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: 811-04000
SUMMIT MUTUAL FUNDS, INC.
(Exact name of registrant as specified in charter)
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Address of Principal Executive Offices)
William M. Tartikoff, Esq.
4550 Montgomery Avenue
Suite 1000N
Bethesda, Maryland 20814
(Name and Address of Agent for Service)
Registrant's telephone number, including area code: (301) 951-4800
Date of fiscal year end: December 31
Date of reporting period: Year ended December 31, 2009
Item 1. Report to Stockholders.
<PAGE>
Summit Zenith
Portfolio
Annual Report
December 31, 2009
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Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
7 | Shareholder Expense Example |
8 | Report of Independent Registered Public Accounting Firm |
9 | Statement of Net Assets |
12 | Statement of Operations |
13 | Statements of Changes in Net Assets |
14 | Notes to Financial Statements |
20 | Financial Highlights |
22 | Explanation of Financial Tables |
23 | Proxy Voting |
24 | Availability of Quarterly Portfolio Holdings |
25 | Basis for Board's Approval of Investment Advisory Contracts |
27 | Director and Officer Information Table |
Summit Zenith Portfolio
Managed by Calvert Asset Management Company, Inc.
Performance
For the 12-month period ended December 31, 2009, Summit Zenith Portfolio returned 25.40%, outperforming the Russell 1000 Value Index, which returned 19.69%. The portfolio's outperformance was largely the result of strong stock selection.
Summit Zenith Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 25.40% |
Five year | 0.26% |
Ten year | 5.08% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
We entered 2009 with a new President, an untested Treasury secretary, and a relatively new Federal Reserve chairman. Their first order of business was to save the financial system from itself. After the dual shocks of the Lehman Brothers bankruptcy and JPMorgan Chase's acquisition of Bear Stearns, the powers in Washington D.C. rescued almost all remaining major banks and financial firms. Unprecedented government and central bank support eased the panic and helped unlock capital markets. Corporate refinancing, which was all but impossible in late 2008 and early 2009, became much easier with the federal funds rate at nearly zero percent and the implicit guarantee that almost all credit would be backstopped by the Federal Reserve.
Markets continued their losing ways until late March 2009. From that point on, they experienced a rally that was even more impressive than annual numbers suggest because it appears to have resulted not from investor enthusiasm, but from markets being oversold late in 2008. Investors, some of whom may have had too much exposure to equities when the market crashed, remained wary even as markets rebounded. Money market holdings, yielding nearly zero, held little attraction for investors. Bond funds became the primary beneficiary of investors' stock market fears and money markets' yield stinginess.
Portfolio Strategy
Early in the year, as equities continued to lose steam, we increased the portfolio's defensive holdings in companies such as Kroger, Berkshire Hathaway, Johnson & Johnson, Southern Company, and Wal-Mart. As equities bottomed in March and rallied into July, we increased the portfolio's holdings of CBS, News Corporation, Equity Residential, and Goldman Sachs. Citigroup, Genworth, and Boeing had fallen on hard times during 2008, but rebounded sufficiently for us to sell our positions during 2009, freeing capital for investment in other opportunities.
We added high-quality names such as U.S. Bank and ExxonMobil to the portfolio. Whenever we have an opportunity to add to the Portfolio's holdings of high-quality stocks at attractive valuations we do so. We also added Newmont Mining and Devon Energy when their prices dropped as a result of commodity fears. We later reduced these positions as their share prices rebounded. We also initiated and built a position in Burlington Northern Santa Fe. We sold these shares once Berkshire Hathaway made its acquisition offer (which was a major reason for our initiation of the position).
Economic Sectors | % of Total
Investments |
Consumer Discretionary | 7.9% |
Consumer Staples | 10.6% |
Energy | 16.9% |
Financials | 22.6% |
Health Care | 9.1% |
Industrials | 7.5% |
Information Technology | 8.8% |
Materials | 2.8% |
Telecommunication Services | 6.1% |
Time Deposit | 3.0% |
Utilities | 4.7% |
Total | 100% |
Contributors to Performance
The sectors that contributed most to the Portfolio's performance during the one year period were Energy, Industrial, and Financial.
Stock selection within the Energy sector helped the Portfolio outperform the benchmark. Relative to the benchmark, the portfolio was underweight ExxonMobil and overweight Anadarko Petroleum, BP, and Spectra Energy. The higher-beta names benefited as oil rose from $50 to $80 per barrel over the course of the year. (Beta refers to the level of price variability in a stock relative to the broad market.) Anadarko Petroleum also was a top contributor to portfolio return as it benefited from exploration successes in West Africa and was rumored to be a potential takeover candidate.
Industrials also contributed postively to performance, primarily as a result of superior stock selection. Overweight positions in 3M and Boeing made positive performance contributions, as did a relative underweight to General Electric.
Finally, the Portfolio benefited from strong subsector allocation within the Financial sector. The portfolio was overweight Capital Markets and underweight Commercial Banks and Diversified Financials. Three of the top-performing companies in the portfolio were in the Financial sector: JPMorgan Chase, Goldman Sachs, and Discover Financial Services.
Detractors from Performance
The Consumer Staples, Materials, and Healthcare sectors detracted from the Portfolio's relative performance during the year. The Portfolio had poor subsector allocations within Consumer Staples. It was overweight Food & Staples Retailing with holdings in Kroger, Wal-Mart, and CVS Caremark. Kroger shares lost value late in the year when it was forced to drop prices in response to heightened competition and value-minded consumers.
Our holdings in the Materials sector also detracted from relative performance primarily because the portfolio did not include Freeport-McMoran, which soared an astonishing 225% during the year. A bright spot in the sector was Newmont Mining, which performed well as it profited from the escalating price of gold.
Healthcare also hurt performance due to poor stock selection within the sector. The Portfolio did not hold Wyeth, which was a top performer in the benchmark. Wyeth's shares gained when Pfizer announced that it was acquiring the company. The Portfolio's overweight position in Managed Care and a lack of exposure to Biotechnology made positive performance contributions.
Outlook
The stimulus package of 2009 was not large enough to reduce unemployment. Consequently, 2010 appears to be the year of job protection, especially in this election year. Voters were not clamoring for new legislation in 2009, but they are fearful of high unemployment and waiting to see what politicians will do to produce jobs. This environment should prove equity-friendly, as it is likely that Congress will favor business-friendly proposals instead of punitive, job-destroying legislation.
In 2010, we could see further recovery in equity prices as economic growth returns. Our plan is to stay fully invested and shift investments from cyclical holdings (on economic enthusiasm) to defensive holdings (as the recovery sputters) and back again.
See the prospectus supplement included at the back of this report for an update on the Portfolio's investment objective and investment strategies.
January 2010
As of December 31, 2009, the following companies represented the following percentages of Portfolio net assets: JPMorgan Chase (2.39%), Kroger (1.96%), Berkshire Hathaway (1.95%), Johnson & Johnson (1.92%), Southern Company (2.58%), Wal-Mart (1.92%), CBS (1.38%), News Corporation (1.58%), Equity Residential (1.25%), Goldman Sachs (0.99%), Citigroup (0.0%), Genworth (0.0%), Boeing (0.0%), U.S. Bancorp (0.86%), ExxonMobil (2.20%), Newmont Mining (1.67%), Devon Energy (2.31%), Burlington Northern Santa Fe (0.0%), Anadarko Petroleum (1.70%), BP (2.15%), Spectra Energy (1.60%), 3M (1.89%), General Electric (1.94%), Discover Financial Services (1.47%), CVS Caremark (1.73%), Freeport-McMoran (0.0%), Wyeth (0.0%), and Pfizer (2.23%). All holdings are subject to change without notice.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
Actual | $1,000.00 | $1,224.60 | $4.15 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,021.48 | $3.77 |
* Expenses are equal to the Fund's annualized expense ratio of 0.74%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Zenith Portfolio:
We have audited the accompanying statement of net assets of the Summit Zenith Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Zenith Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
December 31, 2009
Equity Securities - 96.9% | Shares | Value |
Capital Markets - 6.5% | | |
AllianceBernstein Holding LP* | 96,000 | $2,697,600 |
Bank of New York Mellon Corp. | 115,458 | 3,229,360 |
Goldman Sachs Group, Inc. | 10,400 | 1,755,936 |
Legg Mason, Inc. | 70,000 | 2,111,200 |
Morgan Stanley | 57,100 | 1,690,160 |
| | 11,484,256 |
| | |
Chemicals - 1.1% | | |
Dow Chemical Co. | 70,400 | 1,945,152 |
| | |
Commercial Banks - 2.6% | | |
US Bancorp | 67,700 | 1,523,927 |
Wells Fargo & Co. | 116,900 | 3,155,131 |
| | 4,679,058 |
| | |
Communications Equipment - 4.1% | | |
Cisco Systems, Inc.* | 144,000 | 3,447,360 |
Motorola, Inc.* | 236,700 | 1,836,792 |
Nokia Oyj (ADR) | 159,600 | 2,050,860 |
| | 7,335,012 |
| | |
Computers & Peripherals - 1.6% | | |
International Business Machines Corp. | 21,400 | 2,801,260 |
| | |
Consumer Finance - 1.5% | | |
Discover Financial Services | 178,100 | 2,619,851 |
| | |
Diversified Financial Services - 4.2% | | |
Bank of America Corp. | 216,684 | 3,263,261 |
JPMorgan Chase & Co. | 102,204 | 4,258,841 |
| | 7,522,102 |
| | |
Diversified Telecommunication Services - 6.1% | | |
AT&T, Inc. | 160,500 | 4,498,815 |
Frontier Communications Corp. | 291,600 | 2,277,396 |
Verizon Communications, Inc. | 125,300 | 4,151,189 |
| | 10,927,400 |
| | |
Electric Utilities - 4.7% | | |
Duke Energy Corp. | 214,144 | 3,685,418 |
Southern Co. | 137,800 | 4,591,496 |
| | 8,276,914 |
| | |
Electrical Equipment - 1.9% | | |
Emerson Electric Co. | 80,300 | 3,420,780 |
| | |
Electronic Equipment & Instruments - 1.4% | | |
Tyco Electronics Ltd. | 103,325 | 2,536,629 |
| | |
Equity Securities - Cont'd | Shares | Value |
Food & Staples Retailing - 6.3% | | |
CVS Caremark Corp. | 95,400 | $3,072,834 |
Kroger Co. | 169,800 | 3,485,994 |
Walgreen Co. | 34,800 | 1,277,856 |
Wal-Mart Stores, Inc. | 63,900 | 3,415,455 |
| | 11,252,139 |
| | |
Food Products - 4.3% | | |
Kraft Foods, Inc. | 151,372 | 4,114,291 |
Unilever NV | 107,500 | 3,475,475 |
| | 7,589,766 |
| | |
Health Care Equipment & Supplies - 1.5% | | |
Covidien plc | 57,425 | 2,750,083 |
| | |
Health Care Providers & Services - 1.8% | | |
WellPoint, Inc.* | 53,400 | 3,112,686 |
| | |
Household Durables - 0.9% | | |
Sony Corp. (ADR) | 57,600 | 1,670,400 |
| | |
Industrial Conglomerates - 5.6% | | |
3M Co. | 40,600 | 3,356,402 |
General Electric Co. | 228,200 | 3,452,666 |
Tyco International Ltd.* | 86,425 | 3,083,644 |
| | 9,892,712 |
| | |
Insurance - 6.6% | | |
Allstate Corp. | 79,200 | 2,379,168 |
Berkshire Hathaway, Inc., Class B* | 1,055 | 3,466,730 |
MetLife, Inc. | 83,700 | 2,958,795 |
Travelers Co.'s, Inc. | 59,200 | 2,951,712 |
| | 11,756,405 |
| | |
Internet Software & Services - 0.1% | | |
AOL, Inc.* | 7,742 | 180,234 |
| | |
Media - 6.9% | | |
CBS Corp., Class B | 174,074 | 2,445,740 |
Comcast Corp. | 197,600 | 3,331,536 |
Gannett Co., Inc. | 86,200 | 1,280,070 |
News Corp., Class B | 176,300 | 2,806,696 |
Time Warner, Inc. | 85,166 | 2,481,737 |
| | 12,345,779 |
| | |
Metals & Mining - 1.7% | | |
Newmont Mining Corp. | 62,800 | 2,971,068 |
| | |
Oil, Gas & Consumable Fuels - 16.8% | | |
Anadarko Petroleum Corp. | 48,300 | 3,014,886 |
BP plc (ADR) | 66,000 | 3,826,020 |
ConocoPhillips | 82,542 | 4,215,420 |
Devon Energy Corp. | 56,000 | 4,116,000 |
Exxon Mobil Corp. | 57,400 | 3,914,106 |
| | |
Equity Securities - Cont'd | Shares | Value |
Oil, Gas & Consumable Fuels - Cont'd | | |
Marathon Oil Corp. | 124,500 | $3,886,890 |
Royal Dutch Shell plc (ADR) | 69,300 | 4,165,623 |
Spectra Energy Corp. | 138,672 | 2,844,163 |
| | 29,983,108 |
| | |
Pharmaceuticals - 5.8% | | |
GlaxoSmithKline plc (ADR) | 70,900 | 2,995,525 |
Johnson & Johnson | 52,900 | 3,407,289 |
Pfizer, Inc. | 218,200 | 3,969,058 |
| | 10,371,872 |
| | |
Real Estate Investment Trusts - 1.3% | | |
Equity Residential | 65,900 | 2,226,102 |
| | |
Software - 1.6% | | |
Microsoft Corp. | 93,200 | 2,841,667 |
| | |
| | |
Total Equity Securities (Cost $199,550,168) | | 172,492,435 |
| | |
| | |
| Principal | |
Time Deposit - 3.0% | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | $5,352,760 | 5,352,760 |
| | |
Total Time Deposit (Cost $5,352,760) | | 5,352,760 |
| | |
| | |
| | |
TOTAL INVESTMENTS (Cost $204,902,928) - 99.9% | | 177,845,195 |
Other assets and liabilities, net - 0.1% | | 217,978 |
Net Assets - 100% | | $178,063,173 |
| | |
| | |
Net Assets Consist of: | | |
Paid-in capital applicable to 2,930,839 shares of common stock outstanding; | | |
$0.10 par value, 40,000,000 shares authorized | | $236,481,405 |
Undistributed net investment income | | 318,385 |
Accumulated net realized gain (loss) on investments | | (31,678,884) |
Net unrealized appreciation (depreciation) on investments | | (27,057,733) |
| | |
Net Assets | | $178,063,173 |
| | |
Net Asset Value per share | | $60.76 |
*Non-income producing security.
Abbreviations:
ADR: American Depositary Receipt
LP: Limited Partnership
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income (net of foreign taxes withheld of $67,232) | $4,450,530 |
Interest income | 1,514 |
Total investment income | 4,452,044 |
| |
Expenses: | |
Investment advisory fee | 973,582 |
Transfer agent fees and expenses | 2,627 |
Directors' fees and expenses | 26,187 |
Administrative fees | 152,122 |
Accounting fees | 25,408 |
Custodian fees | 22,072 |
Reports to shareholders | 50,442 |
Professional fees | 32,143 |
Miscellaneous | 11,608 |
Total expenses | 1,296,191 |
Reimbursement from Advisor | (170,174) |
Fees paid indirectly | (313) |
Net expenses | 1,125,704 |
| |
Net Investment Income | 3,326,340 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (29,235,023) |
Change in unrealized appreciation or (depreciation) | 62,691,043 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 33,456,020 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $36,782,360 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $3,326,340 | $1,094,473 |
Net realized gain (loss) on investments | (29,235,023) | 649,111 |
Change in unrealized appreciation or (depreciation) | 62,691,043 | (20,707,578) |
| | |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 36,782,360 | (18,963,994) |
| | |
Distributions to shareholders from: | | |
Net investment income | (3,261,948) | (1,753,024) |
Net realized gain | (354,426) | (5,154,085) |
Total distributions | (3,616,374) | (6,907,109) |
| | |
Capital share transactions: | | |
Shares sold | 14,172,390 | 6,549,955 |
Reinvestment of distributions | 3,616,370 | 6,907,105 |
Shares issued from merger (see Note A) | -- | 107,884,520 |
Shares redeemed | (17,316,930) | (9,202,613) |
Total capital share transactions | 471,830 | 112,138,967 |
| | |
Total Increase (Decrease) in Net Assets | 33,637,816 | 86,267,864 |
| | |
Net Assets | | |
Beginning of year | 144,425,357 | 58,157,493 |
End of year (including undistributed net investment income | | |
of $318,385 and $241,869, respectively) | $178,063,173 | $144,425,357 |
| | |
Capital Share Activity | | |
Shares sold | 289,892 | 99,232 |
Reinvestment of distributions | 59,072 | 99,493 |
Shares issued from merger (see Note A) | -- | 2,227,178 |
Shares redeemed | (338,718) | (130,949) |
Total capital share activity | 10,246 | 2,294,954 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Zenith Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
On December 12, 2008, the net assets of the Ameritas Income & Growth Portfolio, a series of Calvert Variable Series, Inc. merged into Summit Mutual Funds, Inc., Zenith Portfolio. The merger was accomplished by a tax-free exchange of 13,716,124 shares of Ameritas Income & Growth Portfolio (valued at $107,884,520) for 2,227,178 shares of the Summit Zenith Portfolio outstanding at December 12, 2008. The Ameritas Income & Growth Portfolio's net assets as of December 12, 2008, including $74,101,129 of unrealized depreciation, were combined with those of Summit Zenith Portfolio.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Portfolio, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Short-term notes are stated at amortized cost, which approximates fair value. Investments for which market quotations are n ot available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity securities* | $172,492,435 | -- | -- | $172,492,435 |
Other debt obligations | -- | $5,352,760 | -- | 5,352,760 |
TOTAL | $172,492,435 | $5,352,760 | -- | $177,845,195 |
*For further breakdown of Equity Securities by industry type, please refer to the Statement of Net Assets.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the applicable country's tax rules and rates.
Foreign Currency Transactions: The Portfolio's accounting records are maintained in U.S. dollars. For valuation of assets and liabilities on each date of net asset value determination, foreign denominations are converted into U.S. dollars using the current exchange rate. Security transactions, income and expenses are translated at the prevailing rate of exchange on the date of the event. The effect of changes in foreign exchange rates on securities is included with the net realized and unrealized gain or loss on investments.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.64% of the Portfolio's average daily net assets. Under the terms of the agreement, $96,111 was payable at year end. In addition, $2,762 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.74%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $15,032 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), a subsidiary of Calvert, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $64 for the year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $44,981,909 and $42,652,643, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-15 | $2,277,422 |
31-Dec-17 | 29,095,011 |
Capital losses may be utilized to offset future capital gains until expiration. The Portfolio's use of net capital loss carryforwards acquired from Ameritas Income & Growth Portfolio may be limited under certain tax provisions.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | 2009 | 2008 |
Ordinary income | $3,261,948 | $3,179,457 |
Long term capital gain | 354,426 | 3,727,652 |
Total | $3,616,374 | $6,907,109 |
As of December 31, 2009, the tax basis components of distributable earnings / (accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $8,750,016 |
Unrealized (depreciation) | (36,114,200) |
Net unrealized appreciation/(depreciation) | ($27,364,184) |
Undistributed ordinary income | $318,385 |
Capital loss carryforward | ($31,372,433) |
Federal income tax cost of investments | $205,209,379 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales, partnerships and capital loss carryovers subject to limitations under the Internal Revenue Code section 382.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to partnerships and real estate investment trusts.
Undistributed net investment income | $12,124 |
Accumulated net realized gain (loss) | 53,874 |
Paid-in capital | (65,998) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| AVERAGE
DAILY
BALANCE | WEIGHTED
AVERAGE
INTEREST
RATE | MAXIMUM
AMOUNT
BORROWED | MONTH OF
MAXIMUM
AMOUNT
BORROWED | |
| $5,161 | 1.46% | $186,341 | October 2009 | |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates $354,426 of the long term capital gain distributions paid during the year or the maximum amount allowable but not less than the aforementioned amount as capital gain dividend in accordance with Section 852(b)(3)(C) of the Internal Revenue Code.
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 100% of the ordinary dividends paid during the year as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
| 2009 | 2008 | 2007 |
Net asset value, beginning | $49.45 | $92.96 | $101.12 |
Income from investment operations | | | |
Net investment income | 1.16 | .61 | 1.64 |
Net realized and unrealized gain (loss) | 11.41 | (34.05) | (.06) |
Total investment operations | 12.57 | (33.44) | 1.58 |
Distributions from | | | |
Net investment income | (1.14) | (1.95) | (1.42) |
Net realized gain | (.12) | (8.12) | (8.32) |
Total distributions | (1.26) | (10.07) | (9.74) |
Total increase (decrease) in net asset value | 11.31 | (43.51) | (8.16) |
Net asset value, ending | $60.76 | $49.45 | $92.96 |
| | | |
Total return* | 25.40% | (39.49%) | 1.40% |
Ratios to average net assets: A | | | |
Net investment income (loss) | 2.19% | 2.14% | 1.61% |
Total expenses | .85% | .90% | .87% |
Expenses before offsets | .74% | .90% | .87% |
Net expenses | .74% | .90% | .87% |
Portfolio turnover | 29% | 34% | 42% |
Net assets, ending (in thousands) | $178,063 | $144,425 | $58,157 |
| | | |
| | | |
| Years Ended | |
| December 31, | December 31, | |
| 2006 | 2005 | |
Net asset value, beginning | $91.78 | $91.30 | |
Income from investment operations | | | |
Net investment income | 1.42 | 1.35 | |
Net realized and unrealized gain (loss) | 18.02 | 4.57 | |
Total from investment operations | 19.44 | 5.92 | |
Distributions from | | | |
Net investment income | (1.42) | (1.43) | |
Net realized gain | (8.68) | (4.01) | |
Total distributions | (10.10) | (5.44) | |
Total increase (decrease) in net asset value | 9.34 | .48 | |
Net asset value, ending | $101.12 | $91.78 | |
| | | |
Total return* | 23.12% | 6.92% | |
Ratios to average net assets: A | | | |
Net investment income (loss) | 1.57% | 1.49% | |
Total expenses | .88% | .89% | |
Expenses before offsets | .88% | .89% | |
Net expenses | .88% | .89% | |
Portfolio turnover | 61% | 57% | |
Net assets, ending (in thousands) | $62,428 | $52,795 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
* Total return is not annualized for periods less than one year.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Fund and the Advisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's investment, supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's management style and its performance in employing its investment strategies, as well as its current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board concluded that it wa s satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer universe for the one- and three-year periods and above the median of its peer universe for the five-year period ended June 30, 2009. The data also indicated that the Portfolio underperformed its Lipper index for the one- and three-year periods ended June 30, 2009, and it out performed the Lipper index for the five-year period ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance. Based upon its review, the Board concluded that the Portfolio's performance was being addressed.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was below the median of its peer group and that total expenses (net of expense reimbursements) were below the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. The Board noted that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services received by the Portfolio from the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board noted that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's growth and size on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Advisor maintains appropriate compliance programs; (c) performance of the Portfolio is being addressed; (d) the Advisor is likely to execute its investment strategies consistently over time; and (e) the Portfolio's advisory fee is reasonable in relation to those of similar funds and to the services to be provided by the Advisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement would be in the best interests of the Portfolio and its shareholders.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit S&P 500
Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
23 | Statement of Operations |
24 | Statements of Changes in Net Assets |
25 | Notes to Financial Statements |
31 | Financial Highlights |
33 | Explanation of Financial Tables |
34 | Proxy Voting |
35 | Availability of Quarterly Portfolio Holdings |
35 | Basis for Boards Approval of Investment Advisory Contracts |
39 | Director and Officer Information Table |
Summit S&P 500 Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit S&P 500 Index Portfolio provided a return of 26.11% compared to a return of 26.46% for the Standard & Poor's (S&P) 500 Index. As an index fund, the portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of the S&P 500 Index. The portfolio's underperformance was largely attributable to fees and operating expenses. These expenses represent the Portfolio's costs for advisory, administration, accounting, custody, and other services.
Summit S&P 500 Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 26.11% |
Five year | 0.12% |
Ten year | -1.33% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
The stabilized banking system, an improved economic outlook, and low valuations fueled a stock market rally that lasted throughout much of 2009. The S&P 500 Index, which declined significantly during the first quarter of 2009, hit bottom in early March at a level of 676.53. For the balance of the year, the index trended higher, closing the year at 1,115.10. Including dividend reinvestment, the index gained 67.8% from its March 2009 low through the end of the year.
Portfolio Strategy
The Portfolio continued to meet its investment objective of closely tracking the total return of the S&P 500 Index. The index includes 500 of the largest companies in the United States and is widely accepted as a proxy for the performance of U.S. markets. These companies delivered strong returns for the year in absolute terms.
At year end, the S&P 500 Index was most heavily weighted in Information Technology (19.9%) and Financials (14.4%) companies. Other sectors of significant weight included Healthcare (12.6%) and Energy (11.5%). The portfolio had the lowest exposure to companies in the Telecommunications Services (3.2%) and Utilities (3.6%) sectors.
The top-performing sectors of the S&P 500 Index, including dividend reinvestment, were Information Technology (up 61.7% in 2009), Materials (48.6%), and Consumer Discretionary (41.5%). The worst performers included the Telecommunication Services (8.9%), Utilities (11.9%), and Energy (13.8%) sectors.
Summit S&P 500 Index Portfolio fully replicates the S&P 500 Index, which means that it holds all of the stocks in the Index. Market fluctuation, cash flows, and corporate actions may cause the Portfolio to hold slightly different weightings than the Index. Since the S&P 500 Index is not a mutual fund, direct investment is not possible and there are no expenses charged against its return as there are against the Portfolio's return.
Economic Sectors | % of Total
Investments |
Consumer Discretionary | 9.2% |
Consumer Staples | 10.8% |
Energy | 10.9% |
Exchange Traded Funds | 1.1% |
Financials | 13.6% |
Government | 0.4% |
Health Care | 12.0% |
Industrials | 9.6% |
Information Technology | 18.8% |
Materials | 3.4% |
Telecommunication Services | 3.0% |
Time Deposit | 3.7% |
Utilities | 3.5% |
Total | 100% |
Outlook
The outlook for 2010 is for modest growth in the U.S. and global economies, and for improved corporate earnings. Interest rates may increase modestly as the economy strengthens and the Federal Reserve removes the massive liquidity that it has injected into the market. Riskier assets, including equities, may outperform in this environment, in a continuation of the trend established in 2009.
Challenges will remain, however, as the economic recovery will likely be muted by high unemployment and by consumers who continue to repair their balance sheets by curtailing spending. In addition, financial institutions will continue to deal with problem assets, and weakness in the commercial real estate market will likely bring new challenges in 2010. Lastly, the prospect of higher interest rates may negatively affect price/earnings multiples in the equity markets.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,223.60 | $2.13 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,023.29 | $1.94 |
* Expenses are equal to the Fund's annualized expense ratio of 0.38%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit S&P 500 Index Portfolio:
We have audited the accompanying statement of net assets of the Summit S&P 500 Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit S&P 500 Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Equity Securities - 94.8% | Shares | Value |
Aerospace & Defense - 2.6% | | |
Boeing Co. | 16,477 | $891,900 |
General Dynamics Corp. | 8,752 | 596,624 |
Goodrich Corp. | 2,822 | 181,314 |
Honeywell International, Inc. | 17,507 | 686,274 |
ITT Corp. | 4,150 | 206,421 |
L-3 Communications Holdings, Inc. | 2,634 | 229,026 |
Lockheed Martin Corp. | 7,268 | 547,644 |
Northrop Grumman Corp. | 7,127 | 398,043 |
Precision Castparts Corp. | 3,194 | 352,458 |
Raytheon Co. | 8,564 | 441,217 |
Rockwell Collins, Inc. | 3,545 | 196,251 |
United Technologies Corp. | 21,226 | 1,473,297 |
| | 6,200,469 |
| | |
Air Freight & Logistics - 1.0% | | |
C.H. Robinson Worldwide, Inc. | 3,774 | 221,647 |
Expeditors International of Washington, Inc. | 4,800 | 166,704 |
FedEx Corp. | 7,108 | 593,163 |
United Parcel Service, Inc., Class B | 22,485 | 1,289,964 |
| | 2,271,478 |
| | |
Airlines - 0.1% | | |
Southwest Airlines Co. | 16,832 | 192,390 |
| | |
Auto Components - 0.2% | | |
Goodyear Tire & Rubber Co.* | 5,851 | 82,499 |
Johnson Controls, Inc. | 15,251 | 415,437 |
| | 497,936 |
| | |
Automobiles - 0.4% | | |
Ford Motor Co.* | 75,075 | 750,750 |
Harley-Davidson, Inc. | 5,318 | 134,014 |
| | 884,764 |
| | |
Beverages - 2.5% | | |
Brown-Forman Corp., Class B | 2,469 | 132,264 |
Coca-Cola Co. | 52,700 | 3,003,900 |
Coca-Cola Enterprises, Inc. | 7,208 | 152,810 |
Constellation Brands, Inc.* | 4,267 | 67,973 |
Dr Pepper Snapple Group, Inc. | 5,759 | 162,980 |
Molson Coors Brewing Co., Class B | 3,576 | 161,492 |
Pepsi Bottling Group, Inc. | 3,276 | 122,850 |
PepsiCo, Inc. | 35,401 | 2,152,381 |
| | 5,956,650 |
| | |
Equity Securities - Cont'd | Shares | Value |
Biotechnology - 1.5% | | |
Amgen, Inc.* | 23,002 | $1,301,223 |
Biogen Idec, Inc.* | 6,562 | 351,067 |
Celgene Corp.* | 10,381 | 578,014 |
Cephalon, Inc.* | 1,787 | 111,527 |
Genzyme Corp.* | 6,020 | 295,040 |
Gilead Sciences, Inc.* | 20,344 | 880,488 |
| | 3,517,359 |
| | |
Building Products - 0.0% | | |
Masco Corp. | 8,136 | 112,358 |
| | |
Capital Markets - 2.6% | | |
Ameriprise Financial, Inc. | 5,785 | 224,574 |
Bank of New York Mellon Corp. | 27,474 | 768,448 |
Charles Schwab Corp. | 21,904 | 412,233 |
E*Trade Financial Corp.* | 38,249 | 66,936 |
Federated Investors, Inc., Class B | 1,821 | 50,079 |
Franklin Resources, Inc. | 3,353 | 353,239 |
Goldman Sachs Group, Inc. | 11,692 | 1,974,077 |
Invesco Ltd. | 9,952 | 233,772 |
Janus Capital Group, Inc. | 3,994 | 53,719 |
Legg Mason, Inc. | 3,532 | 106,525 |
Morgan Stanley | 30,992 | 917,363 |
Northern Trust Corp. | 5,486 | 287,466 |
State Street Corp. | 11,230 | 488,954 |
T. Rowe Price Group, Inc. | 5,852 | 311,619 |
| | 6,249,004 |
| | |
Chemicals - 1.9% | | |
Air Products & Chemicals, Inc. | 4,808 | 389,736 |
Airgas, Inc. | 1,788 | 85,109 |
CF Industries Holdings, Inc. | 1,054 | 95,682 |
Dow Chemical Co. | 25,922 | 716,225 |
Eastman Chemical Co. | 1,648 | 99,275 |
Ecolab, Inc. | 5,403 | 240,866 |
EI Du Pont de Nemours & Co. | 20,483 | 689,663 |
FMC Corp. | 1,577 | 87,933 |
International Flavors & Fragrances, Inc. | 1,904 | 78,331 |
Monsanto Co. | 12,356 | 1,010,103 |
PPG Industries, Inc. | 3,796 | 222,218 |
Praxair, Inc. | 6,939 | 557,271 |
Sigma-Aldrich Corp. | 2,751 | 139,008 |
| | 4,411,420 |
| | |
Commercial Banks - 2.6% | | |
BB&T Corp. | 15,615 | 396,153 |
Comerica, Inc. | 3,425 | 101,277 |
Fifth Third Bancorp | 18,033 | 175,822 |
First Horizon National Corp.* | 5,363 | 71,860 |
Huntington Bancshares, Inc. | 16,036 | 58,531 |
KeyCorp | 20,923 | 116,123 |
M&T Bank Corp. | 1,980 | 132,442 |
Marshall & Ilsley Corp. | 12,188 | 66,425 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Commercial Banks - Cont'd | | |
PNC Financial Services Group, Inc. | 10,486 | $553,556 |
Regions Financial Corp. | 27,946 | 147,834 |
SunTrust Banks, Inc. | 11,313 | 229,541 |
US Bancorp | 43,688 | 983,417 |
Wells Fargo & Co. | 116,486 | 3,143,957 |
Zions Bancorporation | 3,472 | 44,546 |
| | 6,221,484 |
| | |
Commercial Services & Supplies - 0.5% | | |
Avery Dennison Corp. | 2,440 | 89,036 |
Cintas Corp. | 3,180 | 82,839 |
Iron Mountain, Inc.* | 4,358 | 99,188 |
Pitney Bowes, Inc. | 4,711 | 107,222 |
Republic Services, Inc. | 7,337 | 207,711 |
RR Donnelley & Sons Co. | 4,655 | 103,667 |
Stericycle, Inc.* | 1,825 | 100,685 |
Waste Management, Inc. | 11,111 | 375,663 |
| | 1,166,011 |
| | |
Communications Equipment - 2.5% | | |
Cisco Systems, Inc.* | 130,366 | 3,120,962 |
Harris Corp. | 2,818 | 133,996 |
JDS Uniphase Corp.* | 4,337 | 35,780 |
Juniper Networks, Inc.* | 11,936 | 318,333 |
Motorola, Inc.* | 52,467 | 407,144 |
QUALCOMM, Inc. | 38,046 | 1,760,008 |
Tellabs, Inc.* | 9,576 | 54,392 |
| | 5,830,615 |
| | |
Computers & Peripherals - 5.6% | | |
Apple, Inc.* | 20,448 | 4,311,665 |
Dell, Inc.* | 39,167 | 562,438 |
EMC Corp.* | 46,485 | 812,093 |
Hewlett-Packard Co. | 53,906 | 2,776,698 |
International Business Machines Corp. | 29,820 | 3,903,438 |
Lexmark International, Inc.* | 1,890 | 49,102 |
NetApp, Inc.* | 7,820 | 268,930 |
QLogic Corp.* | 2,876 | 54,270 |
SanDisk Corp.* | 5,179 | 150,139 |
Sun Microsystems, Inc.* | 17,246 | 161,595 |
Teradata Corp.* | 3,857 | 121,226 |
Western Digital Corp.* | 5,159 | 227,770 |
| | 13,399,364 |
| | |
Construction & Engineering - 0.2% | | |
Fluor Corp. | 4,055 | 182,637 |
Jacobs Engineering Group, Inc.* | 2,830 | 106,436 |
Quanta Services, Inc.* | 5,097 | 106,222 |
| | 395,295 |
| | |
Construction Materials - 0.1% | | |
Vulcan Materials Co. | 2,949 | 155,324 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Consumer Finance - 0.8% | | |
American Express Co. | 26,994 | $1,093,797 |
Capital One Financial Corp. | 10,266 | 393,598 |
Discover Financial Services | 12,313 | 181,124 |
SLM Corp.* | 10,759 | 121,254 |
| | 1,789,773 |
| | |
Containers & Packaging - 0.2% | | |
Ball Corp. | 2,138 | 110,534 |
Bemis Co., Inc. | 2,595 | 76,942 |
Owens-Illinois, Inc.* | 3,824 | 125,695 |
Pactiv Corp.* | 3,193 | 77,079 |
Sealed Air Corp. | 3,838 | 83,899 |
| | 474,149 |
| | |
Distributors - 0.1% | | |
Genuine Parts Co. | 3,619 | 137,377 |
| | |
Diversified Consumer Services - 0.2% | | |
Apollo Group, Inc.* | 2,923 | 177,075 |
DeVry, Inc. | 1,491 | 84,585 |
H&R Block, Inc. | 7,494 | 169,514 |
| | 431,174 |
| | |
Diversified Financial Services - 4.1% | | |
Bank of America Corp. | 225,493 | 3,395,925 |
Citigroup, Inc. | 444,524 | 1,471,374 |
CME Group, Inc. | 1,509 | 506,949 |
IntercontinentalExchange, Inc.* | 1,665 | 186,979 |
JPMorgan Chase & Co. | 89,397 | 3,725,173 |
Leucadia National Corp.* | 4,571 | 108,744 |
Moody's Corp. | 4,381 | 117,411 |
NYSE Euronext | 5,892 | 149,068 |
The NASDAQ OMX Group, Inc.* | 3,326 | 65,921 |
| | 9,727,544 |
| | |
Diversified Telecommunication Services - 2.7% | | |
AT&T, Inc. | 133,909 | 3,753,469 |
CenturyTel, Inc. | 6,764 | 244,925 |
Frontier Communications Corp. | 6,531 | 51,007 |
Qwest Communications International, Inc. | 33,811 | 142,344 |
Verizon Communications, Inc. | 64,393 | 2,133,340 |
Windstream Corp. | 9,657 | 106,131 |
| | 6,431,216 |
| | |
Electric Utilities - 1.9% | | |
Allegheny Energy, Inc. | 3,845 | 90,281 |
American Electric Power Co., Inc. | 10,828 | 376,706 |
Duke Energy Corp. | 29,809 | 513,013 |
Edison International | 7,386 | 256,885 |
Entergy Corp. | 4,266 | 349,130 |
Exelon Corp. | 14,952 | 730,704 |
FirstEnergy Corp. | 6,907 | 320,830 |
| | |
Equity Securities - Cont'd | Shares | Value |
Electric Utilities - Cont'd | | |
FPL Group, Inc. | 9,387 | $495,821 |
Northeast Utilities | 3,980 | 102,644 |
Pepco Holdings, Inc. | 5,323 | 89,693 |
Pinnacle West Capital Corp. | 2,446 | 89,475 |
PPL Corp. | 8,559 | 276,541 |
Progress Energy, Inc. | 6,344 | 260,167 |
Southern Co. | 18,198 | 606,357 |
| | 4,558,247 |
| | |
Electrical Equipment - 0.5% | | |
Emerson Electric Co. | 17,055 | 726,543 |
First Solar, Inc.* | 1,091 | 147,721 |
Rockwell Automation, Inc. | 3,229 | 151,699 |
Roper Industries, Inc. | 2,110 | 110,501 |
| | 1,136,464 |
| | |
Electronic Equipment & Instruments - 0.6% | | |
Agilent Technologies, Inc.* | 7,864 | 244,334 |
Amphenol Corp. | 3,889 | 179,594 |
Corning, Inc. | 35,321 | 682,049 |
FLIR Systems, Inc.* | 3,636 | 118,970 |
Jabil Circuit, Inc. | 4,448 | 77,262 |
Molex, Inc. | 3,006 | 64,779 |
| | 1,366,988 |
| | |
Energy Equipment & Services - 1.7% | | |
Baker Hughes, Inc. | 7,024 | 284,332 |
BJ Services Co. | 6,655 | 123,783 |
Cameron International Corp.* | 5,581 | 233,286 |
Diamond Offshore Drilling, Inc. | 1,576 | 155,110 |
FMC Technologies, Inc.* | 2,741 | 158,539 |
Halliburton Co. | 20,558 | 618,590 |
Nabors Industries Ltd.* | 6,442 | 141,015 |
National Oilwell Varco, Inc. | 9,487 | 418,282 |
Rowan Co.'s, Inc.* | 2,394 | 54,200 |
Schlumberger Ltd. | 27,252 | 1,773,833 |
Smith International, Inc. | 5,613 | 152,505 |
| | 4,113,475 |
| | |
Food & Staples Retailing - 2.5% | | |
Costco Wholesale Corp. | 9,907 | 586,197 |
CVS Caremark Corp. | 32,019 | 1,031,332 |
Kroger Co. | 14,725 | 302,304 |
Safeway, Inc. | 8,970 | 190,971 |
SUPERVALU, Inc. | 5,120 | 65,075 |
Sysco Corp. | 13,441 | 375,542 |
Walgreen Co. | 22,423 | 823,373 |
Wal-Mart Stores, Inc. | 48,469 | 2,590,668 |
Whole Foods Market, Inc.* | 3,398 | 93,275 |
| | 6,058,737 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Food Products - 1.6% | | |
Archer-Daniels-Midland Co. | 14,563 | $455,968 |
Campbell Soup Co. | 4,130 | 139,594 |
ConAgra Foods, Inc. | 9,915 | 228,541 |
Dean Foods Co.* | 4,283 | 77,265 |
General Mills, Inc. | 7,317 | 518,117 |
H.J. Heinz Co. | 7,167 | 306,461 |
Hershey Co. | 3,769 | 134,893 |
Hormel Foods Corp. | 1,690 | 64,981 |
J.M. Smucker Co. | 2,710 | 167,342 |
Kellogg Co. | 5,856 | 311,539 |
Kraft Foods, Inc. | 33,535 | 911,481 |
McCormick & Co., Inc. | 2,978 | 107,595 |
Sara Lee Corp. | 15,806 | 192,517 |
Tyson Foods, Inc. | 7,309 | 89,681 |
| | 3,705,975 |
| | |
Gas Utilities - 0.1% | | |
EQT Corp. | 2,968 | 130,355 |
Nicor, Inc. | 945 | 39,784 |
Questar Corp. | 3,956 | 164,451 |
| | 334,590 |
| | |
Health Care Equipment & Supplies - 1.9% | | |
Baxter International, Inc. | 13,605 | 798,341 |
Becton Dickinson & Co. | 5,368 | 423,320 |
Boston Scientific Corp.* | 34,283 | 308,547 |
C.R. Bard, Inc. | 2,146 | 167,173 |
CareFusion Corp.* | 3,829 | 95,751 |
DENTSPLY International, Inc. | 3,594 | 126,401 |
Hospira, Inc.* | 3,692 | 188,292 |
Intuitive Surgical, Inc.* | 869 | 263,585 |
Medtronic, Inc. | 25,164 | 1,106,713 |
St. Jude Medical, Inc.* | 7,598 | 279,454 |
Stryker Corp. | 6,421 | 323,426 |
Varian Medical Systems, Inc.* | 2,823 | 132,258 |
Zimmer Holdings, Inc.* | 4,806 | 284,083 |
| | 4,497,344 |
| | |
Health Care Providers & Services - 2.1% | | |
Aetna, Inc. | 9,853 | 312,340 |
AmerisourceBergen Corp. | 6,403 | 166,926 |
Cardinal Health, Inc. | 8,215 | 264,852 |
CIGNA Corp. | 6,198 | 218,604 |
Coventry Health Care, Inc.* | 3,228 | 78,408 |
DaVita, Inc.* | 2,329 | 136,806 |
Express Scripts, Inc.* | 6,307 | 545,240 |
Humana, Inc.* | 3,851 | 169,020 |
Laboratory Corp. of America Holdings* | 2,404 | 179,915 |
McKesson Corp. | 6,095 | 380,939 |
Medco Health Solutions, Inc.* | 10,841 | 692,848 |
Patterson Co.'s, Inc.* | 1,980 | 55,400 |
Quest Diagnostics, Inc. | 3,531 | 213,202 |
| | |
Equity Securities - Cont'd | Shares | Value |
Health Care Providers & Services - Cont'd | | |
Tenet Healthcare Corp.* | 10,103 | $54,455 |
UnitedHealth Group, Inc. | 26,409 | 804,946 |
WellPoint, Inc.* | 10,401 | 606,274 |
| | 4,880,175 |
| | |
Health Care Technology - 0.0% | | |
IMS Health, Inc. | 4,398 | 92,622 |
| | |
Hotels, Restaurants & Leisure - 1.4% | | |
Carnival Corp.* | 9,903 | 313,826 |
Darden Restaurants, Inc. | 3,318 | 116,362 |
International Game Technology | 6,732 | 126,360 |
Marriott International, Inc. | 5,770 | 157,230 |
McDonald's Corp. | 24,522 | 1,531,154 |
Starbucks Corp.* | 16,874 | 389,115 |
Starwood Hotels & Resorts Worldwide, Inc. | 4,241 | 155,093 |
Wyndham Worldwide Corp. | 3,754 | 75,718 |
Wynn Resorts Ltd. | 1,638 | 95,381 |
Yum! Brands, Inc. | 10,721 | 374,913 |
| | 3,335,152 |
| | |
Household Durables - 0.3% | | |
Black & Decker Corp. | 1,455 | 94,327 |
D.R. Horton, Inc. | 6,671 | 72,514 |
Fortune Brands, Inc. | 3,411 | 147,355 |
Harman International Industries, Inc. | 1,447 | 51,050 |
Leggett & Platt, Inc. | 3,428 | 69,931 |
Lennar Corp. | 3,675 | 46,930 |
Newell Rubbermaid, Inc. | 6,296 | 94,503 |
Pulte Homes, Inc.* | 7,630 | 76,302 |
Whirlpool Corp. | 1,689 | 136,235 |
| | 789,147 |
| | |
Household Products - 2.4% | | |
Clorox Co. | 3,175 | 193,675 |
Colgate-Palmolive Co. | 11,238 | 923,202 |
Kimberly-Clark Corp. | 9,421 | 600,212 |
Procter & Gamble Co. | 66,323 | 4,021,163 |
| | 5,738,252 |
| | |
Independent Power Producers & Energy Traders - 0.2% | | |
AES Corp.* | 15,139 | 201,500 |
Constellation Energy Group, Inc. | 4,588 | 161,360 |
| | 362,860 |
| | |
Industrial Conglomerates - 2.1% | | |
3M Co. | 16,147 | 1,334,872 |
General Electric Co. | 241,644 | 3,656,074 |
Textron, Inc. | 6,180 | 116,246 |
| | 5,107,192 |
| | |
Equity Securities - Cont'd | Shares | Value |
Insurance - 2.3% | | |
Aflac, Inc. | 10,612 | $490,805 |
Allstate Corp. | 12,156 | 365,166 |
American International Group, Inc.* | 3,256 | 97,615 |
AON Corp. | 6,149 | 235,753 |
Assurant, Inc. | 2,849 | 83,989 |
Chubb Corp. | 7,677 | 377,555 |
Cincinnati Financial Corp. | 3,689 | 96,799 |
Genworth Financial, Inc.* | 11,609 | 131,762 |
Hartford Financial Services Group, Inc. | 8,679 | 201,874 |
Lincoln National Corp. | 7,164 | 178,240 |
Loews Corp. | 8,237 | 299,415 |
Marsh & McLennan Co.'s, Inc. | 11,992 | 264,783 |
MetLife, Inc. | 18,560 | 656,096 |
Principal Financial Group, Inc. | 7,517 | 180,709 |
Progressive Corp.* | 15,208 | 273,592 |
Prudential Financial, Inc. | 10,525 | 523,724 |
Torchmark Corp. | 1,791 | 78,714 |
Travelers Co.'s, Inc. | 12,394 | 617,965 |
Unum Group | 7,523 | 146,849 |
XL Capital Ltd. | 7,756 | 142,167 |
| | 5,443,572 |
| | |
Internet & Catalog Retail - 0.6% | | |
Amazon.com, Inc.* | 7,582 | 1,019,930 |
Expedia, Inc.* | 4,780 | 122,894 |
priceline.com, Inc.* | 1,000 | 218,500 |
| | 1,361,324 |
| | |
Internet Software & Services - 2.0% | | |
Akamai Technologies, Inc.* | 3,623 | 91,771 |
AOL, Inc.* | 0.1 | 2 |
eBay, Inc.* | 25,575 | 602,036 |
Google, Inc.* | 5,478 | 3,396,250 |
VeriSign, Inc.* | 4,359 | 105,662 |
Yahoo!, Inc.* | 27,072 | 454,268 |
| | 4,649,989 |
| | |
IT Services - 1.5% | | |
Affiliated Computer Services, Inc.* | 2,215 | 132,214 |
Automatic Data Processing, Inc. | 11,455 | 490,503 |
Cognizant Technology Solutions Corp.* | 6,707 | 303,827 |
Computer Sciences Corp.* | 3,461 | 199,111 |
Fidelity National Information Services, Inc. | 7,437 | 174,323 |
Fiserv, Inc.* | 3,458 | 167,644 |
MasterCard, Inc. | 2,183 | 558,804 |
Paychex, Inc. | 7,294 | 223,488 |
SAIC, Inc.* | 6,982 | 132,239 |
Total System Services, Inc. | 4,771 | 82,395 |
Visa, Inc. | 10,214 | 893,317 |
Western Union Co. | 15,680 | 295,568 |
| | 3,653,433 |
| | |
| | |
Equity Securities - 94.8% - Cont'd | Shares | Value |
Leisure Equipment & Products - 0.1% | | |
Eastman Kodak Co.* | 6,489 | $27,384 |
Hasbro, Inc. | 3,012 | 96,565 |
Mattel, Inc. | 8,229 | 164,415 |
| | 288,364 |
| | |
Life Sciences - Tools & Services - 0.4% | | |
Life Technologies Corp.* | 4,084 | 213,307 |
Millipore Corp.* | 1,342 | 97,094 |
PerkinElmer, Inc. | 2,449 | 50,425 |
Thermo Fisher Scientific, Inc.* | 9,284 | 442,754 |
Waters Corp.* | 2,124 | 131,603 |
| | 935,183 |
| | |
Machinery - 1.5% | | |
Caterpillar, Inc. | 14,162 | 807,092 |
Cummins, Inc. | 4,573 | 209,718 |
Danaher Corp. | 5,993 | 450,674 |
Deere & Co. | 9,595 | 518,994 |
Dover Corp. | 4,223 | 175,719 |
Eaton Corp. | 3,760 | 239,211 |
Flowserve Corp. | 1,263 | 119,391 |
Illinois Tool Works, Inc. | 8,755 | 420,152 |
PACCAR, Inc. | 8,245 | 299,046 |
Pall Corp. | 2,648 | 95,858 |
Parker Hannifin Corp. | 3,642 | 196,231 |
Snap-on, Inc. | 1,212 | 51,219 |
Stanley Works | 1,914 | 98,590 |
| | 3,681,895 |
| | |
Media - 2.7% | | |
CBS Corp., Class B | 15,304 | 215,021 |
Comcast Corp. | 64,883 | 1,093,927 |
DIRECTV* | 21,782 | 726,430 |
Gannett Co., Inc. | 5,624 | 83,516 |
Interpublic Group of Co.'s, Inc.* | 11,575 | 85,423 |
McGraw-Hill Co.'s, Inc. | 7,144 | 239,395 |
Meredith Corp. | 736 | 22,706 |
New York Times Co.* | 2,202 | 27,217 |
News Corp. | 51,233 | 701,380 |
Omnicom Group, Inc. | 7,055 | 276,203 |
Scripps Networks Interactive, Inc. | 1,997 | 82,876 |
Time Warner Cable, Inc. | 7,989 | 330,665 |
Time Warner, Inc. | 26,524 | 772,909 |
Viacom, Inc., Class B* | 13,768 | 409,323 |
Walt Disney Co. | 43,702 | 1,409,389 |
Washington Post Co., Class B | 146 | 64,182 |
| | 6,540,562 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Metals & Mining - 1.0% | | |
AK Steel Holding Corp. | 2,644 | $56,449 |
Alcoa, Inc. | 22,085 | 356,010 |
Allegheny Technologies, Inc. | 2,224 | 99,569 |
Cliffs Natural Resources, Inc. | 2,987 | 137,671 |
Freeport-McMoRan Copper & Gold, Inc.* | 9,766 | 784,112 |
Newmont Mining Corp. | 11,125 | 526,324 |
Nucor Corp. | 7,144 | 333,268 |
Titanium Metals Corp.* | 1,566 | 19,606 |
United States Steel Corp. | 3,249 | 179,085 |
| | 2,492,094 |
| | |
Multiline Retail - 0.8% | | |
Big Lots, Inc.* | 1,737 | 50,338 |
Family Dollar Stores, Inc. | 3,132 | 87,164 |
J.C. Penney Co., Inc. | 5,349 | 142,337 |
Kohl's Corp.* | 6,955 | 375,083 |
Macy's, Inc. | 9,541 | 159,907 |
Nordstrom, Inc. | 3,874 | 145,585 |
Sears Holdings Corp.* | 1,102 | 91,962 |
Target Corp. | 17,041 | 824,273 |
| | 1,876,649 |
| | |
Multi-Utilities - 1.3% | | |
Ameren Corp. | 5,394 | 150,762 |
Centerpoint Energy, Inc. | 9,028 | 130,996 |
CMS Energy Corp. | 5,489 | 85,958 |
Consolidated Edison, Inc. | 6,381 | 289,889 |
Dominion Resources, Inc. | 13,665 | 531,842 |
DTE Energy Co. | 3,753 | 163,593 |
Integrys Energy Group, Inc. | 1,595 | 66,974 |
NiSource, Inc. | 6,644 | 102,185 |
PG&E Corp. | 8,466 | 378,007 |
Public Service Enterprise Group, Inc. | 11,464 | 381,178 |
SCANA Corp. | 2,660 | 100,229 |
Sempra Energy | 5,612 | 314,160 |
TECO Energy, Inc. | 5,151 | 83,549 |
Wisconsin Energy Corp. | 2,650 | 132,050 |
Xcel Energy, Inc. | 10,352 | 219,669 |
| | 3,131,041 |
| | |
Office Electronics - 0.1% | | |
Xerox Corp. | 19,803 | 167,533 |
| | |
Oil, Gas & Consumable Fuels - 9.1% | | |
Anadarko Petroleum Corp. | 11,180 | 697,856 |
Apache Corp. | 7,632 | 787,394 |
Cabot Oil & Gas Corp. | 2,349 | 102,393 |
Chesapeake Energy Corp. | 14,734 | 381,316 |
Chevron Corp. | 45,608 | 3,511,360 |
ConocoPhillips | 33,660 | 1,719,016 |
Consol Energy, Inc. | 4,100 | 204,180 |
Denbury Resources, Inc.* | 6,021 | 89,111 |
| | |
Equity Securities - Cont'd | Shares | Value |
Oil, Gas & Consumable Fuels - Cont'd | | |
Devon Energy Corp. | 10,062 | $739,557 |
El Paso Corp. | 15,898 | 156,277 |
EOG Resources, Inc. | 5,761 | 560,545 |
Exxon Mobil Corp. | 107,860 | 7,354,974 |
Hess Corp. | 6,616 | 400,268 |
Marathon Oil Corp. | 16,036 | 500,644 |
Massey Energy Co. | 1,786 | 75,030 |
Murphy Oil Corp. | 4,330 | 234,686 |
Noble Energy, Inc. | 3,932 | 280,037 |
Occidental Petroleum Corp. | 18,404 | 1,497,165 |
Peabody Energy Corp. | 6,078 | 274,786 |
Pioneer Natural Resources Co. | 2,758 | 132,853 |
Range Resources Corp. | 3,593 | 179,111 |
Southwestern Energy Co.* | 7,847 | 378,225 |
Spectra Energy Corp. | 14,682 | 301,128 |
Sunoco, Inc. | 2,531 | 66,059 |
Tesoro Corp. | 2,957 | 40,067 |
Valero Energy Corp. | 12,949 | 216,896 |
Williams Co.'s, Inc. | 13,279 | 279,921 |
XTO Energy, Inc. | 13,165 | 612,568 |
| | 21,773,423 |
| | |
Paper & Forest Products - 0.2% | | |
International Paper Co. | 9,828 | 263,194 |
MeadWestvaco Corp. | 3,704 | 106,045 |
Weyerhaeuser Co. | 4,791 | 206,684 |
| | 575,923 |
| | |
Personal Products - 0.3% | | |
Avon Products, Inc. | 9,684 | 305,046 |
Estee Lauder Co.'s, Inc. | 2,808 | 135,795 |
Mead Johnson Nutrition Co. | 4,663 | 203,773 |
| | 644,614 |
| | |
Pharmaceuticals - 6.1% | | |
Abbott Laboratories, Inc. | 35,061 | 1,892,943 |
Allergan, Inc. | 6,969 | 439,117 |
Bristol-Myers Squibb Co. | 38,877 | 981,644 |
Eli Lilly & Co. | 22,910 | 818,116 |
Forest Laboratories, Inc.* | 6,840 | 219,633 |
Johnson & Johnson | 62,598 | 4,031,937 |
King Pharmaceuticals, Inc.* | 5,217 | 64,013 |
Merck & Co., Inc. | 69,315 | 2,532,770 |
Mylan, Inc.* | 6,933 | 127,775 |
Pfizer, Inc. | 183,409 | 3,336,210 |
Watson Pharmaceuticals, Inc.* | 2,307 | 91,380 |
| | 14,535,538 |
| | |
Equity Securities - Cont'd | Shares | Value |
Professional Services - 0.1% | | |
Dun & Bradstreet Corp. | 1,112 | $93,819 |
Equifax, Inc. | 3,055 | 94,369 |
Monster Worldwide, Inc.* | 3,050 | 53,070 |
Robert Half International, Inc. | 3,396 | 90,775 |
| | 332,033 |
| | |
Real Estate Investment Trusts - 1.1% | | |
Apartment Investment & Management Co. | 2,364 | $37,635 |
AvalonBay Communities, Inc. | 1,849 | 151,821 |
Boston Properties, Inc. | 3,145 | 210,935 |
Equity Residential | 6,264 | 211,598 |
HCP, Inc. | 6,769 | 206,725 |
Health Care REIT, Inc. | 2,883 | 127,775 |
Host Hotels & Resorts, Inc. | 14,853 | 173,335 |
Kimco Realty Corp. | 9,111 | 123,272 |
Plum Creek Timber Co., Inc. | 3,525 | 133,104 |
ProLogis | 10,725 | 146,825 |
Public Storage | 3,084 | 251,192 |
Simon Property Group, Inc. | 6,435 | 513,513 |
Ventas, Inc. | 3,549 | 155,233 |
Vornado Realty Trust | 3,502 | 244,930 |
| | 2,687,893 |
| | |
Real Estate Management & Development - 0.0% | | |
CB Richard Ellis Group, Inc.* | 6,441 | 87,404 |
| | |
Road & Rail - 0.9% | | |
Burlington Northern Santa Fe Corp. | 5,960 | 587,775 |
CSX Corp. | 8,909 | 431,997 |
Norfolk Southern Corp. | 8,349 | 437,655 |
Ryder System, Inc. | 1,353 | 55,703 |
Union Pacific Corp. | 11,440 | 731,016 |
| | 2,244,146 |
| | |
Semiconductors & Semiconductor Equipment - 2.5% | | |
Advanced Micro Devices, Inc.* | 12,778 | 123,691 |
Altera Corp. | 6,714 | 151,938 |
Analog Devices, Inc. | 6,623 | 209,154 |
Applied Materials, Inc. | 30,222 | 421,295 |
Broadcom Corp.* | 9,869 | 310,380 |
Intel Corp. | 125,371 | 2,557,568 |
KLA-Tencor Corp. | 3,892 | 140,735 |
Linear Technology Corp. | 5,058 | 154,471 |
LSI Corp.* | 15,700 | 94,357 |
MEMC Electronic Materials, Inc.* | 5,408 | 73,657 |
Microchip Technology, Inc. | 4,163 | 120,977 |
Micron Technology, Inc.* | 19,279 | 203,586 |
National Semiconductor Corp. | 5,646 | 86,723 |
Novellus Systems, Inc.* | 2,037 | 47,544 |
NVIDIA Corp.* | 12,639 | 236,096 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Semiconductors & Semiconductor Equipment - Cont'd | | |
Teradyne, Inc.* | 3,535 | $37,931 |
Texas Instruments, Inc. | 28,475 | 742,058 |
Xilinx, Inc. | 6,288 | 157,577 |
| | 5,869,738 |
| | |
Software - 4.1% | | |
Adobe Systems, Inc.* | 11,900 | 437,682 |
Autodesk, Inc.* | 5,236 | 133,047 |
BMC Software, Inc.* | 4,133 | 165,733 |
CA, Inc. | 9,072 | 203,757 |
Citrix Systems, Inc.* | 4,197 | 174,637 |
Compuware Corp.* | 4,553 | 32,918 |
Electronic Arts, Inc.* | 7,393 | 131,226 |
Intuit, Inc.* | 7,173 | 220,283 |
McAfee, Inc.* | 3,760 | 152,543 |
Microsoft Corp. | 175,351 | 5,346,452 |
Novell, Inc.* | 7,081 | 29,386 |
Oracle Corp. | 88,871 | 2,180,894 |
Red Hat, Inc.* | 4,234 | 130,831 |
Salesforce.com, Inc.* | 2,570 | 189,589 |
Symantec Corp.* | 18,275 | 326,940 |
| | 9,855,918 |
| | |
Specialty Retail - 1.9% | | |
Abercrombie & Fitch Co. | 1,859 | 64,786 |
AutoNation, Inc.* | 2,276 | 43,585 |
AutoZone, Inc.* | 638 | 100,849 |
Bed Bath & Beyond, Inc.* | 6,010 | 232,166 |
Best Buy Co., Inc. | 7,743 | 305,539 |
GameStop Corp.* | 3,983 | 87,387 |
Gap, Inc. | 10,818 | 226,637 |
Home Depot, Inc. | 38,733 | 1,120,546 |
Limited Brands, Inc. | 5,988 | 115,209 |
Lowe's Co.'s, Inc. | 33,380 | 780,758 |
Office Depot, Inc.* | 6,647 | 42,873 |
O'Reilly Automotive, Inc.* | 3,283 | 125,148 |
RadioShack Corp. | 3,028 | 59,046 |
Ross Stores, Inc. | 2,853 | 121,852 |
Sherwin-Williams Co. | 2,138 | 131,808 |
Staples, Inc. | 16,581 | 407,727 |
Tiffany & Co. | 2,822 | 121,346 |
TJX Co.'s, Inc. | 9,538 | 348,614 |
| | 4,435,876 |
| | |
Textiles, Apparel & Luxury Goods - 0.5% | | |
Coach, Inc. | 7,240 | 264,477 |
Nike, Inc., Class B | 8,865 | 585,710 |
Polo Ralph Lauren Corp. | 1,368 | 110,781 |
VF Corp. | 2,029 | 148,604 |
| | 1,109,572 |
| | |
Equity Securities - Cont'd | Shares | Value |
Thrifts & Mortgage Finance - 0.1% | | |
Hudson City Bancorp, Inc. | 10,751 | $147,611 |
People's United Financial, Inc. | 7,895 | 131,847 |
| | 279,458 |
| | |
Tobacco - 1.5% | | |
Altria Group, Inc. | 47,080 | 924,181 |
Lorillard, Inc. | 3,562 | 285,779 |
Philip Morris International, Inc. | 43,275 | 2,085,422 |
Reynolds American, Inc. | 3,831 | 202,928 |
| | 3,498,310 |
| | |
Trading Companies & Distributors - 0.1% | | |
Fastenal Co. | 3,127 | 130,208 |
W.W. Grainger, Inc. | 1,442 | 139,629 |
| | 269,837 |
| | |
Wireless Telecommunication Services - 0.3% | | |
American Tower Corp.* | 9,032 | 390,273 |
MetroPCS Communications, Inc.* | 6,387 | 48,733 |
Sprint Nextel Corp.* | 67,425 | 246,776 |
| | 685,782 |
| | |
| | |
Total Equity Securities (Cost $217,335,417) | | 225,637,478 |
| | |
| | |
Exchange Traded Funds - 1.1% | | |
SPDR Trust Series 1 | 24,000 | 2,674,560 |
| | |
Total Exchange Traded Funds (Cost $2,654,101) | | 2,674,560 |
| | |
| Principal | |
U.S. Treasury - 0.4% | Amount | |
United States Treasury Bills, 2/11/10 ^ | $1,000,000 | 999,959 |
| | |
Total U.S. Treasury (Cost $999,959) | | 999,959 |
| | |
| | |
Time Deposit - 3.7% | | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | 8,832,402 | 8,832,402 |
| | |
Total Time Deposit (Cost $8,832,402) | | 8,832,402 |
| | |
| | |
TOTAL INVESTMENTS (Cost $229,821,879) - 100.0% | | 238,144,399 |
Other assets and liabilities, net - 0.0% | | (67,242) |
NET ASSETS - 100% | | $238,077,157 |
Net Assets Consist of: | | |
Paid-in capital applicable to 3,328,750 shares of common | | |
stock outstanding; $0.10 par value, 30,000,000 shares authorized | | $243,402,087 |
Undistributed net investment income | | 449,700 |
Accumulated net realized gain (loss) on investments | | (14,209,551) |
Net unrealized appreciation (depreciation) on investments | | 8,434,921 |
| | |
Net Assets | | $238,077,157 |
| | |
Net Asset Value Per Share | | $71.52 |
Futures | Number of
Contracts | Expiration
Date | Underlying
Face Amount
At Value | Unrealized
Appreciation
(Depreciation) |
Purchased: | | | | |
E-Mini S&P 500 Index^ | 47 | 3/10 | $2,610,145 | $31,351 |
S&P 500 Index^ | 25 | 3/10 | 6,941,875 | 81,050 |
Total Purchased | | | | $112,401 |
^ Futures collateralized by 1,000,000 units of U.S. Treasury Bills.
* Non-income producing security.
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income (net of foreign taxes withheld of $673 ) | $5,073,419 |
Interest Income | 2,143 |
Total investment income | 5,075,562 |
| |
Expenses: | |
Investment advisory fee | 537,555 |
Transfer agency fees and expenses | 4,125 |
Accounting Fees | 31,531 |
Directors' fees and expenses | 35,320 |
Administrative fees | 215,022 |
Custodian fees | 63,563 |
Reports to shareholders | 33,153 |
Professional fees | 38,494 |
Miscellaneous | 37,217 |
Total expenses | 995,980 |
Reimbursement from Advisor | (178,788) |
Fees paid indirectly | (108) |
Net expenses | 817,084 |
| |
Net Investment Income | 4,258,478 |
| |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | 8,460,010 |
Futures | 1,415,901 |
| 9,875,911 |
| |
Changes in unrealized appreciation or (depreciation) on: | |
Investments | 37,239,154 |
Futures | 96,909 |
| 37,336,063 |
| |
| |
Net Realized and Unrealized Gain | |
(Loss) | 47,211,974 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $51,470,452 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $4,258,478 | $4,831,335 |
Net realized gain (loss) on investments | 9,875,911 | (3,880,447) |
Change in unrealized appreciation or (depreciation) | 37,336,063 | (104,302,903) |
| | |
| | |
Increase (Decrease) In Net Assets | | |
Resulting From Operations | 51,470,452 | (103,352,015) |
| | |
Distributions to shareholders from: | | |
Net investment income | (4,209,282) | (8,361,638) |
Net realized gain | (2,915,695) | (3,225,031) |
Total distributions | (7,124,977) | (11,586,669) |
| | |
Capital share transactions: | | |
Shares sold | 21,427,150 | 21,151,535 |
Shares issued from merger (See Note A) | -- | 45,246,467 |
Reinvestment of distributions | 7,124,975 | 11,586,669 |
Shares redeemed | (48,444,184) | (52,242,981) |
Total capital share transactions | (19,892,059) | 25,741,690 |
| | |
Total Increase (Decrease) In Net Assets | 24,453,416 | (89,196,994) |
| | |
| | |
Net Assets | | |
Beginning of year | 213,623,741 | 302,820,735 |
End of year (including undistributed net investment | | |
income of $449,700 and $431,245, respectively) | $238,077,157 | $213,623,741 |
| | |
| | |
Capital Share Activity | | |
Shares sold | 356,748 | 263,983 |
Shares issued from merger (See Note A) | -- | 782,946 |
Shares reinvested | 98,615 | 154,659 |
Shares redeemed | (781,868) | (654,209) |
Total capital share activity | (326,505) | 547,379 |
See notes to financial statements.
