credit Card Trust,
Ser 2000-L, Cl A
6.500%, 04/15/10 7,000 7,344
Pacific Gas, Ser 1997-1, Cl A7
6.420%, 09/25/08 3,498 3,547
USAA Auto Owner Trust,
Ser 2004-1, Cl A3
2.060%, 04/15/08 5,000 4,938
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $30,733) 30,801
---------
- --------------------------------------------------------------------------------
MASTER NOTES (B) - 6.2%
- --------------------------------------------------------------------------------
Bank of America
3.393%, 08/01/05 20,000 20,000
Bear Stearns
3.463%, 08/03/05 10,000 10,000
---------
TOTAL MASTER NOTES
(Cost $30,000) 30,000
---------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.1%
- --------------------------------------------------------------------------------
FNMA
6.375%, 06/15/09 8,000 8,564
FNMA (A)
5.000%, 01/15/07 1,500 1,518
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $9,375) 10,082
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
66 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
BOND FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MISCELLANEOUS - 0.0%
- --------------------------------------------------------------------------------
RETAIL - 0.0%
Kmart Holding Corporation*
(Escrow Shares) 10,000,000 $ --
---------
TOTAL MISCELLANEOUS
(Cost $--) --
---------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.3%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $12,814,757
(collateralized by various mortgage
obligations, ranging in par value
$625,004-$10,121,000, 0.00%-
5.00%, 06/25/20-07/25/35, total
market value $13,451,729) (B) $ 12,811 12,811
Bear Stearns
3.413%, dated 07/29/05, matures on
08/01/05, repurchase price $7,502,133
(collateralized by a commercial
mortgage obligation, par value
$26,250,000, 3.84%, 09/25/45, total
market value, $7,875,000) (B) 7,500 7,500
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $4,973,049
(collateralized by a U.S. Government
obligation, par value $4,391,000,
14.00%, 11/15/11, total market
value $5,071,177) 4,972 4,972
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $25,283) 25,283
---------
TOTAL INVESTMENTS - 114.5%
(Cost $533,805) 551,755
---------
PAYABLE UPON RETURN OF SECURITIES LOANED -- (15.6)% (75,316)
PAYABLE FOR FUND SHARES REDEEMED -- (0.1)% (255)
OTHER ASSETS AND LIABILITIES, NET -- 1.2%@ 5,849
---------
TOTAL OTHER ASSETS AND LIABILITIES - (14.5)% (69,722)
---------
NET ASSETS -- 100.0% $ 482,033
=========
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 474,066
Undistributed net investment income 582
Accumulated net realized loss on investments (10,565)
Net unrealized appreciation on investments 17,950
---------
NET ASSETS $ 482,033
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($429,614,276 / 39,948,014 SHARES) $10.75
=========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (D)
($44,288,605 / 4,168,156 SHARES) $10.63
=========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($10.63 / 96.75%) $10.99
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($8,093,336 / 764,317 SHARES) $10.59
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (D)
($36,723 / 3,475 SHARES) $10.57
=========
- --------------------------------------------------------------------------------
* NON-INCOME PRODUCING SECURITY.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005 (SEE NOTE 6 IN NOTES TO FINANCIAL STATMENTS). THE TOTAL VALUE OF
SECURITIES ON LOAN AT JULY 31, 2005 WAS $73,731,978.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(D) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE NOTE
2 IN NOTES TO FINANCIAL STATEMENTS). CLASS B AND CLASS C HAVE CONTINGENT
DEFERRED SALES CHARGES (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
CL -- CLASS
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 67
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SHORT TERM BOND FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 27.6%
- --------------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.4%
Comcast Cable Communication
6.200%, 11/15/08 $ 250 $ 261
TCI Communications
6.875%, 02/15/06 179 181
Time Warner Entertainment
7.250%, 09/01/08 250 269
Walt Disney, Ser B
6.750%, 03/30/06 175 178
---------
889
---------
CONSUMER STAPLES - 1.4%
Safeway
6.150%, 03/01/06 175 176
Wal-Mart Stores
5.450%, 08/01/06 175 177
---------
353
---------
FINANCIALS - 13.9%
Bank One
7.625%, 08/01/05 24 24
Cigna
6.375%, 01/15/06 175 177
CIT Group
4.000%, 05/08/08 250 246
Citigroup
5.750%, 05/10/06 175 177
FleetBoston Financial
4.875%, 12/01/06 250 252
General Electric Capital, MTN, Ser A
4.250%, 01/15/08 500 498
Golden West Financial
4.125%, 08/15/07 205 204
Housing Finance
6.500%, 01/24/06 175 177
Lehman Brothers Holdings
8.500%, 05/01/07 250 266
Mellon Bank
7.000%, 03/15/06 175 178
Morgan Stanley
5.800%, 04/01/07 250 255
SLM, MTN, Ser A
3.500%, 09/30/06 215 212
Toyota Motor Credit, MTN
5.650%, 01/15/07 250 254
U.S. Bancorp
6.875%, 09/15/07 227 238
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- --------------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
Wachovia
4.950%, 11/01/06 $ 200 $ 201
Wells Fargo
5.125%, 02/15/07 250 253
---------
3,612
---------
HEALTH CARE - 0.6%
Merck
5.250%, 07/01/06 160 162
---------
INDUSTRIALS - 3.1%
McDonnell Douglas
6.875%, 11/01/06 200 206
Raytheon
6.750%, 08/15/07 250 260
Union Pacific
6.400%, 02/01/06 166 168
Waste Management
7.000%, 10/15/06 175 180
---------
814
---------
INFORMATION TECHNOLOGY - 2.0%
Hewlett-Packard
5.500%, 07/01/07 250 255
International Business Machines
6.450%, 08/01/07 250 259
---------
514
---------
REAL ESTATE INVESTMENT TRUST - 1.0%
EOP Operating
7.750%, 11/15/07 250 266
---------
TELECOMMUNICATIONS - 0.7%
SBC Communications
5.750%, 05/02/06 175 177
---------
UTILITIES - 1.5%
FPL Group Capital
7.625%, 09/15/06 200 207
Virginia Electric & Power, Ser A
5.750%, 03/31/06 175 177
---------
384
---------
TOTAL CORPORATE OBLIGATIONS
(Cost $7,233) 7,171
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
68 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SHORT TERM BOND FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 21.7%
- --------------------------------------------------------------------------------
FHLMC
6.000%, 01/01/13 $ 192 $ 198
6.000%, 09/01/13 108 112
6.000%, 10/01/16 468 483
5.500%, 03/01/17 436 444
5.500%, 12/01/17 44 45
5.500%, 02/01/18 433 442
5.500%, 11/01/18 38 38
5.000%, 10/01/18 530 532
FHLMC CMO REMIC, Ser 2722, Cl PA
4.000%, 02/15/21 573 569
FHLMC CMO REMIC, Ser 2743, Cl NL
3.000%, 05/15/23 801 784
FNMA
8.000%, 06/01/30 16 17
8.000%, 11/01/30 9 10
6.500%, 06/01/16 75 78
6.500%, 11/01/16 140 146
6.500%, 02/01/17 59 61
6.500%, 04/01/17 200 208
6.000%, 06/01/16 95 98
5.500%, 12/01/16 189 193
5.500%, 09/01/17 315 321
5.500%, 10/01/17 86 88
5.500%, 11/01/17 140 143
5.500%, 12/01/17 115 117
5.500%, 02/01/18 32 32
5.500%, 04/01/18 65 67
5.500%, 10/01/18 87 89
5.000%, 05/01/18 72 72
5.000%, 06/01/18 267 267
---------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $5,705) 5,654
---------
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 16.9%
- --------------------------------------------------------------------------------
U.S. Treasury Inflation Index Note (A)
3.875%, 01/15/09 1,185 1,273
U.S. Treasury Notes (A)
6.125%, 08/15/07 500 520
3.000%, 11/15/07 650 636
2.375%, 08/31/06 1,000 984
U.S. Treasury Notes
2.625%, 11/15/06 1,000 983
---------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $4,467) 4,396
---------
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 16.1%
- --------------------------------------------------------------------------------
FHLMC
6.375%, 08/01/11 $ 100 $ 102
5.500%, 07/15/06 750 760
FHLMC (A)
3.500%, 09/15/07 1,000 987
FNMA
6.220%, 03/13/06 250 253
5.500%, 02/15/06 150 151
5.000%, 01/15/07 950 961
3.875%, 07/15/08 250 247
2.125%, 04/15/06 750 740
---------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,241) 4,201
---------
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 15.0%
- --------------------------------------------------------------------------------
American Express Credit Account
Master Trust, Ser 2003-4, Cl A
1.690%, 01/15/09 500 489
Citibank Credit Card Issuance Trust,
Ser 2001-A6, Cl A6
5.650%, 06/16/08 500 506
Citibank Credit Card Issuance Trust,
Ser 2002-A1, Cl A1
4.950%, 02/09/09 275 278
Citibank Credit Card Issuance Trust,
Ser 2004-A4, Cl A4
3.200%, 08/24/09 200 195
Comed Transitional Funding Trust,
Ser 1998-1, Cl A6
5.630%, 06/25/09 446 453
MBNA Master Credit Card Trust,
Ser 2000-L, Cl A
6.500%, 04/15/10 500 525
MBNA Master Credit Card Trust,
Ser 2001-A1, Cl A1
5.750%, 10/15/08 325 329
Peco Energy Transition Trust,
Ser 1999-A, Cl A6
6.050%, 03/01/09 200 203
PG&E Energy Recovery Funding Trust,
Ser 2005-1, Cl A2
3.870%, 06/25/11 500 495
TXU Electric Delivery Transition Trust,
Ser 2004-1, Cl A1
3.520%, 11/15/11 438 430
---------
TOTAL ASSET-BACKED SECURITIES
(Cost $3,939) 3,903
---------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 69
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
SHORT TERM BOND FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 19.6%
- --------------------------------------------------------------------------------
Bank of America
3.360%, dated 07/29/05, matures on
08/01/05, repurchase price $3,968,980
(collateralized by various mortgage
obligations, ranging in par value
$625,004 - $10,121,000, 0.00% - 5.00%,
06/25/20 - 07/25/35, total
market value $4,166,262) (B) $3,968 $ 3,968
Deutsche Bank
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $721,971
(collateralized by a U.S. Government
obligation, par value $754,000, 3.25%,
01/15/09, total market value $736,346) 722 722
Lehman Brothers
3.383%, dated 07/29/05, matures on
08/01/05, repurchase price $384,496
(collateralized by various mortgage
obligations, ranging in par value
$52,355,000 - $650,000,000, 0.00% -
0.25%, 03/17/28 - 04/15/33,
total market value $403,331) (B) 384 384
---------
TOTAL REPURCHASE AGREEMENTS
(Cost $5,074) 5,074
---------
TOTAL INVESTMENTS - 116.9%
(Cost $30,659) 30,399
---------
PAYABLE UPON RETURN OF SECURITIES
LOANED -- (16.7)% (4,352)
PAYABLE FOR INVESTMENT SECURITIES
PURCHASED -- (1.0)% (266)
OTHER ASSETS AND LIABILITIES, NET -- 0.8%@ 218
---------
TOTAL OTHER ASSETS AND LIABILITIES - (16.9)% (4,400)
---------
NET ASSETS -- 100.0% $ 25,999
=========
- --------------------------------------------------------------------------------
Description Value (000)*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 26,263
Undistributed net investment income 18
Accumulated net realized loss on investments (22)
Net unrealized depreciation on investments
(260)
---------
NET ASSETS $ 25,999
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($24,545,115 / 2,494,184 SHARES) $9.84
=========
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES (C)
($1,439,623 / 146,318 SHARES) $9.84
=========
MAXIMUM OFFERING PRICE PER SHARE -
CLASS A SHARES ($9.84 / 96.75%) $10.17
=========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS C SHARES (C)
($14,637 / 1,475 SHARES) $9.92
=========
- --------------------------------------------------------------------------------
* VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY IS ON LOAN AT JULY 31,
2005. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2005 IS
$4,261,747.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS C HAS A CONTINGENT
DEFERRED SALES CHARGE (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
CL -- CLASS
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
MTN -- MEDIUM TERM NOTE
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
70 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
100% U.S. TREASURY MONEY MARKET FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS* - 100.2%
- --------------------------------------------------------------------------------
U.S. Treasury Bills
3.019%, 08/04/05 $ 1,657 $ 1,657
3.017%, 08/11/05 124,712 124,609
2.938%, 08/18/05 88,251 88,131
3.014%, 08/25/05 98,381 98,187
2.988%, 09/01/05 12,129 12,098
3.091%, 09/08/05 18,495 18,436
2.968%, 09/15/05 125,000 124,546
3.055%, 09/22/05 123,067 122,535
3.098%, 09/29/05 150,000 149,255
3.189%, 10/06/05 66,688 66,306
3.236%, 10/13/05 63,465 63,058
---------
TOTAL U.S. TREASURY BILLS
(Cost $868,818) 868,818
---------
TOTAL INVESTMENTS - 100.2%
(Cost $868,818) 868,818
---------
INCOME DISTRIBUTION PAYABLE -- (0.1)% (919)
OTHER ASSETS AND LIABILITIES, NET -- (0.1)%@ (593)
---------
TOTAL OTHER ASSETS AND LIABILITIES -- (0.2)% (1,512)
---------
NET ASSETS -- 100.0% $ 867,306
=========
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 867,464
Accumulated net realized loss on investments (158)
---------
NET ASSETS $ 867,306
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($406,280,582 / 406,369,510 SHARES) $1.00
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES
($201,033,806 / 201,054,856 SHARES) $1.00
=========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS S SHARES
($259,991,564 / 260,041,769 SHARES) $1.00
=========
- --------------------------------------------------------------------------------
* RATE SHOWN REPRESENTS THE BOND EQUIVALENT YIELD TO MATURITY AT DATE OF
PURCHASE.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 71
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 41.9%
- --------------------------------------------------------------------------------
FHLB
1.500%, 08/26/05 $25,000 $ 24,971
2.250%, 08/30/05 8,100 8,093
2.350%, 09/01/05 5,000 4,996
1.810%, 10/28/05 7,000 6,972
FHLB (A)
3.309%, 09/16/05 25,000 24,999
3.230%, 06/02/06 25,000 24,986
3.100%, 08/02/06 20,000 19,988
FHLB, Callable 10/14/05 @ 100 (B)
2.510%, 11/04/05 25,000 24,990
FHLMC
1.500%, 08/15/05 2,500 2,498
FNMA (A)
3.505%, 10/21/05 25,000 24,996
3.376%, 12/29/05 35,000 34,992
3.090%, 02/06/06 20,000 19,993
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $222,474) 222,474
-----------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - DISCOUNTED * - 8.4%
- --------------------------------------------------------------------------------
FHLMC
3.272%, 09/13/05 20,000 19,922
3.348%, 09/20/05 25,000 24,885
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS -
DISCOUNTED
(Cost $44,807) 44,807
-----------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - 7.9%
- --------------------------------------------------------------------------------
California, Milpitas Multi-Family Housing
Revenue, Crossing, Ser A, RB,
Guarantee FNMA (A) (C)
3.390%, 08/15/33 5,800 5,800
California, Sacramento County,
Multi-Family Housing Development
Authority, Deer Park Apartments,
RB, Guarantee FNMA (A) (C)
3.420%, 07/15/35 1,650 1,650
California, Simi Valley, Multi-Family
Housing Revenue, Parker Ranch,
RB, Guarantee FNMA (A) (C)
3.420%, 07/15/36 1,950 1,950
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - (CONTINUED)
- --------------------------------------------------------------------------------
California, Statewide Community
Development, Palms Apartments,
Ser C, RB, Guarantee FNMA (A) (C)
3.400%, 05/15/35 $ 4,955 $ 4,955
New York City, Multi-Family Housing
Development Authority, 39th Street
Housing Development, Ser B, RB,
Guarantee FNMA (A) (C)
3.330%, 11/15/31 1,800 1,800
New York City, Multi-Family Housing
Development Authority, Ser B, RB,
Guarantee FNMA (A) (C)
3.320%, 08/15/32 1,800 1,800
New York City, Multi-Family Housing
Development Authority, Westport
Development, Ser B, RB, Guarantee
FNMA (A) (C)
3.320%, 06/15/34 14,000 14,000
New York State, Housing Finance Agency
Revenue, Biltmore Tower Housing,
Ser B, RB, Guarantee FNMA (A) (C)
3.330%, 05/15/34 3,000 3,000
New York State, Housing Finance Agency
Revenue, South Cove, Ser B, RB,
Guarantee FHLMC (A) (C)
3.320%, 11/01/30 1,900 1,900
New York State, Housing Finance Agency
Revenue, Worth Street, Ser A, RB,
Guarantee FNMA (A) (C)
3.350%, 05/15/33 1,100 1,100
Washington State, Housing Finance
Authority, Bridgewood Project, Ser B,
RB, Guarantee FNMA (A) (C)
3.410%, 09/01/34 3,880 3,880
-----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $41,835) 41,835
-----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
72 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
U.S. GOVERNMENT MONEY MARKET FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 41.8%
- --------------------------------------------------------------------------------
Credit Suisse First Boston LLC
3.300%, dated 07/29/05, matures on
08/01/05, repurchase price $126,932,535
(collateralized by various U.S. Government
Agency obligations, ranging in par value
$2,840,000 - $122,965,000, 3.41% -
4.625%, 08/30/07 - 08/15/12,
total market value $129,439,308) $126,898 $ 126,898
Deutsche Bank Securities, Inc.
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $20,005,450
(collateralized by various U.S. Treasury
obligations, ranging in par value
$13,000 - $4,741,000, 3.50% -
13.875%, 08/15/05 - 08/15/26,
total market value $20,293,604) 20,000 20,000
Deutsche Bank Securities, Inc.
3.290%, dated 07/29/05, matures on
08/01/05, repurchase price $25,006,854
(collateralized by various U.S. Treasury
and Government Agency obligations,
ranging in par value $571,000 -
$25,000,000, 0.000% - 2.84%,
11/03/05 - 03/16/07, total market
value $25,320,422) 25,000 25,000
Goldman, Sachs & Co.
3.280%, dated 07/29/05, matures on
08/01/05, repurchase price $25,006,833
(collateralized by various U.S. Government
Agency obligations, ranging in par value
$592,000 - $20,980,000, 2.25% -
2.50%, 12/15/05 - 05/26/05,
total market value $25,500,946) 25,000 25,000
JP Morgan Securities, Inc.
3.280%, dated 07/29/05, matures on
08/01/05, repurchase price $25,006,833
(collateralized by various U.S. Government
Agency obligations, ranging in par value
$320,000 - $16,320,000, 0.00% -
9.375%, 04/15/08 - 10/15/20,
total market value $25,503,695) 25,000 25,000
-----------
TOTAL REPURCHASE AGREEMENTS
(Cost $221,898) 221,898
-----------
TOTAL INVESTMENTS - 100.0%
(Cost $531,014) 531,014
-----------
INCOME DISTRIBUTION PAYABLE -- (0.2)% (847)
OTHER ASSETS AND LIABILITIES, NET -- 0.2%@ 857
-----------
OTHER ASSETS AND LIABILITIES -- 0.0% 10
-----------
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
NET ASSETS -- 100.0% $ 531,024
===========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 531,060
Distributions in excess of net investment income (1)
Accumulated net realized loss on investments (35)
-----------
NET ASSETS $ 531,024
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($437,804,086 / 437,866,754 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES
($33,439,970 / 33,445,981 SHARES) $1.00
===========
NET ASSET VALUE AND OFFERING
PRICE PER SHARE - CLASS B SHARES (D)
($1,177,373 / 1,177,619 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS S SHARES
($58,602,115 / 58,568,025 SHARES) $1.00
===========
- --------------------------------------------------------------------------------
* RATE SHOWN REPRESENTS THE MONEY MARKET EQUIVALENT YIELD TO MATURITY AT
DATE OF PURCHASE.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) ADJUSTABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON JULY 31, 2005.
(B) CALLABLE SECURITY
(C) DEMAND FEATURE -- THE DATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
FINAL MATURITY, NOT THE DATE ON WHICH PRINCIPAL COULD BE RECOVERED.
(D) CLASS B HAS A CONTINGENT DEFERRED SALES CHARGE (SEE NOTE 3 IN NOTES TO
FINANCIAL STATEMENTS).
FHLB -- FEDERAL HOME LOAN BANK
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
LLC -- LIMITED LIABILITY COMPANY
RB -- REVENUE BOND
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 73
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
DIVERSIFIED MONEY MARKET FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - DISCOUNTED * - 55.7%
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - DIVERSIFIED FINANCIAL ASSETS - 18.8%
Bavaria TRR Corp. (B)
3.350%, 08/01/05 $ 75,000 $ 75,000
3.330%, 08/01/05 30,000 30,000
3.416%, 08/22/05 45,000 44,911
3.415%, 08/22/05 80,000 79,841
Cedar Springs Capital Co. (B)
3.175%, 08/04/05 40,411 40,400
3.224%, 08/10/05 18,744 18,729
3.463%, 09/12/05 22,211 22,122
3.429%, 09/19/05 76,167 75,815
Giro Balanced Funding Corp. (B)
3.360%, 08/15/05 25,000 24,967
Greyhawk Funding LLC (B)
3.395%, 08/15/05 36,000 35,953
3.308%, 08/16/05 75,000 74,897
3.347%, 08/18/05 51,000 50,920
Sigma Finance, Inc. (B)
3.256%, 08/24/05 50,000 49,897
-----------
623,452
-----------
ASSET-BACKED SECURITIES - TRADE RECEIVABLES - 17.7%
Cafco LLC (B)
3.333%, 08/17/05 63,775 63,681
3.266%, 08/26/05 40,000 39,910
3.375%, 08/29/05 38,500 38,399
Compass Securitization LLC (B)
3.448%, 08/19/05 52,351 52,261
3.420%, 08/22/05 75,000 74,851
CRC Funding LLC (B)
3.482%, 10/05/05 100,000 99,377
Crown Point Capital Co. LLC (B)
3.386%, 09/06/05 75,000 74,748
Legacy Capital Co. LLC (B)
3.220%, 08/11/05 70,000 69,938
Lexington Parker Capital Co. LLC (B)
3.580%, 10/11/05 21,322 21,173
Old Line Funding LLC (B)
3.364%, 08/25/05 53,459 53,339
-----------
587,677
-----------
BANKING - 12.9%
Old Slip Funding Corp.,
Guarantee Bank of New York (B)
3.470%, 09/28/05 25,195 25,055
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - DISCOUNTED * - (CONTINUED)
- --------------------------------------------------------------------------------
BANKING - (CONTINUED)
PB Finance (Delaware), Inc.
3.410%, 08/22/05 $ 99,190 $ 98,993
3.479%, 09/13/05 45,900 45,710
Steamboat Funding Corp.,
Guarantee National Westminister
Bank Plc (B)
3.374%, 08/10/05 110,793 110,700
3.374%, 08/10/05 50,000 49,958
Westpac Trust Securities NZ Ltd.
3.439%, 09/26/05 100,000 99,470
-----------
429,886
-----------
BROKERAGE - 1.9%
Merrill Lynch & Co., Inc.
3.300%, 08/01/05 65,000 65,000
-----------
OIL - INTEGRATED COMPANIES - 1.5%
BP Trinindad & Tobago LLC (B)
3.319%, 08/02/05 50,000 49,996
-----------
UTILITIES - ELECTRIC - 2.9%
National Rural Utilities Coop. Finance Corp.
3.311%, 08/02/05 50,000 49,995
3.323%, 08/09/05 45,000 44,967
-----------
94,962
-----------
TOTAL COMMERCIAL PAPER - DISCOUNTED
(Cost $1,850,973) 1,850,973
-----------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) - 14.4%
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES - DIVERSIFIED FINANCIAL ASSETS - 6.0%
Liberty Lighthouse U.S. Capital Corp. (A) (B)
3.300%, 06/06/06 100,000 99,983
Sigma Finance, Inc. (A) (B)
3.378%, 08/17/05 48,000 48,000
3.440%, 12/28/05 50,000 49,994
-----------
197,977
-----------
BANKING - 2.7%
Nationwide Building Society (A) (B) (C)
3.340%, 07/07/06 40,000 40,000
3.508%, 07/28/06 50,000 50,000
-----------
90,000
-----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
74 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) - (CONTINUED)
- --------------------------------------------------------------------------------
BROKERAGE - 1.5%
Morgan Stanley & Co. (A) (C)
3.520%, 08/25/06 $ 50,000 $ 50,000
-----------
FINANCIAL SERVICES - 0.9%
American Express Credit Corp. (A) (B) (C)
3.480%, 08/18/06 30,000 30,000
-----------
INSURANCE - 0.8%
Meridian Funding Co. LLC,
Guarantee MBIA (A) (B) (C) (D)
3.601%, 08/28/06 28,115 28,115
-----------
MULTIPLE INDUSTRY - 2.5%
General Electric Capital Corp. (A) (C)
3.450%, 08/09/06 60,000 60,000
3.509%, 08/17/06 24,000 24,000
-----------
84,000
-----------
TOTAL CORPORATE OBLIGATIONS (MEDIUM TERM NOTES)
(Cost $480,092) 480,092
-----------
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - INTEREST BEARING - 9.8%
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITY - TRADE RECEIVABLES - 1.5%
Lexington Parker Capital Co. LLC (A) (B)
3.290%, 10/07/05 50,000 49,998
-----------
BANKING - 2.3%
Eurohypo AG (A) (B)
3.350%, 05/11/06 75,000 75,000
-----------
BROKERAGE - 6.0%
Goldman Sachs Group, Inc. (A) (B) (D)
3.339%, 09/26/05 50,000 50,000
3.410%, 01/12/06 30,000 30,000
3.390%, 01/12/06 30,000 30,000
3.703%, 02/27/06 40,000 40,000
Morgan Stanley (A) (D)
3.370%, 03/24/06 50,000 50,000
-----------
200,000
-----------
TOTAL COMMERCIAL PAPER - INTEREST BEARING
(Cost $324,998) 324,998
-----------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - 6.2%
- --------------------------------------------------------------------------------
BANKING - 1.9%
Alaska State, Four Dam Pool,
Ser B, RB (A) (E) (F)
3.370%, 07/01/26 8,300 8,300
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - (CONTINUED)
- --------------------------------------------------------------------------------
California State, Statewide
Community Development
Authority, RB (A) (E) (F)
3.450%, 12/01/37 $ 6,000 $ 6,000
D&I Properties LLC (A) (E) (F)
3.430%, 11/01/34 1,265 1,265
Holland-Sheltair Av Funding (A) (E) (F)
3.500%, 05/01/35 7,885 7,885
Illinois State, Health Facilities
Authority Revenue (A) (E) (F)
3.370%, 08/15/17 11,700 11,700
New Belgium Brewery Co. (A) (E) (F)
3.520%, 07/01/15 3,120 3,120
New York State, Housing Finance
Agency Revenue, 900 8th Avenue
Housing, Ser B, RB (A) (E) (F)
3.340%, 11/01/35 13,800 13,800
New York State, Housing Finance
Agency Revenue, Archstone,
Ser B, RB (A) (E) (F)
3.330%, 11/01/36 5,000 5,000
Stephens & Stephens XI LLC (A) (E) (F)
3.430%, 11/01/34 2,500 2,500
Stephens & Stephens XII LLC (A) (E) (F)
3.430%, 01/01/35 2,700 2,700
-----------
62,270
-----------
INSURANCE - 4.3%
California State, Housing Finance
Agency, Ser K (A) (E) (F)
3.320%, 08/01/31 68,215 68,215
Florida State, Housing Finance
Agency, Ser A, RB (A) (E) (F)
3.340%, 01/01/34 27,200 27,200
Pasadena, California, Public
Financing Authority, RB (A) (E) (F)
3.400%, 06/01/25 26,100 26,100
Utah State, Board Regents Student
Loan Revenue, RB (A) (E) (F)
3.340%, 11/01/44 21,900 21,900
-----------
143,415
-----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $205,685) 205,685
-----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 75
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
DIVERSIFIED MONEY MARKET FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - DOMESTIC - 5.9%
- --------------------------------------------------------------------------------
Citibank N.A.
3.400%, 09/22/05 $ 50,000 $ 50,000
Regions Bank
3.320%, 09/08/05 50,000 50,000
Wilmington Trust Company
3.300%, 09/06/05 45,000 45,000
3.450%, 09/13/05 50,000 50,000
-----------
TOTAL CERTIFICATES OF DEPOSIT - DOMESTIC
(Cost $195,000) 195,000
-----------
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEE - 3.8%
- --------------------------------------------------------------------------------
Credit Suisse First Boston NY (A)
3.450%, 09/29/05 25,000 25,000
3.379%, 05/17/06 50,000 50,000
3.240%, 05/17/06 50,000 50,000
-----------
TOTAL CERTIFICATES OF DEPOSIT - YANKEE
(Cost $125,000) 125,000
-----------
- --------------------------------------------------------------------------------
BANK NOTES - 2.4%
- --------------------------------------------------------------------------------
American Express Centurion Bank (A)
3.390%, 09/20/05 40,000 40,000
First Tennessee Bank (A)
3.384%, 09/22/05 40,000 39,998
-----------
TOTAL BANK NOTES
(Cost $79,998) 79,998
-----------
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATION - 1.4%
- --------------------------------------------------------------------------------
FNMA (A)
3.505%, 10/21/05 45,380 45,373
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATION
(Cost $45,373) 45,373
-----------
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT - 0.4%
- --------------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
3.270%, dated 07/29/05, matures on
08/01/05, repurchase price $14,019,431
(collateralized by various U.S. Treasury
obligations, ranging in par value
$497,000 - $ 3,935,000, 3.25% -
6.375%, 02/15/07 - 08/15/27,
total market value $14,296,788) 14,016 14,016
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $14,016) 14,016
-----------
TOTAL INVESTMENTS - 100.0%
(Cost $3,321,135) 3,321,135
-----------
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
INCOME DISTRIBUTION PAYABLE -- (0.1)% $ (3,801)
OTHER ASSETS AND LIABILITIES, NET -- 0.1%@ 2,620
-----------
TOTAL OTHER ASSETS AND LIABILITIES -- 0.0% (1,181)
-----------
NET ASSETS -- 100.0% $ 3,319,954
===========
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in Capital
(unlimited authorization - no par value) $ 3,320,088
Accumulated net realized loss on investments (134)
-----------
NET ASSETS $ 3,319,954
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($2,118,148,587 / 2,118,839,649 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS A
($556,443,302 / 556,535,415 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS S
($645,362,404 / 644,711,841 SHARES) $1.00
===========
- --------------------------------------------------------------------------------
* RATE SHOWN REPRESENTS THE MONEY MARKET EQUIVALENT YIELD TO MATURITY AT
DATE OF PURCHASE.
** VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) ADJUSTABLE RATE SECURITY -- THE RATE REFLECTED ON THE STATEMENT OF NET
ASSETS IS THE RATE IN EFFECT ON JULY 31, 2005.
(B) SECURITY 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) EXTENDABLE SECURITY -- THE MATURITY DATE REFLECTS THE NEXT DATE ON WHICH
PRINCIPAL CAN BE RECOVERED.
(D) SECURITY CONSIDERED ILLIQUID. THE TOTAL VALUE OF SUCH SECURITIES AS OF
JULY 31, 2005 WAS $228,115,000.
(E) SECURITY IS HELD IN CONJUNCTION WITH A GUARANTEE/LETTER OF CREDIT AND/OR A
LIQUIDITY AGREEMENT BY A MAJOR COMMERCIAL BANK OR FINANCIAL INSTITUTION.
(F) DEMAND FEATURE -- THE DATE REPORTED ON THE STATEMENT OF NET ASSETS IS THE
FINAL MATURITY, NOT THE DATE ON WHICH PRINCIPAL COULD BE RECOVERED.
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
LLC -- LIMITED LIABILITY COMPANY
LTD -- LIMITED
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
N.A. -- NORTH AMERICA
NY -- NEW YORK
NZ -- NEW ZEALAND
PLC -- PUBLIC LIMITED COMPANY
RB -- REVENUE BOND
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
76 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 99.8%
- --------------------------------------------------------------------------------
ABAG, Multi-Family Housing Finance
Authority, Non-Profit, Paragon
Apartments, Ser A, RB, AMT (A) (B) (C)
2.360%, 03/15/40 $ 4,000 $ 4,000
Berkeley, YMCA, RB (A) (B) (C)
2.280%, 06/01/23 7,460 7,460
California Infrastructure & Economic
Development, Colburn School,
Ser A, RB (A) (B) (C)
2.250%, 08/01/37 4,000 4,000
California Infrastructure & Economic
Development, Colburn School,
Ser B, RB (A) (B) (C)
2.250%, 08/01/37 18,000 18,000
California Infrastructure & Economic
Development, J Paul Getty,
Ser A, RB (A) (B)
1.620%, 10/01/23 5,000 5,000
2.250%, 04/01/33 4,000 4,000
California Infrastructure & Economic
Development, J Paul Getty,
Ser B, RB (A) (B)
1.620%, 10/01/23 3,000 3,000
2.250%, 04/01/33 4,000 4,000
California Infrastructure & Economic
Development, J Paul Getty,
Ser D, RB (A) (B)
2.250%, 04/01/33 7,500 7,500
California School Cash Reserve Program,
Ser A, TRAN, AMBAC Insured
4.000%, 07/06/06 2,250 2,279
California State, Community College
Financing Authority, Ser A, TRAN,
FSA Insured
4.000%, 06/30/06 6,000 6,074
California State, Department of
Water & Power, Ser C-14,
RB (A) (B) (C)
2.250%, 05/01/22 6,750 6,750
California State, Department of
Water & Power, Ser C-18,
RB (A) (B) (C)
2.290%, 05/01/22 19,000 19,000
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
California State, Department of
Water & Power, Ser C-2, RB,
AMBAC Insured (A) (B) (C)
2.270%, 05/01/22 $25,900 $ 25,900
California State, Department of
Water & Power, Ser C-3, RB,
AMBAC Insured (A) (B) (C)
2.270%, 05/01/22 17,000 17,000
California State, Department of
Water & Power, Ser C-7, RB,
FSA Insured (A) (B) (C)
2.280%, 05/01/22 5,800 5,800
California State, Economic Recovery,
Ser C-13, RB, XLCA Insured
(A) (B) (C)
2.280%, 07/01/23 3,925 3,925
California State, Economic Recovery,
Ser C-16, RB, FSA Insured
(A) (B) (C)
2.280%, 07/01/23 6,000 6,000
California State, Economic Recovery,
Ser C-17, RB, XLCA Insured (A) (B)
2.280%, 07/01/23 3,000 3,000
California State, Educational
Facilities Authority, California
Institute of Technology, RB (A) (B)
2.280%, 01/01/24 19,000 19,000
California State, Educational
Facilities Authority, Carnegie,
RB, TECP
2.250%, 08/05/05 7,500 7,500
California State, Educational
Facilities Authority, Pomona College,
Ser B, RB (A) (B)
2.280%, 07/01/54 2,500 2,500
California State, Housing Finance
Agency, Multi-Family Home
Mortgage, Ser C, RB, AMT
(A) (B) (C)
2.360%, 08/01/27 5,605 5,605
California State, Pollution Control
Financing Authority, Pacific
Gas & Electric Project,
Ser B, RB, AMT (A) (B) (C)
2.350%, 11/01/26 1,000 1,000
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 77
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
California State,
Ser C-1, GO (A) (B) (C)
2.230%, 05/01/33 $ 4,300 $ 4,300
California State, Transit Finance
Authority, RB, FSA Insured
(A) (B) (C)
2.280%, 10/01/27 4,715 4,715
California State, University Public
Authority, Kindergarten Project,
Ser B-4, GO (A) (B) (C)
2.150%, 05/01/34 3,025 3,025
California State, University Public
Authority, Kindergarten Project,
Ser B-5, GO (A) (B) (C)
2.290%, 05/01/34 4,000 4,000
California Statewide, Communities
Development Authority,
Fairfax Towers Apartments, Ser A,
RB, FNMA Collateralized (A) (B) (C)
2.310%, 09/15/30 1,000 1,000
CSUCI Financing Revenue Authority,
Rental Housing, RB (A) (B) (C)
1.600%, 08/01/05 1,000 1,000
East Bay, Municipal Utilities District
Water Systems Revenue,
Ser B-2, RB, XLCA Insured (A) (B)
2.300%, 06/01/38 7,400 7,400
Escondino Community Development
Commission, COP, AMT (A) (B) (C)
2.300%, 10/12/16 3,500 3,500
Fremont, Unified School District,
GO, FGIC Insured
3.000%, 09/01/05 4,810 4,814
Los Angeles County, Department
of Housing Authority, Rowland
Heights Apartments, Ser A, RB,
AMT (A) (B) (C)
2.370%, 08/01/30 6,590 6,590
Los Angeles County, Public Water
Works, Regional Park & Open Space,
Special Public Assessment, SA
3.000%, 10/01/05 3,505 3,510
Los Angeles County, Ser A, TRAN
4.000%, 06/30/06 2,500 2,532
Los Angeles, Department of Airports,
Ser A, RB, AMT (A) (B) (C)
2.450%, 05/15/16 9,700 9,700
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Los Angeles, Department of
Water & Power, Sub-Ser B-1,
RB (A) (B) (C)
2.280%, 07/01/34 $21,750 $ 21,750
Los Angeles, Department of
Water & Power, Sub-Ser B-5,
RB (A) (B) (C)
2.270%, 07/01/34 11,600 11,600
Los Angeles, Department of
Water & Power, Sub-Ser B-7,
RB (A) (B) (C)
2.270%, 07/01/34 14,200 14,200
Los Angeles, Waste Water Authority,
Sub-Ser A, RB, FGIC Insured (A) (B)
2.150%, 12/01/31 8,000 8,000
Los Angeles, Waste Water Authority,
Sub-Ser B, RB, FGIC Insured (A) (B)
2.150%, 12/01/31 7,500 7,500
Metropolitan, Water District of
Southern California, Ser B, RB
(A) (B) (C)
2.250%, 07/01/28 4,000 4,000
Metropolitan, Water District of
Southern California, Ser B-2,
RB (A) (B) (C)
2.230%, 07/01/35 2,400 2,400
Metropolitan, Water District of
Southern California, Ser B2,
RB (A) (B) (C)
2.230%, 07/01/20 4,000 4,000
Metropolitan, Water District of
Southern California, Ser C,
RB (A) (B) (C)
2.300%, 07/01/28 9,900 9,900
Ontario, Multi-Family Housing
Authority, Residential Park Centre
Project, Ser A, RB (A) (B) (C)
2.373%, 08/01/07 21,150 21,150
Orange County, Apartment
Development Revenue, Ser B,
RB (A) (B) (C)
2.400%, 11/01/09 3,000 3,000
Orange County, Apartment
Development Revenue,
Villas La Paz Project, Ser F, RB,
FNMA Collateralized (A) (B) (C)
2.250%, 08/15/28 1,100 1,100
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
78 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- --------------------------------------------------------------------------------
Description Par (000) Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
Orange County, Apartment
Development Revenue,
Vintage Woods, Ser H, RB,
FNMA Collateralized (A) (B) (C)
2.270%, 11/15/28 $10,700 $ 10,700
Orange County, Apartment
Development Revenue,
WLCO LF Partners, Ser G-1, RB,
FNMA Collateralized (A) (B) (C)
2.270%, 11/15/28 6,850 6,850
Orange County, Apartment
Development Revenue,
WLCO LF Partners, Ser G-2, RB,
FNMA Collateralized (A) (B) (C)
2.270%, 11/15/28 3,100 3,100
Oxnard, Multi-Family Housing
Authority, Seawind Apartments
Projects, Ser A, RB, AMT, FNMA
Collateralized (A) (B) (C)
2.380%, 12/01/20 3,175 3,175
Redondo Beach, Multi-Family
Housing Authority, McCandless
Senior Housing Project, Ser A,
RB (A) (B) (C)
2.420%, 12/01/25 7,295 7,295
Riverside County, Public Facilities
Authority, Ser A, COP (A) (B) (C)
2.450%, 11/10/05 5,000 5,000
2.450%, 12/01/15 3,100 3,100
Sacramento County, Ser A, TRAN
4.000%, 07/10/06 15,000 15,201
Sacramento, City Financing Authority,
Ser G, RB, AMBAC Insured
(A) (B) (C) (D)
2.360%, 05/01/16 5,700 5,700
Sacramento, Unified School District,
COP, FSA Insured (A) (B)
2.270%, 07/01/31 1,300 1,300
San Diego County, RB, TECP
2.500%, 10/20/05 3,400 3,400
San Diego County, School District,
Ser A, TRAN
4.000%, 07/14/06 6,000 6,079
San Francisco City & County,
Redevelopment Authority,
Fillmore Housing Center Project,
Ser A-1, RB, FHLMC Insured (A) (B) (C)
2.330%, 12/01/17 11,900 11,900
- --------------------------------------------------------------------------------
Description Par (000)/Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- --------------------------------------------------------------------------------
San Francisco City & County,
Redevelopment Authority,
Folsom-Dore Apartment Project,
RB, AMT (A) (B) (C)
2.450%, 12/01/34 $ 3,000 $ 3,000
Santa Clara Valley, Transportation,
Ser B, RB, AMBAC Insured
(A) (B) (C)
2.280%, 06/01/26 5,000 5,000
Santa Clara Valley, Transportation,
Ser C, RB, AMBAC Insured (A) (B) (C)
2.250%, 06/01/26 9,680 9,680
Simi Valley, Multi-Family Housing
Authority, Ser A, RB (A) (B) (C)
2.270%, 07/01/23 10,545 10,545
Simi Valley, Multi-Family Housing
Authority, Shadowridge Apartments,
RB (A) (B) (C)
2.340%, 09/01/19 5,000 5,000
University of California, RB, TECP
2.430%, 11/09/05 6,000 6,000
Val Verde, Unified School District,
Land Bank Program, Ser A, COP
(A) (B) (C)
2.250%, 09/01/24 2,600 2,600
Vallejo, Capital Improvement Project,
COP (A) (B) (C)
2.340%, 09/01/40 15,800 15,800
-----------
TOTAL MUNICIPAL BONDS
(Cost $493,404) 493,404
-----------
- --------------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES - 0.0%
- --------------------------------------------------------------------------------
Blackrock Provident California
Tax Free Money Market 103,361 103
Goldman Sachs California
Tax Free Money Market 59,223 59
-----------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $162) 162
-----------
TOTAL INVESTMENTS - 99.8%
(Cost $493,566) 493,566
-----------
INCOME DISTRIBUTION PAYABLE -- 0.0% (302)
OTHER ASSETS AND LIABILITIES, NET -- 0.2%@ 1,128
-----------
TOTAL OTHER ASSETS AND LIABILITIES -- 0.2% 826
-----------
NET ASSETS -- 100.0% $ 494,392
===========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 79
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENT OF NET ASSETS
JULY 31, 2005
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONCLUDED)
- --------------------------------------------------------------------------------
Description Value (000)**
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Paid-in-Capital
(unlimited authorized - no par value) $ 494,400
Accumulated net realized loss on investments (8)
-----------
NET ASSETS $ 494,392
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - FIDUCIARY SHARES
($188,716,385 / 188,732,883 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS A SHARES
($268,132,483 / 268,133,588 SHARES) $1.00
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE - CLASS S SHARES
($37,542,683 / 37,537,220 SHARES) $1.00
===========
- --------------------------------------------------------------------------------
* VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2005.
(B) PUT AND DEMAND FEATURE -- THE DATE REPORTED ON THE STATEMENT OF NET ASSETS
IS THE FINAL MATURITY, NOT THE NEXT RESET OR PUT DATE.
(C) SECURITY IS HELD IN CONJUNCTION WITH A LETTER OF CREDIT OR A LIQUIDITY
AGREEMENT BY A MAJOR COMMERCIAL BANK OR FINANCIAL INSTITUTION.
(D) SECURITY 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."
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATE OF PARTICIPATION
CSUCI -- CALIFORNIA STATE UNIVERSITY CHANNEL ISLANDS
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
RB -- REVENUE BOND
SA -- SPECIAL ASSESSMENT
SER -- SERIES
TECP -- TAX-EXEMPT COMMERCIAL PAPER
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
XLCA -- XL CAPITAL ASSURANCE
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
80 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2005
CAPITAL GROWTH ALLOCATION FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 87.4%
- --------------------------------------------------------------------------------
HighMark Core Equity Fund,
Fiduciary Shares 425,286 $ 3,445
HighMark Large Cap Growth Fund,
Fiduciary Shares 128,827 1,109
HighMark Large Cap Value Fund,
Fiduciary Shares 156,965 1,960
HighMark Small Cap Growth Fund,
Fiduciary Shares 63,839 936
HighMark Small Cap Value Fund,
Fiduciary Shares 47,510 929
HighMark Value Momentum Fund,
Fiduciary Shares 143,241 3,448
-----------
TOTAL EQUITY FUNDS
(Cost $11,266) 11,827
-----------
- --------------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 9.4%
- --------------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares 66,706 717
HighMark Short Term Bond Fund,
Fiduciary Shares 56,772 559
-----------
TOTAL FIXED INCOME FUNDS
(Cost $1,286) 1,276
-----------
- --------------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND - 2.4%
- --------------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares 316,249 316
-----------
TOTAL MONEY MARKET FUND
(Cost $316) 316
-----------
TOTAL INVESTMENTS - 99.2%
(Cost $12,868) $ 13,419
===========
PERCENTAGES ARE BASED ON NET ASSETS OF $13,530,502.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 81
- --------------------------------------------------------------------------------
[HIGHMARKFUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2005
GROWTH & INCOME ALLOCATION FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 67.2%
- --------------------------------------------------------------------------------
HighMark Core Equity Fund,
Fiduciary Shares 320,836 $ 2,599
HighMark Large Cap Growth Fund,
Fiduciary Shares 121,553 1,047
HighMark Large Cap Value Fund,
Fiduciary Shares 175,905 2,197
HighMark Small Cap Growth Fund,
Fiduciary Shares 50,075 734
HighMark Small Cap Value Fund,
Fiduciary Shares 37,267 728
HighMark Value Momentum Fund,
Fiduciary Shares 108,061 2,601
-----------
TOTAL EQUITY FUNDS
(Cost $9,425) 9,906
-----------
- --------------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 28.9%
- --------------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares 236,791 2,546
HighMark Short Term Bond Fund,
Fiduciary Shares 174,610 1,718
-----------
TOTAL FIXED INCOME FUNDS
(Cost $4,303) 4,264
-----------
- --------------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND - 3.2%
- --------------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares 470,325 470
-----------
TOTAL MONEY MARKET FUND
(Cost $470) 470
-----------
TOTAL INVESTMENTS - 99.3%
(Cost $14,198) $ 14,640
===========
PERCENTAGES ARE BASED ON NET ASSETS OF $14,737,523.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
82 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2005
INCOME PLUS ALLOCATION FUND
- --------------------------------------------------------------------------------
Description Shares Value (000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 57.4%
- --------------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares 75,961 $ 817
HighMark Short Term Bond Fund,
Fiduciary Shares 73,716 725
-----------
TOTAL FIXED INCOME FUNDS
(Cost $1,554) 1,542
-----------
- --------------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 38.2%
- --------------------------------------------------------------------------------
HighMark Core Equity Fund,
Fiduciary Shares 31,575 256
HighMark Large Cap Growth Fund,
Fiduciary Shares 15,007 129
HighMark Large Cap Value Fund,
Fiduciary Shares 21,270 266
HighMark Small Cap Growth Fund,
Fiduciary Shares 4,101 60
HighMark Small Cap Value Fund,
Fiduciary Shares 3,043 59
HighMark Value Momentum Fund,
Fiduciary Shares 10,657 257
-----------
TOTAL EQUITY FUNDS
(Cost $980) 1,027
-----------
- --------------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND - 4.5%
- --------------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares 121,066 121
-----------
TOTAL MONEY MARKET FUND
(Cost $121) 121
-----------
TOTAL INVESTMENTS - 100.1%
(Cost $2,655) $ 2,690
===========
PERCENTAGES ARE BASED ON NET ASSETS OF $2,686,224.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 83
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
[HIGHMARK FUNDS LOGO OMITTED]
STATEMENTS OF ASSETS AND LIABILITIES (000)*
JULY 31, 2005
CAPITAL GROWTH & INCOME
GROWTH INCOME PLUS
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
---------- ---------- ----------
ASSETS:
Affiliated Investments at Value (Cost $12,868, $14,198
and $2,655, respectively) ............................................... $ 13,419 $ 14,640 $ 2,690
Receivable for Fund Shares Sold ........................................... 126 113 --
Accrued Income ............................................................ 1 1 --
Prepaid Expenses .......................................................... 1 1 --
---------- ---------- ----------
TOTAL ASSETS ............................................................ 13,547 14,755 2,690
---------- ---------- ----------
LIABILITIES:
Accrued Expenses@ ........................................................ 16 17 4
---------- ---------- ----------
TOTAL LIABILITIES ....................................................... 16 17 4
---------- ---------- ----------
NET ASSETS ............................................................ $ 13,531 $ 14,738 $ 2,686
========== ========== ==========
NET ASSETS:
Paid-in-Capital (unlimited authorized - no par value) .................... $12,907 $14,246 $ 2,645
Undistributed net investment income ....................................... -- 4 4
Accumulated net realized gain on investments .............................. 73 46 2
Net unrealized appreciation on investments ................................ 551 442 35
---------- ---------- ----------
NET ASSETS ............................................................ $ 13,531 $ 14,738 $ 2,686
========== ========== ==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A SHARES (A)
($8,957,199 / 404,202 SHARES, $10,157,609 / 470,051 SHARES
AND $2,168,649 / 104,636 SHARES, RESPECTIVELY) ............................ $ 22.16 $ 21.61 $ 20.73
========== ========== ==========
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A SHARES
($22.16 / 94.5%, $21.61 / 94.5% AND $20.73 / 95.5%, RESPECTIVELY) ......... $ 23.45 $ 22.87 $ 21.71
========== ========== ==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE -- CLASS C SHARES (A)
($4,573,303 / 207,263 SHARES, $4,579,914 / 212,573 SHARES
AND $517,575 / 25,057 SHARES, RESPECTIVELY) .............................. $ 22.07 $ 21.55 $ 20.66
========== ========== ==========
* VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
@ SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A LISTING OF AFFILIATED
PAYABLES.
(A) CLASS A HAS A POSSIBLE REDEMPTION FEE AND A POSSIBLE EXCHANGE FEE (SEE
NOTE 2 IN NOTES TO FINANCIAL STATEMENTS). CLASS C HAS A CONTINGENT
DEFERRED SALES CHARGE (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
84 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
This page intentionally left blank.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 85
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF OPERATIONS (000)
FOR THE YEAR ENDED JULY 31, 2005
LARGE CAP VALUE LARGE CAP
GROWTH MOMENTUM VALUE
FUND FUND FUND
--------- --------- ---------
Dividend Income ................................................. $ 2,204 $ 10,254 $ 3,095
Interest Income ................................................. 133+ 288+ 105+
Less: Foreign Taxes Withheld, Net of Reclaims ................... (4) (29) (11)
--------- --------- ---------
Total Investment Income .............................. 2,333 10,513 3,189
--------- --------- ---------
Expenses:
Investment Adviser Fee ...................................... 951 2,701 920
Shareholder Servicing Fees Fiduciary Shares ................. 324 1,029 245
Shareholder Servicing Fees Class A Shares ................... 44 71 120
Shareholder Servicing Fees Class B Shares ................... 23 23 10
Administrative Fee .......................................... 317 901 307
Custodian Fees .............................................. 16 45 15
Trustees Fees ............................................... 8 21 7
Transfer Agent Fees ......................................... 86 104 88
Distribution Fees Class A Shares ............................ 44 71 120
Distribution Fees Class B Shares ............................ 71 70 30
Distribution Fees Class C Shares ............................ 15 10 33
Professional Fees ........................................... 25 68 22
Printing Fees ............................................... 16 43 14
Registration Fees ........................................... 14 36 15
Insurance Fees .............................................. 3 7 14
Miscellaneous Fees .......................................... 12 31 11
--------- --------- ---------
Total Expenses ....................................... 1,969 5,231 1,971
--------- --------- ---------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees .............................. -- -- (21)
Shareholder Servicing Fees ........................... (221) (660) (219)
Administrative Fees .................................. (40) (113) (38)
Reduction of Expenses (1) ............................ (76) (78) (79)
--------- --------- ---------
Total Waivers and Reduction of Expenses ..................... (337) (851) (357)
--------- --------- ---------
Total Net Expenses .......................................... 1,632 4,380 1,614
--------- --------- ---------
Net Investment Income (Loss) ................................... 701 6,133 1,575
--------- --------- ---------
Net Realized Gain on Investments ............................... 7,638 40,252 13,957
Net Realized Gain on Option Contracts .......................... -- 633 --
Change in Unrealized Appreciation (Depreciation) on Investments
and Options ................................................. 14,181 23,331 13,838
--------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments ......... 21,819 64,216 27,795
--------- --------- ---------
Increase in Net Assets Resulting from Operations ............... $ 22,520 $ 70,349 $ 29,370
========= ========= =========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
* INCLUDES REALIZED GAINS AS A RESULT OF AN IN-KIND REDEMPTION (SEE NOTE 10
IN NOTES TO FINANCIAL STATEMENTS).
+ INCLUDES INCOME FROM SECURITIES LENDING PROGRAM (SEE NOTE 6 IN NOTES TO
FINANCIAL STATEMENTS).
(1) SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
86 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
CORE SMALL CAP
EQUITY BALANCED GROWTH
FUND FUND FUND
--------- --------- ---------
Dividend Income ................................................ $ 2,500 $ 1,648 $ 69
Interest Income ................................................ 84+ 1,650+ 20+
Less: Foreign Taxes Withheld, Net of Reclaims .................. (6) (3) --
--------- --------- ---------
Total Investment Income ............................. 2,578 3,295 89
--------- --------- ---------
Expenses:
Investment Adviser Fee ..................................... 690 670 369
Shareholder Servicing Fees Fiduciary Shares ................ 271 250 67
Shareholder Servicing Fees Class A Shares .................. 8 18 10
Shareholder Servicing Fees Class B Shares .................. 8 10 1
Administrative Fee ......................................... 230 224 64
Custodian Fees ............................................. 12 11 3
Trustees Fees .............................................. 6 6 2
Transfer Agent Fees ........................................ 75 80 58
Distribution Fees Class A Shares ........................... 8 18 10
Distribution Fees Class B Shares ........................... 24 30 4
Distribution Fees Class C Shares ........................... 3 3 10
Professional Fees .......................................... 17 18 8
Printing Fees .............................................. 13 12 4
Registration Fees .......................................... 16 10 9
Insurance Fees ............................................. -- 2 --
Miscellaneous Fees ......................................... 9 18 7
--------- --------- ---------
Total Expenses ...................................... 1,390 1,380 626
--------- --------- ---------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees ............................. (14) -- (12)
Shareholder Servicing Fees .......................... (167) (161) (46)
Administrative Fees ................................. (29) (28) (8)
Reduction of Expenses (1) ........................... (69) (73) (54)
--------- --------- ---------
Total Waivers and Reduction of Expenses .................... (279) (262) (120)
--------- --------- ---------
Total Net Expenses ......................................... 1,111 1,118 506
--------- --------- ---------
Net Investment Income (Loss) ................................... 1,467 2,177 (417)
--------- --------- ---------
Net Realized Gain on Investments ............................... 9,660 6,575* 1,318
Net Realized Gain on Option Contracts .......................... -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments
and Options ................................................. 1,533 169 6,190
--------- --------- ---------
Net Realized and Unrealized Gain (Loss) on Investments ......... 11,193 6,744 7,508
--------- --------- ---------
Increase in Net Assets Resulting from Operations ............... $ 12,660 $ 8,921 $ 7,091
========= ========= =========
CALIFORNIA NATIONAL
SMALL CAP INTERMEDIATE INTERMEDIATE
VALUE TAX-FREE TAX-FREE
FUND BOND FUND BOND FUND
--------- ------------ ------------
Dividend Income ................................................ $ 3,036 $ 17 $ --
Interest Income ................................................ 319+ 7,620 4,241
Less: Foreign Taxes Withheld, Net of Reclaims .................. (2) -- --
--------- ------------ ------------
Total Investment Income ............................. 3,353 7,637 4,241
--------- ------------ ------------
Expenses:
Investment Adviser Fee ..................................... 1,889 909 494
Shareholder Servicing Fees Fiduciary Shares ................ 290 287 236
Shareholder Servicing Fees Class A Shares .................. 105 149 11
Shareholder Servicing Fees Class B Shares .................. 37 17 --
Administrative Fee ......................................... 378 364 198
Custodian Fees ............................................. 19 18 10
Trustees Fees .............................................. 8 9 5
Transfer Agent Fees ........................................ 99 81 53
Distribution Fees Class A Shares ........................... 105 149 11
Distribution Fees Class B Shares ........................... 111 52 --
Distribution Fees Class C Shares ........................... 160 5 --
Professional Fees .......................................... 27 28 15
Printing Fees .............................................. 18 18 9
Registration Fees .......................................... 10 16 7
Insurance Fees ............................................. -- 3 2
Miscellaneous Fees ......................................... 9 39 21
--------- ------------ ------------
Total Expenses ...................................... 3,265 2,144 1,072
--------- ------------ ------------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees ............................. -- (459) (465)
Shareholder Servicing Fees .......................... (237) (436) (247)
Administrative Fees ................................. (47) (45) (25)
Reduction of Expenses (1) ........................... (88) (70) (47)
--------- ------------ ------------
Total Waivers and Reduction of Expenses .................... (372) (1,010) (784)
--------- ------------ ------------
Total Net Expenses ......................................... 2,893 1,134 288
--------- ------------ ------------
Net Investment Income (Loss) ................................... 460 6,503 3,953
--------- ------------ ------------
Net Realized Gain on Investments ............................... 12,191 1,397 521
Net Realized Gain on Option Contracts .......................... -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments
and Options ................................................. 36,213 (2,975) (2,085)
--------- ------------ ------------
Net Realized and Unrealized Gain (Loss) on Investments ......... 48,404 (1,578) (1,564)
--------- ------------ ------------
Increase in Net Assets Resulting from Operations ............... $ 48,864 $ 4,925 $ 2,389
========= ============ ============
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 87
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF OPERATIONS (000)
FOR THE YEAR ENDED JULY 31, 2005
100%
SHORT TERM U.S. TREASURY
BOND BOND MONEY MARKET
FUND FUND (2) FUND
------- ---------- -------------
Dividend Income ....................................................... $ -- $ -- $ --
Interest Income ....................................................... 25,949+ 480+ 18,186
Income from Investments in Affiliated Funds ........................... -- -- --
------- ---------- -------------
Total Investment Income .................................... 25,949 480 18,186
------- ---------- -------------
Expenses:
Investment Adviser Fee ............................................ 2,495 55 2,535
Shareholder Servicing Fees Fiduciary Shares ....................... 1,110 33 1,043
Shareholder Servicing Fees Class A Shares ......................... 116 1 407
Shareholder Servicing Fees Class B Shares ......................... 22 -- --
Administrative Fee ................................................ 998 45 1,690
Custodian Fees .................................................... 50 1 84
Trustees Fees ..................................................... 23 1 39
Distribution Fees Class A Shares .................................. 116 1 407
Distribution Fees Class B Shares .................................. 67 -- --
Distribution Fees Class C Shares .................................. -- -- --
Distribution Fees Class S Shares .................................. -- -- 1,458
Transfer Agent Fees ............................................... 121 1 90
Professional Fees ................................................. 76 2 127
Registration Fees ................................................. 66 1 95
Printing Fees ..................................................... 49 2 80
Insurance Fees .................................................... 1 -- 15
Miscellaneous Fees ................................................ 59 10 45
------- ---------- -------------
Total Expenses ............................................. 5,369 153 8,115
------- ---------- -------------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees .................................... (75) -- (64)
Shareholder Servicing Fees ................................. (1,127) (34) (1,450)
Administrative Fees ........................................ (125) (28) (211)
Reduction of Expenses (1) .................................. (91) -- (40)
------- ---------- -------------
Total Waivers and Reduction of Expenses ........................... (1,418) (62) (1,765)
------- ---------- -------------
Total Net Expenses .................................................... 3,951 91 6,350
------- ---------- -------------
Net Investment Income ................................................. 21,998 389 11,836
------- ---------- -------------
Net Realized Gain (Loss) on Investments ............................... 1,673 (7) 42
Net Realized Gain on Investments in Affiliated Funds .................. -- -- --
Change in Unrealized Depreciation on Investments ...................... (2,416) (260) --
Change in Unrealized Appreciation on Investments in Affiliated Funds .. -- -- --
------- ---------- -------------
Net Realized and Unrealized Gain (Loss) on Investments ................ (743) (267) 42
------- ---------- -------------
Increase in Net Assets Resulting from Operations ...................... $21,255 $ 122 $ 11,878
======= ========== =============
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
+ INCLUDES INCOME FROM SECURITIES LENDING PROGRAM (SEE NOTE 6 IN NOTES TO
FINANCIAL STATEMENTS).
