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, 2006
DATE OF REPORTING PERIOD: JULY 31, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
- --------------------------------------------------------------------------------
JULY 31, 2006
- --------------------------------------------------------------------------------
HIGHMARK
The smarter approach to investing.
ANNUAL
- ------------------
REPORT
[MOUNTAIN RANGE GRAPHIC OMITTED]
[HIGHMARK FUNDS LOGO OMITTED](R)
[HIGHMARK FUNDS LOGO OMITTED](R)
TABLE OF CONTENTS
management's discussion of fund performance
balanced fund ...................................................... 2
cognitive value fund ............................................... 4
core equity fund ................................................... 6
enhanced growth fund ............................................... 8
international opportunities fund ................................... 10
large cap growth fund .............................................. 12
large cap value fund ............................................... 14
small cap growth fund .............................................. 16
small cap value fund ............................................... 18
value momentum fund ................................................ 20
capital growth allocation fund ..................................... 22
growth & income allocation fund .................................... 24
income plus allocation fund ........................................ 26
bond fund .......................................................... 28
california intermediate tax-free bond fund ......................... 30
national intermediate tax-free bond fund ........................... 32
short term bond fund ............................................... 34
california tax-free money market fund .............................. 36
taxable money market funds ......................................... 37
disclosure of fund expenses .............................................. 38
schedules of investments ................................................. 41
statements of assets and liabilities ..................................... 102
statements of operations ................................................. 106
statements of changes in net assets ...................................... 110
financial highlights ..................................................... 116
notes to financial statements ............................................ 125
report of independent registered public accounting firm .................. 143
notice to shareholders ................................................... 144
trustees and officers .................................................... 145
shareholder voting results ............................................... 147
board approval of the existing advisory and
sub-advisory agreements .................................................. 148
fund information ......................................................... 153
This report and the financial statements contained herein are submitted for the
general information of HighMark 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](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
GENERAL ELECTRIC 3.3%
EXXON MOBIL 2.6
CITIGROUP 2.1
SUNCOR ENERGY 2.1
U.S. TREASURY INFLATION
INDEX NOTE
3.000%, 07/15/12 1.9
JPMORGAN CHASE 1.8
MICROSOFT 1.8
BANK OF AMERICA 1.7
CVS 1.6
PROCTER & GAMBLE 1.5
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 17.8%
U.S. GOVERNMENT AGENCY
OBLIGATIONS 11.8
INFORMATION TECHNOLOGY 10.4
INDUSTRIALS 9.9
HEALTH CARE 9.7
ENERGY 8.5
CONSUMER DISCRETIONARY 8.1
CONSUMER STAPLES 7.1
U.S. TREASURY OBLIGATIONS 4.1
UTILITIES 3.3
REPURCHASE AGREEMENTS 2.3
MATERIALS 1.9
TELECOMMUNICATIONS 1.7
ASSET-BACKED SECURITIES 1.5
FOREIGN GOVERNMENTS 1.0
REAL ESTATE INVESTMENT TRUST 0.9
* 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, 2006, the HighMark Balanced Fund (the "Fund")
produced a total return of 3.77% (Fiduciary Shares). In comparison, the
unmanaged S&P 500 Composite Index returned 5.38% and the Lehman Brothers
U.S. Aggregate Bond Index returned 1.45% for the same period, yielding an
equivalent 60/40 benchmark return of 3.85%.
FACTORS AFFECTING PERFORMANCE
Volatility in the U.S. economy increased as geopolitical concerns collided
with heightened uncertainty about inflation and interest rate hikes.
Despite these concerns, the underlying economic/statistical environment
remained strong. A combination of steady economic growth, accelerating
international economies and collaboration among disinflationary forces
yielded robust profit margins and high productivity.
In order to address inflation fears, the Federal Reserve effectively
executed an increase to equilibrium, raising the Federal Funds rate to
5.25%. A strong cycle of corporate earnings and cash flow helped boost
capital investment. Demand for consumer goods and continued urbanization
within developing economies fueled a secular boost to global growth.
For the year, the Fund's performance was equivalent to its blended
benchmark, with positive performance contribution from the equity portion
and the fixed income sub-portfolios, as well as its tactical asset
allocation exposure, fully offsetting management fees and other fund
expenses. The portfolio remained overweight in stocks and underweight in
bonds relative to its 60% equity and 40% bond benchmark. This asset
allocation decision also proved to be slightly positive due to its equity
overweight.
Within the equity portfolio, sector selection was slightly positive due to
security selection. Financial sector holdings performed particularly well,
lead by Goldman Sachs Group, Merrill Lynch and JPMorgan Chase. The energy
sector also performed well, specifically holdings in Exxon Mobil and
Suncor Energy. Basic material stocks Englehard (acquired by BASF), which
has since been sold, and BHP Billiton rounded out the top contributors.
Performance detractors included Dell, Intel, Tyco International, Harrah's
Entertainment and Target.
Interest rates continued to rise while corporate bonds underperformed
Treasuries by a slim margin. The Fund benefited not only from being
overweight to the current higher yields in corporate, mortgage and
asset-backed securities when compared with its benchmark, but also by
taking on less interest rate risk. While the portfolio's shorter duration
helped as bond yields rose, the corporate sector detracted from
performance as the yield spread between corporate bonds and Treasuries
widened slightly.
- --------------------------------------------------------------------------------
2 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, AN UNMANAGED BLENDED INDEX OF 60% S&P 500 COMPOSITE INDEX
AND 40% THE LEHMAN BROTHERS U.S. AGGREGATE BOND INDEX AND THE MORNINGSTAR
MODERATE ALLOCATION CATEGORY.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark Lehman Morningstar
Balanced Fund, HighMark HighMark HighMark 60/40 Hybrid of S&P 500 Brothers U.S. Moderate
Fiduciary Balanced Fund, Balanced Fund, Balanced Fund, the following Composite Aggregate Bond Allocation
Shares Class A Shares Class B Shares+ Class C Shares+ two Indexes: Index Index Category
7/31/96 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
7/97 13,047 12,293 13,047 13,047 13,428 15,214 11,078 12,928
7/98 14,001 13,168 13,959 14,001 15,417 18,149 11,949 14,192
7/99 15,395 14,437 15,203 15,395 17,495 21,815 12,245 15,600
7/00 15,746 14,730 15,405 15,654 18,900 23,772 12,975 16,641
7/01 14,825 13,824 14,374 14,602 18,155 20,365 14,621 16,496
7/02 12,714 11,824 12,215 12,412 15,995 15,553 15,724 14,508
7/03 13,642 12,669 12,996 13,205 17,453 17,209 16,574 15,702
7/04 14,735 13,640 13,908 14,128 19,181 19,476 17,377 17,123
7/05 16,108 14,877 15,064 15,292 21,170 22,212 18,211 19,197
7/06 16,715 15,401 15,501 15,738 21,985 23,407 18,475 20,143
- --------------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- --------------------------------------------------------------------------------------------------------------
Fiduciary Shares 3.77% 7.00% 2.43% 5.27% 7.41%
- --------------------------------------------------------------------------------------------------------------
Class A Shares 3.52% 6.73% 2.18% 5.01% 7.22%+
- --------------------------------------------------------------------------------------------------------------
Class A Shares with load* -2.15% 4.74% 1.03% 4.41% 6.83%+
- --------------------------------------------------------------------------------------------------------------
Class B Shares 2.90% 6.05% 1.52% 4.48%+ 6.89%+
- --------------------------------------------------------------------------------------------------------------
Class B Shares with load** -2.10% 5.16% 1.14% 4.48%+ 6.89%+
- --------------------------------------------------------------------------------------------------------------
Class C Shares 2.92% 6.03% 1.51% 4.64%+ 6.99%+
- --------------------------------------------------------------------------------------------------------------
Class C Shares with load*** 1.92% 6.03% 1.51% 4.64%+ 6.99%+
- --------------------------------------------------------------------------------------------------------------
+ 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 3
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
ISHARES RUSSELL 2000
VALUE INDEX FUND 1.9%
ISHARES S&P SMALLCAP 600
VALUE INDEX FUND 1.9
ST. MARY LAND & EXPLORATION 1.3
VERITAS DGC 1.1
SHURGARD STORAGE CENTERS,
CL A REIT 1.1
DELPHI FINANCIAL GROUP, CL A 1.0
VALMONT INDUSTRIES 1.0
ODYSSEY RE HOLDINGS 1.0
CASH AMERICA INTERNATIONAL 0.9
ZENITH NATIONAL INSURANCE 0.9
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 20.1%
INDUSTRIALS 17.7
CONSUMER DISCRETIONARY 14.7
INFORMATION TECHNOLOGY 12.8
MATERIALS 7.0
ENERGY 6.3
HEALTH CARE 6.0
CONSUMER STAPLES 4.3
UTILITIES 4.1
REGULATED INVESTMENT COMPANY 3.9
REPURCHASE AGREEMENT 2.3
TELECOMMUNICATIONS 0.8
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
** EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
COGNITIVE VALUE
FUND
PERFORMANCE
For the ten month period from the predecessor fund's last fiscal year
through July 31, 2006, the HighMark Cognitive Value Fund (the "Fund")
produced a total return of 10.13% (Class M Shares). The Fund's one year
return ended July 31, 2006, was 8.06% (Class M Shares). In comparison, the
unmanaged S&P SmallCap 600/Citigroup Value Index returned 6.92% for the
same period.
FACTORS AFFECTING PERFORMANCE
The Fund outperformed its benchmark, the unmanaged S&P SmallCap 600/
Citigroup Value Index, by 1.14% for the period. As an investment style,
small cap value stocks continued their recent history of strong
performance. The investment environment generally favored value stocks, as
global unrest, commodity price pressures, and mixed economic and interest
rate signals prevented investor complacency. Of the four style quadrants
(small growth, small value, large growth, large value), small cap value
returns beat both large and small growth for the period, and were bested
only by large cap value.
The primary drivers of Fund performance were strong stock selection and
value added from both quantitative and qualitative behavioral factors.
Investor overreaction in the cases of Hurricanes Katrina and Rita,
combined with investor under-reaction to positive corporate news helped to
boost Fund performance for the period.
Improvements to the Fund's quantitative stock ranking model also
contributed to good absolute and relative performance. Better financial
statement analysis, more sophisticated trading environment categorization
and increased competitive intelligence gathering all combined to make the
stock ranking model more robust.
The Fund attempted to add active management value entirely through stock
selection within industry sectors. Therefore, its goal was to remain
sector neutral versus its competitors and the benchmark. When the
competitors' sector weights deviated substantially from the benchmark's,
the Fund was aligned with the competitors and away from the benchmark.
This alignment was of benefit to the Fund versus its benchmark in the
second half of the period due to sector overweightings in energy and
underweightings in technology.
The Fund's current benchmark, the S&P SmallCap 600/Citigroup Value Index,
replaced the S&P SmallCap/600 Barra Value Index on December 16, 2005. The
Fund also monitored competitors' sector weights and attempted to remain
sector neutral versus those competitors.
- --------------------------------------------------------------------------------
4 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK COGNITIVE VALUE FUND
INVESTMENT OBJECTIVE
THE HIGHMARK COGNITIVE VALUE FUND SEEKS LONG-TERM CAPITAL APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
TOM MUDGE
BAILARD, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
COGNITIVE VALUE FUND VERSUS THE S&P SMALLCAP 600/CITIGROUP VALUE INDEX AND THE
MORNINGSTAR SMALL VALUE CATEGORY.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark
Cognitive Value Cognitive Value Cognitive Value Cognitive Value S&P SmallCap Morningstar
Fund, Class M Fund, Fiduciary Fund, Class A Fund, Class C 600/Citigroup Small Value
Shares Shares Shares+ Shares+ Value Index Category
5/31/01 $10,000 $10,000 $ 9,450 $10,000 $10,000 $10,000
7/01 10,120 10,116 9,556 10,103 10,335 10,125
7/02 9,576 9,550 8,998 9,466 9,420 8,879
7/03 10,465 10,411 9,785 10,244 10,870 10,078
7/04 12,420 12,328 11,559 12,039 13,191 10,984
7/05 15,394 15,244 14,256 14,774 16,600 12,245
7/06 16,635 16,458 15,356 15,811 17,749 12,701
- ---------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN(1) RETURN RETURN INCEPTION
- ---------------------------------------------------------------------------------------------
Fiduciary Shares 7.98%+ 16.47%+ 10.23%+ 10.00%+
- ---------------------------------------------------------------------------------------------
Class A Shares 7.67%+ 16.18%+ 9.95%+ 9.73%+
- ---------------------------------------------------------------------------------------------
Class A Shares with load* 1.74%+ 14.02%+ 8.71%+ 8.53%+
- ---------------------------------------------------------------------------------------------
Class C Shares 7.04%+ 15.56%+ 9.38%+ 9.14%+
- ---------------------------------------------------------------------------------------------
Class C Shares with load** 6.10%+ 15.56%+ 9.38%+ 9.14%+
- ---------------------------------------------------------------------------------------------
Class M Shares 8.06% 16.71% 10.45% 10.24%
- ---------------------------------------------------------------------------------------------
+ The performance presented links the performance of Class M Shares from May
30, 2001 with the performance of Class A and Class C Shares on April 3,
2006 and Fiduciary Shares on July 3, 2006. Class M Share performance has
been adjusted for the maximum sales charge/CDSC applicable to Class A 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 a sales charge 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.
(1) On April 3, 2006, HighMark Funds acquired the assets and assumed the
identified liabilities of Bailard Cognitive Value Fund (see Note 9 in
notes to financial statements). The fiscal year end of Bailard Cognitive
Value Fund, the predecessor fund to HighMark Cognitive Value Fund, was
September 30. The fiscal year end of the successor HighMark Fund is July
31. Fiduciary Shares commenced operations on July 3, 2006. Class A and
Class C Shares commenced operations on April 3, 2006. Fiduciary, Class A
and Class C returns, from commencement of operations through July 31,
2006, can be found in the financial highlights section of this report. The
return for Class M Shares, from September 30, 2005 through July 31, 2006,
can be found in the financial highlights section of this report.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 5
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
PFIZER 4.1%
CITIGROUP 3.4
NORTHROP GRUMMAN 3.2
NATIONAL CITY 3.1
GOLDMAN SACHS GROUP 3.0
GENERAL ELECTRIC 3.0
EXXON MOBIL 2.8
HESS 2.7
BANK OF AMERICA 2.5
NOKIA ADR 2.3
FUND SECTORS
SECTOR % OF
PORTFOLIO*
FINANCIALS 20.6%
INFORMATION TECHNOLOGY 15.3
HEALTH CARE 13.2
INDUSTRIALS 12.9
ENERGY 9.5
CONSUMER STAPLES 9.5
CONSUMER DISCRETIONARY 9.4
MATERIALS 3.6
UTILITIES 3.1
TELECOMMUNICATIONS 2.7
REPURCHASE AGREEMENT 0.2
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
CORE EQUITY FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Core Equity Fund (the
"Fund") produced a total return of 9.53% (Fiduciary Shares). In
comparison, the unmanaged S&P 500 Composite Index returned 5.38% for the
same period.
FACTORS AFFECTING PERFORMANCE
Volatility in capital markets increased as geopolitical concerns collided
with heightened uncertainty about inflation and interest rate hikes.
Despite these concerns, the underlying economic environment remained
stable and strong. With near full employment and rising incomes, consumers
remained resilient while industrial activity accelerated. A combination of
steady economic growth, accelerating international economies and
collaborative secular disinflationary forces yielded robust profit margins
and high productivity.
As economic activity grew, the Federal Reserve effectively executed an
increase to equilibrium, raising the Federal Funds rate to 5.25%. Rising
corporate earnings and increasing cash flow helped boost capital
investment spending and share buyback programs. Demand for consumer goods
and continued urbanization within developing economies fueled a secular
boost to global growth. Energy, telecommunication and utility sectors all
performed well, while the consumer discretionary and information
technology sectors lagged over the past 12 months.
For the year ended July 31, 2006, the Fund outperformed its benchmark, the
S&P 500 Composite Index, by 4.15%. Fund performance was driven primarily
by security selection. The financial sector contributed positively to Fund
performance, specifically with holdings in Goldman Sachs Group and
JPMorgan Chase. Other top performers included Englehard (acquired by
chemical giant BASF), which has since been sold, aerospace/defense
conglomerate Northrop Grumman, and Ryder System, which particularly
benefited from strong growth in logistics and supply chain management.
King Pharmaceuticals and Manpower rounded out the Fund's top holdings.
Investor concerns about a weak housing market spilled over into home
improvement spending, so that Home Depot topped the list of the largest
contributors to negative performance. Other poor performers included
Intel, STMicroelectronics and Brunswick.
- --------------------------------------------------------------------------------
6 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
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 8,030 8,298 9,425 9,570
7/06 9,213 8,567 8,723 9,003 9,932 10,045
- -----------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------------------
Fiduciary Shares 9.53% 10.26% 2.08% -1.32%
- -----------------------------------------------------------------------------------------------
Class A Shares 9.15% 9.98% 1.82% -1.58%+
- -----------------------------------------------------------------------------------------------
Class A Shares with load* 3.16% 7.93% 0.67% -2.47%+
- -----------------------------------------------------------------------------------------------
Class B Shares 8.63% 9.27% 1.17% -2.19%+
- -----------------------------------------------------------------------------------------------
Class B Shares with load** 3.63% 8.43% 0.78% -2.19%+
- -----------------------------------------------------------------------------------------------
Class C Shares 8.50% 9.42%+ 1.61%+ -1.69%+
- -----------------------------------------------------------------------------------------------
Class C Shares with load*** 7.50% 9.42%+ 1.61%+ -1.69%+
- -----------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
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 7
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
GOOGLE, CL A 3.8%
MICROSOFT 3.5
CISCO SYSTEMS 2.8
QUALCOMM 2.7
APPLE COMPUTER 2.6
ORACLE 2.3
YAHOO! 2.1
NOKIA ADR 1.9
INTEL 1.8
EMC 1.7
FUND SECTORS
SECTOR % OF
PORTFOLIO*
INFORMATION TECHNOLOGY 81.6%
HEALTH CARE 13.3
CONSUMER DISCRETIONARY 3.0
REPURCHASE AGREEMENT 1.1
TELECOMMUNICATIONS 0.6
INDUSTRIALS 0.4
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
ENHANCED GROWTH FUND
PERFORMANCE
For the ten month period from the predecessor fund's last fiscal year
through July 31, 2006, the HighMark Enhanced Growth Fund (the "Fund")
produced a total return of -8.09% (Class M Shares). The Fund's one year
return ended July 31, 2006, was -8.40% (Class M Shares). In comparison,
the unmanaged NASDAQ 100 Index returned -5.55% for the same period.
FACTORS AFFECTING PERFORMANCE
After beginning strongly and maintaining positive momentum for the
majority of the period, the Fund slipped into negative territory as the
period drew to a close.
An analysis of performance over this period highlights some of the reasons
for the Fund's underperformance relative to its benchmark. The Fund
maintained a slight overweight to the information technology sector over
much of this time period. Due to technology stocks' poor performance, this
overweight detracted from the Fund's performance. This poor performance
was accentuated in the last four months of the period, when the Fund's
exposure to this sector was increased. This sector's weak performance led
to much of the underperformance relative to the NASDAQ 100 Index over this
period.
In terms of industry allocation, a specific overweight that hurt the
Fund's relative performance was the poor performance of the semi-conductor
sector. However, this poor performance was somewhat offset within the Fund
by strong stock selection. The Fund benefited from its exposure to the
health care sector, which performed well during this time period. Health
care stocks outperformed the NASDAQ 100 Index over this same period, and
the Fund's stock selection in this sector also contributed to the bottom
line.
- --------------------------------------------------------------------------------
8 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK ENHANCED GROWTH FUND
INVESTMENT OBJECTIVE
THE HIGHMARK ENHANCED GROWTH FUND SEEKS LONG-TERM CAPITAL APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
SONYA THADHANI
BAILARD, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
ENHANCED GROWTH FUND VERSUS THE NASDAQ 100 INDEX AND THE MORNINGSTAR SPECIALTY -
TECHNOLOGY CATEGORY.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark Morningstar
Enhanced Enhanced Enhanced Specialty -
Growth Fund, Growth Fund, Growth Fund, NASDAQ Technology
Class M Shares Class A Shares+ Class C Shares+ 100 Index Category
5/31/01 $10,000 $9,450 $10,000 $10,000 $10,000
7/01 9,320 8,799 9,303 9,355 9,227
7/02 5,490 5,158 5,426 5,350 6,459
7/03 7,180 6,711 7,025 7,112 7,331
7/04 7,840 7,292 7,595 7,818 7,990
7/05 8,886 8,223 8,522 8,994 8,908
7/06 8,139 7,488 7,745 8,495 8,664
- ------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN(1) RETURN RETURN INCEPTION
- ------------------------------------------------------------------------------------------------------
Class A Shares -8.94%+ 3.70%+ -3.17%+ -4.41%+
- ------------------------------------------------------------------------------------------------------
Class A Shares with load* -13.90%+ 1.78%+ -4.27%+ -5.45%+
- ------------------------------------------------------------------------------------------------------
Class C Shares -9.13%+ 3.32%+ -3.61%+ -4.83%+
- ------------------------------------------------------------------------------------------------------
Class C Shares with load** -10.04%+ 3.32%+ -3.61%+ -4.83%+
- ------------------------------------------------------------------------------------------------------
Class M Shares -8.40% 4.27% -2.67% -3.90%
- ------------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Class M Shares from May
30, 2001 with the performance of Class A and Class C Shares on April 3,
2006. Class M Share performance has been adjusted for the maximum sales
charge/CDSC applicable to Class A 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 a sales charge 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.
(1) On April 3, 2006, HighMark Funds acquired the assets and assumed the
identified liabilities of Bailard Enhanced Growth Fund (see Note 9 in
notes to financial statements). The fiscal year end of Bailard Enhanced
Growth Fund, the predecessor fund to HighMark Enhanced Growth Fund, was
September 30. The fiscal year end of the successor HighMark Fund is July
31. Class A and Class C Shares commenced operations on April 3, 2006.
Class A and Class C returns, from commencement of operations through July
31, 2006, can be found in the financial highlights section of this report.
The return for Class M Shares, from September 30, 2005 through July 31,
2006, can be found in the financial highlights section of this report.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 9
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
NOVARTIS 1.4%
NESTLE 1.3
ROYAL DUTCH SHELL, CL A 1.2
UBS 1.2
ROCHE HOLDING 1.2
ING GROEP 1.1
HSBC HOLDINGS 1.1
BP 1.0
TOTAL 1.0
NORSK HYDRO 0.9
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 29.1%
CONSUMER DISCRETIONARY 12.2
INDUSTRIALS 10.4
ENERGY 9.2
MATERIALS 8.3
HEALTH CARE 6.6
CONSUMER STAPLES 5.5
INFORMATION TECHNOLOGY 5.3
TELECOMMUNICATIONS 4.5
UTILITIES 4.3
REGULATED INVESTMENT COMPANY 2.9
REPURCHASE AGREEMENT 1.7
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
** EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
INTERNATIONAL
OPPORTUNITIES FUND
PERFORMANCE
For the ten month period from the predecessor fund's last fiscal year
through July 31, 2006, the HighMark International Opportunities Fund (the
"Fund") produced a total return of 17.96% (Class M Shares). The Fund's one
year return ended July 31, 2006, was 27.97% (Class M Shares). In
comparison, the unmanaged MSCI All-Country World ex-US Index (Gross)
returned 25.10% for the same period.
FACTORS AFFECTING PERFORMANCE
Improving economic indicators and corporate restructuring efforts drove
developed international markets to positive gains for most of the period.
Emerging markets, fed by increasing demand and rising prices for oil and
other commodities, soared higher still, surpassing U.S. stock returns in
the first three quarters.
However, mid-May saw a change in the international macro-economic
environment on the heels of comments made by the new Federal Reserve
Chairman, Ben Bernanke. As a result, an overseas sell-off occurred that
flowed back to the U.S. Despite this brief setback, the Fund did not see
global volatility reach a threshold where a dramatic readjustment of the
portfolio was needed.
The Fund outperformed the MSCI All-Country World ex-US Index, by 2.87%.
Fund performance was driven mainly by gains for most of the period in
Japan and the emerging markets of Europe and Latin America. Toward the end
of the period, foreign currencies, especially in the emerging area, were
bolstered as central bankers raised short-term interest rates.
A slight detractor of Fund performance was the Fund's overweight in the
Japanese market and its underweight in the United Kingdom. The United
Kingdom outperformed the Japanese market, so the allocation had an adverse
effect on overall returns.
- --------------------------------------------------------------------------------
10 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK INTERNATIONAL OPPORTUNITIES
FUND INVESTMENT OBJECTIVE
THE HIGHMARK INTERNATIONAL OPPORTUNITIES FUND SEEKS LONG-TERM CAPITAL
APPRECIATION.
[PHOTO OMITTED]
TEAM LEADER
PETER HILL
BAILARD, INC.
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE HIGHMARK
INTERNATIONAL OPPORTUNITIES FUND VERSUS THE MSCI ALL-COUNTRY WORLD EX-US INDEX
AND THE MORNINGSTAR FOREIGN LARGE BLEND CATEGORY.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark MSCI Morningstar
International International International International All-Country Foreign
Opportunities Fund, Opportunities Fund, Opportunities Fund, Opportunities Fund, World ex-US Large Blend
Class M Shares Fiduciary Shares Class A Shares+ Class C Shares+ Index Category
7/31/96 $10,000 $10,000 $ 9,450 $10,000 $10,000 $10,000
7/97 12,618 12,597 11,873 12,503 12,047 11,972
7/98 14,079 14,031 13,193 13,825 11,993 11,828
7/99 14,349 14,276 13,390 13,960 13,308 13,037
7/00 15,793 15,684 14,675 15,222 14,712 14,315
7/01 11,963 11,858 11,071 11,426 11,359 10,945
7/02 10,215 10,108 9,413 9,666 9,600 9,168
7/03 11,297 11,159 10,365 10,590 10,418 9,880
7/04 14,006 13,811 12,796 13,010 13,007 12,261
7/05 17,752 17,472 16,150 16,337 16,179 15,160
7/06 22,717 22,359 20,607 20,705 20,161 18,672
- -----------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN(1) RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------------------------------
Fiduciary Shares 27.94%+ 26.08%+ 13.52%+ 8.38%+ 8.58%+
- -----------------------------------------------------------------------------------------------------------
Class A Shares 27.60%+ 25.75%+ 13.21%+ 8.10%+ 8.31%+
- -----------------------------------------------------------------------------------------------------------
Class A Shares with load* 20.51%+ 23.44%+ 11.96%+ 7.48%+ 8.08%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares 26.79%+ 25.06%+ 12.63%+ 7.54%+ 7.76%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares with load** 25.79%+ 25.06%+ 12.63%+ 7.54%+ 7.76%+
- -----------------------------------------------------------------------------------------------------------
Class M Shares 27.97% 26.22% 13.68% 8.55% 8.76%
- -----------------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Class M Shares from
September 4, 1979 with the performance of Class A and Class C Shares on
April 3, 2006 and Fiduciary Shares on April 4, 2006. Class M Share
performance has been adjusted for the maximum sales charge/CDSC applicable
to Class A 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 a sales charge 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.
(1) On April 3, 2006, HighMark Funds acquired the assets and assumed the
identified liabilities of Bailard International Equity Fund (see Note 9 in
notes to financial statements). The fiscal year end of Bailard
International Equity Fund, the predecessor fund to HighMark International
Opportunities Fund, was September 30. The fiscal year end of the successor
HighMark Fund is July 31. Fiduciary Shares commenced operations on April
4, 2006. Class A and Class C Shares commenced operations on April 3, 2006.
Fiduciary, Class A and Class C returns, from commencement of operations
through July 31, 2006, can be found in the financial highlights section of
this report. The return for Class M Shares, from September 30, 2005
through July 31, 2006, can be found in the financial highlights section of
this report.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 11
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
SCHLUMBERGER 4.5%
SLM 4.4
SMITH INTERNATIONAL 4.2
GOOGLE, CL A 4.2
WALGREEN 3.9
GENERAL ELECTRIC 3.7
MONSANTO 3.7
COLGATE-PALMOLIVE 3.6
PEPSICO 3.6
GENENTECH 3.5
FUND SECTORS
SECTOR % OF
PORTFOLIO**
INFORMATION TECHNOLOGY 22.8%
INDUSTRIALS 16.1
HEALTH CARE 14.9
CONSUMER STAPLES 13.1
FINANCIALS 12.8
ENERGY 8.7
REPURCHASE AGREEMENT 4.7
MATERIALS 3.7
CONSUMER DISCRETIONARY 3.2
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
** EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
LARGE CAP
GROWTH FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Large Cap Growth Fund (the
"Fund") produced a total return of 2.07% (Fiduciary Shares). In
comparison, the unmanaged S&P 500/Citigroup Growth Index returned -0.61%
for the same period.
FACTORS AFFECTING PERFORMANCE
The market faced significant headwinds over the past year in the form of
high energy prices, rising interest rates and a slowdown in the housing
sector. Against this backdrop, increased capital spending in the energized
industrial sector was an important driver of GDP growth, partially
offsetting weakness in the consumer sector.
For the year, the Fund outpaced its benchmark, the S&P 500/Citigroup
Growth Index by 2.68%. Strong stock selection is believed to be the
primary driver of Fund performance during the period. Holdings in the
energy, financial services and technology sectors were particularly
rewarding. Within energy, the Fund benefited from its holdings in
Schlumberger, the world's largest oil services company. As sector earnings
and cash flows increased, Schlumberger was well positioned for a renewed
drive in oil exploration. The technology sector also performed well, with
strong performance from holdings in Apple Computer and Google. Financial
services performed well relative to its benchmark, and the Fund benefited
from overweighting in that sector. Finally, the Fund benefited from its
underweighting in the weak performing consumer discretionary sector, and
from the strong stock price performance from its position in Las Vegas
Sands.
One disappointment over the year occurred in the health care sector.
Overall, health care was up slightly when compared with its benchmark, but
was underweighted within the Fund. Additionally, Alcon and Genentech,
among the Fund's top performers in the previous year, did not perform to
expectations.
While these were slight detractors from the overall results, the Fund's
performance was relatively strong for the fiscal year.
- --------------------------------------------------------------------------------
12 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 RUSSELL 1000 GROWTH INDEX, THE S&P 500/ CITIGROUP
GROWTH INDEX AND THE MORNINGSTAR LARGE GROWTH CATEGORY.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark
Large Cap Large Cap Large Cap Large Cap S&P 500/
Growth Fund, Growth Fund, Growth Fund, Growth Fund, Russell Citigroup Morningstar
Fiduciary Class A Class B Class C 1000 Growth Growth Large Growth
Shares Shares Shares+ Shares+ Index Index++ Category
7/31/96 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000 $10,000
7/97 14,854 14,032 14,854 14,854 15,185 15,788 14,481
7/98 18,210 17,156 18,131 18,210 18,210 19,362 17,125
7/99 21,349 20,059 21,079 21,349 22,588 24,344 21,328
7/00 23,725 22,239 23,225 23,597 28,094 29,924 27,112
7/01 12,880 12,047 12,488 12,702 18,244 21,357 19,119
7/02 9,690 9,053 9,321 9,469 12,999 14,918 13,674
7/03 10,766 10,005 10,247 10,426 14,512 16,741 15,215
7/04 11,138 10,341 10,516 10,699 15,747 18,289 16,257
7/05 12,826 11,878 11,995 12,201 17,802 20,078 18,672
7/06 13,092 12,093 12,144 12,353 17,667 19,955 18,606
- -----------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------------------------------
Fiduciary Shares 2.07% 6.73% 0.33% 2.73% 4.80%
- -----------------------------------------------------------------------------------------------------------
Class A Shares 1.81% 6.52% 0.07% 2.50% 4.62%+
- -----------------------------------------------------------------------------------------------------------
Class A Shares with load* -3.75% 4.51% -1.05% 1.92% 4.16%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares 1.25% 5.83% -0.56% 1.96%+ 4.18%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares with load** -3.75% 4.92% -0.96% 1.96%+ 4.18%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares 1.24% 5.82% -0.56% 2.14%+ 4.32%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares with load*** 0.24% 5.82% -0.56% 2.14%+ 4.32%+
- -----------------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
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.
++ The S&P 500/Citigroup Growth Index is replacing the S&P 500/BARRA Growth
Index as the Fund's benchmark due to the announcement of Standard & Poor's
to discontinue the S&P 500/BARRA Growth Index.
* 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](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
EXXON MOBIL 6.7%
CITIGROUP 4.5
PFIZER 3.7
JPMORGAN CHASE 3.5
WELLS FARGO 2.6
VERIZON COMMUNICATIONS 2.4
MORGAN STANLEY 2.0
MERRILL LYNCH 1.9
CONOCOPHILLIPS 1.9
WACHOVIA 1.8
FUND SECTORS
SECTOR % OF
PORTFOLIO*
FINANCIALS 35.8%
ENERGY 15.3
CONSUMER DISCRETIONARY 7.7
HEALTH CARE 7.5
CONSUMER STAPLES 7.3
UTILITIES 6.0
TELECOMMUNICATIONS 5.1
INDUSTRIALS 5.0
MATERIALS 5.0
INFORMATION TECHNOLOGY 4.3
REPURCHASE AGREEMENT 1.0
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
LARGE CAP VALUE
FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Large Cap Value Fund (the
"Fund") produced a total return of 10.82% (Fiduciary Shares). In
comparison, the unmanaged Russell 1000 Value Index returned 11.59% for the
same period.
FACTORS AFFECTING PERFORMANCE
During the past fiscal year, value-style investing was the place to be in
the U.S. equity market -- and the larger the market cap the better. More
recently, the market experienced higher volatility, and several benchmarks
that were performing well through April fell into negative territory
before rising again. These movements created an environment that proved
somewhat challenging for the Fund.
The Fund's investment approach assured that performance was driven by
bottom-up stock selection and the measures used to pick stocks.
Specifically, a focus on stocks exhibiting better value than those in the
benchmark, along with a tilt toward companies with forward momentum,
boosted the Fund's relative return over the past 12 months, although not
enough to push it ahead of the benchmark. Over this period, the
examination of company management had little impact on performance, and a
bias away from the largest-capitalization names was costly in the current
bigger-is-better environment. Although the Fund is sector-neutral, it
followed bottom-up stock valuation to overweight the more attractive
industries or underweight the less attractive industries within each
sector. Although the decision to overweight construction-related names in
the capital goods sector proved a drag on relative return, the decision to
underweight media companies in the consumer discretionary sector had a
positive impact on performance. Diversification and risk controls served
to ensure that one security alone would not drive performance. Instead,
the Fund looked to outperform with incremental gains across the 100-plus
names held. That said, the top three individual contributors were steel
manufacturer Nucor, the tobacco holding company Reynolds American and
IPSC, another steel industry name. The three biggest detractors were
JPMorgan Chase, Merck, which has since been sold, and AT&T -- all
companies the Fund chose to avoid holding or underweight relative to the
benchmark.
- --------------------------------------------------------------------------------
14 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark
Large Cap Large Cap Large Cap Large Cap Morningstar
Value Fund, Value Fund, Value Fund, Value Fund, Russell 1000 Large Value
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Value Index Category
7/31/96 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/97 14,013 13,227 14,013 14,013 14,883 14,352
7/98 15,525 14,616 15,458 15,525 17,519 15,744
7/99 17,734 16,653 17,506 17,734 20,145 17,681
7/00 16,019 15,011 15,668 15,938 19,138 17,134
7/01 15,555 14,528 15,066 15,323 20,810 18,877
7/02 11,773 10,961 11,304 11,497 17,223 15,294
7/03 12,628 11,742 12,029 12,228 19,074 16,593
7/04 15,194 14,088 14,338 14,575 22,446 19,130
7/05 18,438 17,063 17,237 17,536 26,718 22,152
7/06 20,433 18,858 18,928 19,265 29,814 23,971
- -----------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------------------------------
Fiduciary Shares 10.82% 17.40% 5.61% 7.41% 11.31%
- -----------------------------------------------------------------------------------------------------------
Class A Shares 10.52% 17.11% 5.36% 7.15% 11.20%+
- -----------------------------------------------------------------------------------------------------------
Class A Shares with load* 4.43% 14.92% 4.18% 6.55% 10.93%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares 9.81% 16.31% 4.67% 6.59%+ 10.93%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares with load** 4.81% 15.57% 4.33% 6.59%+ 10.93%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares 9.86% 16.36% 4.69% 6.78%+ 11.02%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares with load*** 8.86% 16.36% 4.69% 6.78%+ 11.02%+
- -----------------------------------------------------------------------------------------------------------
+ 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-endsales 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](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
HOLOGIC 1.1%
GENLYTE GROUP 0.9
GENERAL CABLE 0.9
INVENTIV HEALTH 0.9
TRIMBLE NAVIGATION 0.9
CORRECTIONS CORP OF AMERICA 0.8
CERADYNE 0.8
PALOMAR MEDICAL TECHNOLOGIES 0.8
SUPERIOR ENERGY SERVICES 0.8
ESTERLINE TECHNOLOGIES 0.7
FUND SECTORS
SECTOR % OF
PORTFOLIO**
INFORMATION TECHNOLOGY 23.6%
INDUSTRIALS 21.6
HEALTH CARE 15.8
CONSUMER DISCRETIONARY 13.3
FINANCIALS 8.9
ENERGY 8.2
MATERIALS 4.6
REPURCHASE AGREEMENT 2.3
CONSUMER STAPLES 1.2
TELECOMMUNICATIONS 0.5
* EXCLUDES SHORT-TERM FIXED INCOME SECURITIES.
** EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
SMALL CAP GROWTH
FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Small Cap Growth Fund (the
"Fund") produced a total return of -4.16% (Fiduciary Shares). In
comparison, the unmanaged Russell 2000 Growth Index returned 1.53% for the
same period.
FACTORS AFFECTING PERFORMANCE
Equity markets performed well throughout most of the Fund's fiscal year.
For the first half of the year, small capitalization stocks outperformed
large capitalization stocks, and within the small cap universe, growth
significantly outpaced value.
The second half of the fiscal year brought a new portfolio management team
led by Stuart Van Arsdale and Jim Foster of Trusco Capital Management.
Small cap performance remained strong in the first quarter of 2006. But
momentum gained at the beginning of the calendar year was difficult to
maintain and propel forward. This factor, combined with continued interest
rate hikes and slowing GDP growth, caused investors to retrench in the
later part of the first quarter, and this trend continued into the second
quarter. The resulting sell-off, as well as a flight to quality in the
large cap space, made for a difficult investment environment. The Fund
underperformed its benchmark, the Russell 2000 Growth Index, for the
fiscal year.
A poorly performing technology sector was responsible for the bulk of the
Fund's underperformance. Positive performance occurred in the energy,
industrial, material and health care sectors -- due mainly to strong stock
selection. These positive performing sectors, along with the Fund's
portfolio of 200-plus companies, helped to mitigate the technology
sector's underperformance.
- --------------------------------------------------------------------------------
16 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
JAMES P. FOSTER
TRUSCO CAPITAL
MANAGEMENT, INC.
[PHOTO OMITTED]
PORTFOLIO MANAGER
STUART VAN ARSDALE
TRUSCO CAPITAL
MANAGEMENT, INC.
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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark
Small Cap Small Cap Small Cap Small Cap Morningstar
Growth Fund, Growth Fund, Growth Fund, 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 14,524 14,523 16,647 16,261
7/06 14,179 13,292 13,493 13,792 16,901 16,368
- ----------------------------------------------------------------------------
ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR SINCE
RETURN RETURN INCEPTION+
- ----------------------------------------------------------------------------
Fiduciary Shares -4.16% 6.74% 11.56%
- ----------------------------------------------------------------------------
Class A Shares -4.46% 6.46% 11.29%
- ----------------------------------------------------------------------------
Class A Shares with load* -9.72% 4.48% 9.38%
- ----------------------------------------------------------------------------
Class B Shares -5.03% 5.79% 10.62%
- ----------------------------------------------------------------------------
Class B Shares with load** -9.51% 4.89% 9.88%
- ----------------------------------------------------------------------------
Class C Shares -5.03% 5.79% 10.62%
- ----------------------------------------------------------------------------
Class C Shares with load*** -5.93% 5.79% 10.62%
- ----------------------------------------------------------------------------
+ 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 17
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS*
COMPANY % OF
PORTFOLIO**
GROUP 1 AUTOMOTIVE 1.3%
AMERUS GROUP 1.3
GREIF, CL A 1.3
OLD NATIONAL BANCORP 1.2
REPUBLIC BANCORP 1.2
ARVINMERITOR 1.2
IKON OFFICE SOLUTIONS 1.1
HRPT PROPERTIES TRUST 1.1
AVISTA 1.1
BJ'S WHOLESALE CLUB 1.1
FUND SECTORS
SECTOR % OF
PORTFOLIO**
FINANCIALS 28.2%
INDUSTRIALS 16.7
CONSUMER DISCRETIONARY 14.6
INFORMATION TECHNOLOGY 11.0
MATERIALS 9.4
ENERGY 4.3
CONSUMER STAPLES 4.2
UTILITIES 4.1
REPURCHASE AGREEMENT 3.8
HEALTH CARE 2.5
TELECOMMUNICATIONS 1.2
* 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, 2006, the HighMark Small Cap Value Fund (the
"Fund") produced a total return of -0.01% (Fiduciary Shares). In
comparison, the unmanaged Russell 2000 Value Index returned 6.93% for the
same period.
FACTORS AFFECTING PERFORMANCE
During the fiscal year, the markets continued their volatile run. At this
time last year, the Fund was 4% ahead of its benchmark, the Russell 2000
Value Index. Small cap stocks started strong, with a third quarter 2005
rally that exceeded large cap stocks by more than 100 basis points. In the
first four months of 2006 alone, the buying of growth and lower quality
stocks caused the benchmark to rise by 14% and the Fund, by comparison, to
rise 11%. But declines in the second quarter saw the Fund and its
benchmark decline to current levels.
Even though the Fund's sector overweightings and underweightings tend to
be modest in both directions, it benefited from slight overweighting in
energy and industrials. However, some sectors of the consumer
discretionary space that have traditionally performed well for the Fund,
specifically homebuilders, hurt performance. The same can be said of the
financial sector, which, along with the homebuilder sector, was adversely
impacted by the rising interest rate environment. Lastly, consumer staples
lagged due to lower levels of consumer discretionary income.
The Fund employed a conservative, defensive portfolio structure and sought
to maintain lower P/E ratios and betas. Because of this structure, the
Fund typically lagged in periods of market recovery. And even though the
Fund was somewhat protected in down markets, it still was not enough to
make up ground on its benchmark in the second quarter.
- --------------------------------------------------------------------------------
18 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark
Small Cap Small Cap Small Cap Small Cap Morningstar
Value Fund, Value Fund, Value Fund, 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
7/06 26,543 24,593 24,791 25,042 27,130 27,718
- --------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR SINCE
RETURN RETURN RETURN INCEPTION
- --------------------------------------------------------------------------------------------
Fiduciary Shares -0.01% 15.94% 13.45% 13.29%
- --------------------------------------------------------------------------------------------
Class A Shares -0.21% 15.67% 13.17% 12.99%
- --------------------------------------------------------------------------------------------
Class A Shares with load* -5.71% 13.50% 11.91% 12.18%
- --------------------------------------------------------------------------------------------
Class B Shares -0.87% 14.94% 12.42% 12.30%
- --------------------------------------------------------------------------------------------
Class B Shares with load** -5.46% 14.18% 12.17% 12.30%
- --------------------------------------------------------------------------------------------
Class C Shares -0.82% 14.93% 12.41% 12.46%+
- --------------------------------------------------------------------------------------------
Class C Shares with load*** -1.74% 14.93% 12.41% 12.46%+
- --------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
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 19
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
COMPANY % OF
PORTFOLIO*
EXXON MOBIL 3.9%
CITIGROUP 3.4
ALTRIA GROUP 3.3
QUESTAR 3.1
GENERAL ELECTRIC 2.8
JPMORGAN CHASE 2.6
PFIZER 2.5
MICROSOFT 2.4
BANK OF AMERICA 2.1
PARKER HANNIFIN 1.9
FUND SECTORS
SECTOR % OF
PORTFOLIO*
FINANCIALS 22.4%
INDUSTRIALS 15.5
ENERGY 11.7
CONSUMER DISCRETIONARY 11.5
CONSUMER STAPLES 9.5
INFORMATION TECHNOLOGY 9.3
HEALTH CARE 7.0
MATERIALS 5.8
UTILITIES 3.2
TELECOMMUNICATIONS 2.9
REPURCHASE AGREEMENT 0.9
REGULATED INVESTMENT COMPANY 0.3
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
VALUE MOMENTUM
FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Value Momentum Fund (the
"Fund") produced a total return of 9.32% (Fiduciary Shares). In
comparison, the unmanaged S&P 500 Composite Index returned 5.38% for the
same period.
FACTORS AFFECTING PERFORMANCE
The U.S. economy continued to rebound throughout the year. Long-term
interest rates barely exceeded 5%, and inflation was effectively
controlled. Although corporate investment spending began to recover from
severely depressed levels, it was still well below normal levels when
measured relative to sales and depreciation. Record levels of
profitability and strong free cash flows left corporate balance sheets in
good condition.
Most classes of stocks performed well for the year, although U.S. equity
markets did not perform as well in the second quarter of 2006 when
compared with the first quarter. Investors reassessed risk in their
portfolios and ran from areas of the market that were favorable at the
start of the year. Oil prices were far above normal and uncertainties over
the war in Iraq caused continued domestic and international concern.
The Fund outpaced its benchmark, the S&P 500 Composite Index, for the
period. The Fund's central theme was to invest in well-established,
broad-based companies that exercised good capital discipline through
dividend increases and major stock repurchase programs. The primary driver
of Fund performance was its overweight relative to the index in the
industrial and materials sectors, and a moderate overweight in the energy
sector. The financial sector, the Fund's largest sector holding, also
performed well.
The technology sector was a slight drag on performance, due mainly to
questions about growth rate and the relative worth of its stocks. Consumer
staples and the consumer cyclical sectors also failed to meet
expectations.
Overall characteristics of the Fund during the year remained in line with
its history and traditional value parameters. The weighted average
dividend yield of the stocks in the Fund was higher than the S&P 500
Composite Index and the Fund's price-to-earnings ratio remained below the
benchmark. However, as of July 31, 2006, the weighted average market cap
of the portfolio was above the weighted average market cap of the S&P 500
Composite Index.
- --------------------------------------------------------------------------------
20 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark Value HighMark S&P 500 Morningstar
Value Momentum Fund, Value Momentum Fund, Momentum Fund, Value Momentum Fund, Composite Large Value
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Index Category
7/31/96 $10,000 $ 9,450 $10,000 $10,000 $10,000 $10,000
7/97 14,750 13,905 14,750 14,750 15,214 14,352
7/98 16,110 15,151 16,038 16,110 18,149 15,744
7/99 18,217 17,088 17,945 18,217 21,815 17,681
7/00 19,031 17,811 18,573 18,918 23,772 17,134
7/01 18,927 17,669 18,298 18,640 20,365 18,877
7/02 15,130 14,091 14,508 14,765 15,553 15,294
7/03 16,643 15,463 15,814 16,095 17,209 16,593
7/04 19,254 17,838 18,121 18,449 19,476 19,130
7/05 22,520 20,807 21,012 21,382 22,212 22,152
7/06 24,619 22,692 22,768 23,165 23,407 23,971
- -----------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -----------------------------------------------------------------------------------------------------------
Fiduciary Shares 9.32% 13.94% 5.40% 9.43% 11.39%
- -----------------------------------------------------------------------------------------------------------
Class A Shares 9.06% 13.64% 5.13% 9.15% 11.20%+
- -----------------------------------------------------------------------------------------------------------
Class A Shares with load* 3.06% 11.51% 3.95% 8.54% 10.80%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares 8.36% 12.92% 4.47% 8.58%+ 10.83%+
- -----------------------------------------------------------------------------------------------------------
Class B Shares with load** 3.54% 12.13% 4.18% 8.58%+ 10.83%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares 8.34% 12.90% 4.44% 8.76%+ 10.96%+
- -----------------------------------------------------------------------------------------------------------
Class C Shares with load*** 7.38% 12.90% 4.44% 8.76%+ 10.96%+
- -----------------------------------------------------------------------------------------------------------
+ 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 21
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
EQUITY FUNDS 88.8%
FIXED INCOME FUNDS 9.5
MONEY MARKET FUND 1.7
CAPITAL GROWTH
ALLOCATION FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Capital Growth Allocation
Fund (the "Fund") (Class A without load) returned 5.33%. In comparison,
the Fund's unmanaged benchmark, a 80/15/5% blend of the S&P 500 Composite
Index, the Lehman Brothers U.S. Aggregate Bond Index, and the Citigroup
Bond 3-Month Treasury Bill Index, respectively, returned 4.75% for the
same period.
FACTORS AFFECTING PERFORMANCE
Volatility in capital markets increased as geopolitical concerns collided
with heightened uncertainty about inflation and interest rate hikes.
Despite these concerns, the underlying economic environment remained
stable and strong. With near full employment and rising incomes, consumers
remained resilient while industrial activity accelerated. A combination of
steady economic growth, accelerating international economies, and
collaborative secular disinflationary forces yielded robust profit margins
and high productivity.
As economic activity firmed, the Federal Reserve effectively executed an
increase to equilibrium, raising the Federal Funds rate to 5.25%. Rising
corporate earnings and increasing cash flow helped boost capital
investment spending and share buy-back programs. Demand for consumer goods
and continued urbanization within developing economies fueled a secular
boost to global growth.
Positive security selection within the underlying equity funds and short
durations on the fixed income side were primary drivers of Fund
performance. In addition, performance benefited from the Fund's
top-down/bottom-up asset allocation strategy. With the top-down strategy,
a tilt toward small cap value in the equity sector contributed to
performance. Conversely, with the bottom-up approach, the Fund benefited
from exposure to large cap core, growth and value momentum strategies.
The timing of the addition of HighMark International Opportunities Fund in
April 2006 resulted in a slight negative on performance. Despite this
slight detractor, the overall Fund performance was relatively strong for
the fiscal year.
- --------------------------------------------------------------------------------
22 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 THE S&P 500 COMPOSITE INDEX, THE LEHMAN
BROTHERS U.S. AGGREGATE BOND INDEX, THE CITIGROUP BOND 3-MONTH TREASURY BILL
INDEX, AN UNMANAGED BLENDED INDEX 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark 80/15/5
Capital Growth Capital Growth Hybrid of S&P 500 Lehman Brothers Citigroup Bond Morningstar
Allocation Fund, Allocation Fund, the following Composite U.S. Aggregate 3-Month Treasury Large Blend
Class A Shares Class C Shares three 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
7/06 11,065 11,557 11,407 11,663 10,318 10,604 11,664
- --------------------------------------------------------------------------------
ANNUALIZED
ONE YEAR SINCE
RETURN INCEPTION+
- --------------------------------------------------------------------------------
Class A Shares 5.33% 9.18%
- --------------------------------------------------------------------------------
Class A Shares with load* -0.46% 5.82%
- --------------------------------------------------------------------------------
Class C Shares 4.56% 8.40%
- --------------------------------------------------------------------------------
Class C Shares with load** 3.56% 8.40%
- --------------------------------------------------------------------------------
+ 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 23
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
EQUITY FUNDS 67.9%
FIXED INCOME FUNDS 27.6
MONEY MARKET FUND 4.5
GROWTH & INCOME
ALLOCATION FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Growth & Income Allocation
Fund (the "Fund") (Class A without load) returned 4.41%. In comparison,
the Fund's unmanaged benchmark, a 60/35/5% blend of the S&P 500 Composite
Index, the Lehman Brothers U.S. Aggregate Bond Index, and the Citigroup
Bond 3-Month Treasury Bill Index, respectively, returned 3.98% for the
same period.
FACTORS AFFECTING PERFORMANCE
Volatility in capital markets increased as geopolitical concerns collided
with heightened uncertainty about inflation and interest rate hikes.
Despite these concerns, the underlying economic environment remained
stable and strong. With near full employment and rising incomes, consumers
remained resilient while industrial activity accelerated. A combination of
steady economic growth, accelerating international economies, and
collaborative secular disinflationary forces yielded robust profit margins
and high productivity.
As economic activity firmed, the Federal Reserve effectively executed an
increase to equilibrium, raising the Federal Funds rate to 5.25%. Rising
corporate earnings and increasing cash flow helped boost capital
investment spending and share buy-back programs. Demand for consumer goods
and continued urbanization within developing economies fueled a secular
boost to global growth.
Positive security selection within the underlying equity funds and short
durations on the fixed income side were primary drivers of Fund
performance. In addition, performance benefited from the Fund's
top-down/bottom-up asset allocation strategy. With the top-down strategy,
a tilt toward small cap value in the equity sector contributed to
performance. Conversely, with the bottom-up approach, the Fund benefited
from exposure to large cap core, growth and value momentum strategies.
The timing of the addition of the HighMark International Opportunities
Fund in April 2006 resulted in a slight negative on performance. Despite
this slight detractor, the overall Fund performed relatively strong for
the fiscal year.
- --------------------------------------------------------------------------------
24 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 THE S&P 500 COMPOSITE INDEX, THE LEHMAN BROTHERS
U.S. AGGREGATE BOND INDEX, THE CITIGROUP BOND 3-MONTH TREASURY BILL INDEX, AN
UNMANAGED BLENDED INDEX 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark Morningstar
Growth & Income Growth & Income 60/35/5 Hybrid S&P 500 Lehman Brothers Citigroup Bond Moderate
Allocation Fund, Allocation Fund, of the following Composite U.S. Aggregate 3-Month Treasury Allocation
Class A Shares Class C Shares three 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
7/06 10,708 11,191 11,137 11,663 10,318 10,604 11,396
- --------------------------------------------------------------------------------
ANNUALIZED
ONE YEAR SINCE
RETURN INCEPTION+
- --------------------------------------------------------------------------------
Class A Shares 4.41% 7.36%
- --------------------------------------------------------------------------------
Class A Shares with load* -1.34% 4.05%
- --------------------------------------------------------------------------------
Class C Shares 3.68% 6.60%
- --------------------------------------------------------------------------------
Class C Shares with load** 2.68% 6.60%
- --------------------------------------------------------------------------------
+ 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 25
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
SECTOR % OF
PORTFOLIO
FIXED INCOME FUNDS 55.6%
EQUITY FUNDS 39.2
MONEY MARKET FUND 5.2
INCOME PLUS
ALLOCATION FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Income Plus Allocation Fund
(the "Fund") (Class A without load) returned 3.11%. In comparison, the
Fund's unmanaged benchmark, a 30/65/5% blend of the S&P 500 Composite
Index, the Lehman Brothers U.S. Aggregate Bond Index and the Citigroup
Bond 3-Month Treasury Bill Index, respectively, returned 2.80% for the
same period.
FACTORS AFFECTING PERFORMANCE
Volatility in capital markets increased as geopolitical concerns collided
with heightened uncertainty about inflation and interest rate hikes.
Despite these concerns, the underlying economic environment remained
stable and strong. With near full employment and rising incomes, consumers
remained resilient while industrial activity accelerated. A combination of
steady economic growth, accelerating international economies, and
collaborative secular disinflationary forces yielded robust profit margins
and high productivity.
As economic activity firmed, the Federal Reserve effectively executed an
increase to equilibrium, raising the Federal Funds rate to 5.25%. Rising
corporate earnings and increasing cash flow helped boost capital
investment spending and share buy-back programs. Demand for consumer goods
and continued urbanization within developing economies fueled a secular
boost to global growth.
Positive security selection within the underlying equity funds and short
durations on the fixed income side were primary drivers of Fund
performance. In addition, performance benefited from the Fund's
top-down/bottom-up asset allocation strategy. With the top-down strategy,
a tilt toward small cap value in the equity sector contributed to
performance. Conversely, with the bottom-up approach, the Fund benefited
from exposure to large cap core, growth and value momentum strategies.
The timing of the addition of the HighMark International Opportunities
Fund in April 2006 resulted in a slight negative on performance. Despite
this slight detractor, the overall Fund performance was relatively strong
for the fiscal year.
- --------------------------------------------------------------------------------
26 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 THE S&P 500 COMPOSITE INDEX, THE LEHMAN BROTHERS
U.S. AGGREGATE BOND INDEX, THE CITIGROUP BOND 3-MONTH TREASURY BILL INDEX, AN
UNMANAGED BLENDED INDEX 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
Highmark Highmark
Income Plus Income Plus 30/65/5 Hybrid Lehman Citigroup Bond Morningstar
Allocation Allocation of the S&P 500 Brothers U.S. 3-month Conservative
Fund, Class A Fund, Class C following Composite Aggregate Bond Treasury Bill Allocation
Shares Shares three Indexes: Index Index 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
7/06 10,320 10,670 10,735 11,663 10,318 10,604 10,848
- ----------------------------------------------------------------------------
ANNUALIZED
ONE YEAR SINCE
RETURN INCEPTION+
- ----------------------------------------------------------------------------
Class A Shares 3.11% 4.34%
- ----------------------------------------------------------------------------
Class A Shares with load* -1.55% 1.72%
- ----------------------------------------------------------------------------
Class C Shares 2.39% 3.62%
- ----------------------------------------------------------------------------
Class C Shares with load** 1.39% 3.62%
- ----------------------------------------------------------------------------
+ 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 27
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
HOLDING % OF
PORTFOLIO*
FNMA
4.500%, 04/01/18 5.9%
U.S. TREASURY INFLATION
INDEX NOTE
3.000%, 07/15/12 4.6
U.S. TREASURY BOND
7.250%, 05/15/16 4.3
U.S. TREASURY BOND
8.125%, 08/15/19 3.7
FHLMC
4.000%, 06/01/19 2.5
FNMA
5.500%, 11/01/33 2.1
TYCO INTERNATIONAL
7.200%, 10/15/08 2.1
FNMA
4.500%, 07/01/20 2.0
U.S. BANCORP
6.875%, 09/15/07 1.7
TIME WARNER
7.480%, 01/15/08 1.7
FUND SECTORS
SECTOR % OF
PORTFOLIO*
U.S. GOVERNMENT AGENCY OBLIGATIONS 38.4%
U.S. TREASURY OBLIGATIONS 14.7
FINANCIALS 10.4
INDUSTRIALS 7.3
ASSET-BACKED SECURITIES 6.0
UTILITIES 4.5
CONSUMER DISCRETIONARY 4.1
REAL ESTATE INVESTMENT TRUSTS 2.5
ENERGY 2.4
TELECOMMUNICATIONS 2.1
HEALTH CARE 2.1
FOREIGN GOVERNMENTS 1.9
INFORMATION TECHNOLOGY 1.7
REPURCHASE AGREEMENT 0.9
CONSUMER STAPLES 0.6
MATERIALS 0.4
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
BOND FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Bond Fund (the "Fund")
produced a total return of 1.08% (Fiduciary Shares). In comparison, the
unmanaged Lehman Brothers U.S. Aggregate Bond Index returned 1.45% for the
same period.
FACTORS AFFECTING PERFORMANCE
For the second consecutive year, the changing relationship between
short-term and long-term interest rates dominated discussions in the bond
market. 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
5.25%, a substantial two percentage points higher than where it started
the year. Despite the Fed's action, however, the flattening of the yield
curve continued, due to what new Fed Chairman Ben Bernanke referred to as
the historically unusual behavior of long-term yields. The result was a
challenging environment for fixed income investors, and the Fund's
performance was negatively affected.
The U.S. Treasury market continued to record minimal returns. High-grade
corporate bonds underperformed equivalent-duration treasuries by a slim
margin during the year ended July 31, 2006. In the mortgage-backed sector,
rising interest rates caused a reduction in the volume of refinancing.
Nevertheless, this sector performed slightly better than similar duration
treasuries during the latest fiscal year.
During the year, the Fund's performance lagged slightly behind its
benchmark, the Lehman Brothers U.S. Aggregate Bond Index. The Fund
benefited from its lower interest rate risk (shorter duration), but the
relatively high corporate bond weighting was a negative influence. As
corporate bond spreads widened to Treasuries, the Fund took on less credit
risk and increased its allocation to mortgage-backed securities.
As of July 31, 2006, the Fund's average credit quality was AA, compared to
AAA for the Fund's benchmark. The Fund's average weighted maturity was 6.4
years and the average duration was 4.2 years, compared to 6.9 years and
4.7 years, respectively, for the Fund's benchmark.