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: The Summit S&P 500 Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
On December 12, 2008, the net assets of the Ameritas Index 500 Portfolio, a series of Calvert Variable Series, Inc. merged into Summit Mutual Funds, Inc., S&P 500 Index Portfolio. The merger was accomplished by a tax-free exchange of 782,946 shares of the Summit S&P 500 Index Portfolio (valued at $45,246,467) for 483,294 shares of the Ameritas Index 500 Portfolio outstanding at December 12, 2008. The Ameritas Index 500 Portfolio's net assets as of December 12, 2008, including $17,423,864 of unrealized depreciation, were combined with those of the Summit S&P 500 Index Portfolio.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Portfolio, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Short-term notes are stated at amortized cost, which approximates fair value. Investments for which market quotations are n ot available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date.
These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity securities* | $225,637,478 | -- | -- | $225,637,478 |
U.S. government obligations | -- | $999,959 | -- | 999,959 |
Exchange traded funds | 2,674,560 | -- | -- | 2,674,560 |
Other debt obligations | -- | 8,832,402 | -- | 8,832,402 |
TOTAL | $228,312,038 | $9,832,361 | -- | $238,144,399 |
| | | | |
Other financial instruments** | $112,401 | -- | -- | $112,401 |
* For further breakdown of Equity Securities by industry type, please refer to the Statement of Net Assets.
** Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument.
Futures Contracts: The Portfolio may purchase and sell futures contracts, but only when, in the judgment of the Advisor, such a position acts as a hedge. The Portfolio may not enter into futures contracts for the purpose of speculation or leverage. These futures contracts may include, but are not limited to, market index futures contracts. The Portfolio is subject to market risk in the normal course of pursuing its investment objectives. The Portfolio may use futures contracts to hedge against changes in the value of securities. The Portfolio may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date. Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract. While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When a futures contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract. The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Portfolio's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms. Futures contracts are designed by boards of trade which are designated "contracts markets" by the Commodities Futures Trading Commission. Futures contracts trade on the contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee the futures contracts against default. As a result, there is minimal counterparty credit risk to the Portfolio.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned.
Foreign Currency Transactions: The Portfolio's accounting records are maintained in U.S. dollars. For valuation of assets and liabilities on each date of net asset value determination, foreign denominations are translated into U.S. dollars using the current exchange rate. Security transactions, income and expenses are translated at the prevailing rate of exchange on the date of the event. The effect of changes in foreign exchange rates on securities and foreign currencies is included with the net realized and unrealized gain or loss on investments and foreign currencies.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Recent Party Transactions
Calvert Asset Management Company, Inc. ("the Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .25% of the Portfolio's average daily net assets. Under the terms of the agreement, $50,458 was payable at year end. In addition, $1,336 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .38%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $20,183 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $106 for the year ended December 31, 2009. Under the terms of the agreement, $7 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $19,012,365 and $49,007,610, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-10 | $2,110,080 |
31-Dec-11 | 960,576 |
31-Dec-12 | 2,529,937 |
31-Dec-13 | 1,687,669 |
31-Dec-15 | 2,330,473 |
31-Dec-16 | 280,386 |
31-Dec-17 | 2,509,534 |
The Portfolio's use of capital loss carryforwards may be limited under certain tax provisions.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: 2009 2008
Ordinary income $4,209,282 $8,361,637
Long term capital gain 2,915,695 3,225,032
Total $7,124,977 $11,586,669
As of December 31, 2009, the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $48,661,637 |
Unrealized (depreciation) | (48,167,705) |
Net unrealized appreciation/(depreciation) | $493,932 |
Undistributed ordinary income | $449,700 |
Undistributed long term capital gain | $6,140,094 |
Capital loss carryforward | ($12,408,655) |
Federal income tax cost of investments | $237,650,467 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales, real estate investment trusts, Section 1256 contracts, and capital loss carryforwards subject to limitations under Internal Revenue Code Section 382.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distributions (or available capital loss carryforwards, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to real estate investment trusts, expired capital losses and litigation settlements.
Undistributed net investment income | ($30,741) |
Accumulated net realized gain (loss) | 7,531,241 |
Paid-in capital | (7,500,500) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no borrowings under the agreement during the year at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| AVERAGE
DAILY
BALANCE | WEIGHTED
AVERAGE
INTEREST
RATE | MAXIMUM
AMOUNT
BORROWED | MONTH OF
MAXIMUM
AMOUNT
BORROWED | |
| $16,735 | 1.46% | $807,387 | December 2009 | |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates $2,915,695 of the long term capital gain distributions paid during the year or the maximum amount allowable but not less than the aforementioned amount as capital gain dividend in accordance with Section 852(b)(3)(C) of the Internal Revenue Code.
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 100% of the ordinary dividends paid during the year as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
| 2009 | 2008 | 2007 |
Net asset value, beginning | $58.44 | $97.44 | $94.19 |
Income from investment operations | | | |
Net investment income | 1.33 | 1.44 | 1.52 |
Net realized and unrealized gain (loss) | 13.95 | (36.76) | 3.31 |
Total from investment operations | 15.28 | (35.32) | 4.83 |
Distributions from | | | |
Net investment income | (1.30) | (2.60) | (1.42) |
Net realized gain | (.90) | (1.08) | (.16) |
Total distributions | (2.20) | (3.68) | (1.58) |
Total increase (decrease) in net asset value | 13.08 | (39.00) | 3.25 |
Net asset value, ending | $71.52 | $58.44 | $97.44 |
| | | |
Total return* | 26.11% | (37.10%) | 5.16% |
Ratios to average net assets: A | | | |
Net investment income | 1.98% | 2.00% | 1.59% |
Total expenses | .46% | .47% | .45% |
Expenses before offsets | .38% | .39% | .39% |
Net expenses | .38% | .39% | .39% |
Portfolio turnover | 9% | 7% | 3% |
Net assets, ending (in thousands) | $238,077 | $213,624 | $302,821 |
| | | |
| Years Ended | |
| December 31, | December 31, | |
| 2006 | 2005 | |
Net asset value, beginning | $82.85 | $80.48 | |
Income from investment operations | | | |
Net investment income | 1.40 | 1.17 | |
Net realized and unrealized gain (loss) | 11.19 | 2.39 | |
Total from investment operations | 12.59 | 3.56 | |
Distributions from | | | |
Net investment income | (1.25) | (1.19) | |
Net realized gain | -- | -- | |
Total distributions | (1.25) | (1.19) | |
Total increase (decrease) in net asset value | 11.34 | 2.37 | |
Net asset value, ending | $94.19 | $82.85 | |
| | | |
Total return* | 15.36% | 4.52% | |
Ratios to average net assets: A | | | |
Net investment income | 1.56% | 1.49% | |
Total expenses | .43% | .49% | |
Expenses before offsets | .39% | .39% | |
Net expenses | .39% | .39% | |
Portfolio turnover | 3% | 6% | |
Net assets, ending (in thousands) | $309,019 | $290,666 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
* Total return is not annualized for periods less than one year.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one- and three-year periods ended June 30, 2009, and performed at the median of its peer universe for the five-year period ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-year period, matched its Lipp er index for the three-year period and underperformed its Lipper index for the five-year period ended June 30, 2009. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was above the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the relatively small range in total expense ratios among the funds in the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Port folio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
<PAGE>
Summit S&P MidCap
400 Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
20 | Statement of Operations |
21 | Statements of Changes in Net Assets |
22 | Notes to Financial Statements |
28 | Financial Highlights |
30 | Explanation of Financial Tables |
31 | Proxy Voting and Availability of Quarterly Portfolio Holdings |
31 | Basis for Board's Approval of Investment Advisory Contracts |
35 | Director and Officer Information Table |
Summit S&P Midcap 400 Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit S&P MidCap 400 Index Portfolio provided a return of 36.38% (Class I) compared to a return of 37.38% for the Standard & Poor's (S&P) MidCap 400 Index. As an index fund, the portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of the S&P 400 Index. The portfolio's underperformance was largely attributable to fees and operating expenses and the timing and size of portfolio cash flows.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
The stabilized banking system, an improved economic outlook, and low valuations fueled a stock market rally that lasted throughout much of 2009. The S&P 400 Index, which declined significantly during the first quarter of 2009, hit bottom in early March, at a level of 404.62. For the balance of the year, the Index trended higher, closing the year at 726.67. Including dividend reinvestment, the Index gained 82.0% from its March 2009 low through the end of the year.
Summit S&P MidCap 400 Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
| Class I | Class F** |
One year | 36.38% | 36.12% |
Five year | 2.65% | 2.46% |
Ten year | 5.62% | 5.37% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**Prior to October 1, 2007, Class F share performance is based on Class I performance.
Absent limitation of expenses during certain of the periods shown, performance would
have been lower.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted. The value of an investment in Class I shares is plotted in the graph. The value of an investment in another class of shares would be different.
Portfolio Strategy
The Portfolio continued to meet its investment objective of closely tracking the total return of the S&P 400 Index. The Index includes 400 mid-sized companies that have average market capitalizations of slightly more than $2 billion. These companies delivered strong returns for the year, both in absolute terms and relative to larger company stocks as measured by the Standard & Poor's 500 Index, which returned 26.5% for the year.
During 2009, the S&P 400 Index was most heavily weighted in Financial Services (18.2%), Consumer Discretionary (15.3%), and Industrial (114.8%) companies. Other sectors of significant weight included Information Technology (14.3%) and Healthcare (12.3%). The Index had the lowest exposure to companies in the Consumer Staples (4.1%) and Telecommunications Services (0.6%) sectors of the market.
The top-performing sectors of the S&P 400 Index, including dividend reinvestment, were Energy (up 63.5% for the year), Technology (59.7%), and Materials (55.8%). The worst performers were Financial Services (12.9%) and Telecommunications Services (14.0%).
The Summit S&P Midcap 400 Index Portfolio fully replicates the S&P 400 Index, which means that it holds all of the stocks in the Index. Market fluctuation, cash flows, and corporate actions may cause the Portfolio to hold slightly different weightings than the Index. Since the S&P 400 Index is not a mutual fund, direct investment in the Index is not possible and there are no expenses charged against its return as there are against the Portfolio's return.
Economic Sectors | % of Total
Invest ments |
Consumer Discretionary | 13.6% |
Consumer Staples | 3.8% |
Energy | 6.5% |
Exchange Traded Funds | 0.6% |
Financials | 18.2% |
Government | 0.4% |
Health Care | 11.2% |
Industrials | 13.8% |
Information Technology | 14.8% |
Materials | 6.0% |
Telecommunication Services | 0.8% |
Time Deposit | 3.9% |
Utilities | 6.4% |
Total | 100% |
Outlook
The outlook for 2010 is for modest growth in the U.S. and global economies, and for improved corporate earnings. Interest rates may increase modestly as the economy strengthens and the Federal Reserve removes the massive liquidity that it has injected into the market. Riskier assets, including equities, may outperform in this environment, in a continuation of the trend established in 2009.
Challenges will remain, however, as the economic recovery will likely be muted by high unemployment and by consumers who continue to repair their balance sheets by curtailing spending. In addition, financial institutions will continue to deal with problem assets and weakness in the commercial real estate market, which will likely bring new challenges in 2010. Lastly, the prospect of higher interest rates may negatively affect price/earnings multiples in the equity markets.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Class I | | | |
Actual | $1,000.00 | $1,261.60 | $3.14 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,022.43 | $2.80 |
| | | |
Class F | | | |
Actual | $1,000.00 | $1,260.70 | $4.50 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,021.22 | $4.02 |
* Expenses are equal to the Fund's annualized expense ratio of 0.55% and 0.79%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit S&P Mid Cap 400 Index Portfolio:
We have audited the accompanying statement of net assets of the Summit S&P Mid Cap 400 Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit S&P Mid Cap 400 Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Equity Securities - 95.1% | | Shares | Value | |
Aerospace & Defense - 0.6% | | | | |
Alliant Techsystems, Inc.* | | 3,599 | $317,684 | |
BE Aerospace, Inc.* | | 11,056 | 259,816 | |
| | | 577,500 | |
| | | | |
Airlines - 0.3% | | | | |
Airtran Holdings, Inc.* | | 14,228 | 74,270 | |
Alaska Air Group, Inc.* | | 3,840 | 132,710 | |
JetBlue Airways Corp.* | | 22,702 | 123,726 | |
| | | 330,706 | |
| | | | |
Auto Components - 0.7% | | | | |
BorgWarner, Inc. | | 12,750 | 423,555 | |
Gentex Corp. | | 15,047 | 268,589 | |
| | | 692,144 | |
| | | | |
Automobiles - 0.1% | | | | |
Thor Industries, Inc. | | 3,908 | 122,711 | |
TravelCenters of America LLC (b)* | | 60,000 | 10 | |
| | | 122,721 | |
| | | | |
Beverages - 0.5% | | | | |
Hansen Natural Corp.* | | 7,925 | 304,320 | |
PepsiAmericas, Inc. | | 6,122 | 179,130 | |
| | | 483,450 | |
| | | | |
Biotechnology - 1.3% | | | | |
OSI Pharmaceuticals, Inc.* | | 6,343 | 196,823 | |
United Therapeutics Corp.* | | 5,218 | 274,728 | |
Vertex Pharmaceuticals, Inc.* | | 21,221 | 909,320 | |
| | | 1,380,871 | |
| | | | |
Building Products - 0.2% | | | | |
Lennox International, Inc. | | 5,309 | 207,263 | |
| | | | |
Capital Markets - 1.9% | | | | |
Affiliated Managers Group, Inc.* | | 4,631 | 311,898 | |
Apollo Investment Corp. | | 18,986 | 180,937 | |
Eaton Vance Corp. | | 12,843 | 390,556 | |
Jefferies Group, Inc.* | | 13,151 | 312,073 | |
Raymond James Financial, Inc. | | 10,798 | 256,669 | |
SEI Investments Co. | | 14,195 | 248,696 | |
Waddell & Reed Financial, Inc. | | 9,386 | 286,648 | |
| | | 1,987,477 | |
| | | | |
Chemicals - 3.0% | | | | |
Albemarle Corp. | | 10,004 | 363,845 | |
Ashland, Inc. | | 8,251 | 326,905 | |
Cabot Corp. | | 7,147 | 187,466 | |
| | | | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Chemicals - Cont'd | | | | |
Cytec Industries, Inc. | | 5,300 | $193,026 | |
Lubrizol Corp. | | 7,518 | 548,438 | |
Minerals Technologies, Inc. | | 2,048 | 111,555 | |
Olin Corp. | | 8,551 | 149,813 | |
RPM International, Inc. | | 14,084 | 286,328 | |
Scotts Miracle-Gro Co. | | 4,887 | 192,108 | |
Sensient Technologies Corp. | | 5,331 | 140,205 | |
Terra Industries, Inc. | | 10,911 | 351,225 | |
Valspar Corp. | | 11,021 | 299,110 | |
| | | 3,150,024 | |
| | | | |
Commercial Banks - 3.1% | | | | |
Associated Banc-Corp. | | 13,982 | 153,942 | |
BancorpSouth, Inc. | | 8,019 | 188,126 | |
Bank of Hawaii Corp. | | 5,231 | 246,171 | |
Cathay General Bancorp | | 7,075 | 53,416 | |
City National Corp. | | 4,726 | 215,506 | |
Commerce Bancshares, Inc. | | 7,979 | 308,947 | |
Cullen/Frost Bankers, Inc. | | 6,523 | 326,150 | |
FirstMerit Corp. | | 9,388 | 189,074 | |
Fulton Financial Corp. | | 19,264 | 167,982 | |
International Bancshares Corp. | | 5,666 | 107,257 | |
PacWest Bancorp | | 3,318 | 66,858 | |
SVB Financial Group* | | 4,479 | 186,729 | |
Synovus Financial Corp. | | 52,505 | 107,635 | |
TCF Financial Corp. | | 12,222 | 166,464 | |
Trustmark Corp. | | 6,112 | 137,764 | |
Valley National Bancorp | | 16,282 | 230,065 | |
Webster Financial Corp. | | 7,320 | 86,888 | |
Westamerica Bancorporation | | 3,194 | 176,852 | |
Wilmington Trust Corp. | | 7,918 | 97,708 | |
| | | 3,213,534 | |
| | | | |
Commercial Services & Supplies - 1.6% | | | | |
Brinks Co. | | 5,233 | 127,371 | |
Clean Harbors, Inc.* | | 2,492 | 148,548 | |
Copart, Inc.* | | 7,356 | 269,450 | |
Corrections Corp. of America* | | 12,586 | 308,986 | |
Deluxe Corp. | | 5,835 | 86,300 | |
Herman Miller, Inc. | | 6,381 | 101,968 | |
HNI Corp. | | 4,917 | 135,857 | |
Mine Safety Appliances Co. | | 3,303 | 87,629 | |
Rollins, Inc. | | 4,957 | 95,571 | |
Waste Connections, Inc.* | | 8,756 | 291,925 | |
| | | 1,653,605 | |
| | | | |
Communications Equipment - 1.8% | | | | |
3Com Corp.* | | 42,744 | 320,580 | |
ADC Telecommunications, Inc.* | | 10,545 | 65,485 | |
Adtran, Inc. | | 6,105 | 137,668 | |
Ciena Corp.* | | 10,081 | 109,278 | |
CommScope, Inc.* | | 10,231 | 271,428 | |
F5 Networks, Inc.* | | 8,730 | 462,515 | |
Palm, Inc.* | | 18,208 | 182,808 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Communications Equipment - Cont'd | | | | |
Plantronics, Inc. | | 5,344 | $138,837 | |
Polycom, Inc.* | | 9,184 | 229,325 | |
| | | 1,917,924 | |
| | | | |
Computers & Peripherals - 0.4% | | | | |
Diebold, Inc. | | 7,239 | 205,949 | |
NCR Corp.* | | 17,368 | 193,306 | |
| | | 399,255 | |
| | | | |
Construction & Engineering - 1.4% | | | | |
AECOM Technology Corp.* | | 12,402 | 341,055 | |
Granite Construction, Inc. | | 3,679 | 123,835 | |
KBR, Inc. | | 17,533 | 333,127 | |
Shaw Group, Inc.* | | 9,136 | 262,660 | |
URS Corp.* | | 9,215 | 410,252 | |
| | | 1,470,929 | |
| | | | |
Construction Materials - 0.4% | | | | |
Martin Marietta Materials, Inc. | | 4,916 | 439,540 | |
| | | | |
Consumer Finance - 0.2% | | | | |
AmeriCredit Corp.* | | 10,494 | 199,806 | |
| | | | |
Containers & Packaging - 1.4% | | | | |
AptarGroup, Inc. | | 7,389 | 264,083 | |
Greif, Inc. | | 3,739 | 201,831 | |
Packaging Corp. of America | | 11,251 | 258,885 | |
Silgan Holdings, Inc. | | 2,950 | 170,746 | |
Sonoco Products Co. | | 10,915 | 319,264 | |
Temple-Inland, Inc. | | 11,642 | 245,763 | |
| | | 1,460,572 | |
| | | | |
Distributors - 0.3% | | | | |
LKQ Corp.* | | 15,385 | 301,392 | |
| | | | |
Diversified Consumer Services - 1.7% | | | | |
Brinks Home Security Holdings, Inc.* | | 5,003 | 163,298 | |
Career Education Corp.* | | 7,540 | 175,757 | |
Corinthian Colleges, Inc.* | | 9,518 | 131,063 | |
ITT Educational Services, Inc.* | | 3,412 | 327,416 | |
Matthews International Corp. | | 3,317 | 117,521 | |
Regis Corp. | | 6,234 | 97,063 | |
Service Corp. International | | 27,435 | 224,693 | |
Sotheby's | | 7,312 | 164,374 | |
Strayer Education, Inc. | | 1,530 | 325,110 | |
| | | 1,726,295 | |
| | | | |
Diversified Financial Services - 0.4% | | | | |
MSCI, Inc.* | | 11,396 | 362,393 | |
| | | | |
Diversified Telecommunication Services - 0.3% | | | | |
Cincinnati Bell, Inc.* | | 22,354 | 77,121 | |
tw telecom, Inc.* | | 16,390 | 280,925 | |
| | | 358,046 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Electric Utilities - 1.8% | | | | |
Cleco Corp. | | 6,610 | $180,651 | |
DPL, Inc. | | 13,190 | 364,044 | |
Great Plains Energy, Inc. | | 14,776 | 286,507 | |
Hawaiian Electric Industries, Inc. | | 10,012 | 209,251 | |
IDACORP, Inc. | | 5,168 | 165,118 | |
NV Energy, Inc. | | 25,644 | 317,473 | |
PNM Resources, Inc. | | 9,545 | 120,744 | |
Westar Energy, Inc. | | 11,898 | 258,424 | |
| | | 1,902,212 | |
| | | | |
Electrical Equipment - 1.3% | | | | |
AMETEK, Inc. | | 11,876 | 454,138 | |
Hubbell, Inc., Class B | | 6,506 | 307,734 | |
Regal-Beloit Corp. | | 4,056 | 210,669 | |
Thomas & Betts Corp.* | | 5,777 | 206,759 | |
Woodward Governor Co. | | 6,160 | 158,743 | |
| | | 1,338,043 | |
| | | | |
Electronic Equipment & Instruments - 2.3% | | | | |
Arrow Electronics, Inc.* | | 13,076 | 387,180 | |
Avnet, Inc.* | | 16,660 | 502,466 | |
Ingram Micro, Inc.* | | 17,813 | 310,837 | |
Itron, Inc.* | | 4,369 | 295,213 | |
National Instruments Corp. | | 6,194 | 182,413 | |
Tech Data Corp.* | | 5,604 | 261,483 | |
Trimble Navigation Ltd.* | | 13,095 | 329,994 | |
Vishay Intertechnology, Inc.* | | 20,399 | 170,332 | |
| | | 2,439,918 | |
| | | | |
Energy Equipment & Services - 2.7% | | | | |
Atwood Oceanics, Inc.* | | 6,228 | 223,274 | |
Exterran Holdings, Inc.* | | 6,830 | 146,504 | |
Helix Energy Solutions Group, Inc.* | | 10,390 | 122,083 | |
Helmerich & Payne, Inc. | | 11,625 | 463,605 | |
Oceaneering International, Inc.* | | 5,997 | 350,944 | |
Patterson-UTI Energy, Inc. | | 16,790 | 257,726 | |
Pride International, Inc.* | | 19,220 | 613,310 | |
Superior Energy Services, Inc.* | | 8,546 | 207,582 | |
Tidewater, Inc. | | 5,650 | 270,917 | |
Unit Corp.* | | 4,415 | 187,638 | |
| | | 2,843,583 | |
| | | | |
Food & Staples Retailing - 0.3% | | | | |
BJ's Wholesale Club, Inc.* | | 6,067 | 198,451 | |
Ruddick Corp. | | 4,456 | 114,653 | |
| | | 313,104 | |
| | | | |
Food Products - 1.5% | | | | |
Corn Products International, Inc. | | 8,159 | 238,488 | |
Flowers Foods, Inc. | | 8,469 | 201,223 | |
Green Mountain Coffee Roasters, Inc.* | | 3,846 | 313,334 | |
Lancaster Colony Corp. | | 2,120 | 105,364 | |
Ralcorp Holdings, Inc.* | | 6,187 | 369,426 | |
Smithfield Foods, Inc.* | | 15,385 | 233,698 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Food Products - Cont'd | | | | |
Tootsie Roll Industries, Inc. | | 2,879 | $78,827 | |
| | | 1,540,360 | |
| | | | |
Gas Utilities - 2.3% | | | | |
AGL Resources, Inc. | | 8,447 | 308,062 | |
Atmos Energy Corp. | | 10,086 | 296,528 | |
Energen Corp. | | 7,839 | 366,865 | |
National Fuel Gas Co. | | 8,872 | 443,600 | |
Oneok, Inc. | | 11,618 | 517,814 | |
UGI Corp. | | 11,850 | 286,652 | |
WGL Holdings, Inc. | | 5,479 | 183,766 | |
| | | 2,403,287 | |
| | | | |
Health Care Equipment & Supplies - 3.6% | | | | |
Beckman Coulter, Inc. | | 7,635 | 499,634 | |
Edwards Lifesciences Corp.* | | 6,230 | 541,077 | |
Gen-Probe, Inc.* | | 5,406 | 231,917 | |
Hill-Rom Holdings, Inc. | | 6,845 | 164,212 | |
Hologic, Inc.* | | 28,410 | 411,945 | |
IDEXX Laboratories, Inc.* | | 6,405 | 342,283 | |
Immucor, Inc.* | | 7,708 | 156,010 | |
Kinetic Concepts, Inc.* | | 6,756 | 254,363 | |
Masimo Corp.* | | 5,667 | 172,390 | |
ResMed, Inc.* | | 8,257 | 431,593 | |
STERIS Corp. | | 6,405 | 179,148 | |
Teleflex, Inc. | | 4,349 | 234,368 | |
Thoratec Corp.* | | 6,182 | 166,419 | |
| | | 3,785,359 | |
| | | | |
Health Care Providers & Services - 3.1% | | | | |
Community Health Systems, Inc.* | | 10,136 | 360,842 | |
Health Management Associates, Inc.* | | 26,998 | 196,275 | |
Health Net, Inc.* | | 11,356 | 264,481 | |
Henry Schein, Inc.* | | 9,965 | 524,159 | |
Kindred Healthcare, Inc.* | | 4,267 | 78,769 | |
LifePoint Hospitals, Inc.* | | 5,989 | 194,702 | |
Lincare Holdings, Inc.* | | 7,417 | 275,319 | |
Omnicare, Inc. | | 13,046 | 315,452 | |
Owens & Minor, Inc. | | 4,567 | 196,061 | |
Psychiatric Solutions, Inc.* | | 6,144 | 129,884 | |
Universal Health Services, Inc., Class B | | 10,734 | 327,387 | |
VCA Antech, Inc.* | | 9,278 | 231,208 | |
WellCare Health Plans, Inc.* | | 4,614 | 169,611 | |
| | | 3,264,150 | |
| | | | |
Health Care Technology - 0.6% | | | | |
Cerner Corp.* | | 7,462 | 615,167 | |
| | | | |
Hotels, Restaurants & Leisure - 1.7% | | | | |
Bob Evans Farms, Inc. | | 3,538 | 102,425 | |
Boyd Gaming Corp.* | | 6,292 | 52,664 | |
Brinker International, Inc. | | 11,164 | 166,567 | |
Cheesecake Factory, Inc.* | | 6,575 | 141,954 | |
Chipotle Mexican Grill, Inc.* | | 3,459 | 304,945 | |
International Speedway Corp. | | 3,355 | 95,450 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Hotels, Restaurants & Leisure - Cont'd | | | | |
Life Time Fitness, Inc.* | | 4,511 | $112,459 | |
Panera Bread Co.* | | 3,411 | 228,435 | |
Scientific Games Corp.* | | 7,416 | 107,903 | |
Wendys/Arbys Group, Inc. | | 40,050 | 187,835 | |
WMS Industries, Inc.* | | 5,776 | 231,040 | |
| | | 1,731,677 | |
| | | | |
Household Durables - 1.7% | | | | |
American Greetings Corp. | | 4,511 | 98,295 | |
KB Home | | 8,148 | 111,465 | |
MDC Holdings, Inc. | | 4,107 | 127,481 | |
Mohawk Industries, Inc.* | | 6,137 | 292,121 | |
NVR, Inc.* | | 654 | 464,804 | |
Ryland Group, Inc. | | 4,999 | 98,480 | |
Toll Brothers, Inc.* | | 14,989 | 281,943 | |
Tupperware Brands Corp. | | 7,000 | 325,990 | |
| | | 1,800,579 | |
| | | | |
Household Products - 0.9% | | | | |
Church & Dwight Co., Inc. | | 7,687 | 464,679 | |
Energizer Holdings, Inc.* | | 7,683 | 470,814 | |
| | | 935,493 | |
| | | | |
Independent Power Producers & Energy Traders - 0.1% | | | | |
Dynegy, Inc.* | | 55,558 | 100,560 | |
| | | | |
Industrial Conglomerates - 0.2% | | | | |
Carlisle Co.'s, Inc. | | 6,695 | 229,371 | |
| | | | |
Insurance - 4.1% | | | | |
American Financial Group, Inc. | | 8,624 | 215,169 | |
Arthur J. Gallagher & Co. | | 11,061 | 248,983 | |
Brown & Brown, Inc. | | 12,842 | 230,771 | |
Everest Re Group Ltd. | | 6,652 | 569,943 | |
Fidelity National Financial, Inc. | | 25,207 | 339,286 | |
First American Corp. | | 10,960 | 362,886 | |
Hanover Insurance Group, Inc. | | 5,559 | 246,986 | |
HCC Insurance Holdings, Inc. | | 12,275 | 343,332 | |
Horace Mann Educators Corp. | | 4,473 | 55,913 | |
Mercury General Corp. | | 3,893 | 152,839 | |
Old Republic International Corp. | | 26,271 | 263,761 | |
Protective Life Corp. | | 9,354 | 154,809 | |
Reinsurance Group of America, Inc. | | 7,955 | 379,056 | |
StanCorp Financial Group, Inc. | | 5,372 | 214,987 | |
Unitrin, Inc. | | 5,456 | 120,305 | |
WR Berkley Corp. | | 14,871 | 366,421 | |
| | | 4,265,447 | |
| | | | |
Internet & Catalog Retail - 0.3% | | | | |
NetFlix, Inc.* | | 4,754 | 262,136 | |
| | | | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Internet Software & Services - 0.9% | | | | |
AOL, Inc.* | | 11,756 | $273,680 | |
Digital River, Inc.* | | 4,407 | 118,945 | |
Equinix, Inc.* | | 4,293 | 455,702 | |
ValueClick, Inc.* | | 9,435 | 95,482 | |
| | | 943,809 | |
| | | | |
IT Services - 2.8% | | | | |
Acxiom Corp.* | | 8,624 | 115,734 | |
Alliance Data Systems Corp.* | | 5,732 | 370,230 | |
Broadridge Financial Solutions, Inc. | | 15,026 | 338,987 | |
Convergys Corp.* | | 13,543 | 145,587 | |
DST Systems, Inc.* | | 4,296 | 187,091 | |
Gartner, Inc.* | | 6,537 | 117,927 | |
Global Payments, Inc. | | 8,925 | 480,701 | |
Hewitt Associates, Inc.* | | 9,165 | 387,313 | |
Lender Processing Services, Inc. | | 10,508 | 427,255 | |
Mantech International Corp.* | | 2,414 | 116,548 | |
NeuStar, Inc.* | | 8,126 | 187,223 | |
SRA International, Inc.* | | 4,879 | 93,189 | |
| | | 2,967,785 | |
| | | | |
Life Sciences - Tools & Services - 1.9% | | | | |
Affymetrix, Inc.* | | 8,062 | 47,082 | |
Bio-Rad Laboratories, Inc.* | | 2,099 | 202,470 | |
Charles River Laboratories International, Inc.* | | 7,205 | 242,736 | |
Covance, Inc.* | | 6,987 | 381,281 | |
Mettler-Toledo International, Inc.* | | 3,689 | 387,308 | |
Pharmaceutical Product Development, Inc. | | 12,914 | 302,704 | |
Techne Corp. | | 4,071 | 279,108 | |
Varian, Inc.* | | 3,160 | 162,866 | |
| | | 2,005,555 | |
| | | | |
Machinery - 5.1% | | | | |
AGCO Corp.* | | 10,107 | 326,860 | |
Bucyrus International, Inc. | | 8,212 | 462,910 | |
Crane Co. | | 5,113 | 156,560 | |
Donaldson Co., Inc. | | 8,436 | 358,867 | |
Federal Signal Corp. | | 5,857 | 35,259 | |
Graco, Inc. | | 6,552 | 187,191 | |
Harsco Corp. | | 8,779 | 282,947 | |
IDEX Corp. | | 8,828 | 274,992 | |
Joy Global, Inc. | | 11,269 | 581,368 | |
Kennametal, Inc. | | 8,878 | 230,118 | |
Lincoln Electric Holdings, Inc. | | 4,648 | 248,482 | |
Nordson Corp. | | 3,673 | 224,714 | |
Oshkosh Corp. | | 9,771 | 361,820 | |
Pentair, Inc. | | 10,750 | 347,225 | |
SPX Corp. | | 5,367 | 293,575 | |
Terex Corp.* | | 11,805 | 233,857 | |
Timken Co. | | 8,678 | 205,755 | |
Trinity Industries, Inc. | | 8,663 | 151,083 | |
Valmont Industries, Inc. | | 2,184 | 171,335 | |
Wabtec Corp. | | 5,199 | 212,327 | |
| | | 5,347,245 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Marine - 0.3% | | | | |
Alexander & Baldwin, Inc. | | 4,479 | $153,316 | |
Kirby Corp.* | | 5,877 | 204,696 | |
| | | 358,012 | |
| | | | |
Media - 1.1% | | | | |
DreamWorks Animation SKG, Inc.* | | 8,248 | 329,508 | |
Harte-Hanks, Inc. | | 4,355 | 46,947 | |
John Wiley & Sons, Inc. | | 4,677 | 195,873 | |
Lamar Advertising Co.* | | 5,817 | 180,851 | |
Marvel Entertainment, Inc.* | | 5,319 | 287,651 | |
Scholastic Corp. | | 2,904 | 86,626 | |
| | | 1,127,456 | |
| | | | |
Metals & Mining - 1.1% | | | | |
Carpenter Technology Corp. | | 4,809 | 129,602 | |
Commercial Metals Co. | | 12,300 | 192,495 | |
Reliance Steel & Aluminum Co. | | 6,991 | 302,151 | |
Steel Dynamics, Inc. | | 23,747 | 420,797 | |
Worthington Industries, Inc. | | 6,657 | 87,007 | |
| | | 1,132,052 | |
| | | | |
Multiline Retail - 0.6% | | | | |
99 Cents Only Stores* | | 5,160 | 67,441 | |
Dollar Tree, Inc.* | | 9,771 | 471,939 | |
Saks, Inc.* | | 18,095 | 118,703 | |
| | | 658,083 | |
| | | | |
Multi-Utilities - 1.9% | | | | |
Alliant Energy Corp. | | 12,091 | 365,874 | |
Black Hills Corp. | | 4,280 | 113,976 | |
MDU Resources Group, Inc. | | 20,677 | 487,977 | |
NSTAR | | 11,674 | 429,603 | |
OGE Energy Corp. | | 10,555 | 389,374 | |
Vectren Corp. | | 8,864 | 218,764 | |
| | | 2,005,568 | |
| | | | |
Office Electronics - 0.2% | | | | |
Zebra Technologies Corp.* | | 6,461 | 183,234 | |
| | | | |
Oil, Gas & Consumable Fuels - 3.8% | | | | |
Arch Coal, Inc. | | 17,758 | 395,116 | |
Bill Barrett Corp.* | | 4,229 | 131,564 | |
Cimarex Energy Co. | | 9,197 | 487,165 | |
Comstock Resources, Inc.* | | 5,097 | 206,785 | |
Encore Acquisition Co.* | | 6,072 | 291,577 | |
Forest Oil Corp.* | | 12,269 | 272,985 | |
Frontier Oil Corp. | | 11,440 | 137,738 | |
Mariner Energy, Inc.* | | 11,140 | 129,335 | |
Newfield Exploration Co.* | | 14,633 | 705,750 | |
Overseas Shipholding Group, Inc. | | 2,574 | 113,127 | |
Patriot Coal Corp.* | | 8,194 | 126,679 | |
Plains Exploration & Production Co.* | | 15,221 | 421,013 | |
Quicksilver Resources, Inc.* | | 12,946 | 194,319 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Oil, Gas & Consumable Fuels - Cont'd | | | | |
Southern Union Co. | | 13,557 | $307,744 | |
| | | 3,920,897 | |
| | | | |
Paper & Forest Products - 0.1% | | | | |
Louisiana-Pacific Corp.* | | 13,311 | 92,911 | |
| | | | |
Personal Products - 0.5% | | | | |
Alberto-Culver Co. | | 9,337 | 273,481 | |
NBTY, Inc.* | | 6,762 | 294,417 | |
| | | 567,898 | |
| | | | |
Pharmaceuticals - 1.0% | | | | |
Endo Pharmaceuticals Holdings, Inc.* | | 12,808 | 262,692 | |
Medicis Pharmaceutical Corp. | | 6,551 | 177,205 | |
Perrigo Co. | | 8,860 | 352,982 | |
Valeant Pharmaceuticals International* | | 7,369 | 234,261 | |
| | | 1,027,140 | |
| | | | |
Professional Services - 1.3% | | | | |
Corporate Executive Board Co. | | 3,731 | 85,141 | |
FTI Consulting, Inc.* | | 5,654 | 266,643 | |
Korn/Ferry International* | | 4,985 | 82,253 | |
Manpower, Inc. | | 8,568 | 467,641 | |
MPS Group, Inc.* | | 10,181 | 139,887 | |
Navigant Consulting, Inc.* | | 5,530 | 82,176 | |
Watson Wyatt Worldwide, Inc.* | | 4,664 | 221,633 | |
| | | 1,345,374 | |
| | | | |
Real Estate Investment Trusts - 6.9% | | | | |
Alexandria Real Estate Equities, Inc. | | 4,865 | 312,771 | |
AMB Property Corp. | | 15,985 | 408,417 | |
BRE Properties, Inc. | | 5,985 | 197,984 | |
Camden Property Trust | | 7,007 | 296,887 | |
Corporate Office Properties Trust | | 6,342 | 232,307 | |
Cousins Properties, Inc. | | 11,099 | 84,685 | |
Duke Realty Corp. | | 24,480 | 297,922 | |
Equity One, Inc. | | 3,861 | 62,432 | |
Essex Property Trust, Inc. | | 3,207 | 268,266 | |
Federal Realty Investment Trust | | 6,687 | 452,844 | |
Highwoods Properties, Inc. | | 7,745 | 258,296 | |
Hospitality Properties Trust | | 13,588 | 322,171 | |
Liberty Property Trust | | 12,402 | 396,988 | |
Macerich Co. | | 10,748 | 386,391 | |
Mack-Cali Realty Corp. | | 8,562 | 295,988 | |
Nationwide Health Properties, Inc. | | 12,267 | 431,553 | |
Omega Healthcare Investors, Inc. | | 9,374 | 182,324 | |
Potlatch Corp. | | 4,345 | 138,519 | |
Rayonier, Inc. | | 8,751 | 368,942 | |
Realty Income Corp. | | 11,398 | 295,322 | |
Regency Centers Corp. | | 8,776 | 307,687 | |
Senior Housing Properties Trust | | 14,028 | 306,792 | |
SL Green Realty Corp. | | 8,505 | 427,291 | |
UDR, Inc. | | 16,830 | 276,685 | |
Weingarten Realty Investors | | 11,391 | 225,428 | |
| | | 7,234,892 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Real Estate Management & Development - 0.3% | | | | |
Jones Lang LaSalle, Inc. | | 4,567 | $275,847 | |
| | | | |
Road & Rail - 1.1% | | | | |
Con-way, Inc. | | 5,359 | 187,083 | |
JB Hunt Transport Services, Inc. | | 9,564 | 308,630 | |
Kansas City Southern* | | 10,573 | 351,975 | |
Landstar System, Inc. | | 5,609 | 217,461 | |
Werner Enterprises, Inc. | | 4,786 | 94,715 | |
| | | 1,159,864 | |
| | | | |
Semiconductors & Semiconductor Equipment - 2.4% | | | | |
Atmel Corp.* | | 49,307 | 227,305 | |
Cree, Inc.* | | 11,413 | 643,351 | |
Fairchild Semiconductor International, Inc.* | | 13,529 | 135,155 | |
Integrated Device Technology, Inc.* | | 18,902 | 122,296 | |
International Rectifier Corp.* | | 7,784 | 172,182 | |
Intersil Corp. | | 13,377 | 205,203 | |
Lam Research Corp.* | | 14,014 | 549,489 | |
RF Micro Devices, Inc.* | | 29,195 | 139,260 | |
Semtech Corp.* | | 6,716 | 114,239 | |
Silicon Laboratories, Inc.* | | 5,030 | 243,150 | |
| | | 2,551,630 | |
| | | | |
Software - 3.5% | | | | |
ACI Worldwide, Inc.* | | 3,884 | 66,611 | |
Advent Software, Inc.* | | 1,776 | 72,336 | |
ANSYS, Inc.* | | 9,769 | 424,561 | |
Cadence Design Systems, Inc.* | | 29,068 | 174,117 | |
FactSet Research Systems, Inc. | | 4,587 | 302,146 | |
Fair Isaac Corp. | | 5,306 | 113,071 | |
Informatica Corp.* | | 9,851 | 254,747 | |
Jack Henry & Associates, Inc. | | 9,203 | 212,773 | |
Mentor Graphics Corp.* | | 10,728 | 94,728 | |
MICROS Systems, Inc.* | | 8,741 | 271,233 | |
Parametric Technology Corp.* | | 12,983 | 212,142 | |
Quest Software, Inc.* | | 6,649 | 122,342 | |
Rovi Corp.* | | 11,349 | 361,693 | |
Solera Holdings, Inc. | | 7,604 | 273,820 | |
Sybase, Inc.* | | 8,979 | 389,689 | |
Synopsys, Inc.* | | 15,937 | 355,076 | |
| | | 3,701,085 | |
| | | | |
Specialty Retail - 4.5% | | | | |
Aaron's, Inc. | | 5,929 | 164,411 | |
Advance Auto Parts, Inc. | | 10,433 | 422,328 | |
Aeropostale, Inc.* | | 7,342 | 249,995 | |
American Eagle Outfitters, Inc. | | 22,673 | 384,988 | |
AnnTaylor Stores Corp.* | | 6,704 | 91,443 | |
Barnes & Noble, Inc. | | 4,464 | 85,128 | |
Carmax, Inc.* | | 24,430 | 592,428 | |
Chicos FAS, Inc.* | | 19,440 | 273,132 | |
Coldwater Creek, Inc.* | | 6,781 | 30,243 | |
Collective Brands, Inc.* | | 7,005 | 159,504 | |
Dicks Sporting Goods, Inc.* | | 9,844 | 244,820 | |
Foot Locker, Inc. | | 17,088 | 190,360 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Specialty Retail - Cont'd | | | | |
Guess?, Inc. | | 6,343 | $268,309 | |
J Crew Group, Inc.* | | 6,081 | 272,064 | |
PetSmart, Inc. | | 13,670 | 364,852 | |
Rent-A-Center, Inc.* | | 7,219 | 127,921 | |
Urban Outfitters, Inc.* | | 14,167 | 495,703 | |
Williams-Sonoma, Inc. | | 11,556 | 240,134 | |
| | | 4,657,763 | |
| | | | |
Textiles, Apparel & Luxury Goods - 1.0% | | | | |
Fossil, Inc.* | | 5,247 | 176,089 | |
Hanesbrands, Inc.* | | 10,355 | 249,659 | |
Phillips-Van Heusen Corp. | | 5,645 | 229,639 | |
Timberland Co.* | | 4,876 | 87,427 | |
Under Armour, Inc.* | | 4,098 | 111,752 | |
Warnaco Group, Inc.* | | 4,962 | 209,347 | |
| | | 1,063,913 | |
| | | | |
Thrifts & Mortgage Finance - 1.4% | | | | |
Astoria Financial Corp. | | 9,307 | 115,686 | |
First Niagara Financial Group, Inc. | | 20,727 | 288,313 | |
New York Community Bancorp, Inc. | | 45,797 | 664,514 | |
NewAlliance Bancshares, Inc. | | 11,682 | 140,301 | |
Washington Federal, Inc. | | 12,364 | 239,120 | |
| | | 1,447,934 | |
| | | | |
Tobacco - 0.1% | | | | |
Universal Corp. | | 2,713 | 123,740 | |
| | | | |
| | | | |
Trading Companies & Distributors - 0.4% | | | | |
GATX Corp. | | 5,023 | 144,411 | |
MSC Industrial Direct Co. | | 4,790 | 225,130 | |
United Rentals, Inc.* | | 6,865 | 67,346 | |
| | | 436,887 | |
| | | | |
Water Utilities - 0.3% | | | | |
Aqua America, Inc. | | 14,856 | 260,129 | |
| | | | |
| | | | |
Wireless Telecommunication Services - 0.5% | | | | |
Syniverse Holdings, Inc.* | | 7,516 | 131,380 | |
Telephone & Data Systems, Inc. | | 10,383 | 352,191 | |
| | | 483,571 | |
| | | | |
Total Equity Securities (Cost $99,438,376) | | | 99,286,167 | |
| | | | |
| | | | |
Exchange Traded Funds - 0.6% | | | | |
Midcap SPDR Trust Series 1 | | 4,900 | 645,624 | |
| | | | |
Total Exchange Traded Funds (Cost $645,886) | | | 645,624 | |
| | | | |
| | | | |
| | Principal | | |
Time Deposit - 3.9% | | Amount | Value | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | $4,040,552 | $4,040,552 | |
| | | | |
Total Time Deposit (Cost $4,040,552) | | | 4,040,552 | |
| | | | |
| | | | |
U.S. Treasury - 0.4% | | | | |
United States Treasury Bills, 2/11/10^ | | 400,000 | 399,938 | |
| | | | |
Total U.S. Treasury (Cost $399,938) | | | 399,938 | |
| | | | |
TOTAL INVESTMENTS (Cost $104,524,752) - 100.0% | | | 104,372,281 | |
Other assets and liabilities, net - 0.0% | | | (24,455) | |
NET ASSETS - 100% | | | $104,347,826 | |
| | | | |
| | | | |
Net Assets Consist of: | | | | |
Paid-in capital applicable to the following shares of common stock outstanding; | | | | |
$0.10 per value, 20,000,000 shares authorized: | | | | |
Class I: 1,899,442 | | | $115,459,542 | |
Class F: 9,495 | | | 438,623 | |
Undistributed net investment income | | | 311,012 | |
Accumulated net realized gain (loss) on investments | | | (11,848,412) | |
Net unrealized appreciation (depreciation) on investments | | | (12,939) | |
| | | | |
Net Assets | | | $104,347,826 | |
| | | | |
Net Asset Value Per Share: | | | | |
Class I: (based on net assets of $103,824,681) | | | $54.66 | |
Class F: (based on net assets of $523,145) | | | $55.10 | |
Futures | Number Of
Contracts | Expiration
Date | Underlying
Face Amount
At Value | Unrealized
Appreciation
(Depreciation) |
Purchased: | | | | |
E-Mini S&P MidCap 400 Index^ | 63 | 3/10 | $4,566,870 | $139,532 |
(b) This security was valued by the Board of Directors. See note A.
^ Futures collateralized by 400,000 units of U.S. Treasury Bills.
* Non-income producing security.
Abbreviations:
LLC: Limited Liability Corporation
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $1,633,487 |
Interest income | 125 |
Total investment income | 1,633,612 |
| |
Expenses: | |
Investment advisory fee | 272,987 |
Transfer agent fees and expenses | 19,909 |
Administrative fees | 90,996 |
Distribution plan expenses: | |
Class F | 727 |
Directors' fees and expenses | 14,298 |
Custodian fees | 42,042 |
Reports to shareholders | 18,150 |
Professional fees | 25,271 |
Accounting fees | 12,095 |
Miscellaneous | 25,876 |
Total expenses | 522,351 |
Reimbursement from Advisor: | |
Class I | (16,885) |
Class F | (4,052) |
Fees paid indirectly | (67) |
Net expenses | 501,347 |
| |
Net Investment Income | 1,132,265 |
| |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | 549,871 |
Futures | 135,066 |
| 684,937 |
| |
Change in unrealized appreciation (depreciation) on: | |
Investments | 27,503,568 |
Futures | 1,778 |
| 27,505,346 |
| |
Net Realized and Unrealized Gain | |
(Loss) | 28,190,283 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $29,322,548 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $1,132,265 | $1,818,988 |
Net realized gain (loss) | 684,937 | (12,128,233) |
Change in unrealized appreciation or (depreciation) | 27,505,346 | (50,236,462) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 29,322,548 | (60,545,707) |
| | |
Distributions to shareholders from: | | |
Net investment income: | | |
Class I shares | (808,995) | (2,853,958) |
Class F shares | (2,174) | (739) |
Net realized gain: | | |
Class I shares | -- | (11,824,562) |
Class F shares | -- | (1,281) |
Total distributions | (811,169) | (14,680,540) |
| | |
Capital share transactions: | | |
Shares sold: | | |
Class I shares | 10,586,679 | 18,892,154 |
Class F shares | 440,988 | 212,505 |
Reinvestment of distributions: | | |
Class I shares | 808,993 | 14,678,521 |
Class F shares | 2,174 | 2,020 |
Shares redeemed: | | |
Class I shares | (20,604,871) | (45,958,150) |
Class F shares | (166,966) | (53,098) |
Total capital share transactions | (8,933,003) | (12,226,048) |
| | |
Total Increase (Decrease) In Net Assets | 19,578,376 | (87,452,295) |
| | |
Net Assets | | |
Beginning of year | 84,769,450 | 172,221,745 |
End of year (including undistributed net investment income | | |
of $311,012 and $131,531 respectively) | $104,347,826 | $84,769,450 |
| | |
Capital Share Activity | | |
Shares sold: | | |
Class I shares | 241,201 | 322,460 |
Class F shares | 10,071 | 3,807 |
Reinvestment of distributions: | | |
Class I shares | 14,611 | 256,407 |
Class F shares | 39 | 38 |
Shares redeemed: | | |
Class I shares | (452,512) | (919,042) |
Class F shares | (3,176) | (1,299) |
Total capital share activity | (189,766) | (337,629) |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit S&P MidCap 400 Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio offers Class I and Class F shares. Class F shares are subject to Distribution Plan Expenses. Each class has different: (a) dividend rates, due to differences in Distribution Plan expenses and other class-specific expenses, (b) exchange privileges; and (c) class-specific voting rights.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Short-term notes are stated at amortized cost, which approximates fair value. The Portfolio may invest in securities whose resale is subject to restrictions. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, securities valued at $10, or 0.0% of net assets were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity securities** | $99,286,157 | -- | $10 | $99,286,167 |
Exchange traded funds | 645,624 | -- | -- | 645,624 |
U.S. government obligations | -- | $399,938 | -- | 399,938 |
Other debt obligations | -- | 4,040,552 | -- | 4,040,552 |
TOTAL | $99,931,781 | $4,440,490 | $10* | $104,372,281 |
| | | | |
Other financial instruments*** | $139,532 | -- | -- | $139,532 |
* Level 3 securities represent 0.0% of net assets.
** For further breakdown of equity securities by industry type, please refer to the Statement of Net Assets.
***Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument
Futures Contracts: The Portfolio may purchase and sell futures contracts, but only when, in the judgment of the Advisor, such a position acts as a hedge. The Portfolio may not enter into futures contracts for the purpose of speculation or leverage. These futures contracts may include, but are not limited to, market index futures contracts. The Portfolio is subject to market risk in the normal course of pursuing its investment objectives. The Portfolio may use futures contracts to hedge against changes in the value of securities. The Portfolio may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date. Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract. While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When a futures contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract. The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Portfolio's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms. Futures contracts are designed by boards of trade which are designated "contracts markets" by the Commodities Futures Trading Commission. Futures contracts trade on the contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee the futures contracts against default. As a result, there is minimal counterparty credit risk to the Portfolio.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Investment income and realized and unrealized gains and losses are allocated to separate classes of shares based upon the relative net assets of each class. Expenses arising in connection with a class are charged directly to that class. Expenses common to the classes are allocated to each class in proportion to their relative net assets. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the app licable country's tax rules and rates.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Mutual Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .30% of the Portfolio's average daily net assets. Under the terms of the agreement, $26,301 was payable at year end. In addition, $16,171 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .55% and .79% for Class I and Class F, respectively. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $8,767 was payable at year end.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and principal underwriter for the Portfolio. Distribution plans, adopted by Class F shares, allow the Portfolio to pay the distributor for expenses and services associated with the distribution of shares. The expenses paid may not exceed 0.20% annually of average daily net assets of Class F. Under the terms of the agreement, $101 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $199 for the year ended December 31, 2009. Under the terms of the agreement, $16 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $14,038,884 and $24,002,152.
Capital Loss Carryforward
Expiration Date
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | | 2009 | 2008 |
Ordinary income | | $811,169 | $3,307,172 |
Long term capital gain | | -- | 11,373,368 |
Total | | $811,169 | $14,680,540 |
As of December 31, 2009, the tax basis components of distributable earnings / (accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $15,695,049 |
Unrealized (depreciation) | (16,280,248) |
Net unrealized appreciation/(depreciation) | ($585,199) |
Undistributed ordinary income | $311,012 |
Capital loss carryforward | ($11,276,152) |
Federal income tax cost of investments | $104,957,480 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales, real estate investment trusts, return of capital distributions and Section 1256 contracts.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to real estate investment trusts and litigation settlements.
Undistributed net investment income | ($141,615) |
Accumulated net realized gain (loss) | 141,615 |
Note D -- Line Of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| AVERAGE
DAILY
BALANCE | WEIGHTED
AVERAGE
INTEREST
RATE | MAXIMUM
AMOUNT
BORROWED | MONTH OF
MAXIMUM
AMOUNT
BORROWED | |
| $6,812 | 1.45% | $183,212 | November 2009 | |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 99.9% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
Class I Shares | 2009 | 2008 (z) | 2007 |
Net asset value, beginning | $40.39 | $70.69 | $69.23 |
Income from investment operations | | | |
Net investment income | .60 | .72 | .67 |
Net realized and unrealized gain (loss) | 14.10 | (24.89) | 4.44 |
Total from investment operations | 14.70 | (24.17) | 5.11 |
Distributions from | | | |
Net investment income | (.43) | (1.26) | (.66) |
Net realized gain | -- | (4.87) | (2.99) |
Total distributions | (.43) | (6.13) | (3.65) |
Total increase (decrease) in net asset value | 14.27 | (30.30) | 1.46 |
Net asset value, ending | $54.66 | $40.39 | $70.69 |
| | | |
Total return* | 36.38% | (36.63%) | 7.38% |
Ratios to average net assets: A | | | |
Net investment income | 1.25% | 1.27% | 1.11% |
Total expenses | .57% | .55% | .52% |
Expenses before offsets | .55% | .55% | .52% |
Net expenses | .55% | .55% | .52% |
Portfolio turnover | 16% | 22% | 23% |
Net assets, ending (in thousands) | $103,825 | $84,665 | $172,221 |
| | | |
| | | |
| Years Ended | |
| December 31, | December 31, | |
Class I Shares | 2006 | 2005 | |
Net asset value, beginning | $66.08 | $60.76 | |
Income from investment operations | | | |
Net investment income | .67 | .52 | |
Net realized and unrealized gain (loss) | 5.64 | 6.50 | |
Total from investment operations | 6.31 | 7.02 | |
Distributions from | | | |
Net investment income | (.59) | (.33) | |
Net realized gain | (2.57) | (1.37) | |
Total distributions | (3.16) | (1.70) | |
Total increase (decrease) in net asset value | 3.15 | 5.32 | |
Net asset value, ending | $69.23 | $66.08 | |
| | | |
Total return* | 9.72% | 11.94% | |
Ratios to average net assets: A | | | |
Net investment income | 1.15% | .91% | |
Total expenses | .52% | .54% | |
Expenses before offsets | .52% | .54% | |
Net expenses | .52% | .54% | |
Portfolio turnover | 14% | 19% | |
Net assets, ending (in thousands) | $144,136 | $127,372 | |
| | | |
| | | |
See notes to financial highlights. | | | |
| | | |
| | | |
Financial Highlights | | | |
| | | |
| | Periods Ended | |
| December 31, | December 31, | December 31, |
Class F Shares | 2009 | 2008 (z) | 2007^ |
Net asset value, beginning | $40.65 | $70.66 | $73.77 |
Income from investment operations | | | |
Net investment income | .43 | .66 | .16 |
Net realized and unrealized gain (loss) | 14.25 | (24.90) | (3.27) |
Total from investment operations | 14.68 | (24.24) | (3.11) |
Distributions from | | | |
Net investment income | (.23) | (.90) | -- |
Net realized gain | -- | (4.87) | -- |
Total distributions | (.23) | (5.77) | -- |
Total increase (decrease) in net asset value | 14.45 | (30.01) | (3.11) |
Net asset value, ending | $55.10 | $40.65 | $70.66 |
| | | |
Total return* | 36.12% | (36.76%) | (4.21%) |
Ratios to average net assets: A | | | |
Net investment income | .98% | 1.26% | .89% (a) |
Total expenses | 1.90% | .79% | .71% (a) |
Expenses before offsets | .79% | .78% | .71% (a) |
Net expenses | .79% | .78% | .71% (a) |
Portfolio turnover | 16% | 22% | 23% |
Net assets, ending (in thousands) | $523 | $104 | $1 |
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
(a) Annualized.
* Total return is not annualized for periods less than one year.
^ From October 1, 2007 inception.
(z) Per share figures calculated using the Average Share Method.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory Contracts
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer group for the one- and five-year periods ended June 30, 2009, and performed above the median of its peer universe for the three-year period ended June 30, 2009. The data also indicated that the Portfolio above its Lipper index for the one-, three- and five-year periods ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance. Based upon its review, the Board concluded that the Portfolio's performance was being addressed.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was above the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the relatively small range in total expense ratios among the funds in the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Port folio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is being addressed; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Por tfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Balanced
Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
24 | Statement of Operations |
25 | Statements of Changes in Net Assets |
26 | Notes to Financial Statements |
32 | Financial Highlights |
34 | Explanation of Financial Tables |
35 | Proxy Voting |
36 | Availability of Quarterly Portfolio Holdings |
36 | Basis for Boards Approval of Investment Advisory Contracts |
40 | Director and Officer Information Table |
Summit Balanced Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Balanced Index Portfolio returned 18.41% compared to 26.46% for the Standard & Poor's (S&P) 500 Index, its benchmark. For context, a composite index, which is comprised of 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index, returned 18.25% for the period. While the Portfolio underperformed the S&P 500 benchmark due to its fixed-income allocation, it outperformed the composite primarily because of its slightly overweight position in equities throughout the year. Also, the fixed-income portion of the portfolio delivered strong returns relative to the fixed-income benchmark.
Summit Balanced Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 18.41% |
Five year | 2.61% |
Ten year | 1.89% |
* Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
** In December 2009 the Portfolio changed its broad-based benchmark in order to adopt an index that is not blended. The Portfolio also continues to show the Summit Balanced Composite because it is more consistent with the Portfolio's construction process and represents a more accurate reflection of the Portfolio's anticipated risk and return patterns.
*** 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index.
The performance data shown represents past performance, and does not guarantee future results.The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled performance in late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
Fixed-income markets opened up for both investment-grade and high-yield issuers, which was critical in breaking the credit crunch that began in 2008. Bond investments provided a wide range of returns during 2009. The corporate bond sector produced a return of 18.68% for the year, while the U.S. Treasury sector returned -3.57%. Mortgage-backed securities returned 5.89% as the government launched a trillion dollar purchase program to support that market. In general, riskier assets performed well, while lower-risk assets lagged. This was a complete reversal from 2008, when riskier assets were shed by investors and delivered strongly negative returns.
After posting negative returns during the first few months of the year, equity markets rallied. As liquidity and risk-taking returned to the marketplace, a more positive economic outlook prevailed and share prices moved higher.
Portfolio Strategy
As an index fund, the Portfolio's strategy is purely passive. Its goal is to mirror, as closely as possible, the performance of a portfolio comprised of 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index. When target weightings change significantly, the Portfolio is rebalanced.
The Portfolio relies on full replication to track the performance of the S&P 500 Index, although market shifts and portfolio cash flows may cause it to have slightly different weightings than the Index. Full replication of the Barclays Capital Aggregate Bond Index is not feasible, as the Index includes more than 8,400 securities. Therefore, the Portfolio employs stratified sampling to track performance of the Index. Stratified sampling requires the portfolio manager to select securities in each sector of the marketplace to represent sectors in the Index.