(1) SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
(2) COMMENCED OPERATIONS ON NOVEMBER 2, 2004 AS SUCH STATEMENTS REFLECT
OPERATIONS FROM THE COMMENCEMENT DATE THROUGH JULY 31, 2005.
(3) COMMENCED OPERATIONS ON OCTOBER 12, 2004 AS SUCH STATEMENTS REFLECT
OPERATIONS FROM THE COMMENCEMENT DATE THROUGH JULY 31, 2005.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
88 1.800.433.6884
- --------------------------------------------------------------------------------
CALIFORNIA
U.S. GOVERNMENT DIVERSIFIED TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
--------------- ------------ ------------
Dividend Income ....................................................... $ -- $ -- $ 8
Interest Income ....................................................... 10,240 78,248 9,664
Income from Investments in Affiliated Funds ........................... -- -- --
--------------- ------------ ------------
Total Investment Income .................................... 10,240 78,248 9,672
--------------- ------------ ------------
Expenses:
Investment Adviser Fee ............................................ 1,295 9,588 1,527
Shareholder Servicing Fees Fiduciary Shares ....................... 888 4,966 527
Shareholder Servicing Fees Class A Shares ......................... 90 1,324 655
Shareholder Servicing Fees Class B Shares ......................... 3 -- --
Administrative Fee ................................................ 864 6,392 1,018
Custodian Fees .................................................... 43 320 51
Trustees Fees ..................................................... 20 148 24
Distribution Fees Class A Shares .................................. 90 1,324 655
Distribution Fees Class B Shares .................................. 10 -- --
Distribution Fees Class C Shares .................................. -- -- --
Distribution Fees Class S Shares .................................. 215 3,740 199
Transfer Agent Fees ............................................... 82 225 72
Professional Fees ................................................. 63 472 76
Registration Fees ................................................. 39 243 37
Printing Fees ..................................................... 40 300 69
Insurance Fees .................................................... 8 56 9
Miscellaneous Fees ................................................ 32 169 36
--------------- ------------ ------------
Total Expenses ............................................. 3,782 29,267 4,955
--------------- ------------ ------------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees .................................... (31) (106) (440)
Shareholder Servicing Fees ................................. (978) (6,290) (1,182)
Administrative Fees ........................................ (108) (799) (127)
Reduction of Expenses (1) .................................. (57) (40) (39)
--------------- ------------ ------------
Total Waivers and Reduction of Expenses ........................... (1,174) (7,235) (1,788)
--------------- ------------ ------------
Total Net Expenses .................................................... 2,608 22,032 3,167
--------------- ------------ ------------
Net Investment Income ................................................. 7,632 56,216 6,505
--------------- ------------ ------------
Net Realized Gain (Loss) on Investments ............................... (1) (2) 1
Net Realized Gain on Investments in Affiliated Funds .................. -- -- --
Change in Unrealized Depreciation on Investments ...................... -- -- --
Change in Unrealized Appreciation on Investments in Affiliated Funds .. -- -- --
--------------- ------------ ------------
Net Realized and Unrealized Gain (Loss) on Investments ................ (1) (2) 1
--------------- ------------ ------------
Increase in Net Assets Resulting from Operations ...................... $ 7,631 $ 56,214 $ 6,506
=============== ============ ============
CAPITAL GROWTH & INCOME
GROWTH INCOME PLUS
ALLOCATION ALLOCATION ALLOCATION
FUND (3) FUND (3) FUND (3)
---------- ---------- ----------
Dividend Income ....................................................... $ -- $ -- $ --
Interest Income ....................................................... -- -- --
Income from Investments in Affiliated Funds ........................... 60 102 22
---------- ---------- ----------
Total Investment Income .................................... 60 102 22
---------- ---------- ----------
Expenses:
Investment Adviser Fee ............................................ 31 34 5
Shareholder Servicing Fees Fiduciary Shares ....................... -- -- --
Shareholder Servicing Fees Class A Shares ......................... 8 9 2
Shareholder Servicing Fees Class B Shares ......................... -- -- --
Administrative Fee ................................................ 38 39 32
Custodian Fees .................................................... -- 1 --
Trustees Fees ..................................................... -- -- --
Distribution Fees Class A Shares .................................. 8 9 2
Distribution Fees Class B Shares .................................. -- -- --
Distribution Fees Class C Shares .................................. 15 17 1
Distribution Fees Class S Shares .................................. -- -- --
Transfer Agent Fees ............................................... -- -- --
Professional Fees ................................................. 1 1 --
Registration Fees ................................................. -- -- --
Printing Fees ..................................................... -- -- --
Insurance Fees .................................................... -- -- --
Miscellaneous Fees ................................................ -- -- --
---------- ---------- ----------
Total Expenses ............................................. 101 110 42
---------- ---------- ----------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees .................................... (10) (12) (3)
Shareholder Servicing Fees ................................. (8) (9) (2)
Administrative Fees ........................................ (33) (34) (30)
Reduction of Expenses (1) .................................. -- -- --
---------- ---------- ----------
Total Waivers and Reduction of Expenses ........................... (51) (55) (35)
---------- ---------- ----------
Total Net Expenses .................................................... 50 55 7
---------- ---------- ----------
Net Investment Income ................................................. 10 47 15
---------- ---------- ----------
Net Realized Gain (Loss) on Investments ............................... -- -- --
Net Realized Gain on Investments in Affiliated Funds .................. 78 46 2
Change in Unrealized Depreciation on Investments ...................... -- -- --
Change in Unrealized Appreciation on Investments in Affiliated Funds .. 551 442 35
---------- ---------- ----------
Net Realized and Unrealized Gain (Loss) on Investments ................ 629 488 37
---------- ---------- ----------
Increase in Net Assets Resulting from Operations ...................... $ 639 $ 535 $ 52
========== ========== ==========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 89
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS ENDED JULY 31,
LARGE CAP GROWTH VALUE MOMENTUM LARGE CAP VALUE
FUND FUND FUND
------------------- ---------------------- ---------------------
2005 2004 2005 2004 2005 2004
------------------- ---------------------- ---------------------
Investment Activities:
Net Investment Income (Loss) ............................. $ 701 $ (465) $ 6,133 $ 5,090 $ 1,575 $ 1,039
Net Realized Gain on Investments ......................... 7,638 12,900 40,252 40,668 13,957 13,762
Net Realized Gain on Option Contracts .................... -- -- 633 136 -- --
Net Realized Loss on Foreign Currency Transactions ....... -- -- -- -- -- --
Change in Unrealized Appreciation (Depreciation) on
Investments and Options ............................... 14,181 (4,253) 23,331 13,554 13,838 5,516
-------- -------- --------- ---------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting From
Operations ................................................ 22,520 8,182 70,349 59,448 29,370 20,317
-------- -------- --------- ---------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................... (420) -- (6,024) (4,871) (1,108) (798)
Class A Shares ........................................ (18) -- (349) (305) (423) (245)
Class B Shares ........................................ -- -- (61) (39) (14) (7)
Class C Shares ........................................ -- -- (7) (4) (12) (3)
Capital Gains:
Fiduciary Shares ...................................... -- -- (31,807) (17,256) -- --
Class A Shares ........................................ -- -- (2,244) (1,354) -- --
Class B Shares ........................................ -- -- (724) (409) -- --
Class C Shares ........................................ -- -- (76) (42) -- --
-------- -------- --------- ---------- --------- ---------
Total Dividends and Distributions .................. (438) -- (41,292) (24,280) (1,557) (1,053)
-------- -------- --------- ---------- --------- ---------
Change in Net Assets ........................................ 22,082 8,182 29,057 35,168 27,813 19,264
-------- -------- --------- ---------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ........................... 16,022 28,888+ 61,206 75,281 37,828 23,702
Reinvestment of Dividends and Distributions ........... 285 -- 34,622 19,803 699 462
Cost of Shares Redeemed ............................... (42,384) (60,165) (81,338) (87,468) (20,473) (15,593)
Redemption Fees ....................................... -- 553 -- -- -- --
-------- -------- --------- ---------- --------- ---------
Total Fiduciary Share Transactions ................. (26,077) (30,724) 14,490 7,616 18,054 8,571
-------- -------- --------- ---------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ........................... 1,446 5,356+ 3,117 5,126 30,043 4,381
Reinvestment of Dividends and Distributions ........... 16 -- 2,331 1,464 373 235
Cost of Shares Redeemed ............................... (5,366) (6,096) (6,926) (7,809) (9,766) (5,709)
Redemption Fees ....................................... 1 76 8 -- 6 --
-------- -------- --------- ---------- --------- ---------
Total Class A Share Transactions ................... (3,903) (664) (1,470) (1,219) 20,656 (1,093)
-------- -------- --------- ---------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ........................... 133 1,269+ 252 1,118 304 1,455
Reinvestment of Dividends and Distributions ........... -- -- 756 435 12 6
Cost of Shares Redeemed ............................... (2,109) (2,162) (1,403) (1,220) (668) (264)
Redemption Fees ....................................... -- 40 -- -- -- --
-------- -------- --------- ---------- --------- ---------
Total Class B Share Transactions ................... (1,976) (853) (395) 333 (352) 1,197
-------- -------- --------- ---------- --------- ---------
Class C Shares (2):
Proceeds from Shares Issued ........................... 191 639+ 357 195 2,542 1,531
Reinvestment of Dividends and Distributions ........... -- -- 66 33 11 3
Cost of Shares Redeemed ............................... (508) (333) (66) (285) (302) (13)
Redemption Fees ....................................... -- 6 -- -- -- --
-------- -------- --------- ---------- --------- ---------
Total Class C Share Transactions ................... (317) 312 357 (57) 2,251 1,521
-------- -------- --------- ---------- --------- ---------
Net Increase (Decrease) in Net Assets From Share
Transactions ............................................. (32,273) (31,929) 12,982 6,673 40,609 10,196
-------- -------- --------- ---------- --------- ---------
Total Increase (Decrease) in Net Assets ............ (10,191) (23,747) 42,039 41,841 68,422 29,460
-------- -------- --------- ---------- --------- ---------
Net Assets:
Beginning of Year ........................................ 168,073 191,820 428,115 386,274 126,032 96,572
-------- -------- --------- ---------- --------- ---------
End of Year .............................................. $157,882 $168,073 $ 470,154 $ 428,115 $ 194,454 $ 126,032
======== ======== ========= ========== ========= =========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment Income) ....... $ 263 $ -- $ -- $ 126 $ 69 $ 51
======== ======== ========= ========== ========= =========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
* INCLUDES REALIZED GAINS OR REDEMPTIONS AS A RESULT OF AN IN-KIND
TRANSACTION (SEE NOTE 10 IN NOTES TO FINANCIAL STATEMENTS).
+ SUBSCRIPTIONS INCLUDE A CAPITAL INFUSION OF $99,244 FROM THE
ADMINISTRATOR (SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS).
(1) FOR SHARE TRANSACTIONS, SEE NOTE 13 IN NOTES TO FINANCIAL
STATEMENTS.
(2) CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 28, 2003 FOR THE
CORE EQUITY FUND.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
90 1.800.433.6884
- --------------------------------------------------------------------------------
CORE EQUITY BALANCED
FUND FUND
------------------- ----------------------
2005 2004 2005 2004
------------------- ----------------------
Investment Activities:
Net Investment Income (Loss) ............................. $ 1,467 $ 460 $ 2,177 $ 1,709
Net Realized Gain on Investments ......................... 9,660 4,005 6,575* 9,876
Net Realized Gain on Option Contracts .................... -- -- -- --
Net Realized Loss on Foreign Currency Transactions ....... -- -- -- --
Change in Unrealized Appreciation (Depreciation) on
Investments and Options ............................... 1,533 7,362 169 (1,341)
-------- -------- --------- ----------
Net Increase (Decrease) in Net Assets Resulting From
Operations ............................................... 12,660 11,827 8,921 10,244
-------- -------- --------- ----------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................... (1,405) (479) (2,072) (1,582)
Class A Shares ........................................ (30) (8) (134) (78)
Class B Shares ........................................ (19) (1) (49) (20)
Class C Shares ........................................ (2) -- (4) (1)
Capital Gains:
Fiduciary Shares ...................................... -- -- -- --
Class A Shares ........................................ -- -- -- --
Class B Shares ........................................ -- -- -- --
Class C Shares ........................................ -- -- -- --
-------- -------- --------- ----------
Total Dividends and Distributions .................. (1,456) (488) (2,259) (1,681)
-------- -------- --------- ----------
Change in Net Assets ........................................ 11,204 11,339 6,662 8,563
-------- -------- --------- ----------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ........................... 12,443 19,620 12,780 25,365
Reinvestment of Dividends and Distributions ........... 304 131 2,022 1,538
Cost of Shares Redeemed ............................... (30,248) (32,197) (79,955)* (31,206)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Fiduciary Share Transactions ................. (17,501) (12,446) (65,153) (4,303)
-------- -------- --------- ----------
Class A Shares:
Proceeds from Shares Issued ........................... 394 1,390 573 966
Reinvestment of Dividends and Distributions ........... 28 8 128 76
Cost of Shares Redeemed ............................... (1,343) (1,305) (958) (1,633)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Class A Share Transactions ................... (921) 93 (257) (591)
-------- -------- --------- ----------
Class B Shares:
Proceeds from Shares Issued ........................... 18 299 110 432
Reinvestment of Dividends and Distributions ........... 18 1 46 19
Cost of Shares Redeemed ............................... (543) (422) (1,031) (601)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Class B Share Transactions ................... (507) (122) (875) (150)
-------- -------- --------- ----------
Class C Shares (2):
Proceeds from Shares Issued ........................... 40 283 94 210
Reinvestment of Dividends and Distributions ........... 2 -- 4 1
Cost of Shares Redeemed ............................... (66) (1) (114) (31)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Class C Share Transactions ................... (24) 282 (16) 180
-------- -------- --------- ----------
Net Increase (Decrease) in Net Assets From Share Transactions (18,953) (12,193) (66,301) (4,864)
-------- -------- --------- ----------
Total Increase (Decrease) in Net Assets ............ (7,749) (854) (59,639) 3,699
-------- -------- --------- ----------
Net Assets:
Beginning of Year ........................................ 120,517 121,371 130,418 126,719
-------- -------- --------- ----------
End of Year .............................................. $112,768 $120,517 $ 70,779 $ 130,418
======== ======== ========= ==========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment Income) ....... $ 6 $ (5) $ (3) $ 46
======== ======== ========= ==========
SMALL CAP GROWTH SMALL CAP VALUE
FUND FUND
------------------- ----------------------
2005 2004 2005 2004
------------------- ----------------------
Investment Activities:
Net Investment Income (Loss) ............................. $ (417) $ (428) $ 460 $ 71
Net Realized Gain on Investments ......................... 1,318 724 12,191 13,910
Net Realized Gain on Option Contracts .................... -- -- -- --
Net Realized Loss on Foreign Currency Transactions ....... -- -- -- (2)
Change in Unrealized Appreciation (Depreciation) on
Investments and Options ............................... 6,190 (1,690) 36,213 10,458
-------- -------- --------- ----------
Net Increase (Decrease) in Net Assets Resulting From
Operations ............................................... 7,091 (1,394) 48,864 24,437
-------- -------- --------- ----------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ...................................... -- -- (126) (448)
Class A Shares ........................................ -- -- (31) (118)
Class B Shares ........................................ -- -- (5) (23)
Class C Shares ........................................ -- -- (6) (10)
Capital Gains:
Fiduciary Shares ...................................... (40) (343) (6,654) (1,235)
Class A Shares ........................................ (6) (80) (2,401) (403)
Class B Shares ........................................ (1) (5) (900) (194)
Class C Shares ........................................ (2) (13) (907) (71)
-------- -------- --------- ----------
Total Dividends and Distributions .................. (49) (441) (11,030) (2,502)
-------- -------- --------- ----------
Change in Net Assets ........................................ 7,042 (1,835) 37,834 21,935
-------- -------- --------- ----------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ........................... 5,056 25,907 35,372 31,292
Reinvestment of Dividends and Distributions ........... 37 319 6,181 1,367
Cost of Shares Redeemed ............................... (10,003) (4,665) (31,441) (25,050)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Fiduciary Share Transactions ................. (4,910) 21,561 10,112 7,609
-------- -------- --------- ----------
Class A Shares:
Proceeds from Shares Issued ........................... 924 2,364 19,921 21,489
Reinvestment of Dividends and Distributions ........... 5 75 2,052 423
Cost of Shares Redeemed ............................... (886) (2,978) (11,787) (13,603)
Redemption Fees ....................................... -- -- 1 --
-------- -------- --------- ----------
Total Class A Share Transactions ................... 43 (539) 10,187 8,309
-------- -------- --------- ----------
Class B Shares:
Proceeds from Shares Issued ........................... 4 520 281 2,612
Reinvestment of Dividends and Distributions ........... 1 5 833 197
Cost of Shares Redeemed ............................... (101) (45) (2,194) (2,273)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Class B Share Transactions ................... (96) 480 (1,080) 536
-------- -------- --------- ----------
Class C Shares (2):
Proceeds from Shares Issued ........................... 137 572 6,869 8,447
Reinvestment of Dividends and Distributions ........... 1 12 681 77
Cost of Shares Redeemed ............................... (247) (55) (1,424) (564)
Redemption Fees ....................................... -- -- -- --
-------- -------- --------- ----------
Total Class C Share Transactions ................... (109) 529 6,126 7,960
-------- -------- --------- ----------
Net Increase (Decrease) in Net Assets From Share Transactions (5,072) 22,031 25,345 24,414
-------- -------- --------- ----------
Total Increase (Decrease) in Net Assets ............ 1,970 20,196 63,179 46,349
-------- -------- --------- ----------
Net Assets:
Beginning of Year ........................................ 32,077 11,881 163,847 117,498
-------- -------- --------- ----------
End of Year .............................................. $ 34,047 $ 32,077 $ 227,026 $ 163,847
======== ======== ========= ==========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment Income) ....... $ -- $ -- $ 292 $ --
======== ======== ========= ==========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 91
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS OR PERIOD ENDED JULY 31,
CALIFORNIA INTERMEDIATE NATIONAL INTERMEDIATE
TAX-FREE BOND TAX-FREE BOND
FUND FUND
---------------------- ----------------------
2005 2004 2005 2004
---------------------- ----------------------
Investment Activities:
Net Investment Income ................................................ $ 6,503 $ 7,831 $ 3,953 $ 4,348
Net Realized Gain (Loss) on Investments .............................. 1,397 2,002 521 740
Change in Unrealized Depreciation on Investments ..................... (2,975) (1,701) (2,085) (2,268)
--------- --------- --------- ---------
Net Increase in Net Assets Resulting From Operations .................... 4,925 8,132 2,389 2,820
--------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares .................................................. (4,235) (4,960) (3,785) (4,146)
Class A Shares .................................................... (2,060) (2,670) (158) (127)
Class B Shares .................................................... (190) (241) -- --
Class C Shares .................................................... (20) (4) (1) --
Class S Shares .................................................... -- -- -- --
Capital Gains:
Fiduciary Shares .................................................. (1,141) (252) (729) (10)
Class A Shares .................................................... (583) (153) (36) --
Class B Shares .................................................... (70) (17) -- --
Class C Shares .................................................... (6) -- -- --
--------- --------- --------- ---------
Total Dividends and Distributions .............................. (8,305) (8,297) (4,709) (4,283)
--------- --------- --------- ---------
Change in Net Assets .................................................... (3,380) (165) (2,320) (1,463)
--------- --------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Conversion of the:
UBOC Municipal Bond Fund (2) ................................... -- -- -- 47,618
Proceeds from Shares Issued ....................................... 10,990 21,780 3,764 4,710
Reinvestment of Dividends and Distributions ....................... 1,443 1,036 718 23
Cost of Shares Redeemed ........................................... (28,742) (41,139) (9,853) (25,916)
--------- --------- --------- ---------
Total Fiduciary Share Transactions ............................. (16,309) (18,323) (5,371) 26,435
--------- --------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ....................................... 5,352 7,985 2,322 3,688
Reinvestment of Dividends and Distributions ....................... 1,880 2,059 118 72
Cost of Shares Redeemed ........................................... (14,856) (38,988) (3,313) (1,705)
--------- --------- --------- ---------
Total Class A Share Transactions ............................... (7,624) (28,944) (873) 2,055
--------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ....................................... 84 464 -- --
Reinvestment of Dividends and Distributions ....................... 196 190 -- --
Cost of Shares Redeemed ........................................... (1,242) (2,852) -- --
--------- --------- --------- ---------
Total Class B Share Transactions ............................... (962) (2,198) -- --
--------- --------- --------- ---------
Class C Shares (3):
Proceeds from Shares Issued ....................................... 376 543 50 --
Reinvestment of Dividends and Distributions ....................... 26 4 1 --
Cost of Shares Redeemed ........................................... (5) -- -- --
--------- --------- --------- ---------
Total Class C Share Transactions ............................... 397 547 51 --
--------- --------- --------- ---------
Class S Shares:
Proceeds from Shares Issued ....................................... -- -- -- --
Reinvestment of Dividends ......................................... -- -- -- --
Cost of Shares Redeemed ........................................... -- -- -- --
--------- --------- --------- ---------
Total Class S Share Transactions ............................... -- -- -- --
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From Share Transactions ........... (24,498) (48,918) (6,193) 28,490
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets ........................ (27,878) (49,083) (8,513) 27,027
--------- --------- --------- ---------
Net Assets:
Beginning of Year .................................................... 191,252 240,335 102,419 75,392
--------- --------- --------- ---------
End of Year .......................................................... $ 163,374 $ 191,252 $ 93,906 $ 102,419
========= ========= ========= =========
Undistributed Net Investment Income (Distributions in Excess of Net
Investment Income) ................................................... $ 186 $ 188 $ 178 $ 169
========= ========= ========= =========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
(1) FOR SHARE TRANSACTIONS, SEE NOTE 13 IN NOTES TO FINANCIAL STATEMENTS.
(2) SEE NOTE 9 IN NOTES TO FINANCIAL STATEMENTS.
(3) CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 28, 2003 FOR THE CALIFORNIA
INTERMEDIATE TAX-FREE BOND, THE NATIONAL INTERMEDIATE TAX-FREE BOND, AND
THE BOND FUND CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 30, 2004 FOR
THE SHORT TERM BOND FUND.