- --------------------------------------------------------------------------------
28 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark HighMark HighMark HighMark Lehman 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
7/31/96 $10,000 $ 9,775 $10,000 $10,000 $10,000 $10,000
7/97 11,059 10,819 11,059 11,059 11,078 11,072
7/98 11,878 11,627 11,878 11,878 11,949 11,838
7/99 12,069 11,804 12,069 12,069 12,245 12,000
7/00 12,655 12,382 12,655 12,655 12,975 12,542
7/01 14,266 13,961 14,170 14,266 14,621 14,027
7/02 14,850 14,524 14,599 14,850 15,724 14,703
7/03 15,816 15,442 15,401 15,816 16,574 15,586
7/04 16,556 16,132 15,972 16,485 17,377 16,289
7/05 17,277 16,801 16,502 17,080 18,211 16,999
7/06 17,463 16,927 16,512 17,147 18,475 17,186
- -------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -------------------------------------------------------------------------------------------------------
Fiduciary Shares 1.08% 3.36% 4.13% 5.73% 7.75%
- -------------------------------------------------------------------------------------------------------
Class A Shares 0.75% 3.11% 3.93% 5.64% 7.68%+
- -------------------------------------------------------------------------------------------------------
Class A Shares with load* -1.48% 2.32% 3.45% 5.41% 7.57%+
- -------------------------------------------------------------------------------------------------------
Class B Shares 0.06% 2.35% 3.11% 5.14%+ 7.48%+
- -------------------------------------------------------------------------------------------------------
Class B Shares with load** -4.74% 1.43% 2.77% 5.14%+ 7.48%+
- -------------------------------------------------------------------------------------------------------
Class C Shares 0.39% 2.73%+ 3.75%+ 5.54%+ 7.66%+
- -------------------------------------------------------------------------------------------------------
Class C Shares with load*** -0.58% 2.73%+ 3.75%+ 5.54%+ 7.66%+
- -------------------------------------------------------------------------------------------------------
+ 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 2.25% sales charge. Prior to December 1, 2005, the sales charge
was 3.25%.
** 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 29
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 2.7%
EASTERN MUNICIPAL WATER DISTRICT,
SER A, COP, FGIC INSURED
CALLABLE 07/01/11 @ 100
5.375%, 07/01/16 2.0
EASTERN MUNICIPAL WATER DISTRICT,
SER A, COP, FGIC INSURED
CALLABLE 07/01/11 @ 100
5.375%, 07/01/17 1.9
M-S-R PUBLIC POWER AUTHORITY,
SAN JUAN PROJECT, SER I,
RB, MBIA INSURED
CALLABLE07/01/11 @ 100
5.000%, 07/01/14 1.9
METROPOLITAN, WATER DISTRICT OF
SOUTHERN CALIFORNIA, SER A, RB
CALLABLE 07/01/11 @ 101
5.375%, 07/01/12 1.7
SAN MATEO, UNIFIED HIGH SCHOOL
DISTRICT, SER A, GO, FGIC INSURED
PREREFUNDED @ 100
5.375%, 09/01/11 1.7
CENTRAL COAST, WATER AUTHORITY,
WATER PROJECT REGIONAL
FACILITIES, SER A, RB,
AMBAC INSURED
CALLABLE 10/01/06 @ 102
5.000%, 10/01/07 1.7
CONTRA COSTA COUNTY, MERRITHEW
MEMORIAL HOSPITAL PROJECT,
COP, MBIA INSURED
CALLABLE 11/01/07 @ 102
5.500%, 11/01/12 1.6
SAN MATEO COUNTY, TRANSIT DISTRICT,
SER A, RB, MBIA INSURED
5.250%, 06/01/16 1.6
SAN BERNARDINO COUNTY,
TRANSPORTATION AUTHORITY,
SER A, RB, MBIA INSURED
6.250%, 03/01/10 1.6
FUND SECTORS
SECTOR % OF
PORTFOLIO
REVENUE BONDS 53.5%
GENERAL OBLIGATIONS 29.5
CERTIFICATES OF PARTICIPATION 12.2
TAX ALLOCATION 4.4
REGULATED INVESTMENT COMPANY 0.4
CALIFORNIA
INTERMEDIATE
TAX-FREE BOND FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark California Intermediate
Tax-Free Bond Fund (the "Fund") produced a total return of 1.65%
(Fiduciary Shares). In comparison, the unmanaged Lehman Brothers 7-Year
Municipal Bond Index returned 2.16% for the same period.
FACTORS AFFECTING PERFORMANCE
For the second consecutive year, the changing relationship between
short-term and long-term interest rates dominated discussions in the bond
market. 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
5.25%, a substantial two percentage points higher than where it started
the year. Despite the Fed's action, however, the flattening of the yield
curve continued, due to what new Fed Chairman Ben Bernanke referred to as
the historically unusual behavior of long-term yields. The result was a
challenging environment for fixed income investors, and the Fund's
performance was negatively affected.
In California, municipal bond issuance declined as higher tax receipts
reduced borrowing needs. California remained the largest issuer of
municipal bonds in the country. The period saw a decrease in refunding
activity, which was largely driven by the strengthening economy and rising
interest rates. Households continued to be the largest holders of
municipal bonds, followed by money market funds and mutual funds. The
percentage of bonds that were credit enhanced decreased, as did the
percentage of bonds with traditional insurance.
The underlying assets within the portfolio slightly underperformed, but
were essentially in line with the benchmark, the Lehman Brothers 7-Year
Municipal Bond Index. With short-term rates rising and long-term rates at
historic lows, the Fund continued to be positioned defensively with
shorter-term, higher-quality bonds. The shorter duration of the portfolio
and concentration on high-quality bonds negatively affected performance,
as lower-quality, higher-yielding bonds were generally the stronger
performers. The Fund's performance benefited during the period from a lack
of exposure to municipalities in the Gulf Coast region that were
negatively impacted and downgraded as a result of extreme weather.
- --------------------------------------------------------------------------------
30 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark California HighMark California HighMark California HighMark California Morningstar Municipal
Intermediate Intermediate Intermediate Intermediate Lehman Brothers California
Tax-Free Bond Fund, Tax-Free Bond Fund, Tax-Free Bond Fund, Tax-Free Bond Fund, 7-Year Municipal Intermediate/Short
Fiduciary Shares Class A Shares Class B Shares+ Class C Shares+ Bond Index Category
7/31/96 $10,000 $ 9,775 $10,000 $10,000 $10,000 $10,000
7/97 10,880 10,637 10,880 10,880 10,864 10,757
7/98 11,397 11,133 11,397 11,397 11,435 11,238
7/99 11,800 11,528 11,800 11,800 11,812 11,545
7/00 12,352 12,069 12,264 12,352 12,354 12,053
7/01 13,331 13,016 13,107 13,331 13,489 12,954
7/02 14,116 13,785 13,741 14,116 14,451 13,682
7/03 14,476 14,118 13,958 14,476 15,007 13,949
7/04 15,009 14,603 14,331 14,946 15,782 14,512
7/05 15,420 14,968 14,581 15,233 16,407 15,067
7/06 15,674 15,178 14,669 15,375 16,761 15,368
- -------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -------------------------------------------------------------------------------------------------------
Fiduciary Shares 1.65% 2.69% 3.29% 4.60% 4.35%
- -------------------------------------------------------------------------------------------------------
Class A Shares 1.40% 2.44% 3.12% 4.50% 4.26%
- -------------------------------------------------------------------------------------------------------
Class A Shares with load* -0.86% 1.66% 2.65% 4.26% 4.08%
- -------------------------------------------------------------------------------------------------------
Class B Shares 0.60% 1.67% 2.28% 3.91%+ 3.81%+
- -------------------------------------------------------------------------------------------------------
Class B Shares with load** -4.24% 0.75% 1.93% 3.91%+ 3.81%+
- -------------------------------------------------------------------------------------------------------
Class C Shares 0.93% 2.03%+ 2.90%+ 4.40%+ 4.20%+
- -------------------------------------------------------------------------------------------------------
Class C Shares with load*** -0.04% 2.03%+ 2.90%+ 4.40%+ 4.20%+
- -------------------------------------------------------------------------------------------------------
+ The performance presented links the performance of Fiduciary Shares from
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 31
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 3.5%
GEORGIA STATE, SER E, GO
5.250%, 02/01/09 3.4
PHOENIX, GO,
PREREFUNDED @ 101
5.000%, 07/01/09 3.2
MILWAUKEE, METROPOLITAN
SEWAGE DISTRICT, SER A, GO
5.500%, 10/01/08 2.7
SEATTLE, LIMITED TAX,
SER B, GO
5.500%, 03/01/11 2.7
SAN RAMON VALLEY, UNIFIED SCHOOL
DISTRICT, GO, FSA INSURED
CALLABLE 08/01/14 @ 100
5.250%, 08/01/18 2.3
MCMINNVILLE, SCHOOL DISTRICT
NO. 40, GO, FSA INSURED
5.000%, 06/15/11 2.2
KING & SNOHOMISH COUNTIES,
SCHOOL DISTRICT AUTHORITY,
GO, FGIC INSURED
PREREFUNDED @ 100
5.250%, 12/01/07 2.1
UTAH STATE, BOARD REGENTS
AUXILIARY & CAMPUS FACILITIES
REVENUE, SER A, RB,
MBIA INSURED
CALLABLE 04/01/15 @ 100
5.000%, 04/01/17 2.0
PIERCE COUNTY, GO,
AMBAC INSURED
CALLABLE 08/01/15 @ 100
5.125%, 08/01/16 1.9
FUND SECTORS
SECTOR % OF
PORTFOLIO
GENERAL OBLIGATIONS 59.5%
REVENUE BONDS 36.8
CERTIFICATES OF PARTICIPATION 1.6
TAX ALLOCATION 1.5
REGULATED INVESTMENT COMPANY 0.6
NATIONAL INTERMEDIATE
TAX-FREE BOND FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark National Intermediate
Tax-Free Bond Fund (the "Fund") produced a total return of 1.94%
(Fiduciary Shares). In comparison, the unmanaged Lehman Brothers 7-Year
Municipal Bond Index returned 2.16% for the same period.
FACTORS AFFECTING PERFORMANCE
For the second consecutive year, the changing relationship between
short-term and long-term interest rates dominated discussions in the bond
market. 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
5.25%, a substantial two percentage points higher than where it started
the year. Despite the Fed's action, however, the flattening of the yield
curve continued, due to what new Fed Chairman Ben Bernanke referred to as
the historically unusual behavior of long-term yields. The result was a
challenging environment for fixed income investors, and the Fund's
performance was negatively affected.
Overall, municipal bond issuance decreased during the year. As for
issuance by state, California remained the largest issuer, followed by
Texas and Florida. The period saw a decrease in refunding activity, which
was driven largely by the strengthening economy and rising interest rates.
Households continued to be the largest holders of municipal bonds,
followed by money market funds and mutual funds. The percentage of bonds
that were credit enhanced decreased, as did the percentage of bonds with
traditional insurance.
The underlying assets within the portfolio slightly underperformed, but
were essentially in line with the benchmark, the Lehman Brothers 7-Year
Municipal Bond Index. With short-term rates rising and long-term rates at
historic lows, the Fund continued to be positioned defensively with
shorter-term, higher-quality bonds. The shorter duration of the portfolio
and concentration on high-quality bonds negatively affected performance,
as lower-quality, higher-yielding bonds were generally the stronger
performers. The Fund's performance benefited during the period from a lack
of exposure to municipalities in the Gulf Coast region that were
negatively impacted and downgraded as a result of extreme weather.
- --------------------------------------------------------------------------------
32 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
HighMark National HighMark National HighMark National
Intermediate Intermediate Intermediate Lehman Brothers Morningstar Municipal
Tax-Free Bond Fund, Tax-Free Bond Fund, Tax-Free Bond Fund, 7-Year Municipal National Intermediate
Fiduciary Shares+ Class A Shares+ Class C Shares++ Bond Index Category
7/31/96 $10,000 $ 9,775 $10,000 $10,000 $10,000
7/97 10,724 10,462 10,703 10,864 10,848
7/98 11,158 10,850 11,100 11,435 11,375
7/99 11,393 11,052 11,307 11,812 11,598
7/00 11,763 11,383 11,645 12,354 11,948
7/01 12,724 12,290 12,573 13,489 13,000
7/02 13,414 12,912 13,209 14,451 13,675
7/03 13,776 13,231 13,535 15,007 13,975
7/04 14,214 13,618 13,913 15,782 14,590
7/05 14,558 13,914 14,351 16,407 15,142
7/06 14,840 14,149 14,529 16,761 15,407
- -------------------------------------------------------------------------------------------------------
ANNUALIZED ANNUALIZED ANNUALIZED ANNUALIZED
ONE YEAR 3 YEAR 5 YEAR 10 YEAR SINCE
RETURN RETURN RETURN RETURN INCEPTION
- -------------------------------------------------------------------------------------------------------
Fiduciary Shares 1.94% 2.51% 3.12%+ 4.03%+ 4.91%+
- -------------------------------------------------------------------------------------------------------
Class A Shares 1.69% 2.26% 2.86%+ 3.77%+ 4.65%+
- -------------------------------------------------------------------------------------------------------
Class A Shares with load* -0.61% 1.48% 2.38%+ 3.53%+ 4.51%+
- -------------------------------------------------------------------------------------------------------
Class C Shares 1.24% 2.39%++ 2.94%++ 3.81%++ 4.67%++
- -------------------------------------------------------------------------------------------------------
Class C Shares with load** 0.27% 2.39%++ 2.94%++ 3.81%++ 4.67%++
- -------------------------------------------------------------------------------------------------------
+ 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 Common Trust Fund
from February 17, 1989, with the performance of the Fiduciary Shares from
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 33
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
TOP TEN HOLDINGS
HOLDING % OF
PORTFOLIO*
FNMA
6.000%, 05/15/08 5.2%
FNMA
5.000%, 01/15/07 3.8
FNMA
3.250%, 11/15/07 3.7
U.S. TREASURY INFLATION
INDEX NOTE
3.875%, 01/15/09 3.3
FNMA
5.500%, 09/01/17 2.7
FHLMC
3.500%, 09/15/07 2.5
FNMA
3.875%, 07/15/08 2.5
U.S. TREASURY NOTE
3.000%, 11/15/07 2.5
FHLMC
5.000%, 10/01/18 2.3
FNMA
5.500%, 09/01/14 2.3
FUND SECTORS
SECTOR % OF
PORTFOLIO*
U.S. GOVERNMENT AGENCY
OBLIGATIONS 48.0%
ASSET-BACKED SECURITIES 13.9
FINANCIALS 11.4
U.S. TREASURY OBLIGATIONS 8.9
UTILITIES 5.6
CONSUMER DISCRETIONARY 2.8
CONSUMER STAPLES 1.9
TELECOMMUNICATIONS 1.9
INDUSTRIALS 1.6
INFORMATION TECHNOLOGY 1.3
HEALTH CARE 1.2
REAL ESTATE INVESTMENT TRUST 0.8
REPURCHASE AGREEMENT 0.7
* EXCLUDES SECURITIES PURCHASED WITH CASH COLLATERAL RECEIVED FROM
SECURITIES LENDING.
SHORT TERM BOND
FUND
PERFORMANCE
For the year ended July 31, 2006, the HighMark Short Term Bond Fund (the
"Fund") produced a total return of 2.71% (Fiduciary Shares). In
comparison, the unmanaged Lehman Brothers 1-3 Year U.S. Government/Credit
Index returned 3.00% for the same period.
FACTORS AFFECTING PERFORMANCE
For the second consecutive year, the changing relationship between
short-term and long-term interest rates dominated discussions in the bond
market. 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
5.25%, a substantial two percentage points higher than where it started
the year. Despite the Fed's action, however, the flattening of the yield
curve continued, due to what new Fed Chairman Ben Bernanke referred to as
the historically unusual behavior of long-term yields. The result was a
challenging environment for fixed income investors, and the Fund's
performance was negatively affected.
The U.S. Treasury market continued to record minimal returns. High-grade
corporate bonds underperformed equivalent-duration treasuries by a slim
margin during the year ended July 31, 2006. In the mortgage-backed sector,
rising interest rates caused a reduction in the volume of refinancing.
Nevertheless, this sector performed slightly better than similar duration
treasuries during the latest fiscal year.
During the year, the Fund's performance lagged slightly behind its
benchmark, the Lehman Brothers 1-3 Year U.S. Government/Credit Index. The
Fund benefited from its lower interest rate risk (shorter duration), but
the relatively high corporate bond weighting was a negative influence.
During the year the Fund decreased its exposure to Treasuries while
increasing its allocation to mortgage-backed securities.
As of July 31, 2006, the Fund's average credit quality was AA+, compared
to AAA for the Fund's benchmark. The Fund's average weighted maturity was
1.9 years and the average duration was 1.6 years, compared to 1.9 and 1.7,
respectively, for the Fund's benchmark.
- --------------------------------------------------------------------------------
34 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.
[THE FOLLOWING TABLE WAS REPRESENTED AS A LINE GRAPH IN THE PRINTED MATERIAL.]
Lehman Brothers
HighMark Short HighMark Short HighMark Short 1-3 Year U.S. Morningstar
Term Bond Fund, Term Bond Fund, Term Bond Fund, Government/Credit Short Bond
Fiduciary Shares Class A Shares Class C Shares+ Index Category
11/30/04 $10,000 $ 9,775 $10,000 $10,000 $10,000
7/05 10,067 9,815 10,061 10,091 10,095
7/06 10,340 10,056 10,260 10,394 10,339
- --------------------------------------------------------------------
ANNUALIZED
ONE YEAR SINCE
RETURN INCEPTION
- --------------------------------------------------------------------
Fiduciary Shares 2.71% 1.74%
- --------------------------------------------------------------------
Class A Shares 2.46% 1.50%
- --------------------------------------------------------------------
Class A Shares with load* 0.12% 0.18%
- --------------------------------------------------------------------
Class C Shares 1.98% 1.29%+
- --------------------------------------------------------------------
Class C Shares with load** 0.99% 1.29%+
- --------------------------------------------------------------------
+ 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 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 2.25% sales charge. Prior to December 1, 2005, the sales charge
was 3.25%.
** 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 35
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
FUND SECTORS
CALIFORNIA TAX-FREE
MONEY MARKET FUND
SECTOR % OF
PORTFOLIO
REVENUE BONDS 76.9%
TAX EXEMPT COMMERCIAL PAPER 10.4
TAX AND REVENUE ANTICIPATION NOTES 5.8
SPECIAL ASSESSMENTS 2.9
CERTIFICATES OF PARTICIPATION 2.6
GENERAL OBLIGATIONS 1.4
REGULATED INVESTMENT COMPANIES 0.0
DIVERSIFIED MONEY
MARKET FUND
SECTOR % OF
PORTFOLIO
COMMERCIAL PAPER 66.3%
CERTIFICATES OF DEPOSIT 15.9
VARIABLE RATE DEMAND NOTES 8.6
CORPORATE OBLIGATIONS 7.7
REPURCHASE AGREEMENT 1.5
U.S. GOVERNMENT MONEY
MARKET FUND
SECTOR % OF
PORTFOLIO
REPURCHASE AGREEMENTS 79.6%
U.S. GOVERNMENT OBLIGATIONS 15.0
VARIABLE RATE DEMAND NOTES 5.4
100% U.S. TREASURY MONEY
MARKET FUND
SECTOR % OF
PORTFOLIO
U.S. TREASURY BILLS 100.0%
CALIFORNIA TAX-FREE
MONEY MARKET FUND*
PERFORMANCE
The HighMark California Tax-Free Money Market Fund's (the "Fund")
seven-day effective yield as of July 31, 2006 (Fiduciary Shares)*** was
3.12%. Using a combined Federal and California state income tax rate of
32.70%, the seven-day effective yield is equivalent to a 4.64% taxable
yield.
FACTORS AFFECTING PERFORMANCE
The Federal Reserve Board raised short-term interest rates from 5% to
5.25% on June 29, 2006, its eighth consecutive rate hike of 25 basis
points since the beginning of the fiscal year. Economic growth moderated
from a cooling housing market, higher energy prices, and the effects of
higher interest rates. Municipal note yields increased from 2.78% to
3.67%, reflecting the new supply of annual cash flow from municipal
issuers. Moody's and Fitch both raised California's long-term credit
rating; Moody's from "A2" to "A1 with a stable outlook," and Fitch from
"A" to "A+", reflecting favorable economic activity and continued positive
tax revenue performance.
As of July 31, 2006, the Fund's weighted average maturity was 31 days, up
from 27 days in January 2006.
- --------------------------------------------------------------------------------
36 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
TAXABLE MONEY MARKET FUNDS*
PERFORMANCE
As of July 31, 2006, HighMark 100% U.S. Treasury Money Market Fund posted a
seven-day effective yield of 4.48% (Fiduciary Shares)**. For the same time
period, HighMark U.S. Government Money Market Fund produced a seven-day
effective yield of 4.86% (Fiduciary Shares)**. HighMark Diversified Money Market
Fund had a seven-day effective yield of 5.03% as of July 31, 2006 (Fiduciary
Shares)**.
FACTORS AFFECTING PERFORMANCE
June 29, 2006, saw the eighth consecutive one-quarter percent rate increase on
the part of the Federal Reserve for the fiscal year, taking rates to a
market-neutral level of 5.25%.
In HighMark 100% U.S. Treasury Money Market Fund, supply/demand imbalances and
safe-haven buyers drove Treasury Bill yields lower in the first half of the
year. Generally, the portfolio was managed to a shorter average maturity than
its peer group. Extension moves centered on the seasonal issuance of cash
management Treasury Bills in September and December 2005, then again in early
April 2006, ahead of anticipated tax receipts.
HighMark U.S. Government Money Market Fund concentrated in overnight repurchase
agreements as the yield curve flattened, then inverted, as the year progressed.
This concentration significantly enhanced performance of this Fund as short-term
interest rates rose steadily.
Money market yield levels anticipated each Federal Open Market Committee meeting
and rate hike, making investing for HighMark Diversified Money Market Fund very
much an exercise in breakeven analysis. Asset-backed commercial paper and weekly
reset taxable demand paper issued by municipalities represented strong relative
value across sectors over the period.
* 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, 2006 was 4.22%, 4.60% and 4.77%, respectively. As of July 31,
2006, the seven-day effective yield for the U.S. Government Money Market
Fund's Class B Shares and Class C Shares was 3.87% and 4.13%,
respectively. 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, 2006 was 3.95%, 4.34% and 4.52%,
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, 2006 for the California
Tax-Free Money Market Fund's Class A Shares and Class S Shares was 2.86%
and 2.60%, respectively.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 37
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
BALANCED FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... $1,000.00 $1,007.10 0.89% $4.43
Class A Shares ............. 1,000.00 1,005.90 1.14 5.67
Class B Shares ............. 1,000.00 1,002.90 1.74 8.64
Class C Shares ............. 1,000.00 1,003.00 1.74 8.64
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,020.38 0.89 4.46
Class A Shares ............. 1,000.00 1,019.14 1.14 5.71
Class B Shares ............. 1,000.00 1,016.17 1.74 8.70
Class C Shares ............. 1,000.00 1,016.17 1.74 8.70
- -----------------------------------------------------------------------------
COGNITIVE VALUE FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares** ......... 1,000.00 973.80 0.39 0.31
Class A Shares*** .......... 1,000.00 962.30 0.94 3.03
Class C Shares*** .......... 1,000.00 959.30 1.86 5.99
Class M Shares ............. 1,000.00 1,000.00 0.97 4.81
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.86 0.39 1.96
Class A Shares ............. 1,000.00 1,020.13 0.94 4.71
Class C Shares ............. 1,000.00 1,015.57 1.86 9.30
Class M Shares ............. 1,000.00 1,019.98 0.97 4.86
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
CORE EQUITY FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... $1,000.00 $1,025.40 0.91% $4.57
Class A Shares ............. 1,000.00 1,024.10 1.18 5.92
Class B Shares ............. 1,000.00 1,020.70 1.78 8.92
Class C Shares ............. 1,000.00 1,020.70 1.78 8.92
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,020.28 0.91 4.56
Class A Shares ............. 1,000.00 1,018.94 1.18 5.91
Class B Shares ............. 1,000.00 1,015.97 1.78 8.90
Class C Shares ............. 1,000.00 1,015.97 1.78 8.90
- -----------------------------------------------------------------------------
ENHANCED GROWTH FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares*** .......... 1,000.00 866.50 1.35 4.14
Class C Shares*** .......... 1,000.00 867.60 1.47 4.51
Class M Shares ............. 1,000.00 864.00 0.95 4.39
HYPOTHETICAL 5% RETURN
Class A Shares ............. 1,000.00 1,018.10 1.35 6.76
Class C Shares ............. 1,000.00 1,017.50 1.47 7.35
Class M Shares ............. 1,000.00 1,020.08 0.95 4.76
- --------------------------------------------------------------------------------
38 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares**** ....... $1,000.00 $ 981.60 1.29% $ 4.17
Class A Shares*** .......... 1,000.00 987.30 1.69 5.52
Class C Shares*** .......... 1,000.00 983.80 2.28 7.44
Class M Shares ............. 1,000.00 1,188.30 1.35 7.32
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,018.40 1.29 6.46
Class A Shares ............. 1,000.00 1,016.41 1.69 8.45
Class C Shares ............. 1,000.00 1,013.49 2.28 11.38
Class M Shares ............. 1,000.00 1,018.10 1.35 6.76
- -----------------------------------------------------------------------------
LARGE CAP GROWTH FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 918.30 0.84 4.00
Class A Shares ............. 1,000.00 918.10 1.10 5.23
Class B Shares ............. 1,000.00 915.50 1.70 8.07
Class C Shares ............. 1,000.00 915.60 1.70 8.07
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,020.63 0.84 4.21
Class A Shares ............. 1,000.00 1,019.34 1.10 5.51
Class B Shares ............. 1,000.00 1,016.36 1.70 8.50
Class C Shares ............. 1,000.00 1,016.36 1.70 8.50
- -----------------------------------------------------------------------------
LARGE CAP VALUE FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,030.70 0.91 4.58
Class A Shares ............. 1,000.00 1,029.40 1.17 5.89
Class B Shares ............. 1,000.00 1,026.20 1.77 8.89
Class C Shares ............. 1,000.00 1,026.50 1.77 8.89
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,020.28 0.91 4.56
Class A Shares ............. 1,000.00 1,018.99 1.17 5.86
Class B Shares ............. 1,000.00 1,016.02 1.77 8.85
Class C Shares ............. 1,000.00 1,016.02 1.77 8.85
- -----------------------------------------------------------------------------
SMALL CAP GROWTH FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 871.30 1.45 6.73
Class A Shares ............. 1,000.00 869.80 1.72 7.97
Class B Shares ............. 1,000.00 867.40 2.32 10.74
Class C Shares ............. 1,000.00 867.40 2.32 10.74
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,017.60 1.45 7.25
Class A Shares ............. 1,000.00 1,016.27 1.72 8.60
Class B Shares ............. 1,000.00 1,013.29 2.32 11.58
Class C Shares ............. 1,000.00 1,013.29 2.32 11.58
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
SMALL CAP VALUE FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... $1,000.00 $ 978.90 1.34% $ 6.57
Class A Shares ............. 1,000.00 978.00 1.60 7.85
Class B Shares ............. 1,000.00 974.80 2.19 10.72
Class C Shares ............. 1,000.00 974.70 2.19 10.72
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,018.15 1.34 6.71
Class A Shares ............. 1,000.00 1,016.86 1.60 8.00
Class B Shares ............. 1,000.00 1,013.93 2.19 10.94
Class C Shares ............. 1,000.00 1,013.93 2.19 10.94
- -----------------------------------------------------------------------------
VALUE MOMENTUM FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,024.20 0.92 4.62
Class A Shares ............. 1,000.00 1,022.50 1.17 5.87
Class B Shares ............. 1,000.00 1,019.60 1.77 8.86
Class C Shares ............. 1,000.00 1,019.30 1.77 8.86
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,020.23 0.92 4.61
Class A Shares ............. 1,000.00 1,018.99 1.17 5.86
Class B Shares ............. 1,000.00 1,016.02 1.77 8.85
Class C Shares ............. 1,000.00 1,016.02 1.77 8.85
- -----------------------------------------------------------------------------
CAPITAL GROWTH ALLOCATION FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares ............. 1,000.00 992.60 0.81 4.00
Class C Shares ............. 1,000.00 989.20 1.51 7.45
HYPOTHETICAL 5% RETURN
Class A Shares ............. 1,000.00 1,020.78 0.81 4.06
Class C Shares ............. 1,000.00 1,017.31 1.51 7.55
- -----------------------------------------------------------------------------
GROWTH & INCOME ALLOCATION FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares ............. 1,000.00 994.70 0.81 4.01
Class C Shares ............. 1,000.00 991.30 1.51 7.46
HYPOTHETICAL 5% RETURN
Class A Shares ............. 1,000.00 1,020.78 0.81 4.06
Class C Shares ............. 1,000.00 1,017.31 1.51 7.55
- -----------------------------------------------------------------------------
INCOME PLUS ALLOCATION FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Class A Shares ............. 1,000.00 999.60 0.88 4.36
Class C Shares ............. 1,000.00 996.30 1.58 7.82
HYPOTHETICAL 5% RETURN
Class A Shares ............. 1,000.00 1,020.43 0.88 4.41
Class C Shares ............. 1,000.00 1,016.96 1.58 7.90
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 39
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
DISCLOSURE OF FUND EXPENSES (UNAUDITED) (CONCLUDED)
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
BOND FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... $1,000.00 $1,002.00 0.73% $3.62
Class A Shares ............. 1,000.00 1,000.80 0.99 4.91
Class B Shares ............. 1,000.00 997.40 1.67 8.27
Class C Shares ............. 1,000.00 999.50 1.41 6.99
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,021.17 0.73 3.66
Class A Shares ............. 1,000.00 1,019.89 0.99 4.96
Class B Shares ............. 1,000.00 1,016.51 1.67 8.35
Class C Shares ............. 1,000.00 1,017.80 1.41 7.05
- -----------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,007.30 0.50 2.49
Class A Shares ............. 1,000.00 1,006.10 0.74 3.68
Class B Shares ............. 1,000.00 1,002.70 1.45 7.20
Class C Shares ............. 1,000.00 1,003.70 1.19 5.91
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.32 0.50 2.51
Class A Shares ............. 1,000.00 1,021.12 0.74 3.71
Class B Shares ............. 1,000.00 1,017.60 1.45 7.25
Class C Shares ............. 1,000.00 1,018.89 1.19 5.96
- -----------------------------------------------------------------------------
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,008.90 0.28 1.39
Class A Shares ............. 1,000.00 1,007.60 0.52 2.59
Class C Shares ............. 1,000.00 1,005.80 0.98 4.87
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,023.41 0.28 1.40
Class A Shares ............. 1,000.00 1,022.22 0.52 2.61
Class C Shares ............. 1,000.00 1,019.93 0.98 4.91
- -----------------------------------------------------------------------------
SHORT TERM BOND FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,015.00 0.65 3.25
Class A Shares ............. 1,000.00 1,013.70 0.91 4.54
Class C Shares ............. 1,000.00 1,011.30 1.36 6.78
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,021.57 0.65 3.26
Class A Shares ............. 1,000.00 1,020.28 0.91 4.56
Class C Shares ............. 1,000.00 1,018.05 1.36 6.80
- -----------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,014.30 0.48 2.40
Class A Shares ............. 1,000.00 1,013.00 0.73 3.64
Class S Shares ............. 1,000.00 1,011.80 0.97 4.84
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.41 0.48 2.41
Class A Shares ............. 1,000.00 1,021.17 0.73 3.66
Class S Shares ............. 1,000.00 1,019.98 0.97 4.86
BEGINNING ENDING NET EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
2/1/06 7/31/06 RATIOS PERIOD*
- -----------------------------------------------------------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... $1,000.00 $1,022.20 0.52% $2.61
Class A Shares ............. 1,000.00 1,021.00 0.77 3.86
Class S Shares ............. 1,000.00 1,019.80 1.02 5.11
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.22 0.52 2.61
Class A Shares ............. 1,000.00 1,020.98 0.77 3.86
Class S Shares ............. 1,000.00 1,019.74 1.02 5.11
- -----------------------------------------------------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,021.70 0.52 2.61
Class A Shares ............. 1,000.00 1,020.50 0.77 3.86
Class B Shares ............. 1,000.00 1,016.90 1.47 7.35
Class C Shares ............. 1,000.00 1,018.20 1.22 6.10
Class S Shares ............. 1,000.00 1,019.20 1.02 5.11
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.22 0.52 2.61
Class A Shares ............. 1,000.00 1,020.98 0.77 3.86
Class B Shares ............. 1,000.00 1,017.50 1.47 7.35
Class C Shares ............. 1,000.00 1,018.74 1.22 6.11
Class S Shares ............. 1,000.00 1,019.74 1.02 5.11
- -----------------------------------------------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- -----------------------------------------------------------------------------
ACTUAL FUND RETURN
Fiduciary Shares ........... 1,000.00 1,020.10 0.52 2.60
Class A Shares ............. 1,000.00 1,018.80 0.77 3.85
Class S Shares ............. 1,000.00 1,017.60 1.02 5.10
HYPOTHETICAL 5% RETURN
Fiduciary Shares ........... 1,000.00 1,022.22 0.52 2.61
Class A Shares ............. 1,000.00 1,020.98 0.77 3.86
Class S Shares ............. 1,000.00 1,019.74 1.02 5.11
* 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).
** Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 29/365 (to
reflect the period since the Class commenced operations).
*** Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 120/365 (to
reflect the period since the Class commenced operations).
**** Expenses are equal to the Fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 119/365 (to
reflect the period since the Class commenced operations).
- --------------------------------------------------------------------------------
40 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BALANCED FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 68.3%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 6.8%
Bed Bath & Beyond* 4,250 $ 142
Coach* 5,750 165
Comcast, Cl A* 8,514 293
Harrah's Entertainment 5,045 303
Hilton Hotels (A) 7,770 186
Home Depot 8,085 280
Kohl's* 4,992 283
News, Cl B 15,020 302
Nordstrom (A) 5,230 179
Staples 7,760 168
Target (A) 8,945 411
Tiffany 4,210 133
Time Warner 13,440 222
Walt Disney (A) 6,295 187
----------
3,254
----------
CONSUMER STAPLES - 6.8%
Altria Group 6,495 519
CVS 23,182 759
Kellogg 5,775 278
PepsiCo 8,940 567
Procter & Gamble 13,105 736
Wal-Mart Stores 9,350 416
----------
3,275
----------
ENERGY - 7.9%
BP ADR 3,780 274
ConocoPhillips 6,790 466
Exxon Mobil 18,358 1,244
Halliburton 15,730 525
Occidental Petroleum 2,690 290
Suncor Energy 12,455 1,009
----------
3,808
----------
FINANCIALS - 14.8%
Allstate (A) 10,490 596
American Express 4,010 209
American International Group 7,567 459
Bank of America 15,825 815
Citigroup 20,952 1,012
Goldman Sachs Group 4,000 611
JPMorgan Chase 19,303 881
Keycorp 7,765 286
Merrill Lynch 9,995 728
National City (A) 7,050 254
SLM 10,320 519
Wells Fargo 5,510 399
Xl Capital, Cl A (A) 5,180 330
----------
7,099
----------
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE - 8.5%
Abbott Laboratories 13,425 $ 641
Gilead Sciences (A)* 4,960 305
GlaxoSmithKline ADR (A) 6,740 373
HCA (A) 3,450 170
Johnson & Johnson 11,315 708
Medtronic (A) 4,920 249
Novartis ADR 7,695 433
Pfizer 16,719 434
Sanofi-Aventis ADR (A) 8,085 383
WellPoint* 5,225 389
----------
4,085
----------
INDUSTRIALS - 7.5%
3M 3,535 249
Danaher (A) 9,855 643
Emerson Electric 2,485 196
General Electric 48,030 1,570
Honeywell International 8,970 347
Rockwell Automation 6,235 386
Tyco International 7,875 206
----------
3,597
----------
INFORMATION TECHNOLOGY - 9.8%
Accenture, Cl A 11,925 349
Applied Materials (A) 14,790 233
Cisco Systems* 32,490 580
Citrix Systems* 12,615 401
Corning* 12,085 230
Dell (A)* 6,125 133
EMC* 18,625 189
Intel 14,980 270
International Business Machines (A) 4,390 340
Maxim Integrated Products 5,795 170
Microsoft 36,515 877
Oracle (A)* 21,240 318
Symantec* 13,705 238
Texas Instruments (A) 13,090 390
----------
4,718
----------
MATERIALS - 1.9%
Alcoa 6,400 192
BHP Billiton ADR (A) 7,755 327
Praxair 7,100 389
----------
908
----------
TELECOMMUNICATIONS - 1.4%
Sprint Nextel 8,895 176
Verizon Communications 15,580 527
----------
703
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 41
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BALANCED FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
UTILITIES - 2.9%
Constellation Energy Group 10,625 $ 615
Exelon (A) 7,565 438
PG&E 7,915 330
----------
1,383
----------
TOTAL COMMON STOCK
(Cost $28,599) 32,830
----------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 11.8%
- -----------------------------------------------------------------------------
FHLMC Gold
6.500%, 11/01/09 $ 81 81
6.000%, 09/01/17 174 175
6.000%, 02/01/28 88 88
5.000%, 10/01/20 62 61
4.500%, 05/01/19 77 74
FHLMC, CMO REMIC, Ser 1626, Cl PT
6.000%, 12/15/08 89 89
FHLMC, CMO REMIC, Ser 2663, Cl QK
3.500%, 04/15/17 91 91
FNMA
8.000%, 08/01/24 6 6
8.000%, 05/01/25 32 34
8.000%, 07/01/26 9 9
7.500%, 09/01/26 8 8
7.000%, 09/01/25 13 14
7.000%, 07/01/26 31 32
7.000%, 09/01/26 13 13
7.000%, 12/01/27 31 32
6.500%, 05/01/14 88 89
6.500%, 03/01/24 9 9
6.500%, 01/01/28 40 40
6.500%, 05/01/29 18 18
6.000%, 08/01/14 189 190
6.000%, 02/01/17 175 177
6.000%, 03/01/28 104 104
6.000%, 05/01/28 25 25
5.500%, 12/01/17 168 167
5.500%, 11/01/33 284 277
5.000%, 12/01/17 54 53
5.000%, 04/01/18 278 270
5.000%, 05/01/18 284 277
5.000%, 11/01/18 22 22
5.000%, 03/01/34 267 254
5.000%, 08/01/34 224 213
5.000%, 07/01/35 234 222
4.500%, 02/01/19 179 171
4.500%, 05/01/19 449 429
4.500%, 07/01/20 364 348
4.000%, 05/01/19 480 448
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
FNMA, CMO REMIC, Ser 25, Cl CD
3.500%, 03/25/17 $ 287 $ 274
GNMA
7.500%, 05/15/24 13 14
7.500%, 09/15/25 13 13
7.500%, 09/15/26 16 17
7.500%, 01/15/27 11 11
7.000%, 02/15/26 35 36
7.000%, 08/15/26 15 15
7.000%, 10/15/27 41 42
7.000%, 03/15/29 48 50
6.500%, 09/15/08 35 35
6.500%, 06/15/23 7 7
6.500%, 04/15/26 15 15
6.500%, 05/15/28 29 29
6.500%, 01/15/29 55 56
6.000%, 11/15/08 38 38
6.000%, 12/15/28 115 115
6.000%, 02/15/29 174 175
6.000%, 04/15/29 98 99
----------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $5,762) 5,651
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 11.7%
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 1.3%
Time Warner
7.480%, 01/15/08 300 307
Time Warner Entertainment
8.375%, 03/15/23 275 306
----------
613
----------
CONSUMER STAPLES - 0.2%
Safeway
7.500%, 09/15/09 100 105
----------
ENERGY - 0.5%
Kinder Morgan (A)
7.250%, 03/01/28 275 251
----------
FINANCIALS - 3.0%
Associates
6.950%, 11/01/18 175 191
Bank of America
5.250%, 02/01/07 100 100
First Bank System
6.875%, 09/15/07 400 404
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
42 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BALANCED FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
GE Global Insurance
7.750%, 06/15/30 $ 200 $ 230
HSBC Bank USA
3.875%, 09/15/09 200 191
Morgan Stanley
6.750%, 04/15/11 200 209
Wells Fargo Bank
6.450%, 02/01/11 100 104
----------
1,429
----------
FOREIGN GOVERNMENTS - 1.0%
Hydro Quebec, Ser HY
8.400%, 01/15/22 150 191
Pemex Project Funding Master Trust
9.125%, 10/13/10 250 277
----------
468
----------
HEALTH CARE - 1.2%
HCA
7.875%, 02/01/11 200 189
Pharmacia
5.875%, 12/01/08 225 227
United Health Group
5.250%, 03/15/11 150 148
----------
564
----------
INDUSTRIALS - 2.3%
General Electric
5.000%, 02/01/13 150 145
McDonnell Douglas
6.875%, 11/01/06 200 201
Raychem
7.200%, 10/15/08 225 232
Raytheon
6.550%, 03/15/10 200 206
Waste Management
7.000%, 10/15/06 350 351
----------
1,135
----------
INFORMATION TECHNOLOGY - 0.6%
Cisco Systems
5.250%, 02/22/11 175 173
International Business Machines
6.500%, 01/15/28 100 104
----------
277
----------
REAL ESTATE INVESTMENT TRUST - 0.9%
Boston Properties
5.000%, 06/01/15 250 232
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST - (CONTINUED)
EOP Operating LP
6.800%, 01/15/09 $ 200 $ 205
----------
437
----------
TELECOMMUNICATION - 0.3%
Bell Atlantic of Maryland
8.000%, 10/15/29 75 80
New England Telephone & Telegraph
7.875%, 11/15/29 50 53
----------
133
----------
UTILITIES - 0.4%
Virginia Electric & Power, Ser A
4.750%, 03/01/13 200 187
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $5,796) 5,599
----------
- -----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 4.1%
- -----------------------------------------------------------------------------
U.S. Treasury Bonds (A)
8.125%, 08/15/19 360 461
7.250%, 05/15/16 400 468
7.125%, 02/15/23 100 121
U.S. Treasury Inflation Index Note (A)
3.000%, 07/15/12 901 932
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $1,988) 1,982
----------
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 1.5%
- -----------------------------------------------------------------------------
CenterPoint Energy Transition Bond Co. II,
Ser A, Cl A3
5.090%, 08/01/15 225 220
MBNA Credit Card Master Note Trust,
Ser 2005-A7, Cl A7
4.300%, 02/15/11 250 245
Pacific Gas, Ser 1997-1, Cl A7
6.420%, 09/25/08 20 20
PG&E Energy Recovery Funding,
Ser 2005-2, Cl A2
5.030%, 03/25/14 200 198
USAA Auto Owner Trust,
Ser 2004-1, Cl A3
2.060%, 04/15/08 60 59
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $755) 742
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 43
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BALANCED FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 19.4%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market value
$2,625,059) (B) $ 2,500 $ 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $1,096,879
(collateralized by a U.S. Treasury
obligation, par value $1,108,000,
4.875%, 04/30/11, total market
value $1,118,886) 1,097 1,097
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $5,720,647
(collateralized by various mortgage
obligations, ranging in par value
$162-$21,504,733, 0.000%-8.000%,
06/05/08-04/11/37, total market
value $6,005,785) (B) 5,720 5,720
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $9,317) 9,317
----------
TOTAL INVESTMENTS - 116.8%
(Cost $52,217) $ 56,121
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $48,063,411.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$8,009,019.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
CMO -- COLLATERALIZED MORTGAGE OBLIGATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA -- GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
LP -- LIMITED PARTNERSHIP
REMIC -- REAL ESTATE MORTGAGE INVESTMENT CONDUIT
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
44 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
COGNITIVE VALUE FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 94.5%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 14.8%
Aftermarket Technology* 16,300 $ 356
Applica (A)* 115,400 444
Ballantyne of Omaha* 13,300 64
Books-A-Million 19,500 297
Building Material Holding (A) 12,600 270
Cato, Cl A 16,500 401
Cavco Industries* 5,000 164
Celebrate Express* 20,100 251
Dress Barn* 14,000 302
Drew Industries* 5,100 119
Emerson Radio* 73,500 221
Ethan Allen Interiors 4,500 168
Fleetwood Enterprises* 27,900 199
IHOP (A) 6,500 296
IMPCO Technologies* 22,700 229
Interface, Cl A* 32,200 395
Interstate Hotels & Resorts* 48,100 478
Jack in the Box* 5,800 229
Jakks Pacific* 15,100 249
John Wiley & Sons, Cl A 20,600 681
Kirkland's (A)* 46,000 238
Landry's Restaurants 4,000 113
Lenox Group* 8,200 57
Live Nation 12,700 266
Lone Star Steakhouse & Saloon 8,400 197
Luby's* 41,100 357
Modine Manufacturing 34,400 811
Multimedia Games (A)* 21,600 212
Nathan's Famous* 16,500 218
Oxford Industries 4,000 142
Rentrak* 28,000 295
Shoe Carnival* 10,500 231
Skyline 7,200 272
Sonic Automotive (A) 25,300 582
Stage Stores 14,000 415
Standard-Pacific 15,800 353
Stein Mart 18,000 232
Steiner Leisure* 8,100 325
Steven Madden 11,800 395
Stride Rite 19,800 251
Sunterra* 15,300 181
Unifi* 74,700 212
United Retail Group* 15,700 226
Universal Technical Institute* 10,000 201
Weyco Group 11,000 255
Wolverine World Wide 16,000 407
World Wrestling Entertainment 41,900 684
----------
13,941
----------
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
CONSUMER STAPLES - 4.3%
Casey's General Stores 11,700 $ 265
Corn Products International 10,500 349
Diamond Foods* 15,000 230
Flowers Foods 10,500 299
Inter Parfums 12,400 226
J&J Snack Foods 22,500 677
Longs Drug Stores 4,500 185
National Beverage 28,900 476
Natural Health Trends (A)* 25,300 71
Performance Food Group (A)* 17,600 490
Reddy Ice Holdings 8,600 192
Schiff Nutrition International* 20,700 141
Spartan Stores* 17,000 255
Spectrum Brands (A)* 5,500 37
WD-40 5,000 163
----------
4,056
----------
ENERGY - 6.4%
Adams Resources & Energy 4,200 170
Grey Wolf (A)* 85,200 653
Lone Star Technologies* 11,000 518
Magellan Petroleum (A)* 82,000 120
NS Group* 5,500 278
Oceaneering International* 18,400 804
Parker Drilling* 44,200 321
St. Mary Land & Exploration (A) 27,900 1,200
Swift Energy* 8,500 408
Veritas DGC* 19,000 1,088
Western Refining 17,500 402
----------
5,962
----------
FINANCIALS - 20.6%
21st Century Holding (A) 15,900 204
American Community Bancshares 17,000 207
Ameris Bancorp 10,000 255
AmeriServ Financial (A)* 34,009 158
Argonaut Group* 22,200 647
Bancorp* 10,100 251
Bancorpsouth 12,200 334
BancTrust Financial Group (A) 10,400 286
Bank of Granite 11,700 254
BankUnited Financial, Cl A 9,300 275
BFC Financial, Cl A (A)* 38,300 234
Boston Private Financial Holdings 14,400 362
Cardinal Financial 18,700 199
Cash America International 25,100 860
Citizens (A)* 43,200 224
Community Bank System 11,000 233
Delphi Financial Group, Cl A 25,650 977
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 45
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
COGNITIVE VALUE FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
Downey Financial (A) 5,700 $ 378
Entertainment Properties Trust REIT 5,000 213
Ezcorp, Cl A* 10,600 441
First Defiance Financial 8,300 220
First Republic Bank 7,000 298
FNB 6,800 254
Intervest Bancshares* 6,700 297
KHD Humboldt Wedag International* 10,000 290
LandAmerica Financial Group (A) 4,500 287
Lexington Corporate Properties Trust REIT (A) 14,000 279
LTC Properties REIT 9,000 199
MBT Financial (A) 13,700 220
Mercer Insurance Group 12,400 247
Metrocorp Bancshares 9,100 285
MicroFinancial 62,300 210
National Bankshares 9,400 209
National Health Realty REIT 11,400 211
National Retail Properties REIT 24,000 500
New Century Financial REIT (A) 11,500 502
Nicholas Financial* 19,400 275
Northrim BanCorp 9,800 242
NorthStar Realty Finance REIT* 54,300 655
Odyssey Re Holdings (A) 33,800 909
ProAssurance* 6,100 303
Procentury 17,400 254
Provident Bankshares 9,900 364
Quanta Capital Holdings* 16,600 37
Redwood Trust REIT (A) 6,500 309
Selective Insurance Group (A) 9,200 469
Shurgard Storage Centers, Cl A REIT (A) 15,600 1,028
Sovran Self Storage REIT (A) 8,600 444
State Bancorp 14,500 258
Sterling Bancshares 21,000 411
Sterling Financial 9,100 291
United Security Bancshares (A) 8,400 232
Whitney Holding 13,400 484
Zenith National Insurance 21,400 856
----------
19,321
----------
HEALTH CARE - 6.0%
Analogic 4,400 201
ArQule* 53,000 273
Datascope 8,000 246
DJO* 6,500 257
Dynavax Technologies (A)* 18,000 72
I-Trax (A)* 68,500 228
Kos Pharmaceuticals* 5,600 231
LCA-Vision 5,000 216
Magellan Health Services* 9,000 433
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE - (CONTINUED)
Medical Staffing Network Holdings* 44,700 $ 272
Memry* 104,500 254
Nutraceutical International* 16,000 226
NWH 18,800 342
Owens & Minor 15,000 453
Parexel International* 12,100 359
PDI* 16,400 251
Pediatric Services of America* 18,100 226
Savient Pharmaceuticals* 31,400 185
SFBC International (A)* 15,100 245
Viasys Healthcare* 14,300 368
Vital Signs 5,800 299
----------
5,637
----------
INDUSTRIALS - 17.7%
ABX Air* 56,200 303
Acuity Brands 18,600 813
Albany International, Cl A 19,700 708
Apogee Enterprises 19,100 275
Applied Industrial Technologies 27,900 651
Arbinet-thexchange* 36,200 158
Arkansas Best 7,800 347
Armor Holdings* 7,500 388
Baldwin Technology, Cl A* 40,700 216
Banta 7,000 247
Barrett Business Services* 9,000 194
Belden CDT 20,700 672
CBIZ* 48,500 358
EGL* 18,200 799
EMCOR Group* 16,100 830
EnPro Industries* 10,500 328
Exponent* 14,400 227
ExpressJet Holdings* 38,500 263
Freightcar America 5,500 295
GP Strategies* 31,900 237
Healthcare Services Group 20,600 445
IDEX 7,800 339
Industrial Distribution Group* 29,900 258
International Aluminum 4,900 183
JLG Industries 14,000 253
Kaman 10,600 195
Kansas City Southern (A)* 12,600 310
Key Technology* 20,200 251
Kirby* 7,200 231
Labor Ready (A)* 16,700 272
Lennox International 17,000 388
LSI Industries 14,900 228
Moog, Cl A* 11,700 406
Mueller Industries 14,000 514
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
46 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
COGNITIVE VALUE FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INDUSTRIALS - (CONTINUED)
NCO Group* 11,600 $ 307
Nordson 5,700 259
Oshkosh Truck (A) 10,700 459
Spherion (A)* 27,000 205
United Stationers* 10,600 521
URS* 20,700 820
Valmont Industries 18,000 915
Viad 16,600 539
----------
16,607
----------
INFORMATION TECHNOLOGY - 12.9%
Advanced Energy Industries* 11,800 153
Aeroflex* 22,100 224
American Software, Cl A 33,800 203
Anixter International 14,900 821
Bel Fuse, Cl B 7,000 221
Brightpoint* 14,580 214
CalAmp* 22,800 143
CallWave (A)* 48,500 160
Catapult Communications* 16,900 170
Ceragon Networks* 50,000 233
Checkpoint Systems* 14,000 231
Coherent* 14,700 471
Cohu 14,400 219
Computer Horizons* 50,700 231
Cymer* 7,400 290
Diodes* 5,500 197
Embarcadero Technologies* 41,500 244
Filenet* 11,000 350
Gerber Scientific* 22,100 339
Glenayre Technologies* 76,000 197
InFocus* 63,000 173
Integral Systems 8,800 262
Inter-Tel 12,400 266
IXYS* 26,800 252
Kopin* 54,800 182
Lightbridge* 23,700 274
Mapinfo* 20,100 230
Micros Systems* 9,100 364
NetScout Systems* 34,000 219
Opnet Technologies* 24,300 308
Overland Storage* 26,900 194
Pegasystems* 28,100 183
Pemstar (A)* 98,300 356
Performance Technologies* 32,300 203
PFSweb (A)* 142,000 136
Phoenix Technologies* 32,400 154
Photronics* 16,700 233
Planar Systems* 14,900 157
Radisys* 15,000 316
Richardson Electronics 27,400 194
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
sAgilysys 14,500 $ 227
Scailex* 39,400 283
Startek 14,700 196
Technitrol 7,800 193
TTI Team Telecom International* 59,700 275
Varian Semiconductor Equipment
Associates* 15,600 495
White Electronic Designs* 39,700 198
Zygo* 16,000 248
----------
12,082
----------
MATERIALS - 7.1%
Aleris International* 12,810 524
AptarGroup 5,200 268
Arch Chemicals 9,600 340
Caraustar Industries* 15,800 112
Carpenter Technology 7,600 748
Chaparral Steel* 5,400 379
Commercial Metals 37,000 840
Core Molding Technologies* 37,000 218
Friedman Industries 19,300 157
HB Fuller 14,400 576
Innospec 11,600 286
Material Sciences* 18,100 170
Olympic Steel 8,600 302
Reliance Steel & Aluminum 18,000 645
Rock-Tenn, Cl A 11,200 193
Schulman A 9,900 217
Synalloy 17,400 230
Texas Industries* 9,200 454
----------
6,659
----------
TELECOMMUNICATIONS - 0.6%
CT Communications 9,200 230
Iowa Telecommunications Services* 9,900 193
North Pittsburgh Systems 7,300 189
----------
612
----------
UTILITIES - 4.1%
Allete 11,500 534
Atmos Energy 15,100 434
Avista 29,400 734
Cascade Natural Gas 11,700 303
Energen 5,500 234
Laclede Group 12,100 402
Northwest Natural Gas 17,500 665
Piedmont Natural Gas (A) 9,200 237
Southern Union 11,041 300
----------
3,843
----------
TOTAL COMMON STOCK
(Cost $78,694) 88,720
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 47
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
COGNITIVE VALUE FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000)/Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MASTER NOTES - 5.3%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 2,500 $ 2,500
Bear Stearns (B)
5.463%, 08/02/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $5,000) 5,000
----------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES - 3.9%
- -----------------------------------------------------------------------------
iShares Russell 2000 Value
Index Fund (A) 24,800 1,769
iShares S&P SmallCap 600 Value
Index Fund (A) 26,100 1,757
Rydex S&P Smallcap 600
Pure Value* 4,500 168
----------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $3,128) 3,694
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.3%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/05/37, total market
value $2,625,059) (B) $ 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $2,208,516
(collateralized by a U.S. Treasury
obligation, par value $2,231,000, 4.875%,
04/30/11, total market value $2,252,920) 2,208 2,208
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $6,795,600
(collateralized by various mortgage
obligations, ranging in par value
$193 - $25,545,636, 0.000% -
8.000%, 06/25/08 - 04/11/37,
total market value $7,134,318) (B) 6,795 6,795
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $11,503) 11,503
----------
TOTAL INVESTMENTS - 116.0%
(Cost $98,325) $ 108,917
==========
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $93,865,734.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$13,618,273.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
CL -- CLASS
REIT -- REAL ESTATE INVESTMENT TRUST
S&P -- STANDARD & POOR'S
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
48 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CORE EQUITY FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 99.8%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 9.4%
Brunswick 27,100 $ 801
Dillard's, Cl A 48,800 1,465
Family Dollar Stores 19,400 441
Gannett 11,900 620
Home Depot 67,795 2,353
Jones Apparel Group 28,500 844
Leggett & Platt 46,600 1,063
Lennar, Cl A (A) 10,925 489
Liz Claiborne (A) 31,900 1,128
Mattel 33,600 606
Newell Rubbermaid 23,400 617
Target (A) 5,700 262
Time Warner 16,700 275
----------
10,964
----------
CONSUMER STAPLES - 9.5%
Anheuser-Busch 16,800 809
ConAgra Foods (A) 54,400 1,170
General Mills 20,700 1,074
Kimberly-Clark 27,305 1,667
Kraft Foods, Cl A (A) 14,400 467
Kroger 28,800 660
Pepsi Bottling Group 61,100 2,032
Safeway (A) 82,400 2,314
Wal-Mart Stores 19,900 885
----------
11,078
----------
ENERGY - 9.4%
BP ADR 9,705 704
Chevron 20,000 1,316
ConocoPhillips 26,930 1,848
Exxon Mobil 48,100 3,258
Hess (A) 58,800 3,110
Nabors Industries (A)* 21,400 756
----------
10,992
----------
FINANCIALS - 20.6%
AMBAC Financial Group 9,900 823
Assurant (A) 24,700 1,190
Bank of America 55,680 2,869
Capital One Financial 8,200 634
CIT Group 26,800 1,230
Citigroup 81,848 3,954
Goldman Sachs Group 23,110 3,530
JPMorgan Chase 16,220 740
Keycorp 10,000 369
Lincoln National 8,600 488
Morgan Stanley 25,300 1,683
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
National City (A) 100,700 $ 3,625
Principal Financial Group (A) 19,100 1,031
Safeco 24,500 1,316
UnumProvident (A) 30,100 489
----------
23,971
----------
HEALTH CARE - 13.2%
Amgen* 9,400 656
Cigna 18,600 1,697
HCA (A) 34,400 1,691
Health Management Associates, Cl A 16,700 340
Johnson & Johnson 10,500 657
King Pharmaceuticals (A)* 48,800 831
Merck 63,300 2,549
Pfizer 184,009 4,782
Universal Health Services, Cl B 37,900 2,122
----------
15,325
----------
INDUSTRIALS - 12.9%
Cendant 20,200 303
CSX 22,100 1,341
General Electric 106,155 3,470
Manpower 11,000 654
Northrop Grumman 56,760 3,757
Paccar 5,700 460
Ryder System 52,100 2,626
Tyco International 65,200 1,701
Waste Management 22,000 757
----------
15,069
----------
INFORMATION TECHNOLOGY - 15.3%
Cisco Systems* 14,000 250
Computer Sciences* 31,100 1,629
Convergys* 78,500 1,498
EMC* 67,800 688
Hewlett-Packard 20,500 654
Intel 106,240 1,912
International Business Machines 29,460 2,281
Lexmark International, Cl A* 10,100 546
Microsoft 54,525 1,310
Molex 15,600 495
Nokia ADR 134,175 2,663
Novellus Systems (A)* 44,600 1,129
STMicroelectronics (A) 99,100 1,483
Synopsys* 73,900 1,323
----------
17,861
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 49
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CORE EQUITY FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
MATERIALS - 3.6%
Alcoa 57,440 $ 1,720
Ashland 4,700 313
Dow Chemical 17,200 595
International Paper 26,900 923
PPG Industries 10,400 640
----------
4,191
----------
TELECOMMUNICATIONS - 2.8%
Telefonos de Mexico ADR (A) 65,200 1,528
Verizon Communications 49,300 1,668
----------
3,196
----------
UTILITIES - 3.1%
American Electric Power 53,700 1,940
DTE Energy (A) 13,200 558
Duke Energy 34,800 1,055
----------
3,553
----------
TOTAL COMMON STOCK
(Cost $110,070) 116,200
----------
- ----------------------------------------------------------------------------
MASTER NOTES - 4.3%
- ----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 2,500 2,500
Bear Stearns (B)