Asset Allocation
(at 12.31.09) | % of Total Investments |
Equity Investments | 57% |
Fixed Income Investments | 40% |
Time Deposit | 3% |
Total | 100% |
Outlook
During 2010, we expect to see modest economic growth in the United States and throughout the world, and improved corporate earnings. We anticipate that the recovery will remain modest as many challenges remain. Unemployment is above 10%, creating slack in the American economy. Consumers continue to reduce debt and limit spending. Many financial institutions have not yet addressed problem assets on their books, which will become problematic if the commercial real estate market experiences weakness as the year unfolds. Finally, the Federal Reserve (Fed) will have to drain liquidity from the system at some point. The Fed's timing and the magnitude of its actions will significantly influence economic and market performance.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,144.70 | $3.24 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,022.18 | $3.06 |
* Expenses are equal to the Fund's annualized expense ratio of 0.60%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Balanced Index Portfolio:
We have audited the accompanying statement of net assets of the Summit Balanced Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Balanced Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Equity Securities - 57.3% | | Shares | Value | |
Aerospace & Defense - 1.6% | | | | |
Boeing Co. | | 656 | $35,509 | |
General Dynamics Corp. | | 348 | 23,723 | |
Goodrich Corp. | | 122 | 7,839 | |
Honeywell International, Inc. | | 679 | 26,617 | |
ITT Corp. | | 165 | 8,207 | |
L-3 Communications Holdings, Inc. | | 115 | 9,999 | |
Lockheed Martin Corp. | | 292 | 22,002 | |
Northrop Grumman Corp. | | 288 | 16,085 | |
Precision Castparts Corp. | | 127 | 14,014 | |
Raytheon Co. | | 352 | 18,135 | |
Rockwell Collins, Inc. | | 155 | 8,581 | |
United Technologies Corp. | | 850 | 58,999 | |
| | | 249,710 | |
| | | | |
Air Freight & Logistics - 0.6% | | | | |
C.H. Robinson Worldwide, Inc. | | 165 | 9,691 | |
Expeditors International of Washington, Inc. | | 192 | 6,668 | |
FedEx Corp. | | 282 | 23,533 | |
United Parcel Service, Inc., Class B | | 898 | 51,518 | |
| | | 91,410 | |
| | | | |
Airlines - 0.0% | | | | |
Southwest Airlines Co. | | 670 | 7,658 | |
| | | | |
Auto Components - 0.1% | | | | |
Goodyear Tire & Rubber Co.* | | 263 | 3,708 | |
Johnson Controls, Inc. | | 584 | 15,908 | |
| | | 19,616 | |
| | | | |
Automobiles - 0.2% | | | | |
Ford Motor Co.* | | 2,909 | 29,090 | |
Harley-Davidson, Inc. | | 212 | 5,342 | |
| | | 34,432 | |
| | | | |
Beverages - 1.5% | | | | |
Brown-Forman Corp., Class B | | 115 | 6,160 | |
Coca-Cola Co. | | 2,105 | 119,985 | |
Coca-Cola Enterprises, Inc. | | 287 | 6,084 | |
Constellation Brands, Inc.* | | 225 | 3,584 | |
Dr Pepper Snapple Group, Inc. | | 230 | 6,509 | |
Molson Coors Brewing Co., Class B | | 154 | 6,955 | |
Pepsi Bottling Group, Inc. | | 148 | 5,550 | |
PepsiCo, Inc. | | 1,407 | 85,546 | |
| | | 240,373 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Biotechnology - 0.9% | | | | |
Amgen, Inc.* | | 918 | $51,931 | |
Biogen Idec, Inc.* | | 261 | 13,964 | |
Celgene Corp.* | | 415 | 23,107 | |
Cephalon, Inc.* | | 82 | 5,118 | |
Genzyme Corp.* | | 245 | 12,007 | |
Gilead Sciences, Inc.* | | 817 | 35,360 | |
| | | 141,487 | |
| | | | |
Building Products - 0.0% | | | | |
Masco Corp. | | 325 | 4,488 | |
| | | | |
Capital Markets - 1.6% | | | | |
Ameriprise Financial, Inc. | | 247 | 9,589 | |
Bank of New York Mellon Corp. | | 1,086 | 30,375 | |
Charles Schwab Corp. | | 860 | 16,185 | |
E*Trade Financial Corp.* | | 1,407 | 2,462 | |
Federated Investors, Inc., Class B | | 103 | 2,834 | |
Franklin Resources, Inc. | | 136 | 14,328 | |
Goldman Sachs Group, Inc. | | 462 | 78,004 | |
Invesco Ltd. | | 408 | 9,584 | |
Janus Capital Group, Inc. | | 163 | 2,192 | |
Legg Mason, Inc. | | 153 | 4,614 | |
Morgan Stanley | | 1,228 | 36,349 | |
Northern Trust Corp. | | 218 | 11,423 | |
State Street Corp. | | 447 | 19,462 | |
T. Rowe Price Group, Inc. | | 232 | 12,354 | |
| | | 249,755 | |
| | | | |
Chemicals - 1.1% | | | | |
Air Products & Chemicals, Inc. | | 190 | 15,401 | |
Airgas, Inc. | | 85 | 4,046 | |
CF Industries Holdings, Inc. | | 48 | 4,357 | |
Dow Chemical Co. | | 1,033 | 28,542 | |
Eastman Chemical Co. | | 78 | 4,699 | |
Ecolab, Inc. | | 214 | 9,540 | |
EI Du Pont de Nemours & Co. | | 816 | 27,475 | |
FMC Corp. | | 75 | 4,182 | |
International Flavors & Fragrances, Inc. | | 91 | 3,744 | |
Monsanto Co. | | 493 | 40,303 | |
PPG Industries, Inc. | | 149 | 8,722 | |
Praxair, Inc. | | 277 | 22,246 | |
Sigma-Aldrich Corp. | | 120 | 6,064 | |
| | | 179,321 | |
| | | | |
Commercial Banks - 1.5% | | | | |
BB&T Corp. | | 616 | 15,628 | |
Comerica, Inc. | | 161 | 4,761 | |
Fifth Third Bancorp | | 780 | 7,605 | |
First Horizon National Corp.* | | 201 | 2,694 | |
Huntington Bancshares, Inc. | | 388 | 1,416 | |
KeyCorp | | 798 | 4,429 | |
M&T Bank Corp. | | 75 | 5,017 | |
Marshall & Ilsley Corp. | | 300 | 1,635 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Commercial Banks - Cont'd | | | | |
PNC Financial Services Group, Inc. | | 417 | $22,013 | |
Regions Financial Corp. | | 1,164 | 6,157 | |
SunTrust Banks, Inc. | | 427 | 8,664 | |
US Bancorp | | 1,727 | 38,875 | |
Wells Fargo & Co. | | 4,643 | 125,315 | |
Zions Bancorporation | | 115 | 1,475 | |
| | | 245,684 | |
| | | | |
Commercial Services & Supplies - 0.3% | | | | |
Avery Dennison Corp. | | 102 | 3,722 | |
Cintas Corp. | | 144 | 3,751 | |
Iron Mountain, Inc.* | | 163 | 3,710 | |
Pitney Bowes, Inc. | | 203 | 4,620 | |
Republic Services, Inc. | | 291 | 8,238 | |
RR Donnelley & Sons Co. | | 202 | 4,499 | |
Stericycle, Inc.* | | 77 | 4,248 | |
Waste Management, Inc. | | 445 | 15,046 | |
| | | 47,834 | |
| | | | |
Communications Equipment - 1.5% | | | | |
Cisco Systems, Inc.* | | 5,226 | 125,110 | |
Harris Corp. | | 129 | 6,134 | |
JDS Uniphase Corp.* | | 278 | 2,294 | |
Juniper Networks, Inc.* | | 474 | 12,642 | |
Motorola, Inc.* | | 2,073 | 16,086 | |
QUALCOMM, Inc. | | 1,501 | 69,436 | |
Tellabs, Inc.* | | 389 | 2,210 | |
| | | 233,912 | |
| | | | |
Computers & Peripherals - 3.4% | | | | |
Apple, Inc.* | | 819 | 172,694 | |
Dell, Inc.* | | 1,554 | 22,315 | |
EMC Corp.* | | 1,826 | 31,900 | |
Hewlett-Packard Co. | | 2,171 | 111,828 | |
International Business Machines Corp. | | 1,199 | 156,949 | |
Lexmark International, Inc.* | | 101 | 2,624 | |
NetApp, Inc.* | | 330 | 11,349 | |
QLogic Corp.* | | 139 | 2,623 | |
SanDisk Corp.* | | 205 | 5,943 | |
Sun Microsystems, Inc.* | | 767 | 7,187 | |
Teradata Corp.* | | 178 | 5,595 | |
Western Digital Corp.* | | 203 | 8,963 | |
| | | 539,970 | |
| | | | |
Construction & Engineering - 0.1% | | | | |
Fluor Corp. | | 177 | 7,972 | |
Jacobs Engineering Group, Inc.* | | 122 | 4,588 | |
Quanta Services, Inc.* | | 220 | 4,585 | |
| | | 17,145 | |
| | | | |
Construction Materials - 0.0% | | | | |
Vulcan Materials Co. | | 113 | 5,952 | |
| | | | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Consumer Finance - 0.5% | | | | |
American Express Co. | | 1,074 | $43,518 | |
Capital One Financial Corp. | | 411 | 15,758 | |
Discover Financial Services | | 508 | 7,473 | |
SLM Corp.* | | 473 | 5,331 | |
| | | 72,080 | |
| | | | |
Containers & Packaging - 0.1% | | | | |
Ball Corp. | | 93 | 4,808 | |
Bemis Co., Inc. | | 122 | 3,617 | |
Owens-Illinois, Inc.* | | 153 | 5,029 | |
Pactiv Corp.* | | 139 | 3,356 | |
Sealed Air Corp. | | 156 | 3,410 | |
| | | 20,220 | |
| | | | |
Distributors - 0.0% | | | | |
Genuine Parts Co. | | 157 | 5,960 | |
| | | | |
Diversified Consumer Services - 0.1% | | | | |
Apollo Group, Inc.* | | 111 | 6,724 | |
DeVry, Inc. | | 70 | 3,971 | |
H&R Block, Inc. | | 329 | 7,442 | |
| | | 18,137 | |
| | | | |
Diversified Financial Services - 2.5% | | | | |
Bank of America Corp. | | 9,081 | 136,760 | |
Citigroup, Inc. | | 17,714 | 58,633 | |
CME Group, Inc. | | 60 | 20,157 | |
IntercontinentalExchange, Inc.* | | 75 | 8,422 | |
JPMorgan Chase & Co. | | 3,601 | 150,054 | |
Leucadia National Corp.* | | 195 | 4,639 | |
Moody's Corp. | | 193 | 5,172 | |
NYSE Euronext | | 235 | 5,946 | |
The NASDAQ OMX Group, Inc.* | | 147 | 2,914 | |
| | | 392,697 | |
| | | | |
Diversified Telecommunication Services - 1.6% | | | | |
AT&T, Inc. | | 5,411 | 151,670 | |
CenturyTel, Inc. | | 292 | 10,573 | |
Frontier Communications Corp. | | 306 | 2,390 | |
Qwest Communications International, Inc. | | 1,522 | 6,408 | |
Verizon Communications, Inc. | | 2,565 | 84,978 | |
Windstream Corp. | | 428 | 4,704 | |
| | | 260,723 | |
| | | | |
Electric Utilities - 1.1% | | | | |
Allegheny Energy, Inc. | | 167 | 3,921 | |
American Electric Power Co., Inc. | | 431 | 14,994 | |
Duke Energy Corp. | | 1,171 | 20,153 | |
Edison International | | 295 | 10,260 | |
Entergy Corp. | | 177 | 14,486 | |
Exelon Corp. | | 596 | 29,127 | |
FirstEnergy Corp. | | 276 | 12,820 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Electric Utilities - Cont'd | | | | |
FPL Group, Inc. | | 372 | $19,649 | |
Northeast Utilities | | 172 | 4,436 | |
Pepco Holdings, Inc. | | 200 | 3,370 | |
Pinnacle West Capital Corp. | | 92 | 3,365 | |
PPL Corp. | | 340 | 10,985 | |
Progress Energy, Inc. | | 253 | 10,376 | |
Southern Co. | | 719 | 23,957 | |
| | | 181,899 | |
| | | | |
Electrical Equipment - 0.3% | | | | |
Emerson Electric Co. | | 679 | 28,925 | |
First Solar, Inc.* | | 50 | 6,770 | |
Rockwell Automation, Inc. | | 140 | 6,577 | |
Roper Industries, Inc. | | 85 | 4,452 | |
| | | 46,724 | |
| | | | |
Electronic Equipment & Instruments - 0.4% | | | | |
Agilent Technologies, Inc.* | | 339 | 10,533 | |
Amphenol Corp. | | 168 | 7,758 | |
Corning, Inc. | | 1,404 | 27,111 | |
FLIR Systems, Inc.* | | 149 | 4,875 | |
Jabil Circuit, Inc. | | 208 | 3,613 | |
Molex, Inc. | | 134 | 2,888 | |
| | | 56,778 | |
| | | | |
Energy Equipment & Services - 1.0% | | | | |
Baker Hughes, Inc. | | 280 | 11,334 | |
BJ Services Co. | | 287 | 5,338 | |
Cameron International Corp.* | | 199 | 8,318 | |
Diamond Offshore Drilling, Inc. | | 63 | 6,201 | |
FMC Technologies, Inc.* | | 111 | 6,420 | |
Halliburton Co. | | 815 | 24,523 | |
Nabors Industries Ltd.* | | 257 | 5,626 | |
National Oilwell Varco, Inc. | | 378 | 16,666 | |
Rowan Co.'s, Inc.* | | 129 | 2,921 | |
Schlumberger Ltd. | | 1,082 | 70,427 | |
Smith International, Inc. | | 226 | 6,141 | |
| | | 163,915 | |
| | | | |
Food & Staples Retailing - 1.5% | | | | |
Costco Wholesale Corp. | | 393 | 23,254 | |
CVS Caremark Corp. | | 1,303 | 41,970 | |
Kroger Co. | | 589 | 12,092 | |
Safeway, Inc. | | 408 | 8,686 | |
SUPERVALU, Inc. | | 225 | 2,860 | |
Sysco Corp. | | 534 | 14,920 | |
Walgreen Co. | | 896 | 32,901 | |
Wal-Mart Stores, Inc. | | 1,938 | 103,586 | |
Whole Foods Market, Inc.* | | 138 | 3,788 | |
| | | 244,057 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Food Products - 1.0% | | | | |
Archer-Daniels-Midland Co. | | 580 | $18,160 | |
Campbell Soup Co. | | 189 | 6,388 | |
ConAgra Foods, Inc. | | 434 | 10,004 | |
Dean Foods Co.* | | 185 | 3,337 | |
General Mills, Inc. | | 294 | 20,818 | |
H.J. Heinz Co. | | 285 | 12,187 | |
Hershey Co. | | 150 | 5,368 | |
Hormel Foods Corp. | | 84 | 3,230 | |
J.M. Smucker Co. | | 117 | 7,225 | |
Kellogg Co. | | 232 | 12,342 | |
Kraft Foods, Inc. | | 1,332 | 36,204 | |
McCormick & Co., Inc. | | 129 | 4,661 | |
Sara Lee Corp. | | 629 | 7,661 | |
Tyson Foods, Inc. | | 315 | 3,865 | |
| | | 151,450 | |
| | | | |
Gas Utilities - 0.1% | | | | |
EQT Corp. | | 129 | 5,666 | |
Nicor, Inc. | | 48 | 2,021 | |
Questar Corp. | | 171 | 7,108 | |
| | | 14,795 | |
| | | | |
Health Care Equipment & Supplies - 1.1% | | | | |
Baxter International, Inc. | | 545 | 31,980 | |
Becton Dickinson & Co. | | 217 | 17,113 | |
Boston Scientific Corp.* | | 1,361 | 12,249 | |
C.R. Bard, Inc. | | 89 | 6,933 | |
CareFusion Corp.* | | 185 | 4,627 | |
DENTSPLY International, Inc. | | 146 | 5,135 | |
Hospira, Inc.* | | 146 | 7,446 | |
Intuitive Surgical, Inc.* | | 35 | 10,616 | |
Medtronic, Inc. | | 1,000 | 43,980 | |
St. Jude Medical, Inc.* | | 315 | 11,586 | |
Stryker Corp. | | 245 | 12,341 | |
Varian Medical Systems, Inc.* | | 113 | 5,294 | |
Zimmer Holdings, Inc.* | | 194 | 11,467 | |
| | | 180,767 | |
| | | | |
Health Care Providers & Services - 1.3% | | | | |
Aetna, Inc. | | 395 | 12,522 | |
AmerisourceBergen Corp. | | 292 | 7,612 | |
Cardinal Health, Inc. | | 325 | 10,478 | |
CIGNA Corp. | | 268 | 9,452 | |
Coventry Health Care, Inc.* | | 165 | 4,008 | |
DaVita, Inc.* | | 102 | 5,991 | |
Express Scripts, Inc.* | | 248 | 21,440 | |
Humana, Inc.* | | 167 | 7,330 | |
Laboratory Corp. of America Holdings* | | 107 | 8,008 | |
McKesson Corp. | | 241 | 15,063 | |
Medco Health Solutions, Inc.* | | 428 | 27,353 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Health Care Providers & Services - Cont'd | | | | |
Patterson Co.'s, Inc.* | | 92 | $2,574 | |
Quest Diagnostics, Inc. | | 155 | 9,359 | |
Tenet Healthcare Corp.* | | 425 | 2,291 | |
UnitedHealth Group, Inc. | | 1,050 | 32,004 | |
WellPoint, Inc.* | | 429 | 25,006 | |
| | | 200,491 | |
| | | | |
Health Care Technology - 0.0% | | | | |
IMS Health, Inc. | | 179 | 3,770 | |
| | | | |
Hotels, Restaurants & Leisure - 0.9% | | | | |
Carnival Corp.* | | 396 | 12,549 | |
Darden Restaurants, Inc. | | 137 | 4,804 | |
International Game Technology | | 291 | 5,462 | |
Marriott International, Inc. | | 247 | 6,731 | |
McDonald's Corp. | | 986 | 61,566 | |
Starbucks Corp.* | | 666 | 15,358 | |
Starwood Hotels & Resorts Worldwide, Inc. | | 184 | 6,729 | |
Wyndham Worldwide Corp. | | 189 | 3,812 | |
Wynn Resorts Ltd. | | 68 | 3,960 | |
Yum! Brands, Inc. | | 422 | 14,757 | |
| | | 135,728 | |
| | | | |
Household Durables - 0.2% | | | | |
Black & Decker Corp. | | 67 | 4,344 | |
D.R. Horton, Inc. | | 271 | 2,946 | |
Fortune Brands, Inc. | | 136 | 5,875 | |
Harman International Industries, Inc. | | 77 | 2,716 | |
Leggett & Platt, Inc. | | 162 | 3,305 | |
Lennar Corp. | | 162 | 2,069 | |
Newell Rubbermaid, Inc. | | 297 | 4,458 | |
Pulte Homes, Inc.* | | 310 | 3,100 | |
Whirlpool Corp. | | 76 | 6,130 | |
| | | 34,943 | |
| | | | |
Household Products - 1.5% | | | | |
Clorox Co. | | 137 | 8,357 | |
Colgate-Palmolive Co. | | 450 | 36,968 | |
Kimberly-Clark Corp. | | 375 | 23,891 | |
Procter & Gamble Co. | | 2,679 | 162,428 | |
| | | 231,644 | |
| | | | |
Independent Power Producers & Energy Traders - 0.1% | | | | |
AES Corp.* | | 603 | 8,026 | |
Constellation Energy Group, Inc. | | 197 | 6,928 | |
| | | 14,954 | |
| | | | |
Industrial Conglomerates - 1.3% | | | | |
3M Co. | | 631 | 52,165 | |
General Electric Co. | | 9,724 | 147,124 | |
Textron, Inc. | | 265 | 4,985 | |
| | | 204,274 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Insurance - 1.4% | | | | |
Aflac, Inc. | | 423 | $19,564 | |
Allstate Corp. | | 485 | 14,569 | |
American International Group, Inc.* | | 132 | 3,957 | |
AON Corp. | | 248 | 9,508 | |
Assurant, Inc. | | 116 | 3,420 | |
Chubb Corp. | | 316 | 15,541 | |
Cincinnati Financial Corp. | | 160 | 4,198 | |
Genworth Financial, Inc.* | | 486 | 5,516 | |
Hartford Financial Services Group, Inc. | | 347 | 8,071 | |
Lincoln National Corp. | | 262 | 6,519 | |
Loews Corp. | | 329 | 11,959 | |
Marsh & McLennan Co.'s, Inc. | | 473 | 10,444 | |
MetLife, Inc. | | 740 | 26,159 | |
Principal Financial Group, Inc. | | 278 | 6,683 | |
Progressive Corp.* | | 613 | 11,028 | |
Prudential Financial, Inc. | | 418 | 20,800 | |
Torchmark Corp. | | 82 | 3,604 | |
Travelers Co.'s, Inc. | | 513 | 25,578 | |
Unum Group | | 300 | 5,856 | |
XL Capital Ltd. | | 336 | 6,159 | |
| | | 219,133 | |
| | | | |
Internet & Catalog Retail - 0.3% | | | | |
Amazon.com, Inc.* | | 301 | 40,490 | |
Expedia, Inc.* | | 207 | 5,322 | |
priceline.com, Inc.* | | 40 | 8,740 | |
| | | 54,552 | |
| | | | |
Internet Software & Services - 1.2% | | | | |
Akamai Technologies, Inc.* | | 156 | 3,951 | |
eBay, Inc.* | | 1,014 | 23,870 | |
Google, Inc.* | | 221 | 137,016 | |
VeriSign, Inc.* | | 189 | 4,581 | |
Yahoo!, Inc.* | | 1,077 | 18,072 | |
| | | 187,490 | |
| | | | |
IT Services - 0.9% | | | | |
Affiliated Computer Services, Inc.* | | 96 | 5,730 | |
Automatic Data Processing, Inc. | | 454 | 19,440 | |
Cognizant Technology Solutions Corp.* | | 265 | 12,005 | |
Computer Sciences Corp.* | | 149 | 8,572 | |
Fidelity National Information Services, Inc. | | 308 | 7,220 | |
Fiserv, Inc.* | | 152 | 7,369 | |
MasterCard, Inc. | | 87 | 22,270 | |
Paychex, Inc. | | 315 | 9,652 | |
SAIC, Inc.* | | 278 | 5,265 | |
Total System Services, Inc. | | 178 | 3,074 | |
Visa, Inc. | | 407 | 35,596 | |
Western Union Co. | | 634 | 11,951 | |
| | | 148,144 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Leisure Equipment & Products - 0.1% | | | | |
Eastman Kodak Co.* | | 338 | $1,426 | |
Hasbro, Inc. | | 124 | 3,975 | |
Mattel, Inc. | | 325 | 6,494 | |
| | | 11,895 | |
| | | | |
Life Sciences - Tools & Services - 0.2% | | | | |
Life Technologies Corp.* | | 173 | 9,048 | |
Millipore Corp.* | | 59 | 4,269 | |
PerkinElmer, Inc. | | 126 | 2,594 | |
Thermo Fisher Scientific, Inc.* | | 369 | 17,598 | |
Waters Corp.* | | 94 | 5,824 | |
| | | 39,333 | |
| | | | |
Machinery - 0.9% | | | | |
Caterpillar, Inc. | | 561 | 31,971 | |
Cummins, Inc. | | 183 | 8,392 | |
Danaher Corp. | | 234 | 17,597 | |
Deere & Co. | | 382 | 20,662 | |
Dover Corp. | | 183 | 7,615 | |
Eaton Corp. | | 150 | 9,543 | |
Flowserve Corp. | | 51 | 4,821 | |
Illinois Tool Works, Inc. | | 348 | 16,701 | |
PACCAR, Inc. | | 328 | 11,897 | |
Pall Corp. | | 122 | 4,416 | |
Parker Hannifin Corp. | | 158 | 8,513 | |
Snap-on, Inc. | | 62 | 2,620 | |
Stanley Works | | 88 | 4,533 | |
| | | 149,281 | |
| | | | |
Media - 1.7% | | | | |
CBS Corp., Class B | | 664 | 9,329 | |
Comcast Corp. | | 2,591 | 43,684 | |
DIRECTV* | | 856 | 28,548 | |
Gannett Co., Inc. | | 212 | 3,148 | |
Interpublic Group of Co.'s, Inc.* | | 544 | 4,015 | |
McGraw-Hill Co.'s, Inc. | | 309 | 10,355 | |
Meredith Corp. | | 41 | 1,265 | |
New York Times Co.* | | 191 | 2,361 | |
News Corp. | | 2,030 | 27,791 | |
Omnicom Group, Inc. | | 281 | 11,001 | |
Scripps Networks Interactive, Inc. | | 96 | 3,984 | |
Time Warner Cable, Inc. | | 319 | 13,203 | |
Time Warner, Inc. | | 1,071 | 31,209 | |
Viacom, Inc., Class B* | | 548 | 16,292 | |
Walt Disney Co. | | 1,758 | 56,695 | |
Washington Post Co., Class B | | 6 | 2,638 | |
| | | 265,518 | |
| | | | |
Metals & Mining - 0.6% | | | | |
AK Steel Holding Corp. | | 120 | 2,562 | |
Alcoa, Inc. | | 880 | 14,186 | |
Allegheny Technologies, Inc. | | 109 | 4,880 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Metals & Mining - Cont'd | | | | |
Cliffs Natural Resources, Inc. | | 119 | $5,485 | |
Freeport-McMoRan Copper & Gold, Inc.* | | 391 | 31,393 | |
Newmont Mining Corp. | | 443 | 20,958 | |
Nucor Corp. | | 285 | 13,295 | |
Titanium Metals Corp.* | | 100 | 1,252 | |
United States Steel Corp. | | 126 | 6,945 | |
| | | 100,956 | |
| | | | |
Multiline Retail - 0.5% | | | | |
Big Lots, Inc.* | | 83 | 2,405 | |
Family Dollar Stores, Inc. | | 137 | 3,813 | |
J.C. Penney Co., Inc. | | 232 | 6,174 | |
Kohl's Corp.* | | 276 | 14,885 | |
Macy's, Inc. | | 412 | 6,905 | |
Nordstrom, Inc. | | 162 | 6,088 | |
Sears Holdings Corp.* | | 49 | 4,089 | |
Target Corp. | | 679 | 32,843 | |
| | | 77,202 | |
| | | | |
Multi-Utilities - 0.8% | | | | |
Ameren Corp. | | 240 | 6,708 | |
Centerpoint Energy, Inc. | | 399 | 5,789 | |
CMS Energy Corp. | | 261 | 4,087 | |
Consolidated Edison, Inc. | | 249 | 11,312 | |
Dominion Resources, Inc. | | 538 | 20,939 | |
DTE Energy Co. | | 162 | 7,062 | |
Integrys Energy Group, Inc. | | 82 | 3,443 | |
NiSource, Inc. | | 270 | 4,153 | |
PG&E Corp. | | 335 | 14,958 | |
Public Service Enterprise Group, Inc. | | 457 | 15,195 | |
SCANA Corp. | | 109 | 4,107 | |
Sempra Energy | | 222 | 12,428 | |
TECO Energy, Inc. | | 244 | 3,958 | |
Wisconsin Energy Corp. | | 115 | 5,730 | |
Xcel Energy, Inc. | | 447 | 9,485 | |
| | | 129,354 | |
| | | | |
Office Electronics - 0.0% | | | | |
Xerox Corp. | | 852 | 7,208 | |
| | | | |
| | | | |
Oil, Gas & Consumable Fuels - 5.5% | | | | |
Anadarko Petroleum Corp. | | 443 | 27,652 | |
Apache Corp. | | 304 | 31,364 | |
Cabot Oil & Gas Corp. | | 102 | 4,446 | |
Chesapeake Energy Corp. | | 579 | 14,985 | |
Chevron Corp. | | 1,823 | 140,353 | |
ConocoPhillips | | 1,339 | 68,383 | |
Consol Energy, Inc. | | 164 | 8,167 | |
Denbury Resources, Inc.* | | 226 | 3,345 | |
Devon Energy Corp. | | 401 | 29,473 | |
El Paso Corp. | | 634 | 6,232 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Oil, Gas & Consumable Fuels - Cont'd | | | | |
EOG Resources, Inc. | | 228 | $22,184 | |
Exxon Mobil Corp. | | 4,353 | 296,831 | |
Hess Corp. | | 263 | 15,911 | |
Marathon Oil Corp. | | 639 | 19,950 | |
Massey Energy Co. | | 87 | 3,655 | |
Murphy Oil Corp. | | 173 | 9,377 | |
Noble Energy, Inc. | | 157 | 11,182 | |
Occidental Petroleum Corp. | | 732 | 59,548 | |
Peabody Energy Corp. | | 242 | 10,941 | |
Pioneer Natural Resources Co. | | 119 | 5,732 | |
Range Resources Corp. | | 142 | 7,079 | |
Southwestern Energy Co.* | | 311 | 14,990 | |
Spectra Energy Corp. | | 584 | 11,978 | |
Sunoco, Inc. | | 125 | 3,262 | |
Tesoro Corp. | | 160 | 2,168 | |
Valero Energy Corp. | | 509 | 8,526 | |
Williams Co.'s, Inc. | | 527 | 11,109 | |
XTO Energy, Inc. | | 524 | 24,382 | |
| | | 873,205 | |
| | | | |
Paper & Forest Products - 0.2% | | | | |
International Paper Co. | | 424 | 11,354 | |
MeadWestvaco Corp. | | 168 | 4,810 | |
Weyerhaeuser Co. | | 191 | 8,240 | |
| | | 24,404 | |
| | | | |
Personal Products - 0.2% | | | | |
Avon Products, Inc. | | 386 | 12,159 | |
Estee Lauder Co.'s, Inc. | | 116 | 5,610 | |
Mead Johnson Nutrition Co. | | 186 | 8,128 | |
| | | 25,897 | |
| | | | |
Pharmaceuticals - 3.7% | | | | |
Abbott Laboratories, Inc. | | 1,396 | 75,370 | |
Allergan, Inc. | | 278 | 17,517 | |
Bristol-Myers Squibb Co. | | 1,589 | 40,122 | |
Eli Lilly & Co. | | 913 | 32,603 | |
Forest Laboratories, Inc.* | | 273 | 8,766 | |
Johnson & Johnson | | 2,518 | 162,184 | |
King Pharmaceuticals, Inc.* | | 225 | 2,761 | |
Merck & Co., Inc. | | 2,795 | 102,129 | |
Mylan, Inc.* | | 300 | 5,529 | |
Pfizer, Inc. | | 7,331 | 133,351 | |
Watson Pharmaceuticals, Inc.* | | 96 | 3,803 | |
| | | 584,135 | |
| | | | |
Professional Services - 0.1% | | | | |
Dun & Bradstreet Corp. | | 52 | 4,387 | |
Equifax, Inc. | | 131 | 4,046 | |
Monster Worldwide, Inc.* | | 152 | 2,645 | |
Robert Half International, Inc. | | 149 | 3,983 | |
| | | 15,061 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Real Estate Investment Trusts - 0.7% | | | | |
Apartment Investment & Management Co. | | 114 | $1,815 | |
AvalonBay Communities, Inc. | | 73 | 5,994 | |
Boston Properties, Inc. | | 126 | 8,451 | |
Equity Residential | | 248 | 8,377 | |
HCP, Inc. | | 265 | 8,093 | |
Health Care REIT, Inc. | | 109 | 4,831 | |
Host Hotels & Resorts, Inc. | | 618 | 7,212 | |
Kimco Realty Corp. | | 364 | 4,925 | |
Plum Creek Timber Co., Inc. | | 160 | 6,042 | |
ProLogis | | 400 | 5,476 | |
Public Storage | | 129 | 10,507 | |
Simon Property Group, Inc. | | 257 | 20,508 | |
Ventas, Inc. | | 154 | 6,736 | |
Vornado Realty Trust | | 153 | 10,701 | |
| | | 109,668 | |
| | | | |
Real Estate Management & Development - 0.0% | | | | |
CB Richard Ellis Group, Inc.* | | 250 | 3,393 | |
| | | | |
Road & Rail - 0.6% | | | | |
Burlington Northern Santa Fe Corp. | | 237 | 23,373 | |
CSX Corp. | | 354 | 17,166 | |
Norfolk Southern Corp. | | 332 | 17,403 | |
Ryder System, Inc. | | 71 | 2,923 | |
Union Pacific Corp. | | 456 | 29,138 | |
| | | 90,003 | |
| | | | |
Semiconductors & Semiconductor Equipment - 1.5% | | | | |
Advanced Micro Devices, Inc.* | | 511 | 4,947 | |
Altera Corp. | | 289 | 6,540 | |
Analog Devices, Inc. | | 264 | 8,337 | |
Applied Materials, Inc. | | 1,205 | 16,798 | |
Broadcom Corp.* | | 390 | 12,267 | |
Intel Corp. | | 5,016 | 102,326 | |
KLA-Tencor Corp. | | 168 | 6,075 | |
Linear Technology Corp. | | 218 | 6,658 | |
LSI Corp.* | | 645 | 3,876 | |
MEMC Electronic Materials, Inc.* | | 244 | 3,323 | |
Microchip Technology, Inc. | | 166 | 4,824 | |
Micron Technology, Inc.* | | 765 | 8,078 | |
National Semiconductor Corp. | | 250 | 3,840 | |
Novellus Systems, Inc.* | | 101 | 2,357 | |
NVIDIA Corp.* | | 495 | 9,247 | |
Teradyne, Inc.* | | 158 | 1,695 | |
Texas Instruments, Inc. | | 1,139 | 29,682 | |
Xilinx, Inc. | | 271 | 6,791 | |
| | | 237,661 | |
| | | | |
Software - 2.5% | | | | |
Adobe Systems, Inc.* | | 474 | 17,434 | |
Autodesk, Inc.* | | 208 | 5,285 | |
BMC Software, Inc.* | | 181 | 7,258 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Software - Cont'd | | | | |
CA, Inc. | | 360 | $8,086 | |
Citrix Systems, Inc.* | | 180 | 7,490 | |
Compuware Corp.* | | 233 | 1,684 | |
Electronic Arts, Inc.* | | 332 | 5,893 | |
Intuit, Inc.* | | 317 | 9,735 | |
McAfee, Inc.* | | 142 | 5,761 | |
Microsoft Corp. | | 7,087 | 216,083 | |
Novell, Inc.* | | 404 | 1,677 | |
Oracle Corp. | | 3,526 | 86,528 | |
Red Hat, Inc.* | | 185 | 5,716 | |
Salesforce.com, Inc.* | | 107 | 7,893 | |
Symantec Corp.* | | 736 | 13,167 | |
| | | 399,690 | |
| | | | |
Specialty Retail - 1.1% | | | | |
Abercrombie & Fitch Co. | | 92 | 3,206 | |
AutoNation, Inc.* | | 129 | 2,470 | |
AutoZone, Inc.* | | 32 | 5,058 | |
Bed Bath & Beyond, Inc.* | | 237 | 9,155 | |
Best Buy Co., Inc. | | 309 | 12,193 | |
GameStop Corp.* | | 149 | 3,269 | |
Gap, Inc. | | 435 | 9,113 | |
Home Depot, Inc. | | 1,539 | 44,523 | |
Limited Brands, Inc. | | 262 | 5,041 | |
Lowe's Co.'s, Inc. | | 1,334 | 31,202 | |
Office Depot, Inc.* | | 321 | 2,071 | |
O'Reilly Automotive, Inc.* | | 134 | 5,108 | |
RadioShack Corp. | | 123 | 2,400 | |
Ross Stores, Inc. | | 114 | 4,869 | |
Sherwin-Williams Co. | | 96 | 5,918 | |
Staples, Inc. | | 653 | 16,057 | |
Tiffany & Co. | | 122 | 5,246 | |
TJX Co.'s, Inc. | | 383 | 13,999 | |
| | | 180,898 | |
| | | | |
Textiles, Apparel & Luxury Goods - 0.3% | | | | |
Coach, Inc. | | 288 | 10,521 | |
Nike, Inc., Class B | | 351 | 23,191 | |
Polo Ralph Lauren Corp. | | 63 | 5,102 | |
VF Corp. | | 88 | 6,445 | |
| | | 45,259 | |
| | | | |
Thrifts & Mortgage Finance - 0.1% | | | | |
Hudson City Bancorp, Inc. | | 463 | 6,357 | |
People's United Financial, Inc. | | 358 | 5,979 | |
| | | 12,336 | |
| | | | |
Tobacco - 0.9% | | | | |
Altria Group, Inc. | | 1,871 | 36,728 | |
Lorillard, Inc. | | 150 | 12,035 | |
Philip Morris International, Inc. | | 1,747 | 84,188 | |
Reynolds American, Inc. | | 153 | 8,104 | |
| | | 141,055 | |
| | | | |
Equity Securities - Cont'd | | Shares | Value | |
Trading Companies & Distributors - 0.1% | | | | |
Fastenal Co. | | 130 | $5,413 | |
W.W. Grainger, Inc. | | 64 | 6,197 | |
| | | 11,610 | |
| | | | |
Wireless Telecommunication Services - 0.2% | | | | |
American Tower Corp.* | | 357 | 15,426 | |
MetroPCS Communications, Inc.* | | 300 | 2,289 | |
Sprint Nextel Corp.* | | 2,597 | 9,505 | |
| | | 27,220 | |
| | | | |
Total Equity Securities (Cost $8,161,138) | | | 9,116,314 | |
| | | | |
Exchange Traded Funds - 2.5% | | | | |
iShares Barclays Aggregate Bond Fund | | 3,800 | 392,122 | |
| | | | |
Total Exchange Traded Funds (Cost $397,203) | | | 392,122 | |
| | | | |
| | Principal | | |
Commercial Mortgage-Backed Securities - 1.8% | | Amount | | |
Wachovia Bank Commercial Mortgage Trust, 4.964%, 11/15/35 | | $285,000 | 283,782 | |
| | | | |
Total Commercial Mortgage-Backed Securities (Cost $203,319) | | | 283,782 | |
| | | | |
Corporate Bonds - 8.4% | | | | |
Affiliated Computer Services, Inc., 5.20%, 6/1/15 | | 140,000 | 144,550 | |
Apache Corp., 5.625%, 1/15/17 | | 100,000 | 106,599 | |
Colonial Pipeline Co., 7.75%, 11/1/10 (e) | | 125,000 | 131,403 | |
Conoco Funding Co., 6.35%, 10/15/11 | | 50,000 | 54,398 | |
Goldman Sachs Group, Inc., 5.35%, 1/15/16 | | 100,000 | 103,866 | |
Honeywell International, Inc., 7.50%, 3/1/10 | | 125,000 | 126,395 | |
Hospira, Inc., 6.40%, 5/15/15 | | 100,000 | 110,938 | |
Public Service Co. of North Carolina, Inc., 6.625%, 2/15/11 | | 150,000 | 156,975 | |
Shell International Finance BV, 4.00%, 3/21/14 | | 100,000 | 104,592 | |
US Bank NA, 4.95%, 10/30/14 | | 100,000 | 106,444 | |
Wells Fargo & Co., 4.375%, 1/31/13 | | 125,000 | 129,496 | |
XTO Energy, Inc., 4.625%, 6/15/13 | | 50,000 | 53,159 | |
| | | | |
Total Corporate Bonds (Cost $1,268,912) | | | 1,328,815 | |
| | | | |
Time Deposit - 2.5% | | | | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | 401,578 | 401,578 | |
| | | | |
Total Time Deposit (Cost $401,578) | | | 401,578 | |
| | | | |
| | Principal | | |
U.S. Government Agencies And Instrumentalities - 2.1% | | Amount | Value | |
Federal Home Loan Bank, 3.625%, 10/18/13 | | $320,000 | $335,152 | |
| | | | |
Total U.S. Government Agencies And Instrumentalities (Cost $329,453) | | | 335,152 | |
| | | | |
| | | | |
| | | | |
U.S. Government Agency Mortgage-Backed Securities - 12.5% | | | | |
Fannie Mae: | | | | |
7.00%, 7/1/29 | | 58,178 | 64,268 | |
6.50%, 8/1/32 | | 48,741 | 52,463 | |
5.50%, 7/1/33 | | 169,231 | 177,869 | |
6.00%, 8/1/33 | | 96,920 | 103,523 | |
5.50%, 11/1/33 | | 284,628 | 299,156 | |
7.50%, 11/1/36 | | 117,971 | 128,821 | |
Freddie Mac: | | | | |
5.00%, 5/1/18 | | 336,258 | 354,373 | |
4.50%, 9/1/18 | | 75,288 | 78,402 | |
6.00%, 8/1/36 | | 348,700 | 370,712 | |
Ginnie Mae, 5.50%, 7/20/34 | | 348,347 | 366,789 | |
| | | | |
Total U.S. Government Agency Mortgage-Backed Securities (Cost $1,916,660) | | | 1,996,376 | |
| | | | |
| | | | |
| | | | |
U.S. Treasury - 12.5% | | | | |
United States Treasury Bills, 2/11/10 ^ | | 100,000 | 99,986 | |
United States Treasury Bonds, 5.25%, 11/15/28 | | 200,000 | 216,844 | |
United States Treasury Notes: | | | | |
2.75%, 10/31/13 | | 400,000 | 409,688 | |
2.00%, 11/30/13 | | 325,000 | 323,273 | |
1.50%, 12/31/13 | | 125,000 | 121,719 | |
2.375%, 8/31/14 | | 350,000 | 347,484 | |
5.125%, 5/15/16 | | 250,000 | 278,867 | |
3.00%, 9/30/16 | | 200,000 | 196,406 | |
| | | | |
Total U.S. Treasury (Cost $1,966,226) | | | 1,994,267 | |
| | | | |
| | | | |
TOTAL INVESTMENTS (Cost $14,644,489) - 99.6% | | | 15,848,406 | |
Other assets and liabilities, net - 0.4% | | | 71,390 | |
Net Assets - 100% | | | $15,919,796 | |
| | | | |
Net Assets Consist of: | | | | |
Paid-in capital applicable to 350,492 shares of common stock outstanding; | | | | |
$0.10 par value, 20,000,000 shares authorized | | | $15,177,218 | |
Undistributed net investment income | | | 111,995 | |
Accumulated net realized gain (loss) on investments | | | (578,017) | |
Net unrealized appreciation (depreciation) on investments | | | 1,208,600 | |
| | | | |
Net Assets | | | $15,919,796 | |
| | | | |
Net Asset Value per Share | | | $45.42 | |
Futures | Number Of
Contracts | Expiration
Date | Underlying
Face Amount
At Value | Unrealized
Appreciation
(Depreciation) |
Purchased: | | | | |
E-Mini S&P 500 Index^ | 7 | 3/10 | $388,745 | $4,683 |
Total Purchased | | | | $4,683 |
* Non-income producing security.
(e) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
^ Futures collateralized by 100,000 units of U.S. Treasury Bills.
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Interest income | $253,817 |
Dividend income | 219,349 |
Total investment income | 473,166 |
| |
Expenses: | |
Investment advisory fee | 45,991 |
Transfer agent fees and expenses | 2,233 |
Directors' fees and expenses | 2,381 |
Administrative fees | 15,330 |
Custodian fees | 35,994 |
Accounting fees | 744 |
Reports to shareholders | 3,248 |
Professional fees | 17,970 |
Contract Services | 17,551 |
Miscellaneous | 52 |
Total expenses | 141,494 |
Reimbursement from Advisor | (49,475) |
Fees paid indirectly | (37) |
Net expenses | 91,982 |
| |
Net Investment Income | 381,184 |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | 174,836 |
Futures | (52,430) |
| 122,406 |
| |
Changes in unrealized appreciation (depreciation) on: | |
Investments | 2,125,293 |
Futures | (29,917) |
| 2,095,376 |
| |
Net Realized and Unrealized Gain | |
(Loss) | 2,217,782 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $2,598,966 |
See notes to financial statements.
Statements of Changes in Net Assets
| | |
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $381,184 | $623,303 |
Net realized gain (loss) on investments | 122,406 | (45,569) |
Change in unrealized appreciation (depreciation) | 2,095,376 | (5,336,359) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 2,598,966 | (4,758,625) |
| | |
Distributions to shareholders from: | | |
Net investment income | (348,198) | (619,228) |
Total distributions | (348,198) | (619,228) |
| | |
Capital share transactions: | | |
Shares sold | 1,518,492 | 1,422,473 |
Reinvestment of distributions | 348,196 | 619,228 |
Shares redeemed | (4,041,694) | (6,813,199) |
Total capital share transactions | (2,175,006) | (4,771,498) |
| | |
Total Increase (Decrease) in Net Assets | 75,762 | (10,149,351) |
| | |
Net Assets | | |
Beginning of year | 15,844,034 | 25,993,385 |
End of year (including undistributed net investment | | |
income of $111,995 and $66,235, respectively) | $15,919,796 | $15,844,034 |
| | |
Capital Share Activity | | |
Shares sold | 36,816 | 29,832 |
Reinvestment of distributions | 7,612 | 14,516 |
Shares redeemed | (98,053) | (143,741) |
Total capital share activity | (53,625) | (99,393) |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Balanced Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Municipal securities are valued utilizing the average bid prices or at bid prices based on a matrix system (which considers such factors as security prices, yields, maturities and ratings) furnished by dealers through an independent pricing service. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Portfolio, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Short-term notes are stated at amortized cost, which approximates fair value. The Portfolio may invest in securities whose resale is subject to restrictions. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued in good faith under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Commercial Mortgage-Backed Securities | -- | $283,782 | -- | $283,782 |
Corporate Bonds | -- | 1,328,815 | -- | 1,328,815 |
Equity Securities* | $9,116,314 | -- | -- | 9,116,314 |
Exchanged Traded Funds | 392,122 | -- | -- | 392,122 |
Other debt Obligations | -- | 401,578 | -- | 401,578 |
U.S. Government Obligations | -- | 4,325,795 | -- | 4,325,795 |
TOTAL | $9,508,436 | $6,339,970 | -- | $15,848,406 |
| | | | |
Other Financial Instruments** | $4,683 | -- | -- | $4,683 |
* For further breakdown of Equity Securities by industry type, please refer to the Statement of Net Assets.
** Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the applicable country's tax rules and rates.
Futures Contracts: The Portfolio may purchase and sell futures contracts, but only when, in the judgment of the Advisor, such a position acts as a hedge. The Portfolio may not enter into futures contracts for the purpose of speculation or leverage. These futures contracts may include, but are not limited to, market index futures contracts. The Portfolio is subject to market risk in the normal course of pursuing its investment objectives. The Portfolio may use futures contracts to hedge against changes in the value of securities. The Portfolio may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date. Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract. While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When a futures contract is closed, a realized gain or loss is recorded equal to the difference between opening and closing value of the contract. The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Portfolio's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms. Futures contracts are designed by boards of trade which are designated "contracts markets" by the Commodities Futures Trading Commission. Futures contracts trade on the contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee the futures contracts against default. As a result, there is minimal counterparty credit risk to the Portfolio.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company ("UNIFI"). The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .30% of the Portfolio's average daily net assets. Under the terms of the agreement, $4,068 was payable at year end. In addition, $5,844 was payable at year end for operating expenses paid by the advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .60%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $1,356 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $51 for the year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term and U.S. Government securities, were $4,922,323 and $6,826,223, respectively. U.S. Government security purchases and sales were $2,965,864 and $2,081,601, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-13 | $337,505 |
31-Dec-16 | 752 |
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | 2009 | 2008 |
Ordinary income | $348,198 | $619,228 |
Total | $348,198 | $619,228 |
As of December 31, 2009, the components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $2,434,147 |
Unrealized (depreciation) | (1,465,307) |
Net unrealized appreciation/(depreciation) | $968,840 |
Undistributed ordinary income | $111,995 |
Capital loss carryforward | ($338,257) |
Federal income tax cost of investments | $14,879,566 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales, real estate investment trusts, and Section 1256 contracts.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to asset-backed securities and real estate investment trusts.
Undistributed net investment income | $12,774 |
Accumulated net realized gain (loss) | (12,774) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Fund had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Weighted
Average
Interest
Rate | Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed | |
| $2,248 | 1.46% | $239,076 | October 2009 | |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 49.2% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
| 2009 | 2008 | 2007 |
Net asset value, beginning | $39.21 | $51.62 | $49.58 |
Income from investment operations | | | |
Net investment income | 1.14 | 1.48 | 1.33 |
Net realized and unrealized gain (loss) | 6.09 | (12.45) | 2.12 |
Total from investment operations | 7.23 | (10.97) | 3.45 |
Distributions from | | | |
Net investment income | (1.02) | (1.44) | (1.41) |
Total distributions | (1.02) | (1.44) | (1.41) |
Total increase (decrease) in net asset value | 6.21 | (12.41) | 2.04 |
Net asset value, ending | $45.42 | $39.21 | $51.62 |
| | | |
Total return* | 18.41% | (21.55%) | 7.02% |
Ratios to average net assets: A | | | |
Net investment income | 2.49% | 3.08% | 2.47% |
Total expenses | .92% | .86% | .69% |
Expenses before offsets | .60% | .60% | .60% |
Net expenses | .60% | .60% | .60% |
Portfolio turnover | 53% | 26% | 15% |
Net assets, ending (in thousands) | $15,920 | $15,844 | $25,993 |
| | | |
| | | |
| Years Ended | |
| December 31, | December 31, | |
| 2006 | 2005 | |
Net asset value, beginning | $45.74 | $45.55 | |
Income from investment operations | | | |
Net investment income | 1.16 | 1.07 | |
Net realized and unrealized gain (loss) | 3.80 | .28 | |
Total from investment operations | 4.96 | 1.35 | |
Distributions from | | | |
Net investment income | (1.12) | (1.16) | |
Total distributions | (1.12) | (1.16) | |
Total increase (decrease) in net asset value | 3.84 | .19 | |
Net asset value, ending | $49.58 | $45.74 | |
| | | |
Total return* | 11.02% | 3.04% | |
Ratios to average net assets: A | | | |
Net investment income | 2.36% | 2.25% | |
Total expenses | .69% | .70% | |
Expenses before offsets | .60% | .60% | |
Net expenses | .60% | .60% | |
Portfolio turnover | 21% | 4% | |
Net assets, ending (in thousands) | $28,784 | $29,316 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
* Total return is not annualized for periods less than one year.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one- and three-year periods ended June 30, 2009, and performed below the median of its peer universe for the five-year period ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-, three- and five-year per iods ended June 30, 2009. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was below the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit NASDAQ-100
Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
13 | Statement of Operations |
14 | Statements of Changes in Net Assets |
15 | Notes to Financial Statements |
21 | Financial Highlights |
23 | Explanation of Financial Tables |
24 | Proxy Voting |
25 | Availability of Quarterly Portfolio Holdings |
26 | Basis for Board's Approval of Investment Advisory Contracts |
29 | Director and Officer Information Table |
Summit Nasdaq-100 Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Nasdaq-100 Index Portfolio provided a return of 53.51% compared to a return of 54.61% for the Nasdaq 100 Index. As an index fund, the Portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of the Nasdaq 100 Index. The Portfolio's underperformance is largely attributable to fees and operating expenses. These expenses represent the Portfolio's costs for advisory, administration, accounting, custody, and other services.
Summit Nasdaq-100 Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 53.51% |
Five year | 2.69% |
Ten year | -6.51% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
The stabilized banking system, an improved economic outlook, and low valuations fueled a stock market rally that lasted throughout much of 2009. The Nasdaq 100 Index, which declined significantly during the first quarter of 2009, hit bottom in early March at a level of 1,043.87. For the balance of the year, the Index trended higher, closing the year at 1,860.31. Including dividend reinvestment, the Index gained 79.1% from its March 2009 low through the end of the year.
Portfolio Strategy
The Portfolio continued to meet its investment objective of closely tracking the total return of the Nasdaq 100 Index. The Index includes 100 of the largest and most actively traded non-financial domestic and international companies. The average market capitalization of the companies in the Index is roughly $30 billion, which is significantly larger than the $20 billion average capitalization of companies in the Standard & Poor's 500 Index (S&P 500 Index). These companies delivered strong returns for the year, both in absolute terms and relative to the S&P 500 Index, which returned 26.5% for the year.
At the end of 2009, the Index was most heavily weighted in Information Technology (63.2%), Consumer Discretionary (14.4%), and Healthcare (15.6%) companies. It had no exposure to companies in the Utilities, Energy, or Financial Services sectors.
The top-performing sectors of the Nasdaq 100 Index, including dividend reinvestment, were Information Technology (up 72.55% for the year) and Consumer Discretionary (66.1%). The worst performers were the Healthcare (15.5%) and Consumer Staples (14.4%) sectors.
The Summit Nasdaq-100 Index Portfolio fully replicates the Nasdaq 100 Index, which means that it holds all of the stocks in the Index. Market fluctuation, cash flows, and corporate actions may cause the Portfolio to hold slightly different weightings than the Index. Since the Nasdaq 100 Index is not a mutual fund, direct investment in the Index is not possible and there are no expenses charged against its return as there are against the Portfolio's return.
Economic Sectors | % of Total
Investments |
Consumer Discretionary | 14.3% |
Consumer Staples | 0.8% |
Exchange Traded Funds | 0.4% |
Government | 0.2% |
Health Care | 15.5% |
Industrials | 4.1% |
Information Technology | 62.8% |
Materials | 0.3% |
Telecommunication Services | 1.6% |
Total | 100% |
Outlook
The outlook for 2010 is for modest growth in the U.S. and global economies, and for improved corporate earnings. Interest rates may increase modestly as the economy strengthens and the Federal Reserve removes the massive liquidity that it has injected into the market. Riskier assets, including equities, may outperform in this environment, in a continuation of the trend established in 2009.
Challenges will remain, however, as the economic recovery will likely be muted by high unemployment and by consumers who continue to repair their balance sheets by curtailing spending. In addition, financial institutions will continue to deal with problem assets and weakness in the commercial real estate market, which will likely bring new challenges in 2010. Lastly, the prospect of higher interest rates may negatively affect price/earnings multiples in the equity markets.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,258.80 | $3.70 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,021.93 | $3.31 |
* Expenses are equal to the Fund's annualized expense ratio of 0.65%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Nasdaq-100 Index Portfolio:
We have audited the accompanying statement of net assets of the Summit Nasdaq-100 Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Nasdaq-100 Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Equity Securities - 98.5% | | Shares | Value |
Air Freight & Logistics - 1.0% | | | |
C.H. Robinson Worldwide, Inc. | | 2,444 | $143,536 |
Expeditors International of Washington, Inc. | | 3,115 | 108,184 |
| | | 251,720 |
| | | |
Biotechnology - 7.9% | | | |
Amgen, Inc.* | | 6,953 | 393,331 |
Biogen Idec, Inc.* | | 4,634 | 247,919 |
Celgene Corp.* | | 6,717 | 374,003 |
Cephalon, Inc.* | | 1,083 | 67,590 |
Genzyme Corp.* | | 4,905 | 240,394 |
Gilead Sciences, Inc.* | | 13,062 | 565,324 |
Vertex Pharmaceuticals, Inc.* | | 3,071 | 131,592 |
| | | 2,020,153 |
| | | |
Chemicals - 0.3% | | | |
Sigma-Aldrich Corp. | | 1,723 | 87,063 |
| | | |
| | | |
Commercial Services & Supplies - 0.6% | | | |
Cintas Corp. | | 2,763 | 71,976 |
Stericycle, Inc.* | | 1,305 | 71,997 |
| | | 143,973 |
| | | |
Communications Equipment - 10.4% | | | |
Cisco Systems, Inc.* | | 30,304 | 725,478 |
QUALCOMM, Inc. | | 29,741 | 1,375,818 |
Research In Motion Ltd.* | | 8,379 | 565,918 |
| | | 2,667,214 |
| | | |
Computers & Peripherals - 17.6% | | | |
Apple, Inc.* | | 18,555 | 3,912,507 |
Dell, Inc.* | | 10,596 | 152,158 |
Logitech International SA* | | 2,526 | 43,195 |
NetApp, Inc.* | | 5,184 | 178,278 |
SanDisk Corp.* | | 3,419 | 99,117 |
Seagate Technology LLC | | 7,394 | 134,497 |
| | | 4,519,752 |
| | | |
Construction & Engineering - 0.2% | | | |
Foster Wheeler AG* | | 1,990 | 58,586 |
| | | |
| | | |
Diversified Consumer Services - 0.6% | | | |
Apollo Group, Inc.* | | 2,331 | 141,212 |
| | | |
| | | |
Electrical Equipment - 0.6% | | | |
First Solar, Inc.* | | 1,099 | 148,805 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Electronic Equipment & Instruments - 0.7% | | | |
Flextronics International Ltd.* | | 13,239 | $96,777 |
FLIR Systems, Inc.* | | 2,347 | 76,794 |
| | | 173,571 |
| | | |
Food & Staples Retailing - 0.8% | | | |
Costco Wholesale Corp. | | 3,386 | 200,350 |
| | | |
| | | |
Health Care Equipment & Supplies - 1.2% | | | |
DENTSPLY International, Inc. | | 2,150 | 75,616 |
Hologic, Inc.* | | 4,064 | 58,928 |
Intuitive Surgical, Inc.* | | 563 | 170,769 |
| | | 305,313 |
| | | |
Health Care Providers & Services - 1.7% | | | |
Express Scripts, Inc.* | | 3,614 | 312,430 |
Henry Schein, Inc.* | | 1,343 | 70,642 |
Patterson Co.'s, Inc.* | | 1,736 | 48,573 |
| | 431,645 | |
| | | |
Health Care Technology - 0.4% | | | |
Cerner Corp.* | | 1,200 | 98,928 |
| | | |
Hotels, Restaurants & Leisure - 1.8% | | | |
Starbucks Corp.* | | 15,162 | 349,636 |
Wynn Resorts Ltd. | | 1,979 | 115,237 |
| | | 464,873 |
| | | |
Household Durables - 0.3% | | | |
Garmin Ltd. | | 2,799 | 85,929 |
| | | |
Internet & Catalog Retail - 3.6% | | | |
Amazon.com, Inc.* | | 4,238 | 570,096 |
Expedia, Inc.* | | 4,187 | 107,648 |
Liberty Media Corp. - Interactive* | | 8,229 | 89,202 |
priceline.com, Inc.* | | 684 | 149,454 |
| | 916,400 | |
| | | |
Internet Software & Services - 8.1% | | | |
Baidu.com (ADR)* | | 399 | 164,081 |
eBay, Inc.* | | 14,207 | 334,433 |
Google, Inc.* | | 2,183 | 1,353,416 |
VeriSign, Inc.* | | 2,732 | 66,224 |
Yahoo!, Inc.* | | 9,921 | 166,474 |
| | | 2,084,628 |
| | | |
IT Services - 3.1% | | | |
Automatic Data Processing, Inc. | | 5,257 | 225,105 |
Cognizant Technology Solutions Corp.* | | 4,233 | 191,755 |
Fiserv, Inc.* | | 2,838 | 137,586 |
Infosys Technologies Ltd. (ADR) | | 1,620 | 89,537 |
Paychex, Inc. | | 5,055 | 154,885 |
| | | 798,868 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Leisure Equipment & Products - 0.5% | | | |
Mattel, Inc. | | 6,092 | $121,718 |
| | | |
| | | |
Life Sciences - Tools & Services - 1.1% | | | |
Illumina, Inc.* | | 1,791 | 54,894 |
Life Technologies Corp.* | | 2,674 | 139,663 |
QIAGEN NV* | | 3,447 | 76,937 |
| | | 271,494 |
| | | |
Machinery - 1.2% | | | |
Joy Global, Inc. | | 1,511 | 77,952 |
PACCAR, Inc. | | 6,006 | 217,838 |
| | | 295,790 |
| | | |
Media - 4.4% | | | |
Comcast Corp. | | 21,283 | 358,831 |
DIRECTV* | | 10,269 | 342,471 |
DISH Network Corp. | | 3,255 | 67,606 |
News Corp. | | 20,972 | 287,107 |
Virgin Media, Inc. | | 4,962 | 83,511 |
| | | 1,139,526 |
| | | |
Multiline Retail - 0.6% | | | |
Sears Holdings Corp.* | | 1,782 | 148,708 |
| | | |
| | | |
Pharmaceuticals - 3.1% | | | |
Mylan, Inc.* | | 4,578 | 84,373 |
Teva Pharmaceutical Industries Ltd. (ADR) | | 10,889 | 611,744 |
Warner Chilcott plc* | | 3,694 | 105,168 |
| | | 801,285 |
| | | |
Road & Rail - 0.2% | | | |
JB Hunt Transport Services, Inc. | | 1,898 | 61,248 |
| | | |
| | | |
Semiconductors & Semiconductor Equipment - 7.8% | | | |
Altera Corp. | | 6,123 | 138,564 |
Applied Materials, Inc. | | 10,159 | 141,616 |
Broadcom Corp.* | | 5,872 | 184,674 |
Intel Corp. | | 28,512 | 581,645 |
KLA-Tencor Corp. | | 3,101 | 112,132 |
Lam Research Corp.* | | 1,953 | 76,577 |
Linear Technology Corp. | | 4,435 | 135,445 |
Marvell Technology Group Ltd.* | | 8,817 | 182,953 |
Maxim Integrated Products, Inc. | | 4,513 | 91,614 |
Microchip Technology, Inc. | | 2,283 | 66,344 |
NVIDIA Corp.* | | 8,075 | 150,841 |
Xilinx, Inc. | | 5,480 | 137,329 |
| | | 1,999,734 |
| | | |
Software - 14.5% | | | |
Activision Blizzard, Inc.* | | 16,679 | 185,304 |
Adobe Systems, Inc.* | | 7,567 | 278,314 |
Autodesk, Inc.* | | 3,553 | 90,282 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Software - Cont'd | | | |
BMC Software, Inc.* | | 3,145 | $126,115 |
CA, Inc. | | 7,392 | 166,024 |
Check Point Software Technologies Ltd.* | | 3,039 | 102,961 |
Citrix Systems, Inc.* | | 3,205 | 133,360 |
Electronic Arts, Inc.* | | 4,887 | 86,744 |
Intuit, Inc.* | | 5,876 | 180,452 |
Microsoft Corp. | | 45,119 | 1,375,678 |
Oracle Corp. | | 30,809 | 756,053 |
Symantec Corp.* | | 12,485 | 223,357 |
| | | 3,704,644 |
| | | |
Specialty Retail - 2.4% | | | |
Bed Bath & Beyond, Inc.* | | 5,208 | 201,185 |
O'Reilly Automotive, Inc.* | | 2,028 | 77,307 |
Ross Stores, Inc. | | 1,865 | 79,654 |
Staples, Inc. | | 7,153 | 175,892 |
Urban Outfitters, Inc.* | | 2,502 | 87,545 |
| | | 621,583 |
| | | |
Trading Companies & Distributors - 0.3% | | | |
Fastenal Co. | | 2,127 | 88,568 |
| | | |
| | | |
Wireless Telecommunication Services - 1.5% | | | |
Millicom International Cellular SA | | 1,567 | 115,597 |
NII Holdings, Inc.* | | 2,427 | 81,499 |
Vodafone Group plc (ADR) | | 8,608 | 198,759 |
| | | 395,855 |
| | | |
Total Equity Securities (Cost $16,114,265) | | | 25,249,136 |
| | | |
| | | |
| | | |
Exchange Traded Funds - 0.3% | | | |
Powershares QQQ | | 2,000 | 91,840 |
| | | |
Total Exchange Traded Funds (Cost $82,380) | | | 91,840 |
| | | |
| | | |
| | Principal | |
U.S. Treasury - 0.2% | | Amount | |
United States Treasury Bills, 2/11/10 ^ | | $50,000 | 49,994 |
| | | |
Total U.S. Treasury (Cost $49,994) | | | 49,994 |
| | | |
| | | |
TOTAL INVESTMENTS (Cost $16,246,639) - 99.0% | | | 25,390,970 |
Other assets and liabilities, net - 1.0% | | | 246,517 |
Net Assets - 100% | | | $25,637,487 |
See notes to financial statements.
Net Assets Consist of: | | | |
Paid-in capital applicable to 1,004,862 shares outstanding; | | | |
$0.10 par value, 20,000,000 shares authorized | | | $26,215,582 |
Undistributed net investment income | | | 3,871 |
Accumulated net realized gain (loss) on investments | | | (9,738,837) |
Net unrealized appreciation (depreciation) on investments | | | 9,156,871 |
| | | |
Net Assets | | | $25,637,487 |
| | | |
Net Asset Value per Share | | | $25.51 |
Futures | Number Of
Contracts | Expiration
Date | Underlying
Face Amount
At Value | Unrealized
Appreciation
(Depreciation) |
Purchased: | | | | |
E-Mini NASDAQ 100 Index^ | 10 | 3/10 | $371,750 | $12,540 |
^ Futures collateralized by 50,000 units of U.S. Treasury Bills.
* Non-income producing security.
Abbreviations:
ADR: American Depositary Receipt
LLC: Limited Liability Corporation
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income (net of foreign taxes withheld of $1,609) | $154,333 |
Interest income | 116 |
Total investment income | 154,449 |
| |
Expenses: | |
Investment advisory fee | 72,643 |
Transfer agent fees and expenses | 4,277 |
Accounting fees | 2,344 |
Trustees' fees and expenses | 3,259 |
Administrative fees | 20,755 |
Custodian fees | 12,772 |
Reports to shareholders | 6,921 |
Professional fees | 18,479 |
Contract services | 12,228 |
Miscellaneous | 77 |
Total expenses | 153,755 |
Reimbursement from Advisor | (18,821) |
Fees paid indirectly | (25) |
Net expenses | 134,909 |
| |
Net Investment Income | 19,540 |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | 19,147 |
Futures | 114,879 |
| 134,026 |
| |
Change in unrealized appreciation (depreciation) on: | |
Investments | 8,815,873 |
Futures | (5,451) |
| 8,810,422 |
| |
Net Realized and Unrealized Gain | |
(Loss) | 8,944,448 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $8,963,988 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $19,540 | $14,757 |
Net realized gain (loss) | 134,026 | (2,191,481) |
Change in unrealized appreciation or (depreciation) | 8,810,422 | (10,861,942) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 8,963,988 | (13,038,666) |
| | |
Distributions to shareholders from: | | |
Net investment income | (18,834) | (11,592) |
Total distributions | (18,834) | (11,592) |
| | |
Capital share transactions: | | |
Shares sold | 4,370,242 | 4,815,827 |
Reinvestment of distributions | 18,834 | 11,590 |
Shares redeemed | (4,886,008) | (7,409,885) |
Total capital share transactions | (496,932) | (2,582,468) |
| | |
Total Increase (Decrease) in Net Assets | 8,448,222 | (15,632,726) |
| | |
Net Assets | | |
Beginning of year | 17,189,265 | 32,821,991 |
End of year (including undistributed net investment | | |
income of $3,871 and $3,165, respectively) | $25,637,487 | $17,189,265 |
| | |
Capital Share Activity | | |
Shares sold | 219,980 | 217,395 |
Reinvestment of distributions | 731 | 703 |
Shares redeemed | (249,786) | (330,016) |
Total capital share activity | (29,075) | (111,918) |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit NASDAQ-100 Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a non-diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Portfolio, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Short-term notes are stated at amortized cost, which approximates fair value. The Portfolio may invest in securities whose resale is subject to restrictions. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity Securities* | $25,249,136 | -- | -- | $25,249,136 |
Exchange traded Funds | 91,840 | -- | -- | 91,840 |
U.S. government obligations | -- | $49,994 | -- | 49,994 |
TOTAL | $25,340,976 | $49,994 | -- | $25,390,970 |
| | | | |
Other Financial Instruments** | $12,540 | -- | -- | $12,540 |
*For further breakdown of Equity Securities by industry type, please refer to the Statement of Net Assets.
**Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, which are valued at the unrealized appreciation/depreciation on the instrument.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the applicable country's tax rules and rates.
Futures Contracts: The Portfolio may purchase and sell futures contracts, but only when, in the judgment of the Advisor, such a position acts as a hedge. The Portfolio may not enter into futures contracts for the purpose of speculation or leverage. These futures contracts may include, but are not limited to, market index futures contracts. The Portfolio is subject to market risk in the normal course of pursuing its investment objectives. The Portfolio may use futures contracts to hedge against changes in the value of securities. The Portfolio may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date. Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract. While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When a futures contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract. The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Portfolio's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms. Futures contracts are designed by boards of trade which are designated "contracts markets" by the Commodities Futures Trading Commission. Futures contracts trade on the contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee the futures contracts against default. As a result, there is minimal counterparty credit risk to the Portfolio.
Foreign Currency Transactions: The Portfolio's accounting records are maintained in U.S. dollars. For valuation of assets and liabilities on each date of net asset value determination, foreign denominations are converted into U.S. dollars using the current exchange rate. Security transactions, income and expenses are translated at the prevailing rate of exchange on the date of the event. The effect of changes in foreign exchange rates on securities is included with the net realized and unrealized gain or loss on investments.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Mutual Holding Company ("UNIFI"). The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .35% of the Portfolio's average daily net assets. Under the terms of the agreement, $7,469 was payable at year end. In addition, $7,007 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .65%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $2,134 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $72 for the year ended December 31, 2009. Under the terms of the agreement, $6 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $2,070,013 and $2,187,890, respectively.
Capital Loss Carryforward
Expiration Date
31-Dec-10 | $3,618,754 |
31-Dec-11 | 231,064 |
31-Dec-12 | 139,726 |
31-Dec-13 | 1,358,042 |
31-Dec-14 | 708,047 |
31-Dec-15 | 697,707 |
31-Dec-16 | 2,318,532 |
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | 2009 | 2008 |
Ordinary income | $18,834 | $11,592 |
Total | $18,834 | $11,592 |
As of December 31, 2009 the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $9,747,656 |
Unrealized (depreciation) | (1,257,750) |
Net unrealized appreciation/(depreciation) | $8,489,906 |
Undistributed ordinary income | $3,871 |
Capital loss carryforward | ($9,071,872) |
Federal income tax cost of investments | $16,901,064 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales and Section 1256 contracts.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to expired capital losses.
Accumulated net realized gain (loss) | $1,545,107 |
Paid-in capital | (1,545,107) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no borrowings under the agreement during the year ended December 31, 2009.
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 100% of the ordinary dividends paid during the year as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
| 2009 | 2008 | 2007 |
Net asset value, beginning | $16.63 | $28.64 | $24.47 |
Income from investment operations | | | |
Net investment income (loss) | .02 | .03 | (.01) |
Net realized and unrealized gain (loss) | 8.88 | (12.01) | 4.49 |
Total from investment operations | 8.90 | (11.98) | 4.48 |
Distributions from | | | |
Net investment income | (.02) | (.03) | *** |
Return of capital | -- | -- | (.31) |
Total distributions | (.02) | (.03) | (.31) |
Total increase (decrease) in net asset value | 8.88 | (12.01) | 4.17 |
Net asset value, ending | $25.51 | $16.63 | $28.64 |
| | | |
Total return* | 53.51% | (41.81%) | 18.50% |
Ratios to average net assets: A | | | |
Net investment income (loss) | .09% | .06% | (.01%) |
Total expenses | .74% | .80% | .71% |
Expenses before offsets | .65% | .65% | .65% |
Net expenses | .65% | .65% | .65% |
Portfolio turnover | 10% | 12% | 13% |
Net assets, ending (in thousands) | $25,637 | $17,189 | $32,822 |
| | | |
| Years Ended | |
| December 31, | December 31, | |
| 2006 | 2005 | |
Net asset value, beginning | $22.97 | $22.81 | |
Income from investment operations | | | |
Net investment income | .02 | .02 | |
Net realized and unrealized gain (loss) | 1.51 | .26 | |
Total from investment operations | 1.53 | .28 | |
Distributions from | | | |
Net investment income | (.03) | (.12) | |
Total distributions | (.03) | (.12) | |
Total increase (decrease) in net asset value | 1.50 | .16 | |
Net asset value, ending | $24.47 | $22.97 | |
| | | |
Total return* | 6.67% | 1.30% | |
Ratios to average net assets: A | | | |
Net investment income | .05% | .09% | |
Total expenses | .76% | .76% | |
Expenses before offsets | .65% | .65% | |
Net expenses | .65% | .65% | |
Portfolio turnover | 8% | 14% | |
Net assets, ending (in thousands) | $26,108 | $26,330 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements.
Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
* Total return is not annualized for periods less than one year.
*** Amount is less than $0.005.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one-, three- and five-year periods ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-, three- and five-year periods ended June 30, 2009. Based upon its review, the Board concluded that the Portfolio's p erformance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was below the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio and the relatively small range in total expense ratios among the funds in the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Port folio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Russell
2000 Small Cap
Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
52 | Statement of Operations |
53 | Statements of Changes in Net Assets |
54 | Notes to Financial Statements |
60 | Financial Highlights |
63 | Explanation of Financial Tables |
64 | Proxy Voting |
65 | Availability of Quarterly Portfolio Holdings |
65 | Basis for Board's Approval of Investment Advisory Contracts |
69 | Director and Officer Information Table |
Summit Russell 2000 Small Cap Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Russell 2000 Small Cap Index Portfolio provided a return of 26.17% (Class I) compared to a return of 27.17% for the Russell 2000 Index. As an index fund, the Portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of the Russell 2000 Index. The Portfolio's underperformance was largely attributable to its fees and operating expenses.
Summit Russell 2000 Small Cap Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
| Class I | Class F** |
One year | 26.17% | 25.91% |
Five year | -0.06% | -0.25% |
Since inception (4.27.00) | 3.39% | 2.96% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**Prior to October 4, 2007, Class F share performance is based on Class I performance, adjusted to reflect Class F expenses.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted. The value of an investment in Class I shares is plotted in the graph. The value of an investment in another class of shares would be different.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
The stabilized banking system, an improved economic outlook, and low valuations fueled a stock market rally that lasted throughout much of 2009. The Russell 2000 Index, which declined significantly during the first quarter of 2009, hit bottom early in March at a level of 343.26. For the balance of the year, the Index trended higher, closing the year at 625.39. Including dividend reinvestment, the Index gained 84.5% from its March 2009 low through the end of the year.
Economic Sectors | % of Total
Investments |
Consumer Discretionary | 13.5% |
Consumer Staples | 3.4% |
Energy | 5.0% |
Exchange Traded Funds | 0.1% |
Financials | 19.8% |
Government | 0.4% |
Health Care | 13.9% |
Industrials | 15.5% |
Information Technology | 18.2% |
Materials | 4.6% |
Telecommunication Services | 0.9% |
Time Deposit | 1.5% |
Utilities | 3.2% |
Total | 100% |
Portfolio Transactions
The Portfolio continued to meet its investment objective of closely tracking the total return of the Russell 2000 Index. The Index includes approximately 2,000 small companies that have average market capitalizations of approximately $600 million, which is significantly smaller than the $20 billion average capitalization of companies in the Standard & Poor's 500 Index (S&P 500 Index). The Russell 2000 Index delivered strong returns for the year, both in absolute terms and relative to the S&P 500 Index, which returned 26.5%.
At the end of 2009, the Index was most heavily weighted in the Financial Services (20.3%) and Information Technology (18.2%) sectors. Other sectors with significant weightings included Healthcare (14.7%) and Industrials (16.1%). The Index had the least exposure to companies in the Telecommunications Services (1%), Utilities (3.2%), and Consumer Staples (3.4%) sectors of the market.
The top-performing sectors in the Russell 2000 Index, including dividend reinvestment, were Consumer Discretionary (up 60.6% for the year), Technology (59.6%), and Materials (59.2%). The worst performers were Financial Services (-1.7%) and Utilities (7.8%).