(4) COMMENCED OPERATIONS ON NOVEMBER 2, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
92 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SHORT TERM
BOND BOND
FUND FUND
---------------------- ----------
2005 2004 2005 (4)
---------------------- ----------
Investment Activities:
Net Investment Income ................................................ $ 21,998 $ 24,458 $ 389
Net Realized Gain (Loss) on Investments .............................. 1,673 2,539 (7)
Change in Unrealized Depreciation on Investments ..................... (2,416) (1,153) (260)
--------- --------- --------
Net Increase in Net Assets Resulting From Operations .................... 21,255 25,844 122
--------- --------- --------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares .................................................. (20,552) (22,544) (371)
Class A Shares .................................................... (2,055) (2,334) (15)
Class B Shares .................................................... (331) (418) --
Class C Shares .................................................... (1) -- --
Class S Shares .................................................... -- -- --
Capital Gains:
Fiduciary Shares .................................................. -- -- --
Class A Shares .................................................... -- -- --
Class B Shares .................................................... -- -- --
Class C Shares .................................................... -- -- --
--------- --------- --------
Total Dividends and Distributions .............................. (22,939) (25,296) (386)
--------- --------- --------
Change in Net Assets .................................................... (1,684) 548 (264)
--------- --------- --------
Share Transactions: (1)
Fiduciary Shares:
Conversion of the:
UBOC Municipal Bond Fund (2) ................................... -- -- --
Proceeds from Shares Issued ....................................... 70,035 76,226 26,111
Reinvestment of Dividends and Distributions ....................... 10,347 11,296 105
Cost of Shares Redeemed ........................................... (100,674) (142,334) (1,411)
--------- --------- --------
Total Fiduciary Share Transactions ............................. (20,292) (54,812) 24,805
--------- --------- --------
Class A Shares:
Proceeds from Shares Issued ....................................... 4,079 7,568 1,632
Reinvestment of Dividends and Distributions ....................... 1,375 1,526 2
Cost of Shares Redeemed ........................................... (8,025) (18,662) (191)
--------- --------- --------
Total Class A Share Transactions ............................... (2,571) (9,568) 1,443
--------- --------- --------
Class B Shares:
Proceeds from Shares Issued ....................................... 164 714 --
Reinvestment of Dividends and Distributions ....................... 260 308 --
Cost of Shares Redeemed ........................................... (1,907) (3,606) --
--------- --------- --------
Total Class B Share Transactions ............................... (1,483) (2,584) --
--------- --------- --------
Class C Shares (3):
Proceeds from Shares Issued ....................................... 26 38 15
Reinvestment of Dividends and Distributions ....................... 1 -- --
Cost of Shares Redeemed ........................................... (3) (24) --
--------- --------- --------
Total Class C Share Transactions ............................... 24 14 15
--------- --------- --------
Class S Shares:
Proceeds from Shares Issued ....................................... -- -- --
Reinvestment of Dividends ......................................... -- -- --
Cost of Shares Redeemed ........................................... -- -- --
--------- --------- --------
Total Class S Share Transactions ............................... -- -- --
--------- --------- --------
Net Increase (Decrease) in Net Assets From Share Transactions ........... (24,322) (66,950) 26,263
--------- --------- --------
Total Increase (Decrease) in Net Assets ........................ (26,006) (66,402) 25,999
--------- --------- --------
Net Assets:
Beginning of Year .................................................... 508,039 574,441 --
--------- --------- --------
End of Year .......................................................... $ 482,033 $ 508,039 $ 25,999
========= ========= ========
Undistributed Net Investment Income (Distributions in Excess of Net
Investment Income) ................................................... $ 582 $ 556 $ 18
========= ========= ========
100% U.S. TREASURY U.S. GOVERNMENT
MONEY MARKET MONEY MARKET
FUND FUND
-------------------------- --------------------------
2005 2004 2005 2004
-------------------------- --------------------------
Investment Activities:
Net Investment Income ............................................. $ 11,836 $ 2,810 $ 7,632 $ 2,736
Net Realized Gain (Loss) on Investments ........................... 42 21 (1) --
Change in Unrealized Depreciation on Investments .................. -- -- -- --
----------- ----------- ----------- -----------
Net Increase in Net Assets Resulting From Operations ................. 11,878 2,831 7,631 2,736
----------- ----------- ----------- -----------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................... (6,673) (2,379) (6,524) (2,584)
Class A Shares ................................................. (2,262) (445) (557) (123)
Class B Shares ................................................. -- -- (10) (1)
Class C Shares ................................................. -- -- -- --
Class S Shares ................................................. (2,902) (250) (541) (28)
Capital Gains:
Fiduciary Shares ............................................... -- -- -- --
Class A Shares ................................................. -- -- -- --
Class B Shares ................................................. -- -- -- --
Class C Shares ................................................. -- -- -- --
----------- ----------- ----------- -----------
Total Dividends and Distributions ........................... (11,837) (3,074) (7,632) (2,736)
----------- ----------- ----------- -----------
Change in Net Assets ................................................. 41 (243) (1) --
----------- ----------- ----------- -----------
Share Transactions: (1)
Fiduciary Shares:
Conversion of the:
UBOC Municipal Bond Fund (2) ................................ -- -- -- --
Proceeds from Shares Issued .................................... 2,968,389 2,040,049 3,157,136 2,781,841
Reinvestment of Dividends and Distributions .................... 320 105 158 52
Cost of Shares Redeemed ........................................ (2,977,833) (2,153,114) (3,106,150) (2,966,230)
----------- ----------- ----------- -----------
Total Fiduciary Share Transactions .......................... (9,124) (112,960) 51,144 (184,337)
----------- ----------- ----------- -----------
Class A Shares:
Proceeds from Shares Issued .................................... 392,802 457,861 64,614 53,832
Reinvestment of Dividends and Distributions .................... 2,262 445 557 123
Cost of Shares Redeemed ........................................ (358,263) (480,928) (73,865) (46,334)
----------- ----------- ----------- -----------
Total Class A Share Transactions ............................ 36,801 (22,622) (8,694) 7,621
----------- ----------- ----------- -----------
Class B Shares:
Proceeds from Shares Issued .................................... -- -- 326 671
Reinvestment of Dividends and Distributions .................... -- -- 10 1
Cost of Shares Redeemed ........................................ -- -- (843) (1,243)
----------- ----------- ----------- -----------
Total Class B Share Transactions ............................ -- -- (507) (571)
----------- ----------- ----------- -----------
Class C Shares (3):
Proceeds from Shares Issued .................................... -- -- -- --
Reinvestment of Dividends and Distributions .................... -- -- -- --
Cost of Shares Redeemed ........................................ -- -- -- --
----------- ----------- ----------- -----------
Total Class C Share Transactions ............................ -- -- -- --
----------- ----------- ----------- -----------
Class S Shares:
Proceeds from Shares Issued .................................... 873,865 1,047,322 317,539 296,462
Reinvestment of Dividends ...................................... 2,902 249 541 28
Cost of Shares Redeemed ........................................ (881,984) (1,165,831) (292,400) (324,807)
----------- ----------- ----------- -----------
Total Class S Share Transactions ............................ (5,217) (118,260) 25,680 (28,317)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets From Share Transactions ........ 22,460 (253,842) 67,623 (205,604)
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets ..................... 22,501 (254,085) 67,622 (205,604)
----------- ----------- ----------- -----------
Net Assets:
Beginning of Year ................................................. 844,805 1,098,890 463,402 669,006
----------- ----------- ----------- -----------
End of Year ....................................................... $ 867,306 $ 844,805 $ 531,024 $ 463,402
=========== =========== =========== ===========
Undistributed Net Investment Income (Distributions in Excess of Net
Investment Income) ................................................ $ -- $ 1 $ (1) $ (1)
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 93
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS OR PERIOD ENDED JULY 31,
DIVERSIFIED CALIFORNIA TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
-------------------------- ------------------------
2005 2004 2005 2004
-------------------------- ------------------------
Investment Activities:
Net Investment Income ................................................. $ 56,216 $ 15,770 $ 6,505 $ 2,180
Net Realized Gain (Loss) on Investments ............................... (2) 13 1 2
Net Realized Gain on Investments in Affiliated Funds .................. -- -- -- --
Change in Unrealized Appreciation on Investments ...................... -- -- -- --
Change in Unrealized Appreciation on Investments in Affiliated Funds .. -- -- -- --
------------ ----------- ---------- -----------
Net Increase in Net Assets Resulting From Operations .................... 56,214 15,783 6,506 2,182
------------ ----------- ---------- -----------
Dividends to Shareholders:
Net Investment Income:
Fiduciary Shares ..................................................... (38,046) (12,892) (3,038) (1,314)
Class A Shares ....................................................... (8,867) (2,283) (3,135) (834)
Class C Shares ....................................................... -- -- -- --
Class S Shares ....................................................... (9,303) (728) (334) (30)
------------ ----------- ---------- -----------
Total Dividends ..................................................... (56,216) (15,903) (6,507) (2,178)
------------ ----------- ---------- -----------
Change in Net Assets .................................................... (2) (120) (1) 4
------------ ----------- ---------- -----------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued .......................................... 5,401,713 4,737,665 620,445 338,586
Reinvestment of Dividends ............................................ 7,261 2,530 -- --
Cost of Shares Redeemed .............................................. (5,330,319) (4,580,627) (637,304) (386,378)
------------ ----------- ---------- -----------
Total Fiduciary Share Transactions .................................. 78,655 159,568 (16,859) (47,792)
------------ ----------- ---------- -----------
Class A Shares:
Proceeds from Shares Issued .......................................... 551,276 458,464 334,065 392,111
Reinvestment of Dividends ............................................ 8,746 2,263 3,179 833
Cost of Shares Redeemed .............................................. (546,899) (551,831) (343,514) (389,632)
------------ ----------- ---------- -----------
Total Class A Share Transactions .................................... 13,123 (91,104) (6,270) 3,312
------------ ----------- ---------- -----------
Class C Shares:
Proceeds from Shares Issued .......................................... -- -- -- --
Reinvestment of Dividends ............................................ -- -- -- --
Cost of Shares Redeemed .............................................. -- -- -- --
------------ ----------- ---------- -----------
Total Class C Share Transactions .................................... -- -- -- --
------------ ----------- ---------- -----------
Class S Shares:
Proceeds from Shares Issued .......................................... 2,747,529 2,518,055 149,640 211,746
Reinvestment of Dividends ............................................ 9,303 728 334 30
Cost of Shares Redeemed .............................................. (2,862,191) (2,753,599) (145,522) (222,556)
------------ ----------- ---------- -----------
Total Class S Share Transactions .................................... (105,359) (234,816) 4,452 (10,780)
------------ ----------- ---------- -----------
Net Increase (Decrease) in Net Assets From Share Transactions ........... (13,581) (166,352) (18,677) (55,260)
------------ ----------- ---------- -----------
Total Increase (Decrease) in Net Assets ............................... (13,583) (166,472) (18,678) (55,256)
------------ ----------- ---------- -----------
Net Assets:
Beginning of Year ..................................................... 3,333,537 3,500,009 513,070 568,326
------------ ----------- ---------- -----------
End of Year ........................................................... $ 3,319,954 $ 3,333,537 $ 494,392 $ 513,070
============ =========== ========== ===========
Undistributed Net Investment Income .................................. $ -- $ -- $ -- $ 2
============ =========== ========== ===========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
(1) FOR SHARE TRANSACTIONS, SEE NOTE 13 IN NOTES TO FINANCIAL STATEMENTS.
(2) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
94 1.800.433.6884
- --------------------------------------------------------------------------------
CAPITAL GROWTH GROWTH & INCOME INCOME PLUS
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
-------------- --------------- -----------
2005 (2) 2005 (2) 2005 (2)
-------------- --------------- -----------
Investment Activities:
Net Investment Income ................................................. $ 10 $ 47 $ 15
Net Realized Gain (Loss) on Investments ............................... -- -- --
Net Realized Gain on Investments in Affiliated Funds .................. 78 46 2
Change in Unrealized Appreciation on Investments ...................... -- -- --
Change in Unrealized Appreciation on Investments in Affiliated Funds .. 551 442 35
-------- ---------- --------
Net Increase in Net Assets Resulting From Operations .................... 639 535 52
--------- ---------- --------
Dividends to Shareholders:
Net Investment Income:
Fiduciary Shares ..................................................... -- -- --
Class A Shares ....................................................... (13) (36) (10)
Class C Shares ....................................................... (2) (7) (1)
Class S Shares ....................................................... -- -- --
-------- ---------- --------
Total Dividends ..................................................... (15) (43) (11)
-------- ---------- --------
Change in Net Assets .................................................... 624 492 41
-------- ---------- --------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued .......................................... -- -- --
Reinvestment of Dividends ............................................ -- -- --
Cost of Shares Redeemed .............................................. -- -- --
-------- ---------- --------
Total Fiduciary Share Transactions .................................. -- -- --
-------- ---------- --------
Class A Shares:
Proceeds from Shares Issued .......................................... 8,741 10,238 2,226
Reinvestment of Dividends ............................................ 11 32 5
Cost of Shares Redeemed .............................................. (223) (457) (96)
-------- ---------- --------
Total Class A Share Transactions .................................... 8,529 9,813 2,135
-------- ---------- --------
Class C Shares:
Proceeds from Shares Issued .......................................... 4,388 4,477 513
Reinvestment of Dividends ............................................ 1 6 1
Cost of Shares Redeemed .............................................. (11) (50) (4)
-------- ---------- --------
Total Class C Share Transactions .................................... 4,378 4,433 510
-------- ---------- --------
Class S Shares:
Proceeds from Shares Issued .......................................... -- -- --
Reinvestment of Dividends ............................................ -- -- --
Cost of Shares Redeemed .............................................. -- -- --
-------- ---------- --------
Total Class S Share Transactions .................................... -- -- --
-------- ---------- --------
Net Increase (Decrease) in Net Assets From Share Transactions ........... 12,907 14,246 2,645
-------- ---------- --------
Total Increase (Decrease) in Net Assets ............................... 13,531 14,738 2,686
-------- ---------- --------
Net Assets:
Beginning of Year ..................................................... -- -- --
-------- ---------- --------
End of Year ........................................................... $ 13,531 $ 14,738 $ 2,686
======== ========== ========
Undistributed Net Investment Income .................................. $ -- $ 4 $ 4
======== ========== ========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 95
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEARS OR PERIODS ENDED JULY 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------- --------------------
NET NET
ASSET NET REALIZED TOTAL ASSET
VALUE, NET AND UNREALIZED TOTAL NET FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL DIVIDENDS AND REDEMPTION END TOTAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES OF PERIOD RETURN**
- ------------------------------------------------------------------------------------------------------------------------------------
- ---------------------
LARGE CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2005+ $ 7.50 $ 0.042 $ 1.094 $ 1.136 $(0.026) $ -- $(0.026) $ -- $ 8.61 15.16%
2004+ 7.25 (0.012) 0.236 0.224 -- -- -- 0.026 7.50 3.45
2003+ 6.53 0.003 0.722 0.725 (0.005)++ -- (0.005) -- 7.25 11.11
2002+ 8.68 (0.004) (2.146) (2.150) -- -- -- -- 6.53 (24.77)
2001 18.62 (0.061) (7.684) (7.745) -- (2.195) (2.195) -- 8.68 (45.71)
CLASS A SHARES
2005+ $ 7.39 $ 0.022 $ 1.076 $ 1.098 $(0.008) $ -- $(0.008) $ -- $ 8.48 14.86%
2004+ 7.15 (0.031) 0.243 0.212 -- -- -- 0.028 7.39 3.36
2003+ 6.47 (0.014) 0.694 0.680 -- ++ -- -- -- 7.15 10.51
2002+ 8.61 (0.022) (2.118) (2.140) -- -- -- -- 6.47 (24.85)
2001 18.53 (0.093) (7.632) (7.725) -- (2.195) (2.195) -- 8.61 (45.83)
CLASS B SHARES
2005+ $ 7.04 $ (0.027) $ 1.017 $ 0.990 $ -- $ -- $ -- $ -- $ 8.03 14.06%
2004+ 6.86 (0.077) 0.231 0.154 -- -- -- 0.026 7.04 2.62
2003+ 6.24 (0.053) 0.673 0.620 -- -- -- -- 6.86 9.94
2002+ 8.36 (0.069) (2.051) (2.120) -- -- -- -- 6.24 (25.36)
2001 18.19 (0.168) (7.467) (7.635) -- (2.195) (2.195) -- 8.36 (46.23)
CLASS C SHARES
2005+ $ 7.05 $ (0.027) $ 1.017 $ 0.990 $ -- $ -- $ -- $ -- $ 8.04 14.04%
2004+ 6.87 (0.078) 0.227 0.149 -- -- -- 0.031 7.05 2.62
2003+ 6.24 (0.055) 0.685 0.630 -- -- -- -- 6.87 10.10
2002+ 8.37 (0.069) (2.061) (2.130) -- -- -- -- 6.24 (25.45)
2001 18.19 (0.160) (7.465) (7.625) -- (2.195) (2.195) -- 8.37 (46.17)
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
2005+ $ 22.58 $ 0.324 $ 3.368 $ 3.692 $(0.340) $ (1.86) $(2.202) $ -- $ 24.07 16.96%
2004+ 20.72 0.277 2.899 3.176 (0.284) (1.032) (1.316) -- 22.58 15.69
2003+ 20.05 0.273 1.583 1.856 (0.264) (0.922) (1.186) -- 20.72 10.00
2002+ 27.00 0.254 (5.404) (5.150) (0.247) (1.553) (1.800) -- 20.05 (20.06)
2001 29.10 0.245 (0.411) (0.166) (0.252) (1.682) (1.934) -- 27.00 (0.55)
CLASS A SHARES
2005+ $ 22.56 $ 0.266 $ 3.360 $ 3.626 $(0.284) $ (1.86) $(2.146) $ -- $ 24.04 16.64%
2004+ 20.71 0.221 2.890 3.111 (0.229) (1.032) (1.261) -- 22.56 15.36
2003+ 20.04 0.225 1.584 1.809 (0.217) (0.922) (1.139) -- 20.71 9.74
2002+ 26.99 0.195 (5.401) (5.206) (0.191) (1.553) (1.744) -- 20.04 (20.25)
2001 29.09 0.160 (0.394) (0.234) (0.184) (1.682) (1.866) -- 26.99 (0.80)
CLASS B SHARES
2005+ $ 22.35 $ 0.114 $ 3.340 $ 3.454 $(0.152) $ (1.86) $(2.014) $ -- $ 23.79 15.95%
2004+ 20.54 0.076 2.862 2.938 (0.096) (1.032) (1.128) -- 22.35 14.59
2003+ 19.90 0.101 1.565 1.666 (0.104) (0.922) (1.026) -- 20.54 9.00
2002+ 26.81 0.038 (5.341) (5.303) (0.054) (1.553) (1.607) -- 19.90 (20.71)
2001 28.95 (0.013) (0.411) (0.424) (0.034) (1.682) (1.716) -- 26.81 (1.48)
CLASS C SHARES
2005+ $ 22.32 $ 0.107 $ 3.331 $ 3.438 $(0.156) $ (1.86) $(2.018) $ -- $ 23.74 15.90%
2004+ 20.51 0.077 2.862 2.939 (0.097) (1.032) (1.129) -- 22.32 14.62
2003+ 19.87 0.102 1.563 1.665 (0.103) (0.922) (1.025) -- 20.51 9.01
2002+ 26.80 0.037 (5.359) (5.322) (0.055) (1.553) (1.608) -- 19.87 (20.79)
2001 28.94 (0.093) (0.329) (0.422) (0.036) (1.682) (1.718) -- 26.80 (1.47)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET ASSETS NET
ASSETS, RATIO EXCLUDING INVESTMENT
END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
(000) NET ASSETS OF EXPENSES NET ASSETS RATE
- ------------------------------------------------------------------------
- ---------------------
LARGE CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2005+ $ 129,824 0.94% 1.16% 0.53% 73%
2004+ 137,682 0.94 1.13 (0.15) 93
2003+ 161,181 0.94 1.12 0.05 57
2002+ 156,663 0.93 1.10 (0.05) 105
2001 279,625 0.92 1.11 (0.46) 26
CLASS A SHARES
2005+ $ 17,377 1.19% 1.41% 0.29% 73%
2004+ 18,845 1.19 1.38 (0.40) 93
2003+ 18,858 1.20 1.37 (0.22) 57
2002+ 12,214 1.18 1.35 (0.28) 105
2001 24,223 1.17 1.36 (0.71) 26
CLASS B SHARES
2005+ $ 9,259 1.84% 1.91% (0.37)% 73%
2004+ 10,003 1.84 1.88 (1.05) 93
2003+ 10,558 1.85 1.87 (0.85) 57
2002+ 10,322 1.83 1.86 (0.94) 105
2001 14,450 1.82 1.86 (1.35) 26
CLASS C SHARES
2005+ $ 1,422 1.84% 1.91% (0.36)% 73%
2004+ 1,543 1.84 1.88 (1.05) 93
2003+ 1,223 1.85 1.87 (0.87) 57
2002+ 736 1.83 1.86 (0.94) 105
2001 817 1.82 1.86 (1.35) 26
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
2005+ $ 430,755 0.94% 1.13% 1.40% 18%
2004+ 389,658 0.92 1.11 1.25 20
2003+ 350,151 0.94 1.11 1.44 6
2002+ 355,004 0.93 1.10 1.06 12
2001 482,337 0.92 1.10 0.85 3
CLASS A SHARES
2005+ $ 28,799 1.18% 1.38% 1.15% 18%
2004+ 28,461 1.17 1.36 1.00 20
2003+ 27,208 1.19 1.36 1.18 6
2002+ 26,595 1.18 1.35 0.81 12
2001 42,466 1.17 1.35 0.59 3
CLASS B SHARES
2005+ $ 9,396 1.83% 1.88% 0.50% 18%
2004+ 9,208 1.82 1.86 0.35 20
2003+ 8,139 1.84 1.86 0.54 6
2002+ 8,427 1.83 1.85 0.16 12
2001 10,292 1.82 1.85 (0.05) 3
CLASS C SHARES
2005+ $ 1,204 1.84% 1.88% 0.47% 18%
2004+ 788 1.82 1.86 0.35 20
2003+ 776 1.84 1.86 0.54 6
2002+ 845 1.83 1.85 0.15 12
2001 1,038 1.82 1.85 (0.06) 3
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
96 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------- --------------------
NET NET
ASSET NET REALIZED TOTAL ASSET
VALUE, NET AND UNREALIZED TOTAL NET FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL DIVIDENDS AND END TOTAL
OF PERIOD INCOME (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD RETURN**
- -------------------------------------------------------------------------------------------------------------------------
- --------------------
LARGE CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2005+ $ 10.41 $ 0.133 $ 2.077 $ 2.210 $(0.130) $ -- $(0.130) $12.49 21.35%
2004+ 8.74 0.100 1.670 1.770 (0.100) -- (0.100) 10.41 20.32
2003+ 8.25 0.105 0.484 0.589 (0.099) -- (0.099) 8.74 7.26
2002+ 11.04 0.123 (2.790) (2.667) (0.123) -- (0.123) 8.25 (24.31)
2001 12.35 0.129 (0.438) (0.309) (0.127) (0.874) (1.001) 11.04 (2.90)
CLASS A SHARES
2005+ $ 10.43 $ 0.103 $ 2.090 $ 2.193 $(0.103) $ -- $(0.103) $12.52 21.12%
2004+ 8.76 0.075 1.671 1.746 (0.076) -- (0.076) 10.43 19.98
2003+ 8.26 0.085 0.495 0.580 (0.080) -- (0.080) 8.76 7.12
2002+ 11.06 0.096 (2.796) (2.700) (0.100) -- (0.100) 8.26 (24.55)
2001 12.38 0.097 (0.445) (0.348) (0.098) (0.874) (0.972) 11.06 (3.22)
CLASS B SHARES
2005+ $ 10.31 $ 0.029 $ 2.052 $ 2.081 $(0.041) $ -- $(0.041) $12.35 20.22%
2004+ 8.67 0.010 1.653 1.663 (0.023) -- (0.023) 10.31 19.20
2003+ 8.19 0.032 0.488 0.520 (0.040) -- (0.040) 8.67 6.41
2002+ 10.97 0.032 (2.764) (2.732) (0.048) -- (0.048) 8.19 (24.97)
2001 12.30 0.020 (0.442) (0.422) (0.034) (0.874) (0.908) 10.97 (3.84)
CLASS C SHARES
2005+ $ 10.28 $ 0.027 $ 2.057 $ 2.084 $(0.044) $ -- $(0.044) $12.32 20.31%
2004+ 8.65 0.010 1.649 1.659 (0.029) -- (0.029) 10.28 19.20
2003+ 8.18 0.035 0.480 0.515 (0.045) -- (0.045) 8.65 6.36
2002+ 10.96 0.028 (2.757) (2.729) (0.051) -- (0.051) 8.18 (24.97)
2001 12.29 0.004 (0.428) (0.424) (0.032) (0.874) (0.906) 10.96 (3.86)
- ----------------
CORE EQUITY FUND
- ----------------
FIDUCIARY SHARES
2005+ $ 7.36 $ 0.101 $ 0.738 $ 0.839 $(0.099) $ -- $(0.099) $ 8.10 11.47%
2004+ 6.73 0.029 0.630 0.659 (0.029) -- (0.029) 7.36 9.80
2003+ 6.22 0.055 0.508 0.563 (0.053) -- (0.053) 6.73 9.15
2002+ 8.26 0.045 (2.042) (1.997) (0.043) -- (0.043) 6.22 (24.25)
2001 9.76 0.044 (1.495) (1.451) (0.047) (0.002) (0.049) 8.26 (14.91)
CLASS A SHARES
2005+ $ 7.34 $ 0.076 $ 0.751 $ 0.827 $(0.077) $ -- $(0.077) $ 8.09 11.32%
2004+ 6.72 0.010 0.626 0.636 (0.016) -- (0.016) 7.34 9.47
2003+ 6.21 0.037 0.512 0.549 (0.039) -- (0.039) 6.72 8.91
2002+ 8.25 0.027 (2.041) (2.014) (0.026) -- (0.026) 6.21 (24.46)
2001 9.76 0.028 (1.507) (1.479) (0.029) (0.002) (0.031) 8.25 (15.19)
CLASS B SHARES
2005+ $ 7.23 $ 0.032 $ 0.732 $ 0.764 $(0.044) $ -- $(0.044) $ 7.95 10.60%
2004+ 6.66 (0.037) 0.609 0.572 (0.002) -- (0.002) 7.23 8.60
2003+ 6.17 (0.001) 0.505 0.504 (0.014) -- (0.014) 6.66 8.20
2002+ 8.22 (0.021) (2.028) (2.049) (0.001) -- (0.001) 6.17 (24.93)
2001 9.75 (0.013) (1.513) (1.526) (0.002) (0.002) (0.004) 8.22 (15.66)
CLASS C SHARES
2005+ $ 7.24 $ 0.030 $ 0.735 $ 0.765 $(0.045) $ -- $(0.045) $ 7.96 10.59%
2004+ (1) 7.16 (0.030) 0.112 0.082 (0.002) -- (0.002) 7.24 1.14
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET ASSETS NET
ASSETS, RATIO EXCLUDING INVESTMENT
END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
(000) NET ASSETS OF EXPENSES NET ASSETS RATE
- --------------------------------------------------------------------------
- --------------------
LARGE CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2005+ $ 123,343 0.93% 1.17% 1.15% 99%
2004+ 87,181 0.93 1.12 1.00 86
2003+ 65,363 0.93 1.11 1.30 337
2002+ 78,479 0.92 1.09 1.24 226
2001 189,327 0.91 1.06 1.08 138
CLASS A SHARES
2005+ $ 62,537 1.18% 1.42% 0.89% 99%
2004+ 33,442 1.18 1.37 0.75 86
2003+ 29,036 1.18 1.36 1.05 337
2002+ 31,773 1.17 1.34 0.98 226
2001 50,776 1.16 1.31 0.81 138
CLASS B SHARES
2005+ $ 3,996 1.83% 1.92% 0.26% 99%
2004+ 3,640 1.83 1.87 0.10 86
2003+ 2,005 1.83 1.86 0.40 337
2002+ 2,164 1.82 1.85 0.32 226
2001 3,521 1.81 1.83 0.16 138
CLASS C SHARES
2005+ $ 4,578 1.83% 1.92% 0.23% 99%
2004+ 1,769 1.85 1.90 0.10 86
2003+ 168 1.83 1.86 0.43 337
2002+ 46 1.82 1.85 0.29 226
2001 16 1.81 1.83 0.18 138
- ----------------
CORE EQUITY FUND
- ----------------
FIDUCIARY SHARES
2005+ $ 106,413 0.93% 1.18% 1.31% 101%
2004+ 113,334 0.92 1.10 0.38 119
2003+ 115,045 0.92 1.09 0.89 71
2002+ 114,854 0.93 1.10 0.61 11
2001 96,112 0.92 1.12 0.49 14
CLASS A SHARES
2005+ $ 3,031 1.18% 1.43% 1.00% 101%
2004+ 3,657 1.17 1.35 0.13 119
2003+ 3,233 1.16 1.34 0.61 71
2002+ 1,729 1.18 1.35 0.36 11
2001 1,870 1.17 1.37 0.23 14
CLASS B SHARES
2005+ $ 3,044 1.83% 1.93% 0.42% 101%
2004+ 3,249 1.82 1.85 (0.52) 119
2003+ 3,093 1.82 1.84 (0.01) 71
2002+ 2,701 1.83 1.85 (0.29) 11
2001 1,883 1.82 1.87 (0.44) 14
CLASS C SHARES
2005+ $ 280 1.83% 1.93% 0.40% 101%
2004+(1) 277 1.83* 1.88* (0.60)* 119
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.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
++ FOR THE FIDUCIARY SHARES, REPRESENTS A $0.005 RETURN OF CAPITAL FOR TAX
PURPOSES. FOR CLASS A, REPRESENTS A $0.0002 RETURN OF CAPITAL FOR TAX
PURPOSES.