5.463%, 08/02/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $5,000) 5,000
----------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER - 2.1%
- ----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 2,500 2,500
----------
TOTAL COMMERCIAL PAPER
(Cost $2,500) 2,500
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.0%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $3,000,451
(collateralized by various mortgage
obligations, ranging in par value
$51,300-$1,668,177, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $3,150,071) (B) $ 3,000 $ 3,000
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $236,940
(collateralized by a U.S. Treasury
obligation, par value $240,000,
4.875%, 04/30/11, total market
value $242,358) 237 237
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $8,431,776
(collateralized by various mortgage
obligations, ranging in par value
$239 - $31,696,255, 0.00% - 8.000%,
06/25/08 - 04/11/37, total market
value $8,852,047) (B) 8,431 8,431
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $11,668) 11,668
----------
TOTAL INVESTMENTS - 116.2%
(Cost $129,238) $ 135,368
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $116,495,781.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$18,227,746.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
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]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
ENHANCED GROWTH FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 98.9%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.0%
Amazon.com (A)* 8,900 $ 239
Comcast, Cl A (A)* 38,900 1,337
Garmin++ (A) 6,700 637
IAC/InterActiveCorp (A)* 35,550 843
XM Satellite Radio Holdings, Cl A (A)* 48,500 563
----------
3,619
----------
HEALTH CARE - 13.3%
Adolor* 12,700 304
Alcon++ 6,800 751
Allergan 9,400 1,014
Amgen* 23,600 1,646
Amylin Pharmaceuticals (A)* 11,700 571
Anadys Pharmaceuticals* 57,000 189
Biogen Idec* 28,100 1,184
BioMarin Pharmaceuticals* 43,000 628
Boston Scientific* 12,600 214
Celgene (A)* 30,500 1,461
Cotherix* 30,500 256
Dusa Pharmaceuticals (A)* 55,900 251
Express Scripts* 7,600 585
Genentech* 17,300 1,398
Genzyme* 13,000 888
Gilead Sciences* 19,800 1,217
Invitrogen* 10,300 636
Medimmune* 13,500 343
Teva Pharmaceutical Industries ADR (A) 46,600 1,542
United Therapeutics* 8,600 510
Varian Medical Systems* 11,100 503
----------
16,091
----------
INDUSTRIALS - 0.4%
Monster Worldwide* 11,200 448
----------
INFORMATION TECHNOLOGY - 81.6%
Adobe Systems* 50,000 1,425
Advanced Micro Devices* 24,800 481
Akamai Technologies* 13,100 519
Altera* 53,000 917
Amdocs++* 34,900 1,266
Analog Devices 36,100 1,167
Apple Computer* 46,800 3,181
Applied Materials (A) 95,000 1,495
aQuantive (A)* 16,000 328
ASML Holding++* 47,000 935
Autodesk* 24,000 819
Automatic Data Processing 29,800 1,304
BEA Systems* 41,400 486
BearingPoint (A)* 30,000 240
Broadcom, Cl A* 64,600 1,550
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
Cadence Design Systems* 41,900 $ 678
CDW 8,000 473
Check Point Software Technologies++* 28,500 479
Checkfree* 14,600 650
Cisco Systems* 187,100 3,340
Citrix Systems* 25,000 794
Cognizant Technology Solutions, Cl A (A)* 27,700 1,814
Cognos++* 17,600 550
Comverse Technology* 42,000 814
Corning* 94,600 1,804
Dell (A)* 83,300 1,806
eBay* 71,600 1,723
Electronic Arts* 32,600 1,536
EMC* 204,400 2,075
F5 Networks* 18,800 871
First Data 28,700 1,172
Fiserv* 22,000 961
Flextronics International++* 62,000 703
Formfactor (A)* 26,600 1,140
Google, Cl A* 11,900 4,601
Hewlett-Packard 60,100 1,918
Intel 119,300 2,147
International Business Machines 24,800 1,920
Intersil, Cl A 20,500 482
Intuit* 46,600 1,439
JDS Uniphase* 153,300 327
Juniper Networks (A)* 77,200 1,038
Kla-Tencor 25,000 1,055
Lam Research (A)* 25,900 1,077
Linear Technology 38,800 1,255
Marvel Technology Group++* 107,300 1,990
Maxim Integrated Products 43,300 1,272
McAfee* 32,500 700
MEMC Electronic Materials* 28,000 852
Microchip Technology 18,000 581
Microsoft 173,900 4,179
Motorola 61,800 1,407
National Semiconductor 30,000 698
NAVTEQ (A)* 31,600 890
Network Appliance* 39,700 1,179
Nokia ADR 116,400 2,311
Nvidia* 40,000 885
Oracle (A)* 183,200 2,742
Paychex 37,500 1,282
Qualcomm 92,300 3,254
Quality Systems (A)* 31,700 1,050
Red Hat* 60,900 1,442
Research In Motion++* 14,000 919
Salesforce.com (A)* 38,400 987
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 51
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
ENHANCED GROWTH FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
Samsung Electronics GDR (C) 4,600 $ 1,464
SanDisk (A)* 21,900 1,022
SAP ADR 26,500 1,209
Sapient* 46,300 222
Sun Microsystems* 140,000 609
Symantec* 85,010 1,477
Taiwan Semiconductor
Manufacturing ADR* 83,386 723
Tellabs* 38,900 366
Texas Instruments (A) 49,800 1,483
VeriSign* 56,800 1,018
Xilinx 45,000 913
Yahoo!* 94,600 2,567
----------
98,448
----------
TELECOMMUNICATIONS - 0.6%
NII Holdings* 14,100 744
----------
TOTAL COMMON STOCK
(Cost $116,435) 119,350
----------
- ----------------------------------------------------------------------------
MASTER NOTES - 4.1%
- ----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 2,500 2,500
Bear Stearns (B)
5.463%, 08/02/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $5,000) 5,000
----------
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 13.1%
- ----------------------------------------------------------------------------
Bear Stearns
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $5,000,745
(collateralized by various mortgage
obligations, ranging in par value
$85,500-$2,780,295, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $5,250,118) (B) 5,000 5,000
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $2,625,059) (B) 2,500 2,500
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - (CONTINUED)
- -----------------------------------------------------------------------------
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $1,383,940
(collateralized by a U.S. Treasury
obligation, par value $1,398,000,
4.875%, 04/30/11, total market
value $1,411,735) $ 1,384 $ 1,384
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $6,937,084
(collateralized by various mortgage
obligations, ranging in par value
$197 - $26,077,495, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market
value $7,282,854) (B) 6,936 6,936
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $15,820) 15,820
----------
TOTAL INVESTMENTS - 116.1%
(Cost $137,255) $ 140,170
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $120,732,672.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
++ SECURITY IS DOMICILED OUTSIDE OF THE UNITED STATES.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$18,828,646.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) 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." THE VALUE OF THIS SECURITY AS OF JULY 31,
2006, WAS $1,463,950 AND REPRESENTED 1.2% OF NET ASSETS.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
GDR -- GLOBAL DEPOSITARY RECEIPT
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
52 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 95.7%+
- -----------------------------------------------------------------------------
AUSTRALIA - 1.8%
Australia & New Zealand Banking
Group 21,000 $ 406
BHP Billiton 30,128 641
Commonwealth Bank of Australia 18,000 618
CSL 10,000 404
ING Office Fund 150,000 165
QBE Insurance Group 30,000 507
Rinker Group 27,000 272
Woodside Petroleum 7,500 246
Woolworths 25,000 365
Zinifex 50,000 404
----------
4,028
----------
AUSTRIA - 1.0%
Erste Bank der Oesterreichischen
Sparkassen 8,000 461
EVN 2,113 220
IMMOFINANZ Immobilien Anlagen* 20,000 230
OMV 8,630 529
Telekom Austria 18,000 407
Voestalpine* 2,500 369
----------
2,216
----------
BELGIUM - 1.2%
Belgacom 7,000 236
Brederode 10,500 344
Dexia 12,300 301
Groupe Bruxelles Lambert 2,300 242
InBev 6,400 336
KBC Groep 5,000 545
Nationale A Portefeuille 600 214
Solvay 3,000 356
----------
2,574
----------
BRAZIL - 2.1%
Banco Bradesco ADR (A) 22,032 739
Banco Itau Holding ADR (A) 28,000 864
Centrais Eletricas Brasileiras 17,500,000 369
Centrais Eletricas Brasileiras,
Preference B 1,000,000 20
Cia Vale do Rio Doce ADR 40,000 928
Embratel Participacoes ADR (A) 37,000 573
Petroleo Brasileiro ADR 11,900 1,093
----------
4,586
----------
CANADA - 1.9%
Agnico Eagle Mines 2,300 82
Alcan 2,000 91
Bank of Montreal 1,500 85
Bank of Nova Scotia 2,000 80
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
CANADA - (CONTINUED)
Barrick Gold 5,500 $ 169
BCE 7,320 167
Canadian Natural Resources 5,000 266
EnCana 5,000 270
Falconbridge 9,735 536
Goldcorp 3,300 97
HudBay Minerals* 4,400 61
Manulife Financial (A) 8,500 268
Methanex (A) 2,400 46
National Bank of Canada 5,000 259
Petro-Canada 4,500 201
Potash Corp of Saskatchewan 1,000 94
Power Corp of Canada 6,000 162
Royal Bank of Canada (A) 6,000 244
Sun Life Financial 4,000 153
Suncor Energy 3,000 243
Teck Cominco, Cl B 1,000 66
Telus 5,000 216
Toronto-Dominion Bank 4,500 230
Ultra Petroleum* 3,000 176
----------
4,262
----------
DENMARK - 0.4%
AP Moller - Maersk 25 189
Danske Bank 7,000 268
DSV 600 96
GN Store Nord* 5,400 77
Novo-Nordisk, Cl B 2,300 142
Topdanmark* 600 84
----------
856
----------
FINLAND - 0.5%
Metso 17,000 613
Sampo, Cl A 25,000 471
----------
1,084
----------
FRANCE - 9.7%
Arcelor 25,500 1,360
Arkema* 838 32
Arkema ADR* 60 2
AXA 39,311 1,356
BNP Paribas 16,780 1,633
Bouygues 15,000 749
Capgemini 14,000 752
Credit Agricole 15,100 607
Eiffage 10,000 851
Euler Hermes 4,500 506
Groupe Danone 5,000 661
L'Oreal 6,000 601
LVMH Moet Hennessy Louis Vuitton 6,000 603
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 53
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FRANCE - (CONTINUED)
Natexis Banques Populaires 2,226 $ 546
Nexans 7,000 543
PPR 6,000 801
Sanofi-Aventis 15,746 1,497
Sanofi-Aventis ADR 12,000 569
Schneider Electric 6,000 617
Societe Generale 8,200 1,223
Sodexho Alliance 17,000 863
Suez 20,000 829
Technip 15,000 805
Total 33,520 2,280
Vivendi* 25,500 863
----------
21,149
----------
GERMANY - 7.9%
Allianz 6,990 1,098
BASF 10,000 805
Bayer 10,000 493
Bayerische Hypo-und Vereinsbank 15,000 607
Celesio 9,000 421
Commerzbank 28,000 981
DaimlerChrysler 18,000 929
Deutsche Bank 11,500 1,325
Deutsche Telekom 21,860 338
E.ON 14,600 1,760
Hochtief 7,000 370
Infineon Technologies* 46,000 491
Lanxess* 19,500 730
MAN 12,000 867
Muenchener Rueckversicherungs 4,000 551
ProSiebenSat.1 Media (A)* 27,000 690
RWE (A) 6,000 527
SAP 5,000 915
Schering (A) 4,000 463
Siemens 10,000 806
ThyssenKrupp 40,000 1,400
Volkswagen 8,000 600
----------
17,167
----------
GREECE - 0.6%
Alpha Bank 19,824 508
Fourlis 25,000 355
National Bank of Greece 11,100 431
----------
1,294
----------
HONG KONG - 2.8%
ASM Pacific Technology 40,000 201
Bank of East Asia 66,000 273
BOC Hong Kong Holdings 120,000 244
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
HONG KONG - (CONTINUED)
Cheung Kong Holdings 40,000 $ 433
China Merchants Holdings International 80,000 243
China Mobile 60,000 387
China Netcom Group 200,000 365
China Overseas Land & Investment 600,000 351
China Resources Power Holdings 280,000 229
Chinese Estates Holdings 190,000 199
Citic Pacific 100,000 292
CNOOC 400,000 340
Esprit Holdings 30,000 228
Foxconn International Holdings* 145,000 337
Guoco Group 17,000 204
Henderson Land Development 60,000 329
HongKong Electric Holdings 50,000 238
Hutchison Whampoa 50,000 456
Li & Fung 119,400 250
MTR 90,000 230
Swire Pacific, Cl A 20,000 208
----------
6,037
----------
IRELAND - 0.7%
Allied Irish Banks 21,400 519
CRH 14,400 464
Irish Life & Permanent 20,700 478
----------
1,461
----------
ITALY - 1.5%
Banca Intesa 76,463 442
Banca Popolare di Milano SCRL 27,000 339
Capitalia 45,000 377
Enel 34,000 300
ENI 25,000 767
Fondiaria-Sai 8,000 323
Mediobanca 13,000 264
Tenaris 22,000 420
----------
3,232
----------
JAPAN - 22.4%
77 Bank 52,000 377
Aeon 10,000 233
Aisin Seiki 6,000 174
Amada 40,000 425
AOC Holdings 8,500 166
Arcs 11,000 130
Asahi Breweries 33,000 482
Astellas Pharma 10,000 398
Autobacs Seven 16,000 706
Bridgestone 8,000 146
Brother Industries 25,000 250
Calpis (A) 35,000 303
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
54 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
JAPAN - (CONTINUED)
Canon 24,000 $ 1,154
Chubu Electric Power 7,000 170
Cosmo Oil 88,000 425
Daiichi Sankyo 25,000 687
Dainippon Ink and Chemicals 50,000 174
Daiwa Securities Group 60,000 671
Fancl 18,000 274
Fuji Heavy Industries 168,000 1,033
Futaba 17,000 423
Futaba Industrial (A) 15,000 327
Hitachi 50,000 320
Hitachi Construction Machinery 12,000 282
Honda Motor 50,000 1,649
Hosiden 17,000 169
Isetan 10,000 157
Juki (A) 90,000 504
Kadokawa Group Holdings 6,000 219
Kinden 100,000 774
Kyushu Electric Power 22,000 513
Maeda 100,000 444
Makino Milling Machine 85,000 860
Makita 23,000 754
Marubeni 110,000 584
Matsushita Electric Industrial 25,000 520
Mazda Motor 105,000 683
Mitsubishi 35,000 718
Mitsubishi Chemical Holdings 50,000 315
Mitsubishi Electric 45,000 353
Mitsubishi Heavy Industries 55,000 225
Mitsui 30,000 457
Mitsui Fudosan 58,000 1,232
Mitsui OSK Lines 50,000 330
Mizuho Financial Group 100 840
Mori Seiki (A) 18,000 372
Nikko Cordial 30,000 358
Nintendo 3,000 560
Nippon Konpo Unyu Soko 60,000 802
Nippon Mining Holdings 46,500 394
Nippon Residential Investment 100 506
Nippon Shokubai 21,000 243
Nippon Suisan Kaisha 45,000 235
Nippon Telegraph & Telephone 195 1,019
Nippon Telegraph & Telephone ADR (A) 13,000 338
Nippon Thompson 20,000 221
Nissan Motor 86,000 927
Nisshin Steel 100,000 300
Nokia ADR 83,700 1,661
Nomura Holdings 35,000 621
NSK 65,000 498
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
JAPAN - (CONTINUED)
NTT DoCoMo 430 $ 627
Obayashi 35,000 226
Okinawa Electric Power 12,300 703
ORIX (A) 1,500 393
Parco 34,000 367
Rengo 25,000 183
Ricoh 30,000 605
Sakai Chemical Industry 150,000 750
Sanwa Shutter 50,000 264
Sanyo Shinpan Finance 5,000 212
Sawai Pharmaceutical (A) 4,000 214
Seven & I Holdings 10,000 349
Shiga Bank 90,000 610
Shinsei Bank 90,000 561
Shizuoka Bank 33,000 376
Sony 13,000 599
Sumitomo 70,000 992
Sumitomo Mitsui Financial Group 80 851
Sumitomo Trust & Banking 40,000 425
Takeda Pharmaceutical 10,000 646
Teijin 55,000 310
Toei (A) 35,000 270
Toei Animation (A) 12,000 290
Toho Pharmaceutical 15,000 257
Tohoku Electric Power 15,000 315
Tokai Carbon 65,000 362
Tokyo Electric Power 12,000 322
Tokyo Electron 15,000 954
Toshiba 100,000 646
Toyo Suisan Kaisha 60,000 969
Toyota Motor 30,000 1,586
Toyota Motor ADR 3,500 368
TV Asahi 150 339
United Urban Investment 100 588
Yamaha Motor 11,000 286
----------
48,900
----------
MEXICO - 1.1%
Carso Global Telecom* 112,000 289
Cemex ADR 8,226 233
Empresas ICA Sociedad Controladora
ADR* 11,000 417
Grupo Aeroportuario del Sureste ADR 7,700 261
Grupo Televisa ADR 10,400 192
Telefonos de Mexico ADR (A) 26,700 626
Wal-Mart de Mexico, Ser V 104,200 321
----------
2,339
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 55
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
NETHERLANDS - 5.9%
ABN AMRO Holding (A) 23,000 $ 637
Aegon 43,000 730
ASML Holding 17,000 335
Buhrmann 25,000 345
Fortis 20,000 711
Heineken 11,000 517
ING Groep (A) 60,000 2,435
Koninklijke DSM 20,000 782
Koninklijke Philips Electronics (A) 12,020 397
Randstad Holdings 6,000 329
Rodamco Europe 5,000 529
Royal Dutch Shell, Cl A 77,000 2,717
Royal Dutch Shell, Cl B 28,733 1,058
Royal KPN 43,000 488
TNT (A) 13,000 465
Wolters Kluwer 15,000 353
----------
12,828
----------
NORWAY - 2.0%
DNB NOR 80,500 1,021
Norsk Hydro 72,500 2,062
Statoil 31,000 920
Yara International (A) 30,000 452
----------
4,455
----------
POLAND - 0.7%
Bank Pekao 5,500 379
Bank Zachodni WBK 2,800 186
KGHM Polska Miedz* 6,000 234
Polski Koncern Naftowy Orlen* 17,000 334
Powszechna Kasa Oszczednosci
Bank Polski* 18,000 238
Telekomunikacja Polska 40,000 275
----------
1,646
----------
SINGAPORE - 0.8%
CapitaLand 82,000 213
DBS Group Holdings 22,000 252
K-REIT Asia* 30,000 27
Keppel 24,000 233
Keppel Land 40,000 99
Oversea-Chinese Banking 30,000 121
SembCorp Industries 75,000 161
SembCorp Marine 42,000 89
Singapore Technologies Engineering 31,000 56
Singapore Telecommunications 118,000 194
United Overseas Bank 21,000 208
UOL Group 30,000 55
----------
1,708
----------
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
SOUTH AFRICA - 1.0%
Impala Platinum Holdings 1,500 $ 277
Imperial Holdings 14,840 286
Nedbank Group 9,000 143
Sasol 11,000 397
Standard Bank Group 15,000 166
Steinhoff International Holdings 142,000 437
Telkom 21,000 397
----------
2,103
----------
SOUTH KOREA - 2.7%
Hana Financial Group 7,575 339
Hyundai Motor 5,000 383
Hyundai Securities 37,000 419
Hyundai Steel 15,000 514
Joongang Construction 14,500 194
Kookmin Bank 8,300 725
Korea Investment Holdings 10,000 375
Samsung Electronics 2,500 1,592
Shinhan Financial Group 10,000 492
SK 3,000 210
SKC 27,500 599
----------
5,842
----------
SPAIN - 1.3%
Banco Bilbao Vizcaya Argentaria (A) 18,066 384
Banco Sabadell 9,000 319
Banco Santander Central Hispano (A) 53,000 803
Corp Mapfre 10,000 197
Endesa 6,000 205
Red Electrica de Espana 10,000 371
Repsol YPF 5,500 154
Telefonica 24,000 406
----------
2,839
----------
SWEDEN - 1.4%
Atlas Copco, Cl A 14,000 349
Electrolux, Cl B 14,000 203
ForeningsSparbanken 12,000 322
Hennes & Mauritz, Cl B 6,500 242
Husqvarna, Cl B* 14,000 151
Investor, Cl B 24,000 440
Nordea Bank 30,000 376
Telefonaktiebolaget LM Ericsson, Cl B 140,000 441
TeliaSonera 35,000 196
Volvo, Cl B 7,000 371
----------
3,091
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
56 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
SWITZERLAND - 7.3%
ABB 56,000 $ 724
Compagnie Financiere Richemont, Cl A 5,400 244
Credit Suisse Group 24,977 1,400
Holcim 5,400 421
Nestle 8,500 2,786
Novartis 53,002 3,011
Roche Holding 14,333 2,551
Swiss Reinsurance 12,500 899
Syngenta 3,700 532
UBS 46,974 2,556
Zurich Financial Services 3,698 830
----------
15,954
----------
TURKEY - 1.0%
Akbank TAS 54,999 265
Dogan Sirketler Grubu Holdings 130,000 534
KOC Holding* 88,000 306
Trakya Cam Sanayi 103,067 252
Turkiye Garanti Bankasi 110,000 316
Turkiye Is Bankasi, Cl C 90,720 485
----------
2,158
----------
UNITED KINGDOM - 16.0%
Alliance Boots 33,300 489
Amlin 92,000 428
Arriva 25,000 258
AstraZeneca 18,085 1,104
Aviva 25,000 335
Barclays 115,000 1,349
BG Group 57,000 767
BHP Billiton 60,000 1,136
BOC Group 17,000 509
BP 190,600 2,296
BP ADR (A) 5,000 363
British Airways* 50,000 361
British American Tobacco 25,000 674
British Energy Group* 25,000 343
British Land 35,000 894
British Sky Broadcasting 23,000 241
BT Group 37,000 164
Burren Energy 15,000 249
Diageo 44,000 773
easyJet* 40,000 333
Enterprise Inns 40,400 733
GKN 55,000 267
GlaxoSmithKline 71,044 1,965
Group 4 Securicor 175,000 547
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
UNITED KINGDOM - (CONTINUED)
HBOS 52,800 $ 961
Henderson Group 200,000 291
HSBC Holdings 127,000 2,303
Imperial Chemical Industries 22,000 152
Imperial Tobacco Group 12,000 392
Informa 52,000 423
International Power 125,000 688
Lloyds TSB Group 57,000 574
Man Group 20,000 917
Meggitt 40,000 222
Mitchells & Butlers 45,000 445
Next 10,000 319
Northern Rock 20,000 417
Old Mutual 89,000 269
Persimmon 40,000 956
Prudential 30,000 315
Punch Taverns 18,000 296
Rio Tinto 15,500 801
Rolls-Royce Group* 30,000 247
Royal Bank of Scotland Group 51,200 1,666
Sage Group 60,000 261
Scottish & Southern Energy 22,000 497
Scottish Power 19,841 224
Severn Trent 10,000 242
Sportingbet 40,000 184
Taylor Woodrow 75,000 482
Tesco 93,000 624
Travis Perkins 15,000 427
Unilever 23,850 564
United Utilities 30,000 370
Vodafone Group 553,386 1,202
Vodafone Group, Cl B (C) 632,441 177
Whitbread 11,656 270
WPP Group 23,000 272
----------
35,028
----------
TOTAL COMMON STOCK
(Cost $159,466) 208,837
----------
- -----------------------------------------------------------------------------
PREFERRED STOCK - 0.1%
- -----------------------------------------------------------------------------
GERMANY
Volkswagen 5,000 268
----------
TOTAL PREFERRED STOCK
(Cost $175) 268
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 57
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INTERNATIONAL OPPORTUNITIES FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES - 2.9%
- -----------------------------------------------------------------------------
iShares MSCI Brazil Index Fund (A) 12,100 $ 478
iShares MSCI France Index Fund (A) 24,700 747
iShares MSCI Hong Kong Index Fund (A) 80,000 1,098
iShares MSCI Italy Index Fund 33,100 974
iShares MSCI Japan Index Fund (A) 107,000 1,452
iShares MSCI United Kingdom
Index Fund (A) 70,700 1,527
----------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $5,490) 6,276
----------
- -----------------------------------------------------------------------------
MASTER NOTES - 3.4%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 2,500 2,500
Bear Stearns (B)
5.463%, 08/02/06 2,500 2,500
JPMorgan (B)
5.393%, 08/15/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $7,500) 7,500
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.0%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $2,625,059) (B) 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $3,816,892
(collateralized by a U.S. Treasury
obligation, par value $4,052,000,
4.250%, 11/15/14, total market
value $3,892,727) 3,816 3,816
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $8,890,247
(collateralized by various mortgage
obligations, par value $252 -
$33,419,714, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market
value $9,333,370) (B) 8,889 8,889
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $15,205) 15,205
----------
TOTAL INVESTMENTS - 109.1%
(Cost $187,836) $ 238,086
==========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $218,239,092.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$18,057,978.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) SECURITY IS FAIR VALUED USING METHODS IN ACCORDANCE WITH FAIR VALUE
PROCEDURES ESTABLISHED BY THE BOARD OF TRUSTEES. THE VALUE OF THIS
SECURITY AS OF JULY 31, 2006 WAS $177,191 AND REPRESENTED 0.1% OF NET
ASSETS.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
MSCI -- MORGAN STANLEY CAPITAL INTERNATIONAL
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
58 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
LARGE CAP GROWTH FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 96.8%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 3.3%
Harman International Industries 9,350 $ 750
Las Vegas Sands (A)* 40,550 2,515
Starbucks (A)* 28,200 966
----------
4,231
----------
CONSUMER STAPLES - 13.3%
Colgate-Palmolive 79,550 4,719
PepsiCo 73,350 4,649
Procter & Gamble 45,800 2,574
Walgreen (A) 109,146 5,106
----------
17,048
----------
ENERGY - 8.8%
Schlumberger (A) 86,900 5,809
Smith International 122,750 5,471
----------
11,280
----------
FINANCIALS - 13.0%
Aflac 28,500 1,258
Chicago Mercantile Exchange Holdings 8,550 3,943
Goldman Sachs Group 21,550 3,292
Legg Mason (A) 29,050 2,425
SLM 113,950 5,732
----------
16,650
----------
HEALTH CARE - 15.2%
Abbott Laboratories 33,150 1,584
Alcon 11,050 1,220
Allergan (A) 20,300 2,189
Dentsply International 53,100 1,662
Genentech* 56,744 4,586
Gilead Sciences (A)* 66,150 4,067
Johnson & Johnson 23,700 1,483
Medtronic (A) 51,750 2,614
----------
19,405
----------
INDUSTRIALS - 16.3%
Boeing (A) 26,050 2,017
Caterpillar 54,900 3,891
Emerson Electric 23,500 1,854
Expeditors International Washington (A) 66,600 3,028
General Dynamics 36,350 2,436
General Electric 147,504 4,822
Robert Half International 41,400 1,340
Rockwell Automation 24,800 1,537
----------
20,925
----------
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 23.2%
Adobe Systems* 42,800 $ 1,220
Apple Computer* 30,000 2,039
Automatic Data Processing 29,800 1,304
Broadcom, Cl A* 22,750 546
Checkfree* 77,000 3,427
Cisco Systems* 208,650 3,725
Electronic Arts (A)* 18,700 881
Google, Cl A* 14,150 5,470
Microchip Technology 109,400 3,529
Paychex (A) 102,400 3,500
Qualcomm 33,250 1,172
SAP ADR (A) 63,750 2,909
----------
29,722
----------
MATERIALS - 3.7%
Monsanto 110,700 4,759
----------
TOTAL COMMON STOCK
(Cost $114,310) 124,020
----------
- -----------------------------------------------------------------------------
MASTER NOTES - 5.9%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 2,500 2,500
Bear Stearns (B)
5.413%, 08/02/06 2,500 2,500
JPMorgan (B)
5.393%, 08/15/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $7,500) 7,500
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATION - 1.9%
- -----------------------------------------------------------------------------
First Tennessee (B) (C)
5.339%, 04/18/07 2,500 2,501
----------
TOTAL CORPORATE OBLIGATION
(Cost $2,501) 2,501
----------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 0.8%
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 1,000 1,000
----------
TOTAL COMMERCIAL PAPER
(Cost $1,000) 1,000
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 59
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
LARGE CAP GROWTH FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 24.4%
- -----------------------------------------------------------------------------
Bear Stearns
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $15,002,234
(collateralized by various mortgage
obligations, ranging in par value
$256,500-$8,340,885, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $15,750,355) (B) $ 15,000 $ 15,000
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $2,625,059) (B) 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $6,185,389
(collateralized by a U.S. Treasury
obligation, par value $6,331,000,
4.250%, 11/30/07, total market
value $6,309,053) 6,184 6,184
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $7,609,970
(collateralized by various mortgage
obligations, par value $216 - $28,606,969,
0.000% - 8.000%, 06/25/08 - 04/11/37,
total market value $7,989,279) (B) 7,609 7,609
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $31,293) 31,293
----------
TOTAL INVESTMENTS - 129.8%
(Cost $156,604) $ 166,314
==========
- -----------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $128,086,360.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY
31, 2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$35,112,525.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2006.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
60 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
LARGE CAP VALUE FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 98.7%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 7.7%
AnnTaylor Stores (A)* 17,100 $ 702
Autoliv 38,200 2,146
Darden Restaurants 9,900 335
Dillard's, Cl A (A) 37,800 1,135
DIRECTV Group* 107,700 1,836
JC Penney (A) 40,600 2,556
Jones Apparel Group 73,000 2,161
Office Depot* 66,700 2,404
OfficeMax 55,600 2,286
Shaw Communications, Cl B 104,100 3,019
Time Warner 289,500 4,777
TRW Automotive Holdings* 26,500 686
----------
24,043
----------
CONSUMER STAPLES - 7.3%
Altria Group 15,800 1,264
Campbell Soup 33,700 1,236
Clorox (A) 18,000 1,079
Energizer Holdings* 30,400 1,934
General Mills (A) 52,300 2,714
HJ Heinz 29,600 1,242
Kimberly-Clark 19,400 1,184
Kroger 164,700 3,777
Pepsi Bottling Group 86,100 2,863
Reynolds American (A) 24,400 3,094
Safeway (A) 85,800 2,409
----------
22,796
----------
ENERGY - 15.2%
Chevron 28,100 1,848
ConocoPhillips 87,344 5,995
Devon Energy 60,900 3,937
Encana 62,000 3,352
Exxon Mobil 308,100 20,871
Hess (A) 27,000 1,428
Holly 53,600 2,712
Marathon Oil 36,200 3,281
Petro-Canada 43,000 1,924
Unit* 34,100 2,000
----------
47,348
----------
FINANCIALS - 35.7%
AG Edwards 13,500 728
Allstate (A) 78,900 4,483
AMBAC Financial Group 31,900 2,651
American International Group 18,500 1,122
Assurant (A) 56,100 2,702
Brookfield Asset Management,
Cl A (A) 56,100 2,329
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
CB Richard Ellis Group, Cl A* 80,100 $ 1,885
CIT Group 55,400 2,543
Citigroup 287,800 13,904
Comerica 40,800 2,389
Countrywide Financial 54,200 1,942
Credicorp 1,000 31
Goldman Sachs Group 25,000 3,819
IndyMac Bancorp 44,400 1,876
Jones Lang LaSalle* 25,200 2,059
JPMorgan Chase 241,500 11,017
Keycorp 69,900 2,579
Lehman Brothers Holdings 66,000 4,287
Loews 33,100 1,227
Merrill Lynch 82,500 6,008
Morgan Stanley 91,500 6,085
National City (A) 94,300 3,395
PMI Group 58,700 2,492
Principal Financial Group (A) 65,500 3,537
Radian Group (A) 43,700 2,689
Safeco 52,600 2,826
US Bancorp 101,600 3,251
Wachovia 106,600 5,717
Washington Mutual (A) 26,300 1,176
Wells Fargo 112,500 8,138
WR Berkley 62,400 2,246
----------
111,133
----------
HEALTH CARE - 7.4%
Aetna 24,400 768
AmerisourceBergen 66,300 2,851
Cardinal Health 34,700 2,325
Dade Behring Holdings 26,500 1,079
Forest Laboratories (A)* 28,500 1,320
King Pharmaceuticals* 84,200 1,433
McKesson 39,900 2,011
Pfizer 439,100 11,412
----------
23,199
----------
INDUSTRIALS - 5.0%
AGCO* 64,700 1,486
CSX 12,900 783
Cummins (A) 19,500 2,281
Honeywell International 31,300 1,211
Lockheed Martin 15,800 1,259
Northrop Grumman 60,700 4,018
Raytheon 54,000 2,434
Ryder System 26,600 1,341
Terex* 15,600 699
----------
15,512
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 61
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
LARGE CAP VALUE FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - 4.3%
Computer Sciences* 46,500 $ 2,436
Fiserv* 27,400 1,196
Hewlett-Packard (A) 127,600 4,072
Ingram Micro, Cl A* 54,500 961
Intuit* 42,000 1,297
Lexmark International, Cl A* 24,300 1,313
Tech Data* 34,600 1,286
Texas Instruments (A) 25,200 751
----------
13,312
----------
MATERIALS - 5.0%
Alcoa 80,700 2,417
Bemis 37,800 1,161
Eagle Materials 48,100 1,730
IPSCO 17,700 1,666
Martin Marietta Materials 24,700 1,989
Methanex 50,800 971
Nucor 22,800 1,212
Pactiv* 82,500 2,022
Steel Dynamics 18,600 1,079
United States Steel 21,900 1,381
----------
15,628
----------
TELECOMMUNICATIONS - 5.1%
AT&T 44,000 1,320
BCE (A) 65,971 1,507
BellSouth 74,100 2,903
CenturyTel (A) 70,400 2,715
Verizon Communications 216,300 7,315
----------
15,760
----------
UTILITIES - 6.0%
Alliant Energy (A) 76,700 2,775
American Electric Power (A) 84,700 3,059
Constellation Energy Group 13,200 764
Edison International 70,200 2,905
Entergy 45,200 3,485
FirstEnergy (A) 55,600 3,114
PG&E 41,600 1,734
Sempra Energy 18,200 878
----------
18,714
----------
TOTAL COMMON STOCK
(Cost $274,636) 307,445
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MASTER NOTES - 4.0%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 5,000 $ 5,000
Bear Stearns (B)
5.463%, 08/02/06 5,000 5,000
JPMorgan (B)
5.393%, 08/15/06 2,500 2,500
----------
TOTAL MASTER NOTES
(Cost $12,500) 12,500
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATION - 0.8%
- -----------------------------------------------------------------------------
First Tennessee (B) (C)
5.339%, 04/18/07 2,500 2,501
----------
TOTAL CORPORATE OBLIGATION
(Cost $2,501) 2,501
----------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 0.4%
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 1,000 1,000
----------
TOTAL COMMERCIAL PAPER
(Cost $1,000) 1,000
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 11.2%
- -----------------------------------------------------------------------------
Bear Stearns
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $20,002,979
(collateralized by various mortgage
obligations, ranging in par value
$342,000-$11,121,180, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $21,000,474) (B) 20,000 20,000
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $2,625,059) (B) 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $2,944,172
(collateralized by a U.S. Treasury
obligation, par value $2,449,000,
6.750%, 08/15/25, total market
value $3,003,118) 2,944 2,944
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
62 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
LARGE CAP VALUE FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - (CONTINUED)
- -----------------------------------------------------------------------------
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $9,584,505
(collateralized by various mortgage
obligations, ranging in par value
$272 - $36,029,529, 0.000% -
8.000%, 06/25/08 - 04/11/37,
total market value $10,062,232) (B) $ 9,583 $ 9,583
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $35,027) 35,027
----------
TOTAL INVESTMENTS - 115.1%
(Cost $325,664) $ 358,473
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $311,494,140.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY
31, 2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$46,232,345.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2006.
CL -- CLASS
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 63
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP GROWTH FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 97.9%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 13.3%
Aaron Rents 7,810 $ 189
Bebe Stores 9,350 145
Bob Evans Farms 3,965 109
Carter's* 4,570 100
Cavco Industries* 3,230 106
CBRL Group 3,550 116
Champion Enterprises* 16,640 110
Charlotte Russe Holdings* 3,550 93
Children's Place* 3,270 183
Christopher & Banks 2,319 65
Coldwater Creek* 6,850 137
Conn's (A)* 6,494 167
Craftmade International 3,540 58
Dick's Sporting Goods* 2,650 96
Dress Barn* 7,260 157
DSW, Cl A (A)* 4,650 160
Ethan Allen Interiors 2,450 91
Guitar Center* 1,250 53
JOS A Bank Clothiers (A)* 3,812 96
MarineMax (A)* 3,270 69
Matthews International, Cl A 3,950 136
Movado Group 4,350 98
Panera Bread, Cl A* 1,480 77
Phillips-Van Heusen 3,550 126
Priceline.com* 7,930 213
Rare Hospitality International* 1,440 38
Sonic* 3,275 64
Speedway Motorsports* 2,800 101
Steiner Leisure* 1,610 65
Steven Madden 5,655 189
Stride Rite 9,050 115
Tween Brands* 4,360 162
Under Armour, Cl A (A)* 4,318 173
WMS Industries (A)* 4,400 117
Zumiez (A)* 2,450 73
----------
4,047
----------
CONSUMER STAPLES - 1.2%
Central European Distribution (A)* 6,150 148
NBTY* 3,872 115
Wild Oats Markets (A)* 5,600 100
----------
363
----------
ENERGY - 8.2%
Allis-Chalmers Energy (A)* 8,121 129
Core Laboratories* 2,550 186
Dril-Quip* 1,700 144
Giant Industries* 1,050 75
Global Industries* 8,500 142
Grey Wolf (A)* 22,750 174
Helix Energy Solutions Group* 4,340 169
- ----------------------------------------------------------------------------
Description Shares Value (000)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- ----------------------------------------------------------------------------
ENERGY - (CONTINUED)
Hornbeck Offshore Services* 5,140 $ 179
Oceaneering International* 3,920 171
PetroHawk Energy (A)* 9,982 117
PetroQuest Energy* 9,250 108
Pioneer Drilling* 6,800 104
RPC 7,650 176
Superior Energy Services* 6,690 229
Tetra Technologies* 3,860 110
Veritas DGC* 2,700 155
W-H Energy Services* 2,580 142
----------
2,510
----------
FINANCIALS - 9.0%
American Safety Insurance Holdings* 2,490 42
BankUnited Financial, Cl A 4,100 121
CompuCredit* 4,850 158
Corus Bankshares (A) 6,200 143
Encore Capital Group (A)* 716 9
Ezcorp, Cl A* 2,350 98
FelCor Lodging Trust 7,000 154
First Bank of Puerto Rico (A) 4,900 47
First Citizens Bancshares, Cl A 760 157
FPIC Insurance Group* 4,500 174
Hanmi Financial 1,750 33
Hanover Insurance Group 3,650 169
Harleysville Group 5,509 175
Infinity Property & Casualty 5,000 206
Nara Bancorp 6,717 124
PrivateBancorp 1,982 93
Safety Insurance Group 3,650 194
Selective Insurance Group 2,073 106
South Financial Group 2,420 65
Triad Guaranty* 3,250 162
United Community Banks 3,370 106
Zenith National Insurance 4,830 193
----------
2,729
----------
HEALTH CARE - 15.9%
Amedisys (A)* 3,540 135
Arena Pharmaceuticals (A)* 15,790 163
Aspect Medical Systems* 8,740 128
Chemed 3,880 143
Cubist Pharmaceuticals* 8,070 185
Healthways* 2,900 156
Hi-Tech Pharmacal* 7,390 121
Hologic* 7,160 322
ICU Medical* 1,900 79
Illumina* 2,350 90
Inventiv Health (A)* 9,650 269
IRIS International* 19 --
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
64 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP GROWTH FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
HEALTH CARE - (CONTINUED)
Kendle International* 6,161 $ 179
LHC Group* 4,470 95
Lifecell* 7,980 228
Meridian Bioscience 6,790 143
Molecular Devices* 3,110 72
Nighthawk Radiology Holdings* 3,450 69
Omnicell* 9,350 152
OSI Pharmaceuticals* 4,800 160
Palomar Medical Technologies (A)* 6,130 233
PDL Biopharma* 9,600 173
Per-Se Technologies* 9,470 226
Phase Forward* 10,000 112
Providence Service* 5,170 127
PSS World Medical* 8,350 166
Res-Care* 8,600 164
Sciele Pharma* 6,300 129
SurModics (A)* 5,340 191
TriPath Imaging* 14,762 92
Trizetto Group* 10,430 141
West Pharmaceutical Services 4,800 186
----------
4,829
----------
INDUSTRIALS - 21.6%
Acuity Brands 4,250 186
Airtran Holdings (A)* 4,030 51
Albany International, Cl A 2,450 88
Ameron International 988 56
Barnes Group 9,253 157
Barrett Business Services* 7,119 153
Brady, Cl A 4,600 155
BTU International (A)* 5,329 57
Builders FirstSource* 7,800 135
CBIZ* 20,400 151
Ceradyne (A)* 4,890 239
Columbus McKinnon* 6,571 124
Commercial Vehicle Group* 5,360 97
Copart* 8,410 224
Corrections Corp of America* 4,550 248
EMCOR Group* 2,090 108
Encore Wire* 4,000 142
Esterline Technologies* 5,400 229
Flow International (A)* 16,760 226
Gardner Denver* 4,840 168
General Cable* 7,800 278
Genesee & Wyoming, Cl A* 4,950 130
Genlyte Group* 4,060 282
Granite Construction 3,700 161
Greenbrier (A) 3,800 106
Griffon* 3,850 87
HUB Group, Cl A* 5,150 116
Insituform Technologies, Cl A* 6,941 150
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INDUSTRIALS - (CONTINUED)
Kansas City Southern (A)* 5,150 $ 127
Kimball International, Cl B 9,950 177
Kirby* 3,700 119
M&F Worldwide* 5,250 90
Marten Transport* 3,550 55
Mobile Mini* 4,170 128
MTC Technologies* 5,850 118
Mueller Industries 3,860 142
NCI Building Systems* 4,490 210
Old Dominion Freight Line* 4,650 151
Power-One* 15,070 95
Simpson Manufacturing (A) 4,765 133
Swift Transportation* 5,200 139
Toro 4,730 196
Ultralife Batteries (A)* 7,200 70
Wabtec 6,870 182
Woodward Governor 5,300 155
----------
6,591
----------
INFORMATION TECHNOLOGY - 23.6%
24/7 Real Media (A)* 13,700 109
Actuate* 22,667 92
Advanced Energy Industries* 7,320 95
Aeroflex* 14,240 144
Anadigics (A)* 13,270 73
Ansys* 3,530 162
Arris Group* 12,294 131
Art Technology Group* 31,660 85
Aspen Technology (A)* 10,678 129
Atmel* 15,800 76
Avocent (A)* 5,150 132
Benchmark Electronics* 6,800 165
Black Box 2,300 95
Blackbaud 5,150 107
Cirrus Logic* 17,121 119
CommScope* 5,404 169
Comtech Group (A)* 10,407 110
Credence Systems* 7,860 22
Cryptologic (A) 3,600 75
Cymer* 3,980 156
Cypress Semiconductor* 11,200 170
Ditech Networks* 13,540 110
FEI* 5,000 109
Hyperion Solutions* 4,790 149
Infocrossing (A)* 12,134 136
Integrated Device Technology* 5,660 88
Ituran Location and Control 9,050 131
Littelfuse* 3,850 130
LivePerson* 18,450 76
Mentor Graphics* 9,350 129
Merix (A)* 5,550 58
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 65
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP GROWTH FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
MIPS Technologies* 12,956 $ 82
Netlogic Microsystems (A)* 2,552 63
Nice Systems ADR* 5,980 157
Nuance Communications* 12,011 111
Orbotech* 7,310 158
Packeteer* 12,800 117
Park Electrochemical 2,466 61
Paxar* 5,800 107
Performance Technologies* 2,823 18
Photronics* 8,900 124
Quest Software* 13,890 190
Radiant Systems* 14,070 154
Radvision (A)* 10,470 153
Radyne* 5,200 58
Rofin-Sinar Technologies* 3,137 169
Rogers* 3,280 187
sAgilysys 7,750 121
SonicWALL* 11,160 112
Stellent 18,400 173
SumTotal Systems* 11,837 64
Technitrol 6,107 151
Tollgrade Communications* 10,520 98
Transaction Systems Architects* 5,710 211
Trimble Navigation* 5,600 269
Triquint Semiconductor* 21,250 100
Vignette* 7,100 92
webMethods* 17,030 127
Xyratex* 6,876 160
Zoran* 4,810 77
----------
7,196
----------
MATERIALS - 4.6%
Albemarle 3,600 181
Aleris International* 3,290 135
AMCOL International 6,880 159
Carpenter Technology 1,450 143
Eagle Materials 3,550 128
Gibraltar Industries 6,160 170
Glatfelter 5,900 92
Metal Management 2,950 84
Myers Industries 3,603 60
PolyOne* 17,950 150
Schulman A 4,097 89
----------
1,391
----------
TELECOMMUNICATIONS - 0.5%
@Road* 34,810 152
----------
TOTAL COMMON STOCK
(Cost $31,083) 29,808
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MASTER NOTE - 3.3%
- -----------------------------------------------------------------------------
Bear Stearns (B)
5.463%, 08/02/06 $ 1,000 $ 1,000
----------
TOTAL MASTER NOTE
(Cost $1,000) 1,000
----------
- ----------------------------------------------------------------------------
COMMERCIAL PAPER - 3.3%
- ----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 1,000 1,000
----------
TOTAL COMMERCIAL PAPER
(Cost $1,000) 1,000
----------
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 10.9%
- ----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $1,000,150
(collateralized by various mortgage
obligations, ranging in par value
$17,100-$556,059, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $1,050,024) (B) 1,000 1,000
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $716,584
(collateralized by a U.S. Treasury
obligation, par value $724,000,
4.875%, 04/30/11, total market
value $731,113) 716 716
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $1,587,924
(collateralized by various mortgage
obligations, ranging in par value $45 -
$5,969,236, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market
value $1,667,073) (B) 1,588 1,588
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $3,304) 3,304
----------
TOTAL INVESTMENTS - 115.4%
(Cost $36,387) $ 35,112
==========
- ------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $30,431,479.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$4,396,842.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
AMOUNTS DESIGNATED AS "--" ARE ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
66 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP VALUE FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 96.0%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 14.5%
American Axle & Manufacturing Holdings (A) 46,400 $ 760
American Greetings, Cl A (A) 61,500 1,386
Arctic Cat (A) 109,238 1,930
ArvinMeritor (A) 182,100 2,997
BorgWarner 41,000 2,460
Brown Shoe 67,200 2,176
Dover Downs Gaming & Entertainment (A) 37,950 609
Ethan Allen Interiors (A) 49,700 1,855
Furniture Brands International (A) 32,300 648
Group 1 Automotive (A) 56,900 3,489
Handleman (A) 57,300 407
Journal Communications, Cl A 135,500 1,430
Kellwood (A) 46,700 1,235
Landry's Restaurants 36,800 1,041
Lone Star Steakhouse & Saloon 8,400 196
M/I Homes (A) 2,000 64
MDC Holdings (A) 19,800 864
Modine Manufacturing 56,500 1,332
Movie Gallery (A) 103,300 525
Rent-A-Center* 47,750 1,286
Rex Stores* 65,200 912
Ryland Group (A) 29,200 1,193
Sonic Automotive (A) 93,500 2,151
Stage Stores 60,900 1,806
Stride Rite 89,600 1,134
Trans World Entertainment (A)* 111,800 620
Tupperware Brands 59,700 1,030
Westwood One 154,500 1,029
Zale (A)* 49,500 1,268
----------
37,833
----------
CONSUMER STAPLES - 4.2%
Alliance One International 200,000 786
BJ's Wholesale Club* 99,200 2,825
Chiquita Brands International (A) 62,600 842
Longs Drug Stores 52,900 2,175
Nash Finch (A) 42,300 946
Ruddick (A) 65,900 1,613
Seaboard 800 912
Universal 22,900 809
----------
10,908
----------
ENERGY - 4.3%
Holly 48,000 2,429
Maverick Tube (A)* 27,400 1,748
NS Group (A)* 30,700 1,553
Stone Energy* 27,600 1,290
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
ENERGY - (CONTINUED)
Swift Energy* 28,500 $ 1,368
Tesoro (A) 19,000 1,421
TransMontaigne* 119,400 1,343
----------
11,152
----------
FINANCIALS - 28.1%
Advanta, Cl B 37,700 1,358
American Home Mortgage Investment REIT (A) 43,600 1,523
AmerUs Group (A) 50,900 3,415
Anthracite Capital REIT 149,300 1,832
Boykin Lodging REIT * 114,200 1,226
Ceres Group* 211,100 1,288
Citizens Banking (A) 110,600 2,808
City Holding 26,000 1,007
Commerce Group 60,800 1,837
Community Bank System 87,200 1,845
Community Trust Bancorp 30,400 1,119
Corus Bankshares (A) 34,400 794
Dime Community Bancshares 75,700 1,058
Federal Agricultural Mortgage, Cl C (A) 63,000 1,690
First Charter (A) 47,375 1,117
First Indiana 45,106 1,131
Flagstar Bancorp 82,600 1,203
Fremont General 54,800 973
Greater Bay Bancorp (A) 89,500 2,563
Horace Mann Educators 108,200 1,836
HRPT Properties Trust REIT 251,400 2,954
Independent Bank 47,300 1,211
IndyMac Bancorp 43,800 1,851
Innkeepers USA Trust REIT 75,600 1,275
Integra Bank 48,300 1,174
LandAmerica Financial Group (A) 43,100 2,751
Luminent Mortgage Capital REIT 125,702 1,213
MAF Bancorp 65,000 2,665
NBT Bancorp 55,200 1,307
Novastar Financial REIT (A) 22,800 789
Old National Bancorp (A) 164,700 3,142
One Liberty Properties REIT 68,700 1,381
Oriental Financial Group (A) 128,900 1,620
Pennsylvania REIT (A) 29,800 1,174
Presidential Life 60,400 1,458
Provident Bankshares 49,200 1,809
PS Business Parks REIT 23,600 1,416
RAIT Investment Trust REIT 38,200 1,080
Republic Bancorp 238,700 3,117
Safety Insurance Group (A) 36,500 1,937
Scottish Re Group (A) 73,200 292
Stancorp Financial Group 45,800 1,974
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 67
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP VALUE FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
United Bankshares 76,300 $ 2,719
Webster Financial (A) 28,100 1,325
----------
73,257
----------
HEALTH CARE - 2.5%
Alpharma, Cl A 86,400 1,951
Bradley Pharmaceuticals (A)* 59,900 607
Conmed (A)* 80,900 1,614
Datascope 36,473 1,121
Kindred Healthcare* 45,500 1,203
Lumenis* 13 --
----------
6,496
----------
INDUSTRIALS - 16.7%
Acuity Brands 63,400 2,772
AGCO* 83,100 1,908
Alaska Air Group* 53,900 2,001
Albany International, Cl A (A) 37,700 1,355
Ameron International 22,900 1,290
AO Smith (A) 42,500 1,822
Applied Industrial Technologies 33,150 773
Arkansas Best 28,700 1,275
Banta 31,000 1,095
Belden CDT 62,000 2,012
Central Parking 82,600 1,270
Crane (A) 60,600 2,327
EnPro Industries* 39,500 1,236
GATX (A) 41,200 1,615
Griffon (A)* 68,300 1,545
IKON Office Solutions 214,100 2,957
Mesa Air Group (A)* 146,700 1,241
NACCO Industries, Cl A 13,100 1,810
Navistar International* 60,900 1,362
Ryder System (A) 45,100 2,273
Saia* 79,900 2,252
Spherion (A)* 130,900 995
Standex International 37,400 1,023
Timken (A) 36,600 1,178
United Rentals (A)* 39,600 1,106
Walter Industries (A) 35,800 1,602
Woodward Governor 41,100 1,205
YRC Worldwide* 6,727 268
----------
43,568
----------
INFORMATION TECHNOLOGY - 11.0%
Advanced Energy Industries* 103,300 1,337
Aeroflex* 140,500 1,425
Aspen Technology (A)* 118,000 1,427
Black Box 30,700 1,262
Brocade Communications Systems* 315,600 1,976
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
INFORMATION TECHNOLOGY - (CONTINUED)
Ciber* 202,800 $ 1,318
CTS 114,100 1,644
Earthlink (A)* 281,600 2,030
Gerber Scientific* 73,200 1,122
Lightbridge* 62,400 721
LTX* 296,300 1,600
McData, Cl A (A)* 465,100 1,488
Mentor Graphics* 164,500 2,267
Methode Electronics 59,500 476
MKS Instruments* 56,900 1,176
Photronics* 71,300 996
Quantum-DLT & Storage* 378,300 813
RF Micro Devices* 183,900 1,133
Skyworks Solutions* 334,100 1,467
Spectralink (A) 103,900 828
Sybase* 28,700 604
United Online 150,700 1,644
----------
28,754
----------
MATERIALS - 9.4%
FMC 24,700 1,524
Glatfelter 87,600 1,367
Greif, Cl A 47,900 3,315
HB Fuller 32,700 1,307
Myers Industries 82,100 1,366
Olin 114,100 1,829
OM Group* 59,000 2,072
Quanex (A) 59,550 2,161
Rock-Tenn, Cl A 73,895 1,270
Ryerson (A) 70,600 1,910
Schulman A (A) 63,000 1,379
Sensient Technologies (A) 77,300 1,541
Spartech 120,100 2,772
Wellman (A) 177,700 540
----------
24,353
----------
TELECOMMUNICATIONS - 1.2%
Commonwealth Telephone Enterprises (A) 64,300 2,155
Golden Telecom (A) 41,400 1,023
----------
3,178
----------
UTILITIES - 4.1%
Avista (A) 113,200 2,828
Duquesne Light Holdings 103,200 2,009
Nicor (A) 42,900 1,880
PNM Resources (A) 46,050 1,234
UIL Holdings (A) 29,833 1,039
Unisource Energy 52,600 1,755
----------
10,745
----------
TOTAL COMMON STOCK
(Cost $222,621) 250,244
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
68 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SMALL CAP VALUE FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MASTER NOTES - 10.5%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 10,000 $ 10,000
Bear Stearns (B)
5.463%, 08/02/06 10,000 10,000
JPMorgan (B)
5.393%, 08/15/06 7,500 7,500
----------
TOTAL MASTER NOTES
(Cost $27,500) 27,500
----------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 2.9%
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 7,500 7,500
----------
TOTAL COMMERCIAL PAPER
(Cost $7,500) 7,500
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 1.9%
- -----------------------------------------------------------------------------
First Tennessee (B) (C)
5.339%, 04/18/07 2,500 2,501
Morgan Stanley (B) (C)
5.390%, 08/01/07 2,500 2,500
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $5,001) 5,001
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 18.1%
- -----------------------------------------------------------------------------
Bear Stearns
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $25,003,724
(collateralized by various mortgage
obligations, ranging in par value
$427,500-$13,901,475, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $26,250,592) (B) 25,000 25,000
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $2,625,059) (B) 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $9,765,921
(collateralized by various U.S. Treasury
obligations, ranging in par value
$606,000 - $9,450,000, 6.125% - 6.250%,
02/15/07 - 08/15/29, total market
value $9,960,068) 9,765 9,765
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - (CONTINUED)
- -----------------------------------------------------------------------------
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $9,810,387
(collateralized by various mortgage
obligations, ranging in par value $278-
$36,878,651, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market
value $10,299,373) (B) $ 9,809 $ 9,809
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $47,074) 47,074
----------
TOTAL INVESTMENTS - 129.4%
(Cost $309,696) $ 337,319
==========
- -----------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $260,749,986.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$74,002,656.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2006.
CL -- CLASS
REIT -- REAL ESTATE INVESTMENT TRUST
AMOUNTS DESIGNATED AS "--" ARE $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 69
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
VALUE MOMENTUM FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - 98.5%+
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 11.4%
Autoliv 40,000 $ 2,247
Comcast, Cl A (A)* 205,000 7,027
Federated Department Stores 120,000 4,213
Harrah's Entertainment 35,000 2,104
Home Depot 76,500 2,655
Leggett & Platt 120,000 2,738
Lennar, Cl A (A) 38,500 1,722
Mattel 136,100 2,455
McGraw-Hill (A) 110,000 6,193
News, Cl A 350,000 6,734
Pulte Homes (A) 123,250 3,513
Target (A) 45,000 2,066
Time Warner 325,000 5,363
Washington Post, Cl B (A) 4,900 3,778
WCI Communities (A)* 84,500 1,328
----------
54,136
----------
CONSUMER STAPLES - 9.5%
Altria Group 195,900 15,666
Archer-Daniels-Midland (A) 55,000 2,420
Cadbury Schweppes ADR 167,000 6,557
Diageo ADR (A) 41,400 2,911
Nestle ADR 82,500 6,754
Universal (A) 95,000 3,355
UST (A) 55,000 2,780
Wal-Mart Stores 104,100 4,633
----------
45,076
----------
ENERGY - 11.7%
BP ADR 65,000 4,714
Chevron 110,000 7,236
ConocoPhillips 85,000 5,834
Exxon Mobil 275,000 18,628
Halliburton 112,000 3,736
Marathon Oil 59,593 5,402
Peabody Energy (A) 45,000 2,246
Suncor Energy 30,000 2,431
Williams 203,800 4,942
----------
55,169
----------
FINANCIALS - 22.4%
Allstate (A) 95,000 5,398
American International Group 110,000 6,674
Bank of America 190,000 9,791
Bank of New York 143,000 4,806
Berkshire Hathaway, Cl B* 1,000 3,047
Citigroup 335,800 16,222
Freddie Mac 71,000 4,108
Goldman Sachs Group 35,000 5,346
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
JPMorgan Chase 272,070 $ 12,412
Marsh & McLennan (A) 246,100 6,652
Metlife (A) 90,000 4,680
Morgan Stanley 100,000 6,650
Prudential Financial (A) 55,000 4,325
St. Paul Travelers 120,000 5,496
Washington Mutual (A) 112,500 5,029
Wells Fargo 39,500 2,857
Xl Capital, Cl A (A) 35,000 2,230
----------
105,723
----------
HEALTH CARE - 7.0%
Baxter International 100,000 4,200
GlaxoSmithKline ADR (A) 112,900 6,247
HCA (A) 50,000 2,458
Merck 75,000 3,020
Pfizer 460,640 11,972
Sanofi-Aventis ADR (A) 106,300 5,038
----------
32,935
----------
INDUSTRIALS - 15.5%
American Power Conversion (A) 144,100 2,432
Avery Dennison 132,600 7,774
Boeing (A) 40,000 3,097
Burlington Northern Santa Fe 30,000 2,067
Cendant 374,779 5,626
General Electric 408,700 13,360
Honeywell International 110,700 4,284
Manpower 45,600 2,712
Masco (A) 155,000 4,143
Parker Hannifin 125,000 9,030
Pitney Bowes (A) 110,000 4,545
Tyco International 229,300 5,983
United Technologies 40,000 2,488
Waste Management 168,000 5,776
----------
73,317
----------
INFORMATION TECHNOLOGY - 9.2%
Accenture, Cl A 194,500 5,691
Cisco Systems* 150,000 2,677
Diebold 71,500 2,889
EMC* 156,700 1,591
First Data 145,000 5,923
Hewlett-Packard (A) 100,000 3,191
International Business Machines (A) 81,500 6,309
Microsoft 465,300 11,181
Nokia ADR 215,000 4,268
----------
43,720
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
70 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
VALUE MOMENTUM FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares/Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMON STOCK - (CONTINUED)
- -----------------------------------------------------------------------------
MATERIALS - 5.8%
Alcoa 160,100 $ 4,795
Ashland (A) 60,000 3,991
BHP Billiton ADR (A) (D) 75,000 3,165
Cabot 150,000 4,991
Dow Chemical 86,300 2,984
Weyerhaeuser 129,600 7,602
----------
27,528
----------
TELECOMMUNICATIONS - 2.9%
AT&T (A) 190,000 5,698
Verizon Communications 235,000 7,948
----------
13,646
----------
UTILITIES - 3.1%
Questar (A) 167,500 14,841
----------
TOTAL COMMON STOCK
(Cost $326,512) 466,091
----------
- -----------------------------------------------------------------------------
MASTER NOTES - 6.3%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 $ 10,000 10,000
Bear Stearns (B)
5.463%, 08/02/06 10,000 10,000
JPMorgan (B)
5.393%, 08/15/06 10,000 10,000
----------
TOTAL MASTER NOTES
(Cost $30,000) 30,000
----------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 3.2%
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 15,000 15,000
----------
TOTAL COMMERCIAL PAPER
(Cost $15,000) 15,000
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 1.1%
- -----------------------------------------------------------------------------
First Tennessee (B) (C)
5.339%, 04/18/07 2,500 2,501
Morgan Stanley (B) (C)
5.390%, 08/01/07 2,500 2,500
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $5,001) 5,001
----------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY - 0.3%
- -----------------------------------------------------------------------------
Templeton Dragon Fund 75,300 1,588
----------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $662) 1,588
----------
- -----------------------------------------------------------------------------
Description Par (000)/Contracts Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.9%
- -----------------------------------------------------------------------------
Bear Stearns
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $10,001,490
(collateralized by various mortgage
obligations, ranging in par value
$171,000-$5,560,590, 0.000%-5.172%,
12/20/30-06/25/37, total market value
$10,500,237) (B) $ 10,000 $ 10,000
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $4,469,747
(collateralized by a U.S. Treasury
obligation, par value $4,745,000, 4.250%,
11/15/14, total market value $4,558,487) 4,469 4,469
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $27,636,330
(collateralized by various mortgage
obligations, ranging in par value
$784 - $103,888,928, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market value
$29,013,827) (B) 27,632 27,632
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $42,101) 42,101
----------
TOTAL INVESTMENTS - 118.3%
(Cost $419,276) $ 559,781
==========
- -----------------------------------------------------------------------------
WRITTEN OPTION - 0.0%
- -----------------------------------------------------------------------------
BHP Billiton ADR, August 2006, 50 Calls,
Strike Price: $50 (50) --
----------
TOTAL WRITTEN OPTION
(Premiums Received $13) --
----------
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $473,039,581.