The Portfolio fully replicates the Russell 2000 Index, which means that it holds all of the stocks in the Index. Market fluctuation, cash flows, and corporate actions may cause the Portfolio to hold slightly different weightings than the Index. Since the Russell 2000 Index is not a mutual fund, direct investment in the Index is not possible and there are no expenses charged against its return as there are against the Portfolio's return.
Outlook
The outlook for 2010 is for modest growth in the U.S. and global economies, and for improved corporate earnings. Interest rates may increase modestly as the economy strengthens and the Federal Reserve removes the massive liquidity that it has injected into the market. Riskier assets, including equities, may outperform in this environment, in a continuation of the trend established in 2009.
Challenges will remain, however, as the economic recovery will likely be muted by high unemployment and by consumers who continue to repair their balance sheets by curtailing spending. In addition, financial institutions will continue to deal with problem assets and weakness in the commercial real estate market, which will likely bring new challenges in 2010. Lastly, the prospect of higher interest rates may negatively affect price/earnings multiples in the equity markets.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Class I | | | |
Actual | $1,000.00 | $1,232.70 | $3.94 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,021.68 | $3.57 |
| | | |
Class F | | | |
Actual | $1,000.00 | $1,231.50 | $5.12 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,020.62 | $4.63 |
* Expenses are equal to the Fund's annualized expense ratio of 0.70% and 0.91%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Russell 2000 Small Cap Index Portfolio:
We have audited the accompanying statement of net assets of the Summit Russell 2000 Small Cap Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Russell 2000 Small Cap Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Equity Securities - 97.7% | | Shares | Value |
Aerospace & Defense - 1.7% | | | |
AAR Corp.* | | 2,670 | $61,357 |
Aerovironment, Inc.* | | 917 | 26,666 |
American Science & Engineering, Inc. | | 628 | 47,627 |
Applied Signal Technology, Inc. | | 897 | 17,303 |
Argon ST, Inc.* | | 932 | 20,243 |
Ascent Solar Technologies, Inc.* | | 1,229 | 6,514 |
Astronics Corp.* | | 730 | 6,241 |
Ceradyne, Inc.* | | 1,779 | 34,175 |
Cubic Corp. | | 1,078 | 40,209 |
Curtiss-Wright Corp. | | 3,121 | 97,750 |
DigitalGlobe, Inc.* | | 1,016 | 24,587 |
Ducommun, Inc. | | 721 | 13,490 |
DynCorp International, Inc.* | | 1,706 | 24,481 |
Esterline Technologies Corp.* | | 2,049 | 83,538 |
GenCorp, Inc.* | | 3,476 | 24,332 |
GeoEye, Inc.* | | 1,322 | 36,857 |
Global Defense Technology & Systems, Inc.* | | 320 | 5,267 |
HEICO Corp. | | 1,594 | 70,662 |
Herley Industries, Inc.* | | 1,076 | 14,946 |
Hexcel Corp.* | | 6,661 | 86,460 |
Ladish Co., Inc.* | | 1,161 | 17,508 |
LMI Aerospace, Inc.* | | 692 | 9,204 |
Moog, Inc.* | | 3,123 | 91,285 |
Orbital Sciences Corp.* | | 3,893 | 59,407 |
Stanley, Inc.* | | 792 | 21,709 |
Taser International, Inc.* | | 4,261 | 18,663 |
Teledyne Technologies, Inc.* | | 2,486 | 95,363 |
Todd Shipyards Corp. | | 455 | 7,626 |
Triumph Group, Inc. | | 1,149 | 55,439 |
| | | 1,118,909 |
| | | |
Air Freight & Logistics - 0.3% | | | |
Air Transport Services Group, Inc.* | | 4,389 | 11,587 |
Atlas Air Worldwide Holdings, Inc.* | | 1,430 | 53,268 |
Dynamex, Inc.* | | 725 | 13,123 |
Forward Air Corp. | | 1,997 | 50,025 |
HUB Group, Inc.* | | 2,563 | 68,765 |
Pacer International, Inc.* | | 2,628 | 8,304 |
| | | 205,072 |
| | | |
Airlines - 0.9% | | | |
Airtran Holdings, Inc.* | | 9,050 | 47,241 |
Alaska Air Group, Inc.* | | 2,512 | 86,815 |
Allegiant Travel Co.* | | 1,059 | 49,953 |
Hawaiian Holdings, Inc.* | | 3,555 | 24,885 |
JetBlue Airways Corp.* | | 17,476 | 95,244 |
Republic Airways Holdings, Inc.* | | 2,380 | 17,588 |
| | | |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Airlines - Cont'd | | | |
Skywest, Inc. | | 3,839 | $64,956 |
UAL Corp.* | | 11,579 | 149,485 |
US Airways Group, Inc.* | | 11,112 | 53,782 |
| | | 589,949 |
| | | |
Auto Components - 0.9% | | | |
American Axle & Manufacturing Holdings, Inc.* | | 2,978 | 23,884 |
Amerigon, Inc.* | | 1,764 | 14,006 |
ArvinMeritor, Inc.* | | 5,111 | 57,141 |
China Automotive Systems, Inc.* | | 341 | 6,380 |
Cooper Tire & Rubber Co. | | 4,068 | 81,563 |
Dana Holding Corp.* | | 9,762 | 105,820 |
Dorman Products, Inc.* | | 875 | 13,702 |
Drew Industries, Inc.* | | 1,267 | 26,163 |
Exide Technologies* | | 3,463 | 24,622 |
Fuel Systems Solutions, Inc.* | | 884 | 36,456 |
Hawk Corp.* | | 433 | 7,625 |
Modine Manufacturing Co.* | | 3,171 | 37,545 |
Raser Technologies, Inc.* | | 3,590 | 4,452 |
Spartan Motors, Inc. | | 2,476 | 13,940 |
Standard Motor Products, Inc.* | | 1,237 | 10,539 |
Stoneridge, Inc.* | | 1,166 | 10,506 |
Superior Industries International, Inc. | | 1,592 | 24,358 |
Tenneco, Inc.* | | 4,072 | 72,197 |
Wonder Auto Technology, Inc.* | | 1,171 | 13,771 |
| | | 584,670 |
| | | |
Automobiles - 0.0% | | | |
Winnebago Industries* | | 2,007 | 24,485 |
| | | |
| | | |
Beverages - 0.1% | | | |
Boston Beer Co., Inc.* | | 659 | 30,709 |
Coca Cola Bottling Co. Consolidated | | 327 | 17,665 |
Heckmann Corp.* | | 5,507 | 27,480 |
National Beverage Corp.* | | 857 | 11,878 |
| | | 87,732 |
| | | |
Biotechnology - 3.8% | | | |
Acorda Therapeutics, Inc.* | | 2,623 | 66,152 |
Affymax, Inc.* | | 1,193 | 29,515 |
Alkermes, Inc.* | | 6,521 | 61,363 |
Alnylam Pharmaceuticals, Inc.* | | 2,483 | 43,750 |
AMAG Pharmaceuticals, Inc.* | | 1,175 | 44,685 |
Amicus Therapeutics, Inc.* | | 1,196 | 4,748 |
Arena Pharmaceuticals, Inc.* | | 5,675 | 20,146 |
Ariad Pharmaceuticals, Inc.* | | 5,295 | 12,073 |
Arqule, Inc.* | | 2,994 | 11,048 |
Array Biopharma, Inc.* | | 3,610 | 10,144 |
AVI BioPharma, Inc.* | | 6,075 | 8,869 |
BioCryst Pharmaceuticals, Inc.* | | 1,477 | 9,541 |
Biospecifics Technologies Corp.* | | 285 | 8,365 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Biotechnology - Cont'd | | | |
Cardium Therapeutics, Inc.* | | 3,073 | $2,090 |
Celera Corp.* | | 5,865 | 40,527 |
Cell Therapeutics, Inc.* | | 35,275 | 40,213 |
Celldex Therapeutics, Inc.* | | 1,190 | 5,569 |
Cepheid, Inc.* | | 3,997 | 49,883 |
Chelsea Therapeutics International, Inc.* | | 1,869 | 5,046 |
Clinical Data, Inc.* | | 826 | 15,083 |
Cubist Pharmaceuticals, Inc.* | | 3,976 | 75,425 |
Curis, Inc.* | | 5,028 | 16,341 |
Cytokinetics, Inc.* | | 2,652 | 7,717 |
Cytori Therapeutics, Inc.* | | 1,587 | 9,681 |
Dyax Corp.* | | 4,431 | 15,021 |
Emergent Biosolutions, Inc.* | | 1,079 | 14,664 |
Enzon Pharmaceuticals, Inc.* | | 3,126 | 32,917 |
Exelixis, Inc.* | | 7,334 | 54,052 |
Facet Biotech Corp.* | | 1,750 | 30,765 |
Genomic Health, Inc.* | | 970 | 18,973 |
Geron Corp.* | | 6,154 | 34,155 |
GTx, Inc.* | | 1,485 | 6,237 |
Halozyme Therapeutics, Inc.* | | 4,454 | 26,145 |
Hemispherx Biopharma, Inc.* | | 8,741 | 4,895 |
Human Genome Sciences, Inc.* | | 12,579 | 384,917 |
Idenix Pharmaceuticals, Inc.* | | 1,994 | 4,287 |
Idera Pharmaceuticals, Inc.* | | 1,638 | 8,468 |
Immunogen, Inc.* | | 3,728 | 29,302 |
Immunomedics, Inc.* | | 5,060 | 16,243 |
Incyte Corp. Ltd.* | | 5,584 | 50,870 |
Infinity Pharmaceuticals, Inc.* | | 1,415 | 8,745 |
Insmed, Inc.* | | 9,871 | 7,601 |
InterMune, Inc.* | | 2,635 | 34,360 |
Isis Pharmaceuticals, Inc.* | | 6,425 | 71,317 |
Lexicon Pharmaceuticals, Inc.* | | 6,399 | 10,878 |
Ligand Pharmaceuticals, Inc., Class B* | | 8,949 | 19,419 |
MannKind Corp.* | | 3,939 | 34,506 |
Martek Biosciences Corp.* | | 2,288 | 43,335 |
Maxygen, Inc.* | | 2,071 | 12,612 |
Medivation, Inc.* | | 1,983 | 74,660 |
Metabolix, Inc.* | | 1,513 | 16,749 |
Micromet, Inc.* | | 3,230 | 21,512 |
Molecular Insight Pharmaceuticals, Inc.* | | 1,409 | 3,170 |
Momenta Pharmaceuticals, Inc.* | | 2,700 | 34,047 |
Myriad Pharmaceuticals, Inc.* | | 1,819 | 9,150 |
Nabi Biopharmaceuticals* | | 4,129 | 20,232 |
Nanosphere, Inc.* | | 1,028 | 6,620 |
Neurocrine Biosciences, Inc.* | | 2,921 | 7,945 |
NeurogesX, Inc.* | | 816 | 6,291 |
Novavax, Inc.* | | 4,156 | 11,055 |
NPS Pharmaceuticals, Inc.* | | 3,762 | 12,791 |
Omeros Corp.* | | 480 | 3,370 |
OncoGenex Pharmaceutical, Inc.* | | 316 | 7,040 |
Onyx Pharmaceuticals, Inc.* | | 4,258 | 124,930 |
Opko Health, Inc.* | | 3,824 | 6,998 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Biotechnology - Cont'd | | | |
Orexigen Therapeutics, Inc.* | | 1,597 | $11,882 |
Osiris Therapeutics, Inc.* | | 1,190 | 8,497 |
OXiGENE, Inc.* | | 2,151 | 2,452 |
PDL BioPharma, Inc. | | 8,243 | 56,547 |
Pharmasset, Inc.* | | 1,446 | 29,932 |
Poniard Pharmaceuticals, Inc.* | | 1,820 | 3,331 |
Progenics Pharmaceuticals, Inc.* | | 2,122 | 9,422 |
Protalix BioTherapeutics, Inc.* | | 2,385 | 15,789 |
Regeneron Pharmaceuticals, Inc.* | | 4,347 | 105,110 |
Repligen Corp.* | | 2,475 | 10,172 |
Rigel Pharmaceuticals, Inc.* | | 3,437 | 32,686 |
Sangamo Biosciences, Inc.* | | 2,918 | 17,275 |
Savient Pharmaceuticals, Inc.* | | 4,666 | 63,504 |
Sciclone Pharmaceuticals, Inc.* | | 2,822 | 6,575 |
Seattle Genetics, Inc.* | | 5,741 | 58,329 |
SIGA Technologies, Inc.* | | 2,047 | 11,873 |
Spectrum Pharmaceuticals, Inc.* | | 2,586 | 11,482 |
StemCells, Inc.* | | 8,151 | 10,270 |
Synta Pharmaceuticals Corp.* | | 1,334 | 6,750 |
Theravance, Inc.* | | 3,677 | 48,058 |
Vanda Pharmaceuticals, Inc.* | | 1,839 | 20,670 |
Vical, Inc.* | | 2,625 | 8,636 |
Zymogenetics, Inc.* | | 2,581 | 16,493 |
| | | 2,504,953 |
| | | |
Building Products - 0.6% | | | |
AAON, Inc. | | 861 | 16,781 |
American Woodmark Corp. | | 707 | 13,914 |
Ameron International Corp. | | 636 | 40,361 |
Apogee Enterprises, Inc. | | 1,923 | 26,922 |
Builders FirstSource, Inc.: | | | |
Common Stock* | | 2,767 | 10,653 |
Rights (Expires 1/14/2010)* | | 2,041 | 499 |
Gibraltar Industries, Inc.* | | 1,862 | 29,289 |
Griffon Corp.* | | 2,998 | 36,636 |
Insteel Industries, Inc. | | 1,210 | 15,730 |
NCI Building Systems, Inc.* | | 6,192 | 11,208 |
Quanex Building Products Corp. | | 2,733 | 46,379 |
Simpson Manufacturing Co., Inc. | | 2,626 | 70,613 |
Trex Co., Inc.* | | 1,069 | 20,952 |
Universal Forest Products, Inc. | | 1,324 | 48,736 |
| | | 388,673 |
| | | |
Capital Markets - 2.5% | | | |
Allied Capital Corp.* | | 12,288 | 44,360 |
American Capital Ltd.* | | 19,367 | 47,255 |
Apollo Investment Corp. | | 11,247 | 107,184 |
Ares Capital Corp. | | 7,501 | 93,387 |
Artio Global Investors, Inc.* | | 1,917 | 48,864 |
BGC Partners, Inc. | | 2,668 | 12,326 |
BlackRock Kelso Capital Corp. | | 1,036 | 8,827 |
Broadpoint Gleacher Securities Group, Inc.* | | 3,814 | 17,010 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Capital Markets - Cont'd | | | |
Calamos Asset Management, Inc. | | 1,353 | $15,600 |
Capital Southwest Corp. | | 205 | 16,154 |
Cohen & Steers, Inc. | | 1,187 | 27,111 |
Cowen Group, Inc.* | | 1,200 | 7,104 |
Diamond Hill Investment Group, Inc. | | 164 | 10,534 |
Duff & Phelps Corp. | | 1,119 | 20,433 |
E*Trade Financial Corp.* | | 107,702 | 188,478 |
Epoch Holding Corp. | | 804 | 8,402 |
Evercore Partners, Inc. | | 993 | 30,187 |
FBR Capital Markets Corp.* | | 1,352 | 8,355 |
Fifth Street Finance Corp. | | 2,258 | 24,251 |
GAMCO Investors, Inc. | | 495 | 23,904 |
GFI Group, Inc. | | 4,486 | 20,501 |
Gladstone Capital Corp. | | 1,681 | 12,944 |
Gladstone Investment Corp. | | 1,760 | 8,026 |
Harris & Harris Group, Inc.* | | 1,858 | 8,491 |
Hercules Technology Growth Capital, Inc. | | 2,420 | 25,144 |
International Assets Holding Corp.* | | 870 | 12,650 |
JMP Group, Inc. | | 1,155 | 11,227 |
Kayne Anderson Energy Development Co. | | 798 | 11,611 |
KBW, Inc.* | | 2,402 | 65,719 |
Knight Capital Group, Inc.* | | 6,414 | 98,776 |
Kohlberg Capital Corp. | | 1,466 | 6,685 |
LaBranche & Co., Inc.* | | 4,089 | 11,613 |
Main Street Capital Corp. | | 559 | 9,011 |
MCG Capital Corp.* | | 4,489 | 19,392 |
MF Global Ltd.* | | 6,677 | 46,405 |
MVC Capital, Inc. | | 1,494 | 17,629 |
NGP Capital Resources Co. | | 1,493 | 12,138 |
Oppenheimer Holdings, Inc. | | 640 | 21,261 |
optionsXpress Holdings, Inc. | | 2,914 | 45,021 |
PennantPark Investment Corp. | | 1,728 | 15,414 |
Penson Worldwide, Inc.* | | 1,340 | 12,140 |
Piper Jaffray Co.'s* | | 1,360 | 68,830 |
Prospect Capital Corp. | | 4,384 | 51,775 |
Pzena Investment Management, Inc.* | | 491 | 3,997 |
Riskmetrics Group, Inc.* | | 1,617 | 25,726 |
Safeguard Scientifics, Inc.* | | 1,400 | 14,434 |
Sanders Morris Harris Group, Inc. | | 1,551 | 8,530 |
Stifel Financial Corp.* | | 2,074 | 122,864 |
SWS Group, Inc. | | 1,661 | 20,098 |
Thomas Weisel Partners Group, Inc.* | | 1,424 | 5,383 |
TICC Capital Corp. | | 2,100 | 12,705 |
TradeStation Group, Inc.* | | 2,296 | 18,115 |
Triangle Capital Corp. | | 586 | 7,085 |
US Global Investors, Inc. | | 1,009 | 12,421 |
Virtus Investment Partners, Inc.* | | 434 | 6,901 |
Westwood Holdings Group, Inc. | | 428 | 15,553 |
| | | 1,645,941 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Chemicals - 2.1% | | | |
American Vanguard Corp. | | 1,505 | $12,491 |
Ampal-American Israel Corp.* | | 1,584 | 4,277 |
Arch Chemicals, Inc. | | 1,728 | 53,361 |
Balchem Corp. | | 1,256 | 42,088 |
Calgon Carbon Corp.* | | 3,776 | 52,486 |
China Green Agriculture, Inc.* | | 648 | 9,526 |
Ferro Corp. | | 5,982 | 49,292 |
H.B. Fuller Co. | | 3,352 | 76,258 |
Hawkins, Inc. | | 688 | 15,019 |
ICO, Inc. | | 2,207 | 16,133 |
Innophos Holdings, Inc. | | 1,189 | 27,335 |
Innospec, Inc. | | 1,631 | 16,457 |
Koppers Holdings, Inc. | | 1,406 | 42,799 |
Landec Corp.* | | 1,849 | 11,538 |
LSB Industries, Inc.* | | 1,190 | 16,779 |
Minerals Technologies, Inc. | | 1,292 | 70,375 |
NewMarket Corp. | | 692 | 79,421 |
NL Industries, Inc. | | 532 | 3,692 |
Olin Corp. | | 5,379 | 94,240 |
OM Group, Inc.* | | 2,106 | 66,107 |
Omnova Solutions, Inc.* | | 3,020 | 18,513 |
PolyOne Corp.* | | 6,363 | 47,532 |
Quaker Chemical Corp. | | 819 | 16,904 |
Rockwood Holdings, Inc.* | | 3,398 | 80,057 |
Schulman A, Inc. | | 1,613 | 32,550 |
Sensient Technologies Corp. | | 3,361 | 88,394 |
ShengdaTech, Inc.* | | 1,941 | 11,898 |
Solutia, Inc.* | | 8,227 | 104,483 |
Spartech Corp. | | 2,109 | 21,638 |
Stepan Co. | | 490 | 31,757 |
STR Holdings, Inc.* | | 852 | 13,385 |
Westlake Chemical Corp. | | 1,345 | 33,531 |
WR Grace & Co.* | | 4,986 | 126,395 |
Zep, Inc. | | 1,487 | 25,755 |
Zoltek Co.'s, Inc.* | | 1,916 | 18,202 |
| | | 1,430,668 |
| | | |
Commercial Banks - 5.7% | | | |
1st Source Corp. | | 1,038 | 16,701 |
Alliance Financial Corp. | | 324 | 8,797 |
American National Bankshares, Inc. | | 482 | 10,556 |
Ameris Bancorp | | 1,097 | 7,857 |
Ames National Corp. | | 514 | 10,851 |
Arrow Financial Corp. | | 649 | 16,225 |
Auburn National Bancorporation, Inc. | | 185 | 3,643 |
Bancfirst Corp. | | 454 | 16,816 |
Banco Latinoamericano de Exportaciones SA | | 1,891 | 26,285 |
Bancorp Rhode Island, Inc. | | 288 | 7,396 |
Bancorp, Inc.* | | 881 | 6,044 |
Bank of Kentucky Financial Corp. | | 243 | 4,564 |
Bank of Marin Bancorp | | 408 | 13,284 |
Bank of the Ozarks, Inc. | | 986 | 28,860 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Commercial Banks - Cont'd | | | |
Banner Corp. | | 1,191 | $3,192 |
Bar Harbor Bankshares | | 227 | 6,231 |
Boston Private Financial Holdings, Inc. | | 4,678 | 26,992 |
Bridge Bancorp, Inc. | | 491 | 11,804 |
Bryn Mawr Bank Corp. | | 548 | 8,269 |
Camden National Corp. | | 528 | 17,266 |
Cape Bancorp, Inc.* | | 930 | 6,250 |
Capital City Bank Group, Inc. | | 939 | 12,996 |
Cardinal Financial Corp. | | 1,926 | 16,833 |
Cathay General Bancorp | | 3,651 | 27,565 |
Center Bancorp, Inc. | | 869 | 7,751 |
Centerstate Banks of Florida, Inc. | | 736 | 7,426 |
Central Pacific Financial Corp.* | | 2,178 | 2,853 |
Century Bancorp, Inc. | | 277 | 6,102 |
Chemical Financial Corp. | | 1,467 | 34,592 |
Chicopee Bancorp, Inc.* | | 510 | 6,365 |
Citizens & Northern Corp. | | 715 | 6,821 |
Citizens Holding Co. | | 314 | 7,030 |
Citizens Republic Bancorp, Inc.* | | 24,665 | 17,019 |
City Holding Co. | | 1,100 | 35,563 |
CNB Financial Corp. | | 682 | 10,905 |
CoBiz Financial, Inc. | | 1,421 | 6,750 |
Columbia Banking System, Inc. | | 1,937 | 31,341 |
Community Bank System, Inc. | | 2,256 | 43,563 |
Community Trust Bancorp, Inc. | | 1,102 | 26,944 |
CVB Financial Corp. | | 5,850 | 50,544 |
Danvers Bancorp, Inc. | | 1,422 | 18,472 |
Eagle Bancorp, Inc.* | | 781 | 8,177 |
East West Bancorp, Inc. | | 6,317 | 99,809 |
Enterprise Bancorp, Inc. | | 399 | 4,369 |
Enterprise Financial Services Corp. | | 881 | 6,793 |
Farmers Capital Bank Corp. | | 495 | 5,059 |
Financial Institutions, Inc. | | 874 | 10,296 |
First Bancorp (North Carolina) | | 1,145 | 15,996 |
First Bancorp (Puerto Rico) | | 6,345 | 14,593 |
First Bancorp, Inc. (Maine) | | 691 | 10,655 |
First Busey Corp. | | 1,922 | 7,477 |
First California Financial Group, Inc.* | | 446 | 1,222 |
First Commonwealth Financial Corp. | | 5,869 | 27,291 |
First Community Bancshares, Inc. | | 723 | 8,712 |
First Financial Bancorp | | 3,548 | 51,659 |
First Financial Bankshares, Inc. | | 1,436 | 77,874 |
First Financial Corp. | | 866 | 26,430 |
First Merchants Corp. | | 1,736 | 10,312 |
First Midwest Bancorp, Inc. | | 3,569 | 38,866 |
First of Long Island Corp. | | 427 | 10,782 |
First South Bancorp, Inc. | | 641 | 6,602 |
FirstMerit Corp. | | 5,699 | 114,778 |
FNB Corp. | | 7,863 | 53,390 |
German American Bancorp, Inc. | | 875 | 14,219 |
Glacier Bancorp, Inc. | | 4,244 | 58,228 |
Great Southern Bancorp, Inc. | | 692 | 14,781 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Commercial Banks - Cont'd | | | |
Guaranty Bancorp* | | 4,153 | $5,482 |
Hampton Roads Bankshares, Inc. | | 1,456 | 2,519 |
Hancock Holding Co. | | 1,894 | 82,938 |
Harleysville National Corp. | | 3,271 | 21,065 |
Heartland Financial USA, Inc. | | 1,017 | 14,594 |
Heritage Financial Corp. | | 440 | 6,063 |
Home Bancorp, Inc.* | | 705 | 8,594 |
Home Bancshares, Inc. | | 1,056 | 25,418 |
Iberiabank Corp. | | 1,422 | 76,518 |
Independent Bank Corp. | | 1,533 | 32,024 |
International Bancshares Corp. | | 3,595 | 68,053 |
Investors Bancorp, Inc.* | | 3,224 | 35,271 |
Lakeland Bancorp, Inc. | | 1,608 | 10,275 |
Lakeland Financial Corp. | | 866 | 14,938 |
MainSource Financial Group, Inc. | | 1,480 | 7,074 |
MB Financial, Inc. | | 3,468 | 68,389 |
Merchants Bancshares, Inc. | | 377 | 8,535 |
Metro Bancorp, Inc.* | | 413 | 5,191 |
Midsouth Bancorp, Inc. | | 362 | 5,032 |
Nara Bancorp, Inc.* | | 1,816 | 20,593 |
National Bankshares, Inc. | | 547 | 15,475 |
National Penn Bancshares, Inc.: | | | |
Common Stock | | 8,719 | 50,483 |
Fractional Shares (b)* | | 25,000 | 5 |
NBT Bancorp, Inc. | | 2,365 | 48,175 |
Northfield Bancorp, Inc. | | 1,332 | 18,009 |
Northrim BanCorp, Inc. | | 500 | 8,440 |
Norwood Financial Corp. | | 148 | 4,231 |
Ohio Valley Banc Corp. | | 315 | 6,939 |
Old National Bancorp | | 6,003 | 74,617 |
Old Point Financial Corp. | | 159 | 2,472 |
Old Second Bancorp, Inc. | | 1,095 | 7,545 |
Oriental Financial Group, Inc. | | 1,831 | 19,775 |
Orrstown Financial Services, Inc. | | 404 | 14,092 |
Pacific Capital Bancorp | | 3,497 | 3,357 |
Pacific Continental Corp. | | 850 | 9,724 |
PacWest Bancorp | | 1,839 | 37,056 |
Park National Corp. | | 759 | 44,690 |
Peapack Gladstone Financial Corp. | | 695 | 8,813 |
Penns Woods Bancorp, Inc. | | 303 | 9,829 |
Peoples Bancorp, Inc. | | 821 | 7,947 |
Peoples Financial Corp. | | 299 | 6,076 |
Pinnacle Financial Partners, Inc.* | | 2,433 | 34,597 |
Porter Bancorp, Inc. | | 221 | 3,324 |
Premierwest Bancorp | | 1,620 | 2,300 |
PrivateBancorp, Inc. | | 3,638 | 32,633 |
Prosperity Bancshares, Inc. | | 3,181 | 128,735 |
Renasant Corp. | | 1,454 | 19,774 |
Republic Bancorp, Inc. | | 737 | 15,182 |
Republic First Bancorp, Inc.* | | 566 | 2,417 |
S&T Bancorp, Inc. | | 1,624 | 27,624 |
Sandy Spring Bancorp, Inc. | | 1,309 | 11,637 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Commercial Banks - Cont'd | | | |
Santander BanCorp* | | 295 | $3,623 |
SCBT Financial Corp. | | 872 | 24,146 |
Shore Bancshares, Inc. | | 669 | 9,674 |
Sierra Bancorp | | 592 | 4,517 |
Signature Bank* | | 2,799 | 89,288 |
Simmons First National Corp. | | 1,010 | 28,078 |
Smithtown Bancorp, Inc. | | 1,158 | 6,890 |
South Financial Group, Inc. | | 12,507 | 8,063 |
Southside Bancshares, Inc. | | 905 | 17,763 |
Southwest Bancorp, Inc. | | 1,158 | 8,037 |
State Bancorp, Inc. | | 1,141 | 8,112 |
StellarOne Corp. | | 1,700 | 16,932 |
Sterling BanCorp. | | 1,434 | 10,239 |
Sterling Bancshares, Inc. | | 5,683 | 29,154 |
Sterling Financial Corp.* | | 3,940 | 2,443 |
Suffolk Bancorp | | 661 | 19,632 |
Sun Bancorp, Inc.* | | 1,172 | 4,394 |
Susquehanna Bancshares, Inc. | | 6,315 | 37,195 |
SVB Financial Group* | | 2,826 | 117,816 |
SY Bancorp, Inc. | | 792 | 16,909 |
Texas Capital Bancshares, Inc.* | | 2,458 | 34,314 |
Tompkins Financial Corp. | | 570 | 23,085 |
Tower Bancorp, Inc. | | 275 | 6,284 |
TowneBank | | 1,583 | 18,489 |
Trico Bancshares | | 961 | 16,001 |
Trustmark Corp. | | 4,356 | 98,184 |
UMB Financial Corp. | | 2,222 | 87,436 |
Umpqua Holdings Corp. | | 5,987 | 80,286 |
Union Bankshares Corp. | | 1,075 | 13,319 |
United Bankshares, Inc. | | 2,635 | 52,621 |
United Community Banks, Inc.* | | 5,653 | 19,164 |
United Security Bancshares | | 475 | 8,141 |
Univest Corp. of Pennsylvania | | 987 | 17,302 |
Washington Banking Co. | | 753 | 8,991 |
Washington Trust Bancorp, Inc. | | 909 | 14,162 |
Webster Financial Corp. | | 4,684 | 55,599 |
WesBanco, Inc. | | 1,582 | 19,522 |
West Bancorporation, Inc. | | 1,387 | 6,838 |
Westamerica Bancorporation | | 2,016 | 111,626 |
Western Alliance Bancorp* | | 3,621 | 13,687 |
Wilber Corp. | | 459 | 3,305 |
Wilshire Bancorp, Inc. | | 1,534 | 12,563 |
Wintrust Financial Corp. | | 1,654 | 50,927 |
Yadkin Valley Financial Corp. | | 913 | 3,342 |
| | | 3,766,320 |
| | | |
Commercial Services & Supplies - 2.4% | | | |
ABM Industries, Inc. | | 3,171 | 65,513 |
ACCO Brands Corp.* | | 3,764 | 27,402 |
American Ecology Corp. | | 1,232 | 20,993 |
American Reprographics Co.* | | 2,509 | 17,588 |
Amrep Corp.* | | 138 | 1,891 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Commercial Services & Supplies - Cont'd | | | |
APAC Customer Services, Inc.* | | 2,008 | $11,968 |
ATC Technology Corp.* | | 1,367 | 32,603 |
Bowne & Co., Inc. | | 2,221 | 14,836 |
Cenveo, Inc.* | | 3,827 | 33,486 |
Clean Harbors, Inc.* | | 1,480 | 88,223 |
Consolidated Graphics, Inc.* | | 675 | 23,639 |
Cornell Co.'s, Inc.* | | 762 | 17,297 |
Courier Corp. | | 832 | 11,856 |
Deluxe Corp. | | 3,526 | 52,150 |
EnergySolutions, Inc. | | 5,203 | 44,173 |
EnerNOC, Inc.* | | 967 | 29,387 |
Ennis, Inc. | | 1,786 | 29,987 |
Fuel Tech, Inc.* | | 1,212 | 9,902 |
G&K Services, Inc. | | 1,278 | 32,116 |
GEO Group, Inc. | | | |
Common Stock* | | 3,532 | 77,280 |
Escrow (b)* | | 100,000 | 12 |
Healthcare Services Group | | 2,987 | 64,101 |
Heritage-Crystal Clean, Inc.* | | 202 | 2,113 |
Herman Miller, Inc. | | 3,709 | 59,270 |
HNI Corp. | | 3,095 | 85,515 |
ICT Group, Inc.* | | 698 | 11,398 |
Innerworkings, Inc.* | | 1,691 | 9,977 |
Interface, Inc. | | 3,349 | 27,830 |
Kimball International, Inc., Class B | | 2,210 | 18,829 |
Knoll, Inc. | | 3,248 | 33,552 |
M&F Worldwide Corp.* | | 739 | 29,191 |
Mcgrath Rentcorp | | 1,629 | 36,424 |
Metalico, Inc.* | | 1,927 | 9,481 |
Mine Safety Appliances Co. | | 1,840 | 48,815 |
Mobile Mini, Inc.* | | 2,541 | 35,803 |
Multi-Color Corp. | | 757 | 9,243 |
North American Galvanizing & Coating, Inc.* | | 1,004 | 4,869 |
Perma-Fix Environmental Services* | | 4,267 | 9,686 |
Rollins, Inc. | | 3,024 | 58,303 |
Schawk, Inc. | | 1,200 | 16,320 |
Standard Parking Corp.* | | 515 | 8,178 |
Standard Register Co. | | 1,196 | 6,100 |
Steelcase, Inc. | | 4,927 | 31,336 |
SYKES Enterprises, Inc.* | | 2,390 | 60,873 |
Team, Inc.* | | 1,357 | 25,525 |
Tetra Tech, Inc.* | | 4,155 | 112,891 |
United Stationers, Inc.* | | 1,638 | 93,120 |
Viad Corp. | | 1,522 | 31,399 |
Waste Services, Inc.* | | 1,226 | 11,169 |
| | | 1,593,613 |
| | | |
Communications Equipment - 3.0% | | | |
3Com Corp.* | | 26,834 | 201,255 |
Acme Packet, Inc.* | | 2,681 | 29,491 |
ADC Telecommunications, Inc.* | | 6,666 | 41,396 |
Adtran, Inc. | | 3,812 | 85,961 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Communications Equipment - Cont'd | | | |
Airvana, Inc.* | | 1,921 | $14,600 |
Anaren, Inc.* | | 1,002 | 15,080 |
Arris Group, Inc.* | | 8,540 | 97,612 |
Aruba Networks, Inc.* | | 4,035 | 43,013 |
Bel Fuse, Inc., Class B | | 701 | 15,064 |
BigBand Networks, Inc.* | | 2,619 | 9,009 |
Black Box Corp. | | 1,286 | 36,445 |
Blue Coat Systems, Inc.* | | 2,724 | 77,743 |
Cogo Group, Inc.* | | 1,591 | 11,726 |
Communications Systems, Inc. | | 482 | 5,996 |
Comtech Telecommunications Corp.* | | 1,941 | 68,032 |
DG FastChannel, Inc.* | | 1,439 | 40,191 |
Digi International, Inc.* | | 1,699 | 15,495 |
Emcore Corp.* | | 5,846 | 6,255 |
EMS Technologies, Inc.* | | 1,050 | 15,225 |
Emulex Corp.* | | 5,723 | 62,381 |
Extreme Networks* | | 6,916 | 19,849 |
Globecomm Systems, Inc.* | | 1,607 | 12,567 |
Harmonic, Inc.* | | 6,897 | 43,658 |
Harris Stratex Networks, Inc.* | | 4,319 | 29,844 |
Hughes Communications, Inc.* | | 572 | 14,889 |
Infinera Corp.* | | 5,793 | 51,384 |
InterDigital, Inc.* | | 3,015 | 80,018 |
Ixia* | | 2,169 | 16,137 |
KVH Industries, Inc.* | | 1,103 | 16,269 |
Loral Space & Communications, Inc.* | | 739 | 23,360 |
Netgear, Inc.* | | 2,372 | 51,449 |
Network Equipment Technologies, Inc.* | | 2,304 | 9,331 |
Oplink Communications, Inc.* | | 1,413 | 23,159 |
Opnext, Inc.* | | 1,520 | 2,888 |
Palm, Inc.* | | 11,397 | 114,426 |
Parkervision, Inc.* | | 1,832 | 3,353 |
PC-Tel, Inc.* | | 1,456 | 8,620 |
Plantronics, Inc. | | 3,370 | 87,553 |
Polycom, Inc.* | | 5,784 | 144,426 |
Powerwave Technologies, Inc.* | | 10,470 | 13,192 |
Riverbed Technology, Inc.* | | 3,775 | 86,712 |
Seachange International, Inc.* | | 2,460 | 16,162 |
ShoreTel, Inc.* | | 3,051 | 17,635 |
Sonus Networks, Inc.* | | 15,017 | 31,686 |
Sycamore Networks, Inc. | | 1,328 | 27,768 |
Symmetricom, Inc.* | | 3,011 | 15,657 |
Tekelec* | | 4,596 | 70,227 |
Utstarcom, Inc.* | | 8,802 | 19,276 |
Viasat, Inc.* | | 1,792 | 56,950 |
| | | 2,000,415 |
| | | |
Computers & Peripherals - 0.8% | | | |
3PAR, Inc.* | | 1,894 | 22,444 |
ActivIdentity Corp.* | | 3,619 | 8,505 |
Adaptec, Inc.* | | 8,430 | 28,240 |
Avid Technology, Inc.* | | 1,946 | 24,831 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Computers & Peripherals - Cont'd | | | |
Compellent Technologies, Inc.* | | 1,125 | $25,515 |
Cray, Inc.* | | 2,516 | 16,153 |
Electronics for Imaging, Inc.* | | 3,397 | 44,195 |
Imation Corp.* | | 2,260 | 19,707 |
Immersion Corp.* | | 2,323 | 10,616 |
Intermec, Inc.* | | 4,280 | 55,041 |
Intevac, Inc.* | | 1,513 | 17,354 |
Isilon Systems, Inc.* | | 1,962 | 13,459 |
Netezza Corp.* | | 3,253 | 31,554 |
Novatel Wireless, Inc.* | | 2,100 | 16,737 |
Quantum Corp.* | | 14,503 | 42,494 |
Rimage Corp.* | | 646 | 11,202 |
Silicon Graphics International Corp.* | | 2,362 | 16,557 |
STEC, Inc.* | | 1,705 | 27,860 |
Stratasys, Inc.* | | 1,396 | 24,123 |
Super Micro Computer, Inc.* | | 1,763 | 19,604 |
Synaptics, Inc.* | | 2,366 | 72,518 |
| | | 548,709 |
| | | |
Construction & Engineering - 0.9% | | | |
Argan, Inc.* | | 585 | 8,418 |
Comfort Systems USA, Inc. | | 2,669 | 32,936 |
Dycom Industries, Inc.* | | 2,691 | 21,609 |
EMCOR Group, Inc.* | | 4,536 | 122,018 |
Furmanite Corp.* | | 2,902 | 11,057 |
Granite Construction, Inc. | | 2,364 | 79,572 |
Great Lakes Dredge & Dock Corp. | | 2,761 | 17,891 |
Insituform Technologies, Inc.* | | 2,679 | 60,867 |
Integrated Electrical Services, Inc.* | | 617 | 3,609 |
Layne Christensen Co.* | | 1,408 | 40,424 |
MasTec, Inc.* | | 3,594 | 44,925 |
Michael Baker Corp.* | | 583 | 24,136 |
MYR Group, Inc.* | | 1,189 | 21,497 |
Northwest Pipe Co.* | | 689 | 18,507 |
Orion Marine Group, Inc.* | | 1,847 | 38,898 |
Pike Electric Corp.* | | 1,145 | 10,626 |
Primoris Services Corp. | | 644 | 5,133 |
Sterling Construction Co., Inc.* | | 919 | 17,626 |
Tutor Perini Corp.* | | 1,778 | 32,146 |
| | | 611,895 |
| | | |
Construction Materials - 0.1% | | | |
Headwaters, Inc.* | | 4,077 | 26,582 |
Texas Industries, Inc. | | 1,630 | 57,034 |
United States Lime & Minerals, Inc.* | | 143 | 4,938 |
US Concrete, Inc.* | | 3,167 | 2,882 |
| | | 91,436 |
| | | |
Consumer Finance - 0.5% | | | |
Advance America Cash Advance Centers, Inc. | | 3,524 | 19,593 |
Cardtronics, Inc.* | | 1,000 | 11,070 |
Cash America International, Inc. | | 2,037 | 71,213 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Consumer Finance - Cont'd | | | |
CompuCredit Holdings Corp.* | | 1,284 | $4,276 |
Credit Acceptance Corp.* | | 415 | 17,471 |
Dollar Financial Corp.* | | 1,662 | 39,323 |
Ezcorp, Inc.* | | 3,122 | 53,730 |
First Cash Financial Services, Inc.* | | 1,531 | 33,973 |
First Marblehead Corp.* | | 4,239 | 9,029 |
Nelnet, Inc. | | 1,394 | 24,019 |
QC Holdings, Inc. | | 270 | 1,299 |
Rewards Network, Inc. | | 504 | 6,371 |
World Acceptance Corp.* | | 1,122 | 40,201 |
| | | 331,568 |
| | | |
Containers & Packaging - 0.5% | | | |
AEP Industries, Inc.* | | 367 | 14,049 |
Boise, Inc.* | | 2,019 | 10,721 |
Bway Holding Co.* | | 596 | 11,455 |
Graphic Packaging Holding Co.* | | 7,706 | 26,740 |
Myers Industries, Inc. | | 2,159 | 19,647 |
Rock-Tenn Co. | | 2,647 | 133,435 |
Silgan Holdings, Inc. | | 1,845 | 106,788 |
| | | 322,835 |
| | | |
Distributors - 0.0% | | | |
Audiovox Corp.* | | 1,390 | 9,855 |
Core-Mark Holding Co., Inc.* | | 670 | 22,083 |
| | | 31,938 |
| | | |
Diversified Consumer Services - 1.1% | | | |
American Public Education, Inc.* | | 1,253 | 43,053 |
Bridgepoint Education, Inc.* | | 1,095 | 16,447 |
Capella Education Co.* | | 1,006 | 75,752 |
ChinaCast Education Corp.* | | 2,320 | 17,539 |
Coinstar, Inc.* | | 2,083 | 57,866 |
Corinthian Colleges, Inc.* | | 5,523 | 76,052 |
CPI Corp. | | 396 | 4,863 |
Grand Canyon Education, Inc.* | | 1,088 | 20,683 |
Jackson Hewitt Tax Service, Inc.* | | 2,266 | 9,970 |
K12, Inc.* | | 1,628 | 32,999 |
Learning Tree International, Inc.* | | 519 | 6,197 |
Lincoln Educational Services Corp.* | | 765 | 16,577 |
Mac-Gray Corp.* | | 905 | 9,321 |
Matthews International Corp. | | 2,100 | 74,403 |
Nobel Learning Communities, Inc.* | | 322 | 2,444 |
Pre-Paid Legal Services, Inc.* | | 508 | 20,869 |
Princeton Review, Inc.* | | 1,065 | 4,324 |
Regis Corp. | | 3,940 | 61,346 |
Sotheby's | | 4,616 | 103,768 |
Steiner Leisure Ltd.* | | 1,008 | 40,078 |
Stewart Enterprises, Inc. | | 5,547 | 28,567 |
Universal Technical Institute, Inc.* | | 1,363 | 27,533 |
| | | 750,651 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Diversified Financial Services - 0.5% | | | |
Asset Acceptance Capital Corp.* | | 1,189 | $8,061 |
California First National Bancorp | | 145 | 1,894 |
Compass Diversified Holdings | | 1,641 | 20,939 |
Encore Capital Group, Inc.* | | 930 | 16,182 |
Financial Federal Corp. | | 1,866 | 51,315 |
Life Partners Holdings, Inc. | | 591 | 12,523 |
MarketAxess Holdings, Inc. | | 2,178 | 30,274 |
Medallion Financial Corp. | | 1,184 | 9,673 |
NewStar Financial, Inc.* | | 1,906 | 7,472 |
PHH Corp.* | | 3,753 | 60,461 |
Pico Holdings, Inc.* | | 1,561 | 51,092 |
Portfolio Recovery Associates, Inc.* | | 1,061 | 47,618 |
Primus Guaranty Ltd.* | | 1,277 | 3,895 |
Resource America, Inc. | | 783 | 3,163 |
| | | 324,562 |
| | | |
Diversified Telecommunication Services - 0.7% | | | |
AboveNet, Inc.* | | 852 | 55,414 |
Alaska Communications Systems Group, Inc. | | 3,177 | 25,352 |
Atlantic Tele-Network, Inc. | | 617 | 33,941 |
Cbeyond, Inc.* | | 1,598 | 25,169 |
Cincinnati Bell, Inc.* | | 14,823 | 51,139 |
Cogent Communications Group, Inc.* | | 3,058 | 30,152 |
Consolidated Communications Holdings, Inc. | | 1,608 | 28,140 |
General Communication, Inc.* | | 2,900 | 18,502 |
Global Crossing Ltd.* | | 2,019 | 28,771 |
HickoryTech Corp. | | 1,030 | 9,095 |
inContact, Inc.* | | 2,138 | 6,264 |
Iowa Telecommunications Services, Inc. | | 2,351 | 39,403 |
Neutral Tandem, Inc.* | | 2,264 | 51,506 |
PAETEC Holding Corp.* | | 8,470 | 35,151 |
Premiere Global Services, Inc.* | | 4,193 | 34,592 |
SureWest Communications* | | 1,128 | 11,235 |
| | | 483,826 |
| | | |
Electric Utilities - 1.2% | | | |
Allete, Inc. | | 2,023 | 66,112 |
Central Vermont Public Service Corp. | | 824 | 17,139 |
Cleco Corp. | | 4,168 | 113,911 |
El Paso Electric Co.* | | 3,099 | 62,848 |
Empire District Electric Co. | | 2,363 | 44,259 |
IDACORP, Inc. | | 3,253 | 103,933 |
MGE Energy, Inc. | | 1,594 | 56,970 |
PNM Resources, Inc. | | 5,977 | 75,609 |
Portland General Electric Co. | | 5,184 | 105,805 |
UIL Holdings Corp. | | 2,024 | 56,834 |
Unisource Energy Corp. | | 2,457 | 79,091 |
Unitil Corp. | | 726 | 16,684 |
| | | 799,195 |
| | | |
Electrical Equipment - 2.2% | | | |
A.O. Smith Corp. | | 1,514 | 65,692 |
Acuity Brands, Inc. | | 2,973 | 105,958 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Electrical Equipment - Cont'd | | | |
Advanced Battery Technologies, Inc.* | | 3,310 | $13,240 |
American Superconductor Corp.* | | 2,996 | 122,536 |
AZZ, Inc.* | | 892 | 29,168 |
Baldor Electric Co. | | 3,211 | 90,197 |
Belden, Inc. | | 3,216 | 70,495 |
Brady Corp. | | 3,305 | 99,183 |
Broadwind Energy, Inc.* | | 2,478 | 20,047 |
Chase Corp. | | 480 | 5,669 |
China BAK Battery, Inc.* | | 2,409 | 6,697 |
Encore Wire Corp. | | 1,252 | 26,380 |
Ener1, Inc.* | | 3,304 | 20,947 |
Energy Conversion Devices, Inc.* | | 3,308 | 34,966 |
EnerSys* | | 2,784 | 60,886 |
Franklin Electric Co., Inc. | | 1,593 | 46,324 |
FuelCell Energy, Inc.* | | 5,465 | 20,548 |
Fushi Copperweld, Inc.* | | 1,149 | 11,628 |
GrafTech International Ltd.* | | 8,291 | 128,925 |
GT Solar International, Inc.* | | 2,291 | 12,738 |
Harbin Electric, Inc.* | | 894 | 18,363 |
II-VI, Inc.* | | 1,792 | 56,986 |
LaBarge, Inc.* | | 972 | 11,713 |
Lihua International, Inc.* | | 220 | 2,299 |
LSI Industries, Inc. | | 1,507 | 11,875 |
Microvision, Inc.* | | 4,522 | 14,335 |
Orion Energy Systems, Inc.* | | 723 | 3,174 |
Polypore International, Inc.* | | 1,562 | 18,588 |
Powell Industries, Inc.* | | 590 | 18,603 |
Power-One, Inc.* | | 5,945 | 25,861 |
PowerSecure International, Inc.* | | 1,349 | 9,726 |
Preformed Line Products Co. | | 155 | 6,789 |
Regal-Beloit Corp. | | 2,472 | 128,396 |
SatCon Technology Corp.* | | 4,075 | 11,491 |
Ultralife Corp.* | | 1,001 | 4,324 |
Valence Technology, Inc.* | | 4,040 | 3,676 |
Vicor Corp.* | | 1,546 | 14,378 |
Woodward Governor Co. | | 4,159 | 107,177 |
| | | 1,459,978 |
| | | |
Electronic Equipment & Instruments - 2.1% | | | |
Agilysys, Inc. | | 1,051 | 9,564 |
Anixter International, Inc.* | | 2,055 | 96,790 |
Benchmark Electronics, Inc.* | | 4,504 | 85,171 |
Brightpoint, Inc.* | | 3,455 | 25,394 |
Checkpoint Systems, Inc.* | | 2,682 | 40,901 |
China Security & Surveillance Technology, Inc.* | | 3,042 | 23,241 |
Cogent, Inc.* | | 3,008 | 31,253 |
Cognex Corp. | | 2,736 | 48,482 |
Coherent, Inc.* | | 1,494 | 44,417 |
Comverge, Inc.* | | 1,315 | 14,781 |
CPI International, Inc.* | | 510 | 6,752 |
CTS Corp. | | 2,326 | 22,376 |
Daktronics, Inc. | | 2,468 | 22,730 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Electronic Equipment & Instruments - Cont'd | | | |
DDi Corp.* | | 1,132 | $5,535 |
DTS, Inc.* | | 1,199 | 41,018 |
Echelon Corp.* | | 2,290 | 26,472 |
Electro Rent Corp. | | 1,223 | 14,113 |
Electro Scientific Industries, Inc.* | | 1,883 | 20,374 |
FARO Technologies, Inc.* | | 1,156 | 24,785 |
ICx Technologies, Inc.* | | 1,092 | 10,396 |
Insight Enterprises, Inc.* | | 3,152 | 35,996 |
IPG Photonics Corp.* | | 1,532 | 25,646 |
L-1 Identity Solutions, Inc.* | | 5,161 | 38,656 |
Littelfuse, Inc.* | | 1,499 | 48,193 |
Maxwell Technologies, Inc.* | | 1,454 | 25,939 |
Measurement Specialties, Inc.* | | 1,150 | 11,558 |
Mercury Computer Systems, Inc.* | | 1,566 | 17,242 |
Methode Electronics, Inc. | | 2,606 | 22,620 |
MTS Systems Corp. | | 1,156 | 33,223 |
Multi-Fineline Electronix, Inc.* | | 692 | 19,632 |
Newport Corp.* | | 2,495 | 22,929 |
OSI Systems, Inc.* | | 1,075 | 29,326 |
PAR Technology Corp.* | | 642 | 3,711 |
Park Electrochemical Corp. | | 1,494 | 41,294 |
PC Connection, Inc.* | | 756 | 5,103 |
PC Mall, Inc.* | | 882 | 4,604 |
Plexus Corp.* | | 2,723 | 77,605 |
Radisys Corp.* | | 1,788 | 17,075 |
RAE Systems, Inc.* | | 3,207 | 3,528 |
Rofin-Sinar Technologies, Inc.* | | 1,995 | 47,102 |
Rogers Corp.* | | 1,083 | 32,826 |
Scansource, Inc.* | | 1,829 | 48,834 |
Smart Modular Technologies WWH, Inc.* | | 2,531 | 15,920 |
Spectrum Control, Inc.* | | 993 | 9,404 |
SYNNEX Corp.* | | 1,344 | 41,207 |
Technitrol, Inc. | | 2,828 | 12,387 |
TTM Technologies, Inc.* | | 2,984 | 34,406 |
Universal Display Corp.* | | 2,015 | 24,905 |
X-Rite, Inc.* | | 2,048 | 4,465 |
Zygo Corp.* | | 1,269 | 8,540 |
| | | 1,378,421 |
| | | |
Energy Equipment & Services - 1.7% | | | |
Allis-Chalmers Energy, Inc.* | | 4,233 | 15,959 |
Basic Energy Services, Inc.* | | 1,787 | 15,904 |
Bolt Technology Corp.* | | 687 | 7,571 |
Boots & Coots, Inc.* | | 6,175 | 10,189 |
Bristow Group, Inc.* | | 2,462 | 94,664 |
BronCo Drilling Co., Inc.* | | 1,634 | 8,284 |
Cal Dive International, Inc.* | | 3,095 | 23,398 |
CARBO Ceramics, Inc. | | 1,329 | 90,598 |
Complete Production Services, Inc.* | | 4,025 | 52,325 |
Dawson Geophysical Co.* | | 533 | 12,318 |
Dril-Quip, Inc.* | | 2,007 | 113,355 |
ENGlobal Corp.* | | 1,283 | 4,016 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Energy Equipment & Services - Cont'd | | | |
Geokinetics, Inc.* | | 381 | $3,665 |
Global Industries Ltd.* | | 6,882 | 49,069 |
Gulf Island Fabrication, Inc. | | 845 | 17,770 |
Gulfmark Offshore, Inc.* | | 1,570 | 44,447 |
Hercules Offshore, Inc.* | | 7,737 | 36,983 |
Hornbeck Offshore Services, Inc.* | | 1,580 | 36,782 |
ION Geophysical Corp.* | | 7,305 | 43,246 |
Key Energy Services, Inc.* | | 8,527 | 74,952 |
Lufkin Industries, Inc. | | 1,026 | 75,103 |
Matrix Service Co.* | | 1,807 | 19,245 |
Natural Gas Services Group, Inc.* | | 835 | 15,740 |
Newpark Resources* | | 6,117 | 25,875 |
OYO Geospace Corp.* | | 325 | 13,939 |
Parker Drilling Co.* | | 8,293 | 41,050 |
PHI, Inc.* | | 914 | 18,920 |
Pioneer Drilling Co.* | | 2,949 | 23,297 |
RPC, Inc. | | 1,943 | 20,207 |
Sulphco, Inc.* | | 4,243 | 2,843 |
Superior Well Services, Inc.* | | 962 | 13,718 |
T-3 Energy Services, Inc.* | | 868 | 22,134 |
Tetra Technologies, Inc.* | | 5,199 | 57,605 |
TGC Industries, Inc.* | | 1,044 | 4,082 |
Union Drilling, Inc.* | | 688 | 4,300 |
Vantage Drilling Co.* | | 2,359 | 3,798 |
Willbros Group, Inc.* | | 2,852 | 48,113 |
| | | 1,165,464 |
| | | |
Food & Staples Retailing - 0.8% | | | |
Andersons, Inc. | | 1,252 | 32,327 |
Arden Group, Inc. | | 92 | 8,797 |
Casey's General Stores, Inc. | | 3,504 | 111,848 |
Diedrich Coffee, Inc.* | | 238 | 8,294 |
Great Atlantic & Pacific Tea Co.* | | 2,321 | 27,365 |
Ingles Markets, Inc. | | 1,002 | 15,160 |
Nash Finch Co. | | 885 | 32,825 |
Pantry, Inc.* | | 1,631 | 22,165 |
Pricesmart, Inc. | | 1,150 | 23,506 |
Ruddick Corp. | | 2,966 | 76,315 |
Spartan Stores, Inc. | | 1,655 | 23,650 |
Susser Holdings Corp.* | | 620 | 5,326 |
United Natural Foods, Inc.* | | 2,967 | 79,337 |
Village Super Market, Inc. | | 430 | 11,748 |
Weis Markets, Inc. | | 764 | 27,779 |
Winn-Dixie Stores, Inc.* | | 3,758 | 37,730 |
| | | 544,172 |
| | | |
Food Products - 1.4% | | | |
AgFeed Industries, Inc.* | | 1,582 | 7,910 |
Alico, Inc. | | 267 | 7,599 |
American Dairy, Inc.* | | 566 | 12,271 |
American Italian Pasta Co.* | | 1,446 | 50,306 |
B&G Foods, Inc. | | 1,602 | 14,706 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Food Products - Cont'd | | | |
Calavo Growers, Inc. | | 718 | $12,206 |
Cal-Maine Foods, Inc. | | 1,004 | 34,216 |
Chiquita Brands International, Inc.* | | 3,174 | 57,259 |
Darling International, Inc.* | | 5,673 | 47,540 |
Diamond Foods, Inc. | | 1,173 | 41,688 |
Dole Food Co., Inc.* | | 2,481 | 30,789 |
Farmer Bros Co. | | 538 | 10,620 |
Fresh Del Monte Produce, Inc.* | | 2,826 | 62,455 |
Griffin Land & Nurseries, Inc. | | 267 | 7,778 |
Hain Celestial Group, Inc.* | | 2,807 | 47,747 |
Harbinger Group, Inc.* | | 714 | 5,012 |
HQ Sustainable Maritime Industries, Inc.* | | 532 | 3,745 |
Imperial Sugar Co. | | 949 | 16,551 |
J&J Snack Foods Corp. | | 977 | 39,041 |
Lancaster Colony Corp. | | 1,325 | 65,853 |
Lance, Inc. | | 1,981 | 52,100 |
Lifeway Foods, Inc.* | | 385 | 4,574 |
Omega Protein Corp.* | | 1,463 | 6,379 |
Overhill Farms, Inc.* | | 1,250 | 6,075 |
Sanderson Farms, Inc. | | 1,403 | 59,150 |
Seneca Foods Corp.* | | 510 | 12,174 |
Smart Balance, Inc.* | | 4,322 | 25,932 |
Synutra International, Inc.* | | 1,420 | 19,184 |
Tootsie Roll Industries, Inc. | | 1,667 | 45,642 |
TreeHouse Foods, Inc.* | | 2,178 | 84,637 |
Zhongpin, Inc.* | | 1,470 | 22,947 |
| | | 914,086 |
| | | |
Gas Utilities - 1.2% | | | |
Chesapeake Utilities Corp. | | 645 | 20,672 |
Laclede Group, Inc. | | 1,529 | 51,634 |
New Jersey Resources Corp. | | 2,908 | 108,759 |
Nicor, Inc. | | 3,120 | 131,352 |
Northwest Natural Gas Co. | | 1,831 | 82,468 |
Piedmont Natural Gas Co., Inc. | | 5,070 | 135,624 |
South Jersey Industries, Inc. | | 2,055 | 78,460 |
Southwest Gas Corp. | | 3,085 | 88,015 |
WGL Holdings, Inc. | | 3,460 | 116,048 |
| | | 813,032 |
| | | |
Health Care Equipment & Supplies - 3.5% | | | |
Abaxis, Inc.* | | 1,512 | 38,632 |
Abiomed, Inc.* | | 2,131 | 18,625 |
Accuray, Inc.* | | 2,876 | 16,134 |
AGA Medical Holdings, Inc.* | | 952 | 14,061 |
Align Technology, Inc.* | | 4,017 | 71,583 |
Alphatec Holdings, Inc.* | | 1,987 | 10,611 |
American Medical Systems Holdings, Inc.* | | 5,093 | 98,244 |
Analogic Corp. | | 883 | 34,004 |
Angiodynamics, Inc.* | | 1,688 | 27,143 |
Atrion Corp. | | 120 | 18,686 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Health Care Equipment & Supplies - Cont'd | | | |
ATS Medical, Inc.* | | 3,743 | $12,090 |
Bovie Medical Corp.* | | 1,345 | 10,504 |
Cantel Medical Corp.* | | 865 | 17,456 |
Cardiac Science Corp.* | | 1,550 | 3,457 |
Cardiovascular Systems, Inc.* | | 710 | 3,259 |
Conceptus, Inc.* | | 2,213 | 41,516 |
Conmed Corp.* | | 2,005 | 45,714 |
CryoLife, Inc.* | | 2,218 | 14,240 |
Cutera, Inc.* | | 1,050 | 8,936 |
Cyberonics, Inc.* | | 1,886 | 38,550 |
Cynosure, Inc.* | | 762 | 8,755 |
Delcath Systems, Inc.* | | 1,790 | 9,201 |
DexCom, Inc.* | | 3,094 | 25,000 |
Electro-Optical Sciences, Inc.* | | 1,393 | 14,431 |
Endologix, Inc.* | | 3,467 | 18,306 |
EnteroMedics, Inc.* | | 1,203 | 674 |
ev3, Inc.* | | 5,149 | 68,688 |
Exactech, Inc.* | | 562 | 9,728 |
Greatbatch, Inc.* | | 1,681 | 32,326 |
Haemonetics Corp.* | | 1,770 | 97,615 |
Hansen Medical, Inc.* | | 1,359 | 4,118 |
HeartWare International, Inc.* | | 368 | 13,053 |
Home Diagnostics, Inc.* | | 913 | 5,569 |
ICU Medical, Inc.* | | 878 | 31,994 |
Immucor, Inc.* | | 4,860 | 98,366 |
Insulet Corp.* | | 2,389 | 34,115 |
Integra LifeSciences Holdings Corp.* | | 1,304 | 47,961 |
Invacare Corp. | | 1,994 | 49,730 |
IRIS International, Inc.* | | 1,248 | 15,425 |
Kensey Nash Corp.* | | 576 | 14,688 |
MAKO Surgical Corp.* | | 1,032 | 11,455 |
Masimo Corp.* | | 3,499 | 106,440 |
Medical Action Industries, Inc.* | | 1,125 | 18,067 |
Meridian Bioscience, Inc. | | 2,792 | 60,168 |
Merit Medical Systems, Inc.* | | 2,024 | 39,043 |
Micrus Endovascular Corp.* | | 1,240 | 18,612 |
Natus Medical, Inc.* | | 2,021 | 29,891 |
Neogen Corp.* | | 1,366 | 32,251 |
NuVasive, Inc.* | | 2,516 | 80,462 |
NxStage Medical, Inc.* | | 1,585 | 13,235 |
OraSure Technologies, Inc.* | | 3,551 | 18,039 |
Orthofix International NV* | | 1,180 | 36,545 |
Orthovita, Inc.* | | 4,562 | 16,013 |
Palomar Medical Technologies, Inc.* | | 1,454 | 14,656 |
Quidel Corp.* | | 1,778 | 24,501 |
Rochester Medical Corp.* | | 791 | 8,804 |
Rockwell Medical Technologies, Inc.* | | 1,116 | 8,582 |
RTI Biologics, Inc.* | | 4,061 | 15,594 |
Sirona Dental Systems, Inc.* | | 1,170 | 37,136 |
Somanetics Corp.* | | 910 | 15,971 |
SonoSite, Inc.* | | 1,183 | 27,954 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Health Care Equipment & Supplies - Cont'd | | | |
Spectranetics Corp.* | | 2,522 | $17,553 |
Stereotaxis, Inc.* | | 2,011 | 7,903 |
STERIS Corp. | | 4,034 | 112,831 |
SurModics, Inc.* | | 1,133 | 25,674 |
Symmetry Medical, Inc.* | | 2,600 | 20,956 |
Synovis Life Technologies, Inc.* | | 796 | 10,276 |
Thoratec Corp.* | | 3,896 | 104,880 |
TomoTherapy, Inc.* | | 3,263 | 12,726 |
TranS1, Inc.* | | 973 | 3,843 |
Utah Medical Products, Inc. | | 254 | 7,447 |
Vascular Solutions, Inc.* | | 1,278 | 10,722 |
Volcano Corp.* | | 3,455 | 60,048 |
West Pharmaceutical Services, Inc. | | 2,261 | 88,631 |
Wright Medical Group, Inc.* | | 2,724 | 51,620 |
Young Innovations, Inc. | | 430 | 10,655 |
Zoll Medical Corp.* | | 1,532 | 40,935 |
| | | 2,363,307 |
| | | |
Health Care Providers & Services - 3.7% | | | |
Air Methods Corp.* | | 746 | 25,081 |
Alliance Imaging, Inc.* | | 1,964 | 11,214 |
Allied Healthcare International, Inc.* | | 3,553 | 10,339 |
Allion Healthcare, Inc.* | | 1,570 | 10,299 |
Almost Family, Inc.* | | 508 | 20,081 |
Amedisys, Inc.* | | 1,887 | 91,633 |
America Service Group, Inc. | | 652 | 10,347 |
American Caresource Holdings, Inc.* | | 836 | 2,006 |
American Dental Partners, Inc.* | | 1,023 | 13,197 |
AMERIGROUP Corp.* | | 3,649 | 98,377 |
AMN Healthcare Services, Inc.* | | 2,252 | 20,403 |
AmSurg Corp.* | | 2,117 | 46,616 |
Assisted Living Concepts, Inc.* | | 694 | 18,301 |
Bio-Reference Laboratories, Inc.* | | 814 | 31,901 |
BioScrip, Inc.* | | 2,676 | 22,371 |
Capital Senior Living Corp.* | | 1,797 | 9,021 |
CardioNet, Inc.* | | 1,876 | 11,143 |
Catalyst Health Solutions, Inc.* | | 2,530 | 92,269 |
Centene Corp.* | | 2,972 | 62,917 |
Chemed Corp. | | 1,559 | 74,785 |
Chindex International, Inc.* | | 880 | 12,434 |
Clarient, Inc.* | | 2,361 | 6,257 |
Continucare Corp.* | | 2,312 | 10,103 |
Corvel Corp.* | | 513 | 17,206 |
Cross Country Healthcare, Inc.* | | 2,311 | 22,902 |
Emergency Medical Services Corp.* | | 2,021 | 109,437 |
Emeritus Corp.* | | 1,367 | 25,631 |
Ensign Group, Inc. | | 663 | 10,190 |
Genoptix, Inc.* | | 1,162 | 41,286 |
Gentiva Health Services, Inc.* | | 1,998 | 53,966 |
Hanger Orthopedic Group, Inc.* | | 1,742 | 24,092 |
Health Grades, Inc.* | | 1,877 | 8,052 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Health Care Providers & Services - Cont'd | | | |
Healthsouth Corp.* | | 6,382 | $119,790 |
HealthSpring, Inc.* | | 3,380 | 59,522 |
Healthways, Inc.* | | 2,328 | 42,696 |
HMS Holdings Corp.* | | 1,782 | 86,766 |
inVentiv Health, Inc.* | | 2,308 | 37,320 |
IPC The Hospitalist Co., Inc.* | | 1,110 | 36,909 |
Kindred Healthcare, Inc.* | | 2,688 | 49,620 |
Landauer, Inc. | | 643 | 39,480 |
LCA-Vision, Inc.* | | 1,300 | 6,656 |
LHC Group, Inc.* | | 1,073 | 36,064 |
Magellan Health Services, Inc.* | | 2,434 | 99,137 |
Medcath Corp.* | | 1,026 | 8,116 |
Metropolitan Health Networks, Inc.* | | 3,191 | 6,350 |
Molina Healthcare, Inc.* | | 916 | 20,949 |
MWI Veterinary Supply, Inc.* | | 794 | 29,934 |
National Healthcare Corp. | | 552 | 19,933 |
National Research Corp. | | 137 | 2,836 |
Nighthawk Radiology Holdings, Inc.* | | 1,459 | 6,609 |
NovaMed, Inc.* | | 1,577 | 6,119 |
Odyssey HealthCare, Inc.* | | 2,272 | 35,398 |
Owens & Minor, Inc. | | 2,877 | 123,510 |
PharMerica Corp.* | | 2,231 | 35,428 |
Providence Service Corp.* | | 729 | 11,518 |
PSS World Medical, Inc.* | | 4,097 | 92,469 |
Psychiatric Solutions, Inc.* | | 3,882 | 82,066 |
RadNet, Inc.* | | 1,700 | 3,468 |
RehabCare Group, Inc.* | | 1,691 | 51,457 |
Res-Care, Inc.* | | 1,816 | 20,339 |
Select Medical Holdings Corp.* | | 2,338 | 24,830 |
Skilled Healthcare Group, Inc.* | | 1,394 | 10,385 |
Sun Healthcare Group, Inc.* | | 3,148 | 28,867 |
Sunrise Senior Living, Inc.* | | 3,577 | 11,518 |
Triple-S Management Corp., Class B* | | 1,418 | 24,957 |
U.S. Physical Therapy, Inc.* | | 799 | 13,527 |
Universal American Corp.* | | 1,866 | 21,832 |
Virtual Radiologic Corp.* | | 557 | 7,107 |
WellCare Health Plans, Inc.* | | 2,913 | 107,082 |
| | | 2,444,421 |
| | | |
Health Care Technology - 0.7% | | | |
AMICAS, Inc.* | | 2,782 | 15,134 |
athenahealth, Inc.* | | 2,311 | 104,550 |
Computer Programs & Systems, Inc. | | 715 | 32,926 |
Eclipsys Corp.* | | 3,876 | 71,783 |
MedAssets, Inc.* | | 2,722 | 57,734 |
Medidata Solutions, Inc.* | | 550 | 8,580 |
MedQuist, Inc. | | 724 | 4,844 |
Merge Healthcare, Inc.* | | 2,049 | 6,885 |
Omnicell, Inc.* | | 2,179 | 25,472 |
Phase Forward, Inc.* | | 2,976 | 45,682 |
Quality Systems, Inc. | | 1,627 | 102,159 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Health Care Technology - Cont'd | | | |
Transcend Services, Inc.* | | 495 | $10,573 |
Vital Images, Inc.* | | 993 | 12,601 |
| | | 498,923 |
| | | |
Hotels, Restaurants & Leisure - 2.4% | | | |
AFC Enterprises, Inc.* | | 1,734 | 14,149 |
Ambassadors Group, Inc. | | 1,297 | 17,237 |
Ameristar Casinos, Inc. | | 1,765 | 26,881 |
Bally Technologies, Inc.* | | 3,758 | 155,168 |
Benihana, Inc.* | | 1,039 | 3,938 |
BJ's Restaurants, Inc.* | | 1,387 | 26,103 |
Bluegreen Corp.* | | 1,023 | 2,476 |
Bob Evans Farms, Inc. | | 2,118 | 61,316 |
Buffalo Wild Wings, Inc.* | | 1,243 | 50,056 |
California Pizza Kitchen, Inc.* | | 1,333 | 17,929 |
Caribou Coffee Co., Inc.* | | 540 | 4,169 |
Carrols Restaurant Group, Inc.* | | 890 | 6,292 |
CEC Entertainment, Inc.* | | 1,589 | 50,721 |
Cheesecake Factory, Inc.* | | 4,148 | 89,555 |
Churchill Downs, Inc. | | 656 | 24,502 |
CKE Restaurants, Inc. | | 3,371 | 28,519 |
Cracker Barrel Old Country Store, Inc. | | 1,561 | 59,302 |
Denny's Corp.* | | 6,630 | 14,520 |
DineEquity, Inc.* | | 1,211 | 29,415 |
Domino's Pizza, Inc.* | | 2,541 | 21,294 |