(1) COMMENCED OPERATIONS ON NOVEMBER 28, 2003.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 97
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEARS OR PERIODS ENDED JULY 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------- -------------------
NET NET
ASSET NET REALIZED TOTAL ASSET
VALUE, NET AND UNREALIZED TOTAL NET FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) FROM INVESTMENT CAPITAL DIVIDENDS AND END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD RETURN**
- ---------------------------------------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
2005+ $12.90 $ 0.267 $ 0.922 $ 1.189 $(0.279) $ -- $(0.279) $13.81 9.32%
2004+ 12.10 0.171 0.796 0.967 (0.167) -- (0.167) 12.90 8.01
2003+ 11.53 0.262 0.563 0.825 (0.255) -- (0.255) 12.10 7.30
2002+ 14.03 0.296 (2.237) (1.941) (0.301) (0.258) (0.559) 11.53 (14.24)
2001 15.74 0.331 (1.224) (0.893) (0.346) (0.471) (0.817) 14.03 (5.85)
CLASS A SHARES
2005+ $12.88 $ 0.228 $ 0.929 $ 1.157 $(0.247) $ -- $(0.247) $13.79 9.07%
2004+ 12.09 0.138 0.787 0.925 (0.135) -- (0.135) 12.88 7.66
2003+ 11.51 0.227 0.581 0.808 (0.228) -- (0.228) 12.09 7.15
2002+ 14.01 0.262 (2.234) (1.972) (0.270) (0.258) (0.528) 11.51 (14.47)
2001 15.73 0.290 (1.229) (0.939) (0.310) (0.471) (0.781) 14.01 (6.15)
CLASS B SHARES
2005+ $12.85 $ 0.142 $ 0.920 $ 1.062 $(0.162) $ -- $(0.162) $13.75 8.31%
2004+ 12.06 0.054 0.791 0.845 (0.055) -- (0.055) 12.85 7.02
2003+ 11.49 0.152 0.573 0.725 (0.155) -- (0.155) 12.06 6.39
2002+ 13.99 0.177 (2.229) (2.052) (0.190) (0.258) (0.448) 11.49 (15.02)
2001 15.70 0.200 (1.222) (1.022) (0.217) (0.471) (0.688) 13.99 (6.69)
CLASS C SHARES
2005+ $12.84 $ 0.142 $ 0.910 $ 1.052 $(0.162) $ -- $(0.162) $13.73 8.24%
2004+ 12.06 0.053 0.789 0.842 (0.062) -- (0.062) 12.84 6.99
2003+ 11.49 0.154 0.571 0.725 (0.155) -- (0.155) 12.06 6.39
2002+ 13.99 0.175 (2.224) (2.049) (0.193) (0.258) (0.451) 11.49 (15.00)
2001 15.71 0.210 (1.238) (1.028) (0.221) (0.471) (0.692) 13.99 (6.72)
- ----------------------
SMALL CAP GROWTH FUND
- ----------------------
FIDUCIARY SHARES
2005+ $11.81 $(0.160) $ 3.030 $ 2.870 $ -- $ (0.020) $(0.020) $14.66 24.31%
2004+ 11.74 (0.177) 0.439 0.262 -- (0.192) (0.192) 11.81 2.08
2003+ (1) 10.00 (0.034) 1.774 1.740 -- -- -- 11.74 17.40
CLASS A SHARES
2005+ $11.78 $(0.192) $ 3.022 $ 2.830 $ -- $ (0.020) $(0.020) $14.59 24.03%
2004+ 11.74 (0.209) 0.441 0.232 -- (0.192) (0.192) 11.78 1.82
2003+ (1) 10.00 (0.040) 1.780 1.740 -- -- -- 11.74 17.40
CLASS B SHARES
2005+ $11.69 $(0.273) $ 2.993 $ 2.720 $ -- $ (0.020) $(0.020) $14.39 23.28%
2004+ 11.73 (0.294) 0.446 0.152 -- (0.192) (0.192) 11.69 1.13
2003+ (1) 10.00 (0.056) 1.786 1.730 -- -- -- 11.73 17.30
CLASS C SHARES
2005+ $11.69 $(0.274) $ 2.994 $ 2.720 $ -- $ (0.020) $(0.020) $14.39 23.28%
2004+ 11.73 (0.292) 0.444 0.152 -- (0.192) (0.192) 11.69 1.13
2003+ (1) 10.00 (0.058) 1.788 1.730 -- -- -- 11.73 17.30
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET ASSETS NET
ASSETS, RATIO EXCLUDING INVESTMENT
END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
(000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
2005+ $ 59,278 0.95% 1.19% 2.00% 57%
2004+ 118,555 0.94 1.12 1.32 97
2003+ 115,067 0.94 1.12 2.29 55
2002+ 180,217 0.93 1.10 2.27 12
2001 321,263 0.92 1.10 2.24 11
CLASS A SHARES
2005+ $ 7,408 1.21% 1.45% 1.71% 57%
2004+ 7,172 1.19 1.37 1.07 97
2003+ 7,280 1.20 1.37 1.98 55
2002+ 7,222 1.18 1.35 2.02 12
2001 9,106 1.17 1.35 1.99 11
CLASS B SHARES
2005+ $ 3,759 1.86% 1.95% 1.07% 57%
2004+ 4,364 1.84 1.87 0.42 97
2003+ 4,235 1.85 1.87 1.33 55
2002+ 4,295 1.83 1.85 1.37 12
2001 5,218 1.82 1.85 1.34 11
CLASS C SHARES
2005+ $ 334 1.86% 1.95% 1.07% 57%
2004+ 327 1.84 1.87 0.42 97
2003+ 137 1.85 1.87 1.35 55
2002+ 151 1.83 1.85 1.36 12
2001 103 1.82 1.85 1.33 11
- ----------------------
SMALL CAP GROWTH FUND
- ----------------------
FIDUCIARY SHARES
2005+ $ 27,941 1.50% 1.88% (1.22)% 181%
2004+ 26,971 1.47 1.66 (1.35) 125
2003+ (1) 7,238 1.49* 1.67* (1.15)* 25
CLASS A SHARES
2005+ $ 4,535 1.75% 2.13% (1.47)% 181%
2004+ 3,647 1.72 1.91 (1.60) 125
2003+ (1) 4,097 1.75* 1.93* (1.33)* 25
CLASS B SHARES
2005+ $ 526 2.40% 2.63% (2.12)% 181%
2004+ 518 2.37 2.41 (2.25) 125
2003+ (1) 90 2.40* 2.43* (1.81)* 25
CLASS C SHARES
2005+ $ 1,045 2.40% 2.63% (2.12)% 181%
2004+ 941 2.37 2.41 (2.25) 125
2003+ (1) 456 2.40* 2.43* (1.90)* 25
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
98 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
----------------------------- --------------------
NET NET
ASSET NET REALIZED TOTAL ASSET
VALUE, NET AND UNREALIZED TOTAL NET FROM VALUE,
BEGINNING INVESTMENT GAIN (LOSS) FROM INVESTMENT CAPITAL DIVIDENDS AND END TOTAL
OF PERIOD INCOME (LOSS) ON INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS OF PERIOD RETURN**
- --------------------------------------------------------------------------------------------------------------------------
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2005+ $16.05 $ 0.078 $ 4.474 $ 4.552 $(0.019) $(1.033) $(1.052) $19.55 29.10%
2004+ 13.53 0.037 2.758 2.795 (0.072) (0.203) (0.275) 16.05 20.72
2003+ 11.25 0.074 2.227 2.301 (0.021) -- (0.021) 13.53 20.49
2002+ 11.85 0.006 (0.022) (0.016) -- (0.584) (0.584) 11.25 0.10
2001 13.61 0.063 (0.536) (0.473) (0.047) (1.240) (1.287) 11.85 (2.80)
CLASS A SHARES
2005+ $15.82 $ 0.033 $ 4.403 $ 4.436 $(0.013) $(1.033) $(1.046) $19.21 28.78%
2004+ 13.36 (0.005) 2.726 2.721 (0.058) (0.203) (0.261) 15.82 20.43
2003+ 11.13 0.047 2.194 2.241 (0.011) -- (0.011) 13.36 20.16
2002+ 11.76 (0.023) (0.023) (0.046) -- (0.584) (0.584) 11.13 (0.16)
2001 13.53 0.138 (0.645) (0.507) (0.023) (1.240) (1.263) 11.76 (3.10)
CLASS B SHARES
2005+ $15.36 $(0.074) $ 4.263 $ 4.189 $(0.006) $(1.033) $(1.039) $18.51 28.00%
2004+ 13.03 (0.101) 2.658 2.557 (0.024) (0.203) (0.227) 15.36 19.68
2003+ 10.93 (0.027) 2.127 2.100 -- -- -- 13.03 19.21
2002+ 11.63 (0.095) (0.021) (0.116) -- (0.584) (0.584) 10.93 (0.79)
2001 13.45 0.091 (0.671) (0.580) -- (1.240) (1.240) 11.63 (3.71)
CLASS C SHARES
2005+ $15.31 $(0.076) $ 4.235 $ 4.159 $(0.006) $(1.033) $(1.039) $18.43 27.89%
2004+ 12.99 (0.111) 2.662 2.551 (0.028) (0.203) (0.231) 15.31 19.70
2003+ 10.90 (0.026) 2.116 2.090 -- -- -- 12.99 19.17
2002+ 11.60 (0.087) (0.029) (0.116) -- (0.584) (0.584) 10.90 (0.79)
2001 13.43 0.043 (0.625) (0.582) (0.008) (1.240) (1.248) 11.60 (3.71)
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
2005+ $10.32 $ 0.381 $(0.099) $ 0.282 $(0.382) $(0.100) $(0.482) $10.12 2.74%
2004+ 10.35 0.386 (0.006) 0.380 (0.390) (0.020) (0.410) 10.32 3.68
2003+ 10.48 0.387 (0.119) 0.268 (0.386) (0.012) (0.398) 10.35 2.55
2002+ 10.32 0.402 0.192 0.594 (0.400) (0.034) (0.434) 10.48 5.89
2001 9.97 0.429 0.345 0.774 (0.424) -- (0.424) 10.32 7.92
CLASS A SHARES
2005+ $10.28 $ 0.354 $(0.098) $ 0.256 $(0.356) $(0.100) $(0.456) $10.08 2.50%
2004+ 10.31 0.358 (0.004) 0.354 (0.364) (0.020) (0.384) 10.28 3.44
2003+ 10.44 0.371 (0.118) 0.253 (0.371) (0.012) (0.383) 10.31 2.41
2002+ 10.28 0.401 0.193 0.594 (0.400) (0.034) (0.434) 10.44 5.91
2001 9.94 0.422 0.342 0.764 (0.424) -- (0.424) 10.28 7.85
CLASS B SHARES
2005+ $10.28 $ 0.277 $(0.096) $ 0.181 $(0.281) $(0.100) $(0.381) $10.08 1.75%
2004+ 10.31 0.280 (0.004) 0.276 (0.286) (0.020) (0.306) 10.28 2.67
2003+ 10.44 0.280 (0.113) 0.167 (0.285) (0.012) (0.297) 10.31 1.58
2002+ 10.29 0.297 0.192 0.489 (0.305) (0.034) (0.339) 10.44 4.84
2001 9.95 0.338 0.335 0.673 (0.333) -- (0.333) 10.29 6.87
CLASS C SHARES
2005+ $10.27 $ 0.302 $(0.104) $ 0.198 $(0.308) $(0.100) $(0.408) $10.06 1.92%
2004+ (2) 10.50 0.209 (0.201) 0.008 (0.218) (0.020) (0.238) 10.27 0.07
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET ASSETS NET
ASSETS, RATIO EXCLUDING INVESTMENT
END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
(000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -------------------------------------------------------------------------
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2005+ $ 135,231 1.33% 1.55% 0.45% 27%
2004+ 101,687 1.32 1.50 0.23 20
2003+ 79,222 1.25 1.43 0.64 24
2002+ 63,399 1.35 1.52 0.05 99
2001 78,869 1.44 1.55 0.27 215
CLASS A SHARES
2005+ $ 54,885 1.58% 1.80% 0.19% 27%
2004+ 36,155 1.57 1.75 (0.02) 20
2003+ 23,436 1.48 1.66 0.41 24
2002+ 15,708 1.60 1.77 (0.19) 99
2001 9,496 1.69 1.80 (0.06) 215
CLASS B SHARES
2005+ $ 15,753 2.23% 2.30% (0.45)% 27%
2004+ 14,079 2.22 2.25 (0.67) 20
2003+ 11,367 2.15 2.18 (0.24) 24
2002+ 9,047 2.25 2.27 (0.82) 99
2001 6,081 2.29 2.31 (0.55) 215
CLASS C SHARES
2005+ $ 21,157 2.23% 2.30% (0.46)% 27%
2004+ 11,926 2.26 2.30 (0.73) 20
2003+ 3,473 2.13 2.16 (0.23) 24
2002+ 2,007 2.25 2.23 (0.76) 99
2001 671 2.29 2.31 (0.66) 215
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
2005+ $ 102,059 0.50% 1.07% 3.69% 6%
2004+ 120,494 0.50 1.02 3.68 1
2003+ 139,051 0.49 1.02 3.65 3
2002+ 123,702 0.47 0.99 3.88 2
2001 123,568 0.46 0.97 4.20 12
CLASS A SHARES
2005+ $ 54,030 0.75% 1.32% 3.44% 6%
2004+ 62,762 0.75 1.27 3.43 1
2003+ 91,632 0.64 1.27 3.51 3
2002+ 99,166 0.47 1.25 3.88 2
2001 68,797 0.46 1.22 4.20 12
CLASS B SHARES
2005+ $ 6,357 1.50% 1.81% 2.69% 6%
2004+ 7,448 1.50 1.77 2.68 1
2003+ 9,652 1.49 1.77 2.65 3
2002+ 7,419 1.47 1.76 2.88 2
2001 3,349 1.46 1.73 3.20 12
CLASS C SHARES
2005+ $ 928 1.25% 1.57% 2.95% 6%
2004+ 548 1.25* 1.53* 3.00* 1
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.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
(1) COMMENCED OPERATIONS ON APRIL 28, 2003.
(2) COMMENCED OPERATIONS ON NOVEMBER 28, 2003.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 99
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEARS OR PERIODS ENDED JULY 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-------------------------- -------------------
NET
ASSET NET REALIZED TOTAL
VALUE, NET AND UNREALIZED TOTAL NET FROM
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL DIVIDENDS AND
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------
- ----------------------------------------
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- ----------------------------------------
FIDUCIARY SHARES
2005+ $11.52 $0.459 $(0.182) $0.277 $(0.459) $(0.088) $(0.547)
2004+ 11.61 0.474 (0.106) 0.368 (0.457) (0.001) (0.458)
2003+ (1) 11.56 0.357 0.040 0.397 (0.347) -- (0.347)
CLASS A SHARES
2005+ $11.52 $0.431 $(0.182) $0.249 $(0.431) $(0.088) $(0.519)
2004+ 11.61 0.444 (0.104) 0.340 (0.429) (0.001) (0.430)
2003+ (1) 11.56 0.334 0.037 0.371 (0.321) -- (0.321)
CLASS C SHARES
2005+ $11.54 $0.381 $(0.018) $0.363 $(0.375) $(0.088) $(0.463)
2004+ (2) 11.78 0.343 (0.315) 0.028 (0.267) (0.001) (0.268)
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
2005+ $10.79 $0.483 $(0.019) $0.464 $(0.504) $ -- $(0.504)
2004+ 10.80 0.492 0.009 0.501 (0.511) -- (0.511)
2003+ 10.68 0.566 0.124 0.690 (0.570) -- (0.570)
2002+ 10.88 0.638 (0.204) 0.434 (0.634) -- (0.634)
2001 10.25 0.641 0.629 1.270 (0.640) -- (0.640)
CLASS A SHARES
2005+ $10.67 $0.451 $(0.013) $0.438 $(0.478) $ -- $(0.478)
2004+ 10.68 0.459 0.015 0.474 (0.484) -- (0.484)
2003+ 10.57 0.541 0.122 0.663 (0.553) -- (0.553)
2002+ 10.78 0.626 (0.202) 0.424 (0.634) -- (0.634)
2001 10.16 0.639 0.621 1.260 (0.640) -- (0.640)
CLASS B SHARES
2005+ $10.64 $0.371 $(0.020) $0.351 $(0.401) $ -- $(0.401)
2004+ 10.65 0.379 0.015 0.394 (0.404) -- (0.404)
2003+ 10.54 0.449 0.127 0.576 (0.466) -- (0.466)
2002+ 10.76 0.528 (0.209) 0.319 (0.539) -- (0.539)
2001 (3) 10.39 0.361 0.389 0.750 (0.380) -- (0.380)
CLASS C SHARES
2005+ $10.62 $0.398 $(0.018) $0.380 $(0.430) $ -- $(0.430)
2004+ (2) 10.80 0.288 (0.158) 0.130 (0.310) -- (0.310)
- --------------------
SHORT TERM BOND FUND
- --------------------
FIDUCIARY SHARES
2005+ (4) $10.00 $0.209 $(0.176) $0.033 $(0.193) $ -- $(0.193)
CLASS A SHARES
2005+ (4) $10.00 $0.214 $(0.198) $0.016 $(0.176) $ -- $(0.176)
CLASS C SHARES
2005+ (5) $ 9.95 $0.163 $(0.093) $0.070 $(0.100) $ -- $(0.100)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -------------------------------------------------------------------------------------------------------- -----------
- ----------------------------------------
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- ----------------------------------------
FIDUCIARY SHARES
2005+ $11.25 2.42% $ 90,137 0.28% 1.07% 4.01% 14%
2004+ 11.52 3.18 97,721 0.28 1.02 4.04 2
2003+ (1) 11.61 3.42 72,718 0.28* 1.01* 3.85* 4
CLASS A SHARES
2005+ $11.25 2.17% $ 3,719 0.53% 1.32% 3.76% 14%
2004+ 11.52 2.93 4,698 0.53 1.27 3.79 2
2003+ (1) 11.61 3.20 2,674 0.53* 1.26* 3.59* 4
CLASS C SHARES
2005+ $11.44 3.15% $ 50 1.03% 1.59% 3.30% 14%
2004+ (2) 11.54 0.23 --++ 0.67* 0.67* 4.30* 2
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
2005+ $10.75 4.35% $ 429,614 0.75% 1.04% 4.44% 11%
2004+ 10.79 4.68 451,384 0.75 1.01 4.49 45
2003+ 10.80 6.51 505,755 0.74 0.99 5.15 58
2002+ 10.68 4.09 485,274 0.75 1.00 5.89 18
2001 10.88 12.73 533,310 0.75 0.98 6.05 19
CLASS A SHARES
2005+ $10.63 4.15% $ 44,289 1.00% 1.29% 4.19% 11%
2004+ 10.67 4.47 47,039 1.00 1.26 4.24 45
2003+ 10.68 6.32 56,529 0.91 1.24 4.98 58
2002+ 10.57 4.03 52,683 0.75 1.25 5.86 18
2001 10.78 12.75 15,316 0.75 1.23 5.98 19
CLASS B SHARES
2005+ $10.59 3.32% $ 8,093 1.73% 1.79% 3.46% 11%
2004+ 10.64 3.71 9,603 1.73 1.76 3.51 45
2003+ 10.65 5.49 12,157 1.72 1.74 4.14 58
2002+ 10.54 3.03 8,209 1.73 1.75 4.95 18
2001 (3) 10.76 7.32 2,278 1.73* 1.75* 4.29* 19
CLASS C SHARES
2005+ $10.57 3.61% $ 37 1.48% 1.55% 3.73% 11%
2004+ (2) 10.62 1.21 13 1.53* 1.58* 3.99* 45
- --------------------
SHORT TERM BOND FUND
- --------------------
FIDUCIARY SHARES
2005+ (4) $ 9.84 0.34% $ 24,545 0.65%* 1.11%* 2.86%* 9%
CLASS A SHARES
2005+ (4) $ 9.84 0.17% $ 1,439 0.91%* 1.39%* 2.93%* 9%
CLASS C SHARES
2005+ (5) $ 9.92 0.61% $ 15 1.38%* 1.57%* 2.43%* 9%
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
100 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-------------------------- --------------------
NET
ASSET NET REALIZED TOTAL
VALUE, NET AND UNREALIZED TOTAL NET FROM
BEGINNING INVESTMENT GAIN (LOSS) ON FROM INVESTMENT CAPITAL DIVIDENDS AND
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
2005+ $1.00 $0.016 $ -- $0.016 $(0.016) $-- $(0.016)
2004+ 1.00 0.005 -- 0.005 (0.005) -- (0.005)
2003+ 1.00 0.009 -- 0.009 (0.009) -- (0.009)
2002+ 1.00 0.019 -- 0.019 (0.019) -- (0.019)
2001 1.00 0.050 -- 0.050 (0.050) -- (0.050)
CLASS A SHARES
2005+ $1.00 $0.014 $ -- $0.014 $(0.014) $-- $(0.014)
2004+ 1.00 0.002 -- 0.002 (0.002) -- (0.002)
2003+ 1.00 0.006 -- 0.006 (0.006) -- (0.006)
2002+ 1.00 0.017 -- 0.017 (0.017) -- (0.017)
2001 1.00 0.047 -- 0.047 (0.047) -- (0.047)
CLASS S SHARES
2005+ $1.00 $0.011 $ -- $0.011 $(0.011) $-- $(0.011)
2004+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2003+ 1.00 0.004 -- 0.004 (0.004) -- (0.004)
2002+ 1.00 0.014 -- 0.014 (0.014) -- (0.014)
2001 1.00 0.044 -- 0.044 (0.044) -- (0.044)
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
2005+ $1.00 $0.018 $ -- $0.018 $(0.018) $-- $(0.018)
2004+ 1.00 0.006 -- 0.006 (0.006) -- (0.006)
2003+ 1.00 0.009 -- 0.009 (0.009) -- (0.009)
2002+ 1.00 0.019 -- 0.019 (0.019) -- (0.019)
2001 1.00 0.051 -- 0.051 (0.051) -- (0.051)
CLASS A SHARES
2005+ $1.00 $0.015 $ 0.001 $0.016 $(0.016) $-- $(0.016)
2004+ 1.00 0.003 -- 0.003 (0.003) -- (0.003)
2003+ 1.00 0.007 -- 0.007 (0.007) -- (0.007)
2002+ 1.00 0.017 -- 0.017 (0.017) -- (0.017)
2001 1.00 0.049 -- 0.049 (0.049) -- (0.049)
CLASS B SHARES
2005+ $1.00 $0.008 $ 0.001 $0.009 $(0.009) $-- $(0.009)
2004+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2003+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2002+ 1.00 0.009 -- 0.009 (0.009) -- (0.009)
2001 1.00 0.041 -- 0.041 (0.041) -- (0.041)
CLASS S SHARES
2005+ $1.00 $0.014 $(0.001) $0.013 $(0.013) $-- $(0.013)
2004+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2003+ 1.00 0.004 -- 0.004 (0.004) -- (0.004)
2002+ 1.00 0.014 -- 0.014 (0.014) -- (0.014)
2001 1.00 0.046 -- 0.046 (0.046) -- (0.046)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS
- --------------------------------------------------------------------------------------------------------
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
2005+ $1.00 1.65% $ 406,281 0.53% 0.82% 1.60%
2004+ 1.00 0.50 415,385 0.52 0.81 0.47
2003+ 1.00 0.89 528,462 0.53 0.80 0.88
2002+ 1.00 1.92 485,283 0.49 0.80 1.89
2001 1.00 5.09 366,161 0.47 0.79 4.94
CLASS A SHARES
2005+ $1.00 1.40% $ 201,034 0.78% 1.07% 1.39%
2004+ 1.00 0.25 164,225 0.77 1.06 0.22
2003+ 1.00 0.64 186,891 0.78 1.05 0.65
2002+ 1.00 1.67 226,456 0.74 1.05 1.69
2001 1.00 4.83 252,535 0.72 1.04 4.70
CLASS S SHARES
2005+ $1.00 1.09% $ 259,991 1.08% 1.12% 1.09%
2004+ 1.00 0.08 265,195 0.94 1.11 0.05
2003+ 1.00 0.36 383,537 1.06 1.10 0.40
2002+ 1.00 1.36 639,187 1.04 1.09 1.37
2001 1.00 4.52 810,796 1.02 1.09 4.42
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
2005+ $1.00 1.86% $ 437,804 0.53% 0.82% 1.83%
2004+ 1.00 0.57 386,661 0.53 0.82 0.57
2003+ 1.00 0.92 570,998 0.53 0.80 0.91
2002+ 1.00 1.93 575,014 0.52 0.80 1.89
2001 1.00 5.24 403,244 0.52 0.80 4.99
CLASS A SHARES
2005+ $1.00 1.61% $ 33,440 0.78% 1.07% 1.55%
2004+ 1.00 0.32 42,134 0.78 1.07 0.32
2003+ 1.00 0.67 34,513 0.78 1.05 0.68
2002+ 1.00 1.67 43,701 0.77 1.05 1.68
2001 1.00 4.97 47,058 0.77 1.05 4.79
CLASS B SHARES
2005+ $1.00 0.87% $ 1,178 1.51% 1.57% 0.79%
2004+ 1.00 0.05 1,684 1.05 1.57 0.05
2003+ 1.00 0.12 2,255 1.32 1.55 0.11
2002+ 1.00 0.92 2,020 1.52 1.55 0.84
2001 1.00 4.20 963 1.52 1.55 3.72
CLASS S SHARES
2005+ $1.00 1.31% $ 58,602 1.08% 1.12% 1.38%
2004+ 1.00 0.06 32,923 1.04 1.12 0.06
2003+ 1.00 0.38 61,240 1.07 1.10 0.42
2002+ 1.00 1.37 101,192 1.07 1.09 1.44
2001 1.00 4.66 161,498 1.07 1.10 4.54
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.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
++ AMOUNT REPRESENTS LESS THAN $1,000.
(1) COMMENCED OPERATIONS ON OCTOBER 18, 2002.
(2) COMMENCED OPERATIONS ON NOVEMBER 28, 2003.
(3) COMMENCED OPERATIONS ON NOVEMBER 30, 2000.
(4) COMMENCED OPERATIONS ON NOVEMBER 2, 2004.
(5) COMMENCED OPERATIONS ON NOVEMBER 30, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 101
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEARS OR PERIODS ENDED JULY 31,
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-------------------------- --------------------
NET
ASSET NET REALIZED TOTAL
VALUE, NET AND UNREALIZED TOTAL NET FROM
BEGINNING INVESTMENT GAIN ON FROM INVESTMENT CAPITAL DIVIDENDS AND
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- --------------------------------------------------------------------------------------------------
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
2005+ $1.00 $0.019 $-- $0.019 $(0.019) $-- $(0.019)
2004+ 1.00 0.006 -- 0.006 (0.006) -- (0.006)
2003+ 1.00 0.010 -- 0.010 (0.010) -- (0.010)
2002+ 1.00 0.021 -- 0.021 (0.021) -- (0.021)
2001 1.00 0.053 -- 0.053 (0.053) -- (0.053)
CLASS A SHARES
2005+ $1.00 $0.017 $-- $0.017 $(0.017) $-- $(0.017)
2004+ 1.00 0.004 -- 0.004 (0.004) -- (0.004)
2003+ 1.00 0.007 -- 0.007 (0.007) -- (0.007)
2002+ 1.00 0.018 -- 0.018 (0.018) -- (0.018)
2001 1.00 0.051 -- 0.051 (0.051) -- (0.051)
CLASS S SHARES
2005+ $1.00 $0.014 $-- $0.014 $(0.014) $-- $(0.014)
2004+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2003+ 1.00 0.004 -- 0.004 (0.004) -- (0.004)
2002+ 1.00 0.015 -- 0.015 (0.015) -- (0.015)
2001 1.00 0.048 -- 0.048 (0.048) -- (0.048)
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
2005+ $1.00 $0.014 $-- $0.014 $(0.014) $-- $(0.014)
2004+ 1.00 0.006 -- 0.006 (0.006) -- (0.006)
2003+ 1.00 0.008 -- 0.008 (0.008) -- (0.008)
2002+ 1.00 0.013 -- 0.013 (0.013) -- (0.013)
2001 1.00 0.029 -- 0.029 (0.029) -- (0.029)
CLASS A SHARES
2005+ $1.00 $0.012 $-- $0.012 $(0.012) $-- $(0.012)
2004+ 1.00 0.003 -- 0.003 (0.003) -- (0.003)
2003+ 1.00 0.006 -- 0.006 (0.006) -- (0.006)
2002+ 1.00 0.010 -- 0.010 (0.010) -- (0.010)
2001 1.00 0.027 -- 0.027 (0.027) -- (0.027)
CLASS S SHARES
2005+ $1.00 $0.009 $-- $0.009 $(0.009) $-- $(0.009)
2004+ 1.00 0.001 -- 0.001 (0.001) -- (0.001)
2003+ 1.00 0.003 -- 0.003 (0.003) -- (0.003)
2002+ 1.00 0.007 -- 0.007 (0.007) -- (0.007)
2001 1.00 0.024 -- 0.024 (0.024) -- (0.024)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS
- -----------------------------------------------------------------------------------------
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
2005+ $1.00 1.94% $2,118,149 0.53% 0.81% 1.91%
2004+ 1.00 0.64 2,039,495 0.52 0.81 0.63
2003+ 1.00 1.00 1,880,002 0.53 0.80 1.01
2002+ 1.00 2.08 2,135,421 0.52 0.80 2.07
2001 1.00 5.45 2,058,393 0.52 0.80 5.26
CLASS A SHARES
2005+ $1.00 1.69% $ 556,443 0.78% 1.06% 1.67%
2004+ 1.00 0.39 543,320 0.77 1.06 0.38
2003+ 1.00 0.75 634,443 0.78 1.05 0.76
2002+ 1.00 1.83 724,983 0.77 1.05 1.85
2001 1.00 5.19 863,773 0.77 1.05 4.98
CLASS S SHARES
2005+ $1.00 1.39% $ 645,362 1.08% 1.11% 1.37%
2004+ 1.00 0.09 750,722 1.07 1.11 0.08
2003+ 1.00 0.45 985,564 1.08 1.10 0.47
2002+ 1.00 1.52 1,337,571 1.07 1.10 1.55
2001 1.00 4.88 1,584,325 1.07 1.10 4.78
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
2005+ $1.00 1.46% $ 188,716 0.45% 0.82% 1.44%
2004+ 1.00 0.58 205,576 0.42 0.81 0.57
2003+ 1.00 0.81 253,367 0.42 0.79 0.80
2002+ 1.00 1.27 275,530 0.42 0.79 1.28
2001 1.00 2.95 313,573 0.42 0.80 2.89
CLASS A SHARES
2005+ $1.00 1.21% $ 268,133 0.70% 1.07% 1.19%
2004+ 1.00 0.33 274,403 0.67 1.06 0.32
2003+ 1.00 0.56 271,089 0.67 1.04 0.55
2002+ 1.00 1.02 244,693 0.67 1.04 1.01
2001 1.00 2.70 257,735 0.67 1.05 2.65
CLASS S SHARES
2005+ $1.00 0.90% $ 37,543 1.00% 1.12% 0.92%
2004+ 1.00 0.07 33,091 0.92 1.11 0.07
2003+ 1.00 0.29 43,870 0.94 1.09 0.29
2002+ 1.00 0.72 65,360 0.97 1.09 0.75
2001 1.00 2.39 122,194 0.97 1.10 2.38
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
102 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
DIVIDENDS AND
INVESTMENT ACTIVITIES DISTRIBUTIONS
-------------------------- --------------------
NET
ASSET NET NET REALIZED TOTAL
VALUE, INVESTMENT AND UNREALIZED TOTAL NET FROM
BEGINNING INCOME GAIN ON FROM INVESTMENT CAPITAL DIVIDENDS AND
OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------------
- ------------------------------
CAPITAL GROWTH ALLOCATION FUND
- ------------------------------
CLASS A SHARES
2005+ (1) $20.00 $ 0.082 $2.157 $2.239 $(0.079) $-- $(0.079)
CLASS C SHARES
2005+ (1) $20.00 $(0.070) $2.185 $2.115 $(0.045) $-- $(0.045)
- -------------------------------
GROWTH & INCOME ALLOCATION FUND
- -------------------------------
CLASS A SHARES
2005+ (1) $20.00 $ 0.193 $1.570 $1.763 $(0.153) $-- $(0.153)
CLASS C SHARES
2005+ (1) $20.00 $ 0.052 $1.587 $1.639 $(0.089) $-- $(0.089)
- ---------------------------
INCOME PLUS ALLOCATION FUND
- ---------------------------
CLASS A SHARES
2005+ (1) $20.00 $ 0.320 $0.617 $0.937 $(0.207) $-- $(0.207)
CLASS C SHARES
2005+ (1) $20.00 $ 0.230 $0.591 $0.821 $(0.161) $-- $(0.161)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -------------------------------------------------------------------------------------------------------
- ------------------------------
CAPITAL GROWTH ALLOCATION FUND
- ------------------------------
CLASS A SHARES
2005+ (1) $22.16 11.21% $ 8,957 0.82%* 1.99%* 0.48%* 55%
CLASS C SHARES
2005+ (1) $22.07 10.58% $ 4,574 1.56%* 2.44%* (0.41)%* 55%
- -------------------------------
GROWTH & INCOME ALLOCATION FUND
- -------------------------------
CLASS A SHARES
2005+ (1) $21.61 8.84% $10,158 0.79%* 1.93%* 1.15%* 79%
CLASS C SHARES
2005+ (1) $21.55 8.21% $ 4,580 1.54%* 2.36%* 0.31%* 79%
- ---------------------------
INCOME PLUS ALLOCATION FUND
- ---------------------------
CLASS A SHARES
2005+ (1) $20.73 4.70% $ 2,169 0.81%* 5.30%* 1.95%* 94%
CLASS C SHARES
2005+ (1) $20.66 4.12% $ 517 1.56%* 5.40%* 1.40%* 94%
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.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
(1) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 103
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTE TO FINANCIAL STATEMENTS
JULY 31, 2005
1. ORGANIZATION
HighMark Funds ("HighMark") was organized as a Massachusetts business trust
under a Declaration of Trust dated March 10, 1987.