+ NARROW INDUSTRIES ARE UTILIZED FOR COMPLIANCE PURPOSES, WHEREAS BROAD
SECTORS ARE UTILIZED FOR REPORTING.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY
31, 2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$84,891,472.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2006.
(D) SECURITY HAS BEEN PLEDGED AS COLLATERAL FOR OPEN WRITTEN OPTION CONTRACTS.
ADR -- AMERICAN DEPOSITARY RECEIPT
CL -- CLASS
AMOUNTS DESIGNATED AS "--" ARE ROUNDED TO $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 71
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CAPITAL GROWTH ALLOCATION FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 87.7%
- -----------------------------------------------------------------------------
HighMark Cognitive Value Fund,
Fiduciary Shares -- 2.6% 92,803 $ 1,209
HighMark Core Equity Fund,
Fiduciary Shares -- 22.4% 1,215,886 10,675
Highmark International Opportunities
Fund, Fiduciary Shares -- 15.8% 884,059 7,541
HighMark Large Cap Growth Fund,
Fiduciary Shares -- 10.0% 542,588 4,759
HighMark Large Cap Value Fund,
Fiduciary Shares -- 9.9% 345,170 4,718
HighMark Small Cap Growth Fund,
Fiduciary Shares -- 4.6% 164,454 2,182
HighMark Small Cap Value Fund,
Fiduciary Shares -- 5.9% 154,889 2,807
HighMark Value Momentum Fund,
Fiduciary Shares -- 16.5% 338,000 7,859
----------
TOTAL AFFILIATED EQUITY FUNDS
(Cost $41,183) 41,750
----------
- -----------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 9.4%
- -----------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares -- 1.9% 87,175 902
Highmark Short Term Bond Fund,
Fiduciary Shares -- 7.5% 365,733 3,570
----------
TOTAL AFFILIATED FIXED INCOME FUNDS
(Cost $4,512) 4,472
----------
- -----------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND (A) - 1.7%
- -----------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares, 5.030% 815,797 816
----------
TOTAL AFFILIATED MONEY MARKET FUND
(Cost $816) 816
----------
TOTAL INVESTMENTS - 98.8%
(Cost $46,511) $ 47,038
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $47,617,763.
(A) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
72 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
GROWTH & INCOME ALLOCATION FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 68.0%
- -----------------------------------------------------------------------------
HighMark Cognitive Value Fund,
Fiduciary Shares -- 1.1% 35,625 $ 464
HighMark Core Equity Fund,
Fiduciary Shares -- 16.6% 815,305 7,158
Highmark International Opportunities
Fund, Fiduciary Shares -- 12.9% 651,605 5,558
HighMark Large Cap Growth Fund,
Fiduciary Shares -- 8.1% 400,897 3,516
HighMark Large Cap Value Fund,
Fiduciary Shares -- 8.2% 260,453 3,560
HighMark Small Cap Growth Fund,
Fiduciary Shares -- 4.0% 129,832 1,723
HighMark Small Cap Value Fund,
Fiduciary Shares -- 4.8% 114,112 2,068
HighMark Value Momentum Fund,
Fiduciary Shares -- 12.3% 229,438 5,335
----------
TOTAL AFFILIATED EQUITY FUNDS
(Cost $28,917) 29,382
----------
- -----------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 27.7%
- -----------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares -- 11.6% 482,499 4,994
Highmark Short Term Bond Fund,
Fiduciary Shares -- 16.1% 714,019 6,969
----------
TOTAL AFFILIATED FIXED INCOME FUNDS
(Cost $12,135) 11,963
----------
- -----------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND (A) - 4.5%
- -----------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares, 5.030% 1,925,147 1,925
----------
TOTAL AFFILIATED MONEY MARKET FUND
(Cost $1,925) 1,925
----------
TOTAL INVESTMENTS - 100.2%
(Cost $42,977) $ 43,270
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $43,178,426.
(A) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 73
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
INCOME PLUS ALLOCATION FUND
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
AFFILIATED FIXED INCOME FUNDS - 56.1%
- -----------------------------------------------------------------------------
HighMark Bond Fund,
Fiduciary Shares -- 23.6% 130,671 $ 1,352
Highmark Short Term Bond Fund,
Fiduciary Shares -- 32.5% 191,237 1,866
----------
TOTAL AFFILIATED FIXED INCOME FUNDS
(Cost $3,284) 3,218
----------
- --------------------------------------------------------------------------------
AFFILIATED EQUITY FUNDS - 39.5%
- --------------------------------------------------------------------------------
HighMark Cognitive Value Fund,
Fiduciary Shares -- 0.9% 4,192 55
HighMark Core Equity Fund,
Fiduciary Shares -- 10.4% 68,121 598
Highmark International Opportunities
Fund, Fiduciary Shares -- 4.6% 31,035 265
HighMark Large Cap Growth Fund,
Fiduciary Shares -- 6.1% 40,112 352
HighMark Large Cap Value Fund,
Fiduciary Shares -- 4.8% 20,077 274
HighMark Small Cap Growth Fund,
Fiduciary Shares -- 2.1% 8,945 119
HighMark Small Cap Value Fund,
Fiduciary Shares -- 2.8% 8,805 159
HighMark Value Momentum Fund,
Fiduciary Shares -- 7.8% 19,171 446
----------
TOTAL AFFILIATED EQUITY FUNDS
(Cost $2,212) 2,268
----------
- -----------------------------------------------------------------------------
AFFILIATED MONEY MARKET FUND (A) - 5.2%
- -----------------------------------------------------------------------------
HighMark Diversified Money Market Fund,
Fiduciary Shares, 5.030% 298,598 299
----------
TOTAL AFFILIATED MONEY MARKET FUND
(Cost $299) 299
----------
TOTAL INVESTMENTS - 100.8%
(Cost $5,795) $ 5,785
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $5,737,156.
(A) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
74 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BOND FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 39.6%
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 4.1%
News America Holdings
7.750%, 02/01/24 $ 1,000 $ 1,069
Staples
7.125%, 08/15/07 4,000 4,049
Time Warner
7.480%, 01/15/08 7,100 7,280
Time Warner Entertainment
8.375%, 03/15/23 5,000 5,558
----------
17,956
----------
CONSUMER STAPLES - 0.6%
Safeway
7.500%, 09/15/09 2,468 2,590
----------
ENERGY - 2.4%
ConocoPhillips
7.125%, 03/15/28 3,000 3,030
El Paso CGP (C)
9.625%, 05/15/12 2,000 2,190
Kinder Morgan
7.250%, 03/01/28 5,600 5,102
----------
10,322
----------
FINANCIALS - 10.3%
Associates
6.950%, 11/01/18 4,000 4,365
Bank of America
5.250%, 02/01/07 5,600 5,591
Bank One
6.000%, 08/01/08 500 505
First Bank System
6.875%, 09/15/07 7,500 7,584
GE Global Insurance
7.750%, 06/15/30 5,000 5,755
HSBC Bank USA
3.875%, 09/15/09 4,200 4,008
John Hancock Financial Services
5.625%, 12/01/08 5,000 5,025
Morgan Stanley
6.750%, 04/15/11 5,500 5,747
Norwest
6.550%, 12/01/06 5,600 5,613
Wells Fargo Capital I
7.960%, 12/15/26 1,000 1,045
----------
45,238
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
FOREIGN GOVERNMENTS - 1.9%
Hydro Quebec, Ser IO
8.050%, 07/07/24 $ 1,125 $ 1,411
Pemex Project Funding Master Trust
9.125%, 10/13/10 5,000 5,545
Province of Saskatchewan
9.375%, 12/15/20 1,000 1,364
----------
8,320
----------
HEALTH CARE - 2.1%
HCA
7.875%, 02/01/11 5,000 4,731
United Health Group
5.250%, 03/15/11 4,500 4,433
----------
9,164
----------
INDUSTRIALS - 7.2%
Continental Airlines, Ser 98-1B
6.748%, 03/15/17 2,564 2,410
General Electric
5.000%, 02/01/13 5,000 4,840
McDonnell Douglas
6.875%, 11/01/06 4,125 4,135
Raychem
7.200%, 10/15/08 9,000 9,274
Raytheon
6.150%, 11/01/08 4,950 5,017
Waste Management
7.000%, 10/15/06 5,800 5,815
----------
31,491
----------
INFORMATION TECHNOLOGY - 1.7%
Cisco Systems
5.250%, 02/22/11 5,000 4,944
International Business Machines
6.500%, 01/15/28 2,500 2,601
----------
7,545
----------
MATERIALS - 0.3%
Potash
7.125%, 06/15/07 1,500 1,518
----------
REAL ESTATE INVESTMENT TRUST - 2.5%
Boston Properties
5.000%, 06/01/15 5,500 5,108
EOP Operating
6.800%, 01/15/09 5,500 5,638
----------
10,746
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 75
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
TELECOMMUNICATION - 2.1%
Bell Atlantic of Maryland
8.000%, 10/15/29 $ 2,980 $ 3,183
New England Telephone & Telegraph
7.875%, 11/15/29 5,625 5,900
----------
9,083
----------
UTILITIES - 4.4%
Arkansas Electric Cooperative
7.330%, 06/30/08 1,495 1,508
Baltimore Gas & Electric, MTN, Ser G
5.780%, 10/01/08 4,000 4,009
Calen Energy
5.000%, 02/15/14 400 378
FPL Group Capital
7.625%, 09/15/06 5,000 5,012
Oklahoma Gas & Electric
6.650%, 07/15/27 2,500 2,622
Orange & Rockland
7.000%, 03/01/29 1,250 1,283
Virginia Electric & Power, Ser A
4.750%, 03/01/13 5,000 4,683
----------
19,495
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $173,184) 173,468
----------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 38.0%
- -----------------------------------------------------------------------------
FHLMC
6.500%, 11/01/09 1,006 1,011
6.000%, 10/01/09 1,297 1,296
6.000%, 06/01/13 1,755 1,762
6.000%, 09/01/13 1,602 1,609
6.000%, 09/01/17 3,931 3,961
6.000%, 11/01/17 1,086 1,094
5.500%, 03/01/17 1,083 1,075
5.000%, 10/01/20 1,924 1,868
5.000%, 07/01/35 5,559 5,260
4.500%, 05/01/19 2,410 2,299
4.500%, 07/01/19 6,948 6,627
4.500%, 04/01/20 933 890
4.000%, 04/01/18 5,396 5,041
4.000%, 06/01/19 11,606 10,823
FHLMC, CMO REMIC, Ser 1666, Cl J
6.250%, 01/15/24 2,000 2,026
FHLMC, CMO REMIC, Ser 2663, Cl QK
3.500%, 04/15/17 2,080 2,069
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
FNMA
8.500%, 05/01/25 $ 37 $ 39
8.000%, 08/01/24 7 7
8.000%, 09/01/24 1 1
8.000%, 07/01/26 48 51
8.000%, 06/01/30 33 35
7.500%, 12/01/26 334 346
7.000%, 02/01/09 429 431
7.000%, 12/01/10 967 974
7.000%, 05/01/30 42 43
6.500%, 12/01/07 72 72
6.500%, 04/01/14 972 986
6.500%, 03/01/24 86 87
6.500%, 05/01/26 71 72
6.500%, 01/01/28 38 39
6.500%, 03/01/28 41 42
6.500%, 04/01/28 347 353
6.500%, 01/01/29 1,092 1,111
6.500%, 06/01/29 1,205 1,225
6.500%, 07/01/29 573 583
6.500%, 08/01/29 241 245
6.500%, 05/01/30 796 810
6.000%, 05/01/09 19 19
6.000%, 09/01/10 83 82
6.000%, 05/01/11 89 89
6.000%, 01/01/12 53 53
6.000%, 03/01/13 173 174
6.000%, 08/01/14 4,716 4,737
6.000%, 10/01/16 1,368 1,381
6.000%, 11/01/17 3,093 3,124
6.000%, 12/01/27 129 129
6.000%, 07/01/28 624 623
6.000%, 08/01/28 164 164
6.000%, 10/01/28 353 353
6.000%, 12/01/28 2,540 2,536
5.500%, 01/01/17 730 724
5.500%, 02/01/17 476 472
5.500%, 12/01/17 3,616 3,588
5.500%, 11/01/33 9,547 9,313
5.500%, 04/01/35 4,329 4,207
5.000%, 01/01/09 971 959
5.000%, 11/01/17 4,582 4,470
5.000%, 12/01/17 1,703 1,662
5.000%, 02/01/18 5,017 4,889
5.000%, 11/01/18 717 699
5.000%, 03/01/34 9,093 8,648
5.000%, 08/01/34 4,458 4,233
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
76 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
FNMA -- (continued)
5.000%, 07/01/35 $ 5,855 $ 5,545
4.500%, 04/01/18 26,551 25,430
4.500%, 08/01/18 3,040 2,911
4.500%, 07/01/20 9,064 8,669
FNMA, CMO REMIC, Ser 1993-140, Cl H
6.500%, 03/25/13 53 52
FNMA, CMO REMIC, Ser 2003-25, Cl CD
3.500%, 03/25/17 6,313 6,019
GNMA
8.000%, 04/15/17 40 42
8.000%, 05/15/17 19 20
8.000%, 11/15/26 388 412
8.000%, 12/15/26 150 159
7.500%, 05/15/23 144 150
7.500%, 01/15/24 122 127
7.500%, 02/15/24 119 124
7.500%, 02/15/27 26 27
7.500%, 06/15/27 57 60
7.500%, 07/15/27 18 19
7.500%, 08/15/27 71 74
7.000%, 01/15/24 55 56
7.000%, 04/15/24 72 74
6.500%, 06/15/23 166 169
6.500%, 12/15/23 112 114
6.500%, 01/15/24 21 22
6.500%, 02/15/24 119 122
6.500%, 10/15/25 61 62
6.500%, 04/15/26 92 93
6.500%, 01/15/29 467 477
6.500%, 05/15/29 1,034 1,056
6.500%, 06/15/29 96 98
6.500%, 11/15/29 22 22
6.000%, 07/15/28 176 176
6.000%, 08/15/28 145 146
6.000%, 09/15/28 564 566
----------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $170,230) 166,684
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 14.6%
- -----------------------------------------------------------------------------
U.S. Treasury Bonds
8.750%, 08/15/20 $ 3,300 $ 4,474
U.S. Treasury Bonds (A)
8.125%, 08/15/19 12,500 16,020
7.250%, 05/15/16 16,100 18,847
7.125%, 02/15/23 4,000 4,856
U.S. Treasury Inflation Index Note (A)
3.000%, 07/15/12 19,143 19,794
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $59,866) 63,991
----------
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 6.0%
- -----------------------------------------------------------------------------
CenterPoint Energy Transition Bond Co. II,
Ser A, Cl A-3
5.090%, 08/01/15 6,600 6,449
MBNA Master Credit Card Trust,
Ser 2000-L, Cl A
6.500%, 04/15/10 7,000 7,103
MBNA Master Credit Card Trust,
Ser 2005-A7, Cl A7
4.300%, 02/15/11 5,500 5,392
Pacific Gas, Ser 1997-1, Cl A7
6.420%, 09/25/08 413 413
PG&E Energy Recovery Funding,
Ser 2005-2, Cl A2
5.030%, 03/25/14 5,600 5,531
USAA Auto Owner Trust,
Ser 2004-1, Cl A3
2.060%, 04/15/08 1,196 1,188
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $26,304) 26,076
----------
- -----------------------------------------------------------------------------
MASTER NOTES - 5.7%
- -----------------------------------------------------------------------------
Bank of America (B)
5.383%, 08/01/06 10,000 10,000
Bear Stearns (B)
5.463%, 08/02/06 10,000 10,000
JPMorgan (B)
5.393%, 08/15/06 5,000 5,000
----------
TOTAL MASTER NOTES
(Cost $25,000) 25,000
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 77
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
BOND FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - 1.1%
- -----------------------------------------------------------------------------
Morgan Stanley Dean Witter (B)
5.383%, 11/09/06 $ 5,000 $ 5,000
----------
TOTAL COMMERCIAL PAPER
(Cost $5,000) 5,000
----------
- -----------------------------------------------------------------------------
MISCELLANEOUS -- 0.0%
- -----------------------------------------------------------------------------
RETAIL -- 0.0%
Kmart Holding Corporation*
(Escrow Shares) 10,000,000 --
----------
TOTAL MISCELLANEOUS
(Cost $--) --
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.9%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $2,500,376
(collateralized by various mortgage
obligations, ranging in par value
$42,750-$1,390,148, 0.000%-5.172%,
12/20/30-06/05/37, total market
value $2,625,059) (B) 2,500 2,500
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $3,764,455
(collateralized by a U.S. Treasury
obligation, par value $3,997,000,
4.250%, 11/15/14, total market
value $3,839,889) 3,764 3,764
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $28,464,771
(collateralized by various mortgage
obligations, ranging in par value
$808 - $107,033,157, 0.000% -
8.000%, 06/25/08 - 04/11/37,
total market value $29,883,561) (B) 28,461 28,461
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $34,725) 34,725
----------
TOTAL INVESTMENTS - 112.9%
(Cost $494,309) $ 494,944
==========
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $438,531,059.
* NON-INCOME PRODUCING SECURITY.
(A) THIS SECURITY OR A PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY
31, 2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$60,163,882.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
(C) 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." THE VALUE OF THIS SECURITY AS OF JULY 31,
2006, WAS $2,190,000 AND REPRESENTED 0.5% OF NET ASSETS.
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 $0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
78 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - 98.3%
Atascadero, Unified School District,
Measure B, Capital Projects, Ser A,
COP, MBIA Insured
Callable 02/01/07 @ 102
5.200%, 08/01/08 $ 1,000 $ 1,028
Berryessa, Unified School District,
GO, MBIA Insured
5.375%, 03/01/12 460 498
Brentwood, Unified School District,
Ser B, GO, FGIC Insured
Callable 08/01/10 @ 101
4.850%, 08/01/14 410 430
Burlingame, Elementary School District,
GO, FSA Insured
5.250%, 07/15/16 795 875
California State, Department of
Transportation, Federal Highway
Grant Anticipation Bonds,
Ser A, RB, FGIC Insured
5.000%, 02/01/14 2,000 2,145
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 1,340
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Q, RB
6.000%, 12/01/07 1,500 1,545
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser W, RB, FSA Insured
5.500%, 12/01/14 1,315 1,464
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Z, RB, FGIC Insured
5.000%, 12/01/12 1,000 1,070
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 1,613
California State, Educational Facilities
Authority, Stanford University, Ser P, RB
5.250%, 12/01/13 800 874
California State, Educational Facilities
Authority, Stanford University, Ser R, RB
5.000%, 11/01/11 610 649
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
California State, GO
7.000%, 08/01/07 $ 1,000 $ 1,032
6.250%, 04/01/08 1,000 1,040
California State, GO, FGIC Insured
4.500%, 09/01/10 1,000 1,030
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 1,038
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 2,287
Chaffey, Unified High School District,
GO, FGIC Insured
5.000%, 08/01/15 1,000 1,080
Coast Community College, GO, MBIA Insured
5.250%, 08/01/15 1,000 1,099
Contra Costa County, Merrithew Memorial
Hospital Project, COP, MBIA Insured
Callable 11/01/07 @ 102
5.500%, 11/01/12 2,160 2,250
5.200%, 11/01/09 2,000 2,075
Contra Costa, Transportation Authority,
Sales Tax, Ser A, ETM, RB
Callable 06/16/06 @ 100
6.875%, 03/01/07 175 178
Contra Costa, Transportation Authority,
Sales Tax, Ser A, RB, FGIC Insured
6.000%, 03/01/09 1,000 1,057
Cupertino, Unified School District, GO,
FSA Insured
Callable 08/01/11 @ 100
5.250%, 08/01/13 595 635
East Bay, Municipal Utility District,
Water System Project, RB, MBIA Insured
Callable 06/01/11 @ 100
5.250%, 06/01/13 500 535
5.250%, 06/01/14 1,250 1,334
Eastern Municipal Water District, Ser A,
COP, FGIC Insured
Callable 07/01/11 @ 100
5.375%, 07/01/16 2,500 2,683
5.375%, 07/01/17 2,410 2,581
5.250%, 07/01/12 300 320
5.250%, 07/01/13 1,000 1,064
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 79
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
El Camino, Community College,
GO, FSA Insured
Callable 08/01/15 @ 100
5.000%, 08/01/16 $ 1,000 $ 1,074
Fallbrook, Unified High School District,
GO, FGIC Insured
5.375%, 09/01/12 250 272
Fremont, Unified High School District,
Ser B, ETM, GO
5.000%, 09/01/10 600 630
Fresno, Joint Powers Financing Authority,
Fresno City Hall, RB, AMBAC Insured
Callable 08/01/10 @ 100
4.600%, 08/01/11 500 514
Glendale, Unified School District,
Ser B, GO, FSA Insured
Callable 09/01/08 @ 101
4.625%, 09/01/09 670 688
Hollister, Redevelopment Agency,
Community Development Project,
TA, AMBAC Insured
Callable 10/01/07 @ 102
5.000%, 10/01/08 740 760
Joshua Basin-Hi Desert Financing Authority,
Water District Project, RB, AMBAC Insured
4.900%, 05/01/09 465 482
Kings River, Conservation District,
Pine Flat Power, Ser F, RB
4.625%, 01/01/11 500 517
Livermore-Amador Valley, Water Management
Authority, Ser A, RB, AMBAC Insured
Callable 08/01/11 @ 100
5.250%, 08/01/14 750 802
5.000%, 08/01/13 400 422
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax
Project,
A-1st Senior Ser B, RB, FSA Insured
5.250%, 07/01/11 1,550 1,658
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax
Project,
C-2nd Senior, Ser A, RB, AMBAC Insured
5.500%, 07/01/10 1,050 1,120
Los Angeles County, Metropolitan
Transportation Authority, Sales Tax
Project,
C-2nd Senior, Ser A, RB, FGIC Insured
5.000%, 07/01/10 2,000 2,097
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
Los Angeles, Department of Water & Power,
Ser A-A-1, RB, MBIA Insured
5.250%, 07/01/10 $ 1,710 $ 1,809
5.250%, 07/01/11 3,485 3,727
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 2,155
Los Angeles, Department of Water & Power,
Ser B, RB, MBIA Insured
5.000%, 07/01/13 430 461
Los Angeles, Los Angeles County Public
Works, Ser A, RB
Callable 10/01/07 @ 101
5.500%, 10/01/08 1,225 1,261
Los Angeles, Ser A, GO, FGIC Insured
5.250%, 09/01/09 600 628
Los Angeles, Ser A, GO, MBIA Insured
5.250%, 09/01/11 250 268
Los Angeles, Ser B, GO, FSA Insured
Callable 09/01/15 @ 100
5.000%, 09/01/16 1,000 1,072
Los Angeles, Unified School District,
GO, MBIA Insured
5.500%, 07/01/12 755 826
Los Angeles, Unified School District,
Ser A, GO, FGIC Insured
6.000%, 07/01/07 1,000 1,022
6.000%, 07/01/11 1,385 1,524
Los Angeles, Unified School District,
Ser D, GO, FGIC Insured
Prerefunded @ 100 (A)
5.500%, 07/01/10 2,000 2,132
Los Angeles, Unified School District,
Ser E, GO, MBIA Insured
Prerefunded @ 100 (A)
5.500%, 07/01/12 1,390 1,519
Los Angeles, Waste Water Systems,
Ser C, RB, MBIA Insured
5.375%, 06/01/12 1,145 1,243
Los Gatos-Saratoga, Joint Unified High
School, Ser B, GO
Prerefunded @ 101 (A)
4.600%, 12/01/10 875 915
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, 2006
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
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 $ 2,568
Menlo Park, Community Development
Agency, Las Pulgas Community
Development Project, TA, AMBAC Insured
Prerefunded @ 102 (A)
4.650%, 06/01/10 520 547
Metropolitan, Water District of
Southern California, Ser A, ETM, RB
5.250%, 07/01/11 380 406
Metropolitan, Water District of
Southern California, Ser A, RB
Callable 07/01/11 @ 101
5.375%, 07/01/12 2,185 2,369
Metropolitan, Water District of
Southern California, Ser C, RB
Callable 01/01/07 @ 102
6.000%, 07/01/07 1,900 1,939
Metropolitan, Water District of
Southern California, Waterworks Project,
Ser B, GO
4.000%, 03/01/11 1,000 1,015
Mountain View, Shoreline Regional Park
Community, Ser A, TA, MBIA Insured
Callable 09/08/06 @ 102
5.600%, 08/01/10 500 511
North Orange County, Community Colllege
District, GO, MBIA Insured
5.000%, 08/01/15 1,000 1,080
Norwalk, La Mirada Unified School District,
Ser A, GO, FGIC Insured
Prerefunded @ 100 (A)
5.000%, 08/01/13 1,800 1,934
Oak Park, Unified School District,
GO, MBIA Insured
5.250%, 05/01/08 1,250 1,285
Orange County, Local Transportation
Authority, Measure M, Second Senior,
Ser A, RB, MBIA Insured
5.500%, 02/15/08 1,000 1,028
5.500%, 02/15/10 1,200 1,273
5.500%, 02/15/11 250 269
Paramount, Unified School District, GO,
FSA Insured
5.000%, 09/01/15 1,000 1,080
Port Oakland, Ser M, RB, FGIC Insured
Callable 11/01/12 @ 100
5.250%, 11/01/13 1,000 1,080
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
Redwood City, Elementary School District,
GO, FGIC Insured
5.500%, 08/01/10 $ 1,140 $ 1,218
5.500%, 08/01/14 900 1,000
Riverside County, Transportation Commission,
Sales Tax Revenue, Ser A, RB,
AMBAC Insured
5.750%, 06/01/09 740 782
Riverside, Community College, GO,
FSA Insured
Callable 08/01/15 @ 100
5.000%, 08/01/19 1,700 1,798
Sacramento, Municipal Utility District,
Electric, Ser C, ETM, RB, FGIC Insured
Callable 09/08/06 @ 100
5.750%, 11/15/08 570 571
Sacramento, Municipal Utility District,
Ser O, RB, MBIA Insured
5.250%, 08/15/10 500 530
Sacramento, Municipal Utility District,
Ser P, RB, FSA Insured
Callable 08/15/11 @ 100
5.250%, 08/15/13 1,585 1,697
Sacramento, Municipal Utility District,
Ser R, RB, MBIA Insured
5.000%, 08/15/15 1,480 1,598
Sacramento, Municipal Utility District,
Ser R, RB, MBIA Insured
Callable 08/15/13 @ 100
5.000%, 08/15/16 1,000 1,060
San Bernardino County, Community College
District, GO, FSA Insured
5.000%, 08/01/15 1,000 1,080
San Bernardino County, Transportation
Authority, Ser A, RB, FSA Insured
Callable 03/01/08 @ 101
5.000%, 03/01/09 1,000 1,030
San Bernardino County, Transportation
Authority, Ser A, RB, MBIA Insured
6.250%, 03/01/10 2,000 2,169
San Bernardino, Municipal Water Department,
Sewer Authority, COP, FGIC Insured
4.500%, 02/01/09 1,025 1,046
San Bernardino, Municipal Water Department,
Sewer Authority, COP, FGIC Insured
Callable 02/01/09 @ 101
5.000%, 02/01/11 1,130 1,174
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 81
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
San Diego County, Water Authority,
COP, FGIC Insured
5.250%, 05/01/16 $ 1,310 $ 1,446
San Diego, Public Facilities Financing
Authority, RB, MBIA Insured
Callable 08/01/12 @ 100
5.000%, 08/01/14 1,000 1,060
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 1,015
San Francisco City & County,
Public Utilities Commission,
Water Revenue, Ser A, RB, FSA Insured
5.000%, 11/01/10 1,000 1,052
5.000%, 11/01/11 1,500 1,591
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 1,330
San Francisco, Bay Area Rapid Transit,
RB, AMBAC Insured
Callable 07/01/11 @ 100
5.250%, 07/01/14 300 320
San Francisco, Bay Area Rapid Transit,
RB, AMBAC Insured
Prerefunded @ 100 (A)
5.250%, 07/01/11 850 909
San Joaquin County, Capital Facilities
Project,
COP, MBIA Insured
4.800%, 11/15/07 1,000 1,015
San Joaquin County, Delta Community
College District, Election 2004,
Ser A, GO, FSA Insured
4.500%, 08/01/15 1,000 1,042
San Jose, Financing Authority, Convention
Center Project, Ser F, RB, MBIA Insured
4.250%, 09/01/11 1,765 1,810
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
ETM, TA, MBIA Insured
6.000%, 08/01/09 500 533
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
TA, AMBAC Insured
Callable 08/01/08 @ 102
5.000%, 08/01/09 1,500 1,555
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
San Jose, Redevelopment Agency,
Merged Area Redevelopment Project,
TA, MBIA Insured
6.000%, 08/01/08 $ 1,000 $ 1,046
6.000%, 08/01/09 1,000 1,064
San Juan, Unified School District, GO,
FSA Insured
5.250%, 08/01/10 1,150 1,218
San Mateo County, Transit District,
Ser A, RB, MBIA Insured
5.250%, 06/01/16 2,000 2,208
San Mateo, Unified High School District,
Ser A, GO, FGIC Insured
Prerefunded @ 100 (A)
5.375%, 09/01/11 2,195 2,365
San Ramon Valley, Unified School District,
GO, FSA Insured
Callable 08/01/14 @ 100
5.250%, 08/01/18 1,250 1,353
Santa Ana, Community Redevelopment
Agency, Mainplace Project,
Ser E, ETM, RB
6.400%, 12/15/10 395 420
Santa Maria, Joint Unified High School
District, Ser A, ETM, GO, FSA Insured
5.500%, 08/01/15 510 570
Solano County, Community College,
Ser A, GO, MBIA Insured
Prerefunded @ 100 (A)
5.000%, 08/01/13 1,865 2,004
South Orange County, Public Financing
Authority, Foothill Area,
Ser C, RB, FGIC Insured
7.500%, 08/15/07 1,000 1,039
South Placer, Waste Water Authority,
Ser A, RB, FGIC Insured
4.500%, 11/01/10 1,000 1,032
Southern California, Public Power Authority,
Ser A, RB, FSA Insured
5.375%, 01/01/09 1,610 1,674
Turlock, Irrigation District,
Ser A, RB, MBIA Insured
6.000%, 01/01/08 1,425 1,472
6.000%, 01/01/11 500 546
----------
TOTAL MUNICIPAL BONDS
(Cost $134,611) 136,273
----------
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, 2006
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY (B) - 0.4%
- -----------------------------------------------------------------------------
BlackRock Provident California
Tax Free Money Market, 3.390% 490,000 $ 490
----------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $490) 490
----------
TOTAL INVESTMENTS - 98.7%
(Cost $135,101) $ 136,763
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $138,622,744.
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
(B) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
COP -- CERTIFICATES 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 83
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED]
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - 98.2%
- -----------------------------------------------------------------------------
ARIZONA - 6.1%
Arizona State, Transportation Board
& Highway Revenue, Ser A, RB
Callable 07/01/12 @ 102
5.250%, 07/01/17 $ 1,000 $ 1,082
Phoenix, GO, Prerefunded @ 101 (A)
5.000%, 07/01/09 2,370 2,473
Phoenix, Ser A, GO
6.250%, 07/01/17 1,000 1,182
----------
4,737
----------
CALIFORNIA - 14.3%
California State, Department of
Transportation, Federal Highway
Grant Anticipation Bonds,
Ser A, RB, FGIC Insured
5.000%, 02/01/14 1,000 1,072
California State, Department of Water
Resources, Central Valley Project,
Water System, Ser Z, RB, FGIC Insured
5.000%, 12/01/12 500 535
California State, Department of Water
Resources, Ser X, RB, FGIC Insured
5.500%, 12/01/15 600 672
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 1,034
California State, GO, FGIC Insured
5.750%, 02/01/11 1,000 1,082
Contra Costa, Water District, Ser E, RB,
AMBAC Insured
6.250%, 10/01/12 1,000 1,079
East Bay, Municipal Utility District, Water
System Project, RB, MBIA Insured
Callable 06/01/11 @ 100
5.250%, 06/01/13 800 856
Eastern Municipal Water District,
Ser A, COP, FGIC Insured
Callable 07/01/11 @ 100
5.375%, 07/01/16 620 665
Elsinore Valley, Municipal Water District,
COP, FGIC Insured
5.375%, 07/01/18 500 557
Los Angeles, Ser A, GO, MBIA Insured
5.250%, 09/01/12 375 406
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
CALIFORNIA - (CONTINUED)
San Jose, Redevelopment Agency, ETM,
TA, MBIA Insured
6.000%, 08/01/15 $ 330 $ 382
San Jose, Redevelopment Agency, TA,
MBIA Insured
6.000%, 08/01/15 670 768
San Ramon Valley, Unified School District,
GO, FSA Insured
Callable 08/01/14 @ 100
5.250%, 08/01/18 1,670 1,808
Southern California Public Power
Authority, Hydroelectric Power,
Ser A, RB, FSA Insured
Callable 10/01/11 @ 100
5.250%, 10/01/12 245 262
----------
11,178
----------
COLORADO - 0.5%
Regional Transportation District, Sales Tax,
Ser B, RB, AMBAC Insured
5.250%, 11/01/12 350 377
----------
DELAWARE - 1.7%
Delaware River & Bay Authority,
RB, FGIC Insured
Callable 09/08/06 @ 102
5.000%, 01/01/07 1,340 1,348
----------
FLORIDA - 2.4%
Florida State, Board of Education, Public
Education Capital Outlay, Ser A, GO
5.000%, 06/01/08 1,300 1,329
Jacksonville, Local Government, Sales Tax
Revenue, RB, FGIC Insured
5.500%, 10/01/13 500 549
----------
1,878
----------
GEORGIA - 4.7%
Atlanta, Water & Wastewater Revenue,
Ser A, RB, FGIC Insured
5.500%, 11/01/13 1,000 1,092
Georgia State, Ser E, GO
5.250%, 02/01/09 2,525 2,619
----------
3,711
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
84 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
HAWAII - 5.6%
Hawaii County, Ser A, GO, FGIC Insured
Callable 07/15/11 @ 100
5.500%, 07/15/13 $ 635 $ 679
Hawaii State, Highway Revenue,
Ser B, RB, FSA Insured
5.000%, 07/01/15 1,000 1,067
Hawaii State, Ser CS, GO, MBIA Insured
5.000%, 04/01/08 1,000 1,020
Honolulu City & County, Ser A, GO,
FSA Insured
Prerefunded @ 100 (A)
5.375%, 09/01/11 1,000 1,073
Kauai County, Ser A, GO, MBIA Insured
Callable 08/01/11 @ 100
5.625%, 08/01/13 440 473
Kauai County, Ser A, GO, MBIA Insured
Prerefunded @ 100 (A)
5.625%, 08/01/11 60 65
----------
4,377
----------
IDAHO - 2.7%
Idaho State, Housing & Finance Authority,
Federal Highway Trust, RB, MBIA Insured
5.000%, 07/15/15 1,000 1,071
Twin Falls County, School District No. 411,
GO, MBIA Insured
5.000%, 09/15/16 1,000 1,073
----------
2,144
----------
ILLINOIS - 7.4%
Chicago, O'Hare International Airport,
2nd Lien, Ser C, RB, MBIA Insured
5.000%, 01/01/08 1,000 1,016
5.000%, 01/01/10 1,000 1,035
Cook County, Ser A, GO, FGIC Insured
Callable 11/15/08 @ 101
4.500%, 11/15/09 1,000 1,021
Du Page & Will Counties, Community
School District, Ser B, GO, FGIC Insured
5.000%, 12/30/07 2,700 2,746
----------
5,818
----------
MASSACHUSETTS - 5.5%
Massachusetts State, Consolidated Loan,
Ser C, GO
5.250%, 08/01/08 1,000 1,028
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
MASSACHUSETTS - (CONTINUED)
Massachusetts State, School Building
Authority, Ser A, RB, FSA Insured
5.000%, 08/15/14 $ 1,000 $ 1,070
Massachusetts State, Water Resources
Authority, Ser A, RB, MBIA Insured
5.250%, 08/01/15 1,000 1,090
5.250%, 08/01/16 1,000 1,094
----------
4,282
----------
NEBRASKA - 1.3%
Omaha Public Power District,
Electric Revenue, Ser D, RB
5.000%, 02/01/07 1,000 1,006
----------
NEVADA - 1.8%
Clark County, School District,
Ser A, GO, FSA Insured
Callable 12/15/12 @ 103
5.500%, 06/15/16 500 554
Las Vegas, Water District Revenue,
Ser B, GO, MBIA Insured
Callable 12/01/12 @ 100
5.250%, 06/01/14 300 321
Nevada State, Capital Improvements,
Ser A, GO, MBIA Insured
Callable 05/01/12 @ 100
5.000%, 11/01/16 500 524
----------
1,399
----------
NEW JERSEY - 2.8%
New Jersey State, Ser L, GO,
AMBAC Insured
5.250%, 07/15/16 1,000 1,091
New Jersey State, Transportation Trust
Fund Authority, Ser C, ETM, RB,
MBIA Insured
5.250%, 06/15/15 1,000 1,094
----------
2,185
----------
NEW YORK - 2.7%
New York State Thruway Authority,
Highway & Board, Ser A, RB,
MBIA Insured
Callable 04/01/14 @ 100
5.000%, 04/01/18 1,000 1,051
New York State, Ser M, GO, FSA Insured
5.000%, 04/01/15 1,000 1,066
----------
2,117
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 85
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
OREGON - 10.4%
Chemeketa, Community College
District, ETM, GO, FGIC Insured
5.500%, 06/01/12 $ 1,060 $ 1,152
Jackson County, Juvenile Services Center,
GO, FSA Insured
5.000%, 06/01/10 1,000 1,042
McMinnville, School District No. 40,
GO, FSA Insured
5.000%, 06/15/11 1,620 1,704
Portland, Sewer Systems,
Ser A, RB, FGIC Insured
Callable 06/01/07 @ 100
5.000%, 06/01/08 1,000 1,011
Washington County, School District
Authority, No. 15, GO, FSA Insured
5.000%, 06/15/14 1,000 1,069
Washington, Multnomah & Yamill Counties,
School District Authority,
GO, MBIA Insured
5.000%, 06/01/11 1,000 1,052
Yamhill County, School District Authority,
No. 29J, GO, FGIC Insured
5.250%, 06/15/16 1,000 1,091
----------
8,121
----------
PENNSYLVANIA - 3.0%
Pennsylvania State, First Ser, GO,
MBIA Insured
5.000%, 06/01/09 1,100 1,137
Pennsylvania State, Second Ser, GO
5.250%, 10/01/09 1,155 1,205
----------
2,342
----------
TENNESSEE - 1.3%
Johnson City, Water & Sewer System, GO,
FGIC Insured
5.250%, 06/01/08 1,000 1,026
----------
TEXAS - 2.9%
Houston, Texas Utility System Revenue,
First Lien, Ser A, RB, FSA Insured
5.250%, 11/15/17 1,000 1,093
Texas State, University Systems, Revenue
Financing System, RB, FSA Insured
Prerefunded @ 100 (A)
4.800%, 03/15/10 1,170 1,210
----------
2,303
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
UTAH - 2.0%
Utah State, Board Regents Auxiliary
& Campus Facilities Revenue,
Ser A, RB, MBIA Insured
Callable 04/01/15 @ 100
5.000%, 04/01/17 $ 1,500 $ 1,584
----------
VIRGINIA - 1.3%
Virginia State, Northern Virginia
Transportation Board, Ser A, RB
Callable 09/08/06 @ 101
5.000%, 05/15/08 1,000 1,014
----------
WASHINGTON - 15.2%
King & Snohomish Counties, School District
Authority, GO, FGIC Insured
Callable 12/01/07 @ 100
5.250%, 12/01/09 1,125 1,148
King & Snohomish Counties, School District
Authority, GO, FGIC Insured
Prerefunded @ 100 (A)
5.250%, 12/01/07 1,610 1,643
King County, School District No. 408,
GO, AMBAC Insured
6.000%, 12/01/08 1,000 1,049
King County, School District No. 410,
GO, FGIC Insured
5.500%, 12/01/10 1,285 1,368
King County III, Lease Revenue
Authority, King Street Center Project,
CDP, RB, MBIA Insured
Callable 06/01/07 @ 101
5.000%, 06/01/09 1,000 1,021
Pierce County, GO, AMBAC Insured
Callable 08/01/15 @ 100
5.125%, 08/01/16 1,375 1,473
Seattle, Limited Tax, Ser B, ETM, GO
5.500%, 03/01/11 65 70
Seattle, Limited Tax, Ser B, GO
5.500%, 03/01/11 1,935 2,065
Seattle, Municipal Light & Power Revenue
Authority, Ser B, RB, MBIA Insured
Callable 06/01/08 @ 101
4.750%, 06/01/09 1,000 1,025
Skagit County, School District No. 103,
GO, FGIC Insured
6.250%, 12/01/07 1,000 1,032
----------
11,894
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
86 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
NATIONAL INTERMEDIATE TAX-FREE BOND FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000)/Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
WISCONSIN - 2.6%
Milwaukee, Metropolitan Sewage District,
Ser A, GO
5.500%, 10/01/08 $ 2,000 $ 2,070
----------
TOTAL MUNICIPAL BONDS
(Cost $76,132) 76,911
----------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANY (B) - 0.6%
- -----------------------------------------------------------------------------
BlackRock Provident California
Tax Free Money Market, 3.390% 483,323 483
----------
TOTAL REGULATED INVESTMENT COMPANY
(Cost $484) 483
----------
TOTAL INVESTMENTS - 98.8%
(Cost $76,616) $ 77,394
==========
- -----------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $78,348,741.
(A) PREREFUNDED SECURITY -- THE MATURITY DATE SHOWN IS THE PREREFUNDED DATE.
(B) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
CDP -- CENSUS DESIGNATED PLACE
COP -- CERTIFICATES 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 87
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHORT TERM BOND FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS - 29.3%
- -----------------------------------------------------------------------------
FHLMC
6.000%, 01/01/13 $ 372 $ 374
6.000%, 09/01/13 81 81
6.000%, 05/01/14 931 937
6.000%, 10/01/16 345 347
5.500%, 03/01/17 342 339
5.500%, 12/01/17 33 33
5.500%, 02/01/18 358 355
5.500%, 11/01/18 30 30
5.000%, 10/01/18 939 913
3.500%, 08/01/10 82 76
FHLMC, ARM
4.764%, 03/01/35 707 692
FHLMC, CMO REMIC, Ser 2722, Cl PA
4.000%, 02/15/21 379 374
FHLMC, CMO REMIC, Ser 2734, Cl JC
3.500%, 11/15/23 141 137
FHLMC, CMO REMIC, Ser 2743, Cl NL
3.000%, 05/15/23 561 546
FHLMC, CMO REMIC, Ser 2836, Cl QC
5.000%, 09/15/22 349 345
FHLMC, CMO REMIC, Ser 2844, Cl PQ
5.000%, 05/15/23 280 278
FNMA
8.000%, 06/01/30 11 12
8.000%, 11/01/30 7 7
6.500%, 06/01/16 54 55
6.500%, 07/01/16 121 123
6.500%, 11/01/16 104 106
6.500%, 01/01/17 107 108
6.500%, 02/01/17 43 44
6.500%, 04/01/17 149 152
6.500%, 07/01/17 128 130
6.000%, 04/01/16 558 563
6.000%, 06/01/16 71 72
6.000%, 08/01/16 117 118
5.500%, 09/01/14 891 885
5.500%, 12/01/16 146 145
5.500%, 09/01/17 1,080 1,072
5.500%, 10/01/17 211 210
5.500%, 11/01/17 378 375
5.500%, 12/01/17 195 193
5.500%, 02/01/18 25 24
5.500%, 04/01/18 50 50
5.500%, 10/01/18 68 67
5.000%, 07/01/14 130 127
5.000%, 05/01/18 58 57
5.000%, 06/01/18 219 213
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED OBLIGATIONS -
(CONTINUED)
- -----------------------------------------------------------------------------
FNMA, ARM
3.527%, 09/01/33 $ 533 $ 518
FNMA, CMO REMIC, Ser 45, Cl NM
4.500%, 06/25/24 480 471
----------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-
BACKED OBLIGATIONS
(Cost $11,937) 11,754
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 27.8%
- -----------------------------------------------------------------------------
CONSUMER DISCRETIONARY - 2.7%
Comcast Cable Communication
6.200%, 11/15/08 300 304
News America Holdings
7.375%, 10/17/08 450 467
Time Warner Entertainment
7.250%, 09/01/08 300 309
----------
1,080
----------
CONSUMER STAPLES - 1.9%
General Mills
5.125%, 02/15/07 250 250
Kellogg
2.875%, 06/01/08 350 334
Wal-Mart Stores
5.450%, 08/01/06 175 175
----------
759
----------
FINANCIALS - 11.1%
American General Finance, MTN, Ser G
5.750%, 03/15/07 250 250
Associates
6.250%, 11/01/08 40 41
Bank One
6.000%, 08/01/08 350 353
Caterpillar Financial Services, MTN, Ser F
3.700%, 08/15/08 450 435
CIT Group
4.000%, 05/08/08 300 293
First Bank System
6.875%, 09/15/07 227 230
FleetBoston Financial
4.875%, 12/01/06 250 249
General Electric Capital, MTN, Ser A
4.250%, 01/15/08 500 492
Golden West Financial
4.125%, 08/15/07 205 202
John Deere Capital, MTN
3.375%, 10/01/07 300 292
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
88 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHORT TERM BOND FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
FINANCIALS - (CONTINUED)
John Hancock Financial Services
5.625%, 12/01/08 $ 204 $ 205
Lehman Brothers Holdings
8.500%, 05/01/07 250 255
Morgan Stanley
5.800%, 04/01/07 250 250
SLM, MTN, Ser A
3.500%, 09/30/06 215 214
Toyota Motor Credit, MTN
5.650%, 01/15/07 250 250
Wachovia
4.950%, 11/01/06 200 200
Wells Fargo
5.125%, 02/15/07 250 250
----------
4,461
----------
HEALTH CARE - 1.2%
United Health Group
3.300%, 01/30/08 500 483
----------
INDUSTRIALS - 1.6%
McDonnell Douglas
6.875%, 11/01/06 200 201
Raytheon
6.750%, 08/15/07 250 252
Waste Management
7.000%, 10/15/06 175 175
----------
628
----------
INFORMATION TECHNOLOGY - 1.2%
Hewlett-Packard
5.500%, 07/01/07 250 250
International Business Machines
6.450%, 08/01/07 250 251
----------
501
----------
REAL ESTATE INVESTMENT TRUST - 0.8%
EOP Operating
7.750%, 11/15/07 300 308
----------
TELECOMMUNICATION - 1.9%
AT&T
7.750%, 03/01/07 250 253
Sprint Capital
6.125%, 11/15/08 500 506
----------
759
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (CONTINUED)
- -----------------------------------------------------------------------------
UTILITIES - 5.4%
Calen Energy
7.520%, 09/15/08 $ 500 $ 519
Carolina Power & Light
5.950%, 03/01/09 435 439
Consolidated Edison of New York, Ser 98-A
6.250%, 02/01/08 300 303
Dominion Resources
4.125%, 02/15/08 350 343
FPL Group Capital
7.625%, 09/15/06 200 200
Ohio Edison
4.000%, 05/01/08 400 389
----------
2,193
----------
TOTAL CORPORATE OBLIGATIONS
(Cost $11,280) 11,172
----------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.5%
- -----------------------------------------------------------------------------
FHLMC
6.375%, 08/01/11 100 100
3.500%, 09/15/07 1,000 980
FNMA (A)
6.000%, 05/15/08 2,000 2,024
5.000%, 01/15/07 1,500 1,497
3.875%, 07/15/08 1,000 975
3.250%, 11/15/07 1,500 1,461
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $7,110) 7,037
----------
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - 13.6%
- -----------------------------------------------------------------------------
CenterPoint Energy Transition Bond
Co. II, Ser A-1
4.840%, 02/01/11 500 501
Citibank Credit Card Issuance Trust,
Ser 2002-A1, Cl A1
4.950%, 02/09/09 275 273
Citibank Credit Card Issuance Trust,
Ser 2003-A3, Cl A3
3.100%, 03/10/10 705 680
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%, 06/25/09 223 223
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 89
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
SHORT TERM BOND FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITIES - (CONTINUED)
- -----------------------------------------------------------------------------
Comed Transitional Funding Trust,
Ser 1998-1, Cl A7
5.740%, 12/25/10 $ 500 $ 503
MBNA Master Credit Card Trust,
Ser 2000-L, Cl A
6.500%, 04/15/10 710 720
MBNA Master Credit Card Trust,
Ser 2003-A11, Cl A11
3.650%, 03/15/11 500 483
MBNA Master Credit Card Trust,
Ser 2005-A7, Cl A7
4.300%, 02/15/11 590 578
Peco Energy Transition Trust,
Ser 1999-A, Cl A6
6.050%, 03/01/09 113 113
PG&E Energy Recovery Funding Trust,
Ser 2005-1, Cl A2
3.870%, 06/25/11 710 695
TXU Electric Delivery Transition Trust,
Ser 2004-1, Cl A1
3.520%, 11/15/11 339 329
Washington Mutual CMO,
Ser 2005-8, Cl 1A8
5.500%, 10/25/35 145 144
----------
TOTAL ASSET-BACKED SECURITIES
(Cost $5,492) 5,437
----------
- -----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 8.7%
- -----------------------------------------------------------------------------
U.S. Treasury Inflation Index Note (A)
3.875%, 01/15/09 1,235 1,278
U.S. Treasury Notes
6.125%, 08/15/07 500 505
2.625%, 11/15/06 750 744
U.S. Treasury Notes (A)
3.000%, 11/15/07 1,000 974
----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $3,578) 3,501
----------
- -----------------------------------------------------------------------------
MASTER NOTE - 2.5%
- -----------------------------------------------------------------------------
Bear Stearns (B)
5.463%, 08/02/06 1,000 1,000
----------
TOTAL MASTER NOTE
(Cost $1,000) 1,000
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 15.0%
- -----------------------------------------------------------------------------
Bear Stearns
5.4125%, dated 07/31/06, matures on
08/01/06, repurchase price $1,000,150
(collateralized by various mortgage
obligations, ranging in par value
$17,100-$556,059, 0.000%-5.172%,
12/20/30-06/25/37, total market
value $1,050,024) (B) $ 1,000 $ 1,000
Deutsche Bank Securities
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $271,531
(collateralized by a U.S. Treasury
obligation, par value $275,000,
4.875%, 04/30/11, total market
value $277,702) 271 271
Lehman Brothers
5.3625%, dated 07/31/06, matures on
08/01/06, repurchase price $4,743,288
(collateralized by various mortgage
obligations, ranging in par value $135 -
$17,830,699, 0.000% - 8.000%,
06/25/08 - 04/11/37, total market
value $4,979,711) (B) 4,743 4,743
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $6,014) 6,014
----------
TOTAL INVESTMENTS - 114.4%
(Cost $46,411) $ 45,915
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $40,119,279.
(A) THIS SECURITY OR PARTIAL POSITION OF THIS SECURITY WAS ON LOAN AT JULY 31,
2006. THE TOTAL VALUE OF SECURITIES ON LOAN AT JULY 31, 2006 WAS
$6,640,198.
(B) THIS SECURITY WAS PURCHASED WITH CASH COLLATERAL RECEIVED FROM SECURITIES
LENDING.
ARM -- ADJUSTABLE RATE MORTGAGE
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.
- --------------------------------------------------------------------------------
90 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - 99.7%
- -----------------------------------------------------------------------------
ABAG, Multi-Family Housing Finance
Authority, Non-Profit, Episcopal Homes
Foundation, COP (A) (B) (C)
3.620%, 02/01/25 $ 5,750 $ 5,750
ABAG, Multi-Family Housing Finance
Authority, Non-Profit, Paragon
Apartments, Ser A, RB, AMT (A) (B) (C)
3.670%, 03/15/40 4,000 4,000
Alameda County, Industrial Development
Authority Revenue, Ettore Products
Company Project, Ser A, RB,
AMT (A) (B) (C)
3.690%, 12/01/30 4,000 4,000
Big Bear Lake, Industrial Revenue,
Southwest Gas Corporation Project,
Ser A, RB, AMT (A) (B) (C)
3.600%, 12/01/28 2,800 2,800
California Infrastructure & Economic
Development, Colburn School,
Ser A, RB (A) (B) (C)
3.570%, 08/01/37 4,000 4,000
California Infrastructure & Economic
Development, Colburn School,
Ser B, RB (A) (B) (C)
3.570%, 08/01/37 5,550 5,550
California Infrastructure & Economic
Development, J Paul Getty,
Ser A, RB (A) (B)
3.170%, 04/01/33 5,000 5,000
California Infrastructure & Economic
Development, J Paul Getty,
Ser B, RB (A) (B)
3.250%, 04/01/33 4,000 4,000
California Infrastructure & Economic
Development, J Paul Getty,
Ser C, RB (A) (B)
3.170%, 04/01/33 4,500 4,500
California Infrastructure & Economic
Development, J Paul Getty,
Ser D, RB (A) (B)
3.250%, 04/01/33 3,000 3,000
California School Cash Reserve Program,
Ser A, TRAN
3.500%, 07/06/07 5,000 5,045
California State, Community College
Financing Authority, Ser A, TRAN,
FSA Insured
4.500%, 06/29/07 4,500 4,535
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
California State, Department of
Water & Power, Ser B-3,
RB (A) (B) (C)
3.600%, 05/01/22 $ 1,400 $ 1,400
California State, Department of
Water & Power, Ser C-15,
RB (A) (B) (C)
3.500%, 05/01/22 4,520 4,520
California State, Department of
Water & Power, Ser C-18,
RB (A) (B) (C)
3.580%, 05/01/22 19,000 19,000
California State, Department of
Water & Power, Ser C-2, RB,
AMBAC Insured (A) (B) (C)
3.590%, 05/01/22 16,160 16,160
California State, Department of
Water & Power, Ser C-7, RB,
FSA Insured (A) (B) (C)
3.580%, 05/01/22 4,050 4,050
California State, Department of
Water & Power, Ser F-2,
RB (A) (B) (C)
3.620%, 05/01/20 1,600 1,600
California State, Department of
Water & Power, Ser F-5,
RB (A) (B) (C)
3.660%, 05/01/22 18,390 18,390
California State, Department of
Water & Power, Ser G-12,
RB, FGIC Insured (A) (B)
3.590%, 05/01/18 3,500 3,500
California State, Department of
Water & Power, Ser G-3,
RB, FSA Insured (A) (B) (C)
3.580%, 05/01/16 13,000 13,000
California State, Department of
Water & Power, Ser G-6,
RB, FSA Insured (A) (B) (C)
3.590%, 05/01/17 15,080 15,080
California State, Department of
Water & Power, Ser G-8, RB,
MBIA Insured (A) (B) (C)
3.570%, 05/01/18 4,800 4,800
California State, Economic Recovery,
Ser C-17, RB, XLCA Insured (A) (B) (C)
3.620%, 07/01/23 12,500 12,500
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 91
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
California State, Educational Facilities
Authority, California Institute of
Technology, RB (A) (B)
3.550%, 01/01/24 $ 19,000 $ 19,000
California State, Educational Facilities
Authority, California Institute of
Technology, Ser A, RB (A) (B)
3.550%, 10/01/36 7,500 7,500
California State, Educational Facilities
Authority, California Institute of
Technology, Ser B, RB (A) (B)
3.540%, 10/01/36 12,000 12,000
California State, Educational Facilities
Authority, Pomona College,
Ser B, RB (A) (B)
3.590%, 07/01/54 2,500 2,500
California State, Housing Finance
Agency, Home Mortgage, Ser F,
RB, AMT, AMBAC Insured (A) (B)
3.680%, 02/01/33 4,700 4,700
California State, Housing Finance
Agency, Home Mortgage, Ser Q,
RB, AMT, AMBAC Insured (A) (B) (C)
3.650%, 02/01/32 2,700 2,700
California State, Housing Finance
Agency, Multi-Family Home
Mortgage, Ser C, RB, AMT (A) (B) (C)
3.680%, 08/01/27 3,305 3,305
California State, Pollution Control
Financing Authority, Pacific
Gas & Electric Project,
Ser C, RB (A) (B) (C)
3.590%, 11/01/26 4,100 4,100
California State, Pollution Control
Financing Authority, Pacific
Gas & Electric Project,
Ser E, RB (A) (B) (C)
3.610%, 11/01/26 7,000 7,000
California State,
Ser A-2, GO (A) (B) (C)
3.560%, 05/01/33 700 700
California State, TECP
3.610%, 10/05/06 7,200 7,200
California State, University
Kindergarten, Ser B-3, GO (A) (B) (C)
3.590%, 05/01/34 6,300 6,300
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
California Statewide, Communities
Development Authority,
North Peninsula Jewish Day School,
RB (A) (B) (C)
3.600%, 07/01/34 $ 1,100 $ 1,100
California Statewide, Communities
Development Authority, Ser A-1,
TRAN, FSA Insured
4.500%, 06/29/07 10,000 10,080
California Statewide, Communities
Development Authority,
Stoneridge Elk Grove, Ser Q, RB,
AMT (A) (B) (C)
3.670%, 10/01/38 6,750 6,750
California Statewide, Communities
Development Authority,
Varenna Assisted Living, Ser F,
RB, AMT (A) (B) (C)
3.670%, 02/15/41 3,800 3,800
East Bay, Municipal Water System, TECP (C)
3.550%, 09/14/06 5,000 5,000
Irvine County, Improvement Bond
Act of 1915, Special Public
Assessment District #85-7-I,
FSA Insured (A) (B) (C)
3.620%, 09/02/11 14,210 14,210
Los Angeles County, Multi-Family
Housing Authority, Castaic Senior
Apartments Project, Ser C, RB,
AMT, FNMA Insured (A) (B) (C)
3.640%, 07/15/36 4,000 4,000
Los Angeles County, Multi-Family
Housing Authority, Sierra Project,
Ser A, RB, AMT, FHLMC Insured
(A) (B) (C)
3.670%, 09/01/30 1,720 1,720
Los Angeles County, Ser A, TRAN
4.500%, 06/29/07 2,900 2,925
Los Angeles, Department of Airports,
L.A. International Airport, Ser A,
RB, AMT (A) (B) (C)
3.680%, 05/15/16 13,700 13,700
Los Angeles, Department of
Water & Power, Sub-Ser B-1,
RB (A) (B) (C)
3.590%, 07/01/34 2,100 2,100
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
92 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
Los Angeles, Department of
Water & Power, Sub-Ser B-2,
RB (A) (B) (C)
3.530%, 07/01/34 $ 15,000 $ 15,000
Los Angeles, Department of
Water & Power, Sub-Ser B-3,
RB (A) (B) (C)
3.600%, 07/01/34 1,700 1,700
Los Angeles, Department of
Water & Power, Sub-Ser B-7,
RB (A) (B) (C)
3.620%, 07/01/34 2,100 2,100
Los Angeles, Department of
Water & Power, Sub-Ser B-8,
RB (A) (B)
3.620%, 07/01/34 12,000 12,000
Los Angeles, Waste Water Systems,
Ser A, RB, XLCA Insured (A) (B) (C)
3.600%, 06/01/28 7,700 7,700
Metropolitan, Water District of
Southern California, Ser A, RB
(A) (B) (C)
3.570%, 07/01/25 4,630 4,630
Metropolitan, Water District of
Southern California, Ser C, RB
(A) (B) (C)
3.570%, 07/01/28 9,900 9,900
Ontario, Multi-Family Housing
Authority, Residential Park Centre
Project, RB, FHLMC Insured (A) (B) (C)
3.580%, 12/01/35 23,500 23,500
Orange County, Apartment
Development Revenue,
WLCO LF Partners, Ser G-2, RB,
FNMA Collateralized (A) (B) (C)
3.580%, 11/15/28 1,000 1,000
Oxnard, Multi-Family Housing
Authority, Seawind Apartments
Projects, Ser A, RB, AMT, FNMA
Insured (A) (B) (C)
3.710%, 12/01/20 3,175 3,175
Redondo Beach, Multi-Family
Housing Authority, McCandless
Senior Housing Project, Ser A,
RB (A) (B) (C)
3.670%, 12/01/25 7,100 7,100
Riverside County, Public Facilities
Authority, Ser A, COP (A) (B) (C)
3.650%, 12/01/15 2,200 2,200
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
MUNICIPAL BONDS - (CONTINUED)
- -----------------------------------------------------------------------------
Riverside County, RB, TECP (C)
3.550%, 09/14/06 $ 5,000 $ 5,000
Sacramento County, Sanitation District
Financing Authority, Ser C, RB (A) (B) (C)
3.570%, 12/01/30 2,250 2,250
Sacramento, City Financing Authority,
Ser G, RB, AMBAC Insured
(A) (B) (C) (D)
3.640%, 05/01/16 5,700 5,700
Sacramento, Unified School District,
COP, FSA Insured (A) (B) (C)
3.620%, 03/01/31 5,050 5,050
San Diego County, TECP
3.580%, 08/09/06 2,000 2,000
3.500%, 08/17/06 3,000 3,000
San Francisco City & County,
Redevelopment Authority,
Fillmore Housing Center Project,
Ser A-1, RB, FHLMC Insured (A) (B) (C)
3.610%, 12/01/17 11,900 11,900
San Francisco City & County,
Redevelopment Authority,
Folsom-Dore Apartment Project,
RB, AMT (A) (B) (C)
3.600%, 12/01/34 900 900
San Francisco City & County,
Redevelopment Authority,
Second Ser 33-G, RB, AMT,
XLCA Insured (A) (B) (C)
3.670%, 05/01/25 9,300 9,300
Santa Clara County, El Camino
Hospital District Lease Authority,
Valley Medical Center Project,
Ser A, RB (A) (B) (C)
3.650%, 08/01/15 3,000 3,000
Simi Valley, Multi-Family Housing
Authority, Shadowridge Apartments,
RB, AMT (A) (B) (C)
3.670%, 09/01/19 5,000 5,000
University of California, Multi-Purpose
Projects, Ser F, RB, FGIC Insured
(A) (B) (C)
5.000%, 09/01/27 7,450 7,537
University of California, TECP
3.460%, 08/11/06 12,700 12,700
3.680%, 11/09/06 16,600 16,600
Ventura County, TRAN
4.500%, 07/02/07 6,000 6,042
----------
TOTAL MUNICIPAL BONDS
(Cost $494,554) 494,554
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 93
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
CALIFORNIA TAX-FREE MONEY MARKET FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Shares Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REGULATED INVESTMENT COMPANIES (E) - 0.1%
- -----------------------------------------------------------------------------
Blackrock Provident California
Tax Free Money Market, 3.390% 214,851 $ 215
Goldman Sachs California
Tax Free Money Market, 3.190% 6,450 6
----------
TOTAL REGULATED INVESTMENT COMPANIES
(Cost $221) 221
----------
TOTAL INVESTMENTS - 99.8%
(Cost $494,775) $ 494,775
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $495,906,083.