Dover Downs Gaming & Entertainment, Inc. | | 975 | 3,686 |
Einstein Noah Restaurant Group, Inc.* | | 351 | 3,450 |
Frisch's Restaurants, Inc. | | 176 | 4,198 |
Gaylord Entertainment Co.* | | 2,652 | 52,377 |
Great Wolf Resorts, Inc.* | | 2,359 | 5,591 |
Interval Leisure Group, Inc.* | | 2,730 | 34,043 |
Isle of Capri Casinos, Inc.* | | 1,259 | 9,417 |
Jack in the Box, Inc.* | | 3,939 | 77,480 |
Krispy Kreme Doughnuts, Inc.* | | 4,485 | 13,231 |
Lakes Entertainment, Inc.* | | 1,479 | 3,712 |
Landry's Restaurants, Inc.* | | 505 | 10,751 |
Life Time Fitness, Inc.* | | 2,778 | 69,256 |
Luby's, Inc.* | | 1,719 | 6,326 |
Marcus Corp. | | 1,385 | 17,756 |
McCormick & Schmick's Seafood Restaurants, Inc.* | | 1,172 | 8,157 |
Monarch Casino & Resort, Inc.* | | 614 | 4,973 |
Morgans Hotel Group Co.* | | 1,503 | 6,809 |
Multimedia Games, Inc.* | | 2,104 | 12,645 |
O'Charleys, Inc.* | | 1,444 | 9,458 |
Orient-Express Hotels Ltd.* | | 5,289 | 53,630 |
Papa John's International, Inc.* | | 1,508 | 35,227 |
Peet's Coffee & Tea, Inc.* | | 786 | 26,197 |
PF Chang's China Bistro, Inc.* | | 1,636 | 62,021 |
Pinnacle Entertainment, Inc.* | | 4,145 | 37,222 |
Red Lion Hotels Corp.* | | 1,051 | 5,192 |
Red Robin Gourmet Burgers, Inc.* | | 1,071 | 19,171 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Hotels, Restaurants & Leisure - Cont'd | | | |
Ruby Tuesday, Inc.* | | 4,037 | $29,066 |
Ruth's Hospitality Group, Inc.* | | 1,602 | 3,348 |
Shuffle Master, Inc.* | | 3,701 | 30,496 |
Sonic Corp.* | | 4,181 | 42,103 |
Speedway Motorsports, Inc. | | 901 | 15,876 |
Steak N Shake Co.* | | 84 | 27,226 |
Texas Roadhouse, Inc.* | | 3,450 | 38,743 |
Town Sports International Holdings, Inc.* | | 1,394 | 3,248 |
Universal Travel Group* | | 792 | 8,031 |
Vail Resorts, Inc.* | | 2,030 | 76,734 |
Youbet.com, Inc.* | | 2,368 | 6,796 |
| | | 1,577,185 |
| | | |
Household Durables - 1.3% | | | |
American Greetings Corp. | | 2,720 | 59,269 |
Beazer Homes USA, Inc.* | | 3,012 | 14,578 |
Blyth, Inc. | | 407 | 13,724 |
Brookfield Homes Corp.* | | 809 | 6,472 |
Cavco Industries, Inc.* | | 516 | 18,535 |
CSS Industries, Inc. | | 519 | 10,089 |
Ethan Allen Interiors, Inc. | | 1,808 | 24,263 |
Furniture Brands International, Inc.* | | 3,311 | 18,078 |
Helen of Troy Ltd.* | | 2,061 | 50,412 |
Hooker Furniture Corp. | | 751 | 9,290 |
Hovnanian Enterprises, Inc.* | | 3,696 | 14,193 |
iRobot Corp.* | | 1,426 | 25,098 |
La-Z-Boy, Inc.* | | 3,552 | 33,850 |
M/I Homes, Inc.* | | 1,117 | 11,606 |
Meritage Homes Corp.* | | 2,257 | 43,628 |
National Presto Industries, Inc. | | 333 | 36,373 |
NIVS IntelliMedia Technology Group, Inc.* | | 646 | 1,667 |
Ryland Group, Inc. | | 2,970 | 58,509 |
Sealy Corp.* | | 3,443 | 10,880 |
Skyline Corp. | | 544 | 10,010 |
Standard Pacific Corp.* | | 6,962 | 26,038 |
Stanley Furniture Co., Inc.* | | 816 | 8,282 |
Tempur-Pedic International, Inc.* | | 5,168 | 122,120 |
Tupperware Brands Corp. | | 4,322 | 201,275 |
Universal Electronics, Inc.* | | 940 | 21,827 |
| | | 850,066 |
| | | |
Household Products - 0.1% | | | |
Central Garden and Pet Co.* | | 4,290 | 42,643 |
Oil-Dri Corp. of America | | 406 | 6,293 |
Orchids Paper Products Co.* | | 383 | 7,668 |
WD-40 Co. | | 1,143 | 36,987 |
| | | 93,591 |
| | | |
Independent Power Producers & Energy Traders - 0.0% | | | |
US Geothermal, Inc.* | | 4,942 | 7,561 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Industrial Conglomerates - 0.3% | | | |
Otter Tail Corp. | | 2,447 | $60,686 |
Raven Industries, Inc. | | 1,172 | 37,234 |
Seaboard Corp. | | 23 | 31,027 |
Standex International Corp. | | 853 | 17,137 |
Tredegar Corp. | | 2,046 | 32,368 |
United Capital Corp.* | | 143 | 3,406 |
| | | 181,858 |
| | | |
Insurance - 3.1% | | | |
AMBAC Financial Group, Inc.* | | 21,026 | 17,452 |
American Equity Investment Life Holding Co. | | 4,252 | 31,635 |
American Physicians Capital, Inc. | | 665 | 20,163 |
American Physicians Service Group, Inc. | | 503 | 11,604 |
American Safety Insurance Holdings Ltd.* | | 593 | 8,569 |
Amerisafe, Inc.* | | 1,303 | 23,415 |
Amtrust Financial Services, Inc. | | 1,567 | 18,522 |
Argo Group International Holdings Ltd.* | | 2,127 | 61,981 |
Assured Guaranty Ltd. | | 8,468 | 184,264 |
Baldwin & Lyons, Inc., Class B | | 563 | 13,855 |
Citizens, Inc.* | | 2,297 | 14,999 |
CNA Surety Corp.* | | 1,156 | 17,213 |
Conseco, Inc.* | | 13,795 | 68,975 |
Crawford & Co., Class B* | | 1,432 | 5,642 |
Delphi Financial Group, Inc. | | 3,191 | 71,383 |
Donegal Group, Inc. | | 916 | 14,235 |
Eastern Insurance Holdings, Inc. | | 618 | 5,327 |
eHealth, Inc.* | | 1,708 | 28,062 |
EMC Insurance Group, Inc. | | 340 | 7,313 |
Employers Holdings, Inc. | | 3,220 | 49,395 |
Enstar Group Ltd.* | | 461 | 33,662 |
FBL Financial Group, Inc. | | 894 | 16,557 |
First Acceptance Corp.* | | 1,175 | 2,291 |
First Mercury Financial Corp. | | 986 | 13,518 |
Flagstone Reinsurance Holdings Ltd. | | 2,700 | 29,538 |
Fpic Insurance Group, Inc.* | | 488 | 18,847 |
Greenlight Capital Re Ltd.* | | 1,943 | 45,797 |
Hallmark Financial Services* | | 470 | 3,741 |
Harleysville Group, Inc. | | 958 | 30,455 |
Hilltop Holdings, Inc.* | | 2,735 | 31,835 |
Horace Mann Educators Corp. | | 2,703 | 33,787 |
Independence Holding Co. | | 517 | 2,999 |
Infinity Property & Casualty Corp. | | 946 | 38,445 |
Kansas City Life Insurance Co. | | 365 | 10,859 |
Maiden Holdings Ltd. | | 3,438 | 25,166 |
Max Capital Group Ltd. | | 3,184 | 71,003 |
Meadowbrook Insurance Group, Inc. | | 4,057 | 30,022 |
Mercer Insurance Group, Inc. | | 441 | 8,013 |
Montpelier Re Holdings Ltd. | | 5,957 | 103,175 |
National Financial Partners Corp.* | | 2,840 | 22,976 |
National Interstate Corp. | | 490 | 8,310 |
National Western Life Insurance Co. | | 156 | 27,085 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Insurance - Cont'd | | | |
Navigators Group, Inc.* | | 862 | $40,609 |
NYMAGIC, Inc. | | 377 | 6,254 |
Phoenix Co.'s, Inc.* | | 7,976 | 22,173 |
Platinum Underwriters Holdings Ltd. | | 3,533 | 135,279 |
PMA Capital Corp.* | | 2,532 | 15,952 |
Presidential Life Corp. | | 1,423 | 13,020 |
ProAssurance Corp.* | | 2,283 | 122,620 |
RLI Corp. | | 1,287 | 68,533 |
Safety Insurance Group, Inc. | | 917 | 33,223 |
SeaBright Insurance Holdings, Inc.* | | 1,495 | 17,178 |
Selective Insurance Group | | 3,645 | 59,960 |
State Auto Financial Corp. | | 979 | 18,111 |
Stewart Information Services Corp. | | 1,361 | 15,352 |
Tower Group, Inc. | | 3,093 | 72,407 |
United America Indemnity Ltd.* | | 2,728 | 21,606 |
United Fire & Casualty Co. | | 1,525 | 27,801 |
Universal Insurance Holdings, Inc. | | 1,043 | 6,122 |
Zenith National Insurance Corp. | | 2,575 | 76,632 |
| | | 2,054,917 |
| | | |
Internet & Catalog Retail - 0.5% | | | |
1-800-FLOWERS.COM, Inc.* | | 2,081 | 5,515 |
Blue Nile, Inc.* | | 873 | 55,287 |
Drugstore.Com* | | 6,658 | 20,573 |
Gaiam, Inc.* | | 1,432 | 11,012 |
HSN, Inc.* | | 2,739 | 55,300 |
NutriSystem, Inc. | | 2,119 | 66,049 |
Orbitz Worldwide, Inc.* | | 2,514 | 18,453 |
Overstock.com, Inc.* | | 1,079 | 14,631 |
PetMed Express, Inc. | | 1,611 | 28,402 |
Shutterfly, Inc.* | | 1,568 | 27,926 |
Stamps.com, Inc.* | | 749 | 6,741 |
Ticketmaster Entertainment, Inc.* | | 2,591 | 31,662 |
US Auto Parts Network, Inc.* | | 778 | 4,046 |
Vitacost.com, Inc.* | | 763 | 7,951 |
| | | 353,548 |
| | | |
Internet Software & Services - 1.8% | | | |
Ancestry.com, Inc.* | | 535 | 7,495 |
Archipelago Learning, Inc.* | | 499 | 10,329 |
Art Technology Group, Inc.* | | 8,734 | 39,390 |
comScore, Inc.* | | 1,433 | 25,149 |
Constant Contact, Inc.* | | 1,654 | 26,464 |
DealerTrack Holdings, Inc.* | | 2,593 | 48,722 |
Dice Holdings, Inc.* | | 1,136 | 7,441 |
Digital River, Inc.* | | 2,634 | 71,092 |
DivX, Inc.* | | 2,147 | 12,109 |
Earthlink, Inc. | | 7,302 | 60,680 |
GSI Commerce, Inc.* | | 2,084 | 52,913 |
Imergent, Inc. | | 619 | 3,757 |
Infospace, Inc.* | | 2,415 | 20,697 |
Innodata Isogen, Inc.* | | 1,692 | 9,374 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Internet Software & Services - Cont'd | | | |
Internap Network Services Corp.* | | 4,018 | $18,885 |
Internet Brands, Inc.* | | 1,767 | 13,836 |
Internet Capital Group, Inc.* | | 2,537 | 16,871 |
Ipass, Inc.* | | 3,977 | 4,136 |
j2 Global Communications, Inc.* | | 3,079 | 62,658 |
Keynote Systems, Inc. | | 1,035 | 11,292 |
Knot, Inc.* | | 2,250 | 22,657 |
Limelight Networks, Inc.* | | 2,297 | 9,027 |
Liquidity Services, Inc.* | | 1,166 | 11,742 |
LivePerson, Inc.* | | 2,848 | 19,851 |
LogMeIn, Inc.* | | 550 | 10,972 |
LoopNet, Inc.* | | 1,590 | 15,805 |
Marchex, Inc., Class B | | 1,359 | 6,904 |
MercadoLibre, Inc.* | | 1,782 | 92,432 |
ModusLink Global Solutions, Inc.* | | 3,148 | 29,623 |
Move, Inc.* | | 10,640 | 17,662 |
NIC, Inc. | | 3,482 | 31,825 |
OpenTable, Inc.* | | 237 | 6,034 |
Openwave Systems, Inc.* | | 6,580 | 15,002 |
Perficient, Inc.* | | 1,973 | 16,632 |
Rackspace Hosting, Inc.* | | 4,573 | 95,347 |
RealNetworks, Inc.* | | 5,723 | 21,232 |
Saba Software, Inc.* | | 1,942 | 8,040 |
SAVVIS, Inc.* | | 2,494 | 35,041 |
support.com, Inc.* | | 3,687 | 9,734 |
Switch & Data Facilities Co., Inc.* | | 1,406 | 28,415 |
TechTarget, Inc.* | | 1,109 | 6,244 |
Terremark Worldwide, Inc.* | | 4,212 | 28,810 |
Travelzoo, Inc.* | | 438 | 5,383 |
United Online, Inc. | | 5,767 | 41,465 |
ValueClick, Inc.* | | 6,001 | 60,730 |
Vocus, Inc.* | | 1,138 | 20,484 |
Web.com Group, Inc.* | | 1,821 | 11,891 |
Zix Corp.* | | 5,001 | 8,552 |
| | | 1,210,826 |
| | | |
IT Services - 2.2% | | | |
Acxiom Corp.* | | 4,683 | 62,846 |
CACI International, Inc.* | | 2,069 | 101,071 |
Cass Information Systems, Inc. | | 540 | 16,416 |
China Information Security Technology, Inc.* | | 1,826 | 11,248 |
Ciber, Inc.* | | 4,183 | 14,431 |
Computer Task Group, Inc.* | | 1,181 | 9,460 |
CSG Systems International, Inc.* | | 2,424 | 46,274 |
Cybersource Corp.* | | 4,767 | 95,864 |
Dynamics Research Corp.* | | 682 | 7,236 |
Echo Global Logistics, Inc.* | | 400 | 5,076 |
eLoyalty Corp.* | | 516 | 3,545 |
Euronet Worldwide, Inc.* | | 3,360 | 73,752 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
IT Services - Cont'd | | | |
ExlService Holdings, Inc.* | | 1,131 | $20,539 |
Forrester Research, Inc.* | | 1,140 | 29,583 |
Gartner, Inc.* | | 4,088 | 73,748 |
Global Cash Access Holdings, Inc.* | | 2,586 | 19,369 |
Hackett Group, Inc.* | | 3,281 | 9,121 |
Heartland Payment Systems, Inc. | | 2,583 | 33,915 |
iGate Corp. | | 1,744 | 17,440 |
infoGROUP, Inc.* | | 2,363 | 18,951 |
Information Services Group, Inc.* | | 1,874 | 5,941 |
Integral Systems, Inc.* | | 1,350 | 11,691 |
Lionbridge Technologies* | | 4,533 | 10,426 |
Mantech International Corp.* | | 1,509 | 72,855 |
MAXIMUS, Inc. | | 1,208 | 60,400 |
MoneyGram International, Inc.* | | 5,675 | 16,344 |
NCI, Inc.* | | 519 | 14,350 |
Ness Technologies, Inc.* | | 2,663 | 13,049 |
Online Resources Corp.* | | 1,746 | 9,184 |
RightNow Technologies, Inc.* | | 1,504 | 26,124 |
Sapient Corp.* | | 5,820 | 48,131 |
SRA International, Inc.* | | 2,876 | 54,932 |
StarTek, Inc.* | | 941 | 7,039 |
Syntel, Inc. | | 889 | 33,809 |
TeleTech Holdings, Inc.* | | 2,241 | 44,887 |
Tier Technologies, Inc., Class B* | | 1,385 | 11,080 |
TNS, Inc.* | | 1,787 | 45,908 |
Unisys Corp.* | | 2,841 | 109,549 |
VeriFone Holdings, Inc.* | | 5,009 | 82,047 |
Virtusa Corp.* | | 703 | 6,369 |
Wright Express Corp.* | | 2,647 | 84,333 |
| | | 1,438,333 |
| | | |
Leisure Equipment & Products - 0.7% | | | |
Brunswick Corp. | | 6,080 | 77,277 |
Callaway Golf Co. | | 4,441 | 33,485 |
Eastman Kodak Co.* | | 18,504 | 78,087 |
Jakks Pacific, Inc.* | | 2,018 | 24,458 |
Leapfrog Enterprises, Inc.* | | 2,658 | 10,393 |
Marine Products Corp. | | 813 | 4,008 |
Polaris Industries, Inc. | | 2,112 | 92,146 |
Pool Corp. | | 3,337 | 63,670 |
RC2 Corp.* | | 1,387 | 20,458 |
Smith & Wesson Holding Corp.* | | 4,203 | 17,190 |
Sport Supply Group, Inc. | | 727 | 9,153 |
Steinway Musical Instruments* | | 547 | 8,703 |
Sturm Ruger & Co., Inc. | | 1,504 | 14,589 |
| | | 453,617 |
| | | |
Life Sciences - Tools & Services - 0.7% | | | |
Accelrys, Inc.* | | 2,135 | 12,234 |
Affymetrix, Inc.* | | 4,868 | 28,429 |
Albany Molecular Research, Inc.* | | 1,613 | 14,646 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Life Sciences - Tools & Services - Cont'd | | | |
BioDelivery Sciences International, Inc.* | | 744 | $2,924 |
Bruker Corp.* | | 3,374 | 40,690 |
Cambrex Corp.* | | 2,197 | 12,259 |
Dionex Corp.* | | 1,220 | 90,121 |
Enzo Biochem, Inc.* | | 2,561 | 13,778 |
eResearchTechnology, Inc.* | | 2,937 | 17,651 |
Harvard Bioscience, Inc.* | | 1,938 | 6,919 |
Kendle International, Inc.* | | 983 | 17,999 |
Luminex Corp.* | | 2,860 | 42,700 |
Parexel International Corp.* | | 3,970 | 55,977 |
Sequenom, Inc.* | | 4,447 | 18,411 |
Varian, Inc.* | | 1,989 | 102,513 |
| | | 477,251 |
| | | |
Machinery - 2.7% | | | |
3D Systems Corp.* | | 1,362 | 15,391 |
Actuant Corp. | | 4,672 | 86,572 |
Alamo Group, Inc. | | 494 | 8,472 |
Albany International Corp. | | 1,865 | 41,888 |
Altra Holdings, Inc.* | | 1,840 | 22,724 |
American Railcar Industries, Inc. | | 744 | 8,199 |
Ampco-Pittsburgh Corp. | | 582 | 18,350 |
Astec Industries, Inc.* | | 1,325 | 35,697 |
Badger Meter, Inc. | | 1,071 | 42,647 |
Barnes Group, Inc. | | 3,219 | 54,401 |
Blount International, Inc.* | | 2,651 | 26,775 |
Briggs & Stratton Corp. | | 3,437 | 64,306 |
Cascade Corp. | | 627 | 17,236 |
Chart Industries, Inc.* | | 1,961 | 32,455 |
China Fire & Security Group, Inc.* | | 967 | 13,084 |
CIRCOR International, Inc. | | 1,236 | 31,122 |
CLARCOR, Inc. | | 3,513 | 113,962 |
Colfax Corp.* | | 1,719 | 20,697 |
Columbus McKinnon Corp.* | | 1,314 | 17,949 |
Duoyuan Printing, Inc.* | | 600 | 4,830 |
Dynamic Materials Corp. | | 887 | 17,784 |
Eastern Co. | | 471 | 6,326 |
Energy Recovery, Inc.* | | 2,650 | 18,232 |
EnPro Industries, Inc.* | | 1,376 | 36,340 |
ESCO Technologies, Inc. | | 1,811 | 64,924 |
Federal Signal Corp. | | 3,522 | 21,202 |
Flanders Corp.* | | 1,282 | 5,718 |
Flow International Corp.* | | 2,995 | 9,225 |
Force Protection, Inc.* | | 5,105 | 26,597 |
FreightCar America, Inc. | | 823 | 16,320 |
Gorman-Rupp Co. | | 1,053 | 29,105 |
Graham Corp. | | 792 | 16,394 |
Greenbrier Co.'s, Inc. | | 1,305 | 13,546 |
Hurco Co.'s, Inc.* | | 512 | 7,578 |
John Bean Technologies Corp. | | 1,901 | 32,336 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Machinery - Cont'd | | | |
Kadant, Inc.* | | 847 | $13,518 |
Kaydon Corp. | | 2,291 | 81,926 |
K-Tron International, Inc.* | | 193 | 20,987 |
LB Foster Co.* | | 700 | 20,867 |
Lindsay Corp. | | 875 | 34,869 |
Met-Pro Corp. | | 1,199 | 12,733 |
Middleby Corp.* | | 1,127 | 55,246 |
Miller Industries, Inc.* | | 795 | 9,023 |
Mueller Industries, Inc. | | 2,563 | 63,665 |
Mueller Water Products, Inc. | | 10,611 | 55,177 |
NACCO Industries, Inc. | | 370 | 18,426 |
Nordson Corp. | | 2,318 | 141,815 |
Omega Flex, Inc. | | 248 | 3,472 |
PMFG, Inc.* | | 1,034 | 16,761 |
Portec Rail Products, Inc. | | 525 | 5,623 |
RBC Bearings, Inc.* | | 1,595 | 38,806 |
Robbins & Myers, Inc. | | 1,834 | 43,136 |
Sauer-Danfoss, Inc.* | | 885 | 10,629 |
SmartHeat, Inc.* | | 527 | 7,652 |
Sun Hydraulics Corp. | | 929 | 24,386 |
Tecumseh Products Co.* | | 1,299 | 15,185 |
Tennant Co. | | 1,214 | 31,795 |
Titan International, Inc. | | 2,604 | 21,118 |
Trimas Corp.* | | 1,166 | 7,894 |
Twin Disc, Inc. | | 694 | 7,245 |
Watts Water Technologies, Inc. | | 2,019 | 62,427 |
| | | 1,822,765 |
| | | |
Marine - 0.2% | | | |
American Commercial Lines, Inc.* | | 711 | 13,033 |
Eagle Bulk Shipping, Inc.* | | 3,538 | 17,513 |
Genco Shipping & Trading Ltd.* | | 1,774 | 39,702 |
Horizon Lines, Inc. | | 2,384 | 13,279 |
International Shipholding Corp. | | 379 | 11,775 |
TBS International Ltd.* | | 835 | 6,137 |
Ultrapetrol (Bahamas) Ltd.* | | 1,489 | 7,088 |
| | | 108,527 |
| | | |
Media - 0.9% | | | |
Arbitron, Inc. | | 1,826 | 42,765 |
Ascent Media Corp.* | | 972 | 24,815 |
Belo Corp. | | 6,159 | 33,505 |
Carmike Cinemas, Inc.* | | 867 | 6,555 |
Cinemark Holdings, Inc. | | 2,379 | 34,186 |
CKX, Inc.* | | 4,193 | 22,097 |
Crown Media Holdings, Inc.* | | 1,039 | 1,507 |
Dolan Media Co.* | | 2,065 | 21,084 |
EW Scripps Co.* | | 2,261 | 15,737 |
Fisher Communications, Inc.* | | 401 | 6,516 |
Global Sources Ltd.* | | 1,248 | 7,800 |
Harte-Hanks, Inc. | | 2,613 | 28,168 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Media - Cont'd | | | |
Journal Communications, Inc. | | 3,369 | $13,105 |
Knology, Inc.* | | 2,049 | 22,437 |
LIN TV Corp.* | | 2,131 | 9,504 |
Live Nation, Inc.* | | 5,769 | 49,094 |
LodgeNet Interactive Corp.* | | 1,598 | 8,837 |
Martha Stewart Living Omnimedia* | | 2,043 | 10,092 |
Mediacom Communications Corp.* | | 3,136 | 14,018 |
National CineMedia, Inc. | | 2,906 | 48,152 |
Outdoor Channel Holdings, Inc.* | | 1,282 | 7,436 |
Playboy Enterprises, Inc., Class B* | | 1,700 | 5,440 |
Primedia, Inc. | | 1,152 | 4,159 |
RCN Corp.* | | 2,520 | 27,342 |
Reading International, Inc.* | | 1,368 | 5,540 |
Rentrak Corp.* | | 746 | 13,182 |
Scholastic Corp. | | 1,555 | 46,386 |
Sinclair Broadcast Group, Inc.* | | 2,946 | 11,872 |
Valassis Communications, Inc.* | | 3,327 | 60,751 |
Value Line, Inc. | | 108 | 2,712 |
World Wrestling Entertainment, Inc. | | 1,509 | 23,133 |
| | | 627,927 |
| | | |
Metals & Mining - 1.1% | | | |
Allied Nevada Gold Corp.* | | 3,483 | 52,524 |
AM Castle & Co. | | 1,145 | 15,675 |
AMCOL International Corp. | | 1,617 | 45,955 |
Brush Engineered Materials, Inc.* | | 1,391 | 25,789 |
Century Aluminum Co.* | | 3,879 | 62,801 |
China Precision Steel, Inc.* | | 1,368 | 2,804 |
Coeur d'Alene Mines Corp.* | | 5,200 | 93,912 |
General Moly, Inc.* | | 4,998 | 10,396 |
General Steel Holdings, Inc.* | | 858 | 3,784 |
Haynes International, Inc. | | 832 | 27,431 |
Hecla Mining Co.* | | 15,660 | 96,779 |
Horsehead Holding Corp.* | | 2,704 | 34,476 |
Kaiser Aluminum Corp. | | 1,064 | 44,284 |
Olympic Steel, Inc. | | 625 | 20,363 |
Paramount Gold and Silver Corp.* | | 5,014 | 7,270 |
RTI International Metals, Inc.* | | 2,078 | 52,303 |
Stillwater Mining Co.* | | 2,819 | 26,724 |
Sutor Technology Group Ltd.* | | 608 | 1,617 |
Universal Stainless & Alloy* | | 534 | 10,071 |
US Gold Corp.* | | 5,504 | 13,650 |
Worthington Industries, Inc. | | 4,156 | 54,319 |
| | | 702,927 |
| | | |
Multiline Retail - 0.3% | | | |
99 Cents Only Stores* | | 3,235 | 42,281 |
Dillard's, Inc. | | 3,539 | 65,294 |
Fred's, Inc. | | 2,763 | 28,183 |
Retail Ventures, Inc.* | | 1,722 | 15,309 |
Saks, Inc.* | | 8,704 | 57,098 |
Tuesday Morning Corp.* | | 2,412 | 6,223 |
| | | 214,388 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Multi-Utilities - 0.4% | | | |
Avista Corp. | | 3,770 | $81,394 |
Black Hills Corp. | | 2,676 | 71,262 |
CH Energy Group, Inc. | | 1,089 | 46,304 |
NorthWestern Corp. | | 2,482 | 64,582 |
| | | 263,542 |
| | | |
Oil, Gas & Consumable Fuels - 3.3% | | | |
Alon USA Energy, Inc. | | 562 | 3,844 |
Apco Oil and Gas International, Inc. | | 721 | 15,934 |
Approach Resources, Inc.* | | 716 | 5,528 |
Arena Resources, Inc.* | | 2,638 | 113,751 |
Atlas Energy, Inc. | | 4,737 | 142,915 |
ATP Oil & Gas Corp.* | | 2,634 | 48,150 |
Berry Petroleum Co. | | 2,957 | 86,197 |
Bill Barrett Corp.* | | 2,646 | 82,317 |
BPZ Resources, Inc.* | | 6,385 | 60,657 |
Brigham Exploration Co.* | | 6,770 | 91,733 |
Carrizo Oil & Gas, Inc.* | | 1,923 | 50,940 |
Cheniere Energy, Inc.* | | 3,868 | 9,361 |
Clayton Williams Energy, Inc.* | | 431 | 15,102 |
Clean Energy Fuels Corp.* | | 2,289 | 35,273 |
Cloud Peak Energy, Inc.* | | 2,122 | 30,896 |
Contango Oil & Gas Co.* | | 836 | 39,300 |
CREDO Petroleum Corp.* | | 555 | 5,161 |
Crosstex Energy, Inc. | | 3,047 | 18,434 |
Cubic Energy, Inc.* | | 2,135 | 3,181 |
CVR Energy, Inc.* | | 1,585 | 10,873 |
Delek US Holdings, Inc. | | 1,057 | 7,198 |
Delta Petroleum Corp.* | | 12,444 | 12,942 |
DHT Maritime, Inc. | | 3,126 | 11,504 |
Endeavour International Corp.* | | 9,060 | 9,785 |
Evergreen Energy, Inc.* | | 6,516 | 2,235 |
FX Energy, Inc.* | | 3,212 | 9,154 |
General Maritime Corp. | | 3,596 | 25,136 |
Georesources, Inc.* | | 439 | 5,997 |
GMX Resources, Inc.* | | 1,939 | 26,642 |
Golar LNG Ltd.* | | 2,230 | 28,589 |
Goodrich Petroleum Corp.* | | 1,691 | 41,176 |
Gran Tierra Energy, Inc.* | | 13,941 | 79,882 |
Green Plains Renewable Energy, Inc.* | | 735 | 10,929 |
GreenHunter Energy, Inc., Warrants (strike price $27.50/share, expire 9/14/11) (b)* | | 34 | - |
Gulfport Energy Corp.* | | 1,809 | 20,713 |
Harvest Natural Resources, Inc.* | | 2,277 | 12,045 |
International Coal Group, Inc.* | | 6,265 | 24,183 |
Isramco, Inc.* | | 85 | 6,077 |
James River Coal Co.* | | 1,903 | 35,263 |
Knightsbridge Tankers Ltd. | | 1,180 | 15,647 |
McMoRan Exploration Co.* | | 5,226 | 41,913 |
Nordic American Tanker Shipping | | 2,914 | 87,420 |
Northern Oil And Gas, Inc.* | | 2,263 | 26,794 |
Oilsands Quest, Inc.* | | 13,143 | 15,114 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Oil, Gas & Consumable Fuels - Cont'd | | | |
Panhandle Oil and Gas, Inc. | | 584 | $15,126 |
Patriot Coal Corp.* | | 5,089 | 78,676 |
Penn Virginia Corp. | | 3,132 | 66,680 |
Petroleum Development Corp.* | | 1,184 | 21,561 |
Petroquest Energy, Inc.* | | 3,456 | 21,185 |
PrimeEnergy Corp.* | | 74 | 2,693 |
Rex Energy Corp.* | | 1,336 | 16,032 |
Rosetta Resources, Inc.* | | 3,607 | 71,887 |
Ship Finance International Ltd. | | 3,078 | 41,953 |
Stone Energy Corp.* | | 2,875 | 51,894 |
Swift Energy Co.* | | 2,577 | 61,745 |
Syntroleum Corp.* | | 4,983 | 13,255 |
Teekay Tankers Ltd. | | 725 | 6,184 |
Toreador Resources Corp.* | | 1,348 | 13,345 |
Uranerz Energy Corp.* | | 3,556 | 4,623 |
Uranium Energy Corp.* | | 3,667 | 13,861 |
USEC, Inc.* | | 8,147 | 31,366 |
Vaalco Energy, Inc.* | | 4,020 | 18,291 |
Venoco, Inc.* | | 1,241 | 16,183 |
W&T Offshore, Inc. | | 2,347 | 27,460 |
Warren Resources, Inc.* | | 4,644 | 11,378 |
Western Refining, Inc.* | | 2,379 | 11,205 |
Westmoreland Coal Co.* | | 757 | 6,745 |
World Fuel Services Corp. | | 4,068 | 108,982 |
Zion Oil & Gas, Inc.* | | 938 | 6,707 |
| | | 2,164,902 |
| | | |
Paper & Forest Products - 0.8% | | | |
Buckeye Technologies, Inc.* | | 2,667 | 26,030 |
Clearwater Paper Corp.* | | 774 | 42,547 |
Deltic Timber Corp. | | 773 | 35,697 |
Domtar Corp.* | | 2,866 | 158,805 |
Glatfelter | | 3,313 | 40,253 |
KapStone Paper and Packaging Corp.* | | 2,269 | 22,350 |
Louisiana-Pacific Corp.* | | 8,588 | 59,944 |
Neenah Paper, Inc. | | 1,163 | 16,224 |
Schweitzer-Mauduit International, Inc. | | 1,211 | 85,194 |
Wausau Paper Corp. | | 3,001 | 34,811 |
| | | 521,855 |
| | | |
Personal Products - 0.7% | | | |
American Oriental Bioengineering, Inc.* | | 4,268 | 19,846 |
Bare Escentuals, Inc.* | | 4,561 | 55,781 |
Chattem, Inc.* | | 1,341 | 125,115 |
China Sky One Medical, Inc.* | | 592 | 13,468 |
China-Biotics, Inc.* | | 576 | 8,911 |
Elizabeth Arden, Inc.* | | 1,846 | 26,656 |
Female Health Co.* | | 1,254 | 5,931 |
Inter Parfums, Inc. | | 1,120 | 13,630 |
Mannatech, Inc. | | 1,100 | 3,432 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Personal Products - Cont'd | | | |
Medifast, Inc.* | | 895 | $27,369 |
Nu Skin Enterprises, Inc. | | 3,409 | 91,600 |
Nutraceutical International Corp.* | | 861 | 10,651 |
Prestige Brands Holdings, Inc.* | | 2,336 | 18,361 |
Revlon, Inc.* | | 1,344 | 22,862 |
Schiff Nutrition International, Inc. | | 744 | 5,818 |
USANA Health Sciences, Inc.* | | 429 | 13,685 |
| | | 463,116 |
| | | |
Pharmaceuticals - 1.5% | | | |
Acura Pharmaceuticals, Inc.* | | 651 | 3,470 |
Adolor Corp.* | | 3,668 | 5,355 |
Akorn, Inc.* | | 4,543 | 8,132 |
Ardea Biosciences, Inc.* | | 861 | 12,054 |
ARYx Therapeutics, Inc.* | | 1,643 | 5,274 |
Auxilium Pharmaceuticals, Inc.* | | 3,191 | 95,666 |
AVANIR Pharmaceuticals, Inc.* | | 4,795 | 9,111 |
Biodel, Inc.* | | 856 | 3,715 |
BioMimetic Therapeutics, Inc.* | | 1,057 | 12,610 |
BMP Sunstone Corp.* | | 1,844 | 10,492 |
Cadence Pharmaceuticals, Inc.* | | 1,701 | 16,449 |
Caraco Pharmaceutical Laboratories Ltd.* | | 813 | 4,911 |
Cornerstone Therapeutics, Inc.* | | 514 | 3,135 |
Cumberland Pharmaceuticals, Inc.* | | 600 | 8,154 |
Cypress Bioscience, Inc.* | | 2,626 | 15,126 |
Depomed, Inc.* | | 3,827 | 12,820 |
Discovery Laboratories, Inc.* | | 7,429 | 4,669 |
Durect Corp.* | | 6,499 | 16,053 |
Hi-Tech Pharmacal Co., Inc.* | | 640 | 17,952 |
Impax Laboratories, Inc.* | | 4,185 | 56,916 |
Inspire Pharmaceuticals, Inc.* | | 4,526 | 24,984 |
ISTA Pharmaceuticals, Inc.* | | 2,623 | 11,961 |
Javelin Pharmaceuticals, Inc.* | | 3,921 | 5,097 |
KV Pharmaceutical Co.* | | 2,490 | 9,138 |
Lannett Co., Inc.* | | 798 | 4,716 |
MAP Pharmaceuticals, Inc.* | | 623 | 5,937 |
Matrixx Initiatives, Inc.* | | 747 | 3,152 |
Medicines Co.* | | 3,811 | 31,784 |
Medicis Pharmaceutical Corp. | | 4,060 | 109,823 |
MiddleBrook Pharmaceuticals, Inc.* | | 2,857 | 1,457 |
Nektar Therapeutics* | | 6,386 | 59,518 |
Obagi Medical Products, Inc.* | | 1,191 | 14,292 |
Optimer Pharmaceuticals, Inc.* | | 1,975 | 22,278 |
Pain Therapeutics, Inc.* | | 2,773 | 14,863 |
Par Pharmaceutical Co.'s, Inc.* | | 2,400 | 64,944 |
Pozen, Inc.* | | 2,076 | 12,435 |
Questcor Pharmaceuticals, Inc.* | | 3,946 | 18,744 |
Repros Therapeutics, Inc.* | | 747 | 595 |
Salix Pharmaceuticals Ltd.* | | 3,801 | 96,545 |
Santarus, Inc.* | | 4,094 | 18,914 |
Sucampo Pharmaceuticals, Inc.* | | 729 | 2,945 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Pharmaceuticals - Cont'd | | | |
SuperGen, Inc.* | | 4,667 | $12,228 |
Viropharma, Inc.* | | 5,341 | 44,811 |
VIVUS, Inc.* | | 5,536 | 50,876 |
XenoPort, Inc.* | | 2,090 | 38,790 |
| | | 1,002,891 |
| | | |
Professional Services - 1.5% | | | |
Acacia Research - Acacia Technologies* | | 2,206 | 20,097 |
Administaff, Inc. | | 1,452 | 34,253 |
Advisory Board Co.* | | 1,069 | 32,775 |
Barrett Business Services, Inc. | | 606 | 7,448 |
CBIZ, Inc.* | | 3,028 | 23,316 |
CDI Corp. | | 840 | 10,878 |
COMSYS IT Partners, Inc.* | | 1,102 | 9,797 |
Corporate Executive Board Co. | | 2,352 | 53,673 |
CoStar Group, Inc.* | | 1,372 | 57,308 |
CRA International, Inc.* | | 752 | 20,041 |
Diamond Management & Technology Consultants, Inc. | | 1,884 | 13,885 |
Exponent, Inc.* | | 931 | 25,919 |
Franklin Covey Co.* | | 1,007 | 6,344 |
GP Strategies Corp.* | | 1,245 | 9,375 |
Heidrick & Struggles International, Inc. | | 1,173 | 36,644 |
Hill International, Inc.* | | 1,866 | 11,644 |
Huron Consulting Group, Inc.* | | 1,485 | 34,214 |
ICF International, Inc.* | | 606 | 16,241 |
Kelly Services, Inc.* | | 1,808 | 21,569 |
Kforce, Inc.* | | 1,976 | 24,700 |
Korn/Ferry International* | | 3,086 | 50,919 |
Mistras Group, Inc.* | | 693 | 10,437 |
MPS Group, Inc.* | | 6,380 | 87,661 |
Navigant Consulting, Inc.* | | 3,549 | 52,738 |
Odyssey Marine Exploration, Inc.* | | 3,831 | 5,402 |
On Assignment, Inc.* | | 2,712 | 19,391 |
Resources Connection, Inc.* | | 3,104 | 65,867 |
School Specialty, Inc.* | | 1,296 | 30,313 |
Spherion Corp.* | | 3,573 | 20,080 |
TrueBlue, Inc.* | | 3,025 | 44,800 |
Volt Information Sciences, Inc.* | | 1,008 | 10,080 |
VSE Corp. | | 320 | 14,426 |
Watson Wyatt Worldwide, Inc.* | | 2,938 | 139,614 |
| | | 1,021,849 |
| | | |
Real Estate Investment Trusts - 6.1% | | | |
Acadia Realty Trust | | 2,737 | 46,173 |
Agree Realty Corp. | | 491 | 11,435 |
Alexander's, Inc.* | | 149 | 45,359 |
American Campus Communities, Inc. | | 3,601 | 101,188 |
American Capital Agency Corp. | | 1,045 | 27,734 |
Anworth Mortgage Asset Corp. | | 7,435 | 52,045 |
Apollo Commercial Real Estate Finance, Inc.* | | 693 | 12,467 |
Ashford Hospitality Trust, Inc.* | | 4,002 | 18,569 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Real Estate Investment Trusts - Cont'd | | | |
Associated Estates Realty Corp. | | 1,155 | $13,017 |
BioMed Realty Trust, Inc. | | 6,754 | 106,578 |
CapLease, Inc. | | 3,566 | 15,619 |
Capstead Mortgage Corp. | | 4,735 | 64,633 |
Care Investment Trust, Inc. | | 1,058 | 8,231 |
CBL & Associates Properties, Inc. | | 9,512 | 91,981 |
Cedar Shopping Centers, Inc. | | 2,890 | 19,652 |
Cogdell Spencer, Inc. | | 2,199 | 12,446 |
Colonial Properties Trust | | 4,679 | 54,885 |
Colony Financial, Inc. | | 997 | 20,309 |
Cousins Properties, Inc. | | 5,082 | 38,776 |
CreXus Investment Corp.* | | 943 | 13,164 |
Cypress Sharpridge Investments, Inc. | | 1,200 | 16,212 |
DCT Industrial Trust, Inc. | | 14,098 | 70,772 |
Developers Diversified Realty Corp. | | 11,063 | 102,443 |
DiamondRock Hospitality Co. | | 8,007 | 67,819 |
DuPont Fabros Technology, Inc. | | 1,826 | 32,850 |
Dynex Capital, Inc. | | 888 | 7,752 |
EastGroup Properties, Inc. | | 1,740 | 66,607 |
Education Realty Trust, Inc. | | 3,909 | 18,920 |
Entertainment Properties Trust | | 2,891 | 101,966 |
Equity Lifestyle Properties, Inc. | | 1,743 | 87,969 |
Equity One, Inc. | | 2,359 | 38,145 |
Extra Space Storage, Inc. | | 5,960 | 68,838 |
FelCor Lodging Trust, Inc.* | | 5,012 | 18,043 |
First Industrial Realty Trust, Inc.* | | 3,355 | 17,547 |
First Potomac Realty Trust | | 1,949 | 24,499 |
Franklin Street Properties Corp. | | 4,607 | 67,308 |
Getty Realty Corp. | | 1,204 | 28,330 |
Gladstone Commercial Corp. | | 676 | 9,065 |
Glimcher Realty Trust | | 3,012 | 8,132 |
Government Properties Income Trust | | 850 | 19,533 |
Gramercy Capital Corp.* | | 3,318 | 8,594 |
Hatteras Financial Corp. | | 2,497 | 69,816 |
Healthcare Realty Trust, Inc. | | 4,094 | 87,857 |
Hersha Hospitality Trust | | 3,645 | 11,445 |
Highwoods Properties, Inc. | | 4,886 | 162,948 |
Home Properties, Inc. | | 2,271 | 108,349 |
Inland Real Estate Corp. | | 4,845 | 39,487 |
Invesco Mortgage Capital, Inc. | | 650 | 14,794 |
Investors Real Estate Trust | | 4,996 | 44,964 |
iStar Financial, Inc.* | | 6,903 | 17,672 |
Kilroy Realty Corp. | | 2,977 | 91,305 |
Kite Realty Group Trust | | 3,655 | 14,876 |
LaSalle Hotel Properties | | 4,385 | 93,094 |
Lexington Realty Trust | | 6,255 | 38,030 |
LTC Properties, Inc. | | 1,603 | 42,880 |
Medical Properties Trust, Inc. | | 5,530 | 55,300 |
MFA Mortgage Investments, Inc. | | 19,311 | 141,936 |
Mid-America Apartment Communities, Inc. | | 1,948 | 94,049 |
Mission West Properties, Inc. | | 1,213 | 8,722 |
Monmouth Real Estate Investment Corp. | | 1,576 | 11,725 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Real Estate Investment Trusts - Cont'd | | | |
National Health Investors, Inc. | | 1,791 | $66,249 |
National Retail Properties, Inc. | | 5,515 | 117,028 |
NorthStar Realty Finance Corp. | | 4,104 | 14,077 |
Omega Healthcare Investors, Inc. | | 5,684 | 110,554 |
Parkway Properties, Inc. | | 1,570 | 32,687 |
Pennsylvania Real Estate Investment Trust | | 2,669 | 22,580 |
Pennymac Mortgage Investment Trust* | | 1,100 | 18,898 |
Post Properties, Inc. | | 3,236 | 63,426 |
Potlatch Corp. | | 2,740 | 87,351 |
PS Business Parks, Inc. | | 1,236 | 61,862 |
RAIT Financial Trust* | | 4,875 | 6,386 |
Ramco-Gershenson Properties Trust | | 1,254 | 11,963 |
Redwood Trust, Inc. | | 5,343 | 77,260 |
Resource Capital Corp. | | 1,695 | 8,339 |
Saul Centers, Inc. | | 507 | 16,609 |
Sovran Self Storage, Inc. | | 1,901 | 67,923 |
Starwood Property Trust, Inc. | | 3,175 | 59,976 |
Strategic Hotels & Resorts, Inc.* | | 5,929 | 11,028 |
Sun Communities, Inc. | | 1,140 | 22,515 |
Sunstone Hotel Investors, Inc.* | | 6,869 | 60,997 |
Tanger Factory Outlet Centers | | 2,778 | 108,314 |
Transcontinental Realty Investors, Inc.* | | 108 | 1,286 |
UMH Properties, Inc. | | 691 | 5,860 |
Universal Health Realty Income Trust | | 765 | 24,503 |
Urstadt Biddle Properties, Inc. | | 1,402 | 21,409 |
U-Store-It Trust | | 5,481 | 40,121 |
Walter Investment Management Corp. | | 1,409 | 20,191 |
Washington Real Estate Investment Trust | | 4,018 | 110,696 |
Winthrop Realty Trust | | 832 | 9,036 |
| | | 4,083,978 |
| | | |
Real Estate Management & Development - 0.2% | | | |
American Realty Investors, Inc.* | | 204 | 2,499 |
Avatar Holdings, Inc.* | | 486 | 8,267 |
China Housing & Land Development, Inc.* | | 2,028 | 8,376 |
Consolidated-Tomoka Land Co. | | 432 | 15,094 |
Forestar Group, Inc.* | | 2,476 | 54,422 |
Tejon Ranch Co.* | | 747 | 21,827 |
| | | 110,485 |
| | | |
Road & Rail - 1.0% | | | |
Amerco, Inc.* | | 617 | 30,677 |
Arkansas Best Corp. | | 1,746 | 51,385 |
Avis Budget Group, Inc.* | | 7,022 | 92,129 |
Celadon Group, Inc.* | | 1,741 | 18,890 |
Dollar Thrifty Automotive Group, Inc.* | | 1,954 | 50,042 |
Genesee & Wyoming, Inc.* | | 2,562 | 83,624 |
Heartland Express, Inc. | | 3,475 | 53,063 |
Knight Transportation, Inc. | | 3,944 | 76,080 |
Marten Transport Ltd.* | | 1,060 | 19,027 |
Old Dominion Freight Line, Inc.* | | 1,921 | 58,975 |
Patriot Transportation Holding, Inc.* | | 89 | 8,407 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Road & Rail - Cont'd | | | |
RailAmerica, Inc.* | | 1,527 | $18,629 |
Saia, Inc.* | | 1,029 | 15,250 |
Universal Truckload Services, Inc. | | 475 | 8,597 |
USA Truck, Inc.* | | 614 | 7,687 |
Werner Enterprises, Inc. | | 2,939 | 58,163 |
YRC Worldwide, Inc.* | | 4,550 | 3,821 |
| | | 654,446 |
| | | |
Semiconductors & Semiconductor Equipment - 3.6% | | | |
Actel Corp.* | | 1,809 | 21,491 |
Advanced Analogic Technologies, Inc.* | | 2,962 | 11,670 |
Advanced Energy Industries, Inc.* | | 2,277 | 34,337 |
Amkor Technology, Inc.* | | 7,526 | 53,886 |
Anadigics, Inc.* | | 4,345 | 18,336 |
Applied Micro Circuits Corp.* | | 4,546 | 33,959 |
Atheros Communications, Inc.* | | 4,413 | 151,101 |
ATMI, Inc.* | | 2,170 | 40,405 |
Brooks Automation, Inc.* | | 4,653 | 39,923 |
Cabot Microelectronics Corp.* | | 1,616 | 53,263 |
Cavium Networks, Inc.* | | 2,501 | 59,599 |
Ceva, Inc.* | | 1,354 | 17,412 |
Cirrus Logic, Inc.* | | 4,502 | 30,704 |
Cohu, Inc. | | 1,611 | 22,473 |
Cymer, Inc.* | | 2,048 | 78,602 |
Diodes, Inc.* | | 2,235 | 45,706 |
DSP Group, Inc.* | | 1,569 | 8,833 |
Entegris, Inc.* | | 8,374 | 44,215 |
Entropic Communications, Inc.* | | 4,168 | 12,796 |
Exar Corp.* | | 2,429 | 17,270 |
FEI Co.* | | 2,578 | 60,222 |
Formfactor, Inc.* | | 3,399 | 73,962 |
GSI Technology, Inc.* | | 1,456 | 6,523 |
Hittite Microwave Corp.* | | 1,478 | 60,228 |
IXYS Corp.* | | 1,911 | 14,180 |
Kopin Corp.* | | 4,655 | 19,458 |
Kulicke & Soffa Industries, Inc.* | | 4,111 | 22,158 |
Lattice Semiconductor Corp.* | | 7,952 | 21,470 |
MEMSIC, Inc.* | | 1,224 | 4,015 |
Micrel, Inc. | | 3,129 | 25,658 |
Microsemi Corp.* | | 5,596 | 99,329 |
Microtune, Inc.* | | 4,122 | 9,316 |
MIPS Technologies, Inc.* | | 3,345 | 14,618 |
MKS Instruments, Inc.* | | 3,403 | 59,246 |
Monolithic Power Systems, Inc.* | | 2,337 | 56,018 |
Netlogic Microsystems, Inc.* | | 1,245 | 57,594 |
NVE Corp.* | | 370 | 15,285 |
Omnivision Technologies, Inc.* | | 3,455 | 50,201 |
Pericom Semiconductor Corp.* | | 1,758 | 20,270 |
Photronics, Inc.* | | 3,214 | 14,302 |
PLX Technology, Inc.* | | 2,208 | 7,132 |
Power Integrations, Inc. | | 1,643 | 59,739 |
RF Micro Devices, Inc.* | | 18,340 | 87,482 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Semiconductors & Semiconductor Equipment - Cont'd | | | |
Rubicon Technology, Inc.* | | 864 | $17,548 |
Rudolph Technologies, Inc.* | | 2,121 | 14,253 |
Semtech Corp.* | | 4,212 | 71,646 |
Sigma Designs, Inc.* | | 1,835 | 19,635 |
Silicon Image, Inc.* | | 5,780 | 14,912 |
Silicon Storage Technology, Inc.* | | 6,318 | 16,174 |
Skyworks Solutions, Inc.* | | 11,541 | 163,767 |
Standard Microsystems Corp.* | | 1,515 | 31,482 |
Supertex, Inc.* | | 843 | 25,121 |
Techwell, Inc.* | | 1,223 | 16,144 |
Tessera Technologies, Inc.* | | 3,354 | 78,048 |
Trident Microsystems, Inc.* | | 4,861 | 9,041 |
TriQuint Semiconductor, Inc.* | | 10,526 | 63,156 |
Ultratech, Inc.* | | 1,630 | 24,222 |
Veeco Instruments, Inc.* | | 2,638 | 87,160 |
Virage Logic Corp.* | | 1,278 | 7,029 |
Volterra Semiconductor Corp.* | | 1,562 | 29,865 |
White Electronic Designs Corp.* | | 1,810 | 8,453 |
Zoran Corp.* | | 3,559 | 39,327 |
| | | 2,391,370 |
| | | |
Software - 4.4% | | | |
ACI Worldwide, Inc.* | | 2,511 | 43,064 |
Actuate Corp.* | | 3,425 | 14,659 |
Advent Software, Inc.* | | 1,054 | 42,929 |
American Software, Inc. | | 1,795 | 10,770 |
ArcSight, Inc.* | | 1,270 | 32,487 |
Ariba, Inc.* | | 6,029 | 75,483 |
AsiaInfo Holdings, Inc.* | | 2,016 | 61,428 |
Blackbaud, Inc. | | 3,024 | 71,457 |
Blackboard, Inc.* | | 2,182 | 99,041 |
Bottomline Technologies, Inc.* | | 1,750 | 30,747 |
Callidus Software, Inc.* | | 2,401 | 7,251 |
China TransInfo Technology Corp.* | | 684 | 5,588 |
Chordiant Software, Inc.* | | 2,524 | 6,941 |
Commvault Systems, Inc.* | | 2,872 | 68,038 |
Concur Technologies, Inc.* | | 2,745 | 117,349 |
Deltek, Inc.* | | 1,456 | 11,328 |
DemandTec, Inc.* | | 1,564 | 13,716 |
Double-Take Software, Inc.* | | 1,377 | 13,756 |
Ebix, Inc.* | | 486 | 23,731 |
Epicor Software Corp.* | | 3,259 | 24,834 |
EPIQ Systems, Inc.* | | 2,234 | 31,254 |
ePlus, Inc.* | | 291 | 4,804 |
Fair Isaac Corp. | | 3,371 | 71,836 |
FalconStor Software, Inc.* | | 2,372 | 9,630 |
Fortinet, Inc.* | | 867 | 15,233 |
GSE Systems, Inc.* | | 1,262 | 6,916 |
i2 Technologies, Inc.* | | 1,112 | 21,261 |
Informatica Corp.* | | 6,012 | 155,470 |
Interactive Intelligence, Inc.* | | 869 | 16,024 |
Jack Henry & Associates, Inc. | | 5,779 | 133,610 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Software - Cont'd | | | |
JDA Software Group, Inc.* | | 1,823 | $46,432 |
Kenexa Corp.* | | 1,553 | 20,267 |
Lawson Software, Inc.* | | 9,472 | 62,989 |
Manhattan Associates, Inc.* | | 1,590 | 38,208 |
Mentor Graphics Corp.* | | 6,646 | 58,684 |
MicroStrategy, Inc.* | | 625 | 58,762 |
Monotype Imaging Holdings, Inc.* | | 1,201 | 10,845 |
Net 1 UEPS Technologies, Inc.* | | 2,147 | 41,695 |
Netscout Systems, Inc.* | | 1,699 | 24,873 |
NetSuite, Inc.* | | 1,152 | 18,409 |
Opnet Technologies, Inc. | | 1,050 | 12,800 |
Parametric Technology Corp.* | | 7,995 | 130,638 |
Pegasystems, Inc. | | 1,036 | 35,224 |
Pervasive Software, Inc.* | | 1,213 | 5,847 |
Phoenix Technologies Ltd.* | | 2,193 | 6,031 |
Progress Software Corp.* | | 2,756 | 80,503 |
PROS Holdings, Inc.* | | 1,025 | 10,609 |
QAD, Inc. | | 1,023 | 6,251 |
Quest Software, Inc.* | | 4,218 | 77,611 |
Radiant Systems, Inc.* | | 1,893 | 19,687 |
Renaissance Learning, Inc. | | 446 | 5,067 |
Rosetta Stone, Inc.* | | 494 | 8,867 |
S1 Corp.* | | 3,646 | 23,772 |
Smith Micro Software, Inc.* | | 1,961 | 17,924 |
SolarWinds, Inc.* | | 837 | 19,259 |
Solera Holdings, Inc. | | 4,798 | 172,776 |
SonicWALL, Inc.* | | 3,708 | 28,218 |
Sourcefire, Inc.* | | 1,546 | 41,355 |
SRS Labs, Inc.* | | 917 | 6,722 |
SuccessFactors, Inc.* | | 3,192 | 52,923 |
Symyx Technologies* | | 2,680 | 14,740 |
Synchronoss Technologies, Inc.* | | 1,308 | 20,679 |
Take-Two Interactive Software, Inc.* | | 5,537 | 55,647 |
Taleo Corp.* | | 2,692 | 63,316 |
TeleCommunication Systems, Inc.* | | 2,682 | 25,962 |
THQ, Inc.* | | 4,874 | 24,565 |
TIBCO Software, Inc.* | | 12,124 | 116,754 |
TiVo, Inc.* | | 7,209 | 73,388 |
Tyler Technologies, Inc.* | | 2,155 | 42,906 |
Ultimate Software Group, Inc.* | | 1,681 | 49,371 |
Unica Corp.* | | 1,113 | 8,626 |
VASCO Data Security International, Inc.* | | 2,141 | 13,424 |
Websense, Inc.* | | 3,055 | 53,340 |
| | | 2,946,601 |
| | | |
Specialty Retail - 3.2% | | | |
America's Car-Mart, Inc.* | | 680 | 17,904 |
AnnTaylor Stores Corp.* | | 4,044 | 55,160 |
Asbury Automotive Group, Inc.* | | 2,219 | 25,585 |
Bebe Stores, Inc. | | 1,889 | 11,844 |
Big 5 Sporting Goods Corp. | | 1,485 | 25,512 |
Books-A-Million, Inc. | | 554 | 3,723 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Specialty Retail - Cont'd | | | |
Borders Group, Inc.* | | 3,373 | $3,980 |
Brown Shoe Co., Inc. | | 2,868 | 28,307 |
Build-A-Bear Workshop, Inc.* | | 1,323 | 6,469 |
Cabela's, Inc.* | | 2,878 | 41,040 |
Cato Corp. | | 1,904 | 38,194 |
Charming Shoppes, Inc.* | | 7,963 | 51,521 |
Christopher & Banks Corp. | | 2,475 | 18,860 |
Citi Trends, Inc.* | | 1,011 | 27,924 |
Coldwater Creek, Inc.* | | 3,939 | 17,568 |
Collective Brands, Inc.* | | 4,418 | 100,598 |
Conn's, Inc.* | | 780 | 4,555 |
Destination Maternity Corp.* | | 373 | 7,087 |
Dress Barn, Inc.* | | 3,902 | 90,136 |
DSW, Inc.* | | 840 | 21,739 |
Finish Line | | 2,917 | 36,608 |
Gander Mountain Co.* | | 407 | 2,076 |
Genesco, Inc.* | | 1,565 | 42,975 |
Group 1 Automotive, Inc.* | | 1,660 | 47,061 |
Gymboree Corp.* | | 2,014 | 87,589 |
Haverty Furniture Co.'s, Inc. | | 1,213 | 16,654 |
hhgregg, Inc.* | | 878 | 19,342 |
Hibbett Sports, Inc.* | | 1,975 | 43,430 |
HOT Topic, Inc.* | | 3,037 | 19,315 |
J Crew Group, Inc.* | | 3,468 | 155,158 |
Jo-Ann Stores, Inc.* | | 1,864 | 67,551 |
JOS A Bank Clothiers, Inc.* | | 1,262 | 53,244 |
Kirkland's, Inc.* | | 980 | 17,023 |
Lithia Motors, Inc.* | | 1,325 | 10,892 |
Lumber Liquidators Holdings, Inc.* | | 995 | 26,666 |
Men's Wearhouse, Inc. | | 3,595 | 75,711 |
Midas, Inc.* | | 1,091 | 9,219 |
Monro Muffler, Inc. | | 1,152 | 38,523 |
New York & Co., Inc.* | | 1,850 | 7,937 |
OfficeMax, Inc.* | | 5,264 | 66,800 |
Pacific Sunwear Of California* | | 4,543 | 18,081 |
PEP Boys-Manny Moe & Jack | | 3,356 | 28,392 |
Pier 1 Imports, Inc.* | | 7,885 | 40,135 |
Rent-A-Center, Inc.* | | 4,556 | 80,732 |
Rex Stores Corp.* | | 499 | 7,016 |
Rue21, Inc.* | | 469 | 13,174 |
Sally Beauty Holdings, Inc.* | | 6,482 | 49,587 |
Shoe Carnival, Inc.* | | 707 | 14,472 |
Sonic Automotive, Inc.* | | 2,078 | 21,590 |
Stage Stores, Inc. | | 2,622 | 32,408 |
Stein Mart, Inc.* | | 1,842 | 19,636 |
Syms Corp.* | | 529 | 3,825 |
Systemax, Inc. | | 704 | 11,060 |
Talbots, Inc.* | | 1,677 | 14,942 |
The Buckle, Inc. | | 1,759 | 51,504 |
The Childrens Place Retail Stores, Inc.* | | 1,524 | 50,307 |
Tractor Supply Co.* | | 2,478 | 131,235 |
Ulta Salon Cosmetics & Fragrance, Inc.* | | 1,909 | 34,667 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Specialty Retail - Cont'd | | | |
Vitamin Shoppe, Inc.* | | 631 | $14,033 |
West Marine, Inc.* | | 1,129 | 9,100 |
Wet Seal, Inc.* | | 6,690 | 23,082 |
Zale Corp.* | | 1,642 | 4,466 |
Zumiez, Inc.* | | 1,398 | 17,783 |
| | | 2,132,707 |
| | | |
Textiles, Apparel & Luxury Goods - 2.1% | | | |
American Apparel, Inc.* | | 2,699 | 8,367 |
Carter's, Inc.* | | 3,912 | 102,690 |
Cherokee, Inc. | | 601 | 10,710 |
Columbia Sportswear Co. | | 794 | 30,998 |
CROCS, Inc.* | | 5,781 | 33,241 |
Deckers Outdoor Corp.* | | 905 | 92,057 |
FGX International Holdings Ltd.* | | 1,095 | 21,451 |
Fossil, Inc.* | | 3,235 | 108,567 |
Fuqi International, Inc.* | | 750 | 13,462 |
G-III Apparel Group Ltd.* | | 901 | 19,525 |
Iconix Brand Group, Inc.* | | 4,924 | 62,289 |
Jones Apparel Group, Inc. | | 5,889 | 94,577 |
Kenneth Cole Productions, Inc.* | | 718 | 6,929 |
K-Swiss, Inc.* | | 1,958 | 19,463 |
Liz Claiborne, Inc.* | | 6,566 | 36,967 |
Lululemon Athletica, Inc.* | | 2,805 | 84,430 |
Maidenform Brands, Inc.* | | 1,302 | 21,730 |
Movado Group, Inc. | | 1,243 | 12,082 |
Oxford Industries, Inc. | | 868 | 17,950 |
Perry Ellis International, Inc.* | | 648 | 9,759 |
Quiksilver, Inc.* | | 9,552 | 19,295 |
Skechers U.S.A., Inc.* | | 2,287 | 67,261 |
Steven Madden Ltd.* | | 1,079 | 44,498 |
Timberland Co.* | | 3,001 | 53,808 |
True Religion Apparel, Inc.* | | 1,749 | 32,339 |
Under Armour, Inc.* | | 2,286 | 62,339 |
Unifi, Inc.* | | 3,597 | 13,956 |
Unifirst Corp. | | 974 | 46,859 |
Volcom, Inc.* | | 1,302 | 21,795 |
Warnaco Group, Inc.* | | 3,159 | 133,278 |
Weyco Group, Inc. | | 483 | 11,418 |
Wolverine World Wide, Inc. | | 3,397 | 92,466 |
| | | 1,406,556 |
| | | |
Thrifts & Mortgage Finance - 1.3% | | | |
Abington Bancorp, Inc. | | 1,510 | 10,404 |
Astoria Financial Corp. | | 5,900 | 73,337 |
Bank Mutual Corp. | | 3,235 | 22,386 |
BankFinancial Corp. | | 1,569 | 15,533 |
Beneficial Mutual Bancorp, Inc.* | | 2,254 | 22,179 |
Berkshire Hills Bancorp, Inc. | | 946 | 19,563 |
Brookline Bancorp, Inc. | | 4,270 | 42,316 |
Brooklyn Federal Bancorp, Inc. | | 270 | 2,711 |
Cheviot Financial Corp. | | 221 | 1,633 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Thrifts & Mortgage Finance - Cont'd | | | |
Clifton Savings Bancorp, Inc. | | 836 | $7,833 |
Dime Community Bancshares | | 1,774 | 20,791 |
Doral Financial Corp.* | | 429 | 1,557 |
ESB Financial Corp. | | 726 | 9,598 |
ESSA Bancorp, Inc. | | 1,049 | 12,273 |
First Defiance Financial Corp. | | 641 | 7,237 |
First Financial Holdings, Inc. | | 930 | 12,081 |
First Financial Northwest, Inc. | | 1,256 | 8,227 |
First Financial Service Corp. | | 319 | 2,890 |
Flagstar Bancorp, Inc.* | | 3,427 | 2,056 |
Flushing Financial Corp. | | 1,707 | 19,221 |
Fox Chase Bancorp, Inc.* | | 492 | 4,684 |
Heritage Financial Group | | 158 | 1,145 |
Home Federal Bancorp, Inc. | | 1,144 | 15,227 |
Kearny Financial Corp. | | 1,413 | 14,243 |
Kentucky First Federal Bancorp | | 240 | 2,640 |
K-Fed Bancorp | | 316 | 2,778 |
Legacy Bancorp, Inc. | | 582 | 5,739 |
Meridian Interstate Bancorp, Inc.* | | 838 | 7,282 |
MGIC Investment Corp.* | | 8,651 | 50,003 |
NASB Financial, Inc. | | 278 | 6,475 |
NewAlliance Bancshares, Inc. | | 7,368 | 88,490 |
Northeast Community Bancorp, Inc. | | 465 | 3,055 |
Northwest Bancshares, Inc. | | 2,821 | 31,934 |
OceanFirst Financial Corp. | | 705 | 7,966 |
Ocwen Financial Corp.* | | 3,935 | 37,658 |
Oritani Financial Corp. | | 698 | 9,584 |
PMI Group, Inc.* | | 5,033 | 12,683 |
Provident Financial Services, Inc. | | 4,125 | 43,931 |
Provident New York Bancorp | | 2,394 | 20,205 |
Prudential Bancorp, Inc. of Pennsylvania | | 316 | 3,008 |
Radian Group, Inc. | | 5,651 | 41,309 |
Rockville Financial, Inc. | | 708 | 7,434 |
Roma Financial Corp. | | 676 | 8,355 |
Territorial Bancorp, Inc.* | | 900 | 16,245 |
Tree.com, Inc.* | | 506 | 4,630 |
Trustco Bank Corp. NY | | 5,541 | 34,908 |
United Financial Bancorp, Inc. | | 1,139 | 14,932 |
ViewPoint Financial Group | | 701 | 10,101 |
Waterstone Financial, Inc.* | | 553 | 1,134 |
Westfield Financial, Inc. | | 2,139 | 17,647 |
WSFS Financial Corp. | | 490 | 12,559 |
| | | 851,810 |
| | | |
Tobacco - 0.2% | | | |
Alliance One International, Inc.* | | 6,125 | 29,890 |
Star Scientific, Inc.* | | 5,250 | 3,675 |
Universal Corp. | | 1,725 | 78,677 |
Vector Group Ltd. | | 2,680 | 37,520 |
| | | 149,762 |
| | | |
Equity Securities - Cont'd | | Shares | Value |
Trading Companies & Distributors - 0.8% | | | |
Aceto Corp. | | 1,948 | $10,032 |
Aircastle Ltd. | | 3,237 | 31,885 |
Applied Industrial Technologies, Inc. | | 2,916 | 64,356 |
Beacon Roofing Supply, Inc.* | | 3,245 | 51,920 |
BlueLinx Holdings, Inc.* | | 916 | 2,537 |
DXP Enterprises, Inc.* | | 572 | 7,476 |
H&E Equipment Services, Inc.* | | 1,884 | 19,763 |
Houston Wire & Cable Co. | | 1,218 | 14,494 |
Interline Brands, Inc.* | | 2,241 | 38,702 |
Kaman Corp. | | 1,861 | 42,971 |
Lawson Products | | 334 | 5,895 |
RSC Holdings, Inc.* | | 3,485 | 24,534 |
Rush Enterprises, Inc.* | | 2,204 | 26,206 |
TAL International Group, Inc. | | 1,136 | 15,029 |
Textainer Group Holdings Ltd. | | 632 | 10,681 |
Titan Machinery, Inc.* | | 1,023 | 11,806 |
United Rentals, Inc.* | | 4,149 | 40,702 |
Watsco, Inc. | | 1,835 | 89,878 |
Willis Lease Finance Corp.* | | 373 | 5,595 |
| | | 514,462 |
| | | |
Transportation Infrastructure - 0.0% | | | |
CAI International, Inc.* | | 587 | 5,301 |
| | | |
Venture Capital - 0.1% | | | |
Allos Therapeutics, Inc.* | | 4,787 | 31,451 |
Evergreen Solar, Inc.* | | 12,957 | 19,565 |
| | | 51,016 |
| | | |
Water Utilities - 0.3% | | | |
American States Water Co. | | 1,275 | 45,148 |
Artesian Resources Corp. | | 490 | 8,972 |
Cadiz, Inc.* | | 953 | 11,407 |
California Water Service Group | | 1,356 | 49,928 |
Connecticut Water Service, Inc. | | 671 | 16,621 |
Consolidated Water Co., Inc. | | 1,003 | 14,333 |
Middlesex Water Co. | | 924 | 16,290 |
Pennichuck Corp. | | 336 | 7,100 |
SJW Corp. | | 892 | 20,132 |
Southwest Water Co. | | 1,950 | 11,485 |
York Water Co. | | 901 | 13,074 |
| | | 214,490 |
| | | |
Wireless Telecommunication Services - 0.3% | | | |
NTELOS Holdings Corp. | | 2,189 | 39,008 |
Shenandoah Telecommunications Co. | | 1,731 | 35,226 |
Syniverse Holdings, Inc.* | | 4,720 | 82,506 |
USA Mobility, Inc. | | 1,562 | 17,198 |
| | | 173,938 |
| | | |
| | | |
Total Equity Securities (Cost $72,707,630) | | | 65,120,183 |
| | | |
| | Principal | |
U.S. Treasury - 0.5% | | Amount | Value |
United States Treasury Bills, 2/11/10 ^ | | $300,000 | $299,966 |
| | | |
Total U.S. Treasury (Cost $299,966) | | | 299,966 |
| | | |
Time Deposit - 1.5% | | | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | 973,490 | 973,490 |
| �� | | |
Total Time Deposit (Cost $973,490) | | | 973,490 |
| | | |
Exchange Traded Funds - 0.1% | | Shares | |
iShares Russell 2000 Index Fund | | 1,000 | 62,260 |
| | | |
Total Exchange Traded Funds (Cost $58,471) | | | 62,260 |
| | | |
| | | |
TOTAL INVESTMENTS (Cost $74,039,557) - 99.8% | | | 66,455,899 |
Other assets and liabilities, net - 0.2% | | | 163,586 |
Net Assets - 100% | | | $66,619,485 |
| | | |
Net Assets Consist of: | | | |
Paid-in capital applicable to the following shares of common stock outstanding; | | | |
$0.10 par value, 20,000,000 shares authorized: | | | |
Class I: 1,261,716 shares outstanding | | | $74,269,179 |
Class F: 65,485 shares outstanding | | | 3,135,369 |
Undistributed net investment income | | | 154,606 |
Accumulated net realized gain (loss) on investments | | | (3,413,643) |
Net unrealized appreciation (depreciation) on investments | | | (7,526,026) |
| | | |
Net Assets | | | $66,619,485 |
| | | |
Net Asset Value per Share: | | | |
Class I (based on net assets of $63,320,160) | | | $50.19 |
Class F (based on net assets of $3,299,325) | | | $50.38 |
Futures | Number Of
Contracts | Expiration
Date | Underlying
Face Amount
At Value | Unrealized
Appreciation
(Depreciation) |
Purchased: | | | | |
E-Mini Russell 2000 Index^ | 23 | 3/10 | $1,434,970 | $57,632 |
(b) This security was valued by the Board of Directors. See note A.