HighMark is registered under the Investment Company Act of 1940 (the "1940
Act"), as amended, as a diversified open-end investment company with twenty
funds: the Large Cap Growth Fund, the Value Momentum Fund, the Large Cap Value
Fund, the Core Equity Fund, the Balanced Fund, the Small Cap Growth Fund, the
Small Cap Value Fund, the International Opportunities Fund, the Small Cap
Advantage Fund, the California Intermediate Tax-Free Bond Fund, the National
Intermediate Tax-Free Bond Fund, the Bond Fund and the Short Term Bond Fund
(collectively the "Non-Money Market Funds"), 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"), the Capital Growth Allocation Fund, the Growth & Income Allocation Fund
and the Income Plus Allocation Fund, (collectively the "Asset Allocation Funds")
(the Non-Money Market Funds, the Money Market Funds and the Asset Allocation
Funds are collectively the "Funds" and each is a "Fund"). Pursuant to HighMark's
multiclass plan, the Funds may offer up to five classes of shares, Class A,
Class B and Class C shares (collectively called the "Retail Shares"), Fiduciary
Shares and Class S Shares. The Funds' prospectuses provide a description of each
Fund's investment objectives, policies and strategies. The International
Opportunities Fund and the Small Cap Advantage Fund have not commenced
operations as of July 31, 2005.
On January 31, 2004, the Class B Shares of the HighMark Funds were closed to
purchases by new and existing investors. Existing investors, however, may still
exchange Shares and reinvest distributions in Class B Shares of the Funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds.
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.
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.
Securities listed on a securities exchange, market or automated quotation system
for which quotations are readily available (except for securities traded on
NASDAQ) are valued at the last quoted sale price on the primary exchange or
market (foreign or domestic) on which they are traded, or, if there is no such
reported sale, at the most recent quoted bid price. For securities traded on
NASDAQ, the NASDAQ Official Closing Price is used. If available, debt securities
are priced based upon valuations provided by independent, third-party pricing
agents. These third-party pricing agents may employ methodologies that utilize
actual market transactions, broker-dealer supplied valuations, or other
electronic data processing techniques. Such techniques generally consider such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. Debt
obligations with remaining maturities of sixty days or less may be valued at
their amortized cost, which approximates market value. Prices for most
securities held in the Funds are provided daily by recognized independent
pricing agents. If a security price cannot be obtained from an independent,
third-party pricing agent, the Funds seek to obtain a bid price from at least
one independent broker.
Securities for which market prices are not "readily available," of which there
were none as of July 31, 2005, are valued in accordance with Fair Value
Procedures established by the Board of Trustees (the "Board"). The Funds' Fair
Value Procedures are implemented through a Fair Value Committee (the
"Committee") designated by the Board. Some of the more common reasons that may
necessitate that a security be valued using Fair Value Procedures include: the
security's trading has been halted or suspended; the security has been de-listed
from a national exchange; the security's primary trading market is temporarily
closed at a time when under normal conditions it would be open; or the
security's primary pricing source is not able or willing to provide a price.
When a security is valued in accordance with the Fair Value Procedures, the
Committee will determine the value after taking into consideration relevant
information reasonably available to the Committee.
The closing prices of securities may no longer reflect their market value at the
time the Fund calculates its net asset value if an event that could materially
affect the value of those securities (a "Significant Event") has occurred
between the time of the security's last close and the time that the Fund
calculates its net asset value. A Significant Event may relate to a single
issuer or to an entire market sector. If HighMark Capital Management, Inc. (the
"Adviser") a wholly owned subsidiary of Union Bank of California, N.A. (a wholly
owned subsidiary of UnionBanCal Corporation), or the sub-
- --------------------------------------------------------------------------------
104 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
adviser of a Fund becomes aware of a Significant Event that has occurred with
respect to a security or group of securities after the closing of the exchange
or market on which the security or securities principally trade, but before the
time at which the Fund calculates its net asset value, it may request that a
Committee meeting be called. In addition, SEI Investments Global Funds Services
(the "Administrator") monitors price movements among certain selected indices,
securities and/or baskets of securities that may be an indicator that the
closing prices received earlier from markets may not reflect market value at the
time the Fund calculates its net asset value. If price movements in a monitored
index or security exceed levels established by the Administrator and approved by
the Board, the Administrator notifies the Adviser or sub-adviser for any Fund
holding the relevant securities that such limits have been exceeded. In such
event, the Adviser or sub-adviser makes the determination whether a Committee
meeting should be called based on the information provided.
Options and warrants for which the primary market is a national securities
exchange are valued at the last sale price on the exchange on which they are
traded, or, in the absence of any sale, at the closing bid price for long option
positions and the closing ask price for short option positions. Options and
warrants not traded on a national securities exchange are valued at the last
quoted bid price for long option positions and the closing ask price for short
option positions.
Investments in mutual funds are priced at the fund's daily net asset value.
The assets of each of the Asset Allocation Funds consist primarily of the
investments in underlying affiliated investment companies, which are valued at
their respective daily net asset values in accordance with Board-approved
pricing procedures.
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.
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, are designed to 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 a Fund may be delayed
or limited.
OPTIONS TRANSACTIONS -- In order to produce incremental earnings and protect
gains or minimize losses, certain 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 a Fund gives up the opportunity of
profit if the market price of the underlying security increases. 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.
A Fund realizes a gain or loss upon the expiration of a written call or
purchased put/call option, respectively. 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.
When a purchased put or call option is closed prior to expiration by being
exercised, the cost of investments sold or purchased, respectively, is increased
by the amount of original premium paid.
A Fund records unrealized depreciation when the underlying security's market
price rises (in case of a written call) and unrealized appreciation/depreciation
when the underlying securities market price falls (in case of a purchased
put/call) to the extent sufficient to cover the option premium and transaction
costs (see Note 8).
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS -- Delivery and payment for
securities that have been purchased by a Fund on a forward commitment or
when-issued basis can take place up to a month or more after the transaction
date. During the period, such securities are subject to market fluctuations and
the Fund maintains, in a segregated account with its custodian, assets with a
market value equal to or greater than the amount of its purchase commitments.
The purchase of securities on a when-issued or forward commitment basis may
increase the volatility of a Fund's net asset value if the Fund makes such
investments while remaining substantially invested in that security.
DISCOUNTS AND PREMIUMS -- Discounts and premiums 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.
CLASSES -- Class specific expenses are borne by that class. Income, non-class
specific expenses, realized/unrealized gains and losses and redemption and
exchange fees are allocated to the respective classes on the basis of the
relative daily net assets. In addition to the Funds' direct expenses as
described above, Fund shareholders of the Asset Allocation Funds also bear a
proportionate share of the underlying Funds' expenses.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 105
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment
income for the Money Market Funds are declared daily and paid monthly. Each of
the Non-Money Market Funds may periodically declare and pay dividends from net
investment income. Each of the Asset Allocation Funds may declare and pay
dividends from net investment income quarterly. None of the Funds has a targeted
dividend rate and none of them guarantee that it will pay any dividends or other
distributions. Any net realized capital gains will be distributed at least
annually by all Funds.
REDEMPTION AND EXCHANGE FEES -- Effective after December 10, 2004, each of the
Non-Money Market Funds and the Asset Allocation Funds imposes a 2% redemption
fee on the value of Class A Shares redeemed 5 business days or less after their
purchase. Each of the Non-Money Market Funds and the Asset Allocation Funds also
imposes an exchange fee on Class A Shares exchanged 5 business days or less
after their purchase. The redemption fee and the exchange fee are designed to
discourage short-term trading and any proceeds of the fees will be recorded as
an increase to paid-in-capital of the applicable Fund.
Prior to December 13, 2004, the Large Cap Growth Fund imposed a 2.00% redemption
fee on the value of Class A Shares redeemed 30 days or less after their
purchase. For the year ended July 31, 2005, the Large Cap Growth Fund, the Value
Momentum Fund, the Large Cap Value Fund and the Small Cap Value Fund imposed
redemption fees of $1,427, $7,502, $6,036 and $539. No other Fund imposed any
such fees.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
HighMark and the Adviser are parties to an Advisory Agreement. For its services,
the Adviser is entitled to receive a fee with respect to each Fund, that is
calculated daily and paid monthly, based on the average daily net assets of each
Fund, at an annual rate of 0.60% for the Large Cap Growth Fund, the Value
Momentum Fund, the Large Cap Value Fund, the Core Equity Fund, and the Balanced
Fund; 1.15% for the Small Cap Growth Fund; 1.00% for the Small Cap Value Fund;
0.50% for the California Intermediate Tax-Free Bond Fund, the National
Intermediate Tax-Free Bond Fund, and the Bond Fund; 0.40% for the Short Term
Bond Fund; 0.30% for 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; and 0.65% for the Capital Growth
Allocation Fund, the Growth & Income Allocation Fund and the Income Plus
Allocation Fund. The Adviser has contractually agreed to reduce its fees
throughout the year ended July 31, 2005 and for the period ending November 29,
2005, and to the extent necessary, reimburse the Funds, in order to limit the
Funds from exceeding certain expense limitations as follows:
FIDUCIARY CLASS A CLASS B CLASS C
SHARES SHARES SHARES SHARES
--------- ---------- --------- ---------
Large Cap Growth ................. 0.97% 1.22% n/a n/a
Value Momentum ................... 0.97 1.22 n/a n/a
Large Cap Value .................. 0.95 1.20 n/a n/a
Core Equity ...................... 0.95 1.20 n/a n/a
Balanced ......................... 0.97 1.22 n/a n/a
Small Cap Growth ................. 1.52 1.77 n/a n/a
Small Cap Value .................. 1.37 1.62 n/a n/a
California Intermediate
Tax-Free Bond ................. 0.52 0.77 1.52% 1.27%
National Intermediate
Tax-Free Bond ................. 0.30 0.55 n/a 1.05
Bond ............................. 0.77 1.02 n/a n/a
Short Term Bond .................. 0.68 0.93 n/a n/a
100% U.S. Treasury Money Market .. 0.55 0.80 n/a n/a
U.S. Government Money Market ..... 0.55 0.80 n/a n/a
Diversified Money Market ......... 0.55 0.80 n/a n/a
California Tax-Free Money Market . 0.55 0.80 n/a n/a
Capital Growth Allocation ........ n/a 1.23 n/a n/a
Growth & Income Allocation ....... n/a 1.23 n/a n/a
Income Plus Allocation ........... n/a 1.23 n/a n/a
Effective October 1, 2001, the Adviser and Waddell & Reed Investment Management
Company ("Waddell & Reed") entered into an investment sub-advisory agreement
relating to the Large Cap Growth Fund. Waddell & Reed is entitled to receive a
fee at the annual rate of 0.30% of the average daily net assets of the Large Cap
Growth Fund. Waddell & Reed's fee is paid from the Adviser's fee.
Effective October 1, 2001, the Adviser and LSV Asset Management ("LSV") entered
into an investment sub-advisory agreement relating to the Small Cap Value Fund.
LSV is entitled to receive a fee at the annual rate of 0.65% of the average
daily net assets on the first $50 million, 0.55% of the average daily net assets
on the next $50 million and 0.50% on the average daily net assets over $100
million of the Small Cap Value Fund. LSV's fee is paid from the Adviser's fee.
- --------------------------------------------------------------------------------
106 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
Effective March 31, 2003, the Adviser and Aronson+Johnson+Ortiz, LP ("AJO")
entered into an investment sub-advisory agreement relating to the Large Cap
Value Fund. AJO is entitled to receive a fee at the annual rate of 0.30% of the
average daily net assets of the Large Cap Value Fund. AJO's fee is paid from the
Adviser's fee.
Effective April 29, 2003, the Adviser and Chartwell Investment Partners L.P.
("Chartwell") entered into an investment sub-advisory agreement relating to the
Small Cap Growth Fund. Chartwell is entitled to receive a fee at the annual rate
of 0.65% of the average daily net assets on the first $100 million and 0.60% on
the average daily net assets over $100 million of the Small Cap Growth Fund.
Chartwell's fee is paid from the Adviser's fee.
The Administrator and HighMark are parties to an Administration Agreement (the
"Agreement") dated February 15, 1997, under which the Administrator provides the
Funds with management and administrative services for an annual fee of 0.20% of
the average daily net assets of each of the Funds, possibly subject to certain
minimum fees. 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. For the year ended July 31, 2005, the
Administrator voluntarily waived 0.025% of its fee for all the Funds.
The Administrator has agreed to absorb certain transfer agency related and legal
expenses on behalf of the Funds. These expenses are reflected on the statements
of operations as "Reduction of Expenses." For any new Funds or classes of shares
which commence operations after October 1, 2004, such new Funds or classes of
shares will be charged all transfer agency related expenses and all such
expenses shall be allocated pro rata amongst all of the then existing Funds
based on their respective net assets.
Certain officers of HighMark are also officers of the Adviser, the Adviser's
parent and the Administrator. Such officers are paid no fees by HighMark for
serving as officers of HighMark.
The independent Trustees of HighMark receive quarterly retainer fees and fees
and expenses for each meeting of the Board attended. Compensation of independent
Trustees is paid by the Funds.
Pursuant to a separate agreement with the Administrator, the Adviser 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. Currently, the Administrator pays the Adviser a fee at
an annual rate of 0.075% of the average daily net assets of the Funds for the
Adviser's sub-administration services. For the year ended July 31, 2005, the
Adviser received sub-administration fees in the amount of $5,231,008.
State Street Bank and Trust Company ("State Street") serves as the transfer
agent, dividend disbursing agent and shareholder servicing agent for HighMark.
State Street has sub-contracted such services to its affiliate, Boston Financial
Data Services.
SEI Investments Distribution Co. (the "Distributor") and HighMark 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.
HighMark has 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 paid monthly, at the annual rate
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 (0.75% of the average daily net assets of the California
Intermediate Tax-Free Bond Fund, the National Intermediate Tax-Free Bond Fund,
the Bond Fund and the Short Term Bond Fund) 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 Distributor has voluntarily agreed to waive up to 0.55% for the
Class S shares of the 100% U.S. Treasury Money Market Fund, up to 0.75% for the
Class B shares of the U.S. Government Money Market Fund, up to 0.55% for the
Class S shares of the U.S. Government Money Market Fund, up to 0.55% for the
Class S shares of the Diversified Money Market Fund, and up to 0.55% of the
Class S shares of the California Tax-Free Money Market Fund beginning April 17,
2003, November 8, 2002, June 20, 2003, July 2, 2003, and December 6, 2002,
respectively. Each waiver is voluntary and may be terminated. Prior to January
1, 2003 and December 1, 2002, the California Intermediate Tax-Free Bond Fund and
Bond Fund waived all Class A distribution fees, respectively. For the year
ended July 31, 2005, the 100% U.S. Treasury Money Market Fund and U.S.
Government Money Market Fund had distribution waivers of $65 and $247,
respectively.
HighMark has also adopted Shareholder Service Plans permitting payment of
compensation to service providers, that may include Union Bank of California,
N.A., or its affiliates, that have agreed to provide certain shareholder support
services for its customers who own Fiduciary, Class A, or Class B Shares. In
consideration for such services, a service provider is entitled to receive
compensation at the annual rate of up to 0.25% of the average daily net assets
of the applicable class or classes of shares of the Funds listed below. The
service providers voluntarily agreed to waive a portion of their fees for all
Funds for the year ended July 31, 2005. Any such waiver is voluntary and may be
terminated at any time. For the year ended July 31, 2005, Union Bank of
California, N.A. or its affiliates received shareholder servicing fees, net of
waivers, from the Funds in the amount of approximately $1,394,000.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 107
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005
For the year ended July 31, 2004, the HighMark Large Cap Growth Fund failed to
impose $674,248 in redemption fees at the time of the shareholders transactions.
During the reporting period, the Fund's Administrator contributed the full
amount of the uncollected redemption fees to the Fund. Additionally, the Adviser
made a contribution of $99,244 to the Fund to account for potential lost
performance while the redemption fees were uncollected. The Fund's Administrator
subsequently reimbursed the Adviser for such amount. The Fund reimbursed
shareholders that received materially understated redemption proceeds as a
result of the failure to impose the redemption fee.
The following fees are payable (receivable) as of July 31, 2005:
INVESTMENT ADMINIS- SHAREHOLDER
ADVISER TRATIVE SERVICING CUSTODIAN TRUSTEES
---------- --------- ----------- --------- ---------
Large Cap Growth .......... $ 80,236 $ 23,400 $ 49,319 $ 1,340 $ 1,420
Value Momentum ............ 237,119 69,154 150,893 3,958 3,506
Large Cap Value ........... 82,985 28,247 55,538 1,615 1,182
Core Equity ............... 51,807 16,668 36,553 954 896
Balanced .................. 36,031 10,523 27,993 605 886
Small Cap Growth .......... 27,948 5,081 10,414 290 254
Small Cap Value ........... 186,724 32,669 59,978 1,696 1,462
California Intermediate
Tax-Free Bond .......... 29,801 24,583 1,371 1,409 1,422
National Intermediate
Tax-Free Bond .......... (1,631) 14,492 -- 828 770
Bond ...................... 171,475 71,881 33,574 3,917 3,892
Short Term Bond ........... 8,600 8,218 -- 211 122
100% U.S. Treasury
Money Market ........... 198,423 135,077 -- 7,733 6,537
U.S. Government
Money Market ........... 105,606 68,268 245 3,913 3,328
Diversified Money
Market ................. 716,725 480,361 -- 27,515 24,851
California Tax-Free
Money Market ........... 85,783 75,049 -- 5,298 3,959
Capital Growth
Allocation ............. 5,638 4,457 -- 104 36
Growth & Income
Allocation ............. 6,301 4,241 -- 183 42
Income Plus
Allocation ............. 1,115 1,831 -- 21 --
A sales charge is imposed on purchases of Class A Shares at the following rates:
CLASS A
SHARES*
-------
Large Cap Growth .............................................. 5.50%
Value Momentum ................................................ 5.50
Large Cap Value ............................................... 5.50
Core Equity ................................................... 5.50
Balanced ...................................................... 5.50
Small Cap Growth .............................................. 5.50
Small Cap Value ............................................... 5.50
California Intermediate Tax-Free Bond ......................... 2.25
National Intermediate Tax-Free Bond ........................... 2.25
Bond .......................................................... 3.25**
Short Term Bond ............................................... 3.25**
Capital Growth Allocation ..................................... 5.50
Growth & Income Allocation .................................... 5.50
Income Plus Allocation ........................................ 4.50
*Maximum sales charge as a percentage of offering price. Lower sales charges
apply based on amount invested.
**Effective December 1, 2005, the sales charge will be 2.25%.
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
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 CDSC of 1% is imposed when Class C Shares are sold within the first year of
purchase.
Union Bank of California, N.A. acts as custodian (the "Custodian") for the
Funds. The Custodian, as compensation for its services, receives a fee at the
annual rate of 0.01% of each Fund's average daily net assets. The Custodian
plays no role in determining the investment policies of the Funds or which
securities are to be purchased or sold in the Funds.
4. INVESTMENT TRANSACTIONS
The purchases and sales (including maturities) of investment securities by the
Non-Money Market Funds, excluding short-term investments and U.S. government
securities, for the year ended July 31, 2005 are as follows:
INVESTMENT SECURITIES
-----------------------
PURCHASES SALES
(000) (000)
---------- ----------
Large Cap Growth ..................................... $ 112,810 $ 144,651
Value Momentum ....................................... 78,604 100,643
Large Cap Value ...................................... 190,107 148,693
Core Equity .......................................... 111,922 120,646
Balanced ............................................. 54,346 95,736
Small Cap Growth ..................................... 56,859 61,430
Small Cap Value ...................................... 57,411 48,689
California Intermediate Tax-Free Bond ................ 10,538 35,321
National Intermediate Tax-Free Bond .................. 14,037 17,876
Bond ................................................. 24,373 21,725
Short Term Bond ...................................... 13,091 545
Capital Growth Allocation ............................ 16,372 3,507
Growth & Income Allocation ........................... 19,742 5,541
Income Plus Allocation ............................... 3,658 1,004
The purchases and sales (including maturities) of U.S. government securities by
the Non-Money Market Funds for the year ended July 31, 2005 are as follows:
PURCHASES SALES
(000) (000)
---------- ----------
Balanced ............................................. $ 4,712 $ 11,781
Bond ................................................. 28,661 58,248
Short Term Bond ...................................... 14,313 1,164
- --------------------------------------------------------------------------------
108 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
Investments made by the Asset Allocation Funds in other HighMark Funds are
considered to be investments in Affiliated Companies as defined under section
2(a)(3) of the 1940 Act. A summary of the investment and income activity in each
Affiliated Company for each Asset Allocation Fund is as follows:
REALIZED NET
CAPITAL GROWTH ALLOCATION GAINS INVESTMENT
CONTRIBUTIONS WITHDRAWALS (LOSSES) INCOME
AFFILIATE (000) (000) (000) (000)
---------------------------------------------- ------------- ----------- -------- ----------
HighMark Bond Fund, Fiduciary Shares $ 812 $ 87 $ -- $ 6
HighMark Core Equity Fund, Fiduciary Shares 3,325 -- -- 10
HighMark Diversified Money Market Fund, Fiduciary Shares 3,549 3,233 -- 4
HighMark Large Cap Growth Fund, Fiduciary Shares 1,029 -- -- 1
HighMark Large Cap Value Fund, Fiduciary Shares 1,962 117 4 8
HighMark Short Term Bond Fund, Fiduciary Shares 562 -- -- 13
HighMark Small Cap Growth Fund, Fiduciary Shares 861 -- (1) --
HighMark Small Cap Value Fund, Fiduciary Shares 919 70 -- --
HighMark Value Momentum Fund, Fiduciary Shares 3,353 -- 75 18
------- ------ ---- ----
TOTAL: $16,372 $3,507 $ 78 $ 60
------- ------ ---- ----
REALIZED NET
GROWTH & INCOME ALLOCATION GAINS INVESTMENT
CONTRIBUTIONS WITHDRAWALS (LOSSES) INCOME
AFFILIATE (000) (000) (000) (000)
---------------------------------------------- ------------- ----------- -------- ----------
HighMark Bond Fund, Fiduciary Shares $ 2,810 $ 236 $ (1) $ 47
HighMark Core Equity Fund, Fiduciary Shares 2,511 -- -- 8
HighMark Diversified Money Market Fund, Fiduciary Shares 5,510 5,040 -- 5
HighMark Large Cap Growth Fund, Fiduciary Shares 972 -- -- 1
HighMark Large Cap Value Fund, Fiduciary Shares 2,194 121 3 9
HighMark Short Term Bond Fund, Fiduciary Shares 1,730 -- -- 18
HighMark Small Cap Growth Fund, Fiduciary Shares 675 -- -- --
HighMark Small Cap Value Fund, Fiduciary Shares 742 76 7 --
HighMark Value Momentum Fund, Fiduciary Shares 2,598 68 37 14
------- ------ ---- ----
TOTAL: $19,742 $5,541 $ 46 $102
------- ------ ---- ----
REALIZED NET
INCOME PLUS ALLOCATION GAINS INVESTMENT
CONTRIBUTIONS WITHDRAWALS (LOSSES) INCOME
AFFILIATE (000) (000) (000) (000)
---------------------------------------------- ------------- ----------- -------- ----------
HighMark Bond Fund, Fiduciary Shares $ 855 $ 31 $ -- $ 12
HighMark Core Equity Fund, Fiduciary Shares 254 7 -- --
HighMark Diversified Money Market Fund, Fiduciary Shares 1,049 928 -- 1
HighMark Large Cap Growth Fund, Fiduciary Shares 122 1 -- --
HighMark Large Cap Value Fund, Fiduciary Shares 269 16 -- 1
HighMark Short Term Bond Fund, Fiduciary Shares 730 -- -- 7
HighMark Small Cap Growth Fund, Fiduciary Shares 57 1 -- --
HighMark Small Cap Value Fund, Fiduciary Shares 60 6 -- --
HighMark Value Momentum Fund, Fiduciary Shares 262 14 2 1
------ ------ ---- ----
TOTAL: $3,658 $1,004 $ 2 $ 22
------ ------ ---- ----
Amounts designated as "--' are either $0 or have been rounded to $0.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 109
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
5. FEDERAL INCOME TAXES
It is each Fund's intention to continue to qualify as a regulated investment
company for Federal income tax purposes and distribute all of its taxable income
and net capital gains. Accordingly, no provision for Federal income taxes is
required.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with Federal tax
regulations, which may differ from accounting principles generally accepted in
the United States of America. As a result, the net investment income (loss) and
net realized gain (loss) on investment transactions for a reporting period may
differ significantly from distributions during such period. These book/tax
differences may be temporary or permanent in nature. To the extent these
differences are permanent, they are charged or credited to paid-in-capital,
undistributed realized gains or undistributed net investment income or
accumulated net realized gain, as appropriate, in the period that the
differences arise. Accordingly, the following permanent differences, primarily
attributable to an in-kind transaction, net operating losses, the classification
of short-term capital gains and ordinary income and expiring capital loss
carry-forwards for tax purposes, have been reclassified to/from the following
accounts:
UNDISTRIBUTED UNDISTRIBUTED
PAID-IN NET REALIZED NET INVESTMENT
CAPITAL GAIN INCOME
(000) (000) (000)
----------- ------------- --------------
Value Momentum ......... $ -- $ (182) $ 182
Balanced ............... 3,335 (3,368) 33
Small Cap Growth ....... (417) -- 417
Bond ................... (1,650) 683 967
Short Term Bond ........ -- (15) 15
Capital Growth
Allocation .......... -- (5) 5
Amounts designated as "--" are $0.
These reclassifications have no effect on net assets or net asset value per
share.
The tax character of dividends and distributions paid on a tax basis during the
years ended July 31, 2005 and July 31, 2004 are as follows:
TAX-EXEMPT ORDINARY LONG-TERM
INCOME INCOME CAPITAL GAIN TOTAL
(000) (000) (000) (000)
---------- -------- ------------ -------
Large Cap Growth
2005 ................. $ -- $ 438 $ -- $ 438
2004 ................. -- -- -- --
Value Momentum
2005 ................. -- 6,684 34,608 41,292
2004 ................. -- 5,355 18,925 24,280
Large Cap Value
2005 ................. -- 1,557 -- 1,557
2004 ................. -- 1,053 -- 1,053
Core Equity
2005 ................. -- 1,456 -- 1,456
2004 ................. -- 488 -- 488
Balanced
2005 ................. -- 2,259 -- 2,259
2004 ................. -- 1,681 -- 1,681
Small Cap Growth
2005 ................. -- -- 49 49
2004 ................. -- 413 28 441
Small Cap Value
2005 ................. -- 168 10,862 11,030
2004 ................. -- 423 2,079 2,502
California
Intermediate
Tax-Free Bond
2005 ................. 6,503 2 1,800 8,305
2004 ................. 7,849 26 422 8,297
National
Intermediate
Tax-Free Bond
2005 ................. 3,940 4 765 4,709
2004 ................. 4,223 50 10 4,283
TAX-EXEMPT ORDINARY LONG-TERM
INCOME INCOME CAPITAL GAIN TOTAL
(000) (000) (000) (000)
---------- -------- ------------ -------
Bond
2005 ................. $ -- $22,939 $-- $22,939
2004 ................. -- 25,296 -- 25,296
Short Term Bond
2005 ................. -- 386 -- 386
100% U.S. Treasury
Money Market
2005 ................. -- 11,837 -- 11,837
2004 ................. -- 3,051 -- 3,051
U.S. Government
Money Market
2005 ................. -- 7,632 -- 7,632
2004 ................. -- 2,740 -- 2,740
Diversified Money
Market
2005 ................. -- 56,216 -- 56,216
2004 ................. -- 15,271 -- 15,271
California Tax-Free
Money Market
2005 ................. 6,482 26 -- 6,508
2004 ................. 2,116 -- -- 2,116
Capital Growth
Allocation
2005 ................. -- 14 1 15
Growth & Income
Allocation
2005 ................. -- 43 -- 43
Income Plus
Allocation
2005 ................. -- 11 -- 11
Amounts designated as "--" are either $0 or have been rounded to $0.
- --------------------------------------------------------------------------------
110 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005
As of July 31, 2005, the components of distributable earnings (accumulated
losses) on a tax basis are as follows:
TOTAL
DISTRIBUTABLE
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED CAPITAL POST- UNREALIZED OTHER EARNINGS
ORDINARY TAX-EXEMPT LONG-TERM LOSS OCTOBER APPRECIATION TEMPORARY (ACCUMULATED
INCOME INCOME CAPITAL GAIN CARRYFORWARD LOSSES (DEPRECIATION) DIFFERENCES LOSSES)
(000) (000) (000) (000) (000) (000) (000) (000)
------------- ------------- ------------- ------------- -------- -------------- ----------- -------------
Large Cap Growth ........ $ 263 $ -- $ -- $ (158,945) $ -- $ 23,598 $ -- $ (135,084)
Value Momentum .......... 1,556 -- 37,526 -- -- 146,105 (173) 185,014
Large Cap Value ......... 72 -- -- (36,562) -- 30,697 -- (5,793)
Core Equity ............. 15 -- -- (21,436) -- 7,286 -- (14,135)
Balanced ................ -- -- -- (1,566) -- 5,437 -- 3,871
Small Cap Growth ........ -- -- 1,280 -- -- 5,238 -- 6,518
Small Cap Value ......... 292 -- 12,191 -- -- 65,515 -- 77,998
California Intermediate
Tax-Free Bond ......... -- 148 1,263 -- -- 5,622 -- 7,033
National Intermediate
Tax-Free Bond ......... -- 135 458 -- -- 3,167 -- 3,760
Bond .................... 267 -- -- (10,525) (40) 17,950 315 7,967
Short Term Bond ......... 18 -- -- -- (22) (260) -- (264)
100% U.S. Treasury
Money Market .......... 1,757 -- -- (153) -- (5) (1,757) (158)
U.S. Government
Money Market .......... 1,029 -- -- (34) (1) -- (1,030) (36)
Diversified Money
Market ................ 7,319 -- -- (132) (1) -- (7,320) (134)
California Tax-Free
Money Market .......... -- 684 -- (8) -- -- (684) (8)
Capital Growth
Allocation ............ -- -- 74 -- -- 550 -- 624
Growth & Income
Allocation ............ 7 -- 49 -- -- 436 -- 492
Income Plus Allocation .. 4 -- 2 -- -- 35 -- 41
Post-October losses represent losses realized on investment transactions from
November 1, 2004 through July 31, 2005, that, in accordance with Federal income
tax regulations, a Fund may elect to defer and treat as having arisen in the
following year. For Federal income tax purposes, capital loss carryforwards may
be carried forward for a maximum of eight years and applied against future
capital gains.