(A) FLOATING RATE SECURITY. RATE DISCLOSED IS AS OF JULY 31, 2006.
(B) PUT AND DEMAND FEATURE -- THE DATE SHOWN IS THE FINAL MATURITY, NOT THE
NEXT RESET OR PUT DATE.
(C) SECURITIES ARE HELD IN CONJUNCTION WITH A LETTER OF CREDIT OR A LIQUIDITY
AGREEMENT BY A MAJOR COMMERCIAL BANK OR FINANCIAL INSTITUTION.
(D) 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." THE VALUE OF THIS SECURITY AS OF JULY 31,
2006, WAS $5,700,000 AND REPRESENTED 1.1% OF NET ASSETS.
(E) RATE SHOWN IS THE 7-DAY EFFECTIVE YIELD AS OF JULY 31, 2006.
ABAG -- ASSOCIATION OF BAY AREA GOVERNMENTS
AMBAC -- AMERICAN MUNICIPAL BOND ASSURANCE COMPANY
AMT -- ALTERNATIVE MINIMUM TAX
COP -- CERTIFICATES OF PARTICIPATION
FGIC -- FINANCIAL GUARANTY INSURANCE CORPORATION
FHLMC -- FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA -- FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA -- FINANCIAL SECURITY ASSURANCE
GO -- GENERAL OBLIGATION
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
RB -- REVENUE BOND
SER -- SERIES
TECP -- TAX-EXEMPT COMMERCIAL PAPER
TRAN -- TAX AND REVENUE ANTICIPATION NOTE
XLCA -- XL CAPITAL ASSURANCE
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
94 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
DIVERSIFIED MONEY MARKET FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - DISCOUNTED * - 66.2%
- -----------------------------------------------------------------------------
ASSET-BACKED SECURITY - DIVERSIFIED FINANCIAL ASSETS - 24.2%
Aquifer Funding LLC (B)
5.340%, 08/07/06 $ 75,000 $ 74,933
Bavaria TRR Corp. (B)
5.413%, 08/23/06 50,000 49,835
5.403%, 08/25/06 50,000 49,821
Bavaria Universal Funding Corp. (B)
5.396%, 08/21/06 100,000 99,702
5.249%, 09/01/06 40,000 39,822
Giro Balanced Funding Corp. (B)
5.150%, 08/15/06 40,074 39,995
5.396%, 08/21/06 50,000 49,851
5.400%, 08/25/06 51,430 51,245
Giro Funding U.S. Corp. (B)
5.334%, 08/11/06 53,282 53,203
Quatro-PMX Funding Corp. (B)
5.375%, 08/18/06 21,540 21,486
5.415%, 08/24/06 50,000 49,828
5.435%, 08/28/06 34,858 34,716
Rhineland Funding Capital Corp. (B)
5.166%, 08/03/06 50,000 49,986
5.167%, 08/04/06 15,000 14,994
5.513%, 11/08/06 75,000 73,879
----------
753,296
----------
ASSET-BACKED SECURITY - TRADE RECEIVABLES - 23.8%
Apreco LLC (B)
5.390%, 08/03/06 50,000 49,985
5.424%, 09/12/06 75,000 74,529
Atlantic Asset Securitization LLC (B)
5.407%, 08/29/06 45,231 45,042
Cedar Springs Capital Co. LLC (B)
5.135%, 08/07/06 25,000 24,979
5.269%, 09/05/06 31,525 31,366
5.505%, 09/25/06 41,269 40,927
5.472%, 10/20/06 40,000 39,520
Compass Securitization LLC (B)
5.324%, 08/10/06 51,630 51,562
5.354%, 08/17/06 50,000 49,881
Crown Point Capital Co. LLC (B)
5.476%, 10/11/06 50,000 49,467
Lexington Parker Capital Co. LLC (B)
5.231%, 08/07/06 50,000 49,957
5.332%, 08/09/06 40,000 39,953
5.401%, 08/21/06 50,000 49,850
Regency Markets No. 1 LLC (B)
5.390%, 08/21/06 142,673 142,247
----------
739,265
----------
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
COMMERCIAL PAPER - DISCOUNTED * - (CONTINUED)
- -----------------------------------------------------------------------------
AUTOMOTIVE - 4.5%
Robert Bosch Finance Corp. (B)
5.320%, 08/01/06 $ 141,000 $ 141,000
----------
BANKING - 5.6%
IXIS Commercial Paper Corp. (B)
5.310%, 08/01/06 30,878 30,878
KBC Financial Products International Ltd. (B)
5.350%, 08/01/06 20,000 20,000
Long Lane Trust IV, Guarantee:
Bank of America (B)
5.416%, 08/29/06 75,000 74,685
Picaros Funding LLC, Guarantee:
KBC Bank N.V. (B)
5.359%, 02/13/07 50,000 48,597
----------
174,160
----------
BROKERAGE - 4.8%
Goldman Sachs Group Inc. (D)
5.320%, 01/26/07 50,000 50,000
5.360%, 02/05/07 50,000 50,000
5.430%, 03/05/07 50,000 50,000
----------
150,000
----------
INSURANCE - 3.3%
Aquinas Funding LLC,
Guarantee: MBIA (B)
5.330%, 08/21/06 30,000 29,911
5.484%, 09/25/06 45,000 44,628
5.616%, 12/29/06 29,480 28,810
----------
103,349
----------
TOTAL COMMERCIAL PAPER - DISCOUNTED
(Cost $2,061,070) 2,061,070
----------
- -----------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - DOMESTIC - 11.3%
- -----------------------------------------------------------------------------
Citibank N.A.
5.200%, 09/01/06 75,000 75,000
Citizens Bank of Pennsylvania
5.500%, 10/30/06 75,000 75,000
M&I Marshall & Ilsley Bank
5.120%, 08/10/06 30,000 30,000
Wells Fargo Bank N.A.
5.300%, 08/08/06 50,000 50,000
Wilmington Trust Company
5.140%, 08/15/06 75,000 75,000
5.190%, 10/13/06 20,000 19,993
5.560%, 01/16/07 25,000 25,000
----------
TOTAL CERTIFICATES OF DEPOSIT - DOMESTIC
(Cost $349,993) 349,993
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 95
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
DIVERSIFIED MONEY MARKET FUND (CONTINUED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (A) (E) (F) - 8.6%
- -----------------------------------------------------------------------------
BANKING - 2.9%
Alaska State, Four Dam Pool, Ser B, RB
5.340%, 07/01/26 $ 7,900 $ 7,900
Bernalillo County, New Mexico, Industrial
Revenue, Tempur Production, Ser A, RB
5.370%, 09/01/30 5,600 5,600
D&I Properties LLC
5.360%, 11/01/34 1,265 1,265
Holland-Sheltair Av Funding
5.380%, 05/01/35 7,820 7,820
Missouri State, Development Finance
Board Infrastructure, RB
5.370%, 10/01/34 9,500 9,500
New Belgium Brewery Co.
5.490%, 07/01/15 2,665 2,665
North Texas Higher Education Authority,
Student Loan Revenue, RB
5.310%, 06/01/45 50,300 50,300
Stephens & Stephens XII LLC
5.360%, 01/01/35 2,600 2,600
Washington State, Housing Finance
Community, Multi-Family Housing,
The Lodge at Eagle Ridge, Ser B, RB
5.360%, 08/01/41 4,065 4,065
----------
91,715
----------
INSURANCE - 5.7%
California State, Housing Finance
Agency, Ser K
5.280%, 08/01/31 77,730 77,730
Connecticut State, Housing Finance
Authority, RB
5.290%, 11/15/16 4,500 4,500
New York, NY, Ser A-9, GO
5.310%, 11/01/23 9,300 9,300
North Carolina State, Education
Assistance Authority, Student Loan,
Ser A-5, RB
5.320%, 09/01/35 4,350 4,350
North Carolina State, Education
Assistance Authority, Student Loan,
Ser A-6, RB
5.320%, 09/01/35 5,000 5,000
Pasadena, California, Public
Financing Authority, RB
5.310%, 06/01/25 25,410 25,410
San Diego, California, Metropolitan
Transportation Development Board,
Ser B, RB
5.310%, 12/01/33 20,880 20,880
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES (A) (E) (F) - (CONTINUED)
- -----------------------------------------------------------------------------
San Jose, California, Financing Authority
Lease Revenue, Hayes Mansion
Phase B, RB
5.380%, 07/01/24 $ 8,000 $ 8,000
Utah State, Board Regents Student
Loan Revenue, RB
5.310%, 11/01/44 21,900 21,900
----------
177,070
----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $268,785) 268,785
----------
- -----------------------------------------------------------------------------
CORPORATE OBLIGATIONS (MEDIUM TERM NOTES) - 7.7%
- -----------------------------------------------------------------------------
BANKING - 2.9%
Nationwide Building Society (A) (B) (C)
5.367%, 07/06/07 40,000 40,000
5.550%, 07/27/07 50,000 50,000
----------
90,000
----------
BROKERAGE - 1.6%
Morgan Stanley & Co. (A) (C)
5.468%, 08/27/07 50,000 50,000
----------
INSURANCE - 0.5%
Meridian Funding Co. LLC,
Guarantee: MBIA (A) (B) (C) (D)
5.550%, 08/28/07 15,680 15,680
----------
MULTIPLE INDUSTRY - 2.7%
General Electric Capital Corp. (A)
5.470%, 08/09/06 60,000 60,000
General Electric Capital Corp. (A) (C)
5.469%, 08/17/07 24,000 24,000
----------
84,000
----------
TOTAL CORPORATE OBLIGATIONS (MEDIUM TERM NOTES)
(Cost $239,680) 239,680
----------
- -----------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - YANKEE - 4.7%
- -----------------------------------------------------------------------------
Norinchukin Bank NY
5.100%, 08/01/06 50,000 50,000
5.310%, 08/07/06 20,000 20,000
5.480%, 09/27/06 75,000 75,000
----------
TOTAL CERTIFICATES OF DEPOSIT - YANKEE
(Cost $145,000) 145,000
----------
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
96 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
DIVERSIFIED MONEY MARKET FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT - 1.5%
- -----------------------------------------------------------------------------
Deutsche Bank Securities, Inc.
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $47,113,646
(collateralized by various U.S. Treasury
obligations, ranging in par value
$2,248,000 - $33,331,000, 4.875% -
9.125%, 04/30/11 - 05/15/18, total
market value $48,049,318) $ 47,107 $ 47,107
----------
TOTAL REPURCHASE AGREEMENT
(Cost $47,107) 47,107
----------
TOTAL INVESTMENTS - 100.0%
(Cost $3,111,635) $3,111,635
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $3,112,833,760.
* RATE SHOWN REPRESENTS THE MONEY MARKET EQUIVALENT YIELD TO MATURITY.
(A) ADJUSTABLE RATE SECURITY -- THE RATE SHOWN IS THE RATE IN EFFECT ON JULY
31, 2006.
(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." THE VALUE OF THESE SECURITIES AS OF JULY 31,
2006, WAS $2,016,750,208 AND REPRESENTED 64.8% OF NET ASSETS.
(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, 2006 WAS $165,680,000 AND REPRESENTED 5.3% OF NET ASSETS.
(E) SECURITIES ARE 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 SHOWN IS THE FINAL MATURITY, NOT THE DATE ON
WHICH PRINCIPAL COULD BE RECOVERED.
GO -- GENERAL OBLIGATION
LLC -- LIMITED LIABILITY COMPANY
LTD. -- LIMITED
MBIA -- MUNICIPAL BOND INVESTORS ASSURANCE
N.A. -- NORTH AMERICA
N.V. -- NAAMLOZE VENNOOTSCHAP
NY -- NEW YORK
RB -- REVENUE BOND
SER -- SERIES
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 97
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
U.S. GOVERNMENT MONEY MARKET FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 15.0%
- -----------------------------------------------------------------------------
FHLB
2.950%, 09/14/06 $ 25,000 $ 24,951
FHLB (A)
5.039%, 08/02/06 20,000 20,000
FHLB, Ser 2046
2.330%, 08/23/06 25,000 24,956
FHLMC, Callable @ 100 (C)
5.410%, 06/22/07 25,000 25,000
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $94,907) 94,907
----------
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - 5.3%
- -----------------------------------------------------------------------------
California, Milpitas Multi-Family Housing
Revenue, Crossing, Ser A, RB,
Guarantee: FNMA (A) (B)
5.340%, 08/15/33 5,200 5,200
California, Sacramento County,
Multi-Family Housing Development
Authority, Deer Park Apartments,
RB, Guarantee: FNMA (A) (B)
5.370%, 07/15/35 1,650 1,650
California, Simi Valley, Multi-Family
Housing Revenue, Parker Ranch,
RB, Guarantee: FNMA (A) (B)
5.370%, 07/15/36 1,850 1,850
California, Statewide Community
Development, Palms Apartments,
Ser C, RB, Guarantee: FNMA (A) (B)
5.350%, 05/15/35 4,855 4,855
New York City, Multi-Family Housing
Development Authority, 39th Street
Housing Development, Ser B, RB,
Guarantee: FNMA (A) (B)
5.310%, 11/15/31 1,800 1,800
New York State, Housing Finance Agency
Revenue, Biltmore Tower Housing,
Ser B, RB, Guarantee: FNMA (A) (B)
5.310%, 05/15/34 5,050 5,050
New York State, Housing Finance Agency
Revenue, South Cove, Ser B, RB,
Guarantee: FHLMC (A) (B)
5.380%, 11/01/30 1,500 1,500
Pennsylvania, Montgomery County,
Redevelopment Authority, Kingswood
Apartments, Ser A, RB, Guarantee:
FNMA (A) (B)
5.310%, 08/15/31 8,405 8,405
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES - (CONTINUED)
- -----------------------------------------------------------------------------
Washington State, Housing Finance
Authority, Bridgewood Project, Ser B,
RB, Guarantee: FNMA (A) (B)
5.360%, 09/01/34 $ 3,790 $ 3,790
----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $34,100) 34,100
----------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 79.8%
- -----------------------------------------------------------------------------
Barclays Capital, Inc.
5.210%, dated 07/31/06, matures on
08/01/06, repurchase price $85,012,301
(collateralized by a U.S. Treasury
obligation, par value $246,307,000,
2.875%, 11/30/06, total market
value $245,630,066) 85,000 85,000
Countrywide Securities Corp.
5.260%, dated 07/31/06, matures on
08/01/06, repurchase price $31,504,603
(collateralized by various U.S. agency
obligations, ranging in par value
$12,570,000 - $20,000,000, 3.880% -
4.000%, 06/19/07 - 11/28/08,
total market value $32,133,562) 31,500 31,500
Credit Suisse Securities (USA) LLC
5.220%, dated 07/31/06, matures on
08/01/06, repurchase price $110,015,950
(collateralized by various U.S. Treasury
obligations, ranging in par value
$8,902,000 - $20,390,000, 5.250% -
8.750%, 05/15/20 - 05/15/30,
total market value $112,203,657) 110,000 110,000
Deutsche Bank Securities, Inc.
5.270%, dated 07/31/06, matures on
08/01/06, repurchase price $152,519,220
(collateralized by various U.S. agency
obligations, ranging in par value
$22,950,000 - $82,833,000, 2.375% -
4.430%, 02/15/07 - 04/07/08,
total market value $155,551,485) 152,497 152,497
Goldman Sachs & Co.
5.250%, dated 07/31/06, matures on
08/01/06, repurchase price $31,504,594
(collateralized by various U.S. agency
obligations, ranging in par value
$11,893,000 - $21,144,000, 4.750% -
5.125%, 07/15/12 - 11/17/15,
total market value $32,130,471) 31,500 31,500
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
98 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
U.S. GOVERNMENT MONEY MARKET FUND (CONCLUDED)
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENTS - (CONTINUED)
- -----------------------------------------------------------------------------
JP Morgan Securities, Inc.
5.260%, dated 07/31/06, matures on
08/01/06, repurchase price $31,504,603
(collateralized by various U.S. agency
obligations, ranging in par value
$965,000 - $5,238,000, 0.000%,
10/15/06 - 07/15/16, total market
value $32,130,676) $ 31,500 $ 31,500
Lehman Brothers
5.230%, dated 07/31/06, matures on
08/01/06, repurchase price $31,504,576
(collateralized by a U.S. agency
obligation, par value $31,375,000,
5.000%, 03/15/13, total market
value $32,120,155) 31,500 31,500
Merrill Lynch Government Securities, Inc.
5.270%, dated 07/31/06, matures on
08/01/06, repurchase price $31,504,611
(collateralized by various U.S. agency
obligations, ranging in par value
$687,000 - $4,000,000, 3.250% -
6.150%, 05/25/07 - 01/15/38,
total market value $32,131,761) 31,500 31,500
----------
TOTAL REPURCHASE AGREEMENTS
(Cost $504,997) 504,997
----------
TOTAL INVESTMENTS - 100.1%
(Cost $634,004) $ 634,004
==========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $633,193,454.
(A) ADJUSTABLE RATE SECURITY -- THE RATE SHOWN IS THE RATE IN EFFECT ON JULY
31, 2006.
(B) DEMAND FEATURE -- THE DATE SHOWN IS THE FINAL MATURITY, NOT THE DATE ON
WHICH PRINCIPAL COULD BE RECOVERED.
(C) SECURITY IS CALLABLE @ 100 QUARTERLY.
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 99
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SCHEDULE OF INVESTMENTS
JULY 31, 2006
100% U.S. TREASURY MONEY MARKET FUND
- -----------------------------------------------------------------------------
Description Par (000) Value (000)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
U.S. TREASURY BILLS* - 100.3%
- -----------------------------------------------------------------------------
U.S. Treasury Bills
4.811%, 08/03/06 $ 28,166 $ 28,159
4.786%, 08/10/06 106,613 106,488
4.821%, 08/17/06 181,201 180,820
4.939%, 08/24/06 59,714 59,529
4.850%, 09/07/06 50,000 49,757
4.939%, 09/14/06 100,000 99,412
4.961%, 10/05/06 97,796 96,944
5.066%, 10/12/06 63,414 62,787
5.092%, 10/19/06 71,214 70,439
5.126%, 12/14/06 50,000 49,076
---------
TOTAL U.S. TREASURY BILLS
(Cost $803,411) 803,411
---------
TOTAL INVESTMENTS - 100.3%
(Cost $803,411) $ 803,411
=========
- --------------------------------------------------------------------------------
PERCENTAGES ARE BASED ON NET ASSETS OF $801,243,540.
* RATE SHOWN REPRESENTS THE BOND EQUIVALENT YIELD TO MATURITY AT DATE OF
PURCHASE.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
100 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
This page intentionally left blank.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 101
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF ASSETS AND LIABILITIES (000)@
JULY 31, 2006
COGNITIVE CORE ENHANCED
BALANCED VALUE EQUITY GROWTH
FUND FUND FUND FUND
----------------- ----------------- ------------------ ------------------
ASSETS:
Investments, at Value+ ............................ $ 46,804* $ 97,414* $ 123,700* $ 124,350*
Repurchase Ageements, at Value+ ................... 9,317 11,503 11,668 15,820
Affiliated Investments, at Value++ ................ -- -- -- --
Cash .............................................. -- -- -- --
Appreciation on Spot Contracts .................... -- -- -- --
Receivable for Investments Sold ................... -- 104 -- 1,435
Accrued Income .................................... 192 88 121 12
Reclaims Receivable ............................... 1 -- 2 2
Receivable for Fund Shares Sold ................... 23 25 134 --
Prepaid Expenses .................................. 9 -- 4 --
Deferred Compensation Asset# ...................... 1 1 2 2
----------- ------------- ------------- --------------
TOTAL ASSETS .................................... 56,347 109,135 135,631 141,621
----------- ------------- ------------- --------------
LIABILITIES:
Payable Upon Return of Securities Loaned .......... 8,220 14,295 18,931 19,436
Payable for Investments Purchased ................. -- 827 -- 1,317
Written Options, at Value ......................... -- -- -- --
Depreciation on Spot Contracts .................... -- -- -- --
Accrued Expenses# ................................. 49 122 105 135
Payable for Fund Shares Redeemed .................. 15 25 99 --
----------- ------------- ------------- --------------
TOTAL LIABILITIES ............................... 8,284 15,269 19,135 20,888
----------- ------------- ------------- --------------
NET ASSETS .................................... $ 48,063 $ 93,866 $ 116,496 $ 120,733
=========== ============= ============= ==============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) .......................................... $ 43,414 $ 73,520 $ 121,699 $ 127,629
Undistributed net investment income
(Accumulated net investment loss) ............... -- 187 7 (222)
Accumulated net realized gain (loss) on
investments, investments in affiliated funds,
written options and futures contracts ........... 745 9,567 (11,340) (9,589)
Net unrealized appreciation (depreciation) on
investments, investments in affiliated funds
and written options ............................. 3,904 10,592 6,130 2,915
Net unrealized depreciation on foreign currency ... -- -- -- --
----------- ------------- ------------- --------------
NET ASSETS .................................... $ 48,063 $ 93,866 $ 116,496 $ 120,733
=========== ============= ============= ==============
+ Cost of Investments and Repurchase Agreements .. $ 52,217 $ 98,325 $ 129,238 $ 137,255
++ Cost of Affiliated Investments ................. $ -- $ -- $ -- $ --
* Includes Market Value of Securities on Loan .... $ 8,009 $ 13,618 $ 18,228 $ 18,829
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES (A) ........... $ 14.06 $ 13.03 $ 8.78 N/A
=========== ============= ============= ==============
($37,570,990 / ($1,727,957 / ($110,719,757 /
2,671,382 shares) 132,620 shares) 12,610,555 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) ............. $ 14.04 $ 13.02 $ 8.76 $ 8.05
=========== ============= ============= ==============
($7,064,886 / ($482,672 / ($2,749,384 / ($38,367 /
503,199 shares) 37,082 shares) 313,920 shares) 4,764 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ....................... $ 14.86 $ 13.78 $ 9.27 $ 8.52
=========== ============= ============= ==============
($14.04 / 94.5%) ($13.02 / 94.5%) ($8.76 / 94.5%) ($8.05 / 94.5%)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) ............. $ 14.00 N/A $ 8.61 N/A
=========== ============= ============= ==============
($3,089,087 / ($2,716,484 /
220,639 shares) 315,650 shares)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) ............. $ 13.98 $ 12.98 $ 8.61 $ 8.06
=========== ============= ============= ==============
($338,448 / ($2,771.8 / ($310,156 / ($216.9 /
24,208 shares) 213.5 shares) 36,036 shares) 26.9 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS M SHARES (A) ............. N/A $ 13.02 N/A $ 8.07
=========== ============= ============= ==============
($91,652,333 / ($120,694,088 /
7,036,909 shares) 14,952,991 shares)
N/A NOT APPLICABLE
@ VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
# SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A BREAKDOWN OF AFFILIATED
PAYABLES.
(1) DOES NOT INCLUDE PREMIUMS RECEIVED ON WRITTEN OPTIONS FOR $12,600.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
INTERNATIONAL LARGE CAP LARGE CAP SMALL CAP
OPPORTUNITIES GROWTH VALUE GROWTH
FUND FUND FUND FUND
------------------ ------------------ ------------------ -----------------
ASSETS:
Investments, at Value+ ............................ $ 222,881* $ 135,021* $ 323,446* $ 31,808*
Repurchase Ageements, at Value+ ................... 15,205 31,293 35,027 3,304
Affiliated Investments, at Value++ ................ -- -- -- --
Cash .............................................. 10 -- 154 --
Appreciation on Spot Contracts .................... 7 -- -- --
Receivable for Investments Sold ................... 3,778 1,620 1,350 727
Accrued Income .................................... 157 98 294 12
Reclaims Receivable ............................... 144 5 -- --
Receivable for Fund Shares Sold ................... 101 348 1,237 6
Prepaid Expenses .................................. 1 19 19 --
Deferred Compensation Asset# ...................... 3 2 4 1
-------------- -------------- -------------- -------------
TOTAL ASSETS .................................... 242,287 168,406 361,531 35,858
-------------- -------------- -------------- -------------
LIABILITIES:
Payable Upon Return of Securities Loaned .......... 18,889 36,110 48,084 4,588
Payable for Investments Purchased ................. 4,632 4,029 1,285 768
Written Options, at Value ......................... -- -- -- --
Depreciation on Spot Contracts .................... 7 -- -- --
Accrued Expenses# ................................. 430 127 305 46
Payable for Fund Shares Redeemed .................. 90 54 363 25
-------------- -------------- -------------- -------------
TOTAL LIABILITIES ............................... 24,048 40,320 50,037 5,427
-------------- -------------- -------------- -------------
NET ASSETS .................................... $ 218,239 $ 128,086 $ 311,494 $ 30,431
============== ============== ============== =============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) .......................................... $ 143,416 $ 263,668 $ 294,664 $ 28,285
Undistributed net investment income
(Accumulated net investment loss) ............... 1,536 6 2 --
Accumulated net realized gain (loss) on
investments, investments in affiliated funds,
written options and futures contracts ........... 23,039 (145,298) (15,981) 3,421
Net unrealized appreciation (depreciation) on
investments, investments in affiliated funds
and written options ............................. 50,250 9,710 32,809 (1,275)
Net unrealized depreciation on foreign currency ... (2) -- -- --
-------------- -------------- -------------- -------------
NET ASSETS .................................... $ 218,239 $ 128,086 $ 311,494 $ 30,431
============== ============== ============== =============
+ Cost of Investments and Repurchase Agreements .. $ 187,836 $ 156,604 $ 325,664 $ 36,387
++ Cost of Affiliated Investments ................. $ -- $ -- $ -- $ --
* Includes Market Value of Securities on Loan .... $ 18,058 $ 35,113 $ 46,232 $ 4,397
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES (A) ........... $ 8.53 $ 8.77 $ 13.67 $ 13.27
============== ============== ============== =============
($13,421,334 / ($103,453,699 / ($168,092,117 / ($24,694,356 /
1,573,581 shares) 11,790,082 shares) 12,294,514 shares) 1,861,594 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) ............. $ 8.52 $ 8.63 $ 13.70 $ 13.16
============== ============== ============== =============
($1,952,339 / ($15,809,104 / ($134,432,801 / ($4,152,906 /
229,268 shares) 1,831,271 shares) 9,812,019 shares) 315,585 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ....................... $ 9.01 $ 9.13 $ 14.50 $ 13.93
============== ============== ============== =============
($8.516 / 94.5%) ($8.63 / 94.5%) ($13.70 / 94.5%) ($13.16 / 94.5%)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) ............. N/A $ 8.13 $ 13.50 $ 12.89
============== ============== ============== =============
($7,519,185 / ($3,042,469 / ($471,853 /
924,661 shares) 225,348 shares) 36,617 shares)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) ............. $ 8.49 $ 8.14 $ 13.47 $ 12.89
============== ============== ============== =============
($731,297 / ($1,304,372 / ($5,926,753 / ($1,112,364 /
86,152 shares) 160,313 shares) 439,990 shares) 86,320 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS M SHARES (A) ............. $ 8.52 N/A N/A N/A
============== ============== ============== =============
($202,134,122 /
23,711,318 shares)
CAPITAL
SMALL CAP VALUE GROWTH
VALUE MOMENTUM ALLOCATION
FUND FUND FUND
----------------- ------------------ -----------------
ASSETS:
Investments, at Value+ ............................ $ 290,245* $ 517,680* $ --
Repurchase Ageements, at Value+ ................... 47,074 42,101 --
Affiliated Investments, at Value++ ................ -- -- 47,038
Cash .............................................. -- -- --
Appreciation on Spot Contracts .................... -- -- --
Receivable for Investments Sold ................... -- 1,202 --
Accrued Income .................................... 241 463 3
Reclaims Receivable ............................... -- 30 --
Receivable for Fund Shares Sold ................... 1,196 243 982
Prepaid Expenses .................................. 22 40 2
Deferred Compensation Asset# ...................... 4 7 --
------------- -------------- -------------
TOTAL ASSETS .................................... 338,782 561,766 48,025
------------- -------------- -------------
LIABILITIES:
Payable Upon Return of Securities Loaned .......... 77,310 87,633 --
Payable for Investments Purchased ................. 25 -- 350
Written Options, at Value ......................... -- -- --
Depreciation on Spot Contracts .................... -- -- --
Accrued Expenses# ................................. 338 431 40
Payable for Fund Shares Redeemed .................. 359 662 17
------------- -------------- -------------
TOTAL LIABILITIES ............................... 78,032 88,726 407
------------- -------------- -------------
NET ASSETS .................................... $ 260,750 $ 473,040 $ 47,618
============= ============== =============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) .......................................... $ 200,941 $ 301,715 $ 46,283
Undistributed net investment income
(Accumulated net investment loss) ............... 611 20 --
Accumulated net realized gain (loss) on
investments, investments in affiliated funds,
written options and futures contracts ........... 31,575 30,787 808
Net unrealized appreciation (depreciation) on
investments, investments in affiliated funds
and written options ............................. 27,623 140,518 527
Net unrealized depreciation on foreign currency ... -- -- --
------------- -------------- -------------
NET ASSETS .................................... $ 260,750 $ 473,040 $ 47,618
============= ============== =============
+ Cost of Investments and Repurchase Agreements .. $ 309,696 $ 419,276(1) $ --
++ Cost of Affiliated Investments ................. $ -- $ -- $ 46,511
* Includes Market Value of Securities on Loan .... $ 74,003 $ 84,891 $ --
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES (A) ........... $ 18.12 $ 23.25 N/A
============= ============== =============
($164,130,879 / ($434,079,417 /
9,056,996 shares) 18,672,677 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) ............. $ 17.77 $ 23.22 $ 23.17
============= ============== =============
($64,483,690 / ($30,046,815 / ($30,900,285 /
3,628,757 shares) 1,294,043 shares) 1,333,715 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ....................... $ 18.80 $ 24.57 $ 24.52
============= ============== =============
($17.77 / 94.5%) ($23.22 / 94.5%) ($23.17 / 94.5%)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) ............. $ 17.01 $ 22.92 N/A
============= ============== =============
($13,145,219 / ($7,470,890 /
772,987 shares) 325,947 shares)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) ............. $ 16.94 $ 22.86 $ 22.97
============= ============== =============
($18,990,198 / ($1,442,459 / ($16,717,478 /
1,121,094 shares) 63,091 shares) 727,694 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS M SHARES (A) ............. N/A N/A N/A
============= ============== =============
(A) FIDUCIARY CLASS, CLASS A AND CLASS M HAVE 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).
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 102 & 103
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF ASSETS AND LIABILITIES (000)@
JULY 31, 2006
GROWTH & INCOME CALIFORNIA
INCOME PLUS INTERMEDIATE
ALLOCATION ALLOCATION BOND TAX-FREE BOND
FUND FUND FUND FUND
----------------- ---------------- ------------------ -----------------
ASSETS:
Investments, at Value+ ............................. $ -- $ -- $ 460,219* $ 136,763
Repurchase Agreements, at Value+ ................... -- -- 34,725 --
Affiliated Investments, at Value++ ................. 43,270 5,785 -- --
Receivable for Investments Sold .................... -- -- -- --
Receivable for Fund Shares Sold .................... 220 30 343 2
Accrued Income ..................................... 7 1 5,311 1,943
Prepaid Expenses ................................... 2 -- 10 17
Deferred Compensation Asset# ....................... -- -- 7 2
------------- ------------ -------------- -------------
TOTAL ASSETS ..................................... 43,499 5,816 500,615 138,727
------------- ------------ -------------- -------------
LIABILITIES:
Payable Upon Return of Securities Loaned ........... -- -- 60,961 --
Payable for Investments Purchased .................. 222 23 -- --
Income Distribution Payable ........................ -- -- -- --
Accrued Expenses# .................................. 35 5 329 93
Payable for Fund Shares Redeemed ................... 64 51 794 11
------------- ------------ -------------- -------------
TOTAL LIABILITIES ................................ 321 79 62,084 104
------------- ------------ -------------- -------------
NET ASSETS ..................................... $ 43,178 $ 5,737 $ 438,531 $ 138,623
============= ============ ============== =============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) ........................................... $ 42,233 $ 5,654 $ 447,903 $ 136,386
Undistributed net investment income ................ 18 8 524 174
Accumulated net realized gain (loss) on
investments and investments in affiliated funds .. 634 85 (10,531) 401
Net unrealized appreciation (depreciation) on
investments and investments in affiliated funds .. 293 (10) 635 1,662
------------- ------------ -------------- -------------
NET ASSETS ..................................... $ 43,178 $ 5,737 $ 438,531 $ 138,623
============= ============ ============== =============
+ Cost of Investments and Repurchase Agreements ... $ -- $ -- $ 494,309 $ 135,101
++ Cost of Affiliated Investments .................. $ 42,977 $ 5,795 $ -- $ --
* Includes Market Value of Securities on Loan ..... $ -- $ -- $ 60,164 $ --
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES ................ N/A N/A $ 10.35 $ 9.81
============= ============ ============== =============
($396,002,887 / ($95,266,336 /
38,253,745 shares) 9,710,295 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) .............. $ 22.26 $ 20.95 $ 10.22 $ 9.77
============= ============ ============== =============
($31,426,184 / ($3,651,205 / ($35,511,493 / ($37,471,566 /
1,411,715 shares) 174,256 shares) 3,474,228 shares) 3,835,615 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ........................ $ 23.56 $ 21.94 $ 10.46 $ 9.99
============= ============ ============== =============
($22.26 / 94.5%) ($20.95 / 95.5%) ($10.22 / 97.75%) ($9.77 / 97.75%)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) .............. N/A N/A $ 10.18 $ 9.76
============= ============ ============== =============
($6,926,153 / ($5,344,533 /
680,168 shares) 547,435 shares)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) .............. $ 22.18 $ 20.85 $ 10.17 $ 9.75
============= ============ ============== =============
($11,752,242 / ($2,085,951 / ($90,526 / ($540,309 /
529,903 shares) 100,045 shares) 8,902 shares) 55,423 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES .................. N/A N/A N/A N/A
============= ============ ============== =============
N/A NOT APPLICABLE
@ VALUES ARE PRESENTED IN THOUSANDS EXCEPT FOR PER SHARE DATA.
# SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS FOR A BREAKDOWN 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 B AND CLASS C HAVE CONTINGENT DEFERRED SALES CHARGES (SEE NOTE 3 IN
NOTES TO FINANCIAL STATEMENTS).
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NATIONAL CALIFORNIA
INTERMEDIATE SHORT TERM TAX-FREE
TAX-FREE BOND BOND MONEY MARKET
FUND FUND FUND
----------------- ----------------- -------------------
ASSETS:
Investments, at Value+ ........................................... $ 77,394 $ 39,901* $ 494,775
Repurchase Agreements, at Value+ ................................. -- 6,014 --
Affiliated Investments, at Value++ ............................... -- -- --
Receivable for Investments Sold .................................. -- 13 --
Receivable for Fund Shares Sold .................................. -- 571 --
Accrued Income ................................................... 973 385 1,878
Prepaid Expenses ................................................. 10 3 63
Deferred Compensation Asset# ..................................... 1 1 8
------------- ------------- ---------------
TOTAL ASSETS ................................................... 78,378 46,888 496,724
------------- ------------- ---------------
LIABILITIES:
Payable Upon Return of Securities Loaned ......................... -- 6,743 --
Payable for Investments Purchased ................................ -- -- --
Income Distribution Payable ...................................... -- -- 483
Accrued Expenses# ................................................ 29 26 335
Payable for Fund Shares Redeemed ................................. -- -- --
------------- ------------- ---------------
TOTAL LIABILITIES .............................................. 29 6,769 818
------------- ------------- ---------------
NET ASSETS ................................................... $ 78,349 $ 40,119 $ 495,906
============= ============= ===============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) ......................................................... $ 77,202 $ 40,653 $ 495,906
Undistributed net investment income .............................. 112 45 1
Accumulated net realized gain (loss) on investments
and investments in affiliated funds ............................ 257 (83) (1)
Net unrealized appreciation (depreciation) on
investments and investments in affiliated funds ................ 778 (496) --
------------- ------------- ---------------
NET ASSETS ................................................... $ 78,349 $ 40,119 $ 495,906
============= ============= ===============
+ Cost of Investments and Repurchase Agreements ................. $ 76,616 $ 46,411 $ 494,775
++ Cost of Affiliated Investments ................................ $ -- $ -- $ --
* Includes Market Value of Securities on Loan ................... $ -- $ 6,640 $ --
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES .............................. $ 10.92 $ 9.76 $ 1.00
============= ============= ===============
($75,400,712 / ($36,497,318 / ($176,711,263 /
6,903,628 shares) 3,739,632 shares) 176,725,283 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) ............................ $ 10.92 $ 9.76 $ 1.00
============= ============= ===============
($2,922,859 / ($1,112,616 / ($278,442,013 /
267,726 shares) 113,983 shares) 278,439,691 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ...................................... $ 11.17 $ 9.98 N/A
============= ============= ===============
($10.92 / 97.75%) ($9.76 / 97.75%)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) ............................ N/A N/A N/A
============= ============= ===============
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) ............................ $ 11.12 $ 9.84 N/A
============= ============= ===============
($25,170 / ($2,509,345 /
2,264 shares) 254,895 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES ................................ N/A N/A $ 1.00
============= ============= ===============
($40,752,807 /
40,746,947 shares)
100%
DIVERSIFIED U.S. GOVERNMENT U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
--------------------- ------------------- -------------------
ASSETS:
Investments, at Value+ ..................................... $ 3,064,528 $ 129,007 $ 803,411
Repurchase Agreements, at Value+ ........................... 47,107 504,997 --
Affiliated Investments, at Value++ ......................... -- -- --
Receivable for Investments Sold ............................ -- -- --
Receivable for Fund Shares Sold ............................ 71 28 --
Accrued Income ............................................. 8,698 1,184 --
Prepaid Expenses ........................................... 114 49 61
Deferred Compensation Asset# ............................... 51 7 14
----------------- --------------- ---------------
TOTAL ASSETS ............................................. 3,120,569 635,272 803,486
----------------- --------------- ---------------
LIABILITIES:
Payable Upon Return of Securities Loaned ................... -- -- --
Payable for Investments Purchased .......................... -- -- --
Income Distribution Payable ................................ 5,882 1,725 1,625
Accrued Expenses# .......................................... 1,853 354 617
Payable for Fund Shares Redeemed ........................... -- -- --
----------------- --------------- ---------------
TOTAL LIABILITIES ........................................ 7,735 2,079 2,242
----------------- --------------- ---------------
NET ASSETS ............................................. $ 3,112,834 $ 633,193 $ 801,244
================= =============== ===============
NET ASSETS:
Paid-in Capital (unlimited authorized -- no par
value) ................................................... $ 3,112,972 $ 633,229 $ 801,420
Undistributed net investment income ........................ -- -- --
Accumulated net realized gain (loss) on investments
and investments in affiliated funds ...................... (138) (36) (176)
Net unrealized appreciation (depreciation) on
investments and investments in affiliated funds .......... -- -- --
----------------- --------------- ---------------
NET ASSETS ............................................. $ 3,112,834 $ 633,193 $ 801,244
================= =============== ===============
+ Cost of Investments and Repurchase Agreements ........... $ 3,111,635 $ 634,004 $ 803,411
++ Cost of Affiliated Investments .......................... $ -- $ -- $ --
* Includes Market Value of Securities on Loan ............. $ -- $ -- $ --
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- FIDUCIARY SHARES ........................ $ 1.00 $ 1.00 $ 1.00
================= =============== ===============
($1,923,511,041 / ($506,572,009 / ($391,906,329 /
1,924,204,844 shares) 506,634,635 shares) 392,002,525 shares)
NET ASSET VALUE AND REDEMPTION
PRICE PER SHARE -- CLASS A SHARES (A) ...................... $ 1.00 $ 1.00 $ 1.00
================= =============== ===============
($724,909,491 / ($32,754,023 / ($177,511,737 /
725,002,516 shares) 32,760,032 shares) 177,536,710 shares)
MAXIMUM OFFERING PRICE
PER SHARE -- CLASS A SHARES ................................ N/A N/A N/A
================= =============== ===============
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS B SHARES (A) ...................... N/A $ 1.00 N/A
================= =============== ===============
($780,133 /
780,376 shares)
NET ASSET VALUE AND OFFERING
PRICE PER SHARE -- CLASS C SHARES (A) ...................... N/A $ 1.00 N/A
================= =============== ===============
($60,936 /
60,936 shares)
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE -- CLASS S SHARES .......................... $ 1.00 $ 1.00 $ 1.00
================= =============== ===============
($464,413,228 / ($93,026,353 / ($231,825,474 /
463,763,271 shares) 92,992,257 shares) 231,883,052 shares)
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 104 & 105
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF OPERATIONS (000)
FOR THE YEAR OR PERIOD ENDED JULY 31, 2006 (UNLESS OTHERWISE INDICATED)
COGNITIVE ENHANCED
VALUE GROWTH
FUND CORE FUND
BALANCED --------------------- EQUITY --------------------
FUND 2006 (2) 2005 (3) FUND 2006 (2) 2005 (3)
-------- --------------------- -------- --------------------
Interest Income .............................................. $ 889+ $ 91+ $ 13 $ 69+ $ 51+ $ 25
Dividend Income .............................................. 696 1,046 1,083 2,139 519 1,586
Income from Investments in Affiliated Funds .................. -- -- -- -- -- --
Less: Foreign Taxes Withheld, Net of Reclaims ................ (1) -- -- (10) (11) (2)
-------- -------- -------- -------- -------- --------
Total Investment Income ...................................... 1,584 1,137 1,096 2,198 559 1,609
-------- -------- -------- -------- -------- --------
Expenses:
Investment Adviser Fee .................................... 343 565 613 675 821 881
Shareholder Servicing Fees Fiduciary Shares ............... 115 -- -- 243 -- --
Shareholder Servicing Fees Class A Shares ................. 18 -- -- 7 -- --
Shareholder Servicing Fees Class B Shares ................. 9 -- -- 7 -- --
Administrative Fee ........................................ 97 84 75 187 107 80
Custodian Fees ............................................ 6 27 44 11 28 46
Trustees Fees ............................................. 2 11 21 4 11 21
Chief Compliance Officer Fees ............................. 1 7 14 1 11 20
Distribution Fees Class A Shares .......................... 18 -- -- 7 -- --
Distribution Fees Class B Shares .......................... 26 -- -- 22 -- --
Distribution Fees Class C Shares .......................... 4 -- -- 3 -- --
Transfer Agent Fees ....................................... 13 32 41 27 33 45
Registration Fees ......................................... 7 1 -- 11 1 --
Professional Fees ......................................... 6 12 62 17 31 60
Insurance Fees ............................................ 2 2 -- 4 8 --
Printing Fees ............................................. -- 5 3 5 7 3
Miscellaneous Fees ........................................ 10 20 20 3 18 21
-------- -------- -------- -------- -------- --------
Total Expenses ................................... 677 766 893 1,234 1,076 1,177
-------- -------- -------- -------- -------- --------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees .......................... (12) -- -- (10) -- --
Shareholder Servicing Fees ....................... (64) -- -- (118) -- --
Administrative Fees .............................. (14) (8) -- (28) (11) --
Reduction of Expenses (1) ........................ (9) (5) -- (17) (7) --
-------- -------- -------- -------- -------- --------
Total Waivers and Reduction of Expenses ................... (99) (13) -- (173) (18) --
-------- -------- -------- -------- -------- --------
Total Net Expenses ........................................ 578 753 893 1,061 1,058 1,177
-------- -------- -------- -------- -------- --------
Net Investment Income (Loss) ................................. 1,006 384 203 1,137 (499) 432
-------- -------- -------- -------- -------- --------
Net Realized Gain (Loss) on Investments ...................... 2,442 9,616 11,222 10,112 11,121 (563)
Net Realized Gain (Loss) on Investments in Affiliated Funds .. -- -- -- -- -- --
Net Realized Gain (Loss) on Foreign Currency ................. -- -- -- -- -- --
Net Realized Gain (Loss) on Written Option Contracts ......... -- -- -- -- -- --
Net Realized Gain (Loss) on Futures Contracts ................ 150 -- -- (3) -- --
Change in Unrealized Appreciation (Depreciation) on
Investments and Written Options ........................... (1,797) (1,351) 1,276 (1,170) (21,123) 11,338
Change in Unrealized Appreciation (Depreciation) on
Investments in Affiliated Funds ........................... -- -- -- -- -- --
Change in Unrealized Appreciation (Depreciation) on
Foreign Currency .......................................... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments ....... 795 8,265 12,498 8,939 (10,002) 10,775
-------- -------- -------- -------- -------- --------
Increase (Decrease) in Net Assets Resulting from Operations .. $ 1,801 $ 8,649 $ 12,701 $ 10,076 $(10,501) $ 11,207
======== ======== ======== ======== ======== ========
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.
(2) FOR THE TEN MONTH PERIOD ENDED JULY 31, 2006. ON APRIL 3, 2006, HIGHMARK
FUNDS ACQUIRED THE ASSETS AND ASSUMED THE IDENTIFIED LIABILITIES OF
BAILARD COGNITIVE VALUE FUND, BAILARD ENHANCED GROWTH FUND AND BAILARD
INTERNATIONAL EQUITY FUND (THE "BAILARD FUNDS") (SEE NOTE 9 IN NOTES TO
FINANCIAL STATEMENTS). THE FISCAL YEAR END OF THE BAILARD FUNDS, THE
PREDECESSOR FUNDS TO HIGHMARK COGNITIVE VALUE FUND, HIGHMARK ENHANCED
GROWTH FUND AND HIGHMARK INTERNATIONAL OPPORTUNITIES FUND, WAS SEPTEMBER
30. THE FISCAL YEAR END OF THE SUCCESSOR HIGHMARK FUNDS IS JULY 31.
(3) FOR THE YEAR ENDED SEPTEMBER 30.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
INTERNATIONAL
OPPORTUNITIES CAPITAL
FUND LARGE CAP LARGE CAP SMALL CAP SMALL CAP VALUE GROWTH
------------------- GROWTH VALUE GROWTH VALUE MOMENTUM ALLOCATION
2006 (2) 2005 (3) FUND FUND FUND FUND FUND FUND
------------------- --------- --------- --------- --------- -------- ----------
Interest Income .......................... $ 166+ $ 46 $ 201+ $ 216+ $ 78+ $ 636+ $ 452+ $ --
Dividend Income .......................... 4,617 4,507 1,242 5,235 118 4,212 10,291 --
Income from Investments in Affiliated
Funds ................................. -- -- -- -- -- -- -- 363
Less: Foreign Taxes Withheld, Net of
Reclaims .............................. (464) (387) (7) (16) (1) (2) (26) --
-------- -------- --------- --------- --------- --------- -------- -----
Total Investment Income .................. 4,319 4,166 1,436 5,435 195 4,846 10,717 363
-------- -------- --------- --------- --------- --------- -------- -----
Expenses:
Investment Adviser Fee ................ 1,523 1,539 870 1,517 387 2,503 2,827 181
Shareholder Servicing Fees Fiduciary
Shares ............................. -- -- 284 343 62 369 1,059 --
Shareholder Servicing Fees Class A
Shares ............................. 1 -- 44 254 12 167 73 46
Shareholder Servicing Fees Class B
Shares ............................. -- -- 22 9 1 36 22 --
Administrative Fee .................... 163 103 244 412 56 415 784 61
Custodian Fees ........................ 239 377 15 25 3 25 47 3
Trustees Fees ......................... 12 22 5 7 1 10 18 1
Chief Compliance Officer Fees ......... 14 28 -- 2 -- 3 3 1
Distribution Fees Class A Shares ...... 1 -- 44 254 12 167 73 46
Distribution Fees Class B Shares ...... -- -- 66 28 4 108 66 --
Distribution Fees Class C Shares ...... 1 -- 14 52 11 192 13 95
Transfer Agent Fees ................... 44 43 34 60 8 62 114 7
Registration Fees ..................... -- -- 9 13 5 18 39 1
Professional Fees ..................... 5 131 19 37 5 41 70 6
Insurance Fees ........................ 12 -- 3 4 1 11 9 --
Printing Fees ......................... 11 4 4 16 2 14 22 3
Miscellaneous Fees .................... 19 96 3 6 2 4 10 --
-------- -------- --------- --------- --------- --------- -------- -----
Total Expenses ............... 2,045 2,343 1,680 3,039 572 4,145 5,249 451
-------- -------- --------- --------- --------- --------- -------- -----
Less: Waivers and Reduction of Expenses
Investment Adviser Fees ...... -- -- (38) (5) (7) (43) (2) (88)
Shareholder Servicing Fees ... -- -- (155) (270) (35) (249) (529) (38)
Administrative Fees .......... (17) -- (36) (63) (8) (63) (118) (24)
Reduction of Expenses (1) .... (11) -- (22) (39) (5) (39) (73) (4)
-------- -------- --------- --------- --------- --------- -------- -----
Total Waivers and Reduction of
Expenses ............................ (28) -- (251) (377) (55) (394) (722) (154)
-------- -------- --------- --------- --------- --------- -------- -----
Total Net Expenses .................... 2,017 2,343 1,429 2,662 517 3,751 4,527 297
-------- -------- --------- --------- --------- --------- -------- -----
Net Investment Income (Loss) ............. 2,302 1,823 7 2,773 (322) 1,095 6,190 66
-------- -------- --------- --------- --------- --------- -------- -----
Net Realized Gain (Loss) on Investments .. 23,804 24,936 18,947* 20,846 5,319 36,674 41,274 --
Net Realized Gain (Loss) on Investments
in Affiliated Funds ................... -- -- -- -- -- -- -- 825
Net Realized Gain (Loss) on Foreign
Currency .............................. (2) -- -- -- -- -- -- --
Net Realized Gain (Loss) on Written
Option Contracts ...................... -- -- -- -- -- -- 98 --
Net Realized Gain (Loss) on Futures
Contracts ............................. -- -- -- -- -- -- -- --
Change in Unrealized Appreciation
(Depreciation) on Investments and
Written Options ....................... 4,009 18,479 (14,091) 1,846 (6,542) (37,893) (5,587) --
Change in Unrealized Appreciation
(Depreciation) on Investments in
Affiliated Funds ...................... -- -- -- -- -- -- -- (24)
Change in Unrealized Appreciation
(Depreciation) on Foreign Currency .... 4 -- -- -- -- -- -- --
-------- -------- --------- --------- --------- --------- -------- -----
Net Realized and Unrealized Gain (Loss)
on Investments ........................ 27,815 43,415 4,856 22,692 (1,223) (1,219) 35,785 801
-------- -------- --------- --------- --------- --------- -------- -----
Increase (Decrease) in Net Assets
Resulting from Operations ............. $ 30,117 $ 45,238 $ 4,863 $ 25,465 $ (1,545) $ (124) $ 41,975 $ 867
======== ======== ========= ========= ========= ========= ======== =====
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 106 & 107
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF OPERATIONS (000)
FOR THE YEAR ENDED JULY 31, 2006
GROWTH & INCOME CALIFORNIA
INCOME PLUS INTERMEDIATE
ALLOCATION ALLOCATION BOND TAX-FREE BOND
FUND FUND FUND FUND
---------- ---------- -------- -------------
Interest Income ................................................. $ -- $ -- $ 24,784+ $ 6,378
Dividend Income ................................................. -- -- -- --
Income from Investments in Affiliated Funds ..................... 494 131 -- --
------ ---- -------- -------
Total Investment Income ............................. 494 131 24,784 6,378
------ ---- -------- -------
Expenses:
Investment Adviser Fee ....................................... 162 29 2,275 756
Shareholder Servicing Fees Fiduciary Shares .................. -- -- 1,011 247
Shareholder Servicing Fees Class A Shares .................... 43 8 98 115
Shareholder Servicing Fees Class B Shares .................... -- -- 19 15
Administrative Fee ........................................... 57 25 762 254
Custodian Fees ............................................... 3 1 46 15
Trustees Fees ................................................ 1 -- 17 6
Chief Compliance Officer Fees ................................ 1 -- 2 --
Distribution Fees Class A Shares ............................. 43 8 99 115
Distribution Fees Class B Shares ............................. -- -- 56 45
Distribution Fees Class C Shares ............................. 76 13 -- 6
Distribution Fees Class S Shares ............................. -- -- -- --
Transfer Agent Fees .......................................... 7 1 110 36
Professional Fees ............................................ 5 1 45 21
Printing Fees ................................................ 3 -- 18 5
Registration Fees ............................................ 1 -- 51 14
Insurance Fees ............................................... -- -- 17 3
Miscellaneous Fees ........................................... -- -- 31 24
------ ---- -------- -------
Total Expenses ...................................... 402 86 4,657 1,677
------ ---- -------- -------
Less: Waivers and Reduction of Expenses
Investment Adviser Fees ............................. (78) (14) (74) (372)
Shareholder Servicing Fees .......................... (37) (7) (877) (315)
Administrative Fees ................................. (26) (17) (114) (38)
Reduction of Expenses (1) ........................... (4) (1) (70) (23)
------ ---- -------- -------
Total Waivers and Reduction of Expenses ......................... (145) (39) (1,135) (748)
------ ---- -------- -------
Total Net Expenses .............................................. 257 47 3,522 929
------ ---- -------- -------
Net Investment Income ........................................... 237 84 21,262 5,449
------ ---- -------- -------
Net Realized Gain (Loss) on Investments ......................... -- -- 619 676
Net Realized Gain (Loss) on Investments in Affiliated Funds ..... 640 86 -- --
Change in Unrealized Appreciation (Depreciation) on
Investments .................................................. -- -- (17,315) (3,922)
Change in Unrealized Appreciation (Depreciation) on
Investments in Affiliated Funds .............................. (149) (45) -- --
------ ---- -------- -------
Net Realized and Unrealized Gain (Loss) on Investments .......... 491 41 (16,696) (3,246)
------ ---- -------- -------
Increase (Decrease) in Net Assets Resulting from Operations ..... $ 728 $125 $ 4,566 $ 2,203
====== ==== ======== =======
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.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NATIONAL CALIFORNIA
INTERMEDIATE SHORT TERM TAX-FREE DIVERSIFIED U.S. GOVERNMENT 100% U.S. TREASURY
TAX-FREE BOND BOND MONEY MARKET MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND FUND FUND FUND
------------- ---------- ------------ ------------ --------------- ------------------
Interest Income ....................... $ 3,649 $1,398+ $14,994 $143,811 $23,627 $35,283
Dividend Income ....................... -- -- -- -- -- --
Income from Investments in Affiliated
Funds .............................. -- -- -- -- -- --
------- ------ ------- -------- ------- -------
Total Investment Income ... 3,649 1,398 14,994 143,811 23,627 35,283
------- ------ ------- -------- ------- -------
Expenses:
Investment Adviser Fee ............. 427 134 1,492 9,706 1,607 2,615
Shareholder Servicing Fees
Fiduciary Shares ................ 205 60 498 5,090 1,014 1,073
Shareholder Servicing Fees
Class A Shares .................. 9 4 659 1,591 80 395
Shareholder Servicing Fees
Class B Shares .................. -- -- -- -- 2 --
Administrative Fee ................. 143 70 831 5,424 889 1,451
Custodian Fees ..................... 9 3 50 323 54 87
Trustees Fees ...................... 3 1 19 148 19 32
Chief Compliance Officer Fees ...... -- -- 2 18 10 6
Distribution Fees Class A Shares ... 9 4 659 1,591 80 395
Distribution Fees Class B Shares ... -- -- -- -- 8 --
Distribution Fees Class C Shares ... -- 18 -- -- -- --
Distribution Fees Class S Shares ... -- -- 190 3,090 534 1,565
Transfer Agent Fees ................ 20 8 121 771 129 210
Professional Fees .................. 12 6 73 328 80 133
Printing Fees ...................... 3 2 21 141 29 40
Registration Fees .................. 8 1 31 484 39 73
Insurance Fees ..................... 2 -- 10 65 9 18
Miscellaneous Fees ................. 15 12 13 29 34 7
------- ------ ------- -------- ------- -------
Total Expenses ............ 865 323 4,669 28,799 4,617 8,100
------- ------ ------- -------- ------- -------
Less: Waivers and Reduction of
Expenses
Investment Adviser Fees ... (400) (11) (254) (261) (46) (33)
Shareholder Servicing Fees (186) (55) (1,005) (5,794) (948) (1,274)
Administrative Fees ....... (21) (14) (124) (809) (134) (218)
Reduction of Expenses (1) . (13) (5) (77) (498) (83) (134)
------- ------ ------- -------- ------- -------
Total Waivers and Reduction
of Expenses ........................ (620) (85) (1,460) (7,362) (1,211) (1,659)
------- ------ ------- -------- ------- -------
Total Net Expenses .................... 245 238 3,209 21,437 3,406 6,441
------- ------ ------- -------- ------- -------
Net Investment Income ................. 3,404 1,160 11,785 122,374 20,221 28,842
------- ------ ------- -------- ------- -------
Net Realized Gain (Loss) on
Investments ........................ 486 (25) 5 (4) (1) (18)
Net Realized Gain (Loss) on Investments
in Affiliated Funds ................ -- -- -- -- -- --
Change in Unrealized Appreciation
(Depreciation) on Investments ...... (2,346) (236) -- -- -- --
Change in Unrealized Appreciation
(Depreciation) on Investments in
Affiliated Funds ................... -- -- -- -- -- --
------- ------ ------- -------- ------- -------
Net Realized and Unrealized Gain
(Loss) on Investments .............. (1,860) (261) 5 (4) (1) (18)
------- ------ ------- -------- ------- -------
Increase (Decrease) in Net Assets
Resulting from Operations .......... $ 1,544 $ 899 $11,790 $122,370 $20,220 $28,824
======= ====== ======= ======== ======= =======
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 108 & 109
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS OR PERIODS ENDED JULY 31, (UNLESS OTHERWISE INDICATED)
BALANCED COGNITIVE VALUE CORE EQUITY
FUND FUND FUND
-------------------- ------------------------------ ---------------------
2006 2005 2006 (5) 2005 (6) 2004 (6) 2006 2005
-------------------- ------------------------------ ---------------------
Investment Activities:
Net Investment Income (Loss) ................... $ 1,006 $ 2,177 $ 384 $ 203 $ 43 $ 1,137 $ 1,467
Net Realized Gain (Loss) on Investments ........ 2,442 6,575* 9,616 11,222 12,565 10,112 9,660
Net Realized Gain (Loss) on Foreign Currency ... -- -- -- -- -- -- --
Net Realized Gain (Loss) on Futures Contracts .. 150 -- -- -- -- (3) --
Change in Unrealized Appreciation
(Depreciation) on Investments ............... (1,797) 169 (1,351) 1,276 2,821 (1,170) 1,533
Change in Unrealized Appreciation
(Depreciation) on Foreign Currency .......... -- -- -- -- -- -- --
-------- --------- -------- -------- -------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Operations ................................ 1,801 8,921 8,649 12,701 15,429 10,076 12,660
-------- --------- -------- -------- -------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................ (863) (2,072) -- -- -- (1,110) (1,405)
Class A Shares .............................. (120) (134) -- -- -- (24) (30)
Class B Shares .............................. (36) (49) -- -- -- (9) (19)
Class C Shares .............................. (4) (4) -- -- -- (1) (2)
Class M Shares .............................. -- -- (212) (159) -- -- --
Capital Gains:
Fiduciary Shares ............................ -- -- -- -- -- -- --
Class A Shares .............................. -- -- -- -- -- -- --
Class B Shares .............................. -- -- -- -- -- -- --
Class C Shares .............................. -- -- -- -- -- -- --
Class M Shares .............................. -- -- (11,055) (7,505) -- -- --
-------- --------- -------- -------- -------- --------- ---------
Total Dividends and Distributions ........ (1,023) (2,259) (11,267) (7,664) -- (1,144) (1,456)
-------- --------- -------- -------- -------- --------- ---------
Change in Net Assets .............................. 778 6,662 (2,618) 5,037 15,429 8,932 11,204
-------- --------- -------- -------- -------- --------- ---------
Share Transactions (1):
Fiduciary Shares (2):
Proceeds from Shares Issued ................. 7,230 12,780 1,735 -- -- 15,592 12,443
Reinvestment of Dividends and
Distributions ............................ 863 2,022 -- -- -- 278 304
Cost of Shares Redeemed ..................... (30,376) (79,955)* -- -- -- (20,005) (30,248)
-------- --------- -------- -------- -------- --------- ---------
Total Fiduciary Share Transactions ....... (22,283) (65,153) 1,735 -- -- (4,135) (17,501)
-------- --------- -------- -------- -------- --------- ---------
Class A Shares (3):
Proceeds from Shares Issued ................. 592 573 492 -- -- 317 394
Reinvestment of Dividends and
Distributions ............................ 116 128 -- -- -- 23 28
Cost of Shares Redeemed ..................... (1,181) (958) -- -- -- (858) (1,343)
Redemption Fees ............................. -- -- -- -- -- -- --
-------- --------- -------- -------- -------- --------- ---------
Total Class A Share Transactions ......... (473) (257) 492 -- -- (518) (921)
-------- --------- -------- -------- -------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ................. 89 110 -- -- -- 21 18
Reinvestment of Dividends and
Distributions ............................ 34 46 -- -- -- 9 18
Cost of Shares Redeemed ..................... (858) (1,031) -- -- -- (588) (543)
-------- --------- -------- -------- -------- --------- ---------
Total Class B Share Transactions ......... (735) (875) -- -- -- (558) (507)
-------- --------- -------- -------- -------- --------- ---------
Class C Shares (4):
Proceeds from Shares Issued ................. 138 94 3 -- -- 42 40
Reinvestment of Dividends and
Distributions ............................ 4 4 -- -- -- 1 2
Cost of Shares Redeemed ..................... (145) (114) -- -- -- (36) (66)
-------- --------- -------- -------- -------- --------- ---------
Total Class C Share Transactions ......... (3) (16) 3 -- -- 7 (24)
-------- --------- -------- -------- -------- --------- ---------
Class M Shares:
Proceeds from Shares Issued ................. -- -- 6,195 8,617 7,027 -- --
Reinvestment of Dividends and
Distributions ............................ -- -- 10,446 7,033 -- -- --
Cost of Shares Redeemed ..................... -- -- (8,852) (7,565) (26,214) -- --
-------- --------- -------- -------- -------- --------- ---------
Total Class M Share Transactions ......... -- -- 7,789 8,085 (19,187) -- --
-------- --------- -------- -------- -------- --------- ---------
Net Increase (Decrease) in Net Assets From Share
Transactions ................................... (23,494) (66,301) 10,019 8,085 (19,187) (5,204) (18,953)
-------- --------- -------- -------- -------- --------- ---------
Total Increase (Decrease) in Net Assets .. (22,716) (59,639) 7,401 13,122 (3,758) 3,728 (7,749)
-------- --------- -------- -------- -------- --------- ---------
Net Assets:
Beginning of Period ............................ 70,779 130,418 86,465 73,343 77,101 112,768 120,517
-------- --------- -------- -------- -------- --------- ---------
End of Period .................................. $ 48,063 $ 70,779 $ 93,866 $ 86,465 $ 73,343 $ 116,496 $ 112,768
======== ========= ======== ======== ======== ========= =========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment
Income/Accumulated Net Investment Loss) ..... $ -- $ (3) $ 187 $ 53 $ 44 $ 7 $ 6
======== ========= ======== ======== ======== ========= =========
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).