^ Futures collateralized by 300,000 units of U.S. Treasury Bills.
* Non-income producing security.
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income (net of foreign taxes withheld of $118) | $920,950 |
Interest income | 6,136 |
Total investment income | 927,086 |
| |
Expenses: | |
Investment advisory fee | 212,159 |
Transfer agent fees and expenses | 10,481 |
Accounting fees | 6,351 |
Distribution plan expenses: | |
Class F | 4,425 |
Directors' fees and expenses | 9,500 |
Administrative fees | 60,617 |
Custodian fees | 99,384 |
Reports to shareholders | 23,685 |
Professional fees | 23,388 |
Contract services | 77,795 |
Miscellaneous | 226 |
Total expenses | 528,011 |
Reimbursement from Advisor: | |
Class F | (7,421) |
Class I | (91,538) |
Fees paid indirectly | (87) |
Net expenses | 428,965 |
| |
Net Investment Income | 498,121 |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | (3,670,917) |
Foreign currency transactions | 164 |
Futures | 428,901 |
| (3,241,852) |
| |
Change in unrealized appreciation (depreciation) on: | |
Investments | 17,766,851 |
Assets and liabilities denominated in foreign currencies | 3 |
Futures | (126,926) |
| 17,639,928 |
| |
Net Realized and Unrealized Gain | |
(Loss) | 14,398,076 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $14,896,197 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $498,121 | $914,785 |
Net realized gain (loss) | (3,241,852) | 1,131,847 |
Change in unrealized appreciation or (depreciation) | 17,639,928 | (33,476,017) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 14,896,197 | (31,429,385) |
| | |
Distributions to shareholders from: | | |
Net investment income: | | |
Class I shares | (331,011) | (1,591,208) |
Class F shares | (8,613) | (10,834) |
Net realized gain: | | |
Class I shares | (685,510) | (5,230,091) |
Class F shares | (35,436) | (48,980) |
Total distributions | ($1,060,570) | (6,881,113) |
| | |
Capital share transactions: | | |
Shares sold: | | |
Class I shares | 8,103,966 | 17,263,850 |
Class F shares | 2,505,356 | 1,086,448 |
Reinvestment of distributions: | | |
Class I shares | 1,016,521 | 6,821,298 |
Class F shares | 44,049 | 59,815 |
Shares redeemed: | | |
Class I shares | (17,396,665) | (19,484,061) |
Class F shares | (880,732) | (420,084) |
Total capital share transactions | (6,607,505) | 5,327,266 |
| | |
Total Increase (Decrease) in Net Assets | 7,228,122 | (32,983,232) |
| | |
Net Assets | | |
Beginning of year | 59,391,363 | 92,374,595 |
End of year (including undistributed net investment | | |
income of $154,606 and $81,759, respectively) | $66,619,485 | $59,391,363 |
| | |
Capital Share Activity | | |
Shares sold: | | |
Class I shares | 197,679 | 301,083 |
Class F shares | 60,682 | 20,691 |
Reinvestment of distributions: | | |
Class I shares | 19,999 | 132,013 |
Class F shares | 863 | 1,189 |
Shares redeemed: | | |
Class I shares | (401,191) | (356,259) |
Class F shares | (20,161) | (8,241) |
Total capital share transactions | (142,129) | 90,476 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Russell 2000 Small Cap Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio offers Class I and Class F shares. Class F shares are subject to Distribution Plan Expenses. Each class has different: (a) dividend rates, due to differences in Distribution Plan expenses and other class-specific expenses, (b) exchange privileges; and (c) class-specific voting rights.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the Portfolio, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Short-term notes are stated at amortized cost, which approximates fair value. The Portfolio may invest in securities whose resale is subject to restrictions. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, securities valued at $17 or 0.0% of net assets were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity Securities** | $65,120,166 | -- | $17 | $65,120,183 |
Exchange Traded Funds | 62,260 | -- | -- | 62,260 |
U.S. Government Obligations | -- | $299,966 | -- | 299,966 |
Other Debt Obligations | -- | 973,490 | -- | 973,490 |
TOTAL | $65,182,426 | $1,273,456 | $17* | $66,455,899 |
| | | | |
Other financial instruments*** | $57,632 | -- | -- | $57,632 |
*Level 3 securities represent 0.0% of net assets.
** For further breakdown of Equity Securities by industry type, please refer to the Statement of Net Assets.
*** Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, which are valued at the unrealized appreciation/ depreciation on the instrument.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Investment income and realized and unrealized gains and losses are allocated to separate classes of shares based upon the relative net assets of each class. Expenses arising in connection with a class are charged directly to that class. Expenses common to the classes are allocated to each class in proportion to their relative net assets. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the applicable country's tax rules and rates.
Futures Contracts: The Portfolio may purchase and sell futures contracts, but only when, in the judgment of the Advisor, such a position acts as a hedge. The Portfolio may not enter into futures contracts for the purpose of speculation or leverage. These futures contracts may include, but are not limited to, market index futures contracts. The Portfolio is subject to market risk in the normal course of pursuing its investment objectives. The Portfolio may use futures contracts to hedge against changes in the value of securities. The Portfolio may enter into futures contracts agreeing to buy or sell a financial instrument for a set price at a future date. Initial margin deposits of either cash or securities as required by the broker are made upon entering into the contract. While the contract is open, daily variation margin payments are made to or received from the broker reflecting the daily change in market value of the contract and are recorded for financial reporting purposes as unrealized gains or losses by the Portfolio. When a futures contract is closed, a realized gain or loss is recorded equal to the difference between the opening and closing value of the contract. The risks associated with entering into futures contracts may include the possible illiquidity of the secondary market which would limit the Portfolio's ability to close out a futures contract prior to the settlement date, an imperfect correlation between the value of the contracts and the underlying financial instruments, or that the counterparty will fail to perform its obligations under the contracts' terms. Futures contracts are designed by boards of trade which are designated "contracts markets" by the Commodities Futures Trading Commission. Futures contracts trade on the contracts markets in a manner that is similar to the way a stock trades on a stock exchange and the boards of trade, through their clearing corporations, guarantee the futures contracts against default. As a result, there is minimal counterparty credit risk to the Portfolio.
Foreign Currency Transactions: The Portfolio's accounting records are maintained in U.S. dollars. For valuation of assets and liabilities on each date of net asset value determination, foreign denominations are converted into U.S. dollars using the current exchange rate. Security transactions, income and expenses are translated at the prevailing rate of exchange on the date of the event. The effect of changes in foreign exchange rates on securities is included with the net realized and unrealized gain or loss on investments.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Mutual Holding Company ("UNIFI"). The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .35% of the Portfolio's average daily net assets. Under the terms of the agreement, $19,442 was payable at year end. In addition, $13,454 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense caps are .70% and .91% for Class I and Class F, respectively. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $5,555 was payable at year end.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and principal underwriter for the Portfolio. Distribution plans, adopted by Class F shares, allow the Portfolio to pay the distributor for expenses and services associated with the distribution of shares. The expenses paid may not exceed 0.20% annually of average daily net assets of Class F. Under the terms of the agreement, $547 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $206 for the year ended December 31, 2009. Under the terms of the agreement, $16 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $14,007,234 and $20,038,469, respectively.
Capital Loss Carryforward
Expiration Date
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $339,624 | $1,976,868 |
Long term capital gain | 720,946 | 4,904,245 |
Total | $1,060,570 | $6,881,113 |
As of December 31, 2009, the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $10,143,494 |
Unrealized (depreciation) | (17,677,995) |
Net unrealized appreciation/(depreciation) | ($7,534,501) |
Undistributed ordinary income | $158,976 |
Capital loss carryforward | ($3,409,538) |
Federal income tax cost of investments | $73,990,400 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales, real estate investment trusts, passive foreign investment companies and Section 1256 contracts.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to real estate investment trusts, foreign currency transactions, litigation settlements, and passive foreign investment companies.
Undistributed net investment income | ($85,650) |
Accumulated net realized gain (loss) | 86,619 |
Paid-in Capital | (969) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loan outstanding pursuant to this line of credit at December 31, 2009.
For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Weighted
Average
Interest
Rate | Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed |
| $10,898 | 1.45% | $3,539,345 | December 2009 |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions ocurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates $720,946 of the long term capital gain distributions paid during the year or the maximum amount allowable but not less than the afore-mentioned amount as capital gain dividend in accordance with Section 852(b)(3)(C) of the Internal Revenue Code.
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 90.7% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
Class I Shares | 2009 | 2008 (z) | 2007 (z) |
Net asset value, beginning | $40.42 | $67.00 | $74.19 |
Income from investment operations | | | |
Net investment income | .40 | .62 | .74 |
Net realized and unrealized gain (loss) | 10.19 | (22.38) | (1.98) |
Total from investment operations | 10.59 | (21.76) | (1.24) |
Distributions from | | | |
Net investment income | (.27) | (1.13) | (.47) |
Net realized gain | (.55) | (3.69) | (5.48) |
Total distributions | (.82) | (4.82) | (5.95) |
Total increase (decrease) in net asset value | 9.77 | (26.58) | (7.19) |
Net asset value, ending | $50.19 | $40.42 | $67.00 |
| | | |
Total return* | 26.17% | (33.95%) | (2.20%) |
Ratios to average net assets: A | | | |
Net investment income | .83% | 1.13% | 1.04% |
Total expenses | .86% | .70% | .64% |
Expenses before offsets | .70% | .70% | .64% |
Net expenses | .70% | .70% | .64% |
Portfolio turnover | 24% | 30% | 19% |
Net assets, ending (in thousands) | $63,320 | $58,414 | $91,676 |
| | | |
| Years Ended | |
| December 31, | December 31, | |
Class I Shares | 2006 | 2005 | |
Net asset value, beginning | $65.46 | $63.92 | |
Income from investment operations | | | |
Net investment income | .46 | .41 | |
Net realized and unrealized gain (loss) | 10.88 | 2.07 | |
Total from investment operations | 11.34 | 2.48 | |
Distributions from | | | |
Net investment income | (.44) | (.31) | |
Net realized gain | (2.17) | (.63) | |
Total distributions | (2.61) | (.94) | |
Total increase (decrease) in net asset value | 8.73 | 1.54 | |
Net asset value, ending | $74.19 | $65.46 | |
Total return* | 17.60% | 4.01% | |
Ratios to average net assets: A | | | |
Net investment income | .84% | .70% | |
Total expenses | .65% | .69% | |
Expenses before offsets | .65% | .69% | |
Net expenses | .65% | .69% | |
Portfolio turnover | 24% | 25% | |
Net assets, ending (in thousands) | $95,694 | $75,815 | |
| | | |
See notes to financial highlights. | | | |
| | | |
| | | |
Financial Highlights | | | |
| | | |
| | | |
| | Years Ended | |
| December 31, | December 31, | December 31, |
Class F Shares | 2009 | 2008 (z) | 2007 (z) |
Net asset value, beginning | $40.55 | $66.78 | $74.02 |
Income from investment operations | | | |
Net investment income | .19 | .58 | .59 |
Net realized and unrealized gain (loss) | 10.32 | (22.36) | (1.97) |
Total from investment operations | 10.51 | (21.78) | (1.38) |
Distributions from | | | |
Net investment income | (.13) | (.76) | (.38) |
Net realized gain | (.55) | (3.69) | (5.48) |
Total distributions | (.68) | (4.45) | (5.86) |
Total increase (decrease) in net asset value | 9.38 | (26.23) | (7.24) |
Net asset value, ending | $50.38 | $40.55 | $66.78 |
| | | |
Total return* | 25.91% | (34.05%) | (2.40%) |
Ratios to average net assets: A | | | |
Net investment income | .63% | 1.09% | .84% |
Total expenses | 1.25% | .91% | .84% |
Expenses before offsets | .91% | .91% | .84% |
Net expenses | .91% | .91% | .84% |
Portfolio turnover | 24% | 30% | 19% |
Net assets, ending (in thousands) | $3,299 | $977 | $699 |
| | | |
| | | |
| Periods Ended | |
| December 31, | December 31, | |
Class F Shares | 2006 | 2005# | |
Net asset value, beginning | $65.43 | $64.41 | |
Income from investment operations | | | |
Net investment income | .31 | .12 | |
Net realized and unrealized gain (loss) | 10.87 | .90 | |
Total from investment operations | 11.18 | 1.02 | |
Distributions from | | | |
Net investment income | (.42) | -- | |
Net realized gain | (2.17) | -- | |
Total distributions | (2.59) | -- | |
Total increase (decrease) in net asset value | 8.59 | 1.02 | |
Net asset value, ending | $74.02 | $65.43 | |
| | | |
Total return* | 17.35% | 1.58% | |
Ratios to average net assets: A | | | |
Net investment income | .64% | .74% (a) | |
Total expenses | .85% | .84% (a) | |
Expenses before offsets | .85% | .84% (a) | |
Net expenses | .85% | .84% (a) | |
Portfolio turnover | 24% | 25% | |
Net assets, ending (in thousands) | $272 | $5 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
(a) Annualized.
# From October 4, 2005, inception.
(z) Per share figures are calculated using the Average Shares Method.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expressed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one-year period ended June 30, 2009, and performed below the median of its peer universe for the three- and five-year periods ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one- and five-year periods end ed June 30, 2009 and underperformed its Lipper index for the three-year period ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance. Based upon its review, the Board concluded that the Portfolio's performance was being addressed.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was above the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Port folio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is being addressed; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Por tfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit EAFE
International Index
Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
30 | Statement of Operations |
31 | Statements of Changes in Net Assets |
33 | Notes to Financial Statements |
39 | Financial Highlights |
41 | Explanation of Financial Tables |
42 | Proxy Voting |
43 | Availability of Quarterly Portfolio Holdings |
43 | Basis for Board's Approval of Investment Advisory Contracts |
47 | Director and Officer Information Table |
Summit EAFE International Index Portfolio
Managed by World Asset Management, Inc.
Performance
For the 12 months ended December 31, 2009, Summit International EAFE Index Portfolio returned 27.83% (Class I) compared to the 32.46% return for the Morgan Stanley Capital International (MSCI) EAFE Index (Standard). As an index fund, the portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of the MSCI EAFE Index before fees and expenses. The difference in performance is attributable to fund expenses and fair value pricing adjustments.
Summit EAFE International Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
| Class I | Class F** |
One year | 27.83% | 27.47% |
Five year | 2.66% | 2.43% |
Since inception (11.12.02) | 8.35% | 8.11% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**Prior to December 17, 2007, Class F share performance is based on Class I performance.
Absent limitation of expenses during certain of the periods shown, performance would have been lower.
The performance data shown represents past performance, and does not guarantee future results.The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted. The value of an investment in Class I Shares is plotted in the graph. The value of an investment in another class of shares would be different.
Investment Climate
Early in 2009, central banks around the world lowered interest rates to record levels, and governments in most countries initiated unprecedented stimulus programs as they fought to limit the effects of the global financial crisis and economic downturn. It appears that the massive liquidity created by these actions helped to limit the magnitude of the crisis. By spring, there were signs that the global economy and credit markets had stabilized. From late March, stock markets across the world rallied strongly. Emerging markets were the best-performing asset category for the year, although many segments of the fixed-income market also delivered stellar returns.
Portfolio Strategy
The Portfolio continued to meet its investment objective of closely tracking the total return of the MSCI EAFE Index. The unmanaged MSCI EAFE Index is made up of a wide range of securities that trade in developed markets throughout the world. These markets delivered strong returns for the year, both in absolute terms and relative to markets in the United States as measured by the Standard & Poor's 500 Index, which returned 26.5% for the year.
There were 21 countries in the MSCI EAFE Index universe at the end of 2009. Japan and the United Kingdom were the most heavily weighted at 20.7% and 21.6%, respectively. Norway, Australia, Singapore, and Sweden delivered the strongest performance for the year. Each country posted an annual return in excess of 60%. Japan and Finland were the weakest performers in the Index, returning 4.4% and 7.2%, respectively. Because of its heavy weighting and weak performance, Japan detracted the most from performance during the year.
At year-end, the MSCI EAFE Index was most heavily weighted in the Financials, Industrials, and Consumer Discretionary sectors, which comprised 25.47%, 11.22%, and 9.67% of the index, respectively. Materials was the best performing sector for the year, while Utilities delivered the weakest performance. Financials and Consumer Discretionary sectors outperformed the benchmark. The Industrials sector underperformed.
Fair value pricing adjustment to the Portfolio accounted for a significant amount of the underperformance relative to the Index. The Portfolio uses the fair value pricing service to adjust its net asset value (NAV) when the closing market prices of international stocks that are held in the portfolio have changed materially relative to their closing prices on their local stock exchanges. This practice helps deter short-term trading in the Portfolio, although, as during the current year, it can cause performance to deviate from the Index.
Cash flows into the Summit EAFE International Portfolio were invested promptly to minimize their impact on total return. Passive market indexes like the MSCI EAFE Index do not incur any operating expenses, unlike the Portfolio. Net Asset Value (NAV) rounding also contributed to the Portfolio's return relative to the Index. NAV rounding occurs because mutual fund prices are carried out only to two decimal places.
Economic Sectors | % of Total
Investments |
Communications | 0.1% |
Consumer Discretionary | 9.4% |
Consumer Staples | 10.0% |
Energy | 8.2% |
Exchange Traded Funds | 1.9% |
Financials | 24.0% |
Health Care | 8.2% |
Industrials | 11.0% |
Information Technology | 4.7% |
Materials | 10.1% |
Telecommunication Services | 5.7% |
Time Deposit | 0.9% |
Utilities | 5.8% |
Total | 100% |
Outlook
Global economic growth generally turned positive in 2009. Central bank and government intervention helped to support demand, reduce uncertainty, and lower systemic risk in financial markets. While it appears that many countries may be at or near recovery, the pace of recovery is likely to be characterized by slow or moderate growth in many places. Financial systems are recovering and the current unprecedented government support will need to be withdrawn over time.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Class I | | | |
Actual | $1,000.00 | $1,208.20 | $5.50 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,020.22 | $5.04 |
| | | |
Class F | | | |
Actual | $1,000.00 | $1,207.30 | $6.40 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,019.41 | $5.85 |
* Expenses are equal to the Fund's annualized expense ratio of 0.99% and 1.15%, respectively, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit EAFE International Index Portfolio:
We have audited the accompanying statement of net assets of the Summit EAFE International Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit EAFE International Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
December 31, 2009
Equity Securities - 96.9% | Shares | Value |
Australia - 8.1% | | |
AGL Energy Ltd. | 3,754 | $47,193 |
Alumina Ltd.* | 20,472 | 33,596 |
Amcor Ltd. | 10,210 | 56,845 |
AMP Ltd. | 16,894 | 101,685 |
Aristocrat Leisure Ltd. | 3,601 | 12,846 |
Arrow Energy NL* | 4,874 | 18,032 |
Asciano Group* | 22,591 | 36,450 |
ASX Ltd. | 1,436 | 44,697 |
Australia & New Zealand Banking Group Ltd. | 19,562 | 397,761 |
AXA Asia Pacific Holdings Ltd. | 8,537 | 50,200 |
Bendigo and Adelaide Bank Ltd. | 2,648 | 23,200 |
BGP Holdings plc* | 77,172 | - |
BHP Billiton Ltd. | 28,156 | 1,077,539 |
Billabong International Ltd. | 1,636 | 15,896 |
BlueScope Steel Ltd. | 15,296 | 42,182 |
Boral Ltd. | 5,219 | 27,562 |
Brambles Ltd. | 11,760 | 71,196 |
Caltex Australia Ltd.* | 1,245 | 10,325 |
CFS Retail Property Trust | 15,218 | 25,758 |
Coca-Cola Amatil Ltd. | 4,668 | 48,073 |
Cochlear Ltd. | 497 | 30,670 |
Commonwealth Bank of Australia | 12,742 | 620,947 |
Computershare Ltd. | 3,729 | 38,000 |
Crown Ltd. | 4,252 | 30,424 |
CSL Ltd. | 5,063 | 147,203 |
CSR Ltd. | 10,250 | 16,476 |
Dexus Property Group | 39,219 | 29,596 |
Energy Resources of Australia Ltd. | 560 | 11,970 |
Fairfax Media Ltd. | 17,758 | 27,374 |
Fortescue Metals Group Ltd.* | 10,366 | 40,798 |
Foster's Group Ltd. | 16,173 | 79,536 |
Goodman Fielder Ltd. | 11,562 | 16,819 |
Goodman Group | 50,138 | 28,198 |
GPT Group | 77,172 | 41,420 |
Harvey Norman Holdings Ltd. | 4,456 | 16,722 |
Incitec Pivot Ltd. | 13,421 | 42,506 |
Insurance Australia Group Ltd. | 17,378 | 62,208 |
Leighton Holdings Ltd. | 1,249 | 42,176 |
Lend Lease Corp. Ltd. | 3,646 | 33,204 |
Macquarie Airports | 6,230 | 16,812 |
Macquarie Group Ltd. | 2,548 | 109,022 |
Macquarie Infrastructure Group | 18,975 | 22,598 |
Metcash Ltd. | 6,417 | 25,669 |
Mirvac Group | 21,331 | 29,657 |
National Australia Bank Ltd. | 16,093 | 391,354 |
Newcrest Mining Ltd. | 4,058 | 127,103 |
Nufarm Ltd. | 1,531 | 14,948 |
OneSteel Ltd. | 11,123 | 33,069 |
Orica Ltd. | 3,013 | 69,794 |
| | |
Equity Securities - Cont'd | Shares | Value |
Australia - Cont'd | | |
Origin Energy Ltd. | 7,335 | $110,052 |
OZ Minerals Ltd.* | 26,186 | 27,365 |
Paladin Energy Ltd.* | 4,709 | 17,465 |
Qantas Airways Ltd. | 9,663 | 25,666 |
QBE Insurance Group Ltd. | 8,411 | 191,860 |
Rio Tinto Ltd. | 3,655 | 241,688 |
Santos Ltd. | 6,871 | 86,466 |
Sims Metal Management Ltd. | 1,289 | 25,217 |
Sonic Healthcare Ltd. | 3,059 | 42,104 |
SP AusNet | 11,118 | 9,100 |
Stockland | 19,149 | 67,252 |
Suncorp-Metway Ltd. | 10,548 | 81,398 |
TABCORP Holdings Ltd. | 5,064 | 31,383 |
Tatts Group Ltd. | 10,122 | 22,067 |
Telstra Corp. Ltd. | 36,908 | 113,038 |
Toll Holdings Ltd. | 5,543 | 43,169 |
Transurban Group | 9,685 | 47,948 |
Wesfarmers Ltd. | 1,274 | 35,399 |
Wesfarmers Ltd. PPS | 8,432 | 234,289 |
Westfield Group | 17,188 | 191,568 |
Westpac Banking Corp. | 24,423 | 549,406 |
Woodside Petroleum Ltd.: | | |
Common Stock | 4,165 | 174,946 |
Rights (expires 1/29/10)* | 347 | 1,589 |
Woolworths Ltd. | 10,310 | 258,088 |
WorleyParsons Ltd. | 1,431 | 37,047 |
| | 7,002,879 |
| | |
Austria - 0.3% | | |
Erste Bank der Oesterreichischen Sparkassen AG | 1,462 | 54,186 |
Immoeast AG* | 3,766 | 20,644 |
OMV AG | 1,258 | 55,084 |
Raiffeisen International Bank Holding AG | 480 | 27,166 |
Telekom Austria AG | 2,701 | 38,560 |
Verbund - Oesterreichische Elektrizitaetswirtschafts AG | 646 | 27,386 |
Vienna Insurance Group | 349 | 17,919 |
Voestalpine AG | 1,029 | 37,518 |
| | 278,463 |
| | |
Belgium - 0.9% | | |
Anheuser-Busch InBev NV | 6,051 | 312,587 |
Belgacom SA | 1,276 | 46,020 |
Colruyt SA | 126 | 30,377 |
Delhaize Group | 843 | 64,561 |
Dexia SA* | 4,435 | 27,896 |
Fortis NV: | | |
Common Stock* | 18,743 | 69,433 |
Rights (expires 7/4/14)(b)* | 14,430 | - |
Groupe Bruxelles Lambert SA | 676 | 63,611 |
KBC Groep NV* | 1,350 | 58,457 |
Mobistar SA | 251 | 17,163 |
Nationale A Portefeuille | 276 | 14,717 |
Solvay SA | 497 | 53,574 |
| | |
Equity Securities - Cont'd | Shares | Value |
Belgium - Cont'd | | |
UCB SA | 846 | $35,423 |
Umicore SA | 1,004 | 33,430 |
| | 827,249 |
| | |
Bermuda - 0.1% | | |
Seadrill Ltd. | 2,344 | 59,330 |
| | |
Canada - 0.1% | | |
Thomson Corp.* | 1,487 | 47,956 |
| | |
China - 0.0% | | |
Foxconn International Holdings Ltd.* | 18,892 | 21,699 |
| | |
Cyprus - 0.0% | | |
Bank of Cyprus Public Co. Ltd. | 4,675 | 32,583 |
| | |
Denmark - 0.9% | | |
A P Moller - Maersk A/S: | | |
Series A | 4 | 26,962 |
Series B | 11 | 76,911 |
Carlsberg A/S, Series B | 897 | 66,188 |
Coloplast A/S, Series B | 207 | 18,811 |
Danske Bank A/S* | 3,810 | 86,740 |
DSV A/S* | 1,754 | 31,464 |
H. Lundbeck A/S | 495 | 9,009 |
Novo Nordisk A/S, Series B | 3,754 | 240,164 |
Novozymes A/S, Series B | 386 | 40,019 |
Topdanmark A/S* | 125 | 16,923 |
TrygVesta A/S | 217 | 14,323 |
Vestas Wind Systems A/S* | 1,709 | 104,557 |
William Demant Holding A/S* | 209 | 15,747 |
| | 747,818 |
| | |
Finland - 1.1% | | |
Elisa Oyj | 1,116 | 25,493 |
Fortum Oyj | 3,726 | 100,931 |
Kesko Oyj, Series B | 598 | 19,722 |
Kone OYJ | 1,289 | 55,086 |
Metso Oyj | 1,070 | 37,616 |
Neste Oil Oyj | 1,075 | 19,063 |
Nokia Oyj | 31,418 | 403,297 |
Nokian Renkaat Oyj | 948 | 22,999 |
Orion Oyj, Class B | 749 | 16,126 |
Outokumpu Oyj | 1,039 | 19,535 |
Pohjola Bank plc | 1,213 | 13,125 |
Rautaruukki Oyj | 747 | 17,150 |
Sampo Oyj | 3,524 | 85,517 |
Sanoma Oyj | 675 | 15,146 |
Stora Enso Oyj, Series R* | 4,880 | 34,202 |
UPM-Kymmene Oyj | 4,362 | 51,871 |
Wartsila Oyj | 737 | 29,458 |
| | 966,337 |
| | |
Equity Securities - Cont'd | Shares | Value |
France - 9.9% | | |
Accor SA | 1,199 | $65,127 |
Aeroports de Paris | 249 | 20,027 |
Air France-KLM* | 1,206 | 18,802 |
Air Liquide SA | 2,096 | 247,393 |
Alcatel-Lucent* | 19,447 | 65,124 |
Alstom SA | 1,695 | 117,754 |
Atos Origin SA* | 380 | 17,300 |
AXA SA | 13,145 | 310,850 |
BioMerieux | 115 | 13,375 |
BNP Paribas | 7,017 | 553,679 |
Bouygues | 1,872 | 97,618 |
Bureau Veritas SA | 410 | 21,236 |
Cap Gemini SA | 1,224 | 55,436 |
Carrefour SA | 5,322 | 255,852 |
Casino Guichard-Perrachon SA | 462 | 41,400 |
Christian Dior SA | 533 | 54,777 |
Cie de Saint-Gobain | 3,086 | 165,632 |
Cie Generale de Geophysique-Veritas* | 1,261 | 26,893 |
Cie Generale d'Optique Essilor International SA | 1,681 | 100,066 |
CNP Assurances SA | 311 | 30,107 |
Compagnie Generale des Etablissements Michelin, Series B | 1,216 | 93,264 |
Credit Agricole SA | 7,471 | 130,233 |
Dassault Systemes SA | 543 | 30,904 |
EDF Energies Nouvelles SA | 1,987 | 118,225 |
Eiffage SA | 339 | 19,151 |
Eramet | 47 | 14,635 |
Eurazeo SA | 251 | 17,514 |
Eutelsat Communications | 829 | 26,595 |
Fonciere Des Regions: | | |
Common | 195 | 19,940 |
Warrants (strike price $65.00/share, expires 12/31/10)* | 195 | 165 |
France Telecom SA | 15,356 | 383,359 |
GDF Suez | 10,122 | 439,084 |
Gecina SA | 167 | 18,074 |
Groupe Danone | 4,613 | 280,899 |
Hermes International | 442 | 58,787 |
Icade SA | 175 | 16,641 |
Iliad SA | 144 | 17,153 |
Imerys SA | 284 | 16,889 |
Ipsen SA | 211 | 11,719 |
JC Decaux SA* | 556 | 13,479 |
Klepierre SA | 797 | 32,418 |
Lafarge SA | 1,675 | 137,732 |
Lagardere SCA | 990 | 39,943 |
Legrand SA | 881 | 24,564 |
L'Oreal SA | 2,008 | 222,915 |
LVMH Moet Hennessy Louis Vuitton SA | 2,055 | 230,716 |
M6-Metropole Television SA | 540 | 13,815 |
Natixis* | 7,319 | 36,430 |
Neopost SA | 261 | 21,562 |
PagesJaunes Groupe | 1,060 | 11,799 |
Pernod-Ricard SA | 1,659 | 142,386 |
| | |
Equity Securities - Cont'd | Shares | Value |
France - Cont'd | | |
PPR SA | 637 | $76,323 |
PSA Peugeot Citroen SA* | 1,276 | 42,742 |
Publicis Groupe | 986 | 39,995 |
Renault SA* | 1,553 | 79,072 |
Safran SA | 1,574 | 30,618 |
Sanofi-Aventis SA | 8,829 | 692,004 |
Schneider Electric SA | 1,945 | 225,308 |
SCOR SE | 1,390 | 34,716 |
Societe BIC SA | 223 | 15,433 |
Societe Des Autoroutes Paris-Rhin-Rhone* | 189 | 14,476 |
Societe Generale Groupe | 3,897 | 269,615 |
Societe Television Francaise 1 | 984 | 18,169 |
Sodexo | 790 | 45,116 |
Suez Environnement SA | 2,259 | 52,181 |
Technip SA | 871 | 61,028 |
Thales SA | 750 | 38,430 |
Total SA | 17,908 | 1,147,452 |
Unibail-Rodamco | 684 | 150,559 |
Vallourec SA | 451 | 82,022 |
Veolia Environnement | 3,171 | 104,258 |
Vinci SA | 3,546 | 198,591 |
Vivendi | 9,821 | 289,902 |
| | 8,627,448 |
| | |
Germany - 7.8% | | |
Adidas AG | 1,623 | 87,619 |
Allianz SE | 3,800 | 472,947 |
BASF SE | 7,744 | 480,283 |
Bayer AG | 6,412 | 512,426 |
Bayerische Motoren Werke AG: | | |
Common | 2,777 | 126,234 |
Preferred | 437 | 14,372 |
Beiersdorf AG | 739 | 48,563 |
Celesio AG | 713 | 18,113 |
Commerzbank AG* | 5,946 | 49,848 |
Daimler AG | 7,565 | 404,133 |
Deutsche Bank AG | 4,967 | 350,051 |
Deutsche Boerse AG | 1,635 | 135,922 |
Deutsche Lufthansa AG | 1,920 | 32,230 |
Deutsche Post AG | 7,098 | 136,560 |
Deutsche Postbank AG* | 734 | 23,982 |
Deutsche Telekom AG | 23,783 | 351,215 |
E.ON AG | 15,948 | 665,722 |
Fraport AG Frankfurt Airport Services Worldwide | 307 | 15,967 |
Fresenius Medical Care AG & Co. KGaA | 1,602 | 84,814 |
Fresenius SE: | | |
Common | 236 | 14,689 |
Preferred | 675 | 48,235 |
GEA Group AG | 1,310 | 29,163 |
Hannover Rueckversicherung AG* | 530 | 24,875 |
| | |
| | |
Equity Securities - Cont'd | Shares | Value |
Germany - Cont'd | | |
Henkel AG & Co. KGaA: | | |
Common | 1,089 | $48,629 |
Preferred | 1,471 | 76,576 |
Hochtief AG | 369 | 28,196 |
Infineon Technologies AG* | 9,085 | 50,149 |
K+S AG | 1,245 | 71,559 |
Linde AG | 1,272 | 153,088 |
MAN AG | 887 | 69,075 |
Merck KGAA | 542 | 50,655 |
Metro AG | 951 | 57,960 |
Muenchener Rueckversicherungs AG | 1,731 | 269,812 |
Porsche Automobil Holding SE, Preferred | 734 | 46,097 |
Puma AG Rudolf Dassler Sport | 44 | 14,571 |
RWE AG: | | |
Common | 3,512 | 341,252 |
Preferred | 342 | 30,511 |
Salzgitter AG | 327 | 31,961 |
SAP AG | 7,199 | 339,498 |
Siemens AG | 6,902 | 633,006 |
SolarWorld AG | 733 | 16,061 |
Suedzucker AG | 602 | 12,498 |
ThyssenKrupp AG | 2,805 | 105,631 |
TUI AG* | 1,272 | 10,610 |
United Internet AG* | 1,126 | 14,889 |
Volkswagen AG: | | |
Common | 370 | 40,925 |
Preferred | 882 | 82,899 |
Wacker Chemie AG | 140 | 24,415 |
| | 6,748,486 |
| | |
Greece - 0.4% | | |
Alpha Bank AE* | 3,007 | 34,784 |
Coca Cola Hellenic Bottling Co. SA | 1,532 | 34,898 |
EFG Eurobank Ergasias SA* | 2,709 | 30,041 |
Hellenic Petroleum SA | 769 | 8,545 |
Hellenic Telecommunications Organization SA | 2,056 | 30,100 |
Marfin Investment Group SA* | 5,328 | 15,152 |
National Bank of Greece SA* | 5,092 | 129,828 |
OPAP SA | 1,873 | 41,000 |
Piraeus Bank SA* | 2,541 | 28,990 |
Public Power Corp. SA* | 973 | 17,957 |
Titan Cement Co. SA | 484 | 14,018 |
| | 385,313 |
| | |
Hong Kong - 2.3% | | |
ASM Pacific Technology Ltd. | 1,812 | 17,031 |
Bank of East Asia Ltd. | 12,359 | 48,679 |
BOC Hong Kong Holdings Ltd. | 31,045 | 70,135 |
Cathay Pacific Airways Ltd.* | 10,771 | 20,234 |
Cheung Kong Holdings Ltd. | 11,659 | 150,098 |
Cheung Kong Infrastructure Holdings Ltd. | 3,782 | 14,354 |
Chinese Estates Holdings Ltd. | 6,434 | 10,939 |
CLP Holdings Ltd. | 17,158 | 115,928 |
Esprit Holdings Ltd. | 9,639 | 63,435 |
| | |
Equity Securities - Cont'd | Shares | Value |
Hong Kong - Cont'd | | |
Genting Singapore plc* | 32,342 | $29,643 |
Hang Lung Group Ltd. | 6,716 | 33,180 |
Hang Lung Properties Ltd. | 17,388 | 67,930 |
Hang Seng Bank Ltd. | 6,415 | 94,285 |
Henderson Land Development Co. Ltd. | 9,005 | 67,322 |
Hong Kong & China Gas Co. Ltd. | 33,248 | 83,005 |
Hong Kong Aircraft Engineering Co. Ltd. | 558 | 7,214 |
Hong Kong Exchanges and Clearing Ltd. | 8,574 | 152,628 |
HongKong Electric Holdings | 11,638 | 63,156 |
Hopewell Highway Infrastructure Ltd. | 434 | 264 |
Hopewell Holdings | 5,159 | 16,620 |
Hutchison Whampoa Ltd. | 17,884 | 122,410 |
Hysan Development Co. Ltd. | 5,712 | 16,173 |
Kerry Properties Ltd. | 6,245 | 31,531 |
Li & Fung Ltd. | 19,238 | 78,800 |
Lifestyle International Holdings Ltd. | 4,881 | 9,053 |
Link REIT | 18,180 | 46,074 |
Mongolia Energy Co. Ltd.* | 25,371 | 12,875 |
MTR Corp. | 11,874 | 40,712 |
New World Development Ltd. | 21,010 | 42,878 |
Noble Group Ltd. | 11,460 | 26,277 |
NWS Holdings Ltd. | 7,388 | 13,624 |
Orient Overseas International Ltd. | 1,967 | 9,155 |
PCCW Ltd. | 31,249 | 7,561 |
Shangri-La Asia Ltd. | 11,781 | 22,035 |
Sino Land Co. | 14,695 | 28,518 |
Sun Hung Kai Properties Ltd. | 11,832 | 175,557 |
Swire Pacific Ltd. | 6,457 | 78,085 |
Television Broadcasts Ltd. | 2,388 | 11,442 |
Wharf Holdings Ltd. | 11,551 | 66,045 |
Wheelock & Co. Ltd. | 8,036 | 24,657 |
Wing Hang Bank Ltd. | 1,612 | 14,978 |
Yue Yuen Industrial Holdings Ltd. | 6,035 | 17,506 |
| | 2,022,026 |
| | |
Ireland - 0.4% | | |
CRH plc | 5,806 | 157,255 |
Elan Corp. plc* | 4,174 | 26,122 |
Experian plc | 8,603 | 85,107 |
Kerry Group plc | 1,174 | 34,601 |
Ryanair Holdings plc* | 3,203 | 15,129 |
| | 318,214 |
| | |
Italy - 3.3% | | |
A2A SpA | 9,199 | 19,253 |
Assicurazioni Generali SpA | 10,043 | 269,236 |
Atlantia SpA | 2,160 | 56,141 |
Autogrill SpA* | 853 | 10,727 |
Banca Carige SpA | 5,423 | 14,431 |
Banca Monte dei Paschi di Siena SpA | 18,433 | 32,271 |
Banca Popolare di Milano Scarl | 3,307 | 23,458 |
Banco Popolare SC* | 5,373 | 40,214 |
| | |
Equity Securities - Cont'd | Shares | Value |
Italy - Cont'd | | |
Enel SpA | 55,223 | $320,641 |
ENI SpA | 21,842 | 556,019 |
Exor SpA | 605 | 11,699 |
Fiat SpA* | 6,414 | 93,338 |
Finmeccanica SpA | 3,395 | 54,139 |
Fondiaria-Sai SpA | 522 | 8,251 |
Intesa Sanpaolo SpA* | 64,617 | 289,495 |
Intesa Sanpaolo SpA-RSP | 7,823 | 26,124 |
Italcementi SpA | 594 | 8,112 |
Luxottica Group SpA | 972 | 25,177 |
Mediaset SpA | 5,946 | 48,579 |
Mediobanca SpA: | | |
Common* | 3,972 | 47,123 |
Warrants (strike price $9.00/share, expires 3/18/11)* | 3,783 | 587 |
Mediolanum SpA | 1,837 | 11,405 |
Parmalat SpA | 14,285 | 40,024 |
Pirelli & C. SpA* | 21,952 | 13,103 |
Prysmian SpA | 905 | 15,840 |
Saipem SpA | 2,221 | 76,290 |
Snam Rete Gas SpA | 12,583 | 62,565 |
Telecom Italia SpA | 50,557 | 55,791 |
Telecom Italia SpA-RSP | 84,195 | 130,567 |
Terna Rete Elettrica Nazionale SpA | 10,911 | 46,943 |
UniCredit SpA* | 119,477 | 397,384 |
Unione di Banche Italiane SCPA: | | |
Common | 4,825 | 69,108 |
Warrants (strike price $12.30/share, expires 6/30/11)* | 5,007 | 352 |
Unipol Gruppo Finanziario SpA* | 7,280 | 9,937 |
| | 2,884,324 |
| | |
Japan - 20.1% | | |
77 Bank Ltd. | 2,894 | 15,322 |
ABC-Mart, Inc. | 210 | 5,839 |
Acom Co. Ltd. | 350 | 5,312 |
Advantest Corp. | 1,339 | 34,806 |
Aeon Co. Ltd. | 5,372 | 43,457 |
Aeon Credit Service Co. Ltd. | 694 | 6,671 |
Aeon Mall Co. Ltd. | 740 | 14,327 |
Aioi Insurance Co. Ltd. | 4,371 | 20,908 |
Air Water, Inc. | 1,225 | 14,430 |
Aisin Seiki Co. Ltd. | 1,606 | 45,924 |
Ajinomoto Co., Inc. | 5,579 | 52,548 |
Alfresa Holdings Corp. | 248 | 9,823 |
All Nippon Airways Co. Ltd. | 6,886 | 18,674 |
Amada Co. Ltd. | 2,874 | 17,845 |
Aozora Bank Ltd.* | 6,756 | 7,143 |
Asahi Breweries Ltd. | 3,245 | 59,539 |
Asahi Glass Co. Ltd. | 8,462 | 79,309 |
Asahi Kasei Corp. | 10,590 | 52,944 |
Asics Corp. | 1,480 | 13,257 |
Astellas Pharma, Inc. | 3,805 | 141,800 |
Bank of Kyoto Ltd. | 2,610 | 21,073 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
Bank of Yokohama Ltd. | 10,277 | $46,563 |
Benesse Corp. | 624 | 26,107 |
Bridgestone Corp. | 5,116 | 89,698 |
Brother Industries Ltd. | 1,862 | 21,282 |
Canon Marketing Japan, Inc. | 570 | 8,375 |
Canon, Inc. | 8,951 | 378,587 |
Casio Computer Co. Ltd. | 2,134 | 16,975 |
Central Japan Railway Co. | 12 | 80,088 |
Chiba Bank Ltd. | 6,386 | 38,128 |
Chiyoda Corp. | 1,306 | 9,934 |
Chubu Electric Power Co., Inc. | 5,555 | 132,444 |
Chugai Pharmaceutical Co. Ltd. | 1,878 | 35,005 |
Chugoku Bank Ltd. | 1,467 | 18,102 |
Chugoku Electric Power Co., Inc. | 2,334 | 44,532 |
Chuo Mitsui Trust Holdings, Inc. | 8,254 | 27,561 |
Citizen Holdings Co. Ltd. | 2,633 | 14,988 |
Coca-Cola West Co. Ltd. | 466 | 8,199 |
Cosmo Oil Co. Ltd. | 5,429 | 11,370 |
Credit Saison Co. Ltd. | 1,351 | 15,132 |
Dai Nippon Printing Co. Ltd. | 4,701 | 59,303 |
Daicel Chemical Industries Ltd. | 2,296 | 13,413 |
Daido Steel Co. Ltd. | 2,623 | 9,689 |
Daihatsu Motor Co. Ltd. | 1,752 | 17,444 |
Daiichi Sankyo Co. Ltd. | 5,650 | 118,273 |
Daikin Industries Ltd. | 1,967 | 76,805 |
Dainippon Sumitomo Pharma Co. Ltd. | 1,345 | 14,053 |
Daito Trust Construction Co. Ltd. | 657 | 30,996 |
Daiwa House Industry Co. Ltd. | 4,278 | 45,796 |
Daiwa Securities Group, Inc. | 13,607 | 68,248 |
Dena Co. Ltd. | 2 | 11,765 |
Denki Kagaku Kogyo K K | 4,031 | 18,035 |
Denso Corp. | 4,079 | 122,308 |
Dentsu, Inc. | 1,400 | 32,235 |
Dowa Holdings Co. Ltd. | 2,166 | 12,027 |
East Japan Railway Co. | 2,852 | 180,048 |
Eisai Co. Ltd. | 2,114 | 77,529 |
Electric Power Development Co. Ltd. | 1,117 | 31,690 |
Elpida Memory, Inc.* | 1,067 | 17,413 |
FamilyMart Co. Ltd. | 491 | 14,478 |
Fanuc Ltd. | 1,607 | 149,500 |
Fast Retailing Co. Ltd. | 400 | 74,691 |
Fuji Electric Holdings Co. Ltd.* | 5,068 | 8,751 |
Fuji Heavy Industries Ltd.* | 5,254 | 25,510 |
Fuji Media Holdings, Inc. | 3 | 4,141 |
FUJIFILM Holdings Corp. | 4,101 | 122,576 |
Fujitsu Ltd. | 15,629 | 100,559 |
Fukuoka Financial Group, Inc. | 6,491 | 22,536 |
Furukawa Electric Co. Ltd. | 5,635 | 23,462 |
GS Yuasa Corp. | 3,077 | 22,593 |
Gunma Bank Ltd. | 3,321 | 16,871 |
Hachijuni Bank Ltd. | 3,374 | 19,637 |
Hakuhodo DY Holdings, Inc. | 195 | 9,421 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
Hankyu Hanshin Holdings, Inc. | 9,599 | $42,636 |
Hino Motors Ltd.* | 2,169 | 7,521 |
Hirose Electric Co. Ltd. | 251 | 26,174 |
Hiroshima Bank Ltd. | 4,196 | 16,088 |
Hisamitsu Pharmaceutical Co., Inc. | 558 | 18,012 |
Hitachi Chemical Co. Ltd. | 874 | 17,602 |
Hitachi Construction Machinery Co. Ltd. | 950 | 24,775 |
Hitachi High-Technologies Corp. | 577 | 11,342 |
Hitachi Ltd.* | 28,257 | 86,588 |
Hitachi Metals Ltd. | 1,480 | 14,100 |
Hokkaido Electric Power Co., Inc. | 1,535 | 27,870 |
Hokuhoku Financial Group, Inc. | 10,507 | 21,389 |
Hokuriku Electric Power Co. | 1,571 | 34,202 |
Honda Motor Co. Ltd. | 13,854 | 468,659 |
Hoya Corp. | 3,467 | 91,957 |
Ibiden Co. Ltd. | 1,075 | 38,303 |
Idemitsu Kosan Co. Ltd. | 198 | 11,474 |
IHI Corp.* | 11,077 | 17,567 |
Inpex Corp. | 6 | 45,055 |
Isetan Mitsukoshi Holdings Ltd. | 2,928 | 26,398 |
Isuzu Motors Ltd.* | 9,965 | 18,624 |
Ito En Ltd. | 535 | $8,028 |
ITOCHU Corp. | 12,631 | 92,926 |
Itochu Techno-Solutions Corp. | 249 | 6,667 |
Iyo Bank Ltd. | 2,037 | 16,496 |
J Front Retailing Co. Ltd. | 4,048 | 17,844 |
JAFCO Co. Ltd. | 289 | 6,950 |
Japan Airlines Corp.* | 8,184 | 5,889 |
Japan Petroleum Exploration Co. | 239 | 10,498 |
Japan Prime Realty Investment Corp. | 4 | 8,286 |
Japan Real Estate Investment Corp. | 3 | 22,031 |
Japan Retail Fund Investment Corp. | 2 | 8,956 |
Japan Steel Works Ltd. | 2,917 | 36,698 |
Japan Tobacco, Inc. | 37 | 124,904 |
JFE Holdings, Inc. | 4,123 | 162,442 |
JGC Corp. | 1,738 | 32,010 |
Joyo Bank Ltd. | 5,518 | 22,044 |
JS Group Corp. | 2,101 | 36,166 |
JSR Corp. | 1,502 | 30,462 |
JTEKT Corp. | 1,617 | 20,674 |
Jupiter Telecommunications Co. Ltd. | 20 | 19,824 |
Kajima Corp. | 7,519 | 15,100 |
Kamigumi Co. Ltd. | 2,186 | 15,892 |
Kaneka Corp. | 2,495 | 15,836 |
Kansai Electric Power Co., Inc. | 6,407 | 144,490 |
Kansai Paint Co. Ltd. | 1,829 | 15,194 |
Kao Corp. | 4,531 | 105,827 |
Kawasaki Heavy Industries Ltd. | 12,469 | 31,446 |
Kawasaki Kisen Kaisha Ltd.* | 5,398 | 15,304 |
KDDI Corp. | 24 | 126,622 |
Keihin Electric Express Railway Co. Ltd. | 3,701 | 27,123 |
Keio Corp. | 4,853 | 29,252 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
Keisei Electric Railway Co. Ltd. | 2,314 | $12,652 |
Keyence Corp. | 347 | 71,573 |
Kikkoman Corp. | 1,412 | 17,259 |
Kinden Corp. | 1,116 | 9,404 |
Kintetsu Corp. | 13,637 | 45,181 |
Kirin Holdings Co. Ltd. | 7,020 | 111,968 |
Kobe Steel Ltd.* | 20,907 | 37,885 |
Koito Manufacturing Co. Ltd. | 830 | 13,229 |
Komatsu Ltd. | 7,960 | 166,030 |
Konami Corp. | 782 | 13,952 |
Konica Minolta Holdings, Inc. | 4,014 | 41,188 |
Kubota Corp. | 9,170 | 84,367 |
Kuraray Co. Ltd. | 2,890 | 33,845 |
Kurita Water Industries Ltd. | 947 | 29,602 |
Kyocera Corp. | 1,364 | 120,354 |
Kyowa Hakko Kirin Co. Ltd. | 2,176 | 22,903 |
Kyushu Electric Power Co., Inc. | 3,182 | 65,471 |
Lawson, Inc. | 543 | 23,933 |
Mabuchi Motor Co. Ltd. | 239 | 11,756 |
Makita Corp. | 939 | 31,966 |
Marubeni Corp. | 13,851 | 75,441 |
Marui Group Co. Ltd. | 1,871 | 11,474 |
Maruichi Steel Tube Ltd. | 315 | 6,296 |
Matsui Securities Co. Ltd. | 1,016 | 7,068 |
Mazda Motor Corp.* | 8,198 | 18,753 |
McDonald's Holdings Company (Japan), Ltd. | 557 | 10,635 |
Mediceo Paltac Holdings Co. Ltd. | 1,230 | 15,195 |
MEIJI Holdings Co. Ltd.* | 576 | 21,678 |
Minebea Co. Ltd. | 3,209 | 17,368 |
Mitsubishi Chemical Holdings Corp. | 10,109 | 42,621 |
Mitsubishi Corp. | 11,383 | 283,150 |
Mitsubishi Electric Corp.* | 16,212 | 119,752 |
Mitsubishi Estate Co. Ltd. | 9,915 | 157,342 |
Mitsubishi Gas Chemical Co., Inc. | 3,508 | 17,626 |
Mitsubishi Heavy Industries Ltd. | 25,473 | 89,495 |
Mitsubishi Logistics Corp. | 959 | 11,229 |
Mitsubishi Materials Corp.* | 9,120 | 22,343 |
Mitsubishi Motors Corp.* | 30,199 | 41,633 |
Mitsubishi Rayon Co. Ltd. | 4,278 | 17,125 |
Mitsubishi Tanabe Pharma Corp. | 1,884 | 23,441 |
Mitsubishi UFJ Financial Group, Inc. | 87,620 | 429,211 |
Mitsubishi UFJ Lease & Finance Co. Ltd. | 514 | 15,425 |
Mitsui & Co. Ltd. | 14,545 | 206,015 |
Mitsui Chemicals, Inc. | 5,374 | 13,826 |
Mitsui Engineering & Shipbuilding Co. Ltd. | 6,713 | 16,063 |
Mitsui Fudosan Co. Ltd. | 7,025 | 118,026 |
Mitsui Mining & Smelting Co. Ltd.* | 4,806 | 12,444 |
Mitsui OSK Lines Ltd. | 9,614 | 50,491 |
Mitsui Sumitomo Insurance Group Holdings, Inc. | 3,534 | 89,737 |
Mitsumi Electric Co. Ltd. | 753 | 13,256 |
Mizuho Financial Group, Inc. | 105,585 | 189,017 |
Mizuho Trust & Banking Co. Ltd.* | 13,678 | 12,689 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
Murata Manufacturing Co. Ltd. | 1,795 | $88,673 |
Namco Bandai Holdings, Inc. | 1,677 | 15,964 |
NEC Corp.* | 16,177 | 41,690 |
NGK Insulators Ltd. | 2,124 | 46,239 |
NGK Spark Plug Co. Ltd. | 1,348 | 15,183 |
NHK Spring Co. Ltd. | 1,330 | 12,339 |
Nidec Corp. | 912 | 83,899 |
Nikon Corp. | 2,690 | 53,080 |
Nintendo Co. Ltd. | 831 | 197,097 |
Nippon Building Fund, Inc. | 4 | 30,319 |
Nippon Electric Glass Co. Ltd. | 2,922 | 39,881 |
Nippon Express Co. Ltd. | 7,129 | 29,173 |
Nippon Meat Packers, Inc. | 1,533 | 17,622 |
Nippon Mining Holdings, Inc. | 7,399 | 31,692 |
Nippon Oil Corp. | 10,443 | 48,372 |
Nippon Paper Group, Inc. | 801 | 20,452 |
Nippon Sheet Glass Co. Ltd. | 5,610 | 16,055 |
Nippon Steel Corp. | 42,831 | 173,246 |
Nippon Telegraph & Telephone Corp. | 4,358 | 171,505 |
Nippon Yusen Kabushiki Kaisha | 9,288 | 28,432 |
Nipponkoa Insurance Co. Ltd. | 5,481 | 31,016 |
Nishi-Nippon City Bank Ltd. | 5,681 | 13,884 |
Nissan Chemical Industries Ltd. | 1,232 | 17,553 |
Nissan Motor Co. Ltd.* | 20,859 | 182,396 |
Nissay Dowa General Insurance Co. Ltd. | 1,472 | 7,018 |
Nissha Printing Co. Ltd. | 222 | 10,924 |
Nisshin Seifun Group, Inc. | 1,582 | 21,259 |
Nisshin Steel Co. Ltd. | 6,421 | 11,360 |
Nisshinbo Holdings, Inc. | 1,156 | 10,589 |
Nissin Foods Holdings Co. Ltd. | 588 | 19,167 |
Nitori Co. Ltd. | 312 | 23,227 |
Nitto Denko Corp. | 1,384 | 49,344 |
NOK Corp. | 944 | 13,034 |
Nomura Holdings, Inc. | 21,209 | 156,377 |
Nomura Real Estate Holdings, Inc. | 777 | 11,478 |
Nomura Real Estate Office Fund, Inc. | 2 | 10,847 |
Nomura Research Institute Ltd. | 849 | 16,638 |
NSK Ltd. | 4,148 | 30,458 |
NTN Corp. | 3,354 | 15,073 |
NTT Data Corp. | 10 | 30,896 |
NTT DoCoMo, Inc. | 129 | 179,787 |
NTT Urban Development Corp. | 10 | 6,634 |
Obayashi Corp. | 5,748 | 19,571 |
Obic Co. Ltd. | 58 | 9,467 |
Odakyu Electric Railway Co. Ltd. | 5,255 | 40,289 |
OJI Paper Co. Ltd. | 7,143 | 29,767 |
Olympus Corp. | 1,820 | 58,508 |
Omron Corp. | 1,705 | 30,430 |
Ono Pharmaceutical Co. Ltd. | 709 | 30,309 |
Oracle Corp. Japan | 319 | 13,222 |
Oriental Land Co. Ltd. | 419 | 27,525 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
ORIX Corp. | 878 | $59,738 |
Osaka Gas Co. Ltd. | 16,297 | 54,933 |
Otsuka Corp.* | 132 | 6,547 |
Panasonic Corp. | 16,464 | 235,559 |
Panasonic Electric Works Co. Ltd. | 3,150 | 37,887 |
Rakuten, Inc.* | 60 | 45,628 |
Resona Holdings, Inc. | 4,077 | 41,189 |
Ricoh Co. Ltd. | 5,624 | 79,359 |
Rinnai Corp. | 318 | 15,302 |
Rohm Co. Ltd. | 822 | 53,405 |
Sankyo Co. Ltd. | 450 | 22,427 |
Santen Pharmaceutical Co. Ltd. | 619 | 19,802 |
SANYO Electric Co. Ltd.* | 14,137 | 25,965 |
Sapporo Hokuyo Holdings, Inc. | 2,513 | 9,095 |
Sapporo Holdings Ltd. | 2,386 | 13,002 |
SBI Holdings, Inc. | 140 | 24,895 |
Secom Co. Ltd. | 1,761 | 83,335 |
Sega Sammy Holdings, Inc. | 1,544 | 18,411 |
Seiko Epson Corp. | 1,161 | 18,637 |
Sekisui Chemical Co. Ltd. | 3,621 | 22,400 |
Sekisui House Ltd. | 4,259 | 38,218 |
Seven & I Holdings Co. Ltd. | 6,464 | 131,264 |
Seven Bank Ltd. | 4 | 7,948 |
Sharp Corp. | 8,386 | 105,573 |
Shikoku Electric Power Co., Inc. | 1,498 | 38,659 |
Shimadzu Corp. | 2,111 | 14,002 |
Shimamura Co. Ltd. | 184 | 17,512 |
Shimano, Inc. | 563 | 22,544 |
Shimizu Corp. | 5,273 | 18,912 |
Shin-Etsu Chemical Co. Ltd. | 3,443 | 194,160 |
Shinko Electric Industries Co. Ltd. | 567 | 8,176 |
Shinko Securities Co. Ltd. | 4,764 | 14,266 |
Shinsei Bank Ltd.* | 8,301 | 9,001 |
Shionogi & Co. Ltd. | 2,504 | 54,179 |
Shiseido Co. Ltd. | 2,923 | 56,051 |
Shizuoka Bank Ltd. | 5,064 | 43,906 |
Showa Denko KK | 9,948 | 19,849 |
Showa Shell Sekiyu KK | 1,580 | 12,862 |
SMC Corp. | 452 | 51,114 |
Softbank Corp. | 6,348 | 148,442 |
Sojitz Corp. | 10,988 | 20,651 |
Sompo Japan Insurance, Inc. | 7,458 | 47,485 |
Sony Corp. | 8,427 | 244,387 |
Sony Financial Holdings, Inc. | 7 | 18,266 |
Square Enix Holdings Co. Ltd. | 532 | 11,166 |
Stanley Electric Co. Ltd. | 1,184 | 23,822 |
Sumco Corp. | 973 | 17,122 |
Sumitomo Chemical Co. Ltd. | 13,194 | 57,615 |
Sumitomo Corp. | 9,442 | 95,080 |
Sumitomo Electric Industries Ltd. | 6,327 | 78,459 |
Sumitomo Heavy Industries Ltd.* | 4,827 | 24,375 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
Sumitomo Metal Industries Ltd. | 28,224 | $75,284 |
Sumitomo Metal Mining Co. Ltd. | 4,391 | 64,761 |
Sumitomo Mitsui Financial Group, Inc. | 7,616 | 217,234 |
Sumitomo Realty & Development Co. Ltd. | 3,195 | 59,953 |
Sumitomo Rubber Industries, Inc. | 1,585 | 13,651 |
Sumitomo Trust & Banking Co. Ltd. | 11,945 | 58,098 |
Suruga Bank Ltd. | 1,778 | 15,430 |
Suzuken Co. Ltd. | 591 | 19,363 |
Suzuki Motor Corp. | 2,961 | 72,743 |
Sysmex Corp. | 273 | 14,256 |
T&D Holdings, Inc. | 1,953 | 39,824 |
Taiheiyo Cement Corp.* | 7,631 | 8,688 |
Taisei Corp. | 8,507 | 14,571 |
Taisho Pharmaceutical Co. Ltd. | 1,075 | 18,401 |
Taiyo Nippon Sanso Corp. | 2,367 | 25,117 |
Takashimaya Co. Ltd. | 2,497 | 15,800 |
Takeda Pharmaceutical Co. Ltd. | 6,293 | 258,488 |
TDK Corp. | 978 | 59,664 |
Teijin Ltd. | 7,848 | 25,237 |
Terumo Corp. | 1,415 | 84,722 |
THK Co. Ltd. | 1,084 | 19,157 |
Tobu Railway Co. Ltd. | 6,843 | 35,687 |
Toho Co. Ltd. | 951 | 15,416 |
Toho Gas Co. Ltd. | 3,757 | 19,935 |
Tohoku Electric Power Co., Inc. | 3,586 | 70,916 |
Tokio Marine Holdings, Inc. | 6,074 | 164,949 |
Tokuyama Corp. | 2,429 | 13,542 |
Tokyo Electric Power Co., Inc. | 10,215 | 256,169 |
Tokyo Electron Ltd. | 1,439 | 92,059 |
Tokyo Gas Co. Ltd. | 19,379 | 77,291 |
Tokyo Steel Manufacturing Co. Ltd. | 950 | 10,693 |
Tokyo Tatemono Co. Ltd. | 2,513 | 9,554 |
Tokyu Corp. | 9,540 | 37,987 |
Tokyu Land Corp. | 3,966 | 14,565 |
TonenGeneral Sekiyu KK | 2,370 | 19,758 |
Toppan Printing Co. Ltd. | 4,694 | 37,993 |
Toray Industries, Inc. | 11,170 | 60,215 |
Toshiba Corp.* | 32,953 | 181,822 |
Tosoh Corp. | 4,570 | 12,583 |
TOTO Ltd. | 2,182 | 13,811 |
Toyo Seikan Kaisha Ltd. | 1,271 | 19,242 |
Toyo Suisan Kaisha Ltd. | 744 | 17,062 |
Toyoda Gosei Co. Ltd. | 545 | 16,409 |
Toyota Boshoku Corp. | 551 | 12,247 |
Toyota Industries Corp. | 1,503 | 44,646 |
Toyota Motor Corp. | 23,141 | 972,759 |
Toyota Tsusho Corp. | 1,782 | 26,291 |
Trend Micro, Inc. | 882 | 33,536 |
Tsumura & Co. | 504 | 16,241 |
Ube Industries Ltd. | 8,466 | 23,192 |
Unicharm Corp. | 347 | 32,501 |
| | |
Equity Securities - Cont'd | Shares | Value |
Japan - Cont'd | | |
UNY Co. Ltd. | 1,624 | $11,354 |
Ushio, Inc. | 937 | 15,606 |
USS Co. Ltd. | 192 | 11,665 |
West Japan Railway Co. | 14 | 46,885 |
Yahoo! Japan Corp. | 121 | 36,188 |
Yakult Honsha Co. Ltd. | 811 | 24,429 |
Yamada Denki Co. Ltd. | 728 | 48,945 |
Yamaguchi Financial Group, Inc. | 1,774 | 16,424 |
Yamaha Corp. | 1,323 | 15,747 |
Yamaha Motor Co. Ltd.* | 1,802 | 22,640 |
Yamato Holdings Co. Ltd. | 3,261 | 45,111 |
Yamato Kogyo Co. Ltd. | 405 | 13,110 |
Yamazaki Baking Co. Ltd.* | 1,016 | 12,031 |
Yaskawa Electric Corp. | 2,011 | 16,756 |
Yokogawa Electric Corp. | 1,915 | 16,765 |
| | 17,429,128 |
| | |
Jersey - 0.1% | | |
Randgold Resources Ltd. | 686 | 54,546 |
| | |
Luxembourg - 0.6% | | |
ArcelorMittal | 7,202 | 326,612 |
Millicom International Cellular SA | 634 | 47,007 |
SES SA (FDR) | 2,374 | 53,227 |
Tenaris SA | 3,961 | 84,680 |
| | 511,526 |
| | |
Mexico - 0.0% | | |
Fresnillo plc | 1,504 | 18,974 |
| | |
Netherlands - 4.4% | | |
Aegon NV* | 13,108 | 83,527 |
Akzo Nobel NV | 1,943 | 128,055 |
ASML Holding NV | 3,618 | 123,046 |
Corio NV | 448 | 30,594 |
European Aeronautic Defence and Space Co. NV | 3,417 | 68,250 |
Fugro NV (CVA) | 566 | 32,319 |
Heineken Holding NV | 925 | 38,750 |
Heineken NV | 2,055 | 97,363 |
ING Groep NV (CVA)* | 16,443 | 158,941 |
James Hardie Industries NV* | 3,626 | 27,323 |
Koninklijke Ahold NV | 9,999 | 132,642 |
Koninklijke Boskalis Westminster NV | 499 | 19,215 |
Koninklijke DSM NV | 1,293 | 63,391 |
Koninklijke KPN NV | 14,382 | 243,918 |
Koninklijke Philips Electronics NV | 8,158 | 241,533 |
Koninklijke Vopak NV* | 262 | 20,697 |
QIAGEN NV* | 1,663 | 37,145 |
Randstad Holding NV* | 853 | 42,171 |
Reed Elsevier NV | 6,071 | 74,484 |
Royal Dutch Shell plc: | | |
Series A | 29,746 | 898,750 |
Series B | 22,616 | 659,502 |
| | |
Equity Securities - Cont'd | Shares | Value |
Netherlands - Cont'd | | |
SBM Offshore NV | 1,257 | $24,593 |
TNT NV | 3,095 | 94,725 |
Unilever NV (CVA) | 13,666 | 445,263 |
Wolters Kluwer NV | 2,333 | 51,130 |
| | 3,837,327 |
| | |
New Zealand - 0.1% | | |
Auckland International Airport Ltd. | 7,195 | 10,509 |
Contact Energy Ltd.* | 2,519 | 11,206 |
Fletcher Building Ltd. | 5,071 | 29,238 |
Sky City Entertainment Group Ltd. | 4,825 | 11,508 |
Telecom Corp. of New Zealand Ltd. | 15,511 | 28,053 |
| | 90,514 |
| | |
Norway - 0.7% | | |
DnB NOR ASA* | 6,149 | 66,701 |
Norsk Hydro ASA* | 5,758 | 47,830 |
Orkla ASA | 6,474 | 63,122 |
Renewable Energy Corp. ASA* | 2,788 | 21,314 |
StatoilHydro ASA | 9,422 | 234,846 |
Telenor ASA* | 7,048 | 98,787 |
Yara International ASA | 1,590 | 71,941 |
| | 604,541 |
| | |
Portugal - 0.3% | | |
Banco Comercial Portugues SA | 19,693 | 23,633 |
Banco Espirito Santo SA | 4,404 | 28,622 |
Brisa Auto-Estradas de Portugal SA | 1,510 | 15,428 |
Cimpor Cimentos de Portugal SGPS SA | 1,973 | 18,178 |
Energias de Portugal SA | 15,338 | 67,879 |
Galp Energia SGPS SA | 1,293 | 22,256 |
Jeronimo Martins SGPS SA | 1,847 | 18,369 |
Portugal Telecom SGPS SA | 4,888 | 59,415 |
| | 253,780 |
| | |
Singapore - 1.4% | | |
Ascendas Real Estate Investment Trust | 11,343 | 17,778 |
CapitaLand Ltd. | 21,370 | 63,347 |
CapitaMall Trust | 19,574 | 24,839 |
City Developments Ltd. | 4,195 | 34,247 |
ComfortDelgro Corp. Ltd. | 15,748 | 18,326 |
Cosco Corp. Singapore Ltd. | 9,136 | 7,678 |
DBS Group Holdings Ltd. | 14,356 | 156,214 |
Fraser and Neave Ltd. | 8,157 | 24,259 |
Golden Agri-Resources Ltd.* | 56,011 | 20,183 |
Jardine Cycle & Carriage Ltd. | 1,044 | 19,938 |
Keppel Corp. Ltd. | 10,692 | 62,262 |
Neptune Orient Lines Ltd. | 7,580 | 8,831 |
Olam International Ltd. | 10,581 | 19,831 |
Oversea-Chinese Banking Corp. Ltd. | 20,984 | 135,182 |
SembCorp Industries Ltd. | 8,237 | 21,529 |
| | |
Equity Securities - Cont'd | Shares | Value |
Singapore - Cont'd | | |
SembCorp Marine Ltd. | 7,323 | $19,098 |
Singapore Airlines Ltd. | 4,479 | 47,328 |
Singapore Airport Terminal Services Ltd. | 3,506 | 6,811 |
Singapore Exchange Ltd. | 7,175 | 42,328 |
Singapore Press Holdings Ltd. | 13,366 | 34,764 |
Singapore Technologies Engineering Ltd. | 11,338 | 26,083 |
Singapore Telecommunications Ltd. | 66,811 | 147,245 |
StarHub Ltd. | 5,029 | 7,666 |
United Overseas Bank Ltd. | 10,228 | 142,450 |
UOL Group Ltd. | 4,818 | 13,835 |
Wilmar International Ltd. | 10,714 | 48,661 |
Yangzijiang Shipbuilding Holdings Ltd. | 11,876 | 10,161 |
| | 1,180,874 |
| | |
Spain - 4.5% | | |
Abertis Infraestructuras SA | 2,362 | 53,293 |
Acciona SA | 213 | 27,662 |
Acerinox SA | 1,173 | 24,261 |
ACS Actividades de Construccion y Servicios SA | 1,202 | 59,755 |
Banco Bilbao Vizcaya Argentaria SA | 29,871 | 541,037 |
Banco de Sabadell SA | 7,550 | 41,932 |
Banco de Valencia SA | 1,787 | 13,600 |
Banco Popular Espanol SA | 6,220 | 45,408 |
Banco Santander SA | 68,422 | 1,124,048 |
Bankinter SA | 2,383 | 24,219 |
Cintra Concesiones de Infraestructuras de Transporte SA | 3,677 | 42,937 |
Criteria Caixacorp SA | 7,053 | 33,326 |
EDP Renovaveis SA* | 1,829 | 17,288 |
Enagas SA | 1,502 | 33,240 |
Fomento de Construcciones y Contratas SA | 320 | 13,420 |
Gamesa Corp. Tecnologica SA | 1,530 | 25,646 |
Gas Natural SDG SA | 1,878 | 40,421 |
Gestevision Telecinco SA | 827 | 12,070 |
Grifols SA | 1,138 | 19,828 |
Iberdrola Renovables SA | 7,087 | 33,761 |
Iberdrola SA | 30,845 | 293,597 |
Iberia Lineas Aereas de Espana SA* | 4,399 | 11,919 |
Inditex SA | 1,830 | 113,382 |
Indra Sistemas SA | 826 | 19,429 |
Mapfre SA | 6,005 | 25,088 |
Red Electrica de Espana SA | 907 | 50,262 |
Repsol YPF SA | 6,145 | 164,048 |
Sacyr Vallehermoso SA* | 837 | 9,541 |
Telefonica SA | 35,525 | 990,033 |
Zardoya Otis SA | 1,180 | 23,000 |
| | 3,927,451 |
| | |
Equity Securities - Cont'd | Shares | Value |
Sweden - 2.4% | | |
Alfa Laval AB | 2,881 | $39,655 |
Assa Abloy AB | 2,618 | 50,130 |
Atlas Copco AB: | | |
Series A | 5,633 | 82,316 |