At July 31, 2005, the Funds had capital loss carryforwards available to offset
future realized capital gains through the indicated expiration dates:
EXPIRING JULY 31,
------------------------------------------------------------------------------------
2006 2007 2008 2009 2010 2011 2012 2013 TOTAL
(000) (000) (000) (000) (000) (000) (000) (000) (000)
----- ----- ------ ----- --------- -------- -------- ----- ---------
Large Cap Growth ..................... $ -- $ -- $ -- $ -- $ 119,920 $ 39,025 $ -- $ -- $ 158,945
Large Cap Value ...................... -- -- -- -- 3,748 32,814 -- -- 36,562
Core Equity .......................... -- -- -- -- -- 5,809 15,627 -- 21,436
Balanced ............................. -- -- -- -- -- 1,566 -- -- 1,566
Bond ................................. -- -- 2,585 137 -- 1,692 6,111 -- 10,525
100% U.S. Treasury Money Market ...... -- -- -- -- -- 153 -- -- 153
U.S. Government Money Market ......... -- -- -- -- 18 15 -- 1 34
Diversified Money Market ............. -- 122 -- 8 -- 1 -- 1 132
California Tax-Free Money Market ..... 7 -- -- -- -- -- 1 -- 8
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 111
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
During the year ended July 31, 2005, capital loss carryforwards that were
utilized to offset gains are as follows:
(000)
-------------
Large Cap Growth ............................................ $ 7,749
Large Cap Value ............................................. 13,964
Core Equity ................................................. 9,381
Balanced .................................................... 2,325
Bond ........................................................ 744
100% U.S. Treasury Money Market ............................. 45
California Tax-Free Money Market ............................ 1
The Bond Fund had a permanent book/tax difference due to the expiration of a
capital loss carryforward. The Bond Fund had $1,649,871 of capital losses which
have expired as of July 31, 2005.
At July 31, 2005, the total cost of securities for Federal income tax purposes
and the aggregate gross unrealized appreciation and depreciation for securities
held by the Funds are as follows:
FEDERAL TAX
COST APPRECIATION DEPRECIATION TOTAL
(000) (000) (000) (000)
------------ ------------ ------------ ------------
Large Cap Growth ........................ $ 156,917 $ 25,526 $ (1,928) $ 23,598
Value Momentum .......................... 401,546 157,198 (11,093) 146,105
Large Cap Value ......................... 193,596 32,675 (1,978) 30,697
Core Equity ............................. 117,150 9,379 (2,093) 7,286
Balanced ................................ 78,034 6,728 (1,291) 5,437
Small Cap Growth ........................ 33,585 5,614 (376) 5,238
Small Cap Value ......................... 208,471 70,299 (4,784) 65,515
California Intermediate Tax-Free Bond ... 155,913 5,962 (340) 5,622
National Intermediate Tax-Free Bond ..... 92,312 3,283 (116) 3,167
Bond .................................... 533,805 21,168 (3,218) 17,950
Short Term Bond ......................... 30,659 -- (260) (260)
100% U.S. Treasury Money Market ......... 868,823 -- (5) (5)
U.S. Government Money Market ............ 531,014 -- -- --
Diversified Money Market ................ 3,321,135 -- -- --
California Tax-Free Money Market ........ 493,566 -- -- --
Capital Growth Allocation ............... 12,869 572 (22) 550
Growth & Income Allocation .............. 14,204 489 (53) 436
Income Plus Allocation .................. 2,655 47 (12) 35
6. SECURITIES LENDING
The Custodian serves as the Funds' securities lending agent. Certain Funds lend
their securities to approved brokers to earn additional income and receive cash
and/or securities as collateral to secure the loans. The Custodian rebates to
the brokers certain negotiated amounts if cash is received as collateral for
securities on loan. Additionally, the Custodian receives fees for administering
the securities lending program for the Funds. For the year ended July 31, 2005,
these fees totaled $148,503. Such fees and the rebates reduce the overall income
the Funds earned on securities purchased with cash collateral, which is
reflected as a reduction to interest income in the statements of operations.
Collateral was maintained at not less than 102% of the value of loaned
securities. During the second quarter, the Funds started to maintain collateral
at not less than 100% of the value of loaned securities. If cash collateral is
received, a related liability is shown on the statement of net assets. Although
the risk of lending is mitigated by the collateral, a Fund could experience a
delay in recovering its securities and a possible loss of income or value if the
borrower fails to return them. The market value of the securities on loan and
collateral at July 31, 2005, and the income generated from the program during
the year ended July 31, 2005, with respect to such loans are as follows:
MARKET VALUE OF MARKET INCOME RECEIVED
SECURITIES VALUE OF FROM SECURITIES
LOANED COLLATERAL LENDING
(000) (000) (000)
--------------- ---------- ---------------
Large Cap Growth ............. $25,374 $26,078 $ 48
Value Momentum ............... 75,211 77,723 97
Large Cap Value .............. 28,766 29,681 42
Core Equity .................. 11,688 12,126 15
Balanced ..................... 12,468 12,841 15
Small Cap Growth ............. 4,925 5,106 2
Small Cap Value .............. 46,152 47,861 168
Bond ......................... 73,732 75,316 63
Short Term Bond .............. 4,262 4,352 --
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
7. 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 these Funds to meet their obligations may
be affected by economic and political developments in that state.
- --------------------------------------------------------------------------------
112 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005
8. OPTION CONTRACTS
Transactions in written covered call options during the year ended July 31, 2005
are summarized as follows:
VALUE MOMENTUM
-----------------------
NUMBER OF
WRITTEN OPTIONS TRANSACTIONS CONTRACTS PREMIUM
- -------------------------------------------------------- --------- -----------
Options written and outstanding at beginning of year ... -- $ --
Call options written during year ....................... 5,525 (1,180,187)
Call options exercised during year ..................... (530) 94,439
Call options expired during year ....................... (1,570) 278,423
Call options closed during year ........................ (1,850) 435,410
------- -----------
Options written and outstanding at end of year ......... 1,575 $ (371,915)
======= ===========
9. FUND MERGERS
On September 19, 2003 the UBOC Municipal Bond Fund, an unregistered common trust
fund of Union Bank of California, was converted into the HighMark National
Intermediate Tax-Free Bond Fund. The assets, which consisted of securities and
related receivables less liabilities, were converted on a tax-free basis. The
HighMark National Intermediate Tax-Free Bond Fund issued 4,027,945 Fiduciary
Shares valued at $47,618,371 (including $3,868,594 of unrealized appreciation)
immediately before the conversion. One share of the UBOC Municipal Bond Fund was
exchanged for 0.6392 shares of the HighMark National Intermediate Tax-Free Bond
Fund.
10. IN-KIND TRANSACTIONS
During the year ended July 31, 2005, the HighMark Balanced Fund primarily
distributed securities in lieu of cash for shareholder redemptions. The
shareholders received a pro-rata portion of the Fund's holdings. The value of
the redemptions were as follows:
FIDUCIARY SHARES:
REALIZED
GAIN FUND
BY THE SHARES
REDEMPTION SECURITIES CASH FUND REDEEMED
----------- ----------- ---------- ---------- ---------
Balanced
05/11/05 $39,990,093 $38,272,463 $1,717,630 $3,334,478 2,993,270
This transaction is not a taxable event, and no gain or loss was recognized by
the Fund upon the delivery of these securities. This transaction was completed
pursuant to procedures adopted by the Board of Trustees. These procedures are
designed to minimize or eliminate any adverse tax implications to the Fund and
its shareholders.
11. OTHER
At July 31, 2005, the percentage of total shares outstanding held by record
shareholders (comprised of omnibus accounts, held on behalf of several
individual shareholders) owning 10% or greater of the aggregate total shares
outstanding for each Fund is as follows:
NO. OF %
SHAREHOLDERS OWNERSHIP
Large Cap Growth ................................. 1 78%
Value Momentum ................................... 1 80
Large Cap Value .................................. 1 57
Core Equity ...................................... 1 76
Balanced ......................................... 1 80
Small Cap Growth ................................. 1 63
Small Cap Value .................................. 1 45
California Intermediate Tax-Free Bond ............ 1 57
National Intermediate Tax-Free Bond .............. 1 91
Bond ............................................. 1 82
Short Term Bond .................................. 1 83
100% U.S. Treasury Money Market .................. 2 98
U.S. Government Money Market ..................... 2 92
Diversified Money Market ......................... 2 100
California Tax-Free Money Market ................. 2 100
Capital Growth Allocation ........................ -- --
Growth & Income Allocation ....................... -- --
Income Plus Allocation ........................... -- --
12. SUBSEQUENT EVENT
Effective December 1, 2005, HighMark Capital Management, Inc., will become the
Funds' administrator. HighMark Capital Management, Inc. will contract with SEI
Global Funds Services to provide sub-administration services to the Funds.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 113
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2005
13. SHARES ISSUED AND REDEEMED (000):
Transactions in Fund Shares are as follows for the years or period ended July
31,
LARGE CAP GROWTH VALUE MOMENTUM LARGE CAP VALUE
FUND FUND FUND
---------------- --------------- ---------------
2005 2004 2005 2004 2005 2004
---------------- --------------- ---------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ............................................ 2,034 3,691 2,634 3,380 3,211 2,418
Issued in Lieu of Cash Distributions .............. 35 -- 1,509 917 61 47
Redeemed .......................................... (5,342) (7,584) (3,505) (3,934) (1,772) (1,566)
------ ------ ------ ------ ------ ------
Total Fiduciary Share Transactions ............. (3,273) (3,893) 638 363 1,500 899
------ ------ ------ ------ ------ ------
Class A Shares:
Issued ............................................ 184 690 133 231 2,596 433
Issued in Lieu of Cash Distributions .............. 2 -- 102 68 32 24
Redeemed .......................................... (687) (776) (299) (351) (837) (565)
------ ------ ------ ------ ------ ------
Total Class A Share Transactions ............... (501) (86) (64) (52) 1,791 (108)
------ ------ ------ ------ ------ ------
Class B Shares:
Issued ............................................ 18 169 11 51 27 148
Issued in Lieu of Cash Distributions .............. -- -- 33 20 1 1
Redeemed .......................................... (286) (287) (61) (55) (58) (27)
------ ------ ------ ------ ------ ------
Total Class B Share Transactions ............... (268) (118) (17) 16 (30) 122
------ ------ ------ ------ ------ ------
Class C Shares (1):
Issued ............................................ 26 86 15 9 225 154
Issued in Lieu of Cash Distributions .............. -- -- 3 1 1 --
Redeemed .......................................... (68) (45) (3) (13) (26) (1)
------ ------ ------ ------ ------ ------
Total Class C Share Transactions ............... (42) 41 15 (3) 200 153
------ ------ ------ ------ ------ ------
Net Increase (Decrease) in Share Transactions ..... (4,084) (4,056) 572 324 3,461 1,066
====== ====== ====== ====== ====== ======
CALIFORNIA INTERMEDIATE NATIONAL INTERMEDIATE
TAX-FREE BOND TAX-FREE BOND
FUND FUND
----------------------- ---------------------
2005 2004 2005 2004
----------------------- ---------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued from the conversion of the UBOC Municipal Bond Fund (2) ... -- -- -- 4,028
Issued ........................................................... 1,075 2,075 329 401
Issued in Lieu of Cash Distributions ............................. 140 99 62 2
Redeemed ......................................................... (2,805) (3,939) (862) (2,216)
------ ------ ---- ------
Total Fiduciary Share Transactions ............................... (1,590) (1,765) (471) 2,215
------ ------ ---- ------
Class A Shares:
Issued ........................................................... 522 765 204 318
Issued in Lieu of Cash Distributions ............................. 183 198 10 6
Redeemed ......................................................... (1,449) (3,747) (291) (146)
------ ------ ---- ------
Total Class A Share Transactions ................................. (744) (2,784) (77) 178
------ ------ ---- ------
Class B Shares:
Issued ........................................................... 8 44 -- --
Issued in Lieu of Cash Distributions ............................. 19 18 -- --
Redeemed ......................................................... (121) (274) -- --
------ ------ ---- ------
Total Class B Share Transactions ................................. (94) (212) -- --
------ ------ ---- ------
Class C Shares (1):
Issued ........................................................... 37 53 4 --
Issued in Lieu of Cash Distributions ............................. 3 -- -- --
Redeemed ......................................................... (1) -- -- --
------ ------ ---- ------
Total Class C Share Transactions ................................. 39 53 4 --
------ ------ ---- ------
Class S Shares:
Issued ........................................................... -- -- -- --
Issued in Lieu of Cash Distributions ............................. -- -- -- --
Redeemed ......................................................... -- -- -- --
------ ------ ---- ------
Total Class S Share Transactions .............................. -- -- -- --
------ ------ ---- ------
Net Increase (Decrease) in Share Transactions .................... (2,389) (4,708) (544) 2,393
====== ====== ==== ======
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, 0 OR HAVE BEEN ROUNDED TO
0.
* INCLUDES REDEMPTIONS AS A RESULT OF AN IN-KIND TRANSACTION (SEE NOTE 10 IN
NOTES TO FINANCIAL STATEMENTS).
(1) CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 28, 2003 FOR THE CORE
EQUITY, CALIFORNIA INTERMEDIATE TAX-FREE BOND, NATIONAL INTERMEDIATE TAX
FREE BOND AND BOND FUNDSCLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER
30, 2004 FOR THE SHORT TERM BOND FUND.
(2) SEE NOTE 9 IN NOTES TO FINANCIAL STATEMENTS.
(3) COMMENCED OPERATIONS ON NOVEMBER 2, 2004.
- --------------------------------------------------------------------------------
114 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
CORE EQUITY BALANCED SMALL CAP GROWTH SMALL CAP VALUE
FUND FUND FUND FUND
--------------- ---------------- ---------------- ---------------
2005 2004 2005 2004 2005 2004 2005 2004
--------------- ---------------- ---------------- ---------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ............................................ 1,605 2,660 960 1,965 381 2,001 2,026 1,983
Issued in Lieu of Cash Distributions .............. 39 18 152 120 3 24 352 88
Redeemed .......................................... (3,921) (4,362) (6,009)* (2,402) (762) (358) (1,796) (1,593)
------ ------ ------ ------ ----- ----- ------ ------
Total Fiduciary Share Transactions ............. (2,277) (1,684) (4,897) (317) (378) 1,667 582 478
------ ------ ------ ------ ----- ----- ------ ------
Class A Shares:
Issued ............................................ 51 192 43 76 69 181 1,136 1,386
Issued in Lieu of Cash Distributions .............. 3 1 10 6 -- 6 119 28
Redeemed .......................................... (178) (175) (72) (128) (68) (226) (683) (883)
------ ------ ------ ------ ----- ----- ------ ------
Total Class A Share Transactions ............... (124) 18 (19) (46) 1 (39) 572 531
------ ------ ------ ------ ----- ----- ------ ------
Class B Shares:
Issued ............................................ 2 42 8 33 -- 40 17 178
Issued in Lieu of Cash Distributions .............. 3 -- 4 2 -- -- 50 13
Redeemed .......................................... (71) (58) (78) (46) (8) (4) (132) (147)
------ ------ ------ ------ ----- ----- ------ ------
Total Class B Share Transactions ............... (66) (16) (66) (11) (8) 36 (65) 44
------ ------ ------ ------ ----- ----- ------ ------
Class C Shares (1):
Issued ............................................ 5 38 7 16 11 45 413 544
Issued in Lieu of Cash Distributions .............. -- -- -- -- -- 1 41 5
Redeemed .......................................... (8) -- (8) (2) (19) (4) (85) (37)
------ ------ ------ ------ ----- ----- ------ ------
Total Class C Share Transactions ............... (3) 38 (1) 14 (8) 42 369 512
------ ------ ------ ------ ----- ----- ------ ------
Net Increase (Decrease) in Share Transactions ..... (2,470) (1,644) (4,983) (360) (393) 1,706 1,458 1,565
====== ====== ====== ====== ===== ===== ====== ======
SHORT TERM 100% U.S. TREASURY
BOND BOND MONEY MARKET
FUND FUND FUND
---------------- ---------- -----------------------
2005 2004 2005 (3) 2005 2004
---------------- ---------- -----------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued from the conversion of the UBOC Municipal Bond Fund (2) ... -- -- -- -- --
Issued ........................................................... 6,446 6,951 2,626 2,968,389 2,040,049
Issued in Lieu of Cash Distributions ............................. 953 1,034 11 320 105
Redeemed ......................................................... (9,267) (13,010) (143) (2,977,833) (2,153,114)
------ ------- ----- ---------- ----------
Total Fiduciary Share Transactions ............................... (1,868) (5,025) 2,494 (9,124) (112,960)
------ ------- ----- ---------- ----------
Class A Shares:
Issued ........................................................... 380 703 165 392,802 457,861
Issued in Lieu of Cash Distributions ............................. 128 141 -- 2,262 445
Redeemed ......................................................... (748) (1,729) (19) (358,263) (480,928)
------ ------- ----- ---------- ----------
Total Class A Share Transactions ................................. (240) (885) 146 36,801 (22,622)
------ ------- ----- ---------- ----------
Class B Shares:
Issued ........................................................... 16 66 -- -- --
Issued in Lieu of Cash Distributions ............................. 24 29 -- -- --
Redeemed ......................................................... (178) (334) -- -- --
------ ------- ----- ---------- ----------
Total Class B Share Transactions ................................. (138) (239) -- -- --
------ ------- ----- ---------- ----------
Class C Shares (1):
Issued ........................................................... 2 3 1 -- --
Issued in Lieu of Cash Distributions ............................. -- -- -- -- --
Redeemed ......................................................... -- (2) -- -- --
------ ------- ----- ---------- ----------
Total Class C Share Transactions ................................. 2 1 1 -- --
------ ------- ----- ---------- ----------
Class S Shares:
Issued ........................................................... -- -- -- 873,865 1,047,322
Issued in Lieu of Cash Distributions ............................. -- -- -- 2,902 249
Redeemed ......................................................... -- -- -- (881,984) (1,165,831)
------ ------- ----- ---------- ----------
Total Class S Share Transactions .............................. -- -- -- (5,217) (118,260)
------ ------- ----- ---------- ----------
Net Increase (Decrease) in Share Transactions .................... (2,244) (6,148) 2,641 22,460 (253,842)
====== ======= ===== ========== ==========
U.S. GOVERNMENT
MONEY MARKET FUND
-----------------------
2005 2004
-----------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued from the conversion of the UBOC Municipal Bond Fund (2) ... -- --
Issued ........................................................... 3,157,136 2,781,841
Issued in Lieu of Cash Distributions ............................. 158 52
Redeemed ......................................................... (3,106,150) (2,966,230)
---------- ----------
Total Fiduciary Share Transactions ............................... 51,144 (184,337)
---------- ----------
Class A Shares:
Issued ........................................................... 64,614 53,832
Issued in Lieu of Cash Distributions ............................. 557 123
Redeemed ......................................................... (73,865) (46,334)
---------- ----------
Total Class A Share Transactions ................................. (8,694) 7,621
---------- ----------
Class B Shares:
Issued ........................................................... 326 671
Issued in Lieu of Cash Distributions ............................. 10 1
Redeemed ......................................................... (843) (1,243)
---------- ----------
Total Class B Share Transactions ................................. (507) (571)
---------- ----------
Class C Shares (1):
Issued ........................................................... -- --
Issued in Lieu of Cash Distributions ............................. -- --
Redeemed ......................................................... -- --
---------- ----------
Total Class C Share Transactions ................................. -- --
---------- ----------
Class S Shares:
Issued ........................................................... 317,539 296,462
Issued in Lieu of Cash Distributions ............................. 541 28
Redeemed ......................................................... (292,400) (324,807)
---------- ----------
Total Class S Share Transactions .............................. 25,680 (28,317)
---------- ----------
Net Increase (Decrease) in Share Transactions .................... 67,623 (205,604)
========== ==========
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 115
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
JULY 31, 2005
13. SHARES ISSUED AND REDEEMED (000) (CONCLUDED):
Transactions in Fund Shares are as follows for the years or period ended July
31,
DIVERSIFIED CALIFORNIA TAX-FREE
MONEY MARKET MONEY MARKET
FUND FUND
----------------------- -------------------
2005 2004 2005 2004
----------------------- -------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued .............................................. 5,401,713 4,737,665 620,445 338,586
Issued in Lieu of Cash Distributions ................ 7,261 2,530 -- --
Redeemed ............................................ (5,330,319) (4,580,627) (637,304) (386,378)
---------- ---------- -------- --------
Total Fiduciary Share Transactions ................ 78,655 159,568 (16,859) (47,792)
---------- ---------- -------- --------
Class A Shares:
Issued .............................................. 551,276 458,464 334,065 392,111
Issued in Lieu of Cash Distributions ................ 8,746 2,263 3,179 833
Redeemed ............................................ (546,899) (551,831) (343,514) (389,632)
---------- ---------- -------- --------
Total Class A Share Transactions .................. 13,123 (91,104) (6,270) 3,312
---------- ---------- -------- --------
Class B Shares:
Issued .............................................. -- -- -- --
Issued in Lieu of Cash Distributions ................ -- -- -- --
Redeemed ............................................ -- -- -- --
---------- ---------- -------- --------
Total Class B Share Transactions .................. -- -- -- --
---------- ---------- -------- --------
Class C Shares:
Issued .............................................. -- -- -- --
Issued in Lieu of Cash Distributions ................ -- -- -- --
Redeemed ............................................ -- -- -- --
---------- ---------- -------- --------
Total Class C Share Transactions .................. -- -- -- --
---------- ---------- -------- --------
Class S Shares:
Issued .............................................. 2,747,529 2,518,055 149,640 211,746
Issued in Lieu of Cash Distributions ................ 9,303 728 334 30
Redeemed ............................................ (2,862,191) (2,753,599) (145,522) (222,556)
---------- ---------- -------- --------
Total Class S Share Transactions .................. (105,359) (234,816) 4,452 (10,780)
---------- ---------- -------- --------
Net Decrease in Share Transactions .................. (13,581) (166,352) (18,677) (55,260)
========== ========== ======== ========
CAPITAL GROWTH GROWTH & INCOME INCOME PLUS
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
-------------- --------------- -----------
2005 (1) 2005 (1) 2005 (1)
-------------- --------------- -----------
Shares Issued and Redeemed:
Class A Shares:
Issued ......................................... 414 490 109
Issued in Lieu of Cash Distributions ........... -- 2 --
Redeemed ....................................... (10) (22) (4)
--- --- ---
Total Class A Share Transactions ............. 404 470 105
--- --- ---
Class C Shares:
Issued ......................................... 208 215 25
Issued in Lieu of Cash Distributions ........... -- -- --
Redeemed ....................................... (1) (2) --
--- --- ---
Total Class C Share Transactions ............. 207 213 25
--- --- ---
Net Increase in Share Transactions ............. 611 683 130
=== === ===
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, 0 OR HAVE BEEN ROUNDED TO
0.
(1) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
- --------------------------------------------------------------------------------
116 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF EACH OF THE
HIGHMARK FUNDS:
We have audited the accompanying statements of net assets and statements of
assets and liabilities, including the schedules of investments of Large Cap
Growth Fund, Value Momentum Fund, Large Cap Value Fund, Core Equity Fund,
Balanced Fund, Small Cap Growth Fund, Small Cap Value Fund, California
Intermediate Tax-Free Bond Fund, National Intermediate Tax-Free Bond Fund, Bond
Fund, Short Term Bond Fund, 100% U.S. Treasury Money Market Fund, U.S.
Government Money Market Fund, Diversified Money Market Fund, California Tax-Free
Money Market Fund, Capital Growth Allocation Fund, Growth & Income Allocation
Fund and Income Plus Allocation Fund (collectively the "HighMark Funds" or the
"Funds" ) as of July 31, 2005, and the related statements of operations, the
statements of changes in net assets and the financial highlights for each of the
periods presented. 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.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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. The Funds
are not required to have, nor were we engaged to perform, an audit of their
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Funds` internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of July 31, 2005, by correspondence with the custodian
and brokers. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Funds as of July 31, 2005, and the results of their operations, the
changes in their net assets and the financial highlights for each of the periods
presented, in conformity with accounting principles generally accepted in the
United States of America.
DELOITTE & TOUCHE LLP
New York, New York
September 23, 2005
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 117
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTICE TO SHAREHOLDERS OF THE
HIGHMARK FUNDS (UNAUDITED)
For shareholders that do not have a July 31, 2005 tax year end, this notice is
for informational purposes only. For shareholders with a July 31, 2005 tax year
end, please consult your tax adviser as to the pertinence of this notice.
For the fiscal year ended July 31, 2005, each Fund is designating the following
items with regard to distributions paid during the year.
QUALIFIED
DIVIDENDS
AND QUALIFYING
CORPORATE DIVIDEND
15% RATE ORDINARY DIVIDENDS INCOME
LONG-TERM INCOME TAX EXEMPT RECEIVED (15% TAX U.S.
CAPITAL GAIN DISTRIBUTIONS INCOME DEDUCTION RATE FOR GOVERNMENT
FUND DISTRIBUTION (TAX BASIS) DISTRIBUTIONS TOTAL (1) QDI) (2) INTEREST (5)
- ------------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth ........................... 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% 0.00%
Value Momentum ............................. 83.81% 16.19% 0.00% 100.00% 82.69% 82.01% 0.00%
Large Cap Value ............................ 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% 0.00%
Core Equity ................................ 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% 0.00%
Balanced ................................... 0.00% 100.00% 0.00% 100.00% 59.63% 58.92% 7.13%
Small Cap Growth ........................... 100.00% 0.00% 0.00% 100.00% 0.00% 0.00% 0.00%
Small Cap Value ............................ 98.48% 1.52% 0.00% 100.00% 100.00% 100.00% 0.00%
California Intermediate Tax-Free Bond (4) .. 21.67% 0.02% 78.31% 100.00% 0.00% 0.00% 0.00%
National Intermediate Tax-Free Bond ........ 16.24% 0.09% 83.67% 100.00% 0.00% 0.00% 0.00%
Bond ....................................... 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 13.63%
Short-Term Bond ............................ 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 18.53%
100% U.S. Treasury Money Market (3) ........ 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 100.00%
U.S. Government Money Market ............... 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 28.42%
Diversified Money Market ................... 0.00% 100.00% 0.00% 100.00% 0.00% 0.00% 1.41%
California Tax-Free Money Market (4) ....... 0.00% 0.42% 99.58% 100.00% 0.00% 0.00% 0.00%
Capital Growth Allocation .................. 0.00% 100.00% 0.00% 100.00% 100.00% 100.00% 0.00%
Growth & Income Allocation ................. 0.00% 100.00% 0.00% 100.00% 100.00% 57.95% 0.00%
Income Plus Allocation ..................... 0.00% 100.00% 0.00% 100.00% 17.92% 13.86% 0.00%
- ------------------------------
(1) QUALIFYING DIVIDENDS REPRESENT DIVIDENDS WHICH QUALIFY FOR THE CORPORATE
DIVIDENDS RECEIVED DEDUCTION AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY
INCOME DISTRIBUTIONS."
(2) THE PERCENTAGE IN THIS COLUMN REPRESENTS THE AMOUNT OF "QUALIFYING
DIVIDEND INCOME" AS CREATED BY THE JOBS AND GROWTH TAX RELIEF
RECONCILIATION ACT OF 2003 AND IS REFLECTED AS A PERCENTAGE OF "ORDINARY
INCOME DISTRIBUTIONS." IT IS THE INTENTION OF EACH OF THE AFOREMENTIONED
FUNDS TO DESIGNATE THE MAXIMUM AMOUNT PERMITTED BY THE LAW.
(3) FOR RESIDENTS OF CALIFORNIA, CONNECTICUT AND NEW YORK: THE 100% U.S.
TREASURY MONEY MARKET FUND MET THE QUARTERLY DIVERSIFICATION TEST FOR THE
FISCAL YEAR ENDED DURING JULY 31, 2005. ALL INCOME EARNED BY 100% U.S.
TREASURY MONEY MARKET FUND IS DESIGNATED TAX EXEMPT INCOME FOR STATE
INCOME TAX PURPOSES.
(4) FOR RESIDENTS OF CALIFORNIA, THE CALIFORNIA INTERMEDIATE TAX-FREE BOND
FUND AND THE CALIFORNIA TAX-FREE MONEY MARKET FUND MET THE QUARTERLY
DIVERSIFICATION TEST FOR THE FISCAL YEAR ENDED JULY 31, 2005 .