(1) FOR SHARE TRANSACTIONS, SEE NOTE 12 IN NOTES TO FINANCIAL STATEMENTS.
(2) FIDUCIARY SHARES COMMENCED OPERATIONS ON JULY 3, 2006 FOR THE COGNITIVE
VALUE FUND AND ON APRIL 4, 2006 FOR THE INTERNATIONAL OPPORTUNITIES FUND.
(3) CLASS A SHARES COMMENCED OPERATIONS ON APRIL 3, 2006 FOR THE COGNITIVE
VALUE, ENHANCED GROWTH AND INTERNATIONAL OPPORTUNITIES FUNDS.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
ENHANCED GROWTH INTERNATIONAL OPPORTUNITIES
FUND FUND
--------------------------------- -----------------------------------
2006 (5) 2005 (6) 2004 (6) 2006 (5) 2005 (6) 2004 (6)
--------------------------------- -----------------------------------
Investment Activities:
Net Investment Income (Loss) ........................ $ (499) $ 432 $ (581) $ 2,302 $ 1,823 $ 1,392
Net Realized Gain (Loss) on Investments ............. 11,121 (563) 1,190 23,804 24,936 10,879
Net Realized Gain (Loss) on Foreign Currency ........ -- -- -- (2) -- --
Net Realized Gain (Loss) on Futures Contracts ....... -- -- -- -- -- --
Change in Unrealized Appreciation (Depreciation)
on Investments ................................... (21,123) 11,338 6,128 4,009 18,479 15,991
Change in Unrealized Appreciation (Depreciation)
on Foreign Currency .............................. -- -- -- 4 -- --
--------- -------- -------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting From
Operations .......................................... (10,501) 11,207 6,737 30,117 45,238 28,262
--------- -------- -------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................. -- -- -- -- -- --
Class A Shares ................................... -- -- -- -- -- --
Class B Shares ................................... -- -- -- -- -- --
Class C Shares ................................... -- -- -- -- -- --
Class M Shares ................................... -- (1,056) -- (3,254) (1,567) (1,339)
Capital Gains:
Fiduciary Shares ................................. -- -- -- -- -- --
Class A Shares ................................... -- -- -- -- -- --
Class B Shares ................................... -- -- -- -- -- --
Class C Shares ................................... -- -- -- -- -- --
Class M Shares ................................... -- -- -- (4,193) -- --
--------- -------- -------- --------- --------- ---------
Total Dividends and Distributions ............. -- (1,056) -- (7,447) (1,567) (1,339)
--------- -------- -------- --------- --------- ---------
Change in Net Assets ................................... (10,501) 10,151 6,737 22,670 43,671 26,923
--------- -------- -------- --------- --------- ---------
Share Transactions (1):
Fiduciary Shares (2):
Proceeds from Shares Issued ...................... -- -- -- 13,738 -- --
Reinvestment of Dividends and Distributions ...... -- -- -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- -- -- --
--------- -------- -------- --------- --------- ---------
Total Fiduciary Share Transactions ............ -- -- -- 13,738 -- --
--------- -------- -------- --------- --------- ---------
Class A Shares (3):
Proceeds from Shares Issued ...................... 41 -- -- 2,063 -- --
Reinvestment of Dividends and Distributions ...... -- -- -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- (125) -- --
Redemption Fees .................................. -- -- -- 2 -- --
--------- -------- -------- --------- --------- ---------
Total Class A Share Transactions .............. 41 -- -- 1,940 -- --
--------- -------- -------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ...................... -- -- -- -- -- --
Reinvestment of Dividends and Distributions ...... -- -- -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- -- -- --
--------- -------- -------- --------- --------- ---------
Total Class B Share Transactions .............. -- -- -- -- -- --
--------- -------- -------- --------- --------- ---------
Class C Shares (4):
Proceeds from Shares Issued ...................... -- -- -- 783 -- --
Reinvestment of Dividends and Distributions ...... -- -- -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- (51) -- --
--------- -------- -------- --------- --------- ---------
Total Class C Share Transactions .............. -- -- -- 732 -- --
--------- -------- -------- --------- --------- ---------
Class M Shares:
Proceeds from Shares Issued ...................... 10,144 59,106 10,170 18,186 25,653 33,374
Reinvestment of Dividends and Distributions ...... -- 974 -- 6,487 1,190 1,017
Cost of Shares Redeemed .......................... (8,204) (8,169) (24,750) (15,563) (59,261) (16,539)
--------- -------- -------- --------- --------- ---------
Total Class M Share Transactions .............. 1,940 51,911 (14,580) 9,110 (32,418) 17,852
--------- -------- -------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From Share
Transactions ........................................ 1,981 51,911 (14,580) 25,520 (32,418) 17,852
--------- -------- -------- --------- --------- ---------
Total Increase (Decrease) in Net Assets ....... (8,520) 62,062 (7,843) 48,190 11,253 44,775
--------- -------- -------- --------- --------- ---------
Net Assets:
Beginning of Period ................................. 129,253 67,191 75,034 170,049 158,796 114,021
--------- -------- -------- --------- --------- ---------
End of Period ....................................... $ 120,733 $129,253 $ 67,191 $ 218,239 $ 170,049 $ 158,796
========= ======== ======== ========= ========= =========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment
Income/Accumulated Net Investment Loss) .......... $ (222) $ (296) $ (382) $ 1,536 $ 1,775 $ 1,245
========= ======== ======== ========= ========= =========
LARGE CAP GROWTH LARGE CAP VALUE
FUND FUND
----------------------- ----------------------
2006 2005 2006 2005
----------------------- ----------------------
Investment Activities:
Net Investment Income (Loss) ........................ $ 7 $ 701 $ 2,773 $ 1,575
Net Realized Gain (Loss) on Investments ............. 18,947* 7,638 20,846 13,957
Net Realized Gain (Loss) on Foreign Currency ........ -- -- -- --
Net Realized Gain (Loss) on Futures Contracts ....... -- -- -- --
Change in Unrealized Appreciation (Depreciation)
on Investments ................................... (14,091) 14,181 1,846 13,838
Change in Unrealized Appreciation (Depreciation)
on Foreign Currency .............................. -- -- -- --
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting From
Operations .......................................... 4,863 22,520 25,465 29,370
--------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................. (256) (420) (1,782) (1,108)
Class A Shares ................................... (8) (18) (1,018) (423)
Class B Shares ................................... -- -- (17) (14)
Class C Shares ................................... -- -- (25) (12)
Class M Shares ................................... -- -- -- --
Capital Gains:
Fiduciary Shares ................................. -- -- -- --
Class A Shares ................................... -- -- -- --
Class B Shares ................................... -- -- -- --
Class C Shares ................................... -- -- -- --
Class M Shares ................................... -- -- -- --
--------- --------- --------- ---------
Total Dividends and Distributions ............. (264) (438) (2,842) (1,557)
--------- --------- --------- ---------
Change in Net Assets ................................... 4,599 22,082 22,623 27,813
--------- --------- --------- ---------
Share Transactions (1):
Fiduciary Shares (2):
Proceeds from Shares Issued ...................... 21,435 16,022 65,766 37,828
Reinvestment of Dividends and Distributions ...... 171 285 1,267 699
Cost of Shares Redeemed .......................... (52,037)* (42,384) (35,365) (20,473)
--------- --------- --------- ---------
Total Fiduciary Share Transactions ............ (30,431) (26,077) 31,668 18,054
--------- --------- --------- ---------
Class A Shares (3):
Proceeds from Shares Issued ...................... 3,512 1,446 86,547 30,043
Reinvestment of Dividends and Distributions ...... 7 16 885 373
Cost of Shares Redeemed .......................... (5,431) (5,366) (24,276) (9,766)
Redemption Fees .................................. -- 1 7 6
--------- --------- --------- ---------
Total Class A Share Transactions .............. (1,912) (3,903) 63,163 20,656
--------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ...................... 137 133 186 304
Reinvestment of Dividends and Distributions ...... -- -- 14 12
Cost of Shares Redeemed .......................... (2,055) (2,109) (1,503) (668)
--------- --------- --------- ---------
Total Class B Share Transactions .............. (1,918) (1,976) (1,303) (352)
--------- --------- --------- ---------
Class C Shares (4):
Proceeds from Shares Issued ...................... 179 191 2,057 2,542
Reinvestment of Dividends and Distributions ..... -- -- 24 11
Cost of Shares Redeemed .......................... (313) (508) (1,192) (302)
--------- --------- --------- ---------
Total Class C Share Transactions .............. (134) (317) 889 2,251
--------- --------- --------- ---------
Class M Shares:
Proceeds from Shares Issued ...................... -- -- -- --
Reinvestment of Dividends and Distributions ...... -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- --
--------- --------- --------- ---------
Total Class M Share Transactions .............. -- -- -- --
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From Share
Transactions ........................................ (34,395) (32,273) 94,417 40,609
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets ....... (29,796) (10,191) 117,040 68,422
--------- --------- --------- ---------
Net Assets:
Beginning of Period ................................. 157,882 168,073 194,454 126,032
--------- --------- --------- ---------
End of Period ....................................... $ 128,086 $ 157,882 $ 311,494 $ 194,454
========= ========= ========= =========
Undistributed Net Investment Income
(Distributions in Excess of Net Investment
Income/Accumulated Net Investment Loss) .......... $ 6 $ 263 $ 2 $ 69
========= ========= ========= =========
(4) CLASS C SHARES COMMENCED OPERATIONS ON APRIL 3, 2006 FOR THE COGNITIVE
VALUE, ENHANCED GROWTH AND INTERNATIONAL OPPORTUNITIES FUNDS.
(5) FOR THE TEN MONTH PERIOD ENDED JULY 31, 2006. ON APRIL 3, 2006, HIGHMARK
FUNDS ACQUIRED THE ASSETS AND ASSUMED THE IDENTIFIED LIABILITIES OF
BAILARD COGNITIVE VALUE FUND, BAILARD ENHANCED GROWTH FUND AND BAILARD
INTERNATIONAL EQUITY FUND (THE "BAILARD FUNDS") (SEE NOTE 9 IN NOTES TO
FINANCIAL STATEMENTS). THE FISCAL YEAR END OF THE BAILARD FUNDS, THE
PREDECESSOR FUNDS TO HIGHMARK COGNITIVE VALUE FUND, HIGHMARK ENHANCED
GROWTH FUND AND HIGHMARK INTERNATIONAL OPPORTUNITIES FUND, WAS SEPTEMBER
30. THE FISCAL YEAR END OF THE SUCCESSOR HIGHMARK FUNDS IS JULY 31.
(6) FOR THE YEAR ENDED SEPTEMBER 30.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 110 & 111
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS OR PERIODS ENDED JULY 31,
SMALL CAP GROWTH SMALL CAP VALUE VALUE MOMENTUM
FUND FUND FUND
--------------------- --------------------- ---------------------
2006 2005 2006 2005 2006 2005
--------------------- --------------------- ---------------------
Investment Activities:
Net Investment Income (Loss) ........................... $ (322) $ (417) $ 1,095 $ 460 $ 6,190 $ 6,133
Net Realized Gain (Loss) on Investments ................ 5,319 1,318 36,674 12,191 41,274 40,252
Net Realized Gain (Loss) on Investments in
Affiliated Funds .................................... -- -- -- -- -- --
Net Realized Gain (Loss) on Written Option
Contracts ........................................... -- -- -- -- 98 633
Change in Unrealized Appreciation (Depreciation)
on Investments and Written Options .................. (6,542) 6,190 (37,893) 36,213 (5,587) 23,331
Change in Unrealized Appreciation (Depreciation)
on Investments in Affiliated Funds .................. -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Operations ........................................ (1,545) 7,091 (124) 48,864 41,975 70,349
--------- --------- --------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares .................................... -- -- (634) (126) (5,796) (6,024)
Class A Shares ...................................... -- -- (219) (31) (322) (349)
Class B Shares ...................................... -- -- -- (5) (50) (61)
Class C Shares ...................................... -- -- -- (6) (7) (7)
Capital Gains:
Fiduciary Shares .................................... (1,540) (40) (9,813) (6,654) (45,279) (31,807)
Class A Shares ...................................... (255) (6) (4,972) (2,401) (3,120) (2,244)
Class B Shares ...................................... (31) (1) (1,057) (900) (965) (724)
Class C Shares ...................................... (63) (2) (1,370) (907) (125) (76)
--------- --------- --------- --------- --------- ---------
Total Dividends and Distributions ................ (1,889) (49) (18,065) (11,030) (55,664) (41,292)
--------- --------- --------- --------- --------- ---------
Change in Net Assets ...................................... (3,434) 7,042 (18,189) 37,834 (13,689) 29,057
--------- --------- --------- --------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ......................... 6,466 5,056 72,844 35,372 57,731 61,206
Reinvestment of Dividends and Distributions ......... 1,378 37 9,562 6,181 47,477 34,622
Cost of Shares Redeemed ............................. (8,347) (10,003) (43,312) (31,441) (89,442) (81,338)
--------- --------- --------- --------- --------- ---------
Total Fiduciary Share Transactions ............... (503) (4,910) 39,094 10,112 15,766 14,490
--------- --------- --------- --------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ......................... 1,690 924 38,819 19,921 4,201 3,117
Reinvestment of Dividends and Distributions ......... 236 5 4,525 2,052 3,038 2,331
Cost of Shares Redeemed ............................. (1,801) (886) (28,565) (11,787) (5,073) (6,926)
Redemption Fees ..................................... -- -- -- 1 -- 8
--------- --------- --------- --------- --------- ---------
Total Class A Share Transactions ................. 125 43 14,779 10,187 2,166 (1,470)
--------- --------- --------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued .......................... 103 4 256 281 110 252
Reinvestment of Dividends and Distributions .......... 25 1 985 833 978 756
Cost of Shares Redeemed .............................. (128) (101) (2,645) (2,194) (2,718) (1,403)
--------- --------- --------- --------- --------- ---------
Total Class B Share Transactions ................... -- (96) (1,404) (1,080) (1,630) (395)
--------- --------- --------- --------- --------- ---------
Class C Shares:
Proceeds from Shares Issued ......................... 163 137 4,444 6,869 483 357
Reinvestment of Dividends and Distributions ......... 60 1 1,251 681 105 66
Cost of Shares Redeemed ............................. (27) (247) (6,251) (1,424) (315) (66)
--------- --------- --------- --------- --------- ---------
Total Class C Share Transactions ................. 196 (109) (556) 6,126 273 357
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From Share
Transactions ........................................... (182) (5,072) 51,913 25,345 16,575 12,982
--------- --------- --------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .......... (3,616) 1,970 33,724 63,179 2,886 42,039
--------- --------- --------- --------- --------- ---------
Net Assets:
Beginning of Year ...................................... 34,047 32,077 227,026 163,847 470,154 428,115
--------- --------- --------- --------- --------- ---------
End of Year ............................................ $ 30,431 $ 34,047 $ 260,750 $ 227,026 $ 473,040 $ 470,154
========= ========= ========= ========= ========= =========
Undistributed Net Investment Income ....................... $ -- $ -- $ 611 $ 292 $ 20 $ --
========= ========= ========= ========= ========= =========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
(1) FOR SHARE TRANSACTIONS, SEE NOTE 12 IN NOTES TO FINANCIAL STATEMENTS.
(2) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
CAPITAL GROWTH GROWTH & INCOME
ALLOCATION ALLOCATION
FUND FUND
--------------------- ---------------------
2006 2005 (2) 2006 2005 (2)
--------------------- ---------------------
Investment Activities:
Net Investment Income (Loss) ................................................... $ 66 $ 10 $ 237 $ 47
Net Realized Gain (Loss) on Investments ........................................ -- -- -- --
Net Realized Gain (Loss) on Investments
in Affiliated Funds ......................................................... 825 78 640 46
Net Realized Gain (Loss) on Written
Option Contracts ............................................................ -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments and Written
Options ..................................................................... -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments in Affiliated
Funds ....................................................................... (24) 551 (149) 442
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................................................. 867 639 728 535
--------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................................ -- -- -- --
Class A Shares .............................................................. (72) (13) (188) (36)
Class B Shares .............................................................. -- -- -- --
Class C Shares .............................................................. (9) (2) (35) (7)
Capital Gains:
Fiduciary Shares ............................................................ -- -- -- --
Class A Shares .............................................................. (50) -- (35) --
Class B Shares .............................................................. -- -- -- --
Class C Shares .............................................................. (25) -- (17) --
--------- --------- --------- ---------
Total Dividends and Distributions ........................................ (156) (15) (275) (43)
--------- --------- --------- ---------
Change in Net Assets .............................................................. 711 624 453 492
--------- --------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ................................................. -- -- -- --
Reinvestment of Dividends and Distributions ................................. -- -- -- --
Cost of Shares Redeemed ..................................................... -- -- -- --
--------- --------- --------- ---------
Total Fiduciary Share Transactions ....................................... -- -- -- --
--------- --------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ................................................. 23,251 8,741 24,075 10,238
Reinvestment of Dividends and Distributions ................................. 105 11 195 32
Cost of Shares Redeemed ..................................................... (1,957) (223) (3,301) (457)
Redemption Fees ............................................................. -- -- -- --
--------- --------- --------- ---------
Total Class A Share Transactions ......................................... 21,399 8,529 20,969 9,813
--------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ................................................. -- -- -- --
Reinvestment of Dividends and Distributions ................................. -- -- -- --
Cost of Shares Redeemed ..................................................... -- -- -- --
--------- --------- --------- ---------
Total Class B Share Transactions ......................................... -- -- -- --
--------- --------- --------- ---------
Class C Shares:
Proceeds from Shares Issued ................................................. 12,908 4,388 7,866 4,477
Reinvestment of Dividends and Distributions ................................. 30 1 48 6
Cost of Shares Redeemed ..................................................... (961) (11) (896) (50)
--------- --------- --------- ---------
Total Class C Share Transactions ......................................... 11,977 4,378 7,018 4,433
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From
Share Transactions ............................................................. 33,376 12,907 27,987 14,246
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. 34,087 13,531 28,440 14,738
--------- --------- --------- ---------
Net Assets:
Beginning of Year .............................................................. 13,531 -- 14,738 --
--------- --------- --------- ---------
End of Year .................................................................... $ 47,618 $ 13,531 $ 43,178 $ 14,738
========= ========= ========= =========
Undistributed Net Investment Income ............................................... $ -- $ -- $ 18 $ 4
========= ========= ========= =========
INCOME PLUS
ALLOCATION BOND
FUND FUND
--------------------- ---------------------
2006 2005 (2) 2006 2005
--------------------- ---------------------
Investment Activities:
Net Investment Income (Loss) ................................................... $ 84 $ 15 $ 21,262 $ 21,998
Net Realized Gain (Loss) on Investments ........................................ -- -- 619 1,673
Net Realized Gain (Loss) on Investments
in Affiliated Funds ......................................................... 86 2 -- --
Net Realized Gain (Loss) on Written
Option Contracts ............................................................ -- -- -- --
Change in Unrealized Appreciation (Depreciation) on Investments and Written
Options ..................................................................... -- -- (17,315) (2,416)
Change in Unrealized Appreciation (Depreciation) on Investments in Affiliated
Funds ....................................................................... (45) 35 -- --
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Operations ............................................................. 125 52 4,566 21,255
--------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ............................................................ -- -- (19,775) (20,552)
Class A Shares .............................................................. (61) (10) (1,829) (2,055)
Class B Shares .............................................................. -- -- (299) (331)
Class C Shares .............................................................. (19) (1) (2) (1)
Capital Gains:
Fiduciary Shares ............................................................ -- -- -- --
Class A Shares .............................................................. (2) -- -- --
Class B Shares .............................................................. -- -- -- --
Class C Shares .............................................................. (1) -- -- --
--------- --------- --------- ---------
Total Dividends and Distributions ........................................ (83) (11) (21,905) (22,939)
--------- --------- --------- ---------
Change in Net Assets .............................................................. 42 41 (17,339) (1,684)
--------- --------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ................................................. -- -- 74,228 70,035
Reinvestment of Dividends and Distributions ................................. -- -- 9,937 10,347
Cost of Shares Redeemed ..................................................... -- -- (102,276) (100,674)
--------- --------- --------- ---------
Total Fiduciary Share Transactions ....................................... -- -- (18,111) (20,292)
--------- --------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ................................................. 2,410 2,226 1,333 4,079
Reinvestment of Dividends and Distributions ................................. 41 5 1,273 1,375
Cost of Shares Redeemed ..................................................... (1,009) (96) (9,841) (8,025)
Redemption Fees ............................................................. -- -- -- --
--------- --------- --------- ---------
Total Class A Share Transactions ......................................... 1,442 2,135 (7,235) (2,571)
--------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ................................................. -- -- 104 164
Reinvestment of Dividends and Distributions ................................. -- -- 241 260
Cost of Shares Redeemed ..................................................... -- -- (1,217) (1,907)
--------- --------- --------- ---------
Total Class B Share Transactions ......................................... -- -- (872) (1,483)
--------- --------- --------- ---------
Class C Shares:
Proceeds from Shares Issued ................................................. 1,828 513 81 26
Reinvestment of Dividends and Distributions ................................. 16 1 1 1
Cost of Shares Redeemed ..................................................... (277) (4) (27) (3)
--------- --------- --------- ---------
Total Class C Share Transactions ......................................... 1,567 510 55 24
--------- --------- --------- ---------
Net Increase (Decrease) in Net Assets From
Share Transactions ............................................................. 3,009 2,645 (26,163) (24,322)
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. 3,051 2,686 (43,502) (26,006)
--------- --------- --------- ---------
Net Assets:
Beginning of Year .............................................................. 2,686 -- 482,033 508,039
--------- --------- --------- ---------
End of Year .................................................................... $ 5,737 $ 2,686 $ 438,531 $ 482,033
========= ========= ========= =========
Undistributed Net Investment Income ............................................... $ 8 $ 4 $ 524 $ 582
========= ========= ========= =========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 112 & 113
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
STATEMENTS OF CHANGES IN NET ASSETS (000)
FOR THE YEARS OR PERIODS ENDED JULY 31,
CALIFORNIA INTERMEDIATE NATIONAL INTERMEDIATE SHORT TERM
TAX-FREE BOND TAX-FREE BOND BOND
FUND FUND FUND
----------------------- --------------------- ---------------------
2006 2005 2006 2005 2006 2005 (2)
----------------------- --------------------- ---------------------
Investment Activities:
Net Investment Income (Loss) ........................ $ 5,449 $ 6,503 $ 3,404 $ 3,953 $ 1,160 $ 389
Net Realized Gain (Loss) on Investments ............. 676 1,397 486 521 (25) (7)
Change in Unrealized Appreciation (Depreciation)
on Investments ................................... (3,922) (2,975) (2,346) (2,085) (236) (260)
--------- --------- --------- --------- --------- ---------
Net Increase (Decrease) in Net Assets Resulting
From Operations ..................................... 2,203 4,925 1,544 2,389 899 122
--------- --------- --------- --------- --------- ---------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................. (3,682) (4,235) (3,337) (3,785) (1,049) (371)
Class A Shares ................................... (1,588) (2,060) (131) (158) (50) (15)
Class B Shares ................................... (166) (190) -- -- -- --
Class C Shares ................................... (25) (20) (2) (1) (70) --
Class S Shares ................................... -- -- -- -- -- --
Capital Gains:
Fiduciary Shares ................................. (993) (1,141) (657) (729) -- --
Class A Shares ................................... (475) (583) (30) (36) -- --
Class B Shares ................................... (61) (70) -- -- -- --
Class C Shares ................................... (9) (6) -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Dividends and Distributions ............. (6,999) (8,305) (4,157) (4,709) (1,169) (386)
--------- --------- --------- --------- --------- ---------
Change in Net Assets ................................... (4,796) (3,380) (2,613) (2,320) (270) (264)
--------- --------- --------- --------- --------- ---------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ...................... 6,658 10,990 1,483 3,764 16,148 26,111
Reinvestment of Dividends and Distributions ...... 1,148 1,443 656 718 502 105
Cost of Shares Redeemed .......................... (11,505) (28,742) (14,374) (9,853) (4,473) (1,411)
--------- --------- --------- --------- --------- ---------
Total Fiduciary Share Transactions ............ (3,699) (16,309) (12,235) (5,371) 12,177 24,805
--------- --------- --------- --------- --------- ---------
Class A Shares:
Proceeds from Shares Issued ...................... 3,804 5,352 842 2,322 1,668 1,632
Reinvestment of Dividends and Distributions ...... 1,458 1,880 134 118 24 2
Cost of Shares Redeemed .......................... (20,339) (14,856) (1,662) (3,313) (2,007) (191)
--------- --------- --------- --------- --------- ---------
Total Class A Share Transactions .............. (15,077) (7,624) (686) (873) (315) 1,443
--------- --------- --------- --------- --------- ---------
Class B Shares:
Proceeds from Shares Issued ...................... 16 84 -- -- -- --
Reinvestment of Dividends and Distributions ...... 166 196 -- -- -- --
Cost of Shares Redeemed .......................... (1,002) (1,242) -- -- -- --
--------- --------- --------- --------- --------- ---------
Total Class B Share Transactions .............. (820) (962) -- -- -- --
--------- --------- --------- --------- --------- ---------
Class C Shares (3):
Proceeds from Shares Issued ...................... 133 376 -- 50 2,880 15
Reinvestment of Dividends and Distributions ...... 26 26 2 1 2 --
Cost of Shares Redeemed .......................... (518) (5) (25) -- (354) --
--------- --------- --------- --------- --------- ---------
Total Class C Share Transactions .............. (359) 397 (23) 51 2,528 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 ........................................ (19,955) (24,498) (12,944) (6,193) 14,390 26,263
--------- --------- --------- --------- --------- ---------
Total Increase (Decrease) in Net Assets ....... (24,751) (27,878) (15,557) (8,513) 14,120 25,999
--------- --------- --------- --------- --------- ---------
Net Assets:
Beginning of Year ................................... 163,374 191,252 93,906 102,419 25,999 --
--------- --------- --------- --------- --------- ---------
End of Year ......................................... $ 138,623 $ 163,374 $ 78,349 $ 93,906 $ 40,119 $ 25,999
========= ========= ========= ========= ========= =========
Undistributed Net Investment Income (Distributions
in Excess of Net Investment Income) ................. $ 174 $ 186 $ 112 $ 178 $ 45 $ 18
========= ========= ========= ========= ========= =========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
(1) FOR SHARE TRANSACTIONS, SEE NOTE 12 IN NOTES TO FINANCIAL STATEMENTS.
(2) COMMENCED OPERATIONS ON NOVEMBER 2, 2004.
(3) CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 29, 2004 FOR THE SHORT
TERM BOND FUND.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
CALIFORNIA TAX-FREE DIVERSIFIED
MONEY MARKET MONEY MARKET
FUND FUND
------------------------- -------------------------
2006 2005 2006 2005
------------------------- -------------------------
Investment Activities:
Net Investment Income (Loss) ........................ $ 11,785 $ 6,505 $ 122,374 $ 56,216
Net Realized Gain (Loss) on Investments ............. 5 1 (4) (2)
Change in Unrealized Appreciation (Depreciation)
on Investments ................................... -- -- -- --
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting
From Operations ..................................... 11,790 6,506 122,370 56,214
----------- ----------- ----------- -----------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................. (5,027) (3,038) (80,087) (38,046)
Class A Shares ................................... (6,057) (3,135) (23,786) (8,867)
Class B Shares ................................... -- -- -- --
Class C Shares ................................... -- -- -- --
Class S Shares ................................... (700) (334) (18,501) (9,303)
Capital Gains:
Fiduciary Shares ................................. -- -- -- --
Class A Shares ................................... -- -- -- --
Class B Shares ................................... -- -- -- --
Class C Shares ................................... -- -- -- --
----------- ----------- ----------- -----------
Total Dividends and Distributions ............. (11,784) (6,507) (122,374) (56,216)
----------- ----------- ----------- -----------
Change in Net Assets ................................... 6 (1) (4) (2)
----------- ----------- ----------- -----------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ...................... 538,460 620,445 5,610,560 5,401,713
Reinvestment of Dividends and Distributions ...... 25 -- 14,690 7,261
Cost of Shares Redeemed .......................... (550,493) (637,304) (5,819,885) (5,330,319)
----------- ----------- ----------- -----------
Total Fiduciary Share Transactions ............ (12,008) (16,859) (194,635) 78,655
----------- ----------- ----------- -----------
Class A Shares:
Proceeds from Shares Issued ...................... 538,589 334,065 854,366 551,276
Reinvestment of Dividends and Distributions ...... 6,054 3,179 23,518 8,746
Cost of Shares Redeemed .......................... (534,337) (343,514) (709,417) (546,899)
----------- ----------- ----------- -----------
Total Class A Share Transactions .............. 10,306 (6,270) 168,467 13,123
----------- ----------- ----------- -----------
Class B Shares:
Proceeds from Shares Issued ...................... -- -- -- --
Reinvestment of Dividends and Distributions ...... -- -- -- --
Cost of Shares Redeemed .......................... -- -- -- --
----------- ----------- ----------- -----------
Total Class B Share Transactions .............. -- -- -- --
----------- ----------- ----------- -----------
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 ...................... 204,308 149,640 2,559,035 2,747,529
Reinvestment of Dividends ........................ 700 334 18,501 9,303
Cost of Shares Redeemed .......................... (201,798) (145,522) (2,758,484) (2,862,191)
----------- ----------- ----------- -----------
Total Class S Share Transactions .............. 3,210 4,452 (180,948) (105,359)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets From Share
Transactions ........................................ 1,508 (18,677) (207,116) (13,581)
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets ....... 1,514 (18,678) (207,120) (13,583)
----------- ----------- ----------- -----------
Net Assets:
Beginning of Year ................................... 494,392 513,070 3,319,954 3,333,537
----------- ----------- ----------- -----------
End of Year ......................................... $ 495,906 $ 494,392 $ 3,112,834 $ 3,319,954
=========== =========== =========== ===========
Undistributed Net Investment Income (Distributions
in Excess of Net Investment Income) ................. $ 1 $ -- $ -- $ --
=========== =========== =========== ===========
U.S. GOVERNMENT 100% U.S. TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
------------------------- -------------------------
2006 2005 2006 2005
------------------------- -------------------------
Investment Activities:
Net Investment Income (Loss) ........................ $ 20,221 $ 7,632 $ 28,842 $ 11,836
Net Realized Gain (Loss) on Investments ............. (1) (1) (18) 42
Change in Unrealized Appreciation (Depreciation)
on Investments ................................... -- -- -- --
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets Resulting
From Operations ..................................... 20,220 7,631 28,824 11,878
----------- ----------- ----------- -----------
Dividends and Distributions to Shareholders:
Net Investment Income:
Fiduciary Shares ................................. (15,723) (6,524) (15,215) (6,673)
Class A Shares ................................... (1,152) (557) (5,056) (2,262)
Class B Shares ................................... (29) (10) -- --
Class C Shares ................................... (1) -- -- --
Class S Shares ................................... (3,315) (541) (8,571) (2,902)
Capital Gains:
Fiduciary Shares ................................. -- -- -- --
Class A Shares ................................... -- -- -- --
Class B Shares ................................... -- -- -- --
Class C Shares ................................... -- -- -- --
----------- ----------- ----------- -----------
Total Dividends and Distributions ............. (20,220) (7,632) (28,842) (11,837)
----------- ----------- ----------- -----------
Change in Net Assets ................................... -- (1) (18) 41
----------- ----------- ----------- -----------
Share Transactions: (1)
Fiduciary Shares:
Proceeds from Shares Issued ...................... 4,084,427 3,157,136 2,941,432 2,968,389
Reinvestment of Dividends and Distributions ...... 298 158 624 320
Cost of Shares Redeemed .......................... (4,015,957) (3,106,150) (2,956,423) (2,977,833)
----------- ----------- ----------- -----------
Total Fiduciary Share Transactions ............ 68,768 51,144 (14,367) (9,124)
----------- ----------- ----------- -----------
Class A Shares:
Proceeds from Shares Issued ...................... 74,914 64,614 403,706 392,802
Reinvestment of Dividends and Distributions ...... 1,152 557 5,056 2,262
Cost of Shares Redeemed .......................... (76,752) (73,865) (432,280) (358,263)
----------- ----------- ----------- -----------
Total Class A Share Transactions .............. (686) (8,694) (23,518) 36,801
----------- ----------- ----------- -----------
Class B Shares:
Proceeds from Shares Issued ...................... 138 326 -- --
Reinvestment of Dividends and Distributions ...... 27 10 -- --
Cost of Shares Redeemed .......................... (563) (843) -- --
----------- ----------- ----------- -----------
Total Class B Share Transactions .............. (398) (507) -- --
----------- ----------- ----------- -----------
Class C Shares (3):
Proceeds from Shares Issued ...................... 60 -- -- --
Reinvestment of Dividends and Distributions ...... 1 -- -- --
Cost of Shares Redeemed .......................... -- -- -- --
----------- ----------- ----------- -----------
Total Class C Share Transactions .............. 61 -- -- --
----------- ----------- ----------- -----------
Class S Shares:
Proceeds from Shares Issued ...................... 616,790 317,539 1,063,189 873,865
Reinvestment of Dividends ........................ 3,315 541 8,571 2,902
Cost of Shares Redeemed .......................... (585,681) (292,400) (1,099,919) (881,984)
----------- ----------- ----------- -----------
Total Class S Share Transactions .............. 34,424 25,680 (28,159) (5,217)
----------- ----------- ----------- -----------
Net Increase (Decrease) in Net Assets From Share
Transactions ........................................ 102,169 67,623 (66,044) 22,460
----------- ----------- ----------- -----------
Total Increase (Decrease) in Net Assets ....... 102,169 67,622 (66,062) 22,501
----------- ----------- ----------- -----------
Net Assets:
Beginning of Year ................................... 531,024 463,402 867,306 844,805
----------- ----------- ----------- -----------
End of Year ......................................... $ 633,193 $ 531,024 $ 801,244 $ 867,306
=========== =========== =========== ===========
Undistributed Net Investment Income (Distributions
in Excess of Net Investment Income) ................. $ -- $ (1) $ -- $ --
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 114 & 115
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
FOR THE YEARS OR PERIODS ENDED JULY 31, (UNLESS OTHERWISE INDICATED)
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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- -----------------------------------------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
2006 $ 13.81 $ 0.257 $ 0.258 $ 0.515 $ (0.265) $ -- $ (0.265) $ --
2005 12.90 0.267 0.922 1.189 (0.279) -- (0.279) --
2004 12.10 0.171 0.796 0.967 (0.167) -- (0.167) --
2003 11.53 0.262 0.563 0.825 (0.255) -- (0.255) --
2002 14.03 0.296 (2.237) (1.941) (0.301) (0.258) (0.559) --
CLASS A SHARES
2006 $ 13.79 $ 0.224 $ 0.258 $ 0.482 $ (0.232) $ -- $ (0.232) $ --
2005 12.88 0.228 0.929 1.157 (0.247) -- (0.247) --
2004 12.09 0.138 0.787 0.925 (0.135) -- (0.135) --
2003 11.51 0.227 0.581 0.808 (0.228) -- (0.228) --
2002 14.01 0.262 (2.234) (1.972) (0.270) (0.258) (0.528) --
CLASS B SHARES
2006 $ 13.75 $ 0.138 $ 0.259 $ 0.397 $ (0.147) $ -- $ (0.147) $ --
2005 12.85 0.142 0.920 1.062 (0.162) -- (0.162) --
2004 12.06 0.054 0.791 0.845 (0.055) -- (0.055) --
2003 11.49 0.152 0.573 0.725 (0.155) -- (0.155) --
2002 13.99 0.177 (2.229) (2.052) (0.190) (0.258) (0.448) --
CLASS C SHARES
2006 $ 13.73 $ 0.138 $ 0.261 $ 0.399 $ (0.149) $ -- $ (0.149) $ --
2005 12.84 0.142 0.910 1.052 (0.162) -- (0.162) --
2004 12.06 0.053 0.789 0.842 (0.062) -- (0.062) --
2003 11.49 0.154 0.571 0.725 (0.155) -- (0.155) --
2002 13.99 0.175 (2.224) (2.049) (0.193) (0.258) (0.451) --
- --------------------
COGNITIVE VALUE FUND
- --------------------
FIDUCIARY SHARES
2006 (1) $ 13.38 $ 0.011 $ (0.361) $ (0.350) $ -- $ -- $ -- $ --
CLASS A SHARES
2006 (2) $ 13.53 $ 0.029 $ (0.539) $ (0.510) $ -- $ -- $ -- $ --
CLASS C SHARES
2006 (2) $ 13.53 $ (0.013) $ (0.537) $ (0.550) $ -- $ -- $ -- $ --
CLASS M SHARES
2006 (3) $ 13.59 $ 0.056 $ 1.155 $ 1.211 $ (0.033) $ (1.748) $ (1.781) $ --
2005 (4) 12.79 0.03 2.08 2.11 (0.03) (1.28) (1.31) --
2004 (4) 10.56 0.01 2.22 2.23 -- -- -- --
2003 (4) 8.43 (0.01) 2.16 2.15 (0.01) (0.01) (0.02) --
2002 (4) 8.84 0.01 (0.41) (0.40) (0.01) -- (0.01) --
2001 (5) 10.00 --# (1.16) (1.16) -- -- -- --
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------
- -------------
BALANCED FUND
- -------------
FIDUCIARY SHARES
2006 $ 14.06 3.77% $ 37,571 0.92% 1.10% 1.85% 16%
2005 13.81 9.32 59,278 0.95 1.19 2.00 57
2004 12.90 8.01 118,555 0.94 1.12 1.32 97
2003 12.10 7.30 115,067 0.94 1.12 2.29 55
2002 11.53 (14.24) 180,217 0.93 1.10 2.27 12
CLASS A SHARES
2006 $ 14.04 3.52% $ 7,065 1.17% 1.34% 1.61% 16%
2005 13.79 9.07 7,408 1.21 1.45 1.71 57
2004 12.88 7.66 7,172 1.19 1.37 1.07 97
2003 12.09 7.15 7,280 1.20 1.37 1.98 55
2002 11.51 (14.47) 7,222 1.18 1.35 2.02 12
CLASS B SHARES
2006 $ 14.00 2.90% $ 3,089 1.79% 1.85% 0.99% 16%
2005 13.75 8.31 3,759 1.86 1.95 1.07 57
2004 12.85 7.02 4,364 1.84 1.87 0.42 97
2003 12.06 6.39 4,235 1.85 1.87 1.33 55
2002 11.49 (15.02) 4,295 1.83 1.85 1.37 12
CLASS C SHARES
2006 $ 13.98 2.92% $ 338 1.79% 1.85% 0.99% 16%
2005 13.73 8.24 334 1.86 1.95 1.07 57
2004 12.84 6.99 327 1.84 1.87 0.42 97
2003 12.06 6.39 137 1.85 1.87 1.35 55
2002 11.49 (15.00) 151 1.83 1.85 1.36 12
- --------------------
COGNITIVE VALUE FUND
- --------------------
FIDUCIARY SHARES
2006 (1) $ 13.03 (2.62)% $ 1,728 0.39%* 0.39%* 1.08%* 76%
CLASS A SHARES
2006 (2) $ 13.02 (3.77)% $ 483 0.94%* 0.94%* 0.67%* 76%
CLASS C SHARES
2006 (2) $ 12.98 (4.07)% $ 3 1.86%* 1.86%* (0.29)%* 76%
CLASS M SHARES
2006 (3) $ 13.02 10.13% $ 91,652 1.00%* 1.02%* 0.51%* 76%
2005 (4) 13.59 17.14 86,500 1.09 1.09 0.25 59
2004 (4) 12.79 21.12 73,300 1.14 1.14 0.06 76
2003 (4) 10.56 25.55 77,100 1.17 1.17 (0.07) 65
2002 (4) 8.43 (4.55) 57,100 1.11 1.11 0.07 51
2001 (5) 8.84 (11.60) 61,500 1.33* 1.33* 0.11* 31
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
116 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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- -----------------------------------------------------------------------------------------------------------------------------
- ----------------
CORE EQUITY FUND
- ----------------
FIDUCIARY SHARES
2006 $ 8.10 $ 0.088 $ 0.680 $ 0.768 $ (0.088) $ -- $ (0.088) $ --
2005 7.36 0.101 0.738 0.839 (0.099) -- (0.099) --
2004 6.73 0.029 0.630 0.659 (0.029) -- (0.029) --
2003 6.22 0.055 0.508 0.563 (0.053) -- (0.053) --
2002 8.26 0.045 (2.042) (1.997) (0.043) -- (0.043) --
CLASS A SHARES
2006 $ 8.09 $ 0.066 $ 0.672 $ 0.738 $ (0.068) $ -- $ (0.068) $ --
2005 7.34 0.076 0.751 0.827 (0.077) -- (0.077) --
2004 6.72 0.010 0.626 0.636 (0.016) -- (0.016) --
2003 6.21 0.037 0.512 0.549 (0.039) -- (0.039) --
2002 8.25 0.027 (2.041) (2.014) (0.026) -- (0.026) --
CLASS B SHARES
2006 $ 7.95 $ 0.014 $ 0.671 $ 0.685 $ (0.025) $ -- $ (0.025) $ --
2005 7.23 0.032 0.732 0.764 (0.044) -- (0.044) --
2004 6.66 (0.037) 0.609 0.572 (0.002) -- (0.002) --
2003 6.17 (0.001) 0.505 0.504 (0.014) -- (0.014) --
2002 8.22 (0.021) (2.028) (2.049) (0.001) -- (0.001) --
CLASS C SHARES
2006 $ 7.96 $ 0.014 $ 0.661 $ 0.675 $ (0.025) $ -- $ (0.025) $ --
2005 7.24 0.030 0.735 0.765 (0.045) -- (0.045) --
2004 (6) 7.16 (0.030) 0.112 0.082 (0.002) -- (0.002) --
- --------------------
ENHANCED GROWTH FUND
- --------------------
CLASS A SHARES
2006 (2) $ 9.29 $ (0.029) $ (1.211) $ (1.240) $ -- $ -- $ -- $ --
CLASS C SHARES
2006 (2) $ 9.29 $ (0.025) $ (1.205) $ (1.230) $ -- $ -- $ -- $ --
CLASS M SHARES
2006 (3) $ 8.78 $ (0.034) $ (0.676) $ (0.710) $ -- $ -- $ -- $ --
2005 (4) 7.89 0.03 0.94 0.97 (0.08) -- (0.08) --
2004 (4) 7.33 (0.07) 0.63 0.56 -- -- -- --
2003 (4) 4.80 (0.06) 2.59 2.53 -- -- -- --
2002 (4) 6.50 (0.08) (1.62) (1.70) -- -- -- --
2001 (5) 10.00 (0.04) (3.46) (3.50) -- -- -- --
- --------------------------------
INTERNATIONAL OPPORTUNITIES FUND
- --------------------------------
FIDUCIARY SHARES
2006 (7) $ 8.69 $ 0.073 $ (0.233) $ (0.160) $ -- $ -- $ -- $ --
CLASS A SHARES
2006 (2) $ 8.63 $ 0.052 $ (0.184) $ (0.132) $ -- $ -- $ -- $ 0.022
CLASS C SHARES
2006 (2) $ 8.63 $ 0.034 $ (0.174) $ (0.140) $ -- $ -- $ -- $ --
CLASS M SHARES
2006 (3) $ 7.54 $ 0.095 $ 1.219 $ 1.314 $ (0.146) $ (0.188) $ (0.334) $ --
2005 (4) 5.79 0.07 1.73 1.80 (0.05) -- (0.05) --
2004 (4) 4.79 0.05 1.00 1.05 (0.05) -- (0.05) --
2003 (4) 3.70 0.06 1.05 1.11 (0.02) --# (0.02) --
2002 (4) 4.27 0.03 (0.60) (0.57) -- -- -- --
2001 (4) 6.69 0.02 (1.83) (1.81) (0.01) (0.60) (0.61) --
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------
- ----------------
CORE EQUITY FUND
- ----------------
FIDUCIARY SHARES
2006 $ 8.78 9.53% $ 110,720 0.91% 1.07% 1.04% 72%
2005 8.10 11.47 106,413 0.93 1.18 1.31 101
2004 7.36 9.80 113,334 0.92 1.10 0.38 119
2003 6.73 9.15 115,045 0.92 1.09 0.89 71
2002 6.22 (24.25) 114,854 0.93 1.10 0.61 11
CLASS A SHARES
2006 $ 8.76 9.15% $ 2,749 1.17% 1.34% 0.79% 72%
2005 8.09 11.32 3,031 1.18 1.43 1.00 101
2004 7.34 9.47 3,657 1.17 1.35 0.13 119
2003 6.72 8.91 3,233 1.16 1.34 0.61 71
2002 6.21 (24.46) 1,729 1.18 1.35 0.36 11
CLASS B SHARES
2006 $ 8.61 8.63% $ 2,717 1.79% 1.84% 0.17% 72%
2005 7.95 10.60 3,044 1.83 1.93 0.42 101
2004 7.23 8.60 3,249 1.82 1.85 (0.52) 119
2003 6.66 8.20 3,093 1.82 1.84 (0.01) 71
2002 6.17 (24.93) 2,701 1.83 1.85 (0.29) 11
CLASS C SHARES
2006 $ 8.61 8.50% $ 310 1.79% 1.84% 0.17% 72%
2005 7.96 10.59 280 1.83 1.93 0.40 101
2004 (6) 7.24 1.14 277 1.83* 1.88* (0.60)* 119
- --------------------
ENHANCED GROWTH FUND
- --------------------
CLASS A SHARES
2006 (2) $ 8.05 (13.35)% $ 39 1.35%* 1.49%* (1.10)%* 53%
CLASS C SHARES
2006 (2) $ 8.06 (13.24)% $ --++ 1.47%* 1.49%* (0.87)%* 53%
CLASS M SHARES
2006 (3) $ 8.07 (8.09)% $ 120,694 0.97%* 0.98%* (0.46)%* 53%
2005 (4) 8.78 12.24 129,300 1.00 1.00 0.37 8
2004 (4) 7.89 7.64 67,200 1.11 1.11 (0.84) 14
2003 (4) 7.33 52.71 75,000 1.15 1.15 (0.97) 62
2002 (4) 4.80 (26.15) 49,700 1.18 1.18 (1.09) 18
2001 (5) 6.50 (35.00) 44,900 1.40* 1.40* (1.24)* 5
- --------------------------------
INTERNATIONAL OPPORTUNITIES FUND
- --------------------------------
FIDUCIARY SHARES
2006 (7) $ 8.53 (1.84)% $ 13,422 1.29%* 1.34%* 2.65%* 48%
CLASS A SHARES
2006 (2) $ 8.52 (1.27)% $ 1,952 1.69%* 1.84%* 1.88%* 48%
CLASS C SHARES
2006 (2) $ 8.49 (1.62)% $ 731 2.28%* 2.33%* 1.23%* 48%
CLASS M SHARES
2006 (3) $ 8.52 17.96% $ 202,134 1.25%* 1.27%* 1.41%* 48%
2005 (4) 7.54 31.32 170,000 1.45 1.45 1.13 74
2004 (4) 5.79 21.95 158,800 1.35 1.35 0.92 69
2003 (4) 4.79 30.12 114,000 1.37 1.37 1.38 39
2002 (4) 3.70 (13.35) 91,400 1.34 1.34 0.59 69
2001 (4) 4.27 (29.43) 101,400 1.44 1.44 0.44 90
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.
# AMOUNT REPRESENTS LESS THAN $0.01.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
++ AMOUNT REPRESENTS LESS THAN $1,000.
(1) COMMENCED OPERATIONS ON JULY 3, 2006.
(2) COMMENCED OPERATIONS ON APRIL 3, 2006.
(3) FOR THE TEN MONTH PERIOD ENDED JULY 31, 2006. ON APRIL 3, 2006, HIGHMARK
FUNDS ACQUIRED THE ASSETS AND ASSUMED THE IDENTIFIED LIABILITIES OF
BAILARD COGNITIVE VALUE FUND, BAILARD ENHANCED GROWTH FUND AND BAILARD
INTERNATIONAL EQUITY FUND (THE "BAILARD FUNDS") (SEE NOTE 9 IN NOTES TO
FINANCIAL STATEMENTS). THE FISCAL YEAR END OF THE BAILARD FUNDS, THE
PREDECESSOR FUNDS TO HIGHMARK COGNITIVE VALUE FUND, HIGHMARK ENHANCED
GROWTH FUND AND HIGHMARK INTERNATIONAL OPPORTUNITIES FUND, WAS SEPTEMBER
30. THE FISCAL YEAR END OF THE SUCCESSOR HIGHMARK FUNDS IS JULY 31.
(4) FOR THE YEAR ENDED SEPTEMBER 30.
(5) COMMENCED OPERATIONS ON MAY 30, 2001.
(6) COMMENCED OPERATIONS ON NOVEMBER 28, 2003.