Series B | 3,273 | 42,455 |
Electrolux AB, Series B* | 2,009 | 47,151 |
Getinge AB, Series B | 1,679 | 31,861 |
Hennes & Mauritz AB | 4,289 | 237,331 |
Holmen AB, Series B | 443 | 11,299 |
Husqvarna AB, Series B* | 3,417 | 25,225 |
Investor AB, Series B | 3,821 | 70,632 |
Loomis AB, Series B | 521 | 5,686 |
Lundin Petroleum AB* | 1,967 | 15,477 |
Nordea Bank AB | 27,098 | 274,497 |
OMX AB (b)* | 588 | - |
Sandvik AB | 8,459 | 101,389 |
Scania AB, Series B | 2,684 | 34,423 |
Securitas AB, Series B | 2,627 | 25,637 |
Skandinaviska Enskilda Banken AB* | 12,743 | 78,339 |
Skanska AB, Series B | 3,347 | 56,952 |
SKF AB, Series B | 3,256 | 55,922 |
SSAB AB, Class B | 697 | 10,773 |
SSAB Svenskt Stal AB | 1,514 | 25,595 |
Svenska Cellulosa AB, Series B | 4,764 | 63,634 |
Svenska Handelsbanken AB | 4,105 | 117,395 |
Swedbank AB* | 2,810 | 27,952 |
Swedish Match AB | 2,105 | 46,013 |
Tele2 AB, Series B | 2,558 | 39,186 |
Telefonaktiebolaget LM Ericsson, Series B | 25,039 | 230,293 |
TeliaSonera AB | 18,836 | 135,983 |
Volvo AB: | | |
Series A | 3,695 | 31,277 |
Series B | 9,128 | 77,764 |
| | 2,092,242 |
| | |
Switzerland - 8.0% | | |
ABB Ltd.* | 18,513 | 353,675 |
Actelion Ltd.* | 839 | 44,760 |
Adecco SA | 1,032 | 56,912 |
Aryzta AG | 681 | 25,372 |
Baloise Holding AG | 419 | 34,863 |
BKW FMB Energie AG | 110 | 8,544 |
Compagnie Financiere Richemont SA | 4,379 | 146,363 |
Credit Suisse Group AG | 9,441 | 464,464 |
Geberit AG | 342 | 60,513 |
Givaudan SA | 64 | 50,878 |
Holcim Ltd.* | 2,058 | 159,351 |
Julius Baer Group Ltd. | 1,770 | 61,750 |
Julius Baer Holding AG | 1,770 | 21,514 |
Kuehne + Nagel International AG | 453 | 43,772 |
Lindt & Spruengli AG | 7 | 15,019 |
| | |
Equity Securities - Cont'd | Shares | Value |
Switzerland - Cont'd | | |
Logitech International SA* | 1,527 | $26,240 |
Lonza Group AG | 380 | 26,620 |
Nestle SA | 30,525 | 1,481,343 |
Nobel Biocare Holding AG | 1,042 | 34,835 |
Novartis AG | 17,743 | 965,605 |
Pargesa Holding SA | 226 | 19,770 |
Roche Holding AG | 5,894 | 1,001,551 |
Schindler Holding AG: | | |
Participation Certificates | 407 | 31,189 |
Registered Shares | 180 | 13,631 |
SGS SA | 39 | 50,727 |
Sonova Holding AG | 388 | 46,865 |
STMicroelectronics NV | 5,727 | 51,924 |
Straumann Holding AG | 65 | 18,301 |
Swatch Group AG: | | |
Bearer Shares | 258 | 64,867 |
Registered Shares | 364 | 17,385 |
Swiss Life Holding AG* | 263 | 33,277 |
Swiss Reinsurance | 2,897 | 138,644 |
Swisscom AG | 201 | 76,566 |
Syngenta AG | 813 | 227,564 |
Synthes, Inc. | 498 | 65,150 |
UBS AG* | 29,850 | 458,044 |
Xstrata plc* | 15,994 | 281,914 |
Zurich Financial Services AG | 1,232 | 267,572 |
| | 6,947,334 |
| | |
United Kingdom - 18.7% | | |
3i Group plc | 8,083 | 36,566 |
Admiral Group plc | 1,629 | 31,097 |
AMEC plc | 2,892 | 36,737 |
Anglo American plc* | 11,044 | 478,311 |
Antofagasta plc | 3,308 | 52,489 |
Associated British Foods plc | 2,988 | 39,681 |
AstraZeneca plc | 12,146 | 571,111 |
Autonomy Corp. plc* | 1,802 | 43,968 |
Aviva plc | 22,978 | 145,629 |
BAE Systems plc | 29,648 | 170,978 |
Balfour Beatty plc | 4,244 | 17,648 |
Barclays plc | 92,570 | 408,216 |
BG Group plc | 28,187 | 505,126 |
BHP Billiton plc | 18,516 | 591,872 |
BP plc | 157,203 | 1,521,420 |
British Airways plc* | 5,002 | 14,933 |
British American Tobacco plc | 16,748 | 543,702 |
British Land Co. plc | 7,149 | 54,839 |
British Sky Broadcasting Group plc | 9,558 | 86,162 |
BT Group plc | 64,976 | 140,787 |
Bunzl plc | 2,745 | 29,780 |
Burberry Group plc | 3,791 | 36,373 |
Cable & Wireless plc | 21,296 | 48,130 |
Cadbury plc | 11,458 | 147,549 |
| | |
Equity Securities - Cont'd | | |
| Shares | Value |
United Kingdom - Cont'd | | |
Cairn Energy plc* | 11,550 | $61,596 |
Capita Group plc | 5,218 | 62,983 |
Carnival plc* | 1,360 | 46,475 |
Carphone Warehouse Group plc | 3,841 | 11,586 |
Centrica plc | 42,934 | 194,042 |
Cobham plc | 9,589 | 38,680 |
Compass Group plc | 15,497 | 110,762 |
Diageo plc | 20,970 | 365,964 |
Drax Group plc | 3,003 | 20,117 |
Eurasian Natural Resources Corp. | 2,160 | 31,881 |
F&C Asset Management plc | 2,040 | 2,484 |
FirstGroup plc | 4,243 | 28,967 |
G4S plc | 10,633 | 44,470 |
GlaxoSmithKline plc | 43,528 | 922,717 |
Hammerson plc | 5,836 | 39,660 |
Home Retail Group plc | 7,361 | 33,578 |
HSBC Holdings plc | 145,263 | 1,658,969 |
ICAP plc | 4,533 | 31,436 |
Imperial Tobacco Group plc | 8,527 | 268,921 |
Inmarsat plc | 3,625 | 40,323 |
Intercontinental Hotels Group plc | 2,157 | 30,889 |
International Power plc | 12,764 | 63,199 |
Invensys plc | 7,010 | 33,609 |
Investec plc | 3,540 | 24,284 |
J Sainsbury plc | 9,974 | 51,896 |
Johnson Matthey plc | 1,801 | 44,516 |
Kazakhmys plc* | 1,795 | 37,584 |
Kingfisher plc | 19,806 | 72,654 |
Land Securities Group plc | 6,342 | 69,553 |
Legal & General Group plc | 49,177 | 63,332 |
Liberty International plc | 3,797 | 31,292 |
Lloyds TSB Group plc* | 136,732 | 109,846 |
London Stock Exchange Group plc | 1,304 | 15,098 |
Lonmin plc* | 1,294 | 40,202 |
Man Group plc | 14,330 | 70,540 |
Marks & Spencer Group plc | 13,242 | 85,967 |
National Grid plc | 20,410 | 223,262 |
Next plc | 1,653 | 55,150 |
Old Mutual plc* | 44,269 | 77,356 |
Pearson plc | 6,794 | 97,738 |
Petrofac Ltd. | 1,738 | 28,961 |
Prudential plc | 21,173 | 215,844 |
Reckitt Benckiser Group plc | 5,083 | 275,582 |
Reed Elsevier plc | 10,169 | 83,565 |
Rexam plc | 7,355 | 34,388 |
Rio Tinto plc | 11,500 | 620,249 |
Rolls-Royce Group plc: | | |
Common* | 15,543 | 121,382 |
Common C Shares Entitlement* | 932,580 | 1,507 |
Royal Bank of Scotland Group plc* | 141,866 | 66,589 |
RSA Insurance Group plc | 27,964 | 54,448 |
| | |
Equity Securities - Cont'd | Shares | Value |
United Kingdom - Cont'd | | |
SABMiller plc | 7,921 | $232,445 |
Sage Group plc | 10,997 | 39,070 |
Schroders plc | 1,077 | 23,005 |
Scottish & Southern Energy plc | 7,722 | 144,406 |
Segro plc | 6,160 | 34,028 |
Serco Group plc | 4,088 | 34,779 |
Severn Trent plc | 2,071 | 36,203 |
Shire plc | 4,700 | 91,977 |
Smith & Nephew plc | 7,417 | 76,213 |
Smiths Group plc | 3,263 | 53,429 |
Standard Chartered plc | 16,863 | 422,593 |
Standard Life plc | 18,566 | 64,470 |
Tesco plc | 66,276 | 455,694 |
Thomas Cook Group plc | 7,639 | 28,390 |
Tomkins plc | 7,691 | 23,761 |
TUI Travel plc | 4,994 | 20,569 |
Tullow Oil plc | 6,724 | 140,322 |
Unilever plc | 10,767 | 344,888 |
United Utilities Group plc | 5,717 | 45,520 |
Vedanta Resources plc | 1,159 | 47,937 |
Vodafone Group plc | 440,349 | 1,020,442 |
Whitbread plc | 1,463 | 32,926 |
William Morrison Supermarkets plc | 17,650 | 78,745 |
Wolseley plc* | 2,381 | 47,666 |
WPP plc | 10,511 | 102,711 |
| | 16,211,386 |
| | |
| | |
Total Equity Securities (Cost $86,770,980) | | 84,129,748 |
Exchange Traded Funds - 1.9% | | |
iShares MSCI EAFE Index Fund | 29,139 | 1,611,387 |
| | |
Total Exchange Traded Funds (Cost $1,615,451) | | 1,611,387 |
| | |
| Principal | |
Time Deposit - 0.9% | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | $808,366 | 808,366 |
| | |
Total Time Deposit (Cost $808,366) | | 808,366 |
| | |
| | |
| | |
TOTAL INVESTMENTS (Cost $89,194,797) - 99.7% | | 86,549,501 |
Other assets and liabilities, net - 0.3% | | 292,960 |
Net Assets - 100% | | $86,842,461 |
| | |
Net Assets Consist of: | | |
Paid-in capital applicable to the following shares of common stock | | |
with 20,000,000 shares of $.10 par value shares authorized: | | |
Class I: 1,155,283 shares outstanding | | $99,048,408 |
Class F: 67,541 shares outstanding | | 4,392,756 |
Undistributed net investment income | | 307,648 |
Accumulated net realized gain (loss) on investments | | (14,269,797) |
Net unrealized appreciation (depreciation) on investments | | (2,636,554) |
| | |
Net Assets | | $86,842,461 |
| | |
Net Asset Value Per Share | | |
Class I (based on net assets of $81,899,137) | | $70.89 |
Class F (based on net assets of $4,943,324) | | $73.19 |
(b) This security was valued by the Board of Directors. See Note A.
* Non-income producing security.
Abbreviations:
CVA: Certification Van Aandelen
FDR: Fiduciary Depositary Receipts
REIT: Real Estate Investment Trust
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income (net of foreign taxes withheld of $211,214) | $2,260,610 |
Interest income | 492 |
Total investment income | 2,261,102 |
| |
Expenses: | |
Investment advisory fee | 416,753 |
Transfer agency fees and expenses | 9,589 |
Distribution Plan expenses: | |
Class F | 5,692 |
Trustees' fees and expenses | 11,755 |
Administrative fees | 74,420 |
Custodian fees | 175,587 |
Reports to shareholders | 6,251 |
Professional fees | 24,705 |
Accounting fess | 3,783 |
Contract services | 60,020 |
Miscellaneous | 281 |
Total expenses | 788,836 |
Reimbursement from Advisor: | |
Class I | (68,463) |
Class F | (7,656) |
Fees paid indirectly | (33) |
Net expenses | 712,684 |
| |
Net Investment Income | 1,548,418 |
| |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investments | 824,920 |
Foreign currency transactions | 29,829 |
| 854,749 |
| |
Change in unrealized appreciation (depreciation) on: | |
Investments | 16,963,020 |
Assets and liabilities denominated in foreign currencies | 17,224 |
| 16,980,244 |
| |
Net Realized and Unrealized Gain | |
(Loss) | 17,834,993 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $19,383,411 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $1,548,418 | $2,485,490 |
Net realized gain (loss) | 854,749 | (14,616,221) |
Change in unrealized appreciation or (depreciation) | 16,980,244 | (40,508,872) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 19,383,411 | (52,639,603) |
| | |
Distributions to shareholders from: | | |
Net investment income | | |
Class I shares | (1,583,672) | (3,151,804) |
Class F shares | (41,939) | (4,508) |
Net realized gain | | |
Class I shares | -- | (2,054,260) |
Class F shares | -- | (18) |
Total distributions | (1,625,611) | (5,210,590) |
| | |
Capital share transactions: | | |
Shares sold | | |
Class I shares | 17,519,588 | 28,840,408 |
Class F shares | 3,196,044 | 1,720,729 |
Reinvestment of distributions | | |
Class I shares | 1,583,666 | 5,206,064 |
Class F shares | 41,939 | 4,526 |
Shares redeemed | | |
Class I shares | (20,101,692) | (29,136,738) |
Class F shares | (451,745) | (119,737) |
Total capital share transactions | 1,787,800 | 6,515,252 |
| | |
Total Increase (Decrease) in Net Assets | 19,545,600 | (51,334,941) |
| | |
Net Assets | | |
Beginning of year | 67,296,861 | 118,631,802 |
End of year (including undistributed net investment | | |
income of $307,648 and $1,007,403, respectively) | $86,842,461 | $67,296,861 |
See notes to financial statements.
| Year Ended | Year Ended |
| December 31, | December 31, |
Capital Share Activity | 2009 | 2008 |
Shares sold | | |
Class I shares | 303,824 | 328,264 |
Class F shares | 51,752 | 24,311 |
Reinvestment of distributions | | |
Class I shares | 22,318 | 69,512 |
Class F shares | 572 | 78 |
Shares redeemed | | |
Class I shares | (337,457) | (363,522) |
Class F shares | (7,644) | (1,538) |
Total capital share transactions | 33,365 | 57,105 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: Summit EAFE International Index Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund"), is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio offers Class I and Class F shares. Class F shares are subject to Distribution Plan Expenses. Each class has different: (a) dividend rates, due to differences in Distribution Plan expenses and other class-specific expenses, (b) exchange privileges; and (c) class-specific voting rights.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investments Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Foreign securities are valued based on quotations from the principal market in which such securities are normally traded. If events occur after the close of the principal market in which foreign securities are traded, and before the close of business of the fund, that are expected to materially affect the value of those securities, then they are valued at their fair value taking these events into account. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the directi on of the Board of Directors.
The Portfolio has retained a third party fair value pricing service to quantitatively analyze the price movement of its holdings on foreign exchanges and to automatically fair value if the variation from the prior day's closing price exceeds specified parameters. On December 31, 2009, price movements exceeded specified parameters and the third party fair value pricing service quantitatively fair valued the affected securities.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, securities valued at $0 or 0.0% of net assets were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Equity Securities* | $52,156 | $84,077,592** | -- | $84,129,748 |
Exchange Traded Funds | 1,611,387 | -- | -- | 1,611,387 |
Other Debt Obligations | -- | 808,366 | -- | 808,366 |
TOTALS | $1,663,543 | $84,885,958 | -- | $86,549,501 |
*For further breakdown of Equity Securities by country, please refer to the Statement of Net Assets.
**Includes certain securities trading primarily outside the U.S. whose value was adjusted as a result of significant market movements following the close of local trading.
Foreign Currency Transactions: The Portfolio's accounting records are maintained in U.S. dollars. For valuation of assets and liabilities on each date of net asset value determination, foreign denominations are translated into U.S. dollars using the current exchange rate. Security transactions, income and expenses are translated at the prevailing rate of exchange on the date of the event. The effect of changes in foreign exchange rates on securities and foreign currencies is included with the net realized and unrealized gain or loss on investments and foreign currencies.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Investment income and realized and unrealized gains and losses are allocated to separate classes of shares based upon the relative net assets of each class. Expenses arising in connection with a class are charged directly to that class. Expenses common to the classes are allocated to each class in proportion to their relative net assets. Withholding taxes on foreign dividends have been provided for in accordance with the Portfolio's understanding of the applicable country's tax rules and rates.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by UNIFI Mutual Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.56% of the Portfolio's average daily net assets. Under the terms of the agreement, $41,149 was payable at year end. In addition, $20,748 was payable at year end for operating expenses paid by the Portfolio during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .95% and 1.15% for Class I and Class F, respectively. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services to the Portfolio for an annual fee, payable monthly, of .10% based on the Portfolio's average daily net assets. Under the terms of the agreement, $7,348 was payable at year end.
Calvert Distributors, Inc., an affiliate of the Advisor, is the distributor and principal underwriter for the Portfolio. Distribution plans, adopted by Class F shares, allow the Portfolio to pay the distributor for expenses and services associated with the distribution of shares. The expenses paid may not exceed 0.20% annually of average daily net assets of Class F. Under the terms of the agreement, $810 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $172 for the year ended December 31, 2009. Under the terms of the agreement, $14 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities, were $22,717,508 and $21,295,797, respectively.
Capital Loss Carryforward
Expiration Date
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $1,625,611 | $3,309,051 |
Long-term capital gain | -- | 1,901,539 |
Total | $1,625,611 | $5,210,590 |
As of December 31, 2009 the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $9,117,887 |
Unrealized (depreciation) | (12,180,770) |
Net unrealized appreciation/(depreciation) | ($3,062,883) |
Undistributed ordinary income | $362,805 |
Capital loss carryforward | ($13,907,367) |
Federal income tax cost of investments | $89,612,384 |
The differences between components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These book-tax differences are due to wash sales and passive foreign investment companies.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distributions (or available capital loss carryforwards, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to foreign currency transactions and passive foreign investment companies.
Undistributed net investment income | $34,610 |
Accumulated net realized gain (loss) | (34,610) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Weighted
Average
Interest
Rate | Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed |
| $15,292 | 1.46% | $1,930,503 | September 2009 |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
The Portfolio designates $2.00 per share as income derived from foreign sources and $.17 per share as foreign taxes paid for the calendar year ended December 31, 2009.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
Class I Shares | 2009 | 2008 | 2007 |
Net asset value, beginning | $56.55 | $104.77 | $98.66 |
Income from investment operations | | | |
Net investment income | 1.33 | 2.17 | 1.00 |
Net realized and unrealized gain (loss) | 14.41 | (45.83) | 8.00 |
Total from investment operations | 15.74 | (43.66) | 9.80 |
Distributions from | | | |
Net investment income | (1.40) | (2.77) | (1.48) |
Net realized gain | -- | (1.79) | (2.21) |
Total distributions | (1.40) | (4.56) | (3.69) |
Total increase (decrease) in net asset value | 14.34 | (48.22) | 6.11 |
Net asset value, ending | $70.89 | $56.55 | $104.77 |
| | | |
Total return* | 27.83% | (42.68%) | 10.10% |
Ratios to average net assets: A | | | |
Net investment income | 2.10% | 2.51% | 1.48% |
Total expenses | 1.05% | 1.22% | 1.26% |
Expenses before offsets | .95% | .95% | .95% |
Net expenses | .95% | .95% | .95% |
Portfolio turnover | 29% | 47% | 48% |
Net assets, ending (in thousands) | $81,899 | $65,973 | $118,631 |
| | | |
| | | |
| Years Ended | |
| December 31, | December 31, | |
Class I Shares | 2006 | 2005 | |
Net asset value, beginning | $81.98 | $74.34 | |
Income from investment operations | | | |
Net investment income | 1.46 | 1.59 | |
Net realized and unrealized gain (loss) | 18.83 | 7.59 | |
Total from investment operations | 20.29 | 9.18 | |
Distributions from | | | |
Net investment income | (1.63) | (.72) | |
Net realized gain | (1.98) | (.82) | |
Total distributions | (3.61) | (1.54) | |
Total increase (decrease) in net asset value | 16.68 | 7.64 | |
Net asset value, ending | $98.66 | $81.98 | |
| | | |
Total return* | 25.56% | 12.57% | |
Ratios to average net assets: A | | | |
Net investment income | 1.66% | 1.75% | |
Total expenses | 1.29% | 1.50% | |
Expenses before offsets | .95% | .95% | |
Net expenses | .95% | .95% | |
Portfolio turnover | 44% | 77% | |
Net assets, ending (in thousands) | $58,754 | $44,084 | |
| | | |
| | | |
| | | |
See notes to financial highlights. | | | |
| | | |
| | | |
| | Periods Ended | |
| December 31, | December 31, | December 31, |
Class F Shares | 2009 | 2008 | 2007^ |
Net asset value, beginning | $57.91 | $104.76 | $102.10 |
Income from investment operations | | | |
Net investment income | .68 | 1.25 | .01 |
Net realized and unrealized gain (loss) | 15.23 | (45.05) | 2.65 |
Total from investment operations | 15.91 | (43.80) | 2.66 |
Distributions from | | | |
Net investment income | (.63) | (1.26) | -- |
Net realized gain | -- | (1.79) | -- |
Total distributions | (.63) | (3.05) | -- |
Total increase (decrease) in net asset value | 15.28 | (46.85) | 2.66 |
Net asset value, ending | $73.19 | $57.91 | $104.76 |
| | | |
Total return* | 27.47% | (42.81%) | 2.61% |
Ratios to average net assets: A | | | |
Net investment income | 1.67% | 1.33% | .25% (a) |
Total expenses | 1.42% | 1.42% | 1.46% (a) |
Expenses before offsets | 1.15% | 1.15% | 1.15% (a) |
Net expenses | 1.15% | 1.15% | 1.15% (a) |
Portfolio turnover | 29% | 47% | 48% |
Net assets, ending (in thousands) | $4,943 | $1,324 | $1 |
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
(a) Annualized.
* Total return is not annualized for periods less than one year.
^ From December 17, 2007 inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer universe for the one-, three- and five-year periods ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance. Based upon its review, the Board concluded that the Portfolio's performance was being addressed.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was above the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. The Board also relied on the ability of the Advisor to negotiate the Investment Subadvisory Agreement and the corresponding subadvisory fee at arm's length. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor pays the Subadvisor's subadvisory fee and the subadvisory fee was negotiated at arm's length by the Advisor, the cost of services to be provided by the Subadvisor was not a material factor in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration, although the Board noted that the subadvisory fee included breakpoints that would reduce the subadvisory fee on assets above certain specified asset levels.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is being addressed; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Por tfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Barclays
Capital Aggregate
Bond Index Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
12 | Statement of Operations |
13 | Statements of Changes in Net Assets |
14 | Notes to Financial Statements |
19 | Financial Highlights |
21 | Explanation of Financial Tables |
22 | Proxy Voting |
22 | Availability of Quarterly Portfolio Holdings |
23 | Basis for Board's Approval of Investment Advisory Contracts |
27 | Director and Officer Information Table |
Summit Barclays Capital Aggregate Bond Index Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Barclays Capital Aggregate Bond Index Portfolio provided a return of 4.59% compared to a 5.93% return for its benchmark index, the Barclays Capital Aggregate Bond Index. As an index fund, the Portfolio employs a passive management approach and seeks, as closely as possible, to replicate the holdings and match the performance of its benchmark index before fees and expenses. The Portfolio did not perform as well as the Index because of fund expenses and the Portfolio's reliance on stratified sampling to replicate index performance.
Summit Barclays Capital Aggregate Bond Index Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 4.59% |
Five year | 4.74% |
Since inception (3.31.03) | 4.28% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
In 2009, interest rates rose materially at the longer-maturity end of the yield curve as the 30-year Treasury rate increased from 2.77% to 4.64%. Interest rates at the shorter-maturity end of the yield curve remained low and increased less; the two-year Treasury rate increased from 0.76% to 1.14%. Shorter-term rates remained low, as the Federal Reserve continued to pursue an accommodative monetary policy, injecting a massive amount of liquidity into the system.
Fixed-income markets opened up for both investment-grade and high-yield issuers, which was critical in breaking the credit crunch that began in 2008. Bond investments provided a wide range of returns during 2009. The corporate bond sector produced a return of 18.68% for the year, while the U.S. Treasury sector returned -3.57%. Mortgage-backed securities returned 5.89% as the government launched a trillion-dollar purchase program to support that market. In general, riskier assets performed well, while lower-risk assets lagged. This was a complete reversal from 2008, when riskier assets were shed by investors and delivered strongly negative returns. In a market such as this, a small overweight or underweight to a given sector had the potential to change relative performance substantially.
Portfolio Strategy
The Portfolio's strategy is purely passive. Its goal is to mirror the performance of the Barclays Capital Aggregate Bond Index as closely as possible. An exact replication of the Index is not feasible, as the Index is comprised of more than 8,400 securities. Therefore, the Portfolio relies on stratified sampling. Stratified sampling is a strategy that attempts to replicate the performance of the index by using fewer securities and closely matching the characteristics of the index, such as duration, sector allocation, quality, and others.
During 2009, there was significant volatility, and difference of return, between the various sectors of the Index. For example, the corporate bond portion of the Index returned 18.68%. The Treasury portion of the index returned -3.57%. The lower quality, BBB rated bond portion of the Index returned 27.49%. During periods like this, the slight underweighting or overweighting of one sector can significantly affect performance. The portfolio's underweight position in BBB rated corporate securities during the first half of the year, along with other minor weighting variations, was responsible for a significant amount of underperformance in 2009.
Economic Sectors | % of Total
Investments |
Asset Backed Securities | 0.2% |
Basic Materials | 0.4% |
Communications | 1.4% |
Consummer, Cyclical | 1.3% |
Consummer, Non-cyclical | 2.1% |
Energy | 4.0% |
Exchange Traded Funds | 0.9% |
Financials | 6.3% |
Government | 35.7% |
Industrials | 3.6% |
Mortgage Backed Securities | 40.7% |
Technology | 2.3% |
Utilities | 1.1% |
Total | 100% |
Outlook
While the unemployment rate remains high, we expect a modestly improved economic picture in 2010. An improving economy and increased corporate earnings will likely extend the trends that occurred in 2009. Interest rates will likely rise and bond spreads may be tighter. This, in turn, is likely to help the corporate bond sector outperform Treasuries again in 2010.
If the economy continues to strengthen, as we expect, the Federal Reserve will be forced to remove liquidity from the system at some point in order to stave off future inflation concerns. The impact of reduced liquidity in the system could drive short-term rates materially higher, resulting in a flatter yield curve. Higher rates and a flatter yield curve are not positives for fixed-income investors.
During 2010, we expect to see modest economic growth in the United States and throughout the world, and improved corporate earnings. We anticipate that recovery will remain modest as many challenges remain. Unemployment is above 10%, creating slack in the American economy. Consumers continue to reduce debt and limit spending. Many financial institutions have not yet addressed problem assets on their books, which will become problematic if the commercial real estate market experiences weakness as the year unfolds.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,031.00 | $2.84 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,022.41 | $2.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.55%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Barclays Capital Aggregate Bond Index Portfolio:
We have audited the accompanying statement of net assets of the Summit Barclays Capital Aggregate Bond Index Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Barclays Capital Aggregate Bond Index Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
| | Principal | |
Asset-Backed Securities - 0.2% | | Amount | Value |
Residential Asset Securities Corp., STEP, 4.61% to 3/25/13, 5.11% thereafter to 5/25/33 (r) | | $97,375 | $57,107 |
| | | |
Total Asset-Backed Securities (Cost $96,287) | | | 57,107 |
| | | |
Commercial Mortgage-Backed Securities - 4.4% | | | |
Banc of America Commercial Mortgage, Inc.: | | | |
6.186%, 6/11/35 | | 500,000 | 522,850 |
5.889%, 4/10/49 (r) | | 550,000 | 473,984 |
Bear Stearns Commercial Mortgage Securities: | | | |
4.24%, 8/13/39 (r) | | 299,029 | 299,806 |
4.254%, 7/11/42 | | 305,690 | 307,038 |
JP Morgan Chase Commercial Mortgage Securities Corp., 5.464%, 10/12/35 | | 32,025 | 32,295 |
JP Morgan Commercial Mortgage Finance Corp., 7.023%, 2/15/32 (e)(r) | | 758 | 757 |
| | | |
Total Commercial Mortgage-Backed Securities (Cost $1,629,320) | | | 1,636,730 |
| | | |
Corporate Bonds - 22.3% | | | |
Affiliated Computer Services, Inc., 5.20%, 6/1/15 | | 300,000 | 309,750 |
Alcoa, Inc., 5.72%, 2/23/19 | | 149,000 | 144,058 |
Apache Corp., 5.625%, 1/15/17 | | 100,000 | 106,599 |
AstraZeneca plc, 6.45%, 9/15/37 | | 350,000 | 394,203 |
Bank of America Corp., 7.375%, 5/15/14 | | 100,000 | 113,395 |
BlackRock, Inc., 3.50%, 12/10/14 | | 100,000 | 98,998 |
BP Capital Markets plc, 3.625%, 5/8/14 | | 200,000 | 204,439 |
CA, Inc., 5.375%, 12/1/19 | | 100,000 | 101,076 |
Camden Property Trust, 5.875%, 11/30/12 | | 100,000 | 104,101 |
Citigroup, Inc.: | | | |
6.50%, 8/19/13 | | 125,000 | 133,149 |
6.125%, 5/15/18 | | 200,000 | 201,082 |
Coca-Cola Co., 5.35%, 11/15/17 | | 100,000 | 108,579 |
Colonial Pipeline Co.: | | | |
7.75%, 11/1/10 (e) | | 375,000 | 394,208 |
6.58%, 8/28/32 (e) | | 100,000 | 105,321 |
Connecticut Light & Power Co., 5.65%, 5/1/18 | | 200,000 | 213,043 |
Conoco Funding Co., 6.35%, 10/15/11 | | 80,000 | 87,037 |
Deere & Co., 6.55%, 10/1/28 | | 250,000 | 273,031 |
Deutsche Bank AG, 4.875%, 5/20/13 | | 150,000 | 159,357 |
Emerson Electric Co., 4.75%, 10/15/15 | | 200,000 | 215,189 |
Goldman Sachs Group, Inc., 5.35%, 1/15/16 | | 200,000 | 207,733 |
GTE Corp., 6.94%, 4/15/28 | | 80,000 | 82,979 |
Harley-Davidson Funding Corp., 5.75%, 12/15/14 (e) | | 100,000 | 99,293 |
Honeywell International, Inc.: | | | |
7.50%, 3/1/10 | | 108,000 | 109,205 |
4.25%, 3/1/13 | | 100,000 | 105,342 |
| | | |
| | Principal | |
Corporate Bonds - Cont'd | | Amount | Value |
Hospira, Inc., 6.40%, 5/15/15 | | $250,000 | $277,344 |
JPMorgan Chase & Co., 4.75%, 5/1/13 | | 250,000 | 263,881 |
L-3 Communications Corp., 5.20%, 10/15/19 (e) | | 200,000 | 199,750 |
Lockheed Martin Corp., 7.20%, 5/1/36 | | 150,000 | 177,920 |
McDonald's Corp., 4.30%, 3/1/13 | | 100,000 | 105,788 |
Merrill Lynch & Co., Inc., 6.875%, 11/15/18 | | 123,000 | 130,448 |
Metropolitan Life Global Funding I, 5.125%, 4/10/13 (e) | | 100,000 | 105,772 |
Northern Trust Corp., 5.50%, 8/15/13 | | 100,000 | 108,508 |
Oracle Corp., 5.75%, 4/15/18 | | 250,000 | 271,500 |
Pitney Bowes, Inc., 5.75%, 9/15/17 | | 180,000 | 192,859 |
Progressive Corp., 6.375%, 1/15/12 | | 165,000 | 176,826 |
Public Service Co. of North Carolina, Inc., 6.625%, 2/15/11 | | 180,000 | 188,370 |
Shell International Finance BV, 4.00%, 3/21/14 | | 300,000 | 313,775 |
Suncor Energy, Inc., 6.50%, 6/15/38 | | 250,000 | 262,681 |
TCI Communications, Inc., 8.75%, 8/1/15 | | 100,000 | 119,834 |
Thomson Reuters Corp., 6.20%, 1/5/12 | | 100,000 | 107,601 |
Time Warner Cable, Inc., 5.00%, 2/1/20 | | 100,000 | 97,265 |
United Parcel Service, Inc., 6.20%, 1/15/38 | | 250,000 | 277,161 |
US Bank NA, 4.95%, 10/30/14 | | 100,000 | 106,444 |
Verizon Communications, Inc., 4.35%, 2/15/13 | | 100,000 | 104,941 |
Walgreen Co., 4.875%, 8/1/13 | | 100,000 | 106,986 |
Wal-Mart Stores, Inc., 6.50%, 8/15/37 | | 250,000 | 287,417 |
Wells Fargo & Co., 4.375%, 1/31/13 | | 125,000 | 129,496 |
XTO Energy, Inc., 4.625%, 6/15/13 | | 200,000 | 212,635 |
| | | |
Total Corporate Bonds (Cost $8,026,144) | | | 8,396,369 |
Sovereign Government Bonds - 0.3% | | | |
Province of New Brunswick Canada, 6.75%, 8/15/13 | | 100,000 | 113,518 |
| | | |
Total Sovereign Government Bonds (Cost $107,274) | | | 113,518 |
U.S. Government Agencies And Instrumentalities - 12.8% | | | |
Fannie Mae: | | | |
5.05%, 2/7/11 | | 1,300,000 | 1,362,049 |
6.125%, 3/15/12 | | 550,000 | 606,612 |
4.625%, 10/15/14 | | 100,000 | 108,037 |
Federal Farm Credit Bank, 4.25%, 2/1/12 | | 750,000 | 794,241 |
Freddie Mac: | | | |
7.00%, 3/15/10 | | 1,300,000 | 1,317,654 |
3.25%, 2/25/11 | | 300,000 | 308,670 |
5.00%, 2/16/17 | | 200,000 | 217,186 |
4.875%, 6/13/18 | | 100,000 | 107,080 |
| | | |
Total U.S. Government Agencies and Instrumentalities (Cost $4,649,394) | | | 4,821,529 |
| | | |
| | Principal | |
U.S. Government Agency Mortgage-Backed Securities - 35.9% | | Amount | Value |
Fannie Mae: | | | |
5.00%, 12/1/16 | | $616,015 | $648,624 |
5.00%, 11/1/17 | | 97,954 | 103,231 |
5.50%, 8/1/18 | | 349,743 | 372,957 |
5.00%, 6/1/20 | | 251,417 | 264,255 |
6.50%, 4/1/23 | | 62,041 | 66,578 |
6.50%, 8/1/32 | | 265,370 | 285,634 |
5.50%, 7/1/33 | | 613,353 | 644,659 |
5.50%, 7/1/33 | | 464,576 | 488,289 |
6.00%, 8/1/33 | | 79,298 | 84,701 |
5.50%, 11/1/33 | | 498,099 | 523,523 |
5.50%, 3/1/34 | | 837,456 | 880,201 |
6.00%, 6/1/34 | | 436,027 | 466,549 |
5.00%, 10/1/34 | | 668,346 | 688,013 |
5.50%, 3/1/35 | | 1,989,477 | 2,092,556 |
5.50%, 6/1/35 | | 943,265 | 990,821 |
5.50%, 2/1/36 | | 424,496 | 445,897 |
5.50%, 11/1/36 | | 641,849 | 674,102 |
7.50%, 11/1/36 | | 347,026 | 378,945 |
Freddie Mac: | | | |
4.50%, 9/1/18 | | 301,150 | 313,607 |
5.00%, 11/1/20 | | 475,664 | 500,100 |
5.00%, 2/1/33 | | 886,219 | 912,436 |
5.00%, 4/1/35 | | 529,376 | 543,878 |
6.00%, 8/1/36 | | 523,050 | 556,068 |
Ginnie Mae, 5.50%, 7/20/34 | | 564,937 | 594,845 |
| | | |
Total U.S. Government Agency Mortgage-Backed Securities (Cost $13,017,575) | | | 13,520,469 |
| | | |
U.S. Treasury - 22.2% | | | |
United States Treasury Bonds: | | | |
6.25%, 8/15/23 | | 600,000 | 717,094 |
5.50%, 8/15/28 | | 500,000 | 557,578 |
4.50%, 2/15/36 | | 100,000 | 98,578 |
United States Treasury Notes: | | | |
4.50%, 9/30/11 | | 150,000 | 158,977 |
4.50%, 4/30/12 | | 200,000 | 214,438 |
1.375%, 5/15/12 | | 400,000 | 400,000 |
2.75%, 2/28/13 | | 300,000 | 309,188 |
3.50%, 5/31/13 | | 300,000 | 316,172 |
3.125%, 8/31/13 | | 300,000 | 311,812 |
3.125%, 9/30/13 | | 350,000 | 363,836 |
2.75%, 10/31/13 | | 200,000 | 204,844 |
4.25%, 11/15/13 | | 200,000 | 216,063 |
2.00%, 11/30/13 | | 350,000 | 348,141 |
1.875%, 2/28/14 | | 410,000 | 403,273 |
1.875%, 4/30/14 | | 300,000 | 293,859 |
2.25%, 5/31/14 | | 540,000 | 536,372 |
2.625%, 7/31/14 | | 250,000 | $251,328 |
2.375%, 8/31/14 | | 250,000 | 248,203 |
4.00%, 2/15/15 | | 400,000 | 425,125 |
| | | |
| | Principal | |
U.S. Treasury - Cont'd | | Amount | Value |
United States Treasury Notes - Cont'd: | | | |
4.50%, 11/15/15 | | $250,000 | $270,820 |
2.625%, 2/29/16 | | 100,000 | 97,328 |
2.375%, 3/31/16 | | 400,000 | 382,812 |
4.875%, 8/15/16 | | 450,000 | 495,070 |
4.625%, 2/15/17 | | 400,000 | 432,187 |
4.00%, 8/15/18 | | 160,000 | 163,525 |
3.625%, 8/15/19 | | 150,000 | 147,563 |
| | | |
Total U.S. Treasury (Cost $8,315,328) | | | 8,364,186 |
| | | |
| | Principal | |
Time Deposit - 0.0% | | Amount | Value |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | 10,545 | 10,545 |
| | | |
Total Time Deposit (Cost $10,545) | | | 10,545 |
| | | |
Exchange Traded Funds - 0.9% | | Shares | |
iShares Barclays Aggregate Bond Fund | | 3,200 | 330,208 |
| | | |
Total Exchange Traded Funds (Cost $321,764) | | | 330,208 |
| | | |
TOTAL INVESTMENTS (Cost $36,173,631) - 99.0% | | | 37,250,661 |
Other assets and liabilities, net - 1.0% | | | 378,272 |
Net Assets - 100% | | | $37,628,933 |
| | | |
| | | |
Net Assets Consist Of: | | | |
Paid-in capital applicable to 740,386 shares of common stock outstanding; | | | |
$0.10 par value, 20,000,000 shares authorized | | | $36,318,705 |
Undistributed net investment income | | | 224,316 |
Accumulated net realized gain (loss) on investments | | | 8,882 |
Net unrealized appreciation (depreciation) on investments | | | 1,077,030 |
| | | |
Net Assets | | | $37,628,933 |
| | | |
Net Asset Value Per Share | | | $50.82 |
(e) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
(r) The coupon rate shown on floating or adjustable rate securities represents the rate at year end.
Abbreviations:
STEP: Stepped coupon bond for which the coupon rate of interest will adjust on specified future date(s)
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $48,663 |
Interest income | 1,984,910 |
Total investment income | 2,033,573 |
| |
Expenses: | |
Investment advisory fee | 139,683 |
Transfer agent fees and expenses | 3,471 |
Trustees' fees and expenses | 7,203 |
Administrative fees | 46,561 |
Accounting fees | 5,763 |
Custodian fees | 26,013 |
Reports to shareholders | 1,187 |
Professional fees | 21,057 |
Miscellaneous | 1,342 |
Total expenses | 252,280 |
Fees paid indirectly | (21) |
Net expenses | 252,259 |
| |
Net Investment Income | 1,781,314 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | 416,495 |
Change in unrealized appreciation (depreciation) | (60,512) |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 355,983 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $2,137,297 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $1,781,314 | $2,153,031 |
Net realized gain (loss) | 416,495 | 164,365 |
Change in unrealized appreciation or (depreciation) | (60,512) | 731,034 |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 2,137,297 | 3,048,430 |
| | |
Distributions to shareholders from: | | |
Net investment income | (1,758,972) | (2,284,162) |
Net realized gain | (142,302) | -- |
Total capital share transactions | (1,901,274) | (2,284,162) |
| | |
Capital share transactions: | | |
Shares sold | 11,942,522 | 23,271,552 |
Reinvestment of distributions | 1,901,274 | 2,284,157 |
Shares redeemed | (27,738,019) | (19,528,466) |
Total capital share transactions | (13,894,223) | 6,027,243 |
| | |
Total Increase (Decrease) in Net Assets | (13,658,200) | 6,791,511 |
| | |
Net Assets | | |
Beginning of year | 51,287,133 | 44,495,622 |
End of year (including undistributed net investment | | |
income of $224,316 and $165,268, respectively) | $37,628,933 | $51,287,133 |
| | |
Capital Share Activity | | |
Shares sold | 230,028 | 460,877 |
Reinvestment of distributions | 37,324 | 45,892 |
Shares redeemed | (529,259) | (389,612) |
Total capital share activity | (261,907) | 117,157 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Barclays Capital Aggregate Bond Index (formerly Lehman Aggregate Bond Index) Portfolio (the "Portfolio"), a series of Summit Mutal Funds, Inc. (or the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Municipal securities are valued utilizing the average of bid prices or at bid prices based on a matrix system (which considers such factors as security prices, yields, maturities and ratings) furnished by dealers through an independent pricing service. Short-term notes are stated at amortized cost, which approximates fair value. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Asset-Backed Securities | -- | $57,107 | -- | $57,107 |
Commercial Mortgage-Backed Securities | -- | 1,636,730 | -- | 1,636,730 |
Corporate Bonds | -- | 8,396,369 | -- | 8,396,369 |
Exchanged Traded Funds | $330,208 | -- | -- | 330,208 |
Other Debt Securities | -- | 10,545 | -- | 10,545 |
Sovereign Government Bonds | -- | 113,518 | -- | 113,518 |
U.S. Government Obligations | -- | 26,706,184 | -- | 26,706,184 |
TOTAL | $330,208 | $36,920,453 | -- | $37,250,661 |
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date or, in the case of dividends on certain foreign securities, as soon as the Portfolio is informed of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. ("the Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .30% of the Portfolio's average daily net assets. Under the terms of the agreement, $9,643 was payable at year end. In addition, $8,669 was payable at year end for reimbursement of operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is .60%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $3,214 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $86 for year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than U.S. Government and short-term securities, were $8,884,150 and $14,885,618, respectively. U.S. Government security purchases and sales were $23,638,121 and $26,963,842, respectively.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | 2009 | 2008 |
Ordinary income | $1,758,972 | $2,284,162 |
Long-term capital gain | 142,302 | -- |
Total | $1,901,274 | $2,284,162 |
As of December 31, 2009 the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $1,211,703 |
Unrealized (depreciation) | (144,530) |
Net unrealized appreciation/(depreciation) | $1,067,173 |
Undistributed ordinary income | $224,316 |
Undistributed long term capital gain | $18,739 |
Federal income tax cost of investments | $36,183,488 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distributions (or available capital loss carryforwards, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to asset-backed securities.
Undistributed net investment income | $36,706 |
Accumulated net realized gain (loss) | (36,706) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Weighted
Average
Interest
Rate | Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed |
| $3,730 | 1.46% | $471,847 | October 2009 |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates $142,302 of the long term capital gain distributions paid during the year or the maximum amount allowable but not less than the aforementioned amount as capital gain dividend in accordance with Section 852(b)(3)(C) of the Internal Revenue Code.
Financial Highlights
| | Years Ended | |
| December 31, | December 31, | December 31, |
| 2009 (z) | 2008 | 2007 |
Net asset value, beginning | $51.17 | $50.27 | $48.85 |
Income from investment operations | | | |
Net investment income | 2.00 | 2.13 | 2.13 |
Net realized and unrealized gain (loss) | .35 | 1.07 | 1.40 |
Total from investment operations | 2.35 | 3.20 | 3.53 |
Distributions from | | | |
Net investment income | (2.50) | (2.30) | (2.11) |
Net realized gain | (.20) | -- | -- |
Total distributions | 2.70 | (2.30) | (2.11) |
Total increase (decrease) in net asset value | (.35) | .90 | 1.42 |
Net asset value, ending | $50.82 | $51.17 | $50.27 |
| | | |
Total return* | 4.59% | 6.56% | 7.43% |
Ratios to average net assets: A | | | |
Net investment income | 3.83% | 4.29% | 4.24% |
Total expenses | .54% | .61% | .59% |
Expenses before offsets | .54% | .60% | .59% |
Net expenses | .54% | .60% | .59% |
Portfolio turnover | 71% | 30% | 24% |
Net assets, ending (in thousands) | $37,629 | $51,287 | $44,496 |
| | | |
| Years Ended | |
| December 31, | December 31, | |
| 2006 | 2005 | |
Net asset value, beginning | $49.06 | $50.13 | |
Income from investment operations | | | |
Net investment income | 1.97 | 1.83 | |
Net realized and unrealized gain (loss) | (.24) | (1.06) | |
Total from investment operations | 1.73 | .77 | |
Distributions from | | | |
Net investment income | (1.94) | (1.84) | |
Total distributions | (1.94) | (1.84) | |
Total increase (decrease) in net asset value | (.21) | (1.07) | |
Net asset value, ending | $48.85 | $49.06 | |
| | | |
Total return* | 3.64% | 1.57% | |
Ratios to average net assets: A | | | |
Net investment income | 3.96% | 3.54% | |
Total expenses | .59% | .63% | |
Expenses before offsets | .59% | .60% | |
Net expenses | .59% | .60% | |
Portfolio turnover | 28% | 16% | |
Net assets, ending (in thousands) | $39,160 | $37,657 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
(z) Per share figures calculated using the average shares method.
* Total return is not annualized for periods less than one year.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory Contracts
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one-, three- and five-year periods ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-, three- and five-year periods ended June 30, 2009. The Board also took into account management's discussion of the P ortfolio's tracking error and performance versus its benchmark index. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee, which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was above the median of its peer group and that total expenses were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through D ecember 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio and the relatively small range in total expense ratios among the funds in the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-, three- and five-year periods ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. In addition, the Board considered the subadvisory fee paid to the Subadvisor by the Advisor in comparison to fees paid by similar institutional clients. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Port folio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Inflation
Protected Plus
Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
11 | Statement of Operations |
12 | Statements of Changes in Net Assets |
13 | Notes to Financial Statements |
18 | Financial Highlights |
20 | Explanation of Financial Tables |
21 | Proxy Voting |
22 | Availability of Quarterly Portfolio Holdings |
22 | Basis for Board's Approval of Investment Advisory Contracts |
26 | Director and Officer Information Table |
Summit Inflation Protected Plus Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the 12-month period ended December 31, 2009, Summit Inflation Protected Plus Portfolio provided a return of 7.62% compared with a return of 11.41% for the Barclays Capital U.S. Treasury Inflation Protected Securities Index (TIPS Index). The Portfolio underperformed the TIPS Index because it does not invest only in Treasury Inflation Protected Securities (TIPS), which performed well during 2009. The Portfolio also includes floating-rate notes, which underperformed TIPS during the period, and various other fixed-income instruments. When compared to the Lipper General U.S. Government Index, which returned 3.31% for the year, the Portfolio outperformed.
Summit Inflation Protected Plus Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 7.62% |
Since inception (12.28.06) | 5.25% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
In 2009, interest rates rose materially at the longer-maturity end of the yield curve as the 30-year Treasury rate increased from 2.77% to 4.64%. Interest rates at the short-maturity end of the Treasury yield curve remained low and increased less; the two-year Treasury rate increased from 0.76% to 1.14%. Shorter-term rates remained low, as the Federal Reserve continued to pursue an accommodative monetary policy, injecting a massive amount of liquidity into the system.
The rate of inflation, as measured by the Consumer Price Index for Urban Consumers, was up 2.8% in 2009. In 2008, it had risen by 0.1%. Core inflation, which excludes changes in food and energy prices, grew by 1.8% during 2009. The widening difference between yields on 10-year Treasury bonds and 10-year TIPS indicates that investors believe inflation will rise further. At year-end 2008, the yield differential was about 0.10%. By the end of 2009, it had increased to 2.40%.
Portfolio Strategy
The Portfolio primarily invests in TIPS and floating-rate bonds. Throughout 2009, it maintained an intermediate duration. Higher inflation and expectations that inflation will rise in the future pushed returns on TIPS above those of U.S. Treasury securities with similar durations. The Portfolio will continue to hold TIPS in an effort to protect against future inflation expectations. We also plan to continue holding floating-rate notes, which generally provide greater income during times of inflation.
Investment Allocation
(at 12.31.09) | % of Total
Investments |
Long Term | 30% |
Intermediate Term | 34% |
Short Term | 36% |
Total | 100% |
Outlook
The outlook for inflation-protected securities depends on expectations for economic growth, money supply, the value of the dollar, and the dollar's impact on inflation. The prospect for inflation in the near term remains low, given the slack labor market and low capacity utilization. However, the prospect for inflation over the intermediate and long term appears much more substantial. Massive economic and fiscal stimulus programs, in tandem with a strengthening economy and a weakening dollar, should create heightened concern over the future rate of inflation. The Federal Reserve will need to withdraw stimulus support at some point. Its skill in determining the magnitude and timing of withdrawal will influence future economic and market performance.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,032.20 | $3.84 |
Hypothetical (5% return per year before expenses) | $1,000.00 | $1,021.42 | $3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Inflation Protected Plus Portfolio:
We have audited the accompanying statement of net assets of the Summit Inflation Protected Plus Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Inflation Protected Plus Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
| | Principal | |
U.S. Treasury(i) - 50.6% | | Amount | Value |
United States Treasury Bonds: | | | |
2.375%, 1/15/25 | | $2,098,662 | $2,215,728 |
2.00%, 1/15/26 | | 2,265,411 | 2,276,738 |
2.375%, 1/15/27 | | 1,393,509 | 1,467,322 |
1.75%, 1/15/28 | | 1,877,985 | 1,801,692 |
3.625%, 4/15/28 | | 1,396,674 | 1,727,074 |
2.50%, 1/15/29 | | 604,120 | 648,579 |
3.875%, 4/15/29 | | 1,400,432 | 1,803,276 |
3.375%, 4/15/32 | | 207,036 | 256,110 |
United States Treasury Notes: | | | |
2.00%, 1/15/14 | | 216,435 | 228,914 |
1.625%, 1/15/15 | | 588,697 | 612,429 |
2.00%, 1/15/16 | | 1,323,305 | 1,397,948 |
2.50%, 7/15/16 | | 920,553 | 1,002,683 |
2.375%, 1/15/17 | | 900,421 | 972,877 |
2.625%, 7/15/17 | | 62,581 | 68,849 |
1.625%, 1/15/18 | | 670,709 | 686,743 |
2.125%, 1/15/19 | | 251,713 | 267,091 |
1.875%, 7/15/19 | | 506,210 | 525,747 |
| | | |
Total U.S. Treasury (Cost $17,535,139) | | | 17,959,800 |
Corporate Bonds - 44.4% | | | |
Affiliated Computer Services, Inc., 5.20%, 6/1/15 | | 700,000 | 722,750 |
Bank of America Corp.: | | | |
0.581%, 4/30/12 (r) | | 1,000,000 | 1,008,727 |
7.375%, 5/15/14 | | 100,000 | 113,395 |
Baxter International, Inc., 4.00%, 3/1/14 | | 100,000 | 103,124 |
BlackRock, Inc., 3.50%, 12/10/14 | | 100,000 | 98,998 |
Bottling Group LLC, 6.95%, 3/15/14 | | 100,000 | 115,897 |
BP Capital Markets plc, 3.625%, 5/8/14 | | 100,000 | 102,219 |
CA, Inc., 5.375%, 12/1/19 | | 100,000 | 101,076 |
Citibank NA, 0.414%, 11/15/12 (r) | | 1,000,000 | 999,784 |
Citigroup Funding, Inc., 0.198%, 5/5/11 (r) | | 500,000 | 499,743 |
Eastman Chemical Co., 5.50%, 11/15/19 | | 200,000 | 199,482 |
Eli Lilly & Co., 4.20%, 3/6/14 | | 100,000 | 105,249 |
Freeport-McMoRan Copper & Gold, Inc., 3.881%, 4/1/15 (r) | | 250,000 | 248,783 |
General Electric Capital Corp.: | | | |
0.454%, 3/12/12 (r) | | 500,000 | 502,429 |
0.225%, 5/8/12 (r) | | 500,000 | 499,539 |
0.505%, 12/7/12 (r) | | 400,000 | 402,952 |
General Mills, Inc., 5.65%, 2/15/19 | | 100,000 | 106,717 |
GMAC LLC, 0.253%, 12/19/12 (r) | | 1,000,000 | 999,707 |
Goldman Sachs Group, Inc., 0.525%, 11/9/11 (r) | | 1,000,000 | 1,005,721 |
Harley-Davidson Funding Corp., 5.75%, 12/15/14 (e) | | 700,000 | 695,054 |
| | | |
| | Principal | |
Corporate Bonds - Cont'd | | Amount | Value |
Hewlett-Packard Co., 4.75%, 6/2/14 | | $100,000 | $106,811 |
Hospira, Inc., 6.40%, 5/15/15 | | 100,000 | 110,938 |
JPMorgan Chase & Co., 0.631%, 6/22/12 (r) | | 1,000,000 | 1,009,697 |
Kroger Co., 3.90%, 10/1/15 | | 250,000 | 252,114 |
L-3 Communications Corp.: | | | |
5.875%, 1/15/15 | | 500,000 | 498,750 |
5.20%, 10/15/19 (e) | | 200,000 | 199,750 |
Morgan Stanley, 0.603%, 6/20/12 (r) | | 1,500,000 | 1,514,152 |
Novartis Capital Corp., 4.125%, 2/10/14 | | 100,000 | 104,877 |
Potash Corp. of Saskatchewan, Inc., 5.25%, 5/15/14 | | 100,000 | 107,498 |
Pride International, Inc., 7.375%, 7/15/14 | | $500,000 | $516,250 |
Procter & Gamble Co., 3.50%, 2/15/15 | | 100,000 | 102,331 |
Shell International Finance BV, 4.00%, 3/21/14 | | 100,000 | 104,592 |
Southern California Gas Co., 5.50%, 3/15/14 | | 290,000 | 318,176 |
State Street Bank and Trust Co., 0.454%, 9/15/11 (r) | | 900,000 | 903,646 |
SunTrust Bank, 0.904%, 12/16/10 (r) | | 500,000 | 503,449 |
Time Warner Cable, Inc., 5.00%, 2/1/20 | | 200,000 | 194,530 |
Unilever Capital Corp., 4.80%, 2/15/19 | | 100,000 | 102,722 |
Union Bank, 0.334%, 3/16/11 (r) | | 500,000 | 500,665 |
| | | |
Total Corporate Bonds (Cost $15,684,988) | | | 15,782,294 |
| | | |
| | | |
U.S. Government Agencies And Instrumentalities - 4.0% | | | |
Fannie Mae, 5.00%, 3/15/16 | | 900,000 | 978,273 |
Federal Home Loan Bank, 5.125%, 8/14/13 | | 200,000 | 219,963 |
Freddie Mac, 4.75%, 1/19/16 | | 200,000 | 215,777 |
| | | |
Total U.S. Government Agencies and Instrumentalities (Cost $1,431,863) | | | 1,414,013 |
| | | |
| | | |
Time Deposit - 0.4% | | | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | 148,840 | 148,840 |
| | | |
Total Time Deposit (Cost $148,840) | | | 148,840 |
| | | |
| | | |
TOTAL INVESTMENTS (Cost $34,800,830) - 99.4% | | | 35,304,947 |
Other assets and liabilities, net - 0.6% | | | 220,414 |
Net Assets - 100% | | | $35,525,361 |
| | | |
| | | |
Net Assets Consist of: | | | |
Paid-in capital applicable to 666,672 shares of common stock outstanding; | | | |
$0.10 par value, 20,000,000 shares authorized | | | $35,281,745 |
Undistributed net investment income | | | 20,198 |
Accumulated net realized gain (loss) on investments | | | (280,699) |
Net unrealized appreciation (depreciation) on investments | | | 504,117 |
| | | |
Net Assets | | | $35,525,361 |
| | | |
Net Asset Value per Share | | | $53.29 |
(e) Security is exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.
(i) Inflation protected security.
(r) The coupon rate shown on floating or adjustable rate securities represents the rate at year end.
Abbreviations:
LLC: Limited Liability Corporation
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Interest income | $439,944 |
Inflation principal income (loss) | (105,615) |
Total investment income | 334,329 |
| |
Expenses: | |
Investment advisory fee | 126,387 |
Transfer agency fees and expenses | 1,984 |
Accounting fees | 3,139 |
Directors' fees and expenses | 3,961 |
Administrative fees | 25,277 |
Custodian fees | 8,928 |
Reports to shareholders | 15,202 |
Professional fees | 18,371 |
Miscellaneous | 951 |
Total expenses | 204,200 |
Reimbursement from Advisor | (14,595) |
Fees paid indirectly | (25) |
Net expenses | 189,580 |
| |
Net Investment Income | 144,749 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (27,478) |
Changes in unrealized appreciation (depreciation) | 1,678,310 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 1,650,832 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $1,795,581 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) In Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $144,749 | $262,189 |
Net realized gain (loss) | (27,478) | (252,456) |
Change in unrealized appreciation (depreciation) | 1,678,310 | (1,231,292) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting from Operations | 1,795,581 | (1,221,559) |
| | |
Distributions to shareholders from: | | |
Net investment income | (124,551) | (269,196) |
Return of capital | - | (159,940) |
Total distributions | (124,551) | (429,136) |
| | |
Capital share transactions: | | |
Shares sold | 21,325,384 | 23,796,424 |
Reinvestment of distributions | 124,551 | 429,136 |
Shares redeemed | (5,087,708) | (6,240,110) |
Total capital share transactions | 16,362,227 | 17,985,450 |
| | |
Total Increase (Decrease) in Net Assets | 18,033,257 | 16,334,755 |
| | |
| | |
Net Assets | | |
Beginning of year | 17,492,104 | 1,157,349 |
End of year (including undistributed net investment | | |
income of $20,198 and $0, respectively) | $35,525,361 | $17,492,104 |
| | |
| | |
Capital Share Activity | | |
Shares sold | 411,207 | 442,165 |
Shares reinvested | 2,334 | 8,714 |
Shares redeemed | (98,917) | (120,669) |
Total capital share activity | 314,624 | 330,210 |
See notes to financial statements.