(5) "U.S. GOVERNMENT INTEREST" REPRESENTS THE AMOUNT OF INTEREST THAT WAS
DERIVED FROM DIRECT U.S. GOVERNMENT OBLIGATIONS AND DISTRIBUTED DURING THE
FISCAL YEAR. THIS AMOUNT IS REFLECTED AS A PERCENTAGE OF TOTAL ORDINARY
INCOME DISTRIBUTIONS (THE TOTAL OF SHORT TERM CAPITAL GAIN AND NET
INVESTMENT INCOME DISTRIBUTIONS). GENERALLY, INTEREST FROM DIRECT U.S.
GOVERNMENT OBLIGATIONS IS EXEMPT FROM STATE INCOME TAX. HOWEVER, FOR
SHAREHOLDERS OF EACH FUND, EXCEPT FOR THE 100% U.S. TREASURY MONEY MARKET
FUND, WHO ARE RESIDENTS OF CALIFORNIA, CONNECTICUT AND NEW YORK, THE
STATUTORY THRESHHOLD REQUIREMENTS WERE NOT SATISFIED TO PERMIT EXEMPTION
OF THESE AMOUNTS FROM STATE INCOME.
- -------------------------------------------
- --------------------------------------------------------------------------------
118 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
TRUSTEES AND OFFICERS (UNAUDITED)
Information pertaining to the trustees and officers of HighMark Funds (the
"Trust") is set forth below. Trustees who are not deemed to be "interested
persons" of the Trust as defined in the Investment Company Act of 1940, as
amended, are referred to as "Independent Board Members." Trustees who are deemed
to be "interested persons" of the Trust are referred to as "Interested Board
Members." Currently, the Trust does not have any Interested Board Members. The
SAI includes additional information about Fund directors. The SAI is available
upon request, by calling 1-800-433-6884. The following trustees and officers
list is current as of September 30, 2005.
- -------------------------------------------------------------------------------------------------------------------------
TERM OF NUMBER OF PORTFOLIOS
OFFICE IN HIGHMARK
AND PRINCIPAL FUNDS OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
NAME, HELD WITH TIME DURING PAST OVERSEEN HELD BY
ADDRESS AND AGE THE TRUST SERVED(2) 5 YEARS BY BOARD MEMBER(3) BOARD MEMBER(4)
- -------------------------------------------------------------------------------------------------------------------------
INDEPENDENT BOARD MEMBERS
- -------------------------
David Benkert Trustee Since 03/04 From April 1, 1992 to 18 None
48 present, Principal,
Navigant Consulting, Inc.
(Financial Consulting -
Healthcare).
Thomas L. Braje Trustee, Vice Since 06/87 Prior to retirement in 18 None
62 Chairman October 1996, Vice President
and Chief Financial Officer
of Bio Rad Laboratories,
Inc.
David A. Goldfarb Trustee Since 06/87 Partner, Goldfarb & Simens, 18 None
62 Certified Public Accountants.
Joseph C. Jaeger Trustee, Since 06/87 Prior to retirement in June 18 None
69 Chairman 1998, Senior Vice President
and Chief Financial Officer,
Delta Dental Plan of
California.
Michael L. Noel Trustee Since 12/98 President, Noel Consulting 18 Avista Corp.
64 Company since 1998. Senior (AVA)
Advisor, Saber Partners
(financial advisory firm)
since 2002. Member, Board of
Directors, Avista Corp.
(utility company), since
January 2004. Member, Board
of Directors, SCAN Health
Plan, since 1997. From April
1997 to December 1998,
Member of HighMark Funds
Advisory Board.
Robert M. Whitler Trustee Since 12/98 Prior to retirement in 1996, 18 None
66 Executive Vice President
and Chief Trust Officer of
Union Bank of California,
N.A. From April 1997 to
December 1998, Member of
HighMark Funds Advisory
Board. From April 1997 to
April 2002, Director,
Current Income Shares, Inc.
(closed-end investment
company).
OFFICERS
- --------
James F. Volk President Since 11/03 Chief Accounting Officer and N/A N/A
One Freedom Chief Compliance Officer,
Valley Drive SEI Investments Global Funds
Oaks, PA 19456 Services 2004-Present. Senior
Age: 43 Operations Officer, Fund
Accounting and Administration
1996-2004. From 1993 until
1996, Assistant Chief
Accountant for the U.S.
Securities and Exchange
Commission.
Jennifer E. Spratley Controller and Since 6/05 Fund Accounting Director, SEI N/A N/A
One Freedom Chief Financial Investments (1999-Present).
Valley Drive Officer Audit Manager, Ernst & Young
Oaks, PA 19456 LLP (1991-1999).
Age: 36
- ----------
1 Each trustee may be contacted by writing to the Trustee c/o HighMark Funds,
One Freedom Valley Drive, Oaks, PA 19456.
2 Each trustee shall hold office during the lifetime of the Trust until the
election and qualification of his or her successor, or until he or she sooner
dies, resigns or is removed in accordance with the Trust's Declaration of
Trust. The president, treasurer and secretary shall hold office for a one
year term and until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns is removed, or becomes
disqualified in accordance with the Trust's by-laws.
3 The "HighMark Funds Complex" consists of all registered investment companies
for which HighMark Capital Management, Inc. serves as investment adviser. As
of July 31, 2005, the HighMark Funds Complex consisted of 18 Funds.
4 Directorships of companies required to report to the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (i.e., "public
companies") or other investment companies registered under the 1940 Act.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 119
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
OFFICERS (UNAUDITED) (CONCLUDED)
- -------------------------------------------------------------------------------------------------------------------------
TERM OF NUMBER OF PORTFOLIOS
OFFICE IN HIGHMARK
AND PRINCIPAL FUNDS OTHER
POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
NAME, HELD WITH TIME DURING PAST OVERSEEN HELD BY
ADDRESS AND AGE THE TRUST SERVED 5 YEARS BY BOARD MEMBER(1) BOARD MEMBER(2)
- -------------------------------------------------------------------------------------------------------------------------
Catherine Vacca Chief Since 9/04 Senior Vice President and N/A N/A
475 Sansome Street Compliance Chief Compliance Officer
San Francisco, Officer of the Adviser since July
CA 94111 2004. From December 2002
48 to July 2004, Vice President
and Chief Compliance
Officer, Wells Fargo Funds
Management, LLC. From
November 2000 to February
2002, Vice President
and Head of Fund
Administration, Charles
Schwab & Co., Inc.
R. Gregory Knopf Vice President Since 9/04 Managing Director of the N/A N/A
445 S. Figueroa Street & Assistant Adviser since 1998.
Suite #306 Secretary
Los Angeles, CA 90071
55
Philip T. Masterson Vice President Since 9/04 Vice President & Assistant N/A N/A
One Freedom Valley Drive & Assistant Secretary of SEI Investments
Oaks, PA 19456 Secretary Global Funds Services
41 since 2005. General Counsel
at Citco Mutual Fund
Services (2003-2004). Vice
President and Associate
Counsel at Oppenheimer
Funds (1998-2003).
Timothy D. Barto Vice President Since 03/00 Vice President and N/A N/A
One Freedom & Assistant Assistant Secretary of
Valley Drive Secretary the Administrator since
Oaks, PA 19456 December 1999. Vice
37 President and Assistant
Secretary of the Distributor
from 1999 to 2004.
Sofia A. Rosala Vice President Since 3/05 Vice President & Assistant N/A N/A
One Freedom & Assistant Secretary of SEI Investments
Valley Drive Secretary Global Funds Services
Oaks, PA 19456 since 2005. Compliance
31 Officer of SEI Investments
(2001-2004). Account and
Product Consultant, SEI
Private Trust Company
(1998-2001).
James Ndiaye Vice President Since 3/05 Vice President & Assistant N/A N/A
One Freedom & Assistant Secretary of SEI Investments
Valley Drive Secretary Global Funds Services
Oaks, PA 19456 since 2005. Vice President,
37 Deutsche Asset Management
(2003-2004). Associate,
Morgan, Lewis and Bockius
LLP (2000-2003). Assistant
Vice President, ING
Variable Annuities Group
1999-2000).
Michael T. Pang Vice President Since 3/05 Vice President & Assistant N/A N/A
One Freedom & Assistant Secretary of SEI Investments
Valley Drive Secretary Global Funds Services since
Oaks, PA 19456 2005. Counsel, Caledonian
33 Bank & Trust's Mutual Fund
Group (2004-2005). Counsel,
Permal Asset Management
(2001-2004). Associate,
Schulte, Roth & Zabel's
Investment Management
Group (2000-2001).
1 The "HighMark Funds Complex" consists of all registered investment companies
for which HighMark Capital Management, Inc. serves as investment adviser. As
of July 31, 2005, the HighMark Funds Complex consisted of 18 Funds.
2 Directorships of companies required to report to the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (i.e., "public
companies") or other investment companies registered under the 1940 Act.
- --------------------------------------------------------------------------------
120 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
BOARD APPROVAL OF THE EXISTING ADVISORY AND
SUB-ADVISORY AGREEMENTS (UNAUDITED)
The Board of Trustees, which consists entirely of trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of
HighMark, the Adviser or the sub-advisers of the Funds ("Independent Trustees"),
considers matters bearing on the advisory and the sub-advisory agreements that
relate to the Funds (collectively, the "Agreements") at most of its meetings
throughout the year. Once a year, usually in the summer, the Board of Trustees
meets to review the Agreements to determine whether to approve the continuation
of the Agreements for an additional one-year period.
In connection with these meetings, the Trustees receive materials that the
Adviser and the Funds' sub-advisers (collectively with the Adviser, the
"Managers") believe to be reasonably necessary for the Trustees to evaluate the
Agreements. These materials generally include, among other items,
o information on the investment performance of the Funds and the
performance of peer groups of mutual funds and the Funds' performance
benchmarks,
o information on the Funds' advisory and sub-advisory fees and other
expenses, including information comparing the Funds' expenses to those
of peer groups of mutual funds and information about any applicable
expense caps and fee "breakpoints" (fee rates that decline as Fund
assets reach higher levels),
o sales and redemption data for the Funds,
o information about the profitability of the Managers' relationship to the
Funds and
o information obtained through the completion of an informational
questionnaire sent to the Managers by the Trustees.
The Board of Trustees may also consider other material facts such as:
o each Manager's financial results and financial condition,
o the size, education and experience of the Managers' respective
investment staffs and their use of technology, external research and
trading cost measurement tools,
o the procedures employed to determine the value of the Funds' assets,
o the allocation of the Funds' brokerage, if any, including allocations to
brokers affiliated with the Managers and the use of "soft" commission
dollars to pay for research and services for the Managers,
o the Managers' resources devoted to, and record of compliance with, the
Funds' investment policies and restrictions, policies on personal
securities transactions and other compliance policies and
o the economic outlook generally and for the mutual fund industry in
particular.
Throughout the process, the Trustees are afforded the opportunity to ask
questions of and request additional materials from the Managers. The Trustees
also meet with, and ask questions of, representatives of each Manager, either in
person or by conference telephone.
The Board of Trustees most recently approved the continuation of the Agreements
at a meeting held on July 20, 2005. This approval followed extensive discussion
of the Agreements at meetings held on June 23, 24 and July 20. In considering
whether to approve the continuation of the Agreements, the Board of Trustees did
not identify any single factor as determinative. Matters considered by the
Trustees in connection with their approval of the Agreements included the
following:
THE NATURE, EXTENT AND QUALITY OF THE SERVICES PROVIDED TO THE FUNDS UNDER THE
AGREEMENTS. The Trustees considered the nature, extent and quality of the
services provided by the Managers and their affiliates to the Funds and the
resources dedicated to the Funds by the Managers and their affiliates. The
Trustees considered not only the advisory services provided by the Managers to
the Funds, but also the monitoring and oversight services provided by the
Adviser with respect to the sub-advised Funds. For each Fund, the Trustees also
considered the benefits to shareholders of investing in a mutual fund that is
part of a family of funds offering a variety of investment disciplines and
providing for a variety of fund and shareholder services. After reviewing these
and related factors and discussions with Fund management, the Trustees
concluded, within the context of their overall conclusions regarding each of the
Agreements, that the nature, extent and quality of services provided supported
the renewal of the Agreements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 121
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
BOARD APPROVAL OF THE EXISTING ADVISORY AND
SUB-ADVISORY AGREEMENTS (UNAUDITED) (CONCLUDED)
INVESTMENT PERFORMANCE OF THE FUNDS AND THE MANAGERS. As noted above, the
Trustees received information about the performance of the Funds over various
time periods, including information which compared the performance of the Funds
to the performance of peer groups of funds and the Funds' respective performance
benchmarks. In addition, the Trustees held various discussions with the Managers
about Fund performance, and such discussions with the Adviser occurred at each
regular board meeting. With respect to each Fund, the Board concluded that the
Fund's performance supported the renewal of the Agreement(s) relating to that
Fund. In the case of each Fund that had performance that lagged that of a
relevant peer group for certain (although not necessarily all) periods
considered, the Board concluded that other factors relevant to performance
supported renewal of the Agreements. These factors varied from Fund to Fund, but
included one or more of the following: (1) that the Fund's performance, although
lagging in certain recent periods, was strong over the longer term; (2) that the
underperformance was attributable, to a significant extent, to investment
decisions by the Fund's Manager(s) that were reasonable and consistent with the
Fund's investment objective and policies; (3) that the Fund's performance was
competitive when compared to other relevant performance benchmarks or peer
groups; and (4) that the Fund's Manager(s) have taken or are taking steps
designed to help improve the Fund's investment performance. The Trustees also
noted that some Funds were recently formed and therefore performance comparisons
were unavailable or related to a time period that was too short for a comparison
to be meaningful. In addition, the Trustees noted that some of the Funds have
sub-advisers who have been managing the Fund for a limited period of time, and
that the long-term investment performance of those Funds to a substantial extent
is not attributable to the current sub-adviser's efforts. In such circumstances,
the Trustees paid particular attention to the Fund's investment performance
during the limited period for which the sub-adviser has managed the Fund. The
Trustees also considered each Manager's performance and reputation generally,
the Funds' performance as a fund family generally, and the historical
responsiveness of the Managers to Trustee concerns about performance and the
willingness of the Managers to take steps intended to improve performance. After
reviewing these and related factors and discussions with Fund management, the
Trustees concluded, within the context of their overall conclusions regarding
each of the Agreements, that the performance of the Funds and the Managers
supported the renewal of the Agreements.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
MANAGERS AND THEIR AFFILIATES FROM THEIR RESPECTIVE RELATIONSHIPS WITH THE
FUNDS. The Trustees considered and had discussions with Fund management
regarding the fees charged to the Funds for advisory and sub-advisory services
as well as the total expense levels of the Funds. This information included
comparisons of the Funds' advisory fees and total expense levels to those of
their peer groups and information about the advisory fees charged by the
Managers to other funds and accounts with similar investment programs, if any.
In considering the fees charged to such other funds or accounts, the Trustees
considered, among other things, the differences between managing mutual funds as
compared to other types of accounts, including the additional resources required
to manage mutual fund assets effectively. In evaluating each Fund's advisory
fees (and sub-advisory fees, if any), the Trustees also took into account the
demands, complexity and quality of the investment management of such Fund. The
Trustees also considered any compensation other than advisory fees received by
the Managers and their affiliates from the Funds. The Trustees reviewed
information provided by the Managers as to the profitability of the Managers'
and their affiliates' relationships with the Funds, and information about the
allocation of expenses used to calculate profitability. When reviewing
profitability, the Trustees also considered information about the performance of
the relevant Funds, the expense levels of the Funds, and whether the Managers
had implemented breakpoints in their investment advisory fees and/or expense
caps with respect to such Funds. The Trustees also considered the Adviser's
commitment to add a breakpoint on the administration fees for the Funds on
aggregate Trust net asset levels exceeding $10 billion. After reviewing these
and related factors and discussions with Fund management, the Trustees
concluded, within the context of their overall conclusions regarding each of the
Agreements, that the advisory fees charged to each of the Funds were fair and
reasonable, and that the costs of these services generally and the related
profitability of the Managers and their affiliates in respect of their
relationships with the Funds supported the renewal of the Agreements.
ECONOMIES OF SCALE. The Trustees considered the existence of any economies of
scale (i.e. decreasing per unit costs as a Fund increases in asset size) in the
provision of services by the Managers and whether those economies are shared
with the Funds through breakpoints in their investment advisory fees or other
means, such as expense waivers. The Trustees noted that at least one share class
in each of the Funds benefited from expense caps, and that some Funds had
multiple share classes that
- --------------------------------------------------------------------------------
122 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
benefited from expense caps. In considering these issues, the Trustees also took
note of the costs of the services provided (both on an absolute and a relative
basis) and the profitability to the Managers and their affiliates of their
relationships with the Funds, as discussed above. Finally, the Trustees noted
the Adviser's commitment to add a breakpoint on the administration fees for the
Funds on aggregate Trust net asset levels exceeding $10 billion. After reviewing
these and related factors and discussions with Fund management, the Trustees
considered, within the context of their overall conclusions regarding each of
the Agreements, that the extent to which any economies of scale are shared with
the Funds supported the renewal of the Agreements.
The Trustees also considered other factors, which included but were not limited
to the following:
o whether each Fund has operated in accordance with its investment
objective and the Fund's record of compliance with its investment
policies and restrictions, and the compliance programs of the Funds and
the Managers.
o the nature, quality, cost and extent of administrative, custody,
securities lending and shareholder services performed by the Adviser and
its affiliates, both under the applicable Agreement and under other
separate agreements with or with respect to HighMark.
o so-called "fallout benefits" to the Managers, such as the engagement of
affiliates of the Adviser to provide custody, securities lending,
administration and other services to the Funds, and the benefits of
investment research provided to the Managers by reason of brokerage
commissions generated by the Funds' securities transactions. The
Trustees considered the possible conflicts of interest associated with
these fallout and other benefits, and the reporting, disclosure and
other processes in place to disclose and monitor such possible conflicts
of interest.
Based on their evaluation of all factors that they deemed to be material,
including those factors described above, and assisted by the advice of
independent counsel, the Trustees concluded that the existing advisory and
sub-advisory agreements relating to the Funds should be continued with respect
to the Funds through July 31, 2006.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 123
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK FUND INFORMATION
HighMark Funds is committed to managing our mutual funds in the best interests
of our shareholders. The Board of Trustees of HighMark Funds has delegated the
authority to vote proxies on behalf of the Funds that own voting securities to
the Adviser. The Board has authorized the Adviser to delegate proxy voting
authority with respect to a Fund to that Fund's sub-adviser. A description of
the proxy voting guidelines and policies that the Funds use to determine how to
vote proxies relating to portfolio securities, is available, (i) without charge,
upon request by calling our investor services desk at 1-800-433-6884; (ii) on
the SEC's website at http://www.sec.gov; and (iii) on the HighMark Funds'
website at http://www.highmarkfunds.com. Information relating to how a Fund
voted proxies relating to portfolio securities during the most recent 12-month
period ended June 30 is available, (i) without charge, upon request by calling
our investor services desk at 1-800-433-6884; (ii) on the SEC's website at
http://www.sec.gov; and (iii) on the HighMark Funds' website at
http://www.highmarkfunds.com. The Trust files its complete schedule of portfolio
holdings with the Securities and Exchange Commission for the first and third
quarters of each fiscal year on Form N-Q within sixty days after the end of the
period. The Funds' Forms N-Q are available (i) without charge upon request by
calling our investors services desk at 1-800-433-6884; (ii) on the Commission's
web site at http://www.sec.gov; (iii) on the HighMark Funds' website at
http://www.highmarkfunds.com; and (iv) may be reviewed and copied at the
Commission's Public Reference Room in Washington, DC. Information on the
operation of the Public Reference Room may be obtained by calling
1-800-SEC-0330.
FIDUCIARY SHARES INFORMATION
FUND CUSIP TICKER FUND #
LARGE CAP GROWTH 431114818 HMGRX 492
VALUE MOMENTUM 431114677 HMVMX 871
LARGE CAP VALUE 431114206 HMIEX 490
CORE EQUITY 431112788 HMCFX 1627
BALANCED 431114792 HMBAX 491
SMALL CAP GROWTH 431112739 HSRFX 1204
SMALL CAP VALUE 431112101 HMSCX 148
CA INTERMEDIATE TAX-FREE BOND 431114644 HMITX 847
NATIONAL INTERMEDIATE TAX-FREE BOND 431112655 HMNTX 1600
BOND 431114305 HMBDX 489
SHORT TERM BOND 431112549 HMSFX 1506
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
RETAIL SHARES INFORMATION
LARGE CAP GROWTH
CLASS A SHARES 431114768 HMRGX 481
CLASS B SHARES 431114511 HMGBX 455
CLASS C SHARES 431112879 HGRCX 1755
VALUE MOMENTUM
CLASS A SHARES 431114628 HMVLX 870
CLASS B SHARES 431114529 HVMBX 456
CLASS C SHARES 431112812 HVMCX 1753
- --------------------------------------------------------------------------------
124 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
RETAIL SHARES INFORMATION (CONTINUED)
FUND CUSIP TICKER FUND #
LARGE CAP VALUE
CLASS A SHARES 431114784 HMERX 479
CLASS B SHARES 431114537 HIEBX 457
CLASS C SHARES 431112861 HIECX 1754
CORE EQUITY
CLASS A SHARES 431112770 HCEAX 1626
CLASS B SHARES 431112762 HCEBX 1628
CLASS C SHARES 431112754 HCECX 1632
BALANCED
CLASS A SHARES 431114776 HMBRX 480
CLASS B SHARES 431114545 HMBBX 452
CLASS C SHARES 431112887 HMBCX 1760
SMALL CAP GROWTH
CLASS A SHARES 431112713 HSRAX 1201
CLASS B SHARES 431112697 HSRBX 1202
CLASS C SHARES 431112689 HSRCX 1203
SMALL CAP VALUE
CLASS A SHARES 431112200 HASVX 41
CLASS B SHARES 431112309 HBSVX 123
CLASS C SHARES 431112820 HSVCX 1756
CA INTERMEDIATE TAX-FREE BOND
CLASS A SHARES 431114578 HMCIX 846
CLASS B SHARES 431112796 HCABX 1761
CLASS C SHARES 431112630 HCTCX 1491
NATIONAL INTERMEDIATE TAX-FREE BOND
CLASS A SHARES 431112663 HMNFX 1598
CLASS C SHARES 431112622 HNTCX 1490
BOND
CLASS A SHARES 431114743 HMRBX 478
CLASS B SHARES 431112747 HBDBX 1090
CLASS C SHARES 431112648 HBDCX 1492
SHORT TERM BOND
CLASS A SHARES 431112523 HMSAX 1505
CLASS C SHARES 431112515 HBTCX 1470
100% U.S. TREASURY MONEY MARKET
CLASS A SHARES 431114404 HMRXX 475
U.S. GOVERNMENT MONEY MARKET
CLASS A SHARES 431114602 HMUXX 474
CLASS B SHARES 431114495 HGBXX 450
DIVERSIFIED MONEY MARKET
CLASS A SHARES 431114800 HMVXX 473
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 125
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK FUND INFORMATION (CONCLUDED)
RETAIL SHARES INFORMATION (CONTINUED)
FUND CUSIP TICKER FUND #
CA TAX-FREE MONEY MARKET
CLASS A SHARES 431114859 HMAXX 476
CAPITAL GROWTH ALLOCATION FUND
CLASS A SHARES 431112564 HMAAX 1494
CLASS C SHARES 431112556 HBACX 1497
GROWTH & INCOME ALLOCATION FUND
CLASS A SHARES 431112580 HMRAX 1493
CLASS C SHARES 431112572 HBRCX 1496
INCOME PLUS ALLOCATION FUND
CLASS A SHARES 431112614 HMPAX 1495
CLASS C SHARES 431112598 HBPCX 1498
CLASS S SHARES INFORMATION
100% U.S. TREASURY MONEY MARKET
CLASS S SHARES 431112606 HUSXX 1730
U.S. GOVERNMENT MONEY MARKET
CLASS S SHARES 431112507 HGSXX 1729
DIVERSIFIED MONEY MARKET
CLASS S SHARES 431112408 HDSXX 1728
CA TAX-FREE MONEY MARKET
CLASS S SHARES 431112705 HCSXX 1727
- --------------------------------------------------------------------------------
126 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 127
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
SERVICE PROVIDERS & BOARD OF TRUSTEES
INVESTMENT ADVISER
HighMark Capital Management, Inc.
475 Sansome Street
San Francisco, CA 94111
SUB-ADVISERS
Large Cap Growth Fund:
Waddell & Reed Investment Management Company
6300 Lamar Avenue
Shawnee Mission, KS 66202
Large Cap Value Fund:
Aronson+Johnson+Ortiz, LP
230 South Broad Street, 20th Floor
Philadelphia, PA 19102
Small Cap Growth Fund:
Chartwell Investment Partners L.P.
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312
Small Cap Value Fund:
LSV Asset Management
One North Wacker Drive, Suite 4000
Chicago, IL 60606
CUSTODIAN
Union Bank of California, N.A.
475 Sansome Street
San Francisco, CA 94111
ADMINISTRATOR & DISTRIBUTOR
SEI Investments Global Funds Services
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL
Ropes & Gray LLP
One Embarcadero Center, Suite 2200
San Francisco, CA 94111
AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
TRANSFER AGENT
State Street Bank & Trust Co.
PO Box 8416
Boston, MA 02266
BOARD OF TRUSTEES
Joseph C. Jaeger, Chairman
Thomas L. Braje, Vice Chairman
David Benkert
David A. Goldfarb
Michael L. Noel
Robert M. Whitler
- --------------------------------------------------------------------------------
128 1.800.433.6884
- --------------------------------------------------------------------------------
--------------------------------------------------------
To learn more about HighMark, visit us at
www.highmarkfunds.com or call:
INVESTOR SERVICES DESK
1.800.433.6884
INVESTMENT PROFESSIONAL SUPPORT DESK
1.800.455.5609
THANK YOU
FOR YOUR INVESTMENT.
[HIGHMARK FUNDS LOGO OMITTED]
------------------------------
Mutual Funds:
o are not FDIC insured
o have no bank guarantee
o may lose value
------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
445 South Figueroa Street o Suite 306 o Los Angeles o California o 90071
WWW.HIGHMARKFUNDS.COM
HMK-AR-002-0300
84806 (07/05)
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principle executive officer, principle financial officer, controller or
principle accounting officer and any person who performs a similar function.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that the registrant has
at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial experts are David A. Goldfarb and Robert M.
Whitler and are independent as defined in Form N-CSR Item 3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Deloitte & Touche LLP billed the Trust aggregate fees for services rendered to
the Trust for the last two fiscal years as follows:
- ------------------ ----------------------------------------------------------------------- -----------------------------------
2005 2004
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
All fees and All fees and All other fees All fees and All fees and All other fees
services to the services to and services to services to the services to and services to
Trust that were service service Trust that were service service
pre-approved affiliates that affiliates that pre-approved affiliates that affiliates that
were did not require were did not require
pre-approved pre-approval pre-approved pre-approval
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(a) Audit $323,000 N/A N/A $231,200 N/A N/A
Fees(1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit- $20,750 N/A N/A $ 18,000 N/A N/A
Related
Fees(2)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax $ 0 N/A N/A $ 13,800 N/A N/A
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(d) All $ 0 N/A N/A $ 5,000 N/A N/A
Other
Fees
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
Notes:
(1) Audit fees include amounts related to the audit of the registrant's
annual financial statements and services normally provided by the
accountant in connection with statutory and regulatory filings.
(2) The above "Audit-Related Fees" were billed for three security count
verifications for the Funds as required under section (f) of Rule 17f-2
of the Investment Company Act of 1940 (the "Act").
(e)(1) To the extent required by applicable law, the Fund's audit committee
approves, in advance, the engagement, of all audit and non-audit
services rendered to the Fund by the Fund's independent public
accountants and all non-audit services rendered by the Fund's
independent public accountants to the investment adviser and to certain
of the investment adviser's affiliates; provided however that the audit
committee may implement policies and procedures pursuant to which such
services are pre-approved other than by the full audit committee,
subject to subsequent reporting of any such pre-approvals to the audit
committee (generally at the audit committee's next regular meeting).
(e)(2) Percentage of fees billed applicable to non-audit services pursuant to
waiver of pre-approval requirement were as follows:
----------------------- --------------- --------------
2005 2004
----------------------- --------------- --------------
Audit-Related Fees $ 0 $ 0
----------------------- --------------- --------------
Tax Fees $ 0 $ 0
----------------------- --------------- --------------
All Other Fees $ 0 $ 0
----------------------- --------------- --------------
(f) Hours expended as part of the financial statement audit were
substantially all by Deloitte & Touche LLP employees.
(g) The aggregate non-audit fees and services billed by Deloitte & Touche
LLP for the last two fiscal years were $20,750 and $36,800 for 2005 and 2004,
respectively.
(h) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS
Included as part of Item 1 above.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable. Effective for closed-end management investment companies for
fiscal years ending on or after December 31, 2005
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT COMPANY AND
AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, in cases where
those changes were implemented after the Funds last provided disclosure in
response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A or this
Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that has materially affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
ITEMS 12. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) A separate certification for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are filed
herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) HighMark Funds
By (Signature and Title)* /s/ James F. Volk
-----------------
James F. Volk, President
Date: October 6, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James F. Volk
-----------------
James F. Volk, President
Date: October 6, 2005
By (Signature and Title)* /s/ Jennifer E. Spratley
------------------------
Jennifer E. Spratley, Controller
and Chief Financial Officer
Date: October 6, 2005
* Print the name and title of each signing officer under his or her signature.