(7) COMMENCED OPERATIONS ON APRIL 4, 2006.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 117
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- --------------------------------------------------------------------------------------------------------------------------------
- ---------------------
LARGE CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2006 $ 8.61 $ 0.009 $ 0.170 $ 0.179 $ (0.019) $ -- $ (0.019) $ --
2005 7.50 0.042 1.094 1.136 (0.026) -- (0.026) --
2004 7.25 (0.012) 0.236 0.224 -- -- -- 0.026
2003 6.53 0.003 0.722 0.725 (0.005)++ -- (0.005) --
2002 8.68 (0.004) (2.146) (2.150) -- -- -- --
CLASS A SHARES
2006 $ 8.48 $ (0.013) $ 0.167 $ 0.154 $ (0.004) $ -- $ (0.004) $ --
2005 7.39 0.022 1.076 1.098 (0.008) -- (0.008) --
2004 7.15 (0.031) 0.243 0.212 -- -- -- 0.028
2003 6.47 (0.014) 0.694 0.680 --++ -- -- --
2002 8.61 (0.022) (2.118) (2.140) -- -- -- --
CLASS B SHARES
2006 $ 8.03 $ (0.064) $ 0.164 $ 0.100 $ -- $ -- $ -- $ --
2005 7.04 (0.027) 1.017 0.990 -- -- -- --
2004 6.86 (0.077) 0.231 0.154 -- -- -- 0.026
2003 6.24 (0.053) 0.673 0.620 -- -- -- --
2002 8.36 (0.069) (2.051) (2.120) -- -- -- --
CLASS C SHARES
2006 $ 8.04 $ (0.064) $ 0.164 $ 0.100 $ -- $ -- $ -- $ --
2005 7.05 (0.027) 1.017 0.990 -- -- -- --
2004 6.87 (0.078) 0.227 0.149 -- -- -- 0.031
2003 6.24 (0.055) 0.685 0.630 -- -- -- --
2002 8.37 (0.069) (2.061) (2.130) -- -- -- --
- ---------------------
LARGE CAP VALUE FUND
- ---------------------
FIDUCIARY SHARES
2006 $ 12.49 $ 0.161 $ 1.182 $ 1.343 $ (0.163) $ -- $ (0.163) $ --
2005 10.41 0.133 2.077 2.210 (0.130) -- (0.130) --
2004 8.74 0.100 1.670 1.770 (0.100) -- (0.100) --
2003 8.25 0.105 0.484 0.589 (0.099) -- (0.099) --
2002 11.04 0.123 (2.790) (2.667) (0.123) -- (0.123) --
CLASS A SHARES
2006 $ 12.52 $ 0.129 $ 1.181 $ 1.310 $ (0.131) $ -- $ (0.131) $ 0.001
2005 10.43 0.103 2.090 2.193 (0.103) -- (0.103) --
2004 8.76 0.075 1.671 1.746 (0.076) -- (0.076) --
2003 8.26 0.085 0.495 0.580 (0.080) -- (0.080) --
2002 11.06 0.096 (2.796) (2.700) (0.100) -- (0.100) --
CLASS B SHARES
2006 $ 12.35 $ 0.047 $ 1.163 $ 1.210 $ (0.060) $ -- $ (0.060) $ --
2005 10.31 0.029 2.052 2.081 (0.041) -- (0.041) --
2004 8.67 0.010 1.653 1.663 (0.023) -- (0.023) --
2003 8.19 0.032 0.488 0.520 (0.040) -- (0.040) --
2002 10.97 0.032 (2.764) (2.732) (0.048) -- (0.048) --
CLASS C SHARES
2006 $ 12.32 $ 0.046 $ 1.166 $ 1.212 $ (0.062) $ -- $ (0.062) $ --
2005 10.28 0.027 2.057 2.084 (0.044) -- (0.044) --
2004 8.65 0.010 1.649 1.659 (0.029) -- (0.029) --
2003 8.18 0.035 0.480 0.515 (0.045) -- (0.045) --
2002 10.96 0.028 (2.757) (2.729) (0.051) -- (0.051) --
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
--------------------------------------------------------------------------------------
- ---------------------
LARGE CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2006 $ 8.77 2.07% $ 103,454 0.89% 1.07% 0.10% 68%
2005 8.61 15.16 129,824 0.94 1.16 0.53 73
2004 7.50 3.45 137,682 0.94 1.13 (0.15) 93
2003 7.25 11.11 161,181 0.94 1.12 0.05 57
2002 6.53 (24.77) 156,663 0.93 1.10 (0.05) 105
CLASS A SHARES
2006 $ 8.63 1.81% $ 15,809 1.14% 1.32% (0.15)% 68%
2005 8.48 14.86 17,377 1.19 1.41 0.29 73
2004 7.39 3.36 18,845 1.19 1.38 (0.40) 93
2003 7.15 10.51 18,858 1.20 1.37 (0.22) 57
2002 6.47 (24.85) 12,214 1.18 1.35 (0.28) 105
CLASS B SHARES
2006 $ 8.13 1.25% $ 7,519 1.76% 1.83% (0.77)% 68%
2005 8.03 14.06 9,259 1.84 1.91 (0.37) 73
2004 7.04 2.62 10,003 1.84 1.88 (1.05) 93
2003 6.86 9.94 10,558 1.85 1.87 (0.85) 57
2002 6.24 (25.36) 10,322 1.83 1.86 (0.94) 105
CLASS C SHARES
2006 $ 8.14 1.24% $ 1,304 1.76% 1.83% (0.77)% 68%
2005 8.04 14.04 1,422 1.84 1.91 (0.36) 73
2004 7.05 2.62 1,543 1.84 1.88 (1.05) 93
2003 6.87 10.10 1,223 1.85 1.87 (0.87) 57
2002 6.24 (25.45) 736 1.83 1.86 (0.94) 105
- --------------------
LARGE CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2006 $ 13.67 10.82% $ 168,092 0.92% 1.08% 1.23% 81%
2005 12.49 21.35 123,343 0.93 1.17 1.15 99
2004 10.41 20.32 87,181 0.93 1.12 1.00 86
2003 8.74 7.26 65,363 0.93 1.11 1.30 337
2002 8.25 (24.31) 78,479 0.92 1.09 1.24 226
CLASS A SHARES
2006 $ 13.70 10.52% $ 134,433 1.17% 1.32% 0.98% 81%
2005 12.52 21.12 62,537 1.18 1.42 0.89 99
2004 10.43 19.98 33,442 1.18 1.37 0.75 86
2003 8.76 7.12 29,036 1.18 1.36 1.05 337
2002 8.26 (24.55) 31,773 1.17 1.34 0.98 226
CLASS B SHARES
2006 $ 13.50 9.81% $ 3,042 1.79% 1.84% 0.36% 81%
2005 12.35 20.22 3,996 1.83 1.92 0.26 99
2004 10.31 19.20 3,640 1.83 1.87 0.10 86
2003 8.67 6.41 2,005 1.83 1.86 0.40 337
2002 8.19 (24.97) 2,164 1.82 1.85 0.32 226
CLASS C SHARES
2006 $ 13.47 9.86% $ 5,927 1.79% 1.84% 0.36% 81%
2005 12.32 20.31 4,578 1.83 1.92 0.23 99
2004 10.28 19.20 1,769 1.85 1.90 0.10 86
2003 8.65 6.36 168 1.83 1.86 0.43 337
2002 8.18 (24.97) 46 1.82 1.85 0.29 226
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
118 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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- --------------------------------------------------------------------------------------------------------------------------------
- ---------------------
SMALL CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2006 $ 14.66 $ (0.128) $ (0.430) $ (0.558) $ -- $ (0.832) $ (0.832) $ --
2005 11.81 (0.160) 3.030 2.870 -- (0.020) (0.020) --
2004 11.74 (0.177) 0.439 0.262 -- (0.192) (0.192) --
2003 (1) 10.00 (0.034) 1.774 1.740 -- -- -- --
CLASS A SHARES
2006 $ 14.59 $ (0.165) $ (0.434) $ (0.599) $ -- $ (0.832) $ (0.832) $ 0.001
2005 11.78 (0.192) 3.022 2.830 -- (0.020) (0.020) --
2004 11.74 (0.209) 0.441 0.232 -- (0.192) (0.192) --
2003 (1) 10.00 (0.040) 1.780 1.740 -- -- -- --
CLASS B SHARES
2006 $ 14.39 $ (0.252) $ (0.416) $ (0.668) $ -- $ (0.832) $ (0.832) $ --
2005 11.69 (0.273) 2.993 2.720 -- (0.020) (0.020) --
2004 11.73 (0.294) 0.446 0.152 -- (0.192) (0.192) --
2003 (1) 10.00 (0.056) 1.786 1.730 -- -- -- --
CLASS C SHARES
2006 $ 14.39 $ (0.250) $ (0.418) $ (0.668) $ -- $ (0.832) $ (0.832) $ --
2005 11.69 (0.274) 2.994 2.720 -- (0.020) (0.020) --
2004 11.73 (0.292) 0.444 0.152 -- (0.192) (0.192) --
2003 (1) 10.00 (0.058) 1.788 1.730 -- -- -- --
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2006 $ 19.55 $ 0.115 $ (0.156) $ (0.041) $ (0.080) $ (1.309) $ (1.389) $ --
2005 16.05 0.078 4.474 4.552 (0.019) (1.033) (1.052) --
2004 13.53 0.037 2.758 2.795 (0.072) (0.203) (0.275) --
2003 11.25 0.074 2.227 2.301 (0.021) -- (0.021) --
2002 11.85 0.006 (0.022) (0.016) -- (0.584) (0.584) --
CLASS A SHARES
2006 $ 19.21 $ 0.068 $ (0.145) $ (0.077) $ (0.054) $ (1.309) $ (1.363) $ --
2005 15.82 0.033 4.403 4.436 (0.013) (1.033) (1.046) --
2004 13.36 (0.005) 2.726 2.721 (0.058) (0.203) (0.261) --
2003 11.13 0.047 2.194 2.241 (0.011) -- (0.011) --
2002 11.76 (0.023) (0.023) (0.046) -- (0.584) (0.584) --
CLASS B SHARES
2006 $ 18.51 $ (0.043) $ (0.148) $ (0.191) $ -- $ (1.309) $ (1.309) $ --
2005 15.36 (0.074) 4.263 4.189 (0.006) (1.033) (1.039) --
2004 13.03 (0.101) 2.658 2.557 (0.024) (0.203) (0.227) --
2003 10.93 (0.027) 2.127 2.100 -- -- -- --
2002 11.63 (0.095) (0.021) (0.116) -- (0.584) (0.584) --
CLASS C SHARES
2006 $ 18.43 $ (0.044) $ (0.137) $ (0.181) $ -- $ (1.309) $ (1.309) $ --
2005 15.31 (0.076) 4.235 4.159 (0.006) (1.033) (1.039) --
2004 12.99 (0.111) 2.662 2.551 (0.028) (0.203) (0.231) --
2003 10.90 (0.026) 2.116 2.090 -- -- -- --
2002 11.60 (0.087) (0.029) (0.116) -- (0.584) (0.584) --
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
---------------------------------------------------------------------------------------
- ---------------------
SMALL CAP GROWTH FUND
- ---------------------
FIDUCIARY SHARES
2006 $ 13.27 (4.16)% $ 24,694 1.45% 1.62% (0.87)% 227%
2005 14.66 24.31 27,941 1.50 1.88 (1.22) 181
2004 11.81 2.08 26,971 1.47 1.66 (1.35) 125
2003 (1) 11.74 17.40 7,238 1.49* 1.67* (1.15)* 25
CLASS A SHARES
2006 $ 13.16 (4.46)% $ 4,153 1.72% 1.90% (1.14)% 227%
2005 14.59 24.03 4,535 1.75 2.13 (1.47) 181
2004 11.78 1.82 3,647 1.72 1.91 (1.60) 125
2003 (1) 11.74 17.40 4,097 1.75* 1.93* (1.33)* 25
CLASS B SHARES
2006 $ 12.89 (5.03)% $ 472 2.33% 2.40% (1.76)% 227%
2005 14.39 23.28 526 2.40 2.63 (2.12) 181
2004 11.69 1.13 518 2.37 2.41 (2.25) 125
2003 (1) 11.73 17.30 90 2.40* 2.43* (1.81)* 25
CLASS C SHARES
2006 $ 12.89 (5.03)% $ 1,112 2.33% 2.40% (1.76)% 227%
2005 14.39 23.28 1,045 2.40 2.63 (2.12) 181
2004 11.69 1.13 941 2.37 2.41 (2.25) 125
2003 (1) 11.73 17.30 456 2.40* 2.43* (1.90)* 25
- --------------------
SMALL CAP VALUE FUND
- --------------------
FIDUCIARY SHARES
2006 $ 18.12 (0.01)% $ 164,131 1.32% 1.49% 0.62% 35%
2005 19.55 29.10 135,231 1.33 1.55 0.45 27
2004 16.05 20.72 101,687 1.32 1.50 0.23 20
2003 13.53 20.49 79,222 1.25 1.43 0.64 24
2002 11.25 0.10 63,399 1.35 1.52 0.05 99
CLASS A SHARES
2006 $ 17.77 (0.21)% $ 64,484 1.57% 1.74% 0.37% 35%
2005 19.21 28.78 54,885 1.58 1.80 0.19 27
2004 15.82 20.43 36,155 1.57 1.75 (0.02) 20
2003 13.36 20.16 23,436 1.48 1.66 0.41 24
2002 11.13 (0.16) 15,708 1.60 1.77 (0.19) 99
CLASS B SHARES
2006 $ 17.01 (0.87)% $ 13,145 2.18% 2.24% (0.25)% 35%
2005 18.51 28.00 15,753 2.23 2.30 (0.45) 27
2004 15.36 19.68 14,079 2.22 2.25 (0.67) 20
2003 13.03 19.21 11,367 2.15 2.18 (0.24) 24
2002 10.93 (0.79) 9,047 2.25 2.27 (0.82) 99
CLASS C SHARES
2006 $ 16.94 (0.82)% $ 18,990 2.18% 2.24% (0.25)% 35%
2005 18.43 27.89 21,157 2.23 2.30 (0.46) 27
2004 15.31 19.70 11,926 2.26 2.30 (0.73) 20
2003 12.99 19.17 3,473 2.13 2.16 (0.23) 24
2002 10.90 (0.79) 2,007 2.25 2.23 (0.76) 99
AMOUNTS DESIGNATE 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 APRIL 28, 2003.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 119
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- -----------------------------------------------------------------------------------------------------------------------------
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
2006 $ 24.07 $ 0.314 $ 1.777 $ 2.091 $ (0.311) $ (2.600) $ (2.911) $ --
2005 22.58 0.324 3.368 3.692 (0.340) (1.862) (2.202) --
2004 20.72 0.277 2.899 3.176 (0.284) (1.032) (1.316) --
2003 20.05 0.273 1.583 1.856 (0.264) (0.922) (1.186) --
2002 27.00 0.254 (5.404) (5.150) (0.247) (1.553) (1.800) --
CLASS A SHARES
2006 $ 24.04 $ 0.255 $ 1.780 $ 2.035 $ (0.255) $ (2.600) $ (2.855) $ --
2005 22.56 0.266 3.360 3.626 (0.284) (1.862) (2.146) --
2004 20.71 0.221 2.890 3.111 (0.229) (1.032) (1.261) --
2003 20.04 0.225 1.584 1.809 (0.217) (0.922) (1.139) --
2002 26.99 0.195 (5.401) (5.206) (0.191) (1.553) (1.744) --
CLASS B SHARES
2006 $ 23.79 $ 0.114 $ 1.746 $ 1.860 $ (0.130) $ (2.600) $ (2.730) $ --
2005 22.35 0.114 3.340 3.454 (0.152) (1.862) (2.014) --
2004 20.54 0.076 2.862 2.938 (0.096) (1.032) (1.128) --
2003 19.90 0.101 1.565 1.666 (0.104) (0.922) (1.026) --
2002 26.81 0.038 (5.341) (5.303) (0.054) (1.553) (1.607) --
CLASS C SHARES
2006 $ 23.74 $ 0.110 $ 1.742 $ 1.852 $ (0.132) $ (2.600) $ (2.732) $ --
2005 22.32 0.107 3.331 3.438 (0.156) (1.862) (2.018) --
2004 20.51 0.077 2.862 2.939 (0.097) (1.032) (1.129) --
2003 19.87 0.102 1.563 1.665 (0.103) (0.922) (1.025) --
2002 26.80 0.037 (5.359) (5.322) (0.055) (1.553) (1.608) --
- ------------------------------
CAPITAL GROWTH ALLOCATION FUND
- ------------------------------
CLASS A SHARES
2006 $ 22.16 $ 0.112 $ 1.066 $ 1.178 $ (0.090) $ (0.078) $ (0.168) $ --
2005 (1) 20.00 0.082 2.157 2.239 (0.079) -- (0.079) --
CLASS C SHARES
2006 $ 22.07 $ (0.057) $ 1.063 $ 1.006 $ (0.028) $ (0.078) $ (0.106) $ --
2005 (1) 20.00 (0.070) 2.185 2.115 (0.045) -- (0.045) --
- ------------------------------
GROWTH & INCOME ALLOCATION FUND
- ------------------------------
CLASS A SHARES
2006 $ 21.61 $ 0.259 $ 0.688 $ 0.947 $ (0.240) $ (0.057) $ (0.297) $ --
2005 (1) 20.00 0.193 1.570 1.763 (0.153) -- (0.153) --
CLASS C SHARES
2006 $ 21.55 $ 0.103 $ 0.688 $ 0.791 $ (0.104) $ (0.057) $ (0.161) $ --
2005 (1) 20.00 0.052 1.587 1.639 (0.089) -- (0.089) --
- ---------------------------
INCOME PLUS ALLOCATION FUND
- ---------------------------
CLASS A SHARES
2006 $ 20.73 $ 0.434 $ 0.205 $ 0.639 $ (0.407) $ (0.012) $ (0.419) $ --
2005 (1) 20.00 0.320 0.617 0.937 (0.207) -- (0.207) --
CLASS C SHARES
2006 $ 20.66 $ 0.308 $ 0.183 $ 0.491 $ (0.289) $ (0.012) $ (0.301) $ --
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 (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- ---------------------------------------------------------------------------------------------------------
- -------------------
VALUE MOMENTUM FUND
- -------------------
FIDUCIARY SHARES
2006 $23.25 9.32% $ 434,080 0.93% 1.08% 1.35% 21%
2005 24.07 16.96 430,755 0.94 1.13 1.40 18
2004 22.58 15.69 389,658 0.92 1.11 1.25 20
2003 20.72 10.00 350,151 0.94 1.11 1.44 6
2002 20.05 (20.06) 355,004 0.93 1.10 1.06 12
CLASS A SHARES
2006 $23.22 9.06% $ 30,047 1.18% 1.34% 1.09% 21%
2005 24.04 16.64 28,799 1.18 1.38 1.15 18
2004 22.56 15.36 28,461 1.17 1.36 1.00 20
2003 20.71 9.74 27,208 1.19 1.36 1.18 6
2002 20.04 (20.25) 26,595 1.18 1.35 0.81 12
CLASS B SHARES
2006 $22.92 8.36% $ 7,471 1.80% 1.84% 0.49% 21%
2005 23.79 15.95 9,396 1.83 1.88 0.50 18
2004 22.35 14.59 9,208 1.82 1.86 0.35 20
2003 20.54 9.00 8,139 1.84 1.86 0.54 6
2002 19.90 (20.71) 8,427 1.83 1.85 0.16 12
CLASS C SHARES
2006 $22.86 8.34% $ 1,442 1.80% 1.84% 0.49% 21%
2005 23.74 15.90 1,204 1.84 1.88 0.47 18
2004 22.32 14.62 788 1.82 1.86 0.35 20
2003 20.51 9.01 776 1.84 1.86 0.54 6
2002 19.87 (20.79) 845 1.83 1.85 0.15 12
- ------------------------------
CAPITAL GROWTH ALLOCATION FUND
- ------------------------------
CLASS A SHARES
2006 $23.17 5.33% $ 30,900 0.82% 1.45% 0.49% 12%
2005 (1) 22.16 11.21 8,957 0.82* 1.99* 0.48* 55++
CLASS C SHARES
2006 $22.97 4.56% $ 16,718 1.53% 1.95% (0.25)% 12%
2005 (1) 22.07 10.58 4,574 1.56* 2.44* (0.41)* 55++
- -------------------------------
GROWTH & INCOME ALLOCATION FUND
- -------------------------------
CLASS A SHARES
2006 $22.26 4.41% $ 31,426 0.81% 1.45% 1.17% 13%
2005 (1) 21.61 8.84 10,158 0.79* 1.93* 1.15* 79++
CLASS C SHARES
2006 $22.18 3.68% $ 11,752 1.52% 1.96% 0.47% 13%
2005 (1) 21.55 8.21 4,580 1.54* 2.36* 0.31* 79++
- ---------------------------
INCOME PLUS ALLOCATION FUND
- ---------------------------
CLASS A SHARES
2006 $20.95 3.11% $ 3,651 0.87% 1.83% 2.07% 26%
2005 (1) 20.73 4.70 2,169 0.81* 5.30* 1.95* 94++
CLASS C SHARES
2006 $20.85 2.39% $ 2,086 1.59% 2.20% 1.48% 26%
2005 (1) 20.66 4.12 517 1.56* 5.40* 1.40* 94++
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
120 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 REDEMPTION
OF PERIOD INCOME (LOSS)+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- -----------------------------------------------------------------------------------------------------------------------------
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
2006 $10.75 $ 0.496 $ (0.384) $ 0.112 $ (0.512) $ -- $ (0.512) $ --
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) --
CLASS A SHARES
2006 $10.63 $ 0.463 $ (0.387) $ 0.076 $ (0.486) $ -- $ (0.486) $ --
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) --
CLASS B SHARES
2006 $10.59 $ 0.389 $ (0.383) $ 0.006 $ (0.416) $ -- $ (0.416) $ --
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) --
CLASS C SHARES
2006 $10.57 $ 0.423 $ (0.384) $ 0.039 $ (0.439) $ -- $ (0.439) $ --
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) --
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
2006 $10.12 $ 0.370 $ (0.208) $ 0.162 $ (0.372) $(0.100) $ (0.472) $ --
2005 10.32 0.381 (0.099) 0.282 (0.382) (0.100) (0.482) --
2004 10.35 0.386 (0.006) 0.380 (0.390) (0.020) (0.410) --
2003 10.48 0.387 (0.119) 0.268 (0.386) (0.012) (0.398) --
2002 10.32 0.402 0.192 0.594 (0.400) (0.034) (0.434) --
CLASS A SHARES
2006 $10.08 $ 0.344 $ (0.207) $ 0.137 $ (0.347) $(0.100) $ (0.447) $ --
2005 10.28 0.354 (0.098) 0.256 (0.356) (0.100) (0.456) --
2004 10.31 0.358 (0.004) 0.354 (0.364) (0.020) (0.384) --
2003 10.44 0.371 (0.118) 0.253 (0.371) (0.012) (0.383) --
2002 10.28 0.401 0.193 0.594 (0.400) (0.034) (0.434) --
CLASS B SHARES
2006 $10.08 $ 0.272 $ (0.214) $ 0.058 $ (0.278) $(0.100) $ (0.378) $ --
2005 10.28 0.277 (0.096) 0.181 (0.281) (0.100) (0.381) --
2004 10.31 0.280 (0.004) 0.276 (0.286) (0.020) (0.306) --
2003 10.44 0.280 (0.113) 0.167 (0.285) (0.012) (0.297) --
2002 10.29 0.297 0.192 0.489 (0.305) (0.034) (0.339) --
CLASS C SHARES
2006 $10.06 $ 0.296 $ (0.206) $ 0.090 $ (0.300) $(0.100) $ (0.400) $ --
2005 10.27 0.302 (0.104) 0.198 (0.308) (0.100) (0.408) --
2004 (2) 10.50 0.209 (0.201) 0.008 (0.218) (0.020) (0.238) --
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME (LOSS) PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE TURNOVER
OF PERIOD RETURN** (000) NET ASSETS OF EXPENSES NET ASSETS RATE
- ---------------------------------------------------------------------------------------------------------
- ---------
BOND FUND
- ---------
FIDUCIARY SHARES
2006 $ 10.35 1.08% $ 396,003 0.74% 0.99% 4.71% 20%
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
CLASS A SHARES
2006 $ 10.22 0.75% $ 35,511 0.99% 1.24% 4.45% 20%
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
CLASS B SHARES
2006 $ 10.18 0.06% $ 6,926 1.69% 1.74% 3.75% 20%
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
CLASS C SHARES
2006 $ 10.17 0.39% $ 91 1.43% 1.49% 4.10% 20%
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
- ------------------------------------------
CALIFORNIA INTERMEDIATE TAX-FREE BOND FUND
- ------------------------------------------
FIDUCIARY SHARES
2006 $ 9.81 1.65% $ 95,266 0.50% 1.00% 3.72% 5%
2005 10.12 2.74 102,059 0.50 1.07 3.69 6
2004 10.32 3.68 120,494 0.50 1.02 3.68 1
2003 10.35 2.55 139,051 0.49 1.02 3.65 3
2002 10.48 5.89 123,702 0.47 0.99 3.88 2
CLASS A SHARES
2006 $ 9.77 1.40% $ 37,472 0.75% 1.25% 3.47% 5%
2005 10.08 2.50 54,030 0.75 1.32 3.44 6
2004 10.28 3.44 62,762 0.75 1.27 3.43 1
2003 10.31 2.41 91,632 0.64 1.27 3.51 3
2002 10.44 5.91 99,166 0.47 1.25 3.88 2
CLASS B SHARES
2006 $ 9.76 0.60% $ 5,345 1.46% 1.75% 2.75% 5%
2005 10.08 1.75 6,357 1.50 1.81 2.69 6
2004 10.28 2.67 7,448 1.50 1.77 2.68 1
2003 10.31 1.58 9,652 1.49 1.77 2.65 3
2002 10.44 4.84 7,419 1.47 1.76 2.88 2
CLASS C SHARES
2006 $ 9.75 0.93% $ 540 1.22% 1.50% 3.00% 5%
2005 10.06 1.92 928 1.25 1.57 2.95 6
2004 (2) 10.27 0.07 548 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.
++ IN ORDER TO CONFORM WITH THE 2006 PRESENTATION, PORTFOLIO TURNOVER
INCLUDES THE PURCHASES AND SALES OF THE DIVERSIFIED MONEY MARKET FUND. IF
THESE TRANSACTIONS WERE NOT INCLUDED, PORTFOLIO TURNOVER WOULD HAVE BEEN
4%, 7% AND 8% FOR THE CAPITAL GROWTH ALLOCATION FUND, THE GROWTH & INCOME
ALLOCATION FUND AND THE INCOME PLUS ALLOCATION FUND, RESPECTIVELY.
(1) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
(2) COMMENCED OPERATIONS ON NOVEMBER 28, 2003.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 121
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 REDEMPTION
OF PERIOD INCOME+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------
NATIONAL INTERMEDIATE TAX-FREE BOND FUND
- ----------------------------------------
FIDUCIARY SHARES
2006 $ 11.25 $ 0.442 $ (0.231) $ 0.211 $ (0.451) $ (0.090) $ (0.541) $ --
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
2006 $ 11.25 $ 0.414 $ (0.230) $ 0.184 $ (0.424) $ (0.090) $ (0.514) $ --
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
2006 $ 11.44 $ 0.368 $ (0.230) $ 0.138 $ (0.368) $ (0.090) $ (0.458) $ --
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) --
- --------------------
SHORT TERM BOND FUND
- --------------------
FIDUCIARY SHARES
2006 $ 9.84 $ 0.346 $ (0.085) $ 0.261 $ (0.341) $ -- $ (0.341) $ --
2005 (3) 10.00 0.209 (0.176) 0.033 (0.193) -- (0.193) --
CLASS A SHARES
2006 $ 9.84 $ 0.319 $ (0.082) $ 0.237 $ (0.317) $ -- $ (0.317) $ --
2005 (3) 10.00 0.214 (0.198) 0.016 (0.176) -- (0.176) --
CLASS C SHARES
2006 $ 9.92 $ 0.277 $ (0.084) $ 0.193 $ (0.273) $ -- $ (0.273) $ --
2005 (4) 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 (LOSS) 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
2006 $ 10.92 1.94% $ 75,401 0.28% 1.00% 4.00% 7%
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
2006 $ 10.92 1.69% $ 2,923 0.53% 1.25% 3.74% 7%
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
2006 $ 11.12 1.24% $ 25 1.00% 1.51% 3.27% 7%
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
- --------------------
SHORT TERM BOND FUND
- --------------------
FIDUCIARY SHARES
2006 $ 9.76 2.71% $ 36,497 0.65% 0.92% 3.54% 27%
2005 (3) 9.84 0.34 24,545 0.65* 1.11* 2.86* 9
CLASS A SHARES
2006 $ 9.76 2.46% $ 1,113 0.90% 1.21% 3.26% 27%
2005 (3) 9.84 0.17 1,439 0.91* 1.39* 2.93* 9
CLASS C SHARES
2006 $ 9.84 1.98% $ 2,509 1.37% 1.47% 2.80% 27%
2005 (4) 9.92 0.61 15 1.38* 1.57* 2.43* 9
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
122 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 REDEMPTION
OF PERIOD INCOME+ INVESTMENTS OPERATIONS INCOME GAINS DISTRIBUTIONS FEES
- --------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
2006 $ 1.00 $ 0.025 $ -- $ 0.025 $ (0.025) $ -- $ (0.025) $ --
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) --
CLASS A SHARES
2006 $ 1.00 $ 0.023 $ -- $ 0.023 $ (0.023) $ -- $ (0.023) $ --
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) --
CLASS S SHARES
2006 $ 1.00 $ 0.020 $ -- $ 0.020 $ (0.020) $ -- $ (0.020) $ --
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) --
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
2006 $ 1.00 $ 0.039 $ -- $ 0.039 $ (0.039) $ -- $ (0.039) $ --
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) --
CLASS A SHARES
2006 $ 1.00 $ 0.037 $ -- $ 0.037 $ (0.037) $ -- $ (0.037) $ --
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) --
CLASS S SHARES
2006 $ 1.00 $ 0.033 $ 0.001 $ 0.034 $ (0.034) $ -- $ (0.034) $ --
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) --
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
- ----------------------------------------------------------------------------------------------------
- -------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
- -------------------------------------
FIDUCIARY SHARES
2006 $ 1.00 2.57% $ 176,711 0.48% 0.79% 2.53%
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
CLASS A SHARES
2006 $ 1.00 2.32% $ 278,442 0.73% 1.03% 2.30%
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
CLASS S SHARES
2006 $ 1.00 2.05% $ 40,753 0.99% 1.09% 2.03%
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
- -----------------------------
DIVERSIFIED MONEY MARKET FUND
- -----------------------------
FIDUCIARY SHARES
2006 $ 1.00 4.02% $1,923,511 0.52% 0.79% 3.93%
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
CLASS A SHARES
2006 $ 1.00 3.76% $ 724,910 0.77% 1.04% 3.74%
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
CLASS S SHARES
2006 $ 1.00 3.49% $ 464,413 1.05% 1.10% 3.29%
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
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 2, 2004.
(4) COMMENCED OPERATIONS ON NOVEMBER 29, 2004.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 123
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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
- ----------------------------------------------------------------------------------------------------------
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
2006 $ 1.00 $ 0.039 $ -- $ 0.039 $ (0.039) $ -- $ (0.039)
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)
CLASS A SHARES
2006 $ 1.00 $ 0.036 $ -- $ 0.036 $ (0.036) $ -- $ (0.036)
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)
CLASS B SHARES
2006 $ 1.00 $ 0.028 $ 0.001 $ 0.029 $ (0.029) $ -- $ (0.029)
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)
CLASS C SHARES
2006 (1) $ 1.00 $ 0.025 $ (0.001) $ 0.024 $ (0.024) $ -- $ (0.024)
CLASS S SHARES
2006 $ 1.00 $ 0.034 $ (0.001) $ 0.033 $ (0.033) $ -- $ (0.033)
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)
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
2006 $ 1.00 $ 0.035 $ -- $ 0.035 $ (0.035) $ -- $ (0.035)
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)
CLASS A SHARES
2006 $ 1.00 $ 0.032 $ 0.001 $ 0.033 $ (0.033) $ -- $ (0.033)
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)
CLASS S SHARES
2006 $ 1.00 $ 0.030 $ -- $ 0.030 $ (0.030) $ -- $ (0.030)
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)
RATIO
OF EXPENSES
TO AVERAGE RATIO OF
NET NET NET ASSETS NET
ASSET ASSETS, RATIO EXCLUDING INVESTMENT
VALUE, END OF EXPENSES FEE WAIVERS INCOME
REDEMPTION END TOTAL OF PERIOD TO AVERAGE AND REDUCTION TO AVERAGE
FEES OF PERIOD RETURN* (000) NET ASSETS OF EXPENSES NET ASSETS
- ------------------------------------------------------------------------------------------------------
- ---------------------------------
U.S. GOVERNMENT MONEY MARKET FUND
- ---------------------------------
FIDUCIARY SHARES
2006 $ -- $ 1.00 3.93% $ 506,572 0.53% 0.79% 3.88%
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
CLASS A SHARES
2006 $ -- $ 1.00 3.67% $ 32,754 0.78% 1.04% 3.61%
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
CLASS B SHARES
2006 $ -- $ 1.00 2.93% $ 780 1.50% 1.54% 2.83%
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
CLASS C SHARES
2006 (1) $ -- $ 1.00 2.40% $ 61 1.23% 1.29% 3.80%
CLASS S SHARES
2006 $ -- $ 1.00 3.40% $ 93,026 1.04% 1.09% 3.41%
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
- ------------------------------------
100% U.S. TREASURY MONEY MARKET FUND
- ------------------------------------
FIDUCIARY SHARES
2006 $ -- $ 1.00 3.58% $ 391,906 0.52% 0.78% 3.54%
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
CLASS A SHARES
2006 $ -- $ 1.00 3.32% $ 177,512 0.78% 1.04% 3.20%
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
CLASS S SHARES
2006 $ -- $ 1.00 3.04% $ 231,826 1.04% 1.09% 3.01%
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
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
* TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
+ PER SHARE AMOUNTS CALCULATED USING AVERAGE SHARES METHOD.
(1) COMMENCED OPERATIONS ON DECEMBER 1, 2005.
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
124 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2006
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 an open-end investment company with twenty-two funds: the
Balanced Fund, the Cognitive Value Fund, the Core Equity Fund, the Enhanced
Growth Fund, the International Opportunities Fund, the Large Cap Growth Fund,
the Large Cap Value Fund, the Small Cap Growth Fund, the Small Cap Value Fund,
the Value Momentum Fund, the Small Cap Advantage Fund, the Bond Fund, the
California Intermediate Tax-Free Bond Fund, the National Intermediate Tax-Free
Bond Fund and the Short Term Bond Fund (collectively the "Non-Money Market
Funds"), the California Tax-Free Money Market Fund, the Diversified Money Market
Fund, the U.S. Government Money Market Fund and the 100% U.S. Treasury 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 multiple
class plan, the Funds may offer up to six classes of shares, Class A, Class B
and Class C shares (collectively called the "Retail Shares"), Fiduciary Shares,
Class S Shares and Class M Shares. The Funds' prospectuses provide a description
of each Fund's investment objectives, policies and strategies. The Small Cap
Advantage Fund has not commenced operations as of July 31, 2006.
On January 31, 2004, the Class B Shares of the 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. Where 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.
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.
Securities for which market prices are not "readily available" are valued in
accordance with Fair Value Procedures established by HighMark's 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
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 125
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
consideration relevant information reasonably available to the Committee.
For securities that principally trade on a foreign market or exchange, a
significant gap in time can exist between the time of a particular security's
last trade and the time at which a Fund calculates its net asset value. 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" or the "Administrator") a wholly owned subsidiary of Union Bank of
California, N.A. (a wholly owned subsidiary of UnionBanCal Corporation), or the
sub-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 shall
request that a Committee meeting be called. In addition, SEI Investments Global
Funds Services (the "Sub-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
Sub-Administrator and approved by the Board, the Sub-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.
The International Opportunities Fund, which holds international securities, also
uses a third-party fair valuation vendor. The vendor provides a fair value for
foreign securities held by the Fund based on certain factors and methodologies
(involving, generally, tracking valuation correlations between the U.S. market
and each non-U.S. security). Values from the fair value vendor are applied in
the event that there is a movement in the U.S. market that exceeds a specific
threshold that has been established by the Committee. The Committee has also
established a "confidence interval" which is used to determine the level of
historical correlation between the value of a specific foreign security and
movements in the U.S. market before a particular security will be fair valued
when the threshold is exceeded. In the event that the threshold established by
the Committee is exceeded on a specific day, the Fund will value the non-U.S.
securities in its portfolio that exceed the applicable "confidence interval"
based upon the adjusted prices provided by the fair valuation vendor.
FOREIGN CURRENCY TRANSLATION -- The books and records of the International
Opportunities Fund, which invests in international securities, are maintained in
U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The Fund does not isolate that portion of gains and losses on investments in
equity securities that is due to changes in the foreign exchange rates from that
which is due to changes in market prices of equity securities. The Fund reports
certain foreign-currency-related transactions as components of realized gains
for financial reporting purposes, whereas such components are treated as
ordinary income for Federal income tax purposes.
FORWARD FOREIGN CURRENCY CONTRACTS -- The International Opportunities Fund may
enter into forward foreign currency contracts as hedges against either specific
transactions, fund positions or anticipated fund positions. All commitments are
"marked-to-market" daily at the applicable foreign exchange rate, and any
resulting unrealized gains or losses are recorded currently. The International
Opportunities Fund realizes gains and losses at the time forward contracts are
extinguished. Unrealized gains or losses on outstanding positions in forward
foreign currency contracts held at the close of the period are recognized as
ordinary income or loss for Federal income tax purposes. The International
Opportunities Fund could be exposed to risk if the counterparties to the
contracts are unable to meet the terms of the contract and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Finally, the risk exists that losses could exceed amounts disclosed on the
statement of assets and liabilities. As of July 31, 2006, the International
Opportunities Fund did not have any forward foreign currency contracts
outstanding.
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
- --------------------------------------------------------------------------------
126 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
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, as described in the Funds' prospectus. 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 call or put 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 call or put option is closed prior to expiration by being
exercised, the cost of investments purchased or sold, 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 security's market price falls (in case of a purchased call
or put) to the extent sufficient to cover the option premium and transaction
costs (see Note 8).
FUTURES CONTRACTS - The Balanced and Core Equity Funds utilized futures
contracts during the year ended July 31, 2006. The Funds' investments in futures
contracts are designed to enable the Funds to more closely approximate the
performance of their benchmark indices or are designed for tactical hedging
purposes. Initial margin deposits of cash or securities are made upon entering
into futures contracts. The contracts are marked to market daily and the
resulting changes in value are accounted for as unrealized gains and losses.
Variation margin payments are paid or received, depending upon whether
unrealized losses or gains are incurred. When the contract is closed, the Funds
record a realized gain or loss equal to the difference between the proceeds from
(or cost of) the closing transaction and the amount invested in the contract.
Risks of entering into futures contracts include the possibility that there will
be an imperfect price correlation between the futures and the underlying
securities. Second, it is possible that a lack of liquidity for futures
contracts could exist in the secondary market, resulting in an inability to
close a position prior to its maturity date. Third, the futures contract
involves the risk that the Fund could lose more than the original margin deposit
required to initiate a futures transaction. Finally, the risk exists that losses
could exceed amounts disclosed on the statement of assets and liabilities. As of
July 31, 2006, there were no open futures contracts.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS -- Delivery and payment for
securities that have been purchased by a Fund on a when-issued or forward
commitment basis can take place up to a month or more after the trade 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. As of July 31, 2006,
there were no when-issued securities held by the Funds.
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 and realized/unrealized gains and losses 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 indirectly a proportionate share of their underlying
Funds' expenses.
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 the Funds guarantees that it will pay any dividends or
other distributions. Any net realized capital gains, if any, will be distributed
at least annually by all Funds.
DEFERRED COMPENSATION PLAN -- Under the deferred compensation plan approved by
the Board, members of the Board who are not officers or employees of Union Bank
of California N.A. (the "Bank") or any subsidiary of the Bank (the "Trustees")
are permitted to defer a portion of their annual complex-wide compensation.
Deferred amounts earn an approximate return as though equivalent dollar amounts
had been invested in shares of Funds selected by the Trustees, which has the
same economic effect for the Trustees as if the Trustees had invested the
deferred amounts in such Funds.
The deferred compensation plan is not funded and obligations thereunder
represent general unsecured claims against the general assets of HighMark.
However, HighMark has elected to invest in shares of those Funds selected by the
Trustees in order to match the deferred compensation obligation.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 127
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
REDEMPTION AND EXCHANGE FEES -- 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. Effective
December 13, 2004, each of the Non-Money Market Funds (except for the
International Opportunities Fund) and the Asset Allocation Funds imposes a 2%
redemption fee on the value of Class A Shares redeemed 5 days or less after
their purchase and imposes a 2% exchange fee on Class A Shares exchanged 5 days
or less after their purchase. The Cognitive Value and Enhanced Growth Funds
impose a 2% redemption fee on the value of Class M Shares redeemed 5 days or
less after their purchase and impose a 2% exchange fee on Class M Shares
exchanged 5 days or less after their purchase. Prior to December 13, 2004, the
Large Cap Growth Fund imposed a 2% redemption fee on the value of Class A Shares
redeemed 30 days or less after their purchase. Effective April 3, 2006, the
International Opportunities Fund imposes a 2% redemption fee on the value of
Fiduciary Class, Class A and Class M Shares redeemed 30 days or less after their
purchase. Prior to April 3, 2006, the International Opportunities Fund imposed a
2% redemption fee and a 2% exchange fee on shares redeemed or exchanged within
31 days after purchase.
For the year ended July 31, 2006, the International Opportunities Fund, the
Large Cap Growth Fund, the Large Cap Value Fund, the Small Cap Growth Fund, the
Small Cap Value Fund, the Value Momentum Fund, the Capital Growth Allocation
Fund and the Growth & Income Allocation Fund imposed redemption fees of $2,334,
$57, $6,867, $177, $28, $21, $36 and $185, respectively. No other Fund imposed
any such fees.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
HighMark and the Adviser are parties to an Investment Advisory agreement. For
its services, the Adviser is entitled to receive a fee with respect to each
Fund, which is calculated daily and paid monthly, based on the average daily net
assets of each Fund, at an annual rate of:
Balanced ................................... 0.60%
Cognitive Value ............................ 0.75% on the first $500 million
0.70% on assets over $500 million
Core Equity ................................ 0.60%
Enhanced Growth ............................ 0.75% on the first $500 million
0.70% on the next $500 million
0.65% on assets over $1 billion
International Opportunities ................ 0.95% on the first $250 million
0.90% on the next $250 million
0.85% on the next $500 million
0.80% on assets over $1 billion
Large Cap Growth ........................... 0.60%
Large Cap Value ............................ 0.60%
Value Momentum ............................. 0.60%
Small Cap Growth ........................... 1.15%
Small Cap Value ............................ 1.00%
Capital Growth Allocation .................. 0.65%
Growth & Income Allocation ................. 0.65%
Income Plus Allocation ..................... 0.65%
Bond ....................................... 0.50%
California Intermediate Tax-Free Bond ...... 0.50%
National Intermediate Tax-Free Bond ........ 0.50%
Short Term Bond ............................ 0.40%
California Tax-Free Money Market ........... 0.30%
Diversified Money Market ................... 0.30%
U.S. Government Money Market ............... 0.30%
100% U.S. Treasury Money Market ............ 0.30%
Beginning on August 1, 2006, the fee for the Asset Allocation Funds will be
0.20% of the average daily net assets of each Fund.
Prior to April 3, 2006, Bailard, Inc. ("Bailard") served as the Investment
Adviser to Bailard Cognitive Value Fund, Bailard Enhanced Growth Fund and
Bailard International Equity Fund. For its services, Bailard was entitled to
receive a fee with respect to each Fund, which was calculated daily and paid
monthly, based on the average daily net assets of each Fund, at the annual rate
of 0.75% for Bailard Cognitive Value Fund and Bailard Enhanced Growth Fund and
0.95% for Bailard International Equity Fund.
The Adviser has contractually agreed to reduce its fees throughout the year
ended July 31, 2006 and for the period ending November 30, 2006 (except for
Class M Shares, which have agreed to reduce its fees for the period beginning
April 3, 2006 and ending on April 2, 2008), and to the extent necessary, to
reimburse the Funds, in order to limit the Funds from exceeding certain expense
limitations as follows:
FIDUCIARY CLASS A CLASS B CLASS C CLASS M
SHARES SHARES SHARES SHARES SHARES
--------- ------- ------- ------- -------
Balanced .......................... 0.97% 1.22% n/a n/a n/a
Cognitive Value ................... 1.23 1.48 n/a n/a 1.09%
Core Equity ....................... 0.95 1.20 n/a n/a n/a
Enhanced Growth ................... 1.15 1.40 n/a n/a 1.00
International Opportunities ....... 1.53 1.78 n/a n/a 1.45
Large Cap Growth .................. 0.97 1.22 n/a n/a n/a
Large Cap Value ................... 0.95 1.20 n/a n/a n/a
Small Cap Growth .................. 1.52 1.77 n/a n/a n/a
Small Cap Value ................... 1.37 1.62 n/a n/a n/a
Value Momentum .................... 0.97 1.22 n/a n/a n/a
Capital Growth Allocation ......... n/a 1.23* n/a n/a n/a
Growth & Income Allocation ........ n/a 1.23* n/a n/a n/a
Income Plus Allocation ............ n/a 1.23* n/a n/a n/a
Bond .............................. 0.77 1.02 n/a n/a n/a
California Intermediate ...........
Tax-Free Bond .................. 0.52 0.77 1.47%** 1.22%** n/a
National Intermediate
Tax-Free Bond .................. 0.30 0.55 n/a 1.00** n/a
Short Term Bond ................... 0.68 0.93 n/a n/a n/a
California Tax-Free Money Market .. 0.55 0.80 n/a n/a n/a
Diversified Money Market .......... 0.55 0.80 n/a n/a n/a
U.S. Government Money Market ...... 0.55 0.80 n/a n/a n/a
100% U.S. Treasury Money Market ... 0.55 0.80 n/a n/a n/a
* Beginning on August 1, 2006, the expense limitation will be 0.78% for
Class A Shares of the Asset Allocation Funds.
** Prior to December 1, 2005, the expense limitations were 1.52% and 1.27%
for Class B Shares and Class C Shares of the California Intermediate
Tax-Free Bond Fund, respectively, and 1.05% for Class C Shares of the
National Intermediate Tax-Free Bond Fund.
- --------------------------------------------------------------------------------
128 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
Effective April 3, 2006, the Adviser and Bailard entered into an investment
sub-advisory agreement relating to the Cognitive Value Fund, the Enhanced Growth
Fund and the International Opportunities Fund. Bailard is entitled to receive a
fee at the annual rate of 0.375% of the average daily net assets on the first
$500 million and 0.35% on the average daily net assets over $500 million of the
Cognitive Value Fund. Bailard is entitled to receive a fee at the annual rate of
0.375% of the average daily net assets on the first $500 million, 0.350% on the
average daily net assets on the next $500 million and 0.325% on the average
daily net assets over $1 billion of the Enhanced Growth Fund. Bailard is
entitled to receive a fee at the annual rate of 0.475% of the average daily net
assets on the first $250 million, 0.450% on the average daily net assets on the
next $250 million, 0.425% on the average daily net assets on the next $500
million and 0.400% on the average daily net assets over $1 billion of the
International Opportunities Fund. Bailard's fee is paid from the Adviser's fee.
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 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 June 30, 2006, the Adviser and Trusco Capital Management ("Trusco")
entered into an investment sub-advisory agreement relating to the Small Cap
Growth Fund. Trusco is entitled to receive a fee at the annual rate of 0.65% of
all of the average daily net assets of the Fund when assets are less than $100
million, 0.58% of all of the average daily net assets of the Fund when assets
are at least $100 million but less than $200 million, 0.50% of all of the
average daily net assets of the Fund when assets are at least $200 million but
less than $400 million and 0.45% of all of the average daily net assets of the
Fund when assets are $400 million or more of the Small Cap Growth Fund. Trusco's
fee is paid from the Adviser's fee. Previously, Trusco had an interim
sub-advisory agreement, with the same compensation structure disclosed above,
with the Adviser from February 1, 2006 to June 29, 2006 relating to the Small
Cap Growth Fund. Prior to February 1, 2006, the Adviser and Chartwell Investment
Partners L.P. ("Chartwell") were parties to an investment sub-advisory agreement
relating to the Small Cap Growth Fund. Chartwell was 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 was 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.
Prior to December 1, 2005, the Sub-Administrator served as the Administrator to
the Funds and the Administrator served as the Sub-Administrator.
Effective December 1, 2005, the Administrator and HighMark are parties to an
Administrative Services Agreement dated December 1, 2005 (the "Agreement") under
which the Administrator provides the Funds with management and administrative
services for an annual fee of 0.15% of the first $10 billion of the average
daily net assets of each of the Funds and 0.145% of such average daily net
assets in excess of $10 billion, 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. From December 1, 2005 through July 31, 2006, the
Administrator voluntarily waived 0.025% of its fee for all the Funds.
Effective December 1, 2005, pursuant to a separate agreement with the
Administrator, the Sub-Administrator performs sub-administration services on
behalf of each Fund, for which it receives a fee paid by the Administrator at
the annual rate of 0.04% of the first $10 billion of the average daily net
assets of the Funds and 0.035% of such assets in excess of $10 billion. From
December 1, 2005 through July 31, 2006, the Sub-Administrator received
sub-administration fees in the amount of $1,992,859.
Prior to April 3, 2006, Bailard provided administrative services to Bailard
Cognitive Value Fund, Bailard Enhanced Growth Fund and the Bailard International
Equity Fund. Bailard's fee for such services was included in the Investment
Advisory Fee. Bailard Cognitive Value Fund, Bailard Enhanced Growth Fund and
Bailard International Equity Fund are the predecessor funds to HighMark
Cognitive Value Fund, HighMark Enhanced Growth Fund and HighMark International
Opportunities Fund.
Prior to December 1, 2005, pursuant to a separate agreement with the
Sub-Administrator, the Adviser performed sub-administration services on behalf
of each Fund, for which it received a fee paid by the Sub-Administrator at the
annual rate of up to 0.10% of the average daily net assets of the Funds. From
August 1, 2005 through November 30, 2005, the Sub-Administrator paid 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. From August 1, 2005
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 129
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
through November 30, 2005, the Adviser received sub-administration fees in the
amount of $1,841,550.
Prior to December 1, 2005, the Sub-Administrator and HighMark were parties to an
Administration Agreement dated February 15, 1997, under which the
Sub-Administrator provided 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 Sub-Administrator was able to
voluntarily waive its fee, subject to termination at any time by the
Sub-Administrator, to the extent necessary to limit the total operating expenses
of a Fund. From August 1, 2005 through November 30, 2005, the Sub-Administrator
voluntarily waived 0.025% of its fee for all the Funds.
During the period October 1, 2004 to December 1, 2005, the Sub-Administrator had
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." This agreement did not apply to any new Funds or
classes of shares which commenced operations during this period, which were
charged all transfer agency related expenses and all such expenses were
allocated pro rata amongst all of the then existing Funds based on their
respective net assets. Effective December 1, 2005, the Administrator has agreed
to absorb certain transfer agency related and legal expenses on behalf of the
Funds. The Sub-Administrator has agreed to absorb these expenses on behalf of
the Administrator. Any transfer agency related expenses in excess of the agreed
upon amount will 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 Sub-Administrator. Such officers, except for the Chief Compliance
Officer, are paid no fees by the Funds for serving as officers of HighMark.
The independent Trustees receive quarterly retainer fees and fees and expenses
for each meeting of the Board attended which is paid by the Funds.
State Street Bank and Trust Company ("State Street") serves as the transfer
agent, dividend disbursing agent and shareholder servicing agent for the Funds.
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 Bond Fund, the
California Intermediate Tax-Free Bond Fund, the National Intermediate Tax-Free
Bond Fund, the Short Term Bond Fund and the U.S. Government Money Market 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. For the year ended July 31, 2006, the Funds
waived no distribution fees.
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. The service providers
have agreed to waive a portion of their fees for all Funds for the year ended
July 31, 2006. For the year ended July 31, 2006, Union Bank of California, N.A.
or its affiliates received shareholder servicing fees, net of waivers, from the
Funds in the amount of approximately $3,482,000.
The following fees are payable as of July 31, 2006:
INVESTMENT ADMINIS- SHAREHOLDER
ADVISER TRATIVE SERVICING CUSTODIAN
(000) (000) (000) (000)
---------- -------- ----------- ---------
Balanced ..................... $ 23 $ 5 $ 6 $ --
Cognitive Value .............. 85 10 -- --
Core Equity .................. 59 12 13 1
Enhanced Growth .............. 77 13 -- 10
International
Opportunities ............. 171 22 -- 115
Large Cap Growth ............. 66 14 16 1
Large Cap Value .............. 155 32 37 3
Small Cap Growth ............. 31 3 3 --
Small Cap Value .............. 196 28 31 2
Value Momentum ............... 235 49 58 4
Capital Growth
Allocation ................ 9 5 1 --
Growth & Income
Allocation ................ 8 4 1 --
Income Plus
Allocation ................ 1 1 -- --
Bond ......................... 186 46 27 4
California Intermediate
Tax-Free Bond ............. 27 15 7 1
National Intermediate
Tax-Free Bond ............. -- 8 3 1
Short Term Bond .............. 9 4 1 --
California Tax-Free
Money Market .............. 104 54 20 5
Diversified Money
Market .................... 743 310 107 25
U.S. Government
Money Market .............. 140 60 20 5
100% U.S. Treasury
Money Market .............. 212 93 27 7
- --------------------------------------------------------------------------------
130 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
CHIEF
COMPLIANCE DEFERRED
TRUSTEES OFFICER COMPENSATION
(000) (000) (000)
-------- ---------- ------------
Balanced ......................... $ -- $ -- $ 1
Cognitive Value .................. 2 -- 1
Core Equity ...................... -- -- 2
Enhanced Growth .................. 2 1 2
International
Opportunities ................. 2 1 3
Large Cap Growth ................. -- -- 2
Large Cap Value .................. 1 1 4
Small Cap Growth ................. -- -- 1
Small Cap Value .................. -- 1 4
Value Momentum ................... -- 1 7
Capital Growth
Allocation .................... -- -- --
Growth & Income
Allocation .................... -- -- --
Income Plus
Allocation .................... -- -- --
Bond ............................. -- 2 7
California Intermediate
Tax-Free Bond ................. -- -- 2
National Intermediate
Tax-Free Bond ................. -- -- 1
Short Term Bond .................. -- -- 1
California Tax-Free
Money Market .................. -- 1 8
Diversified Money
Market ........................ 23 10 51
U.S. Government
Money Market .................. -- 1 7
100% U.S. Treasury
Money Market .................. -- 2 14
Amounts designated as "--" are either $0 or have been rounded to $0.
A sales charge is imposed on purchases of Class A Shares at the following rates:
CLASS A
SHARES*
-------
Balanced ........................................................... 5.50%
Cognitive Value .................................................... 5.50
Core Equity ........................................................ 5.50
Enhanced Growth .................................................... 5.50
International Opportunities ........................................ 5.50
Large Cap Growth ................................................... 5.50
Large Cap Value .................................................... 5.50
Small Cap Growth ................................................... 5.50
Small Cap Value .................................................... 5.50
Value Momentum ..................................................... 5.50
Capital Growth Allocation .......................................... 5.50
Growth & Income Allocation ......................................... 5.50
Income Plus Allocation ............................................. 4.50
Bond ............................................................... 2.25**
California Intermediate Tax-Free Bond .............................. 2.25
National Intermediate Tax-Free Bond ................................ 2.25
Short Term Bond .................................................... 2.25**
* Maximum sales charge as a percentage of offering price. Lower sales
charges apply based on amount invested.
** Prior to December 1, 2005, the sales charge was 3.25%.
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 redeemed 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 except for the
International Opportunities Fund which pays on transactions and 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, 2006 are as follows:
INVESTMENT SECURITIES
-----------------------
PURCHASES SALES
(000) (000)
---------- ----------
Balanced ............................................. $ 6,718 $ 27,534
Cognitive Value* ..................................... 68,596 71,561
Core Equity .......................................... 80,847 85,478
Enhanced Growth* ..................................... 69,795 68,948
International Opportunities* ......................... 110,320 92,679
Large Cap Growth ..................................... 96,245 112,856
Large Cap Value ...................................... 295,603 202,666
Small Cap Growth ..................................... 74,906 77,478
Small Cap Value ...................................... 120,129 84,312
Value Momentum ....................................... 95,276 120,972
Capital Growth Allocation ............................ 36,275 3,209
Growth & Income Allocation ........................... 30,358 3,185
Income Plus Allocation ............................... 4,012 1,078
Bond ................................................. 33,330 63,754
California Intermediate Tax-Free Bond ................ 7,339 27,659
National Intermediate Tax-Free Bond .................. 5,835 21,235
Short Term Bond ...................................... 10,463 3,849
* For the ten month period ended July 31, 2006.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 131
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
The purchases and sales (including maturities) of U.S. government securities by
the Non-Money Market Funds for the year ended July 31, 2006 are as follows:
U.S. GOVERNMENT SECURITIES
--------------------------
PURCHASES SALES
(000) (000)
------------- ----------
Balanced ........................................... $ 1,965 $ 4,710
Bond ............................................... 56,523 46,831
Short Term Bond .................................... 12,456 4,999
Investments made by the Asset Allocation Funds in other 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's Fiduciary Shares for each Asset Allocation Fund is as follows:
CAPITAL GROWTH ALLOCATION
- --------------------------------------------------------------------------------
REALIZED INCOME
GAINS (LOSSES) FROM
ON INVESTMENTS INVESTMENTS
IN AFFILIATED IN AFFILIATED
PURCHASES SALES FUNDS FUNDS
AFFILIATED INVESTMENT (000) (000) (000) (000)
- --------------------- --------- ------- -------------- -------------
Bond .................... $ 685 $ 479 $ (5) $ 33
Cognitive Value ......... 1,214 -- -- --
Core Equity ............. 6,694 -- -- 74
Diversified Money
Market ............... 12,129 11,629 -- 21
International
Opportunities ........ 7,764 -- -- --
Large Cap Growth ........ 3,757 -- -- 4
Large Cap Value ......... 2,818 400 62 44
Short Term Bond ......... 3,024 -- -- 74
Small Cap Growth ........ 2,278 726 96 --
Small Cap Value ......... 1,976 -- 102 7
Value Momentum .......... 6,065 1,604 570 106
--------- ------- ------ -----
TOTAL: $ 48,404 $14,838 $ 825 $ 363
========= ======= ====== =====
GROWTH & INCOME ALLOCATION
- --------------------------------------------------------------------------------
REALIZED INCOME
GAINS (LOSSES) FROM
ON INVESTMENTS INVESTMENTS
IN AFFILIATED IN AFFILIATED
PURCHASES SALES FUNDS FUNDS
AFFILIATED INVESTMENT (000) (000) (000) (000)
- --------------------- --------- ------- -------------- -------------
Bond .................... $ 3,153 $ 593 $ (15) $ 167
Cognitive Value ......... 470 -- -- --
Core Equity ............. 4,366 136 8 47
Diversified Money
Market ............... 13,406 11,951 -- 27
International
Opportunities ........ 5,648 -- -- --
Large Cap Growth ........ 2,587 62 7 3
Large Cap Value ......... 2,146 1,106 149 38
Short Term Bond ......... 5,273 -- -- 139
Small Cap Growth ........ 1,705 479 58 --
Small Cap Value ......... 1,662 247 85 5
Value Momentum .......... 3,348 561 348 68
--------- ------- ----- -----
TOTAL: $ 43,764 $15,135 $ 640 $ 494
========= ======= ===== =====
INCOME PLUS ALLOCATION
- --------------------------------------------------------------------------------
REALIZED INCOME
GAINS (LOSSES) FROM
ON INVESTMENTS INVESTMENTS
IN AFFILIATED IN AFFILIATED
PURCHASES SALES FUNDS FUNDS
AFFILIATED INVESTMENT (000) (000) (000) (000)
- --------------------- --------- ------- -------------- -------------
Bond .................... $ 983 $ 402 $(13) $ 59
Cognitive Value ......... 54 -- -- --
Core Equity ............. 328 21 2 5
Diversified Money
Market ............... 2,973 2,795 -- 7
International
Opportunities ........ 269 -- -- --
Large Cap Growth ........ 235 7 1 1
Large Cap Value ......... 235 270 36 5
Short Term Bond ......... 1,321 171 (1) 47
Small Cap Growth ........ 160 87 11 --
Small Cap Value ......... 107 -- 7 --
Value Momentum .......... 320 121 43 7
--------- ------- ---- -----
TOTAL: $ 6,985 $ 3,874 $ 86 $ 131
========= ======= ==== =====
Amounts designated as "--" are either $0 or have been rounded to $0.
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 net operating losses, in-kind transactions, distribution
reclasses, different treatment for gains and losses on paydowns of mortgage- and
asset-backed securities, reclassifications of long-term capital gain
distributions on Real Estate Investment Trust securities, gains and losses on
passive foreign investment companies, the classification of short-term capital
gains and ordinary income and expiring capital loss carryforwards for tax
purposes, have been reclassified to/from the following accounts:
- --------------------------------------------------------------------------------
132 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED PAID-IN
INCOME GAIN CAPITAL
(000) (000) (000)
-------------- ------------- -------
Balanced ........................... $ 20 $ (20) $ --
Cognitive Value .................... (38) 38 --
Core Equity ........................ 8 (8) --
Enhanced Growth .................... 573 -- (573)
International Opportunities ........ 713 (713) --
Large Cap Growth ................... -- (5,097) 5,097
Large Cap Value .................... 2 (2) --
Small Cap Growth ................... 322 (1,260) 938
Small Cap Value .................... 77 (77) --
Value Momentum ..................... 5 (5) --
Capital Growth Allocation .......... 15 (15) --
Bond ............................... 585 (585) --
Short Term Bond .................... 36 (36) --
California Tax-Free Money Market ... -- 2 (2)
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 or periods ended July 31, 2006 and July 31, 2005 (unless otherwise
indicated) are as follows:
TAX-EXEMPT ORDINARY LONG-TERM
INCOME INCOME CAPITAL GAIN TOTAL
(000) (000) (000) (000)
---------- -------- ------------ --------
Balanced
2006 ...................... $ -- $ 1,015 $ 8 $ 1,023
2005 ...................... -- 2,259 -- 2,259
Cognitive Value
2006 (1) .................. -- 3,573 7,694 11,267
2005 (2) .................. -- 159 7,505 7,664
2004 (2) .................. -- -- -- --
Core Equity
2006 ...................... -- 1,144 -- 1,144
2005 ...................... -- 1,456 -- 1,456
Enhanced Growth
2006 (1) .................. -- -- -- --
2005 (2) .................. -- 1,056 -- 1,056
2004 (2) .................. -- -- -- --
International Opportunities
2006 (1) .................. -- 3,254 4,193 7,447
2005 (2) .................. -- 1,567 -- 1,567
2004 (2) .................. -- 1,339 -- 1,339
Large Cap Growth
2006 ...................... -- 264 -- 264
2005 ...................... -- 438 -- 438
TAX-EXEMPT ORDINARY LONG-TERM
INCOME INCOME CAPITAL GAIN TOTAL
(000) (000) (000) (000)
---------- -------- ------------ --------
Large Cap Value
2006 ...................... $ -- $ 2,842 $ -- $ 2,842
2005 ...................... -- 1,557 -- 1,557
Small Cap Growth
2006 ...................... -- -- 1,889 1,889
2005 ...................... -- -- 49 49
Small Cap Value
2006 ...................... -- 853 17,212 18,065
2005 ...................... -- 168 10,862 11,030
Value Momentum
2006 ...................... -- 7,765 47,899 55,664
2005 ...................... -- 6,684 34,608 41,292
Capital Growth Allocation
2006 ...................... -- 66 90 156
2005 ...................... -- 14 1 15
Growth & Income Allocation
2006 ...................... -- 226 49 275
2005 ...................... -- 43 -- 43
Income Plus Allocation
2006 ...................... -- 81 2 83
2005 ...................... -- 11 -- 11
Bond
2006 ...................... -- 21,905 -- 21,905
2005 ...................... -- 22,939 -- 22,939
California Intermediate
Tax-Free Bond
2006 ...................... 5,452 9 1,538 6,999
2005 ...................... 6,503 2 1,800 8,305
National Intermediate
Tax-Free Bond
2006 ...................... 3,449 21 687 4,157
2005 ...................... 3,940 4 765 4,709
Short Term Bond
2006 ...................... -- 1,169 -- 1,169
2005 ...................... -- 386 -- 386
California Tax-Free Money
Market
2006 ...................... 11,661 123 -- 11,784
2005 ...................... 6,482 25 -- 6,507
Diversified Money Market
2006 ...................... -- 122,374 -- 122,374
2005 ...................... -- 56,216 -- 56,216
U.S. Government Money
Market
2006 ...................... -- 20,220 -- 20,220
2005 ...................... -- 7,632 -- 7,632
100% U.S. Treasury Money
Market
2006 ...................... -- 28,842 -- 28,842
2005 ...................... -- 11,837 -- 11,837
(1) For the ten month period ended July 31, 2006. On April 3, 2006, HighMark
Funds acquired the assets and assumed the identified liabilities of
Bailard Cognitive Value Fund, Bailard Enhanced Growth Fund and Bailard
International Equity Fund (the "Bailard Funds") (See Note 9). The fiscal
year end of the Bailard Funds, the predecessor funds to HighMark Cognitive
Value Fund, HighMark Enhanced Growth Fund and HighMark International
Opportunities Fund was September 30. The fiscal year end of the successor
HighMark Funds is July 31.
(2) For the year ended September 30.
Amounts designated as "--" are either $0 or have been rounded to $0.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 133
- --------------------------------------------------------------------------------
[HIGHMARKFUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
As of July 31, 2006, the components of distributable earnings (accumulated
losses) on a tax basis are as follows:
UNDISTRIBUTED UNDISTRIBUTED UNDISTRIBUTED CAPITAL
ORDINARY TAX-EXEMPT LONG-TERM LOSS
INCOME INCOME CAPITAL GAIN CARRYFORWARD
(000) (000) (000) (000)
------------- ------------- ------------- ------------
Balanced ................................. $ -- $ -- $ 1,002 $ --
Cognitive Value .......................... 2,393 -- 7,399 --
Core Equity .............................. 7 -- -- (11,335)
Enhanced Growth .......................... -- -- -- (8,457)
International Opportunities .............. 9,770 -- 16,123 --
Large Cap Growth ......................... 7 -- -- (145,253)
Large Cap Value .......................... 2 -- -- (15,841)
Small Cap Growth ......................... 1,856 -- 1,713 --
Small Cap Value .......................... 3,379 -- 28,807 --
Value Momentum ........................... 20 -- 31,222 --
Capital Growth Allocation ................ -- -- 819 --
Growth & Income Allocation ............... 43 -- 645 --
Income Plus Allocation ................... 24 -- 85 --
Bond ..................................... 171 -- -- (10,174)
California Intermediate Tax-Free Bond .... -- 140 402 --
National Intermediate Tax-Free Bond ...... -- 87 257 --
Short Term Bond .......................... 45 -- -- (36)
California Tax-Free Money Market ......... -- 1,245 -- (1)
Diversified Money Market ................. 11,710 -- -- (133)
U.S. Government Money Market ............. 2,213 -- -- (35)
100% U.S. Treasury Money Market .......... 3,058 -- -- (151)
TOTAL
DISTRIBUTABLE
POST- UNREALIZED OTHER EARNINGS
OCTOBER APPRECIATION TEMPORARY (ACCUMULATED
LOSSES (DEPRECIATION) DIFFERENCES LOSSES)
(000) (000) (000) (000)
------- -------------- ----------- -------------
Balanced ................................. $ -- $ 3,647 $ -- $ 4,649
Cognitive Value .......................... -- 10,554 -- 20,346
Core Equity .............................. -- 6,125 -- (5,203)
Enhanced Growth .......................... -- 1,561 -- (6,896)
International Opportunities .............. -- 48,930 -- 74,823
Large Cap Growth ......................... -- 9,664 (135,582)
Large Cap Value .......................... -- 32,669 -- 16,830
Small Cap Growth ......................... -- (1,423) -- 2,146
Small Cap Value .......................... -- 27,622 1 59,809
Value Momentum ........................... -- 140,515 (432) 171,325
Capital Growth Allocation ................ -- 516 -- 1,335
Growth & Income Allocation ............... -- 258 (1) 945
Income Plus Allocation ................... -- (27) 1 83
Bond ..................................... -- 635 (4) (9,372)
California Intermediate Tax-Free Bond .... -- 1,694 1 2,237
National Intermediate Tax-Free Bond ...... -- 802 1 1,147
Short Term Bond .......................... (47) (496) -- (534)
California Tax-Free Money Market ......... -- -- (1,244) --
Diversified Money Market ................. (4) -- (11,711) (138)
U.S. Government Money Market ............. -- -- (2,214) (36)
100% U.S. Treasury Money Market .......... (26) -- (3,057) (176)
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
Post-October losses represent losses realized on investment transactions from
November 1, 2005 through July 31, 2006, 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, 2006, the Funds had capital loss carryforwards available to offset
future realized capital gains through the indicated expiration dates:
EXPIRING JULY 31,
-----------------------------------------------------------------------------------
2007 2008 2009 2010 2011 2012 2013 2014 TOTAL
(000) (000) (000) (000) (000) (000) (000) (000) (000)
----- ------ ----- --------- -------- -------- ----- ----- --------
Core Equity ................................. $ -- $ -- $ -- $ -- $ -- $ 11,335 $ -- $ -- $ 11,335
Enhanced Growth ............................. -- -- -- -- -- 7,695 762 -- 8,457
Large Cap Growth ............................ -- -- -- 106,228 39,025 -- -- -- 145,253
Large Cap Value ............................. -- -- -- -- 15,841 -- -- -- 15,841
Bond ........................................ -- 2,234 137 -- 1,692 6,111 -- -- 10,174
Short Term Bond ............................. -- -- -- -- -- -- -- 36 36
California Tax-Free Money Market ............ -- -- -- -- -- 1 -- -- 1
Diversified Money Market .................... 122 -- 8 -- 1 -- 1 1 133
U.S. Government Money Market ................ -- -- -- 18 15 -- 1 1 35
100% U.S. Treasury Money Market ............. -- -- -- -- 151 -- -- -- 151
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, $0 OR HAVE BEEN ROUNDED TO
$0.
- --------------------------------------------------------------------------------
134 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
During the year ended July 31, 2006, capital loss carry-forwards that were
utilized to offset gains are as follows:
(000)
-------
Balanced ............................................................ $ 1,566
Core Equity ......................................................... 10,101
Enhanced Growth ..................................................... 10,497
Large Cap Growth .................................................... 13,692
Large Cap Value ..................................................... 20,721
Bond ................................................................ 351
California Tax-Free Money Market .................................... 5
100% U.S. Treasury Money Market ..................................... 2
At July 31, 2006, 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)
----------- ------------ ------------ --------
Balanced .................................. $ 52,474 $ 5,450 $ (1,803) $ 3,647
Cognitive Value ........................... 98,363 15,479 (4,925) 10,554
Core Equity ............................... 129,243 10,495 (4,370) 6,125
Enhanced Growth ........................... 138,609 15,585 (14,024) 1,561
International Opportunities ............... 189,154 53,369 (4,437) 48,932
Large Cap Growth .......................... 156,650 15,175 (5,511) 9,664
Large Cap Value ........................... 325,804 38,553 (5,884) 32,669
Small Cap Growth .......................... 36,535 1,575 (2,998) (1,423)
Small Cap Value ........................... 309,697 48,268 (20,646) 27,622
Value Momentum ............................ 419,279 153,932 (13,430) 140,502
Capital Growth Allocation ................. 46,522 1,386 (870) 516
Growth & Income Allocation ................ 43,012 1,002 (744) 258
Income Plus Allocation .................... 5,812 86 (113) (27)
Bond ...................................... 494,309 8,814 (8,179) 635
California Intermediate Tax-Free Bond ..... 135,069 2,445 (751) 1,694
National Intermediate Tax-Free Bond ....... 76,592 1,233 (431) 802
Short Term Bond ........................... 46,411 22 (518) (496)
California Tax-Free Money Market .......... 494,775 -- -- --
Diversified Money Market .................. 3,111,635 -- -- --
U.S. Government Money Market .............. 634,004 -- -- --
100% U.S. Treasury Money Market ........... 803,411 -- -- --
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, 2006,
these fees totaled $191,810. Such fees and rebates reduce the overall income the
Funds earned on securities purchased with cash collateral, which is reflected
net 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 of 2005, the Funds started to maintain
collateral at not less than 100% of the value of loaned securities, provided the
initial collateral was 102% for domestic U.S. securities, and 105% for
international securities. If cash collateral is received, a related liability is
shown on the statements of assets & liabilities. 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, 2006, and the income generated from the program during the year ended July
31, 2006, with respect to such loans are as follows:
MARKET VALUE MARKET INCOME RECEIVED
OF SECURITIES VALUE OF FROM SECURITIES
LOANED COLLATERAL LENDING
(000) (000) (000)
------------- ---------- ---------------
Balanced ........................ $ 8,009 $ 8,220 $ 11
Cognitive Value* ................ 13,618 14,295 54
Core Equity ..................... 18,228 18,931 31
Enhanced Growth* ................ 18,829 19,436 14
International Opportunities* .... 18,058 18,889 71
Large Cap Growth ................ 35,113 36,110 40
Large Cap Value ................. 46,232 48,084 55
Small Cap Growth ................ 4,397 4,588 40
Small Cap Value ................. 74,003 77,310 239
Value Momentum .................. 84,891 87,633 130
Bond ............................ 60,164 60,961 63
Short Term Bond ................. 6,640 6,743 8
* For the ten month period ended July 31, 2006.
7. CONCENTRATION OF CREDIT RISK
The California Intermediate Tax-Free Bond Fund and the California Tax-Free Money
Market Fund invest in debt securities issued by 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. Each Fund may invest in securities of foreign issuers in various
countries. These investments may involve certain considerations and risks not
typically associated with investments in the United States, as a result of,
among other factors, the possibility of future political and economic
developments and the level of governmental supervision and regulation of
securities markets in the respective countries.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 135
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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, 2006
are summarized as follows:
VALUE MOMENTUM
----------------------
NUMBER OF
WRITTEN OPTIONS TRANSACTIONS CONTRACTS PREMIUM
- ------------------------------------ --------- ----------
Options written and outstanding at
beginning of period ............................... 1,575 $ (371,915)
Call options written during period ................... 700 (186,947)
Call options exercised during period ................. (1,625) 447,908
Call options expired during period ................... (600) 98,354
--------- ---------
Options written and outstanding at
end of period ..................................... 50 $ (12,600)
========= ==========
9. FUND REORGANIZATION
The Board of Directors of the Bailard Opportunity Fund Group, Inc. and the
stockholders of Bailard Cognitive Value Fund, Bailard Enhanced Growth Fund and
Bailard International Equity Fund (the "Reorganizing Funds") approved plans of
reorganization pursuant to which the assets and identified liabilities of each
of the Reorganizing Funds were transferred to the corresponding, similarly
managed series of HighMark Funds (shown below) in exchange for newly issued
Class M shares of the corresponding HighMark Fund. The consummation of the
reorganization took place on April 3, 2006.
REORGANIZING FUNDS HIGHMARK FUNDS
- --------------------------------------------------------------------------------
Bailard Cognitive Value Fund Cognitive Value Fund
Bailard Enhanced Growth Fund Enhanced Growth Fund
Bailard International Equity Fund International Opportunities Fund
The following information relates to the Reorganizing Funds immediately prior to
the consummation of the reorganization:
REORGANIZING SHARES FAIR VALUE COST OF UNREALIZED
FUNDS NET ASSETS ISSUED OF SECURITIES SECURITIES APPRECIATION
- ------------------------------------------------------------------------------------------------
Bailard Cognitive
Value Fund $ 96,828,364 $ 7,123,827 $ 94,226,405 $ 77,615,271 $ 16,611,134
Bailard Enhanced
Growth Fund 136,944,149 14,778,883 135,030,712 104,146,040 30,884,672
Bailard
International
Equity Fund 200,631,520 23,542,424 197,380,613 134,187,807 63,192,806
The HighMark Funds listed above were created in anticipation of the
reorganization. The financial statements and financial highlights of the
Reorganizing Funds for periods prior to April 3, 2006 are included in this
report as part of the financial statements and financial highlights of the
HighMark Funds above.
10. IN-KIND TRANSACTIONS
During the years ended July 31, 2006 and July 31, 2005, the Large Cap Growth
Fund and the Balanced Fund, respectively, primarily distributed securities in
lieu of cash for shareholder redemptions. The shareholders received a pro-rata
portion of each Fund's holdings. The value of the redemptions were as follows:
FIDUCIARY SHARES:
REALIZED
GAIN FUND
BY THE SHARES
REDEMPTION SECURITIES CASH FUND REDEEMED
----------- ----------- ---------- ----------- ---------
Large Cap
Growth
01/13/06 $18,923,320 $18,480,548 $ 442,772 $ 5,097,422 2,002,468
Balanced
05/11/05 $39,990,093 $38,272,463 $1,717,630 $ 3,334,478 2,993,270
Since these transactions were non-taxable events to the Funds, these gains will
have no impact on the Funds' capital gains distributions in the current year.
These transactions were completed pursuant to procedures adopted by the Board.
These procedures are designed to minimize or eliminate any adverse tax
implications to the Funds and its shareholders.
11. OTHER (UNAUDITED)
At July 31, 2006, the percentage of total shares outstanding held by
shareholders of record (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
------------ ---------
Balanced .......................................... 1 73%
Cognitive Value ................................... 1 12
Core Equity ....................................... 1 60
Enhanced Growth ................................... 1 11
International Opportunities ....................... 1 10
Large Cap Growth .................................. 1 71
Large Cap Value ................................... 2 40
Small Cap Growth .................................. 1 54
Small Cap Value ................................... 1 32
Value Momentum .................................... 1 79
Capital Growth Allocation ......................... -- --
Growth & Income Allocation ........................ -- --
Income Plus Allocation ............................ -- --
Bond .............................................. 1 82
California Intermediate Tax-Free Bond ............. 1 63
National Intermediate Tax-Free Bond ............... 1 91
Short Term Bond ................................... 2 73
California Tax-Free Money Market .................. 2 100
Diversified Money Market .......................... 2 100
U.S. Government Money Market ...................... 2 98
100% U.S. Treasury Money Market ................... 2 98
- --------------------------------------------------------------------------------
136 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
This page intentionally left blank.
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 137
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
12. SHARES ISSUED AND REDEEMED (000)
Transactions in Fund Shares are as follows for the years or period ended July
31, (unless otherwise indicated)
BALANCED COGNITIVE VALUE
FUND FUND
--------------- ---------------------------
2006 2005 2006(4) 2005(5) 2004(5)
--------------- ---------------------------
Shares Issued and Redeemed:
Fiduciary Shares (1):
Issued .................................................................... 520 960 133 -- --
Issued in Lieu of Cash Distributions ...................................... 62 152 -- -- --
Redeemed .................................................................. (2,202) (6,009)* -- -- --
------ ------ ------- ------- -------
Total Fiduciary Share Transactions ........................................ (1,620) (4,897) 133 -- --
------ ------ ------- ------- -------
Class A Shares (2):
Issued .................................................................... 42 43 37 -- --
Issued in Lieu of Cash Distributions ...................................... 8 10 -- -- --
Redeemed .................................................................. (84) (72) -- -- --
------ ------ ------- ------- -------
Total Class A Share Transactions .......................................... (34) (19) 37 -- --
------ ------ ------- ------- -------
Class B Shares:
Issued .................................................................... 7 8 -- -- --
Issued in Lieu of Cash Distributions ...................................... 2 4 -- -- --
Redeemed .................................................................. (62) (78) -- -- --
------ ------ ------- ------- -------
Total Class B Share Transactions .......................................... (53) (66) -- -- --
------ ------ ------- ------- -------
Class C Shares (3):
Issued .................................................................... 10 7 -- -- --
Issued in Lieu of Cash Distributions ...................................... -- -- -- -- --
Redeemed .................................................................. (10) (8) -- -- --
------ ------ ------- ------- -------
Total Class C Share Transactions .......................................... -- (1) -- -- --
------ ------ ------- ------- -------
Class M Shares:
Issued .................................................................... -- -- 471 662 575
Issued in Lieu of Cash Distributions ...................................... -- -- 876 550 --
Redeemed .................................................................. -- -- (674) (581) (2,141)
------ ------ ------- ------- -------
Total Class M Share Transactions .......................................... -- -- 673 631 (1,566)
------ ------ ------- ------- -------
Net Increase (Decrease) in Share Transactions ............................. (1,707) (4,983) 843 631 (1,566)
====== ====== ======= ======= =======
CORE EQUITY ENHANCED GROWTH
FUND FUND
--------------- ---------------------------
2006 2005 2006(4) 2005(5) 2004(5)
--------------- ---------------------------
Shares Issued and Redeemed:
Fiduciary Shares (1):
Issued .................................................................... 1,839 1,605 -- -- --
Issued in Lieu of Cash Distributions ...................................... 33 39 -- -- --
Redeemed .................................................................. (2,393) (3,921) -- -- --
------ ------ ------- ------- -------
Total Fiduciary Share Transactions ........................................ (521) (2,277) -- -- --
------ ------ ------- ------- -------
Class A Shares (2):
Issued .................................................................... 38 51 5 -- --
Issued in Lieu of Cash Distributions ...................................... 3 3 -- -- --
Redeemed .................................................................. (102) (178) -- -- --
------ ------ ------- ------- -------
Total Class A Share Transactions .......................................... (61) (124) 5 -- --
------ ------ ------- ------- -------
Class B Shares:
Issued .................................................................... 3 2 -- -- --
Issued in Lieu of Cash Distributions ...................................... 1 3 -- -- --
Redeemed .................................................................. (71) (71) -- -- --
------ ------ ------- ------- -------
Total Class B Share Transactions .......................................... (67) (66) -- -- --
------ ------ ------- ------- -------
Class C Shares (3):
Issued .................................................................... 5 5 -- -- --
Issued in Lieu of Cash Distributions ...................................... -- -- -- -- --
Redeemed .................................................................. (4) (8) -- -- --
------ ------ ------- ------- -------
Total Class C Share Transactions .......................................... 1 (3) -- -- --
------ ------ ------- ------- -------
Class M Shares:
Issued .................................................................... -- -- 1,137 7,058 1,288
Issued in Lieu of Cash Distributions ...................................... -- -- -- 111 --
Redeemed .................................................................. -- -- (903) (962) (3,011)
------ ------ ------- ------- -------
Total Class M Share Transactions .......................................... -- -- 234 6,207 (1,723)
------ ------ ------- ------- -------
Net Increase (Decrease) in Share Transactions ............................. (648) (2,470) 239 6,207 (1,723)
====== ====== ======= ======= =======
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) FIDUCIARY SHARES COMMENCED OPERATIONS ON JULY 3, 2006 FOR COGNITIVE VALUE
FUND AND APRIL 4, 2006 FOR INTERNATIONAL OPPORTUNITIES FUND.
(2) CLASS A SHARES COMMENCED OPERATIONS ON APRIL 3, 2006 FOR COGNITIVE VALUE,
ENHANCED GROWTH AND INTERNATIONAL OPPORTUNITIES FUNDS.
(3) CLASS C SHARES COMMENCED OPERATIONS ON APRIL 3, 2006 FOR THE COGNITIVE
VALUE, ENHANCED GROWTH AND INTERNATIONAL OPPORTUNITIES FUNDS.
(4) FOR THE TEN MONTH PERIOD ENDED JULY 31, 2006. ON APRIL 3, 2006, HIGHMARK
FUNDS ACQUIRED THE ASSETS AND ASSUMED THE IDENTIFIED LIABILITIES OF
BAILARD COGNITIVE VALUE FUND, BAILARD ENHANCED GROWTH FUND AND BAILARD
INTERNATIONAL EQUITY FUND (THE "BAILARD FUNDS") (SEE NOTE 9). THE FISCAL
YEAR END OF THE BAILARD FUNDS, THE PREDECESSOR FUNDS TO HIGHMARK COGNITIVE
VALUE FUND, HIGHMARK ENHANCED GROWTH FUND AND HIGHMARK INTERNATIONAL
OPPORTUNITIES FUND WAS SEPTEMBER 30. THE FISCAL YEAR END OF THE SUCCESSOR
HIGHMARK FUNDS IS JULY 31.
(5) FOR THE YEAR ENDED SEPTEMBER 30.
- --------------------------------------------------------------------------------
138 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
INTERNATIONAL
OPPORTUNITIES LARGE CAP GROWTH LARGE CAP VALUE
FUND FUND FUND
--------------------------- ---------------- ---------------
2006(4) 2005(5) 2004(5) 2006 2005 2006 2005
--------------------------- ---------------- ---------------
Shares Issued and Redeemed:
Fiduciary Shares (1):
Issued .................................................. 1,574 -- -- 2,368 2,034 5,032 3,211
Issued in Lieu of Cash Distributions .................... -- -- -- 19 35 96 61
Redeemed ................................................ -- -- -- (5,671)* (5,342) (2,707) (1,772)
------- ------- ------- ------ ------ ------ ------
Total Fiduciary Share Transactions ...................... 1,574 -- -- (3,284) (3,273) 2,421 1,500
------- ------- ------- ------ ------ ------ ------
Class A Shares (2):
Issued .................................................. 244 -- -- 387 184 6,579 2,596
Issued in Lieu of Cash Distributions .................... -- -- -- 1 2 67 32
Redeemed ................................................ (15) -- -- (606) (687) (1,830) (837)
------- ------- ------- ------ ------ ------ ------
Total Class A Share Transactions ........................ 229 -- -- (218) (501) 4,816 1,791
------- ------- ------- ------ ------ ------ ------
Class B Shares:
Issued .................................................. -- -- -- 16 18 15 27
Issued in Lieu of Cash Distributions .................... -- -- -- -- -- 1 1
Redeemed ................................................ -- -- -- (244) (286) (114) (58)
------- ------- ------- ------ ------ ------ ------
Total Class B Share Transactions ........................ -- -- -- (228) (268) (98) (30)
------- ------- ------- ------ ------ ------ ------
Class C Shares (3):
Issued .................................................. 92 -- -- 21 26 160 225
Issued in Lieu of Cash Distributions .................... -- -- -- -- -- 2 1
Redeemed ................................................ (6) -- -- (38) (68) (94) (26)
------- ------- ------- ------ ------ ------ ------
Total Class C Share Transactions ........................ 86 -- -- (17) (42) 68 200
------- ------- ------- ------ ------ ------ ------
Class M Shares:
Issued .................................................. 2,206 4,025 6,397 -- -- -- --
Issued in Lieu of Cash Distributions .................... 855 187 190 -- -- -- --
Redeemed ................................................ (1,908) (9,076) (2,945) -- -- -- --
------- ------- ------- ------ ------ ------ ------
Total Class M Share Transactions ........................ 1,153 (4,864) 3,642 -- -- -- --
------- ------- ------- ------ ------ ------ ------
Net Increase (Decrease) in Share Transactions ........... 3,042 (4,864) 3,642 (3,747) (4,084) 7,207 3,461
======= ======= ======= ====== ====== ====== ======
SMALL CAP GROWTH SMALL CAP VALUE
FUND FUND
---------------- ----------------
2006 2005 2006 2005
---------------- ----------------
Shares Issued and Redeemed:
Fiduciary Shares (1):
Issued .................................................. 438 381 3,969 2,026
Issued in Lieu of Cash Distributions .................... 97 3 540 352
Redeemed ................................................ (579) (762) (2,368) (1,796)
---- ----- ------ ------
Total Fiduciary Share Transactions ...................... (44) (378) 2,141 582
---- ----- ------ ------
Class A Shares (2):
Issued .................................................. 113 69 2,089 1,136
Issued in Lieu of Cash Distributions .................... 17 -- 261 119
Redeemed ................................................ (125) (68) (1,578) (683)
---- ----- ------ ------
Total Class A Share Transactions ........................ 5 1 772 572
---- ----- ------ ------
Class B Shares:
Issued .................................................. 7 -- 14 17
Issued in Lieu of Cash Distributions .................... 2 -- 59 50
Redeemed ................................................ (9) (8) (151) (132)
---- ----- ------ ------
Total Class B Share Transactions ........................ -- (8) (78) (65)
---- ----- ------ ------
Class C Shares (3):
Issued .................................................. 11 11 253 413
Issued in Lieu of Cash Distributions .................... 4 -- 75 41
Redeemed ................................................ (1) (19) (355) (85)
---- ----- ------ ------
Total Class C Share Transactions ........................ 14 (8) (27) 369
---- ----- ------ ------
Class M Shares:
Issued .................................................. -- -- -- --
Issued in Lieu of Cash Distributions .................... -- -- -- --
Redeemed ................................................ -- -- -- --
---- ----- ------ ------
Total Class M Share Transactions ........................ -- -- -- --
---- ----- ------ ------
Net Increase (Decrease) in Share Transactions ........... (25) (393) 2,808 1,458
==== ===== ====== ======
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 139
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 2006
12. SHARES ISSUED AND REDEEMED (000) (CONCLUDED)
Transactions in Fund Shares are as follows for the years or period ended July
31,
CAPITAL GROWTH GROWTH & INCOME
VALUE MOMENTUM ALLOCATION ALLOCATION
FUND FUND FUND
---------------- ---------------- ---------------
2006 2005 2006 2005(1) 2006 2005(1)
---------------- ---------------- ---------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ......................................... 2,487 2,634 -- -- -- --
Issued in Lieu of Cash Distributions ........... 2,123 1,509 -- -- -- --
Redeemed ....................................... (3,836) (3,505) -- -- -- --
------ ------ ------ ------- ----- -------
Total Fiduciary Share Transactions ............. 774 638 -- -- -- --
------ ------ ------ ------- ----- -------
Class A Shares:
Issued ......................................... 180 133 1,010 414 1,083 490
Issued in Lieu of Cash Distributions ........... 135 102 5 -- 9 2
Redeemed ....................................... (219) (299) (85) (10) (150) (22)
------ ------ ------ ------- ----- -------
Total Class A Share Transactions ............... 96 (64) 930 404 942 470
------ ------ ------ ------- ----- -------
Class B Shares:
Issued ......................................... 5 11 -- -- -- --
Issued in Lieu of Cash Distributions ........... 44 33 -- -- -- --
Redeemed ....................................... (118) (61) -- -- -- --
------ ------ ------ ------- ----- -------
Total Class B Share Transactions ............... (69) (17) -- -- -- --
------ ------ ------ ------- ----- -------
Class C Shares:
Issued ......................................... 21 15 561 208 356 215
Issued in Lieu of Cash Distributions ........... 5 3 1 -- 2 --
Redeemed ....................................... (14) (3) (42) (1) (41) (2)
------ ------ ------ ------- ----- -------
Total Class C Share Transactions ............... 12 15 520 207 317 213
------ ------ ------ ------- ----- -------
Net Increase (Decrease) in Share Transactions .. 813 572 1,450 611 1,259 683
====== ====== ====== ======= ===== =======
SHORT TERM CALIFORNIA TAX-FREE
BOND MONEY MARKET
FUND FUND
---------------- -------------------
2006 2005(3) 2006 2005
---------------- -------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ......................................... 1,651 2,626 538,460 620,445
Issued in Lieu of Cash Distributions ........... 51 11 25 --
Redeemed ....................................... (457) (143) (550,493) (637,304)
------ ------- -------- --------
Total Fiduciary Share Transactions .......... 1,245 2,494 (12,008) (16,859)
------ ------- -------- --------
Class A Shares:
Issued ......................................... 170 165 538,589 334,065
Issued in Lieu of Cash Distributions ........... 2 -- 6,054 3,179
Redeemed ....................................... (204) (19) (534,337) (343,514)
------ ------- -------- --------
Total Class A Share Transactions ............ (32) 146 10,306 (6,270)
------ ------- -------- --------
Class B Shares:
Issued ......................................... -- -- -- --
Issued in Lieu of Cash Distributions ........... -- -- -- --
Redeemed ....................................... -- -- -- --
------ ------- -------- --------
Total Class B Share Transactions ............ -- -- -- --
------ ------- -------- --------
Class C Shares (2):
Issued ......................................... 289 1 -- --
Issued in Lieu of Cash Distributions ........... -- -- -- --
Redeemed ....................................... (36) -- -- --
------ ------- -------- --------
Total Class C Share Transactions ............ 253 1 -- --
------ ------- -------- --------
Class S Shares:
Issued ......................................... -- -- 204,308 149,640
Issued in Lieu of Cash Distributions ........... -- -- 700 334
Redeemed ....................................... -- -- (201,798) (145,522)
------ ------- -------- --------
Total Class S Share Transactions ............ -- -- 3,210 4,452
------ ------- -------- --------
Net Increase (Decrease) in Share Transactions .. 1,466 2,641 1,508 (18,677)
====== ======= ======== ========
AMOUNTS DESIGNATED AS "--" ARE EITHER NOT APPLICABLE, 0 OR HAVE BEEN ROUNDED TO
0.
(1) COMMENCED OPERATIONS ON OCTOBER 12, 2004.
(2) CLASS C SHARES COMMENCED OPERATIONS ON NOVEMBER 29, 2004 FOR THE SHORT
TERM BOND FUND.
(3) COMMENCED OPERATIONS ON NOVEMBER 2, 2004.
- --------------------------------------------------------------------------------
140 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
INCOME PLUS CALIFORNIA INTERMEDIATE NATIONAL INTERMEDIATE
ALLOCATION BOND TAX-FREE BOND TAX-FREE BOND
FUND FUND FUND FUND
-------------- ---------------- ---------------------- ---------------------
2006 2005(1) 2006 2005 2006 2005 2006 2005
-------------- ---------------- ---------------------- ---------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ................................ -- -- 7,043 6,446 670 1,075 134 329
Issued in Lieu of Cash Distributions .. -- -- 946 953 116 140 59 62
Redeemed .............................. -- -- (9,683) (9,267) (1,158) (2,805) (1,298) (862)
---- ------- ------ ------ ------ ------ ------- -----
Total Fiduciary Share Transactions .... -- -- (1,694) (1,868) (372) (1,590) (1,105) (471)
---- ------- ------ ------ ------ ------ ------- -----
Class A Shares:
Issued ................................ 116 109 128 380 383 522 75 204
Issued in Lieu of Cash Distributions .. 2 -- 123 128 147 183 12 10
Redeemed .............................. (48) (4) (945) (748) (2,054) (1,449) (150) (291)
---- ------- ------ ------ ------ ------ ------- -----
Total Class A Share Transactions ...... 70 105 (694) (240) (1,524) (744) (63) (77)
---- ------- ------ ------ ------ ------ ------- -----
Class B Shares:
Issued ................................ -- -- 10 16 2 8 -- --
Issued in Lieu of Cash Distributions .. -- -- 23 24 17 19 -- --
Redeemed .............................. -- -- (117) (178) (102) (121) -- --
---- ------- ------ ------ ------ ------ ------- -----
Total Class B Share Transactions ...... -- -- (84) (138) (83) (94) -- --
---- ------- ------ ------ ------ ------ ------- -----
Class C Shares:
Issued ................................ 86 25 8 2 14 37 -- 4
Issued in Lieu of Cash Distributions .. 2 -- -- -- 3 3 -- --
Redeemed .............................. (13) -- (3) -- (54) (1) (2) --
---- ------- ------ ------ ------ ------ ------- -----
Total Class C Share Transactions ...... 75 25 5 2 (37) 39 (2) 4
---- ------- ------ ------ ------ ------ ------- -----
Net Increase (Decrease) in
Share Transactions ................. 145 130 (2,467) (2,244) (2,016) (2,389) (1,170) (544)
==== ======= ====== ====== ====== ====== ======= =====
DIVERSIFIED U.S. GOVERNMENT 100% U.S. TREASURY
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------------------ ------------------------ ------------------------
2006 2005 2006 2005 2006 2005
------------------------ ------------------------ ------------------------
Shares Issued and Redeemed:
Fiduciary Shares:
Issued ................................. 5,610,560 5,401,713 4,084,427 3,157,136 2,941,432 2,968,389
Issued in Lieu of Cash Distributions ... 14,690 7,261 298 158 624 320
Redeemed ............................... (5,819,885) (5,330,319) (4,015,957) (3,106,150) (2,956,423) (2,977,833)
---------- ---------- ---------- ---------- ---------- ----------
Total Fiduciary Share Transactions .. (194,635) 78,655 68,768 51,144 (14,367) (9,124)
---------- ---------- ---------- ---------- ---------- ----------
Class A Shares:
Issued ................................. 854,366 551,276 74,914 64,614 403,706 392,802
Issued in Lieu of Cash Distributions ... 23,518 8,746 1,152 557 5,056 2,262
Redeemed ............................... (709,417) (546,899) (76,752) (73,865) (432,280) (358,263)
---------- ---------- ---------- ---------- ---------- ----------
Total Class A Share Transactions .... 168,467 13,123 (686) (8,694) (23,518) 36,801
---------- ---------- ---------- ---------- ---------- ----------
Class B Shares:
Issued ................................. -- -- 138 326 -- --
Issued in Lieu of Cash Distributions ... -- -- 27 10 -- --
Redeemed ............................... -- -- (563) (843) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Class B Share Transactions .... -- -- (398) (507) -- --
---------- ---------- ---------- ---------- ---------- ----------
Class C Shares (2):
Issued ................................. -- -- 60 -- -- --
Issued in Lieu of Cash Distributions ... -- -- 1 -- -- --
Redeemed ............................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Class C Share Transactions .... -- -- 61 -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Class S Shares:
Issued ................................. 2,559,035 2,747,529 616,790 317,539 1,063,189 873,865
Issued in Lieu of Cash Distributions ... 18,501 9,303 3,315 541 8,571 2,902
Redeemed ............................... (2,758,484) (2,862,191) (585,681) (292,400) (1,099,919) (881,984)
---------- ---------- ---------- ---------- ---------- ----------
Total Class S Share Transactions .... (180,948) (105,359) 34,424 25,680 (28,159) (5,217)
---------- ---------- ---------- ---------- ---------- ----------
Net Increase (Decrease) in
Share Transactions .................. (207,116) (13,581) 102,169 67,623 (66,044) 22,460
========== ========== ========== ========== ========== ==========
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 141
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
JULY 31, 2006
13. NEW ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
interpretation 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes". This
standard requires the evaluation as to whether a tax position taken or expected
to be taken on a tax return has a "more-likely-than-not" probability of being
sustained by the taxing authority and requires the measurement of those tax
positions meeting the more-likely-than-not criterion, based on the largest
benefit that is more than 50 percent likely of being realized upon ultimate
settlement. FIN 48 is effective as of the beginning of the first fiscal year
beginning after December 15, 2006. At adoption, companies must adjust their
financial statements to reflect only those tax positions that management
believes will more-likely-than-not be sustained as of the adoption date. As of
July 31, 2006, the Funds have not completed their evaluation of the impact, if
any, that will result from the adoption of FIN 48.
- --------------------------------------------------------------------------------
142 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of HighMark Funds:
We have audited the accompanying statements of assets and liabilities of
Balanced Fund, Cognitive Value Fund, Core Equity Fund, Enhanced Growth Fund,
International Opportunities Fund, Large Cap Growth Fund, Large Cap Value Fund,
Small Cap Growth Fund, Small Cap Value Fund, Value Momentum Fund, Capital Growth
Allocation Fund, Growth & Income Allocation Fund, Income Plus Allocation Fund,
Bond Fund, California Intermediate Tax-Free Bond Fund, National Intermediate
Tax-Free Bond Fund, Short Term Bond Fund, California Tax-Free Money Market Fund,
Diversified Money Market Fund, U.S. Government Money Market Fund, and 100% U.S.
Treasury Money Market Fund (the "Funds"), each comprising a series of HighMark
Funds, including the schedules of investments, as of July 31, 2006, and the
related statements of operations for the year then ended, and the statements of
changes in net assets and the financial highlights for each of the periods
presented for all of the Funds except for Cognitive Value Fund, Enhanced Growth
Fund and International Opportunities Fund for which the statements of
operations, the statements of changes in net assets and the financial highlights
are presented for the ten month period ended July 31, 2006. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The statements of
changes in net assets for the year ended September 30, 2005 and the financial
highlights for each period ending on or before September 30, 2005 of Cognitive
Value Fund, Enhanced Growth Fund and International Opportunities Fund were
audited by other auditors whose report, dated November 11, 2005, expressed an
unqualified opinion on those statements and financial highlights.
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 audits 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, audits 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 opinions on the effectiveness of the Funds'
internal control over financial reporting. Accordingly, we express no such
opinions. 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, 2006, by correspondence
with the custodians 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, 2006, the results of their operations, the changes
in their net assets and the financial highlights for each of the periods
presented for all of the Funds except for Cognitive Value Fund, Enhanced Growth
Fund and International Opportunities Fund for which the period is the ten months
ended July 31, 2006, in conformity with accounting principles generally accepted
in the United States of America.
DELOITTE & TOUCHE LLP
New York, New York
September 28, 2006
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 143
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTICE TO SHAREHOLDERS OF THE HIGHMARK FUNDS (UNAUDITED)
For shareholders that do not have a July 31, 2006 tax year end, this notice is
for informational purposes only. For shareholders with a July 31, 2006 tax year
end, please consult your tax adviser as to the pertinence of this notice.
For the fiscal year ended July 31, 2006, each Fund is designating the following
items with regard to distributions paid during the year.
QUALIFIED
DIVIDENDS
AND CORPORATE
15% RATE ORDINARY DIVIDENDS
LONG-TERM INCOME TAX EXEMPT RECEIVED
CAPITAL GAIN DISTRIBUTIONS INCOME DEDUCTION
FUND DISTRIBUTION (TAX BASIS) DISTRIBUTIONS TOTAL (1)
- -------------------------------------------------------------------------------------------------------
Balanced ............................ 0.78% 99.22% 0.00% 100.00% 51.09%
Cognitive Value ..................... 68.29% 31.71% 0.00% 100.00% 96.37%
Core Equity ......................... 0.00% 100.00% 0.00% 100.00% 100.00%
Enhanced Growth ..................... 0.00% 0.00% 0.00% 0.00% 0.00%
International Opportunities (4) ..... 53.41% 46.59% 0.00% 100.00% 8.43%
Large Cap Growth .................... 0.00% 100.00% 0.00% 100.00% 100.00%
Large Cap Value ..................... 0.00% 100.00% 0.00% 100.00% 100.00%
Small Cap Growth .................... 100.00% 0.00% 0.00% 100.00% 0.00%
Small Cap Value ..................... 95.28% 4.72% 0.00% 100.00% 78.77%
Value Momentum ...................... 86.05% 13.95% 0.00% 100.00% 92.44%
Capital Growth Allocation ........... 57.64% 42.36% 0.00% 100.00% 100.00%
Growth & Income Allocation .......... 17.86% 82.14% 0.00% 100.00% 58.33%
Income Plus Allocation .............. 1.71% 98.29% 0.00% 100.00% 16.16%
Bond ................................ 0.00% 100.00% 0.00% 100.00% 0.00%
California Intermediate
Tax-Free Bond (5) ................ 21.97% 0.13% 77.90% 100.00% 0.00%
National Intermediate
Tax-Free Bond .................... 16.54% 0.51% 82.95% 100.00% 0.00%
Short-Term Bond ..................... 0.00% 100.00% 0.00% 100.00% 0.00%
California Tax-Free
Money Market (5) ................. 0.00% 1.09% 98.91% 100.00% 0.00%
Diversified Money Market ............ 0.00% 100.00% 0.00% 100.00% 0.00%
U.S. Government Money
Market ........................... 0.00% 100.00% 0.00% 100.00% 0.00%
100% U.S. Treasury
Money Market (6) ................. 0.00% 100.00% 0.00% 100.00% 0.00%
QUALIFYING
DIVIDEND
INCOME
(15% TAX U.S. QUALIFIED QUALIFIED
RATE FOR GOVERNMENT INTEREST SHORT-TERM
FUND QDI) (2) INTEREST (3) INCOME CAPITAL GAIN
- ----------------------------------------------------------------------------------------
Balanced ............................ 51.08% 8.40% 55.62% 0.00%
Cognitive Value ..................... 25.10% 0.00% 13.26% 0.70%
Core Equity ......................... 100.00% 0.00% 1.68% 0.00%
Enhanced Growth ..................... 0.00% 0.00% 0.00% 0.00%
International Opportunities (4) ..... 88.89% 0.00% 2.18% 0.00%
Large Cap Growth .................... 100.00% 0.00% 0.14% 0.00%
Large Cap Value ..................... 100.00% 0.00% 2.89% 0.00%
Small Cap Growth .................... 0.00% 0.00% 0.00% 0.00%
Small Cap Value ..................... 80.11% 0.00% 23.83% 0.00%
Value Momentum ...................... 96.21% 0.00% 3.01% 2.08%
Capital Growth Allocation ........... 100.00% 0.00% 0.00% 0.00%
Growth & Income Allocation .......... 56.42% 0.00% 0.00% 0.93%
Income Plus Allocation .............. 15.82% 0.00% 0.00% 1.16%
Bond ................................ 0.00% 14.74% 98.78% 0.00%
California Intermediate
Tax-Free Bond (5) ................ 0.00% 0.00% 97.31% 0.00%
National Intermediate
Tax-Free Bond .................... 0.00% 0.00% 96.11% 0.00%
Short-Term Bond ..................... 0.00% 11.98% 98.40% 0.00%
California Tax-Free
Money Market (5) ................. 0.00% 0.84% 93.91% 0.00%
Diversified Money Market ............ 0.00% 0.00% 93.80% 0.00%
U.S. Government Money
Market ........................... 0.00% 14.24% 94.59% 0.00%
100% U.S. Treasury
Money Market (6) ................. 0.00% 100.00% 93.62% 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) "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.
(4) THE FUND INTENDS TO PASS THROUGH A FOREIGN TAX CREDIT TO THE SHAREHOLDERS.
FOR THE FISCAL YEAR ENDED 2006, THE TOTAL AMOUNT OF FOREIGN SOURCE INCOME
IS $3,804,877. THE TOTAL AMOUNT OF FOREIGN TAX TO BE PAID IS $404,451.
YOUR ALLOCABLE SHARE OF THE FOREIGN TAX CREDIT WILL BE REPORTED ON FORM
1099 DIV.
(5) 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, 2006.
(6) 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 JULY 31, 2006. ALL INCOME EARNED BY THE 100% U.S.
TREASURY MONEY MARKET FUND IS DESIGNATED TAX EXEMPT INCOME FOR STATE
INCOME TAX PURPOSES.
- --------------------------------------------------------------------------------
144 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 July 31, 2006.
- ------------------------------------------------------------------------------------------------------------------------------------
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 present, 22 None
49 Principal, Navigant Consulting,
Inc. (Financial Consulting --
Healthcare).
Thomas L. Braje Trustee, Vice Since 06/87 Prior to retirement in October 22 None
63 Chairman 1996, Vice President and Chief
Financial Officer of Bio Rad
Laboratories, Inc.
David A. Goldfarb Trustee Since 06/87 Partner, Goldfarb & Simens, 22 None
64 Certified Public Accountants.
Joseph C. Jaeger Trustee, Since 06/87 Prior to retirement in June 1998, 22 None
71 Chairman Senior Vice President and Chief
Financial Officer, Delta Dental
Plan of California.
Michael L. Noel Trustee Since 12/98 President, Noel Consulting 22 Avista Corp.
65 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, 22 None
67 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
- --------
Earle A. Malm II President Since 12/05 Chairman of the Board of the N/A N/A
350 California Street Adviser since February 2005.
San Francisco, CA President, Chief Executive
94104 Officer and Director of the
56 Adviser since October 2002. From
January 2001 to December 2002,
President of NVMLI (mort gage
marketing). From January 2001 to
December 2001, Vice Chairman and
Advisor of Value Click (internet
technology).
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
Oaks, PA 19456
37
- -----------------------------------
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, 2006, the HighMark Funds Complex consisted of 22
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 145
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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
- ------------------------------------------------------------------------------------------------------------------------------------
Pamela O'Donnell Treasurer Since 12/05 Vice President and Director of N/A N/A
350 California Street Mutual Funds Administration since
San Francisco, CA 2003. Vice President of
94104 Operations and Client Service of
42 the Adviser from 2003 to 2005.
Vice President of Finance and
Administration of MiFund, Inc.
from March 2000 to May 2002.
Catherine Vacca Chief Since 9/04 Senior Vice President and Chief N/A N/A
350 California Street Compliance Compliance Officer of the Adviser
San Francisco, CA 94111 Officer since July 2004. From December
49 2002 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 Adviser N/A N/A
445 S. Figueroa Street & Assistant since 1998.
Suite #306 Secretary
Los Angeles, CA 90071
56
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 since 2005.
42 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 Assistant N/A N/A
One Freedom & Assistant Secretary of the Administrator
Valley Drive Secretary since December 1999.
Oaks, PA 19456 Vice President and Assistant
38 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 since 2005.
Oaks, PA 19456 Compliance Officer of SEI
32 Investments (2001-2004).
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 since 2005.
Oaks, PA 19456 Vice President, Deutsche Asset
38 Management (2003-2004).
Associate, Morgan, Lewis and
Bockius LLP (2000-2003).
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 2005.
Oaks, PA 19456 Counsel, Caledonian Bank &
34 Trust's Mutual Fund Group
(2004-2005). Counsel, Permal
Asset Management (2001-2004).
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, 2006, the HighMark Funds Complex consisted of 22
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.
- --------------------------------------------------------------------------------
146 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
SHAREHOLDER VOTING RESULTS (UNAUDITED)
At a special meeting held on June 26, 2006, the shareholders of the HighMark
Small Cap Growth Fund voted to approve the investment sub-advisory agreement
between Highmark Capital Management, Inc. and Trusco Capital Management, with
respect to the Highmark Small Cap Growth Fund.
The result of the vote was as follows:
No. of Shares % of outstanding shares % of shares present
- --------------------------------------------------------------------------------
FOR 1,683,796.000 99.714% of shares voted 72.613% of total shares
AGAINST 1,806.000 0.107% of shares voted 0.078% of total shares
ABSTAIN 3,018.000 0.179% of shares voted 0.130% of total shares
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 147
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[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 agreement between HighMark and the
Adviser (the "Investment Advisory Agreement") and the sub-advisory agreements
that relate to the Funds at most of its meetings throughout the year.
Once a year, usually in the summer, the Board of Trustees meets to extensively
review the Investment Advisory Agreement and the sub-advisory agreements (unless
with respect to any agreement it is still within the first year of its initial
term) to determine whether to approve the continuation of the agreements for an
additional one-year period. In connection with these annual determinations, the
Trustees receive materials that the Adviser and the Funds' sub-advisers 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 Adviser and the sub-advisers
with respect to their provision of services to the Funds and
o information obtained through the completion of an informational
questionnaire sent to the Adviser and the sub-advisers by the Trustees.
The Board of Trustees may also consider other material facts such as:
o the Adviser's and the sub-advisers' financial results and financial
condition,
o the size, education and experience of the Adviser's and each sub-adviser's
investment staff 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 Adviser or any sub-adviser and the use of
"soft" commission dollars to pay for research and services for the Adviser
and the sub-advisers,
o the Adviser's and the sub-advisers' 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 Adviser and the
sub-advisers. The Trustees also meet with, and ask questions of, representatives
of the Adviser and the sub-advisers, either in person or by conference
telephone. As a consequence of this process, the Trust has, in past years,
replaced sub-advisers that have underperformed and has effected other changes in
Fund portfolio management. In addition, in 2005, the Board requested to
supplement the then existing Board material by obtaining for the 2006 meetings
additional, independent fee and expense comparisons from Lipper Inc.
The Board of Trustees most recently approved the continuation of the Investment
Advisory Agreement with respect to all of the Funds and the sub-advisory
agreements that relate to each of the Funds other than HighMark International
Opportunities Fund, HighMark Cognitive Value Fund, HighMark Enhanced Growth Fund
and HighMark Small Cap Growth Fund (the Investment Advisory Agreement,
collectively with the sub-advisory agreements relating to each of the Funds
other than HighMark International Opportunities Fund, HighMark Cognitive Value
Fund, HighMark Enhanced Growth Fund and HighMark Small Cap Growth Fund, the
"Agreements") at meetings held on June 21-22, 2006. The sub-advisory agreements
relating to
- --------------------------------------------------------------------------------
148 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
HighMark International Opportunities Fund, HighMark Cognitive Value Fund,
HighMark Enhanced Growth Fund and HighMark Small Cap Growth Fund were still
within the first year of their initial term and therefore were not required to
be considered for renewal at these meetings. For a discussion of the Board's
consideration of the sub-advisory agreements relating to HighMark International
Opportunities Fund, HighMark Cognitive Value Fund and HighMark Enhanced Growth
Fund (as well as the amendment to the Investment Advisory Agreement relating to
such Funds that was approved at such time), please see pages 151 through 152. A
discussion of the Board's most recent consideration of the sub-advisory
agreement relating to HighMark Small Cap Growth Fund was set forth in the Funds'
semi-annual report dated January 31, 2006.
In considering whether to approve the continuation of the Agreements at the
meetings held on June 21-22, 2006, 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 Adviser, Waddell & Reed Investment Management Company,
Aronson+Johnson+Ortiz, LP and LSV Asset Management (collectively, 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.
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 is not entirely
attributable to the current sub-adviser's efforts. In such circumstances, the
Trustees paid particular attention to the Fund's investment performance during
the 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
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 149
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS (UNAUDITED)
(CONTINUED)
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 the proposals
at the meetings to contractually reduce the advisory fee rates for each of
HighMark Income Plus Allocation Fund, HighMark Growth & Income Allocation Fund
and HighMark Capital Growth Allocation Fund and to reduce, by means of fee
waivers, the advisory and sub-advisory fee rates for HighMark Large Cap Value
Fund. The Trustees also considered any compensation received by the Managers and
their affiliates from the Funds for providing services other than advisory or
sub-advisory services. 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 fee schedules and/or expense caps with respect to such Funds. 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 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 proposals to contractually reduce the advisory
fee rates for each of HighMark Income Plus Allocation Fund, HighMark Growth &
Income Allocation Fund and HighMark Capital Growth Allocation Fund and to
reduce, by means of fee waivers, the advisory and sub-advisory fee rates for
HighMark Large Cap Value Fund. 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 Agreements should be
continued with respect to the Funds through July 31, 2007.
- --------------------------------------------------------------------------------
150 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
In addition to the foregoing renewals, during the period covered by this annual
report, HighMark established three new series: HighMark Cognitive Value Fund,
HighMark Enhanced Growth Fund and HighMark International Opportunities Fund (the
"New Funds"). The Board of Trustees approved the establishment of the New Funds
in connection with HighMark acquiring the assets of Bailard Cognitive Value
Fund, Bailard Enhanced Growth Fund and Bailard International Equity Fund (the
"Bailard Funds") in exchange for Class M shares of the New Funds and the
assumption by the New Funds of the identified liabilities of the Bailard Funds.
In connection with its approval of the establishment of the New Funds, the Board
of Trustees, at a meeting held on January 12, 2006, approved amending the
schedule to the Investment Advisory Agreement to include the New Funds (the
"Amendment"). The Board of Trustees also approved, at the January 12, 2006
meeting, three new sub-advisory agreements between the Adviser and Bailard, Inc.
("Bailard") relating to the New Funds (the "New Sub-Advisory Agreements"). This
approval followed extensive discussion of the Bailard Funds and Bailard at a
meeting held on December 14, 2005. In considering whether to approve the
Amendment and the New Sub-Advisory 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 Amendment and the New Sub-Advisory
Agreements included the following:
THE NATURE, EXTENT AND QUALITY OF THE SERVICES TO BE PROVIDED TO THE NEW FUNDS
UNDER THE AMENDMENT AND THE NEW SUB-ADVISORY AGREEMENTS. The Trustees considered
the nature, extent and quality of the services to be provided by the Adviser and
Bailard to the New Funds and the resources to be dedicated to the New Funds by
the Adviser and Bailard. The Trustees considered not only the advisory services
to be provided by Bailard to the New Funds, but also the monitoring and
oversight services to be provided to the New Funds by the Adviser. 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
the Amendment and each of the New Sub-Advisory Agreements, that the nature,
extent and quality of services to be provided by the Adviser and Bailard
supported approval of the Amendment and the New Sub-Advisory Agreements.
INVESTMENT PERFORMANCE OF THE BAILARD FUNDS. The Trustees received and
considered information about the performance history of each Bailard Fund since
its inception, including information which compared the performance of the
Bailard Funds to the performance of peer groups of funds and the Bailard Funds'
respective performance benchmarks. The Trustees also considered the Adviser's
and Bailard's reputation generally. After reviewing these and related factors
and discussions with Fund management, the Trustees concluded, within the context
of their overall conclusions regarding the Amendment and the New Sub-Advisory
Agreements, that the performance of Bailard in managing the Bailard Funds
supported approval of the Amendment and the New Sub-Advisory Agreements.
THE COSTS OF THE SERVICES TO BE PROVIDED AND PROFITS TO BE REALIZED BY THE
ADVISER AND BAILARD AND THEIR AFFILIATES FROM THEIR RESPECTIVE RELATIONSHIPS
WITH THE NEW FUNDS. The Trustees considered and had discussions with Fund
management regarding the fees charged to the New Funds for advisory and
sub-advisory services as well as the total expense levels of the New Funds. This
information included comparisons of the advisory fees and total expense levels
of the New Funds to the advisory fees and total expense levels of other mutual
funds within the same investment universe. In evaluating each New Fund's
advisory and sub-advisory fees, the Trustees also took into account the demands,
complexity and quality of the investment management of the New Funds. The
Trustees also considered whether any compensation other than advisory fees or
sub-advisory fees, as applicable, would be received by the Adviser and its
affiliates or Bailard and its affiliates from the New Funds or any other Fund.
The Trustees reviewed information provided by the Adviser and Bailard as to the
profitability of the Adviser and Bailard, respectively, and their affiliates'
relationships with the New Funds. When reviewing the profitability of the
Adviser and Bailard, the Trustees took into account the proposed expense levels
of the New Funds, the proposed breakpoints in the advisory and sub-advisory fees
and the proposed expense caps. After reviewing these and related factors and
discussions with Fund management, the Trustees concluded, within the context of
their overall conclusions regarding the Amendment and each of the New
Sub-Advisory Agreements, that the advisory fees proposed to be charged by the
Adviser relating to its services to be
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 151
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
BOARD APPROVAL OF THE EXISTING ADVISORY AND SUB-ADVISORY AGREEMENTS (UNAUDITED)
(CONCLUDED)
provided to the New Funds, and the sub-advisory fees proposed to be charged by
Bailard relating to its services to be provided to the New Funds, were fair and
reasonable, and that the costs of these services generally and the related
profitability of the Adviser and its affiliates and Bailard and its affiliates
in respect of their relationships with the New Funds and supported approval of
the Amendment and each of the Sub-Advisory Agreements.
ECONOMIES OF SCALE. The Trustees considered the possible existence of economies
of scale in the provision of services by the Adviser and Bailard and noted that
any economies of scale in the provision of services by Bailard would be shared,
at least in part, with the Adviser through breakpoints in sub-advisory fees,
which would be matched by breakpoints in the fee schedule payable by the New
Funds to the Adviser. The Trustees noted that Class M shares, Class A shares and
the Fiduciary share class in each of the New Funds are proposed to benefit from
expense caps, and Class C shares in each of the New Funds are proposed to
benefit from certain voluntary fee waivers. In considering these issues, the
Trustees also took note of the costs of the services to be provided (both on an
absolute and a relative basis) and the proposed profitability to the Adviser and
Bailard and their affiliates of their relationships with the New Funds, as
discussed above. After reviewing these and related factors and discussions with
Fund management, the Trustees considered, within the context of their overall
conclusions regarding the Amendment and each of the Sub-Advisory Agreements,
that the extent to which any economies of scale are to be shared with the New
Funds supported the approval of the Amendment and each of the Sub-Advisory
Agreements.
The Trustees also considered other factors, which included but were not limited
to the following:
o the compliance programs of the Adviser and Bailard.
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 Amendment and under other separate
agreements with or with respect to HighMark.
o so-called "fallout benefits" to the Adviser and Bailard, 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 Bailard by reason of
brokerage commissions generated by the New 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 approved the Amendment and the New
Sub-Advisory Agreements.
- --------------------------------------------------------------------------------
152 1.800.433.6884
- --------------------------------------------------------------------------------
[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 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 investor services desk at 1-800-433-6884; (ii) on the Commission's
website 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 #
BALANCED 431114792 HMBAX 491
COGNITIVE VALUE 431112390 HCLFX 2209
CORE EQUITY 431112788 HMCFX 1627
ENHANCED GROWTH 431112358 HEGFX 2210
INTERNATIONAL OPPORTUNITIES 431112341 HIOFX 2211
LARGE CAP GROWTH 431114818 HMGRX 492
LARGE CAP VALUE 431114206 HMIEX 490
SMALL CAP GROWTH 431112739 HSRFX 1204
SMALL CAP VALUE 431112101 HMSCX 148
VALUE MOMENTUM 431114677 HMVMX 871
BOND 431114305 HMBDX 489
CA INTERMEDIATE TAX-FREE BOND 431114644 HMITX 847
NATIONAL INTERMEDIATE TAX-FREE BOND 431112655 HMNTX 1600
SHORT TERM BOND 431112549 HMSFX 1506
CA TAX-FREE MONEY MARKET 431114842 HMCXX 487
DIVERSIFIED MONEY MARKET 431114883 HMDXX 484
U.S. GOVERNMENT MONEY MARKET 431114701 HMGXX 485
100% U.S. TREASURY MONEY MARKET 431114503 HMTXX 486
RETAIL SHARES INFORMATION
BALANCED
CLASS A SHARES 431114776 HMBRX 480
CLASS B SHARES 431114545 HMBBX 452
CLASS C SHARES 431112887 HMBCX 1760
COGNITIVE VALUE
CLASS A SHARES 431112432 HCLAX 2203
CLASS C SHARES 431112424 HCLCX 2206
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 153
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK FUND INFORMATION (CONTINUED)
RETAIL SHARES INFORMATION (CONTINUED)
FUND CUSIP TICKER FUND #
CORE EQUITY
CLASS A SHARES 431112770 HCEAX 1626
CLASS B SHARES 431112762 HCEBX 1628
CLASS C SHARES 431112754 HCECX 1632
ENHANCED GROWTH
CLASS A SHARES 431112382 HEHAX 2204
CLASS C SHARES 431112374 HEGCX 2207
INTERNATIONAL OPPORTUNITIES
CLASS A SHARES 431112481 HIOAX 2205
CLASS C SHARES 431112473 HITCX 2208
LARGE CAP GROWTH
CLASS A SHARES 431114768 HMRGX 481
CLASS B SHARES 431114511 HMGBX 455
CLASS C SHARES 431112879 HGRCX 1755
LARGE CAP VALUE
CLASS A SHARES 431114784 HMERX 479
CLASS B SHARES 431114537 HIEBX 457
CLASS C SHARES 431112861 HIECX 1754
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
VALUE MOMENTUM
CLASS A SHARES 431114628 HMVLX 870
CLASS B SHARES 431114529 HVMBX 456
CLASS C SHARES 431112812 HVMCX 1753
CAPITAL GROWTH ALLOCATION
CLASS A SHARES 431112564 HMAAX 1494
CLASS C SHARES 431112556 HMACX 1497
GROWTH & INCOME ALLOCATION
CLASS A SHARES 431112580 HMRAX 1493
CLASS C SHARES 431112572 HMRCX 1496
INCOME PLUS ALLOCATION
CLASS A SHARES 431112614 HMPAX 1495
CLASS C SHARES 431112598 HMPCX 1498
- --------------------------------------------------------------------------------
154 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
RETAIL SHARES INFORMATION (CONTINUED)
FUND CUSIP TICKER FUND #
BOND
CLASS A SHARES 431114743 HMRBX 478
CLASS B SHARES 431112747 HBDBX 1090
CLASS C SHARES 431112648 HBDCX 1492
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
SHORT TERM BOND
CLASS A SHARES 431112523 HMSAX 1505
CLASS C SHARES 431112515 HMTCX 1470
CA TAX-FREE MONEY MARKET
CLASS A SHARES 431114859 HMAXX 476
DIVERSIFIED MONEY MARKET
CLASS A SHARES 431114800 HMVXX 473
U.S. GOVERNMENT MONEY MARKET
CLASS A SHARES 431114602 HMUXX 474
CLASS B SHARES 431114495 HGBXX 450
CLASS C SHARES 431112531 HGTXX 1499
100% U.S. TREASURY MONEY MARKET
CLASS A SHARES 431114404 HMRXX 475
CLASS S SHARES INFORMATION
CA TAX-FREE MONEY MARKET
CLASS S SHARES 431112705 HCSXX 1727
DIVERSIFIED MONEY MARKET
CLASS S SHARES 431112408 HDSXX 1728
U.S. GOVERNMENT MONEY MARKET
CLASS S SHARES 431112507 HGSXX 1729
100% U.S. TREASURY MONEY MARKET
CLASS S SHARES 431112606 HUSXX 1730
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 155
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
HIGHMARK FUND INFORMATION (CONCLUDED)
CLASS M SHARES INFORMATION
FUND CUSIP TICKER FUND #
COGNITIVE VALUE
CLASS M SHARES 431112416 HCLMX 2200
ENHANCED GROWTH
CLASS M SHARES 431112366 HEGMX 2201
INTERNATIONAL OPPORTUNITIES
CLASS M SHARES 431112499 HIOMX 2202
- --------------------------------------------------------------------------------
156 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 157
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES
- --------------------------------------------------------------------------------
158 1.800.433.6884
- --------------------------------------------------------------------------------
[MOUNTAIN RANGE GRAPHIC OMITTED]
NOTES
- --------------------------------------------------------------------------------
WWW.HIGHMARKFUNDS.COM 159
- --------------------------------------------------------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
[MOUNTAIN RANGE GRAPHIC OMITTED]
SERVICE PROVIDERS & BOARD OF TRUSTEES
INVESTMENT ADVISER & ADMINISTRATOR
HighMark Capital Management, Inc.
350 California Street
San Francisco, CA 94104
SUB-ADVISERS
Cognitive Value Fund,
Enhanced Growth Fund and
International Opportunities Fund:
Bailard, Inc.
950 Tower Lane, Suite 1900
Foster City, CA 94404-2131
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:
Trusco Capital Management, Inc.
50 Hurt Plaza, Suite 1400
Atlanta, GA 30303
Small Cap Value Fund:
LSV Asset Management
One North Wacker Drive, Suite 4000
Chicago, IL 60606
CUSTODIAN
Union Bank of California, N.A.
350 California Street
San Francisco, CA 94104
DISTRIBUTOR
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
- --------------------------------------------------------------------------------
160 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](R)
------------------------------
Mutual Funds:
o are not FDIC insured
o have no bank guarantee
o may lose value
------------------------------
[HIGHMARK FUNDS LOGO OMITTED](R)
445 South Figueroa Street o Suite 306 o Los Angeles o California o 90071
WWW.HIGHMARKFUNDS.COM
HMK-AR-002-0400
84806 (07/06)
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.
Fees billed by Deloitte & Touche LLP related to the Trust
Deloitte & Touche LLP billed the Trust aggregate fees for services rendered to
the Trust for the last two fiscal years as follows:
- ------------------ ----------------------------------------------------- -----------------------------------------------------
2006 2005
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
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 $404,500 N/A N/A $323,000 N/A N/A
Fees (1)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(b) Audit- $ 25,200 N/A N/A $ 20,750 N/A N/A
Related
Fees (2)
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(c) Tax Fees $ 0 N/A N/A $ 0 N/A N/A
- ------- ---------- ----------------- ----------------- ----------------- ----------------- ----------------- -----------------
(d) All $ 0 N/A N/A $ 0 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 Trust's audit committee
approves, in advance, the engagement of all audit and non-audit services
rendered to the Trust by the Trust's independent registered public accounting
firm and all non-audit services rendered by the Trust's independent registered
public accounting firm 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:
-------------------------- --------------- --------------
2006 2005
-------------------------- --------------- --------------
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 $25,200 and $20,750 for 2006 and 2005,
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,
except as noted below, 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. The registrant's fund accountant indentified a
weakness in its internal controls relating to the application of fair value
pricing for certain international equity securities held by international equity
funds that used an automated fair valuation process. This resulted in the
registrant identifying a significant deficiency that has since been corrected.
(b) Except for the corrections noted above that were made in the current
quarter, 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
/s/ Earle A. Malm II
By (Signature and Title)* ---------------------------
Earle A. Malm II, President
Date: October 6, 2006
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.
/s/ Earle A. Malm II
By (Signature and Title)* ----------------------------
Earle A. Malm II, President
Date: October 6, 2006
/s/ Jennifer A. Spratley
By (Signature and Title)* -----------------------------
Jennifer E. Spratley, Chief Financial Officer
Date: October 6, 2006
* Print the name and title of each signing officer under his or her signature.