Notes to Financial Statements
Note A -- Significant Accounting Policies
General: Summit Inflation Protected Plus Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund"), is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Municipal securities are valued utilizing the average of bid prices or at bid prices based on a matrix system (which considers such factors as security prices, yields, maturities and ratings) furnished by dealers through an independent pricing service. Short-term notes are stated at amortized cost, which approximates fair value. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
U.S. government obligations | -- | $19,373,813 | -- | $19,373,813 |
Corporate debt Obligations | -- | 15,782,294 | -- | 15,782,294 |
Other debt obligations | -- | 148,840 | -- | 148,840 |
TOTAL | -- | $35,304,947 | -- | $35,304,947 |
Repurchase Agreements: The Portfolio may enter into repurchase agreements with recognized financial institutions or registered broker/dealers and, in all instances, holds underlying securities with a value exceeding the total repurchase price, including accrued interest. Although risk is mitigated by the collateral, the Portfolio could experience a delay in recovering its value and a possible loss of income or value if the counterparty fails to perform in accordance with the terms of the agreement.
Treasury Inflation-Protected Securities: The Portfolio invests in Treasury Inflation-Protected Securities ("TIPS"), in which the principal amount is adjusted daily to keep pace with inflation. Interest is accrued based on the adjusted principal amount. The adjustments to principal due to inflation are reflected as increases or decreases to inflation principal income in the accompanying Statement of Operations. Such adjustments may have a significant impact on the Portfolio's distributions.
Security Transactions and Investment Income: Security transactions are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis and may include proceeds from litigation. Dividend income is recorded on the ex-dividend date. Interest income, which includes amortization of premium and accretion of discount on debt securities is accrued as earned. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by UNIFI Mutual Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of .50%, of the Portfolio's average daily net assets. Under the terms of the agreement, $14,849 was payable at year end. In addition, $6,608 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.75%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services to the Portfolio for an annual fee, payable monthly, of .10% based on the Portfolio's average daily net assets. Under the terms of the agreement, $2,970 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $56 for the year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term and U.S. Government securities, were $27,507,816 and $10,452,514, respectively. U.S. Government security purchases and sales were $19,840,484 and $20,428,832, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-15 | $765 |
31-Dec-16 | 109,614 |
31-Dec-17 | 83,290 |
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $124,551 | $269,196 |
Return of capital | -- | 159,940 |
Total | $124,551 | $429,136 |
As of December 31, 2009, the components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $468,149 |
Unrealized (depreciation) | (51,062) |
Net unrealized appreciation/(depreciation) | $417,087 |
Undistributed ordinary income | $20,198 |
Capital loss carryforward | ($193,669) |
Federal income tax cost of investments | $34,887,860 |
The differences between components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales.
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Fund had no loans outstanding pursuant to this line of credit at December 31, 2009. For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Weighted
Average
Interest
Rate | Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed |
| $3,995 | 1.45% | $599,207 | October 2009 |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Financial Highlights
| Years Ended |
| December 31, | December 31, |
| 2009 | 2008 (z) |
Net asset value, beginning | $49.69 | $53.00 |
Income from investment operations | | |
Net investment income | .22 | 1.35 |
Net realized and unrealized gain (loss) | 3.57 | (2.47) |
Total from investment operations | 3.79 | (1.12) |
Distributions from | | |
Net investment income | (.19) | (1.37) |
Return of capital | -- | (.82) |
Total distributions | (.19) | (2.19) |
Total increase (decrease) in net asset value | 3.60 | (3.31) |
Net asset value, ending | $53.29 | $49.69 |
| | |
Total return* | 7.62% | (2.33%) |
Ratios to average net assets: A | | |
Net investment income | .57% | 2.59% |
Total expenses | .81% | 1.25% |
Expenses before offsets | .75% | .75% |
Net expenses | .75% | .75% |
Portfolio turnover | 123% | 56% |
Net assets, ending (in thousands) | $35,525 | $17,492 |
| | |
| | |
| Periods Ended |
| December 31, | December 31, |
| 2007 | 2006^ |
Net asset value, beginning | $50.09 | $50.00 |
Income from investment operations | | |
Net investment income | 2.64 | -- |
Net realized and unrealized gain (loss) | 2.59 | .09 |
Total from investment operations | 5.23 | .09 |
Distributions from | | |
Net investment income | (2.32) | -- |
Return of capital | -- | -- |
Total distributions | (2.32) | -- |
Total increase (decrease) in net asset value | 2.91 | .09 |
Net asset value, ending | $53.00 | $50.09 |
| | |
Total return* | 10.80% | .18% |
Ratios to average net assets: A | | |
Net investment income (loss) | 5.19% | (2.28%) (a) |
Total expenses | 5.27% | 33.70% (a) |
Expenses before offsets | .75% | .75% (a) |
Net expenses | .75% | .75% (a) |
Portfolio turnover | 8% | 0% |
Net assets, ending (in thousands) | $1,157 | $1,002 |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
(a) Annualized.
(z) Per share figures are calculated using Average Shares Method.
* Total return is not annualized for periods less than one year.
^ From December 28, 2006 inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory Contracts
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer universe for the one-year period ended June 30, 2009. The data also indicated that the Portfolio underperformed its Lipper index for the one-year period ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance, including the imp act of current market conditions on the Portfolio's investment strategy and differences in the investment strategies used by the funds in the Portfolio's peer universe that also affect relative performance. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was below the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Advisor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-year period ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Lifestyle
ETF Market Strategy
Target
Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Schedule of Investments |
9 | Statement of Assets and Liabilities |
10 | Statement of Operations |
11 | Statements of Changes in Net Assets |
12 | Notes to Financial Statements |
17 | Financial Highlights |
19 | Explanation of Financial Tables |
20 | Proxy Voting |
21 | Availability of Quarterly Portfolio Holdings |
21 | Basis for Board's Approval of Investment Advisory Contracts |
25 | Director and Officer Information Table |
Summit Lifestyle ETF Market Strategy Target Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Lifestyle ETF Market Strategy Target Portfolio returned 17.02% compared to 26.46% for the Standard & Poor's (S&P) 500 Index, its benchmark. For context, the composite index, which is comprised of 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index, returned 18.25%. The Portfolio underperformed relative to this composite primarily because of slight weighting differences between the stock and bond components of the Portfolio and the weighting of stocks and bonds in the composite index. The incorporation of certain stock and bond exposures in the Portfolio that are not in the composite index also contributed to the difference in performance.
Summit Lifestyle ETF Market Strategy Target Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 17.02% |
Since inception (12.28.06) | -2.47% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**In December 2009 the Portfolio changed its broad-based benchmark to the S&P 500 Index from the Summit Lifestyle ETF Market Strategy Target Composite in order to adopt an index that is not blended. The Portfolio also continues to show the Summit Lifestyle ETF Market Strategy Target Composite because it is more consistent with the Portfolio's construction process and represents a more accurate reflection of the Portfolio's anticipated risk and return patterns.
*** 60% S&P 500 Index and 40% Barclays Capital Aggregate Bond Index.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve (Fed) and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
Fixed-income markets opened up for both investment-grade and high-yield issuers, which was critical in breaking the credit crunch that began in 2008. Bond investments provided a wide range of returns during 2009. The corporate bond sector produced a return of 18.68% for the year, while the U.S. Treasury sector returned -3.57%. Mortgage-backed securities returned 5.89% as the government launched a trillion dollar purchase program to support that market. In general, riskier assets performed well, while lower-risk assets lagged. This was a complete reversal from 2008, when riskier assets were shed by investors and delivered strongly negative returns.
After posting negative returns during the first few months of the year, equity markets rallied. As liquidity and risk-taking returned to the marketplace, a more positive economic outlook prevailed and share prices moved higher.
Asset Allocation
(at 12.31.09) | % of Total
Investments |
Domestic Equity Exchange Traded Funds | |
International and Global Equity Exchange Traded Funds | 10% |
Fixed Income Exchange Traded Funds | 37% |
Time Deposit | 2% |
Total | 100% |
Portfolio Strategy
The Portfolio was slightly underweight in equities during much of the fourth quarter. The Portfolio includes ETFs investing in domestic and international stocks, investment-grade bonds and, to a lesser extent, high-yield bonds. As a 'fund of funds,' the Portfolio holds a variety of ETFs that focus on specific asset classes.
During 2009, the Portfolio's positions in large, mid-sized, and smaller company growth ETFs helped performance relative to the composite, as did small positions in emerging markets and international ETFs. Positions in large-cap value ETFs detracted from relative performance. On the fixed-income side of the portfolio, high-yield bond ETFs and Treasury Inflation Protected Securities (TIPS) outperformed the index, while a Treasury ETF underperformed on a relative basis. Throughout the year, the Portfolio was reallocated periodically in an effort to optimize returns.
Outlook
During 2010, we expect to see modest economic growth in the United States and throughout the world, and improved corporate earnings. We anticipate that recovery will remain modest as many challenges remain. Unemployment is above 10%, creating slack in the American economy. Consumers continue to reduce debt and limit spending. Many financial institutions have not yet addressed problem assets on their books, which will become problematic if the commercial real estate market experiences weakness as the year unfolds. Finally, the Fed will have to drain liquidity from the system at some point. The Fed's timing and the magnitude of its actions will significantly influence economic and market performance.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,147.80 | $4.06 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,021.42 | $3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The fees and expenses of the Underlying Funds in which the Portfolio invests are not included in the annualized expense ratios.
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Lifestyle ETF Market Strategy Target Portfolio:
We have audited the accompanying statement of assets and liabilities of the Summit Lifestyle ETF Market Strategy Target Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., including the schedule of investments, as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Lifestyle ETF Market Strategy Target Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
Schedule of Investments
December 31, 2009
Exchange Traded Funds - 97.2% | Shares | Value |
iShares Barclays 3-7 Year Treasury Bond Fund | 2,143 | $236,073 |
iShares Barclays Aggregate Bond Fund | 48,043 | 4,957,557 |
iShares Barclays Intermediate Credit Bond Fund | 9,185 | 943,391 |
iShares Barclays MBS Bond Fund | 13,002 | 1,378,732 |
iShares Barclays TIPS Bond Fund | 4,546 | 472,329 |
iShares iBoxx $ High Yield Corporate Bond Fund | 8,059 | 707,903 |
iShares MSCI EAFE Index Fund | 33,931 | 1,876,384 |
iShares Russell 2000 Index Fund | 7,460 | 464,460 |
iShares S&P 500 Growth Index Fund | 68,645 | 3,980,724 |
iShares S&P 500 Index Fund | 23,028 | 2,570,155 |
iShares S&P 500 Value Index Fund | 75,081 | 3,980,044 |
Midcap SPDR Trust Series 1 | 7,083 | 933,256 |
Vanguard Emerging Markets Fund | 11,443 | 469,163 |
| | |
Total Exchange Traded Funds (Cost $21,644,131) | | 22,970,171 |
| | |
| Principal | |
Time Deposit - 2.5% | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | $584,358 | 584,358 |
| | |
Total Time Deposit (Cost $584,358) | | 584,358 |
| | |
| | |
| | |
TOTAL INVESTMENTS (Cost $22,228,489) - 99.7% | | 23,554,529 |
Other assets and liabilities, net - 0.3% | | 61,747 |
Net Assets - 100% | | $23,616,276 |
See notes to financial statements.
Statement of Assets and Liabilities
December 31, 2009
Assets | |
Investments in securities, at value (Cost $22,228,489) - see accompanying schedule | $23,554,529 |
Receivable for securities sold | 1,210,758 |
Receivable for shares sold | 62,259 |
Interest and dividends receivable | 32,533 |
Other assets | 469 |
Total assets | 24,860,548 |
| |
Liabilities | |
Payable for securities purchased | 1,211,781 |
Payable for shares redeemed | 19 |
Payable to Calvert Asset Management Co., Inc. | 15,931 |
Payable to Calvert Administrative Services Company | 2,016 |
Payable to Calvert Shareholder Services, Inc. | 5 |
Accrued expenses and other liabilities | 14,520 |
Total liabilities | 1,244,272 |
Net Assets | $23,616,276 |
| |
Net Assets Consist of: | |
Paid in capital applicable to 531,242 shares of common stock | |
outstanding; $0.10 par value, 20,000,000 shares authorized | $25,554,083 |
Undistributed net investment income | 92,039 |
Accumulated net realized gain (loss) on investments | (3,355,886) |
Net unrealized appreciation (depreciation) on investments | 1,326,040 |
| |
Net Assets | $23,616,276 |
| |
Net Asset Value per Share | $44.45 |
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $457,289 |
Interest income | 25 |
Total investment income | 457,314 |
| |
Expenses: | |
Investment advisory fee | 79,540 |
Transfer agent fees and expenses | 2,242 |
Accounting fees | 1,589 |
Trustees' fees and expenses | 2,239 |
Administrative fees | 14,462 |
Custodian fees | 5,106 |
Reports to shareholders | 408 |
Professional fees | 16,766 |
Miscellaneous | 467 |
Total expenses | 122,819 |
Reimbursement from Advisor | (14,327) |
Fees paid indirectly | (28) |
Net expenses | 108,464 |
| |
Net Investment Income | 348,850 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (2,144,203) |
Change in unrealized appreciation (depreciation) | 3,964,367 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 1,820,164 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $2,169,014 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $348,850 | $324,091 |
Net realized gain (loss) | (2,144,203) | (1,212,625) |
Change in unrealized appreciation or (depreciation) | 3,964,367 | (2,471,324) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 2,169,014 | (3,359,858) |
| | |
Distributions to shareholders from: | | |
Net investment income | (323,160) | (310,151) |
Net realized gain | -- | (2,098) |
Total distributions | (323,160) | (312,249) |
| | |
Capital share transactions: | | |
Shares sold | 13,148,996 | 12,266,373 |
Reinvestment of distributions | 323,158 | 312,250 |
Shares redeemed | (2,373,267) | (2,921,273) |
Total capital share transactions | 11,098,887 | 9,657,350 |
| | |
Total Increase (Decrease) in Net Assets | 12,944,741 | 5,985,243 |
| | |
Net Assets | | |
Beginning of year | 10,671,535 | 4,686,292 |
End of year (including undistributed net investment | | |
income of $92,039 and $73,109, respectively) | $23,616,276 | $10,671,535 |
Capital Share Activity | | |
Shares sold | 304,546 | 235,845 |
Reinvestment of distributions | 7,223 | 8,273 |
Shares redeemed | (57,634) | (56,064) |
Total capital share activity | 254,135 | 188,054 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Lifestyle ETF Market Strategy Target Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio invests primarily in various exchange traded funds (the "Underlying Funds"), representing different market exposure.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Exchange Traded Funds | $22,970,171 | -- | -- | $22,970,171 |
Other Debt Obligations | -- | $584,358 | -- | 584,358 |
TOTAL | $22,970,171 | $584,358 | -- | $23,554,529 |
Security Transactions and Investment Income: Security transactions, normally shares of the Underlying Funds, are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis. Income and capital gain distributions from the Underlying Funds, if any, are recorded on ex-dividend date. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Expenses included in the accompanying financial statements reflect the expenses of the Portfolio and do not include any expenses associated with the Underlying Funds.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements: In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.55% of the Portfolio's average daily net assets.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.75%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $62 for the year ended December 31, 2009. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $22,126,368 and $11,505,525, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-16 | $826,659 |
31-Dec-17 | 1,480,970 |
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 were as follows:
Distributions paid from: | 2009 | 2008 |
Ordinary income | $323,160 | $312,249 |
Total | $323,160 | $312,249 |
As of December 31, 2009, the components of distributable earnings / (accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $430,577 |
Unrealized (depreciation) | (152,794) |
Net unrealized appreciation/(depreciation) | $277,783 |
Undistributed ordinary income | $92,039 |
Capital loss carryforward | ($2,307,629) |
Federal income tax cost of investments | $23,276,746 |
The differences between the components of distributable earnings on a tax basis and the amounts reflected in the statement of assets and liabilities are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales and exchange traded funds.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to exchange traded funds.
Undistributed net investment income | ($6,760) |
Accumulated net realized gain (loss) | 6,760 |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no loans outstanding pursuant to this line of credit at December 31, 2009.
For the year ended December 31, 2009, borrowing information by the Portfolio under the Agreement was as follows:
| Average
Daily
Balance | Average
Interest
Rate | Weighted
Maximum
Amount
Borrowed | Month Of
Maximum
Amount
Borrowed | |
| $602 | 1.46% | $88,795 | October 2009 | |
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 37.3% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| Years Ended |
| December 31, | December 31, |
| 2009 (z) | 2008 |
Net asset value, beginning | $38.51 | $52.62 |
Income from investment operations | | |
Net investment income | .97 | .74 |
Net realized and unrealized gain (loss) | 5.59 | (13.70) |
Total from investment operations | 6.56 | (12.96) |
Distributions from | | |
Net investment income | (.62) | (1.14) |
Net realized gain | -- | (.01) |
Total distributions | (.62) | (1.15) |
Total increase (decrease) in net asset value | 5.94 | (14.11) |
Net asset value, ending | $44.45 | $38.51 |
| | |
Total return* | 17.02% | (24.72%) |
Ratios to average net assets: A,B | | |
Net investment income | 2.41% | 2.58% |
Total expenses | .85% | 1.13% |
Expenses before offsets | .75% | .75% |
Net expenses | .75% | .75% |
Portfolio turnover | 80% | 79% |
Net assets, ending (in thousands) | $23,616 | $10,672 |
| | |
| Periods Ended |
| December 31, | December 31, |
| 2007 (z) | 2006^ |
Net asset value, beginning | $49.84 | $50.00 |
Income from investment operations | | |
Net investment income | 2.33 | -- |
Net realized and unrealized gain (loss) | .45 | (.16) |
Total from investment operations | 2.78 | (.16) |
Distributions from | | |
Net investment income | -- | -- |
Net realized gain | -- | -- |
Total distributions | -- | -- |
Total increase (decrease) in net asset value | 2.78 | (.16) |
Net asset value, ending | $52.62 | $49.84 |
Total return* | 5.58% | (.32%) |
Ratios to average net assets: A,B | | |
Net investment income (loss) | 4.46% | (.59%) (a) |
Total expenses | 4.09% | 220.56% (a) |
Expenses before offsets | .75% | .75% (a) |
Net expenses | .75% | .75% (a) |
Portfolio turnover | 17% | 0% |
Net assets, ending (in thousands) | $4,686 | $150 |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
B Amounts do not include the activity of the underlying funds.
(a) Annualized.
(z) Per share figures calculated using the average shares method.
* Total return is not annualized for periods less than one year.
^ From December 28, 2006 inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory Contracts
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer universe for the one-year period ended June 30, 2009. The data also indicated that the Portfolio underperformed its Lipper index for the one-year period ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance, including the imp act of current market conditions on the Portfolio's investment strategy. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was at the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Adv isor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. The Board also took into account management's discussion of the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-year period ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Lifestyle
ETF Market Strategy
Conservative
Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
9 | Statement of Operations |
10 | Statements of Changes in Net Assets |
11 | Notes to Financial Statements |
16 | Financial Highlights |
18 | Explanation of Financial Tables |
19 | Proxy Voting |
20 | Availability of Quarterly Portfolio Holdings |
20 | Basis for Board's Approval of Investment Advisory Contracts |
24 | Director and Officer Information Table |
Summit Lifestyle ETF Market Strategy Conservative Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Lifestyle ETF Market Strategy Conservative Portfolio returned 12.40% compared to 5.93% for the Barclays Capital Aggregate Bond Index, its benchmark. For context, the composite index, which is comprised of 40% S&P 500 Index and 60% Barclays Capital Aggregate Bond Index, returned 14.14%. The Portfolio underperformed relative to this composite primarily because of slight weighting differences between the stock and bond components of the Portfolio and the weighting of stocks and bonds in the composite index. The incorporation of certain stock and bond exposures in the Portfolio that are not in the composite index also contributed to the difference in performance.
Summit Lifestyle ETF Market Strategy Conservative Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 12.40% |
Since inception (12.28.06) | 1.07% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**In December 2009 the Portfolio changed its broad-based benchmark to the Barclays Capital Aggregate Bond Index from the Summit Lifestyle ETF Conservative Composite in order to adopt an index that is not blended. The Portfolio also continues to show the Summit Lifestyle ETF Conservative Composite because it is more consistent with the Portfolio's construction process and represents a more accurate reflection of the Portfolio's anticipated risk and return patterns.
*** 40% S&P 500 Index and 60% Barclays Capital Aggregate Bond Index.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve (Fed) and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
Fixed-income markets opened up for both investment-grade and high-yield issuers, which was critical in breaking the credit crunch that began in 2008. Bond investments provided a wide range of returns during 2009. The corporate bond sector produced a return of 18.68% for the year, while the U.S. Treasury sector returned -3.57%. Mortgage-backed securities returned 5.89% as the government launched a trillion dollar purchase program to support that market. In general, riskier assets performed well, while lower-risk assets lagged. This was a complete reversal from 2008, when riskier assets were shed by investors and delivered strongly negative returns.
After posting negative returns during the first few months of the year, equity markets rallied. As liquidity and risk-taking returned to the marketplace, a more positive economic outlook prevailed and share prices moved higher.
Asset Allocation
(at 12.31.09) | % of Total
Investments |
Domestic Equity Exchange Traded Funds | 34% |
International and Global Equity Exchange Traded Funds | 7% |
Fixed Income Exchange Traded Funds | 54% |
Time Deposit | 5% |
Total | 100% |
Portfolio Strategy
The Lifestyle ETF Market Strategy Conservative Portfolio was slightly underweight in equities during much of the fourth quarter. The Portfolio includes ETFs investing in domestic and international stocks, investment-grade bonds and, to a lesser extent, high-yield bonds. As a "fund of funds," the Portfolio holds a variety of ETFs that focus on specific asset classes.
During 2009, the Portfolio's positions in large, mid-sized, and smaller company growth ETFs helped performance relative to the composite, as did small positions in emerging markets and international ETFs. Positions in large-cap value ETFs detracted from annual performance. On the fixed-income side of the Portfolio, high-yield bond and Treasury Inflation Protected Securities (TIPS) ETFs outperformed the index, while a Treasury ETF underperformed on a relative basis. Throughout the year, the Portfolio was reallocated periodically in an effort to optimize returns.
Outlook
During 2010, we expect to see modest economic growth in the United States and throughout the world, and improved corporate earnings. We anticipate that recovery will remain modest as many challenges remain. Unemployment is above 10%, creating slack in the American economy. Consumers continue to reduce debt and limit spending. Many financial institutions have not yet addressed problem assets on their books, which will become problematic if the commercial real estate market experiences weakness as the year unfolds. Finally, the Fed will have to drain liquidity from the system at some point. The Fed's timing and the magnitude of its actions will significantly influence economic and market performance.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,111.50 | $3.99 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,021.42 | $3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The fees and expenses of the Underlying Funds in which the Portfolio invests are not included in the annualized expense ratios.
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Lifestyle ETF Market Strategy Conservative Portfolio:
We have audited the accompanying statement of net assets of the Summit Lifestyle ETF Market Strategy Conservative Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Lifestyle ETF Market Strategy Conservative Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Exchange Traded Funds - 96.2% | | | Shares | Value |
iShares Barclays 3-7 Year Treasury Bond Fund | | | 1,170 | $128,887 |
iShares Barclays Aggregate Bond Fund | | | 26,279 | 2,711,730 |
iShares Barclays Intermediate Credit Bond Fund | | | 5,024 | 516,015 |
iShares Barclays MBS Bond Fund | | | 6,921 | 733,903 |
iShares Barclays TIPS Bond Fund | | | 2,391 | 248,425 |
iShares iBoxx $ High Yield Corporate Bond Fund | | | 4,411 | 387,462 |
iShares MSCI EAFE Index Fund | | | 8,253 | 456,391 |
iShares Russell 2000 Index Fund | | | 1,808 | 112,566 |
iShares S&P 500 Growth Index Fund | | | 16,693 | 968,027 |
iShares S&P 500 Index Fund | | | 5,595 | 624,458 |
iShares S&P 500 Value Index Fund | | | 18,257 | 967,804 |
Midcap SPDR Trust Series 1 | | | 1,723 | 227,022 |
Vanguard Emerging Markets Fund | | | 2,773 | 113,693 |
| | | | |
Total Exchange Traded Funds (Cost $7,996,871) | | | | 8,196,383 |
| | | | |
| | | Principal | |
Time deposit - 4.9% | | | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | | $417,249 | 417,249 |
| | | | |
Total Time Deposit (Cost $417,249) | | | | 417,249 |
| | | | |
| | | | |
TOTAL INVESTMENTS (Cost $8,414,120) - 101.1% | | | | 8,613,632 |
Other assets and liabilities, net - (1.1%) | | | | (92,378) |
Net Assets - 100% | | | | $8,521,254 |
| | | | |
Net Assets Consist Of: | | | | |
Paid-in capital applicable to 175,975 shares of common stock outstanding; | | | | |
$0.10 par value, 20,000,000 shares authorized | | | | $8,471,177 |
Undistributed net investment income | | | | 14,955 |
Accumulated net realized gain (loss) on investments | | | | (164,390) |
Net unrealized appreciation (depreciation) on investments | | | | 199,512 |
| | | | |
Net Assets | | | | $8,521,254 |
| | | | |
Net Asset Value per Share | | | | $48.42 |
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $148,910 |
Interest Income | 34 |
Total investment income | 148,944 |
| |
Expenses: | |
Investment advisory fee | 22,338 |
Transfer agent fees and expenses | 2,232 |
Directors' fees and expenses | 633 |
Administrative fees | 4,061 |
Custodian fees | 3,938 |
Reports to shareholders | 350 |
Professional fees | 15,793 |
Miscellaneous | 76 |
Total expenses | 49,421 |
Reimbursement from Advisor | (18,946) |
Fees paid indirectly | (14) |
Net expenses | 30,461 |
Net Investment Income | 118,483 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (57,916) |
Change in unrealized appreciation (depreciation) | 331,267 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 273,351 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $391,834 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $118,483 | $47,659 |
Net realized gain (loss) | (57,916) | (108,357) |
Change in unrealized appreciation or (depreciation) | 331,267 | (134,151) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 391,834 | (194,849) |
| | |
Distributions to shareholders from: | | |
Net investment income | (102,530) | (70,432) |
Net realized gain | -- | (776) |
Total distributions | (102,530) | (71,208) |
| | |
Capital share transactions: | | |
Shares sold | 8,529,761 | 1,830,907 |
Reinvestment of distributions | 102,529 | 71,207 |
Shares redeemed | (2,595,680) | (351,647) |
Total capital share transactions | 6,036,610 | 1,550,467 |
| | |
Total Increase (Decrease) in Net Assets | 6,325,914 | 1,284,410 |
| | |
Net Assets | | |
Beginning of year | 2,195,340 | 910,930 |
End of year (including undistributed net investment | | |
income of $14,955 and $926, respectively) | $8,521,254 | $2,195,340 |
| | |
Capital Share Activity | | |
Shares sold | 180,606 | 38,698 |
Reinvestment of distributions | 2,108 | 1,672 |
Shares redeemed | (57,087) | (7,256) |
Total capital share activity | 125,627 | 33,114 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Lifestyle ETF Market Strategy Conservative Portfolio (the "Portfolio"), a series of Summit Mutal Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio invests primarily in various exchange traded funds (the "Underlying Funds"), representing different market exposure.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Exchange traded funds | $8,196,383 | -- | -- | $8,196,383 |
Other debt obligations | -- | $417,249 | -- | 417,249 |
TOTAL | $8,196,383 | $417,249 | -- | $8,613,632 |
Security Transactions and Investment Income: Security transactions, normally shares of the Underlying Funds, are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis. Income and capital gain distributions from the Underlying Funds, if any, are recorded on the ex-dividend date. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Expenses included in the accompanying financial statements reflect the expenses of the Portfolio and do not include any expenses associated with the Underlying Funds.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. ("the Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.55% of the Portfolio's average daily net assets. Under the terms of the agreement, $3,984 was payable at year end. In addition, $3,541 was payable to the Advisor for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.75%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement, $724 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $62 for the year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $9,286,273 and $3,546,714, respectively.
Capital Loss Carryforward
Expiration Date
31-Dec-16 | $56,593 |
31-Dec-17 | 39,392 |
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $102,530 | $71,208 |
Total | $102,530 | $71,208 |
As of December 31, 2009, the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $154,290 |
Unrealized (depreciation) | (23,183) |
Net unrealized appreciation/(depreciation) | $131,107 |
Undistributed ordinary income | $14,955 |
Capital loss carryforward | ($95,985) |
Federal income tax cost of investments | $8,482,525 |
The differences between components of distributable earnings on a tax basis and the amounts reflected in the statement of net assets are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales and exchange traded funds.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distributions (or available capital loss carryforwards, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to exchange traded funds and excise taxes.
Undistributed net investment income | ($1,924) |
Accumulated net realized gain (loss) | 1,938 |
Paid-in capital | (14) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no borrowings under the agreement during the year ended December 31, 2009.
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (Unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 27.5% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| Years Ended | |
| December 31, | December 31, | |
| 2009 | 2008 | |
Net asset value, beginning | $43.60 | $52.86 | |
Income from investment operations | | | |
Net investment income | .67 | 1.09 | |
Net realized and unrealized gain (loss) | 4.74 | (7.85) | |
Total from investment operations | 5.41 | (6.76) | |
Distributions from | | | |
Net investment income | (.59) | (2.45) | |
Net realized gain | -- | (.05) | |
Total distributions | (.59) | (2.50) | |
Total increase (decrease) in net asset value | 4.82 | (9.26) | |
Net asset value, ending | $48.42 | $43.60 | |
| | | |
Total return* | 12.40% | (13.12%) | |
Ratios to average net assets: A,B | | | |
Net investment income (loss) | 2.92% | 3.50% | |
Total expenses | 1.22% | 4.48% | |
Expenses before offsets | .75% | .75% | |
Net expenses | .75% | .75% | |
Portfolio turnover | 88% | 66% | |
Net assets, ending (in thousands) | $8,521 | $2,195 | |
| | | |
| Periods Ended | |
| December 31, | December 31, | |
| 2007(z) | 2006^ | |
Net asset value, beginning | $49.89 | $50.00 | |
Income from investment operations | | | |
Net investment income | 1.80 | -- | |
Net realized and unrealized gain (loss) | 1.17 | (.11) | |
Total from investment operations | 2.97 | (.11) | |
Distributions from | | | |
Net investment income | -- | -- | |
Net realized gain | -- | -- | |
Total distributions | -- | -- | |
Total increase (decrease) in net asset value | 2.97 | (.11) | |
Net asset value, ending | $52.86 | $49.89 | |
| | | |
Total return* | 5.95% | (.22%) | |
Ratios to average net assets: A,B | | | |
Net investment income (loss) | 3.47% | (.52%) (a) | |
Total expenses | 7.28% | 220.34% (a) | |
Expenses before offsets | .75% | .75% (a) | |
Net expenses | .75% | .75% (a) | |
Portfolio turnover | 15% | 0% | |
Net assets, ending (in thousands) | $911 | $150 | |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
B Amounts do not include the activity of the underlying funds.
(a) Annualized.
(z) Per share figures calculated using the average shares method.
* Total return is not annualized for periods less than one year.
^ From December 28, 2006 inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one-year period ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-year period ended June 30, 2009. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was at the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Adv isor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also noted that the Advisor was reimbursing expenses of the Portfolio in an amount that exceeded its entire advisory fee. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. The Board also took into account management's discussion of the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation.
The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbur sed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-year period ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Summit Lifestyle
ETF Market Strategy
Aggressive
Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
9 | Statement of Operations |
10 | Statements of Changes in Net Assets |
11 | Notes to Financial Statements |
16 | Financial Highlights |
18 | Explanation of Financial Tables |
19 | Proxy Voting |
19 | Availability of Quarterly Portfolio Holdings |
20 | Basis for Board's Approval of Investment Advisory Contracts |
24 | Director and Officer Information Table |
Summit Lifestyle ETF Market Strategy Aggressive Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Lifestyle ETF Market Strategy Aggressive Portfolio returned 20.09% compared to 26.46% for the Standard & Poor's (S&P) 500 Index, its benchmark. For context, a composite index, which is comprised of 80% S&P 500 Index and 20% Barclays Capital Aggregate Bond Index, returned 22.36% for the reporting period. The Portfolio underperformed relative to this composite primarily because of slight weighting differences between the stock and bond components of the Portfolio and the weighting of stocks and bonds in the composite index. The incorporation of certain stock and bond exposures in the Portfolio that are not in the composite index also contributed to the difference in performance.
Summit Lifestyle ETF Market Strategy Aggressive Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 20.09% |
Since inception (12.28.06) | -3.16% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
**In December 2009 the Portfolio changed its broad-based benchmark to the S&P 500 Index from the Summit Lifestyle ETF Market Strategy Aggresive Composite in order to adopt an index that is not blended. The Portfolio also continues to show the Summit Lifestyle ETF Market Strategy Aggressive Composite because it is more consistent with the Portfolio's construction process and represents a more accurate reflection of the Portfolio's anticipated risk and return patterns.
***80% S&P 500 Index and 20% Barclays Capital Aggregate Bond Index.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Economic and market performance in early 2009 closely resembled that of late 2008. Equity markets were weak. Fixed-income markets were frozen. Economies around the world were in recession. The stability of the global financial system was uncertain, as was the viability of many of the world's leading financial institutions. In an effort to prevent economic depression, the Federal Reserve (Fed) and central banks around the world flooded the system with liquidity and stabilized markets. Severely negative GDP growth in the United States, which persisted from late 2008 into 2009, turned positive during the last two quarters of the year, albeit off a lower base.
Fixed-income markets opened up for both investment-grade and high-yield issuers, which was critical in breaking the credit crunch that began in 2008. Bond investments provided a wide range of returns during 2009. The corporate bond sector produced a return of 18.68% for the year, while the U.S. Treasury sector returned -3.57%. Mortgage-backed securities returned 5.89% as the government launched a trillion dollar purchase program to support that market. In general, riskier assets performed well, while lower-risk assets lagged. This was a complete reversal from 2008, when riskier assets were shed by investors and delivered strongly negative returns.
After posting negative returns during the first few months of the year, equity markets rallied. As liquidity and risk-taking returned to the marketplace, a more positive economic outlook prevailed and share prices moved higher.
Asset Allocation | % of Total
Investments |
Domestic Equity Exchange Traded Funds | 67% |
International and Global Equity Exchange Traded Funds | 13% |
Fixed Income Exchange Traded Funds | 18% |
Time Deposit | 2% |
Total | 100% |
Portfolio Strategy
The Portfolio was slightly underweight in equities during much of the fourth quarter; however, it finished 2009 with an equity weighting that was roughly in-line with the composite. The Portfolio includes ETFs investing in domestic and international stocks, investment-grade bonds and, to a lesser extent, high-yield bonds. As a "fund of funds," the Portfolio holds a variety of ETFs that focus on specific asset classes.
During 2009, the Portfolio's positions in large, mid-sized, and smaller company growth ETFs helped performance relative to the composite, as did small positions in emerging markets and international ETFs. Positions in large-cap value ETFs detracted from annual performance. On the fixed-income side of the portfolio, high-yield bond ETFs and Treasury Inflation Protected Securities (TIPS) outperformed the index, while a Treasury ETF underperformed on a relative basis. Throughout the year, the Portfolio was reallocated periodically in an effort to optimize returns.
Outlook
During 2010, we expect to see some economic growth in the United States and throughout the world, and improved corporate earnings. We anticipate that recovery will remain modest as many challenges remain. Unemployment is above 10%, creating slack in the American economy. Consumers continue to reduce debt and limit spending. Many financial institutions have not yet addressed problem assets on their books, which may become problematic if the commercial real estate market experiences weakness as the year unfolds. Finally, the Fed will have to drain liquidity from the system at some point. The Fed's timing and the magnitude of its actions will significantly influence economic and market performance.
January 2010
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,186.80 | $4.13 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,021.42 | $3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The fees and expenses of the Underlying Funds in which the Portfolio invests are not included in the annualized expense ratios.
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Lifestyle ETF Market Strategy Aggressive Portfolio:
We have audited the accompanying statement of net assets of the Summit Lifestyle ETF Market Strategy Aggressive Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Lifestyle ETF Market Strategy Aggressive Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
December 31, 2009
Exchange Traded Funds - 99.2% | | | Shares | Value |
iShares Barclays 3-7 Year Treasury Bond Fund | | | 469 | $51,665 |
iShares Barclays Aggregate Bond Fund | | | 10,453 | 1,078,645 |
iShares Barclays Intermediate Credit Bond Fund | | | 1,995 | 204,906 |
iShares Barclays MBS Bond Fund | | | 3,119 | 330,739 |
iShares Barclays TIPS Bond Fund | | | 1,077 | 111,900 |
iShares iBoxx $ High Yield Corporate Bond Fund | | | 1,753 | 153,984 |
iShares MSCI EAFE Index Fund | | | 20,118 | 1,112,525 |
iShares Russell 2000 Index Fund | | | 4,432 | 275,936 |
iShares S&P 500 Growth Index Fund | | | 40,705 | 2,360,483 |
iShares S&P 500 Index Fund | | | 13,670 | 1,525,709 |
iShares S&P 500 Value Index Fund | | | 44,521 | 2,360,058 |
Midcap SPDR Trust Series 1 | | | 4,200 | 553,392 |
Vanguard Emerging Markets Fund | | | 6,798 | 278,718 |
| | | | |
Total Exchanged Traded Funds (Cost $10,069,061) | | | | 10,398,660 |
| | | | |
| | | Principal | |
Time Deposit - 1.7% | | | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | | $182,232 | 182,232 |
| | | | |
Total Time Deposit (Cost $182,232) | | | | 182,232 |
| | | | |
| | | | |
| | | | |
TOTAL INVESTMENTS (Cost $10,251,293) - 100.9% | | | | 10,580,892 |
Other assets and liabilities, net - (0.9%) | | | | (97,074) |
Net Assets - 100% | | | | $10,483,818 |
| | | | |
Net Assets Consist of: | | | | |
Paid-in capital applicable to 242,288 shares of common stock outstanding; | | | | |
$0.10 par value, 20,000,000 shares authorized | | | | $10,409,625 |
Undistributed net investment income | | | | 7,450 |
Accumulated net realized gain (loss) on investments | | | | (262,856) |
Net unrealized appreciation (depreciation) on investments | | | | 329,599 |
| | | | |
Net Assets | | | | $10,483,818 |
| | | | |
Net Asset Value per Share | | | | $43.27 |
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $122,847 |
Total investment income | 122,847 |
| |
Expenses: | |
Investment advisory fee | 20,348 |
Transfer agent fees and expenses | 2,230 |
Directors' fees and expenses | 565 |
Administrative fees | 3,700 |
Custodian fees | 3,619 |
Reports to shareholders | 230 |
Professional fees | 15,735 |
Miscellaneous | 3 |
Total expenses | 46,430 |
Reimbursement from Advisor | (18,675) |
Fees paid indirectly | (7) |
Net expenses | 27,748 |
| |
Net Investment Income | 95,099 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (156,438) |
Change in unrealized appreciation (depreciation) | 600,809 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 444,371 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $539,470 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $95,099 | $26,354 |
Net realized gain (loss) | (156,438) | (107,257) |
Change in unrealized appreciation or (depreciation) | 600,809 | (264,832) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 539,470 | (345,735) |
| | |
Distributions to shareholders from: | | |
Net investment income | (87,313) | (42,235) |
Net realized gain | -- | (125) |
Total distributions | (87,313) | (42,360) |
| | |
Capital share transactions: | | |
Shares sold | 10,628,986 | 640,683 |
Reinvestment of distributions | 87,312 | 42,360 |
Shares redeemed | (1,896,196) | (61,545) |
Total capital share transactions | 8,820,102 | 621,498 |
| | |
Total Increase (Decrease) in Net Assets | 9,272,259 | 233,403 |
| | |
Net Assets | | |
Beginning of year | 1,211,559 | 978,156 |
End of year (including undistributed net investment | | |
income of $7,450 and $531, respectively) | $10,438,818 | $1,211,559 |
| | |
Capital Share Activity | | |
Shares sold | 252,978 | 14,956 |
Reinvestment of distributions | 2,002 | 1,201 |
Shares redeemed | (46,038) | (1,520) |
Total capital share activity | 208,942 | 14,637 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: The Summit Lifestyle ETF Market Strategy Aggressive Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio invests primarily in various exchange traded funds (the "Underlying Funds"), representing different market exposure.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entity, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Exchanged Traded Funds | $10,398,660 | -- | -- | $10,398,660 |
Other Debt Obligations | -- | $182,232 | -- | 182,232 |
TOTAL | $10,398,660 | $182,232 | -- | $10,580,892 |
Security Transactions and Investment Income: Security transactions, normally shares of the Underlying Funds, are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis. Income and capital gain distributions from the Underlying Funds, if any, are recorded on ex-dividend date. Interest income, which includes amortization of premium and accretion of discount on debt securities, is accrued as earned. Expenses included in the accompanying financial statements reflect the expenses of the Portfolio and do not include any expenses associated with the Underlying Funds.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. ("the Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly owned by UNIFI Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.55% of the Portfolio's average daily net assets. Under the terms of the agreement, $4,910 was payable at year end. In addition, $3,642 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.75%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services for the Portfolio. For its services, CASC receives an annual fee, payable monthly, of .10% of the Portfolio's average daily net assets. Under the terms of the agreement $893 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $56 for the year ended December 31, 2009. Under the terms of the agreement, $5 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $10,822,129 and $2,081,745, respectively.
Capital Loss Carryforwards
Expiration Date
31-Dec-16 | $48,485 |
31-Dec-17 | 110,750 |
Capital losses may be utilized to offset future capital gains to expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $87,313 | $42,360 |
Total | $87,313 | $42,360 |
As of December 31, 2009, the tax basis components of distributable earnings (accumulated losses) and the federal taxt cost were as follows:
Unrealized appreciation | $254,974 |
Unrealized (depreciation) | (28,996) |
Net unrealized appreciation/(depreciation) | $225,978 |
Undistributed ordinary income | $7,450 |
Capital loss carryforward | ($159,235) |
Federal income tax cost of investments | $10,354,914 |
The differences between components of distributable earnings on a tax basis and the amounts reflected in the statement of assets and liabilities are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales and exchange traded funds.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distribution (or available capital loss carryovers, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have no impact on net assets. The primary -permanent differences causing such reclassifications for the Portfolio are due to exchange traded funds and excise taxes.
Undistributed net investment income | ($867) |
Accumulated net realized gain (loss) | 917 |
Paid-in capital | (50) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no borrowings under the agreement during the year ended December 31, 2009.
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions occurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements were issued, that would have materially impacted the financial statements as presented.
Notice to Shareholders (unaudited)
For the year ended December 31, 2009, in order to meet certain requirements of the Internal Revenue Code, we are advising you that the Portfolio designates 69.3% of the ordinary dividends paid during the year or the maximum amount allowable but not less than the aforementioned percentage as eligible for the corporate dividends received deduction in accordance with Section 854 of the Internal Revenue Code.
Financial Highlights
| Years Ended |
| December 31, | December 31, |
| 2009 | 2008 |
Net asset value, beginning | $36.33 | $52.28 |
Income from investment operations | | |
Net investment income | .38 | .78 |
Net realized and unrealized gain (loss) | 6.92 | (15.08) |
Total from investment operations | 7.30 | (14.30) |
Distributions from | | |
Net investment income | (.36) | (1.64) |
Net realized gain | -- | (.01) |
Total distributions | (.36) | (1.65) |
Total increase (decrease) in net asset value | 6.94 | (15.95) |
Net asset value, ending | $43.27 | $36.33 |
| | |
Total return* | 20.09% | (27.72%) |
Ratios to average net assets: A,B | | |
Net investment income | 2.57% | 2.50% |
Total expenses | 1.25% | 5.55% |
Expenses before offsets | .75% | .75% |
Net expenses | .75% | .75% |
Portfolio turnover | 54% | 69% |
Net assets, ending (in thousands) | $10,484 | $1,212 |
| | |
| Periods Ended |
| December 31, | December 31, |
| 2007 (z) | 2006^ |
Net asset value, beginning | $49.79 | $50.00 |
Income from investment operations | | |
Net investment income | 1.23 | -- |
Net realized and unrealized gain (loss) | 1.26 | (.21) |
Total from investment operations | 2.49 | (.21) |
Total increase (decrease) in net asset value | 2.49 | (.21) |
Net asset value, ending | $52.28 | $49.79 |
| | |
Total return* | 5.00% | (.42%) |
Ratios to average net assets: A,B | | |
Net investment income | 2.35% | (.72%) (a) |
Total expenses | 7.14% | 220.77% (a) |
Expenses before offsets | .75% | .75% (a) |
Net expenses | .75% | .75% (a) |
Portfolio turnover | 27% | 0% |
Net assets, ending (in thousands) | $978 | $149 |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses be fore offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
B Amounts do not include the activity of the underlying funds.
(a) Annualized.
(z) Per share figures calculated using the average shares method.
* Total return is not annualized for periods less than one year.
^ From December 28, 2006 inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory Contracts
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed below the median of its peer universe for the one-year period ended June 30, 2009. The data also indicated that the Portfolio underperformed its Lipper index for the one-year period ended June 30, 2009. The Board took into account management's discussion of the Portfolio's performance. Based upon its re view, the Board concluded that the Portfolio's performance was being addressed.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was at the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Adv isor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also noted that the Advisor was reimbursing expenses of the Portfolio in an amount that exceeded its entire advisory fee. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. The Board also took into account management's discussion of the Portfolio's peer group. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-year period ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is being addressed; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Por tfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
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Summit Natural
Resources Portfolio
Annual Report
December 31, 2009
E-Delivery Sign-Up --
Details Inside
Calvert Investments
A UNIFI Company
TABLE OF CONTENTS
4 | Portfolio Manager Remarks |
6 | Shareholder Expense Example |
7 | Report of Independent Registered Public Accounting Firm |
8 | Statement of Net Assets |
9 | Statement of Operations |
10 | Statements of Changes in Net Assets |
11 | Notes to Financial Statements |
16 | Financial Highlights |
18 | Explanation of Financial Tables |
19 | Proxy Voting |
20 | Availability of Quarterly Portfolio Holdings |
20 | Basis for Board's Approval of Investment Advisory Contracts |
24 | Director and Officer Information Table |
Summit Natural Resources Portfolio
Managed by Summit Investment Partners, Inc.
Performance
For the year ended December 31, 2009, Summit Natural Resources Portfolio returned 31.04% compared to 26.46% for its benchmark, the Standard & Poor's (S&P) 500 Index. Concentrated holdings in the commodity and natural resource sectors were behind the Portfolio's strong performance. The S&P 500 Index has a more diversified allocation of holdings across sectors.
Summit Natural Resources Portfolio*
Comparison of change in
value of a hypothetical $10,000 investment.
Average Annual Total Return
(period ended 12.31.09)
One year | 31.04% |
Since inception (12.28.06) | -1.44% |
*Performance information is for the Portfolio only and does not reflect charges and expenses of the variable annuity or variable universal life contract.
The performance data shown represents past performance, and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
Current performance may be lower or higher than the performance data quoted.
Investment Climate
Investor sentiment was positive for both commodities and natural resources in general during 2009. The price of crude oil futures, for example, increased 32% and closed the year at $79 per barrel. Metal prices also rose dramatically during 2009. Copper futures were up 131%, and gold and materials prices gained substantially, as well.
Natural gas was one of the few commodities to experience a price reduction in 2009. Its price fell by roughly 25%. An improved global economic environment provided pricing support to natural resources as the year progressed. The weakening U.S. dollar also provided pricing support, in dollar-denominated terms, throughout the year.
Portfolio Strategy
The Portfolio invests in exchange-traded funds (ETFs) and exchange-traded notes (ETNs) that track various commodity, natural resource, raw material, and utility indexes. The Portfolio's positions in the iShares S&P Global Materials ETF and the Vanguard Materials ETF provided some of the best returns during the year. In addition, exposure to the Claymore Clear Global Timber ETF provided a positive relative return. The iShares Dow Jones Utilities Sector ETF and the Powershares Water Resources ETF delivered the worst performance in the portfolio. The Powershares DB Commodity Index and the iPath Dow Jones UBS Commodity Index ETNs also provided relatively poor returns.
The Portfolio reduced its exposure to commodity index ETFs during the year and increased exposure to global utilities, materials, and water resource ETFs. Commodity index ETFs have a reasonable amount of energy-related exposure, but they did not perform as well as other ETFs during 2009.
Economic Sectors | % of Total
Investments |
Material Stocks | 27.4% |
Forestry Stocks | 2.0% |
Energy Stocks | 23.4% |
Water Stocks | 4.0% |
Utilities Stocks | 4.1% |
Energy Commodities | 16.9% |
Grain Commodities | 6.2% |
Industrial Metals Commodities | 7.9% |
Precious Metals Commodities | 3.9% |
Soft Commodities | 3.2% |
Livestock Commodities | 1.0% |
Total | 100% |
Outlook
Global economic growth generally turned positive in 2009. Central bank and government intervention helped to support demand, reduce uncertainty, and lower systemic risk in financial markets. While it appears that many countries may be at or near recovery, the pace of recovery is likely to be characterized by slow or moderate growth in many places. Financial systems are recovering and the current unprecedented government support will need to be withdrawn over time.
Ongoing global economic recovery should bode well for commodity and natural resource prices in 2010. In addition, fiscal and monetary stimulus in the United States should support commodity and natural resource prices. If the U.S. dollar continues to weaken, it will support higher dollar-denominated commodity prices.
January 2010
As of December 31, 2009, the following holdings represented the following percentages of Portfolio net assets: iShares S&P Global Materials (22.92%), Vanguard Materials (18.88%), Claymore Clear Global Timber (1.99%), iShares Dow Jones Utilities Sector (3.99%), Powershares Water Resources (3.96%), Powershares DB Commodity Index (19.11%), and iPath Dow Jones UBS Commodity Index (19.14%). All holdings are subject to change without notice.
Shareholder Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
This Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2009 to December 31, 2009).
Note: Expenses do not reflect charges and expenses of the variable annuity or variable universal life contract.
Actual Expenses
The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. 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 in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare the 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Beginning
Account Value
7/1/09 | Ending
Account Value
12/31/09 | Expenses Paid
During Period*
7/1/09 - 12/31/09 |
| | | |
Actual | $1,000.00 | $1,194.30 | $4.15 |
Hypothetical
(5% return per year before expenses) | $1,000.00 | $1,021.42 | $3.82 |
* Expenses are equal to the Fund's annualized expense ratio of 0.75%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). The fees and expenses of the Underlying Funds in which the Portfolio invests are not included in the annualized expense ratios.
Report of Independent Registered Public Accounting Firm
The Board of Directors of Summit Mutual Funds, Inc. and
Shareholders of Summit Natural Resources Portfolio:
We have audited the accompanying statement of net assets of the Summit Natural Resources Portfolio (the Portfolio), a series of Summit Mutual Funds, Inc., as of December 31, 2009, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the years in the two-year period then ended. These financial statements and financial highlights are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying financial highlights of the Portfolio for the periods presented through December 31, 2007 were audited by other auditors whose report thereon dated February 22, 2008, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2009, by correspondence with custodians and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Summit Natural Resources Portfolio as of December 31, 2009, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.
/s/KPMG LLP
Philadelphia, Pennsylvania
February 24, 2010
STATEMENT OF NET ASSETS
DECEMBER 31, 2009
Investment Companies - 98.1% | | Shares | Value |
Claymore/Beacon Global Timber Index ETF | | 19,270 | $346,089 |
iPath Dow Jones-UBS Commodity Index Total Return ETN* | | 78,748 | 3,327,891 |
iShares Dow Jones US Utilities Sector Index ETF | | 9,266 | 693,004 |
iShares S&P Global Materials Index ETF | | 22,383 | 1,392,670 |
iShares S&P North American Natural Resources Sector Index ETF | | 116,176 | 3,985,999 |
PowerShares DB Commodity Index Tracking Fund* | | 134,971 | 3,322,986 |
PowerShares Water Resources Portfolio ETF | | 40,791 | 687,736 |
Vanguard Materials ETF | | 48,403 | 3,282,692 |
| | | |
Total Investment Companies (Cost $15,836,387) | | | 17,039,067 |
| | Principal | |
Time Deposit - 3.0% | | Amount | |
State Street Corp. Time Deposit, 0.00%, 1/4/10 | | $517,649 | 517,649 |
| | | |
Total Time Deposit (Cost $517,649) | | | 517,649 |
| | | |
| | | |
| | | |
TOTAL INVESTMENTS (Cost $16,354,036) - 101.1% | | | 17,556,716 |
Other assets and liabilities, net - (1.1%) | | | (187,736) |
NET ASSETS - 100% | | | $17,368,980 |
| | | |
Net Assets Consist Of: | | | |
Paid-in capital applicable to 364,814 shares of common | | | |
stock outstanding; $0.10 par value, 20,000,000 shares authorized | | | $20,691,405 |
Undistributed net investment income | | | 12,181 |
Accumulated net realized gain (loss) on investments | | | (4,537,286) |
Net unrealized appreciation (depreciation) on investments | | | 1,202,680 |
| | | |
Net Assets | | | $17,368,980 |
| | | |
Net Asset Value Per Share | | | $47.61 |
* Non-income producing security.
Abbreviations:
ETF: Exchange-traded fund
ETN: Exchange-traded note
See notes to financial statements.
Statement of Operations
Year Ended December 31, 2009
Net Investment Income | |
Investment Income: | |
Dividend income | $115,267 |
Interest income | 48 |
Total investment income | 115,315 |
| |
Expenses: | |
Investment advisory fee | 66,676 |
Transfer agent fees and expenses | 2,322 |
Accounting fees | 1,186 |
Directors' fees and expenses | 1,940 |
Administrative fees | 12,123 |
Custodian fees | 4,728 |
Reports to shareholders | 2,058 |
Professional fees | 17,277 |
Miscellaneous | 365 |
Total expenses | 108,675 |
Reimbursement from Advisor | (17,725) |
Fees paid indirectly | (29) |
Net expenses | 90,921 |
| |
Net Investment Income | 24,394 |
| |
Realized and Unrealized Gain (Loss) on Investments | |
Net realized gain (loss) | (2,288,408) |
Change in unrealized appreciation (depreciation) | 5,748,315 |
| |
Net Realized and Unrealized Gain | |
(Loss) on Investments | 3,459,907 |
| |
Increase (Decrease) in Net Assets | |
Resulting From Operations | $3,484,301 |
See notes to financial statements.
Statements of Changes in Net Assets
| Year Ended | Year Ended |
| December 31, | December 31, |
Increase (Decrease) in Net Assets | 2009 | 2008 |
Operations: | | |
Net investment income | $24,394 | $32,764 |
Net realized gain (loss) | (2,288,408) | (2,232,758) |
Change in unrealized appreciation or (depreciation) | 5,748,315 | (4,718,312) |
| | |
Increase (Decrease) in Net Assets | | |
Resulting From Operations | 3,484,301 | (6,918,306) |
| | |
Distributions to shareholders from: | | |
Net investment income | (41,810) | (18,369) |
| | |
Capital share transactions: | | |
Shares sold | 10,788,926 | 21,854,364 |
Reinvestment of distributions | 41,810 | 18,369 |
Shares redeemed | (4,578,253) | (8,516,773) |
Total capital share transactions | 6,252,483 | 13,355,960 |
| | |
Total Increase (Decrease) in Net Assets | 9,694,974 | 6,419,285 |
| | |
| | |
Net Assets | | |
Beginning of year | 7,674,006 | 1,254,721 |
End of year (including undistributed net | | |
investment income of $12,181 and $16,370, respectively) | $17,368,980 | $7,674,006 |
| | |
Capital Share Activity | | |
Shares sold | 266,524 | 342,208 |
Reinvestment of distributions | 874 | 516 |
Shares redeemed | (113,298) | (152,612) |
Total capital share activity | 154,100 | 190,112 |
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
Note A --- Significant Accounting Policies
General: Summit Natural Resources Portfolio (the "Portfolio"), a series of Summit Mutual Funds, Inc. (the "Fund"), is registered under the Investment Company Act of 1940 as a non-diversified, open-end management investment company. The Fund is comprised of thirteen separate portfolios. The operations of each series of the Fund are accounted for separately. The shares of the Portfolio are sold to affiliated and unaffiliated insurance companies for allocation to certain of their variable separate accounts. The Portfolio invests primarily in exchange traded funds and exchange traded notes (the "Underlying Funds") representing different natural resources exposures.
On December 12, 2008, Calvert Asset Management Company, Inc. ("CAMCO") consummated a transaction with Summit Investment Partners, Inc. ("Summit"), an affiliated entitiy, whereby CAMCO acquired Summit's mutual fund business and became investment advisor for the portfolios of Summit Mutual Funds, Inc.
Security Valuation: Net asset value per share is determined every business day as of the close of the regular session of the New York Stock Exchange (generally 4:00 p.m. Eastern time). The Portfolio uses independent pricing services approved by the Board of Directors to value its investments wherever possible. Securities for which market quotations are available are valued at last sale price or official closing price on the primary market or exchange in which they trade. Investments for which market quotations are not available or deemed not reliable are fair valued in good faith under the direction of the Board of Directors.
In determining fair value, the Board considers all relevant qualitative and quantitative information available. These factors are subject to change over time and are reviewed periodically. The values assigned to fair value investments are based on available information and do not necessarily represent amounts that might ultimately be realized. Further, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. At December 31, 2009, no securities were fair valued under the direction of the Board of Directors.
The Portfolio utilizes various methods to measure the fair value of its investments. Generally Accepted Accounting Principles (GAAP) establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:
Level 1 -- quoted prices in active markets for identical securities
Level 2 -- other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)
Level 3 -- significant unobservable inputs (including the Portfolio's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
Changes in valuation techniques may result in transfers in or out of an investment's assigned level within the hierarchy during the period. For additional information on the Portfolio's policy regarding valuation of investments, please refer to the Portfolio's most recent prospectus.
The following is a summary of the inputs used to value the Portfolio's net assets as of December 31, 2009:
| Valuation Inputs |
Investments in Securities | Level 1 | Level 2 | Level 3 | Total |
Exchange traded funds & notes | $17,039,067 | -- | -- | $17,039,067 |
Other debt obligations | -- | $517,649 | -- | 517,649 |
TOTAL | $17,039,067 | $517,649 | -- | $17,556,716 |
Security Transactions and Investment Income: Security transactions, normally shares of the Underlying Funds, are accounted for on trade date. Realized gains and losses are recorded on an identified cost basis. Income and capital gain distributions from the Underlying Funds, if any, are recorded on ex-dividend date. Interest income, which includes amortization of premium and accretion of discount on debt securities is accrued as earned. Expenses included in the accompanying financial statements reflect the expenses of the Portfolio and do not include any expenses associated with the Underlying Funds.
Distributions to Shareholders: Distributions to shareholders are recorded by the Portfolio on ex-dividend date. Dividends from net investment income and distributions from net realized capital gains, if any, are paid at least annually. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; accordingly, periodic reclassifications are made within the Portfolio's capital accounts to reflect income and gains available for distribution under income tax regulations.
Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent 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 those estimates.
Expense Offset Arrangements: The Portfolio has an arrangement with its custodian bank whereby the custodian's fees may be paid indirectly by credits earned on the Portfolio's cash on deposit with the bank. These credits are used to reduce the Portfolio's expenses. Such a deposit arrangement may be an alternative to overnight investments.
Federal Income Taxes: No provision for federal income or excise tax is required since the Portfolio intends to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable earnings.
Management has analyzed the Portfolio's tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Portfolio's financial statements. A Portfolio's federal tax return is subject to examination by the Internal Revenue Service for a period of three years.
New Accounting Pronouncements:
In July 2009, the Financial Accounting Standards Board (FASB) launched the FASB Accounting Standards CodificationTM as the single source of authoritative nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is nonauthoritative.
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about Fair Value Measurements". ASU 2010-06 will require reporting entities to make new disclosures about amount and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements and input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measures, which are effective for fiscal years beginning after December 15, 2010. At this time, management is evaluating th e implications of ASU No. 2010-06 and its impact on the financial statements has not been determined.
Note B -- Related Party Transactions
Calvert Asset Management Company, Inc. (the "Advisor") is wholly-owned by Calvert Group, Ltd. ("Calvert"), which is indirectly wholly-owned by UNIFI Mutual Holding Company. The Advisor provides investment advisory services and pays the salaries and fees of officers and Directors of the Fund who are employees of the Advisor or its affiliates. For its services, the Advisor receives an annual fee, payable monthly, of 0.55%, of the Portfolio's average daily net assets. Under the terms of the agreement, $7,870 was payable at year end. In addition, $4,270 was payable at year end for operating expenses paid by the Advisor during December 2009.
The Advisor has contractually agreed to limit net annual portfolio operating expenses through December 12, 2010. The contractual expense cap is 0.75%. For the purpose of this expense limit, operating expenses do not include interest expense, brokerage commissions, taxes, and extraordinary expenses. To the extent any expense credits are earned, the Advisor's obligation under the contractual limitation may be reduced and the Advisor may benefit from the expense offset arrangement.
Calvert Administrative Services Company ("CASC"), an affiliate of the Advisor, provides administrative services to the Portfolio for an annual fee, payable monthly, of .10% based on the Portfolio's average daily net assets. Under the terms of the agreement, $1,431 was payable at year end.
Calvert Shareholder Services, Inc. ("CSSI"), an affiliate of the Advisor, acts as shareholder servicing agent for the Portfolio. For its services, CSSI received a fee of $72 for the year ended December 31, 2009. Under the terms of the agreement, $6 was payable at year end. Boston Financial Data Services, Inc. is the transfer and dividend disbursing agent.
Each Director of the Fund who is not an employee of the Advisor or its affiliates receives a fee of $1,500 for each Board and Committee meeting attended plus an annual fee of $20,000. Director's fees are allocated to each of the portfolios served.
Note C -- Investment Activity
During the year, the cost of purchases and proceeds from sales of investments, other than short-term securities were $10,331,784 and $4,139,376, respectively.
Capital Loss Carryforwards
Expiration Date
Capital losses may be utilized to offset future capital gains until expiration.
The tax character of dividends and distributions paid during the years ended December 31, 2009 and December 31, 2008 was as follows:
| 2009 | 2008 |
Distributions paid from: | | |
Ordinary income | $41,810 | $18,369 |
Total | $41,810 | $18,369 |
As of December 31, 2009, the tax basis components of distributable earnings/(accumulated losses) and the federal tax cost were as follows:
Unrealized appreciation | $240,733 |
Unrealized (depreciation) | (1,682,238) |
Net unrealized appreciation/(depreciation) | ($1,441,505) |
Undistributed ordinary income | $12,181 |
Capital loss carryforward | ($1,893,101) |
Federal income tax cost of investments | $18,998,221 |
The differences between components of distributable earnings on a tax basis and the amounts reflected in the statement of assets and liabilities are primarily due to temporary book-tax differences that will reverse in a subsequent period. These differences are due to wash sales and partnerships.
Reclassifications, as shown in the table below, have been made to the Portfolio's components of net assets to reflect income and gains available for distributions (or available capital loss carryforwards, as applicable) under income tax law and regulations. These reclassifications are due to permanent book-tax differences and have not impact on net assets. The primary permanent differences causing such reclassifications for the Portfolio are due to partnerships and prior year adjustments to real estate investment trusts.
Undistributed net investment income | $13,227 |
Accumulated net realized gain (loss) | (13,227) |
Note D -- Line of Credit
A financing agreement is in place with all Calvert Group Funds and State Street Corporation ("SSC"). Under the agreement, SSC provides an unsecured line of credit facility, in the aggregate amount of $50 million ($25 million committed and $25 million uncommitted), accessible by the Funds for temporary or emergency purposes only. Borrowings under the committed facility bear interest at the higher of the London Interbank Offered Rate, (LIBOR) or the overnight Federal Funds Rate plus 1.25% per annum. A commitment fee of .15% per annum is incurred on the unused portion of the committed facility, which is allocated to all participating funds. The Portfolio had no borrowings under the agreement during the year ended December 31, 2009.
Note E -- Subsequent Events
In preparing the financial statements as of December 31, 2009, no subsequent events or transactions ocurred through February 24, 2010, the date the financial statements were issued, that would have materially impacted the financial statements as presented.
Financial Highlights
| Years Ended |
| December 31, | December 31, |
| 2009 (z) | 2008 |
Net asset value, beginning | $36.42 | $60.90 |
Income from investment operations | | |
Net investment income | .08 | .10 |
Net realized and unrealized gain (loss) | 11.22 | (24.46) |
Total from investment operations | 11.30 | (24.36) |
Distributions from | | |
Net investment income | (.11) | (.12) |
Total distributions | (.11) | (.12) |
Total increase (decrease) in net asset value | 11.19 | (24.48) |
Net asset value, ending | $47.61 | $36.42 |
| | |
Total return* | 31.04% | (40.03%) |
Ratios to average net assets: A,B | | |
Net investment income | .20% | .40% |
Total expenses | .90% | 1.38% |
Expenses before offsets | .75% | .75% |
Net expenses | .75% | .75% |
Portfolio turnover | 35% | 101% |
Net assets, ending (in thousands) | $17,369 | $7,674 |
| | |
| Periods Ended |
| December 31, | December 31, |
| 2007 | 2006^ |
Net asset value, beginning | $49.98 | $50.00 |
Income from investment operations | | |
Net investment income | .10 | -- |
Net realized and unrealized gain (loss) | 10.82 | (.02) |
Total from investment operations | 10.92 | (.02) |
Distributions from | | |
Net investment income | -- | -- |
Total distributions | -- | -- |
Total increase (decrease) in net asset value | 10.92 | (.02) |
Net asset value, ending | $60.90 | $49.98 |
| | |
Total return* | 21.85% | (.04%) |
Ratios to average net assets: A,B | | |
Net investment income (loss) | .23% | (.75%) (a) |
Total expenses | 6.33% | 133.46% (a) |
Expenses before offsets | .75% | .75% (a) |
Net expenses | .75% | .75% (a) |
Portfolio turnover | 28% | 0% |
Net assets, ending (in thousands) | $1,255 | $250 |
See notes to financial highlights.
A Total expenses do not reflect amounts reimbursed and/or waived by the Advisor or reductions from expense offset arrangements. Expenses before offsets reflect expenses after reimbursement and/or waiver by the Advisor but prior to reductions from expense offset arrangements. Net expenses are net of all reductions and represent the net expenses paid by the portfolio.
B Amounts do not include the activity of the underlying funds.
(a) Annualized.
(z) Per share figures are calculated using the Average Shares Method.
* Total return is not annualized for periods less than one year.
^ From December 28, 2006, inception.
See notes to financial statements.
Explanation of Financial Tables
Schedule of Investments
The Schedule of Investments is a snapshot of all securities held in the fund at their market value, on the last day of the reporting period. Securities are listed by asset type (e.g., common stock, corporate bonds, U.S. government obligations) and may be further broken down into sub-groups and by industry classification.
Statement of Assets and Liabilities
The Statement of Assets and Liabilities is often referred to as the fund's balance sheet. It lists the value of what the fund owns, is due and owes on the last day of the reporting period. The fund's assets include the market value of securities owned, cash, receivables for securities sold and shareholder subscriptions, and receivables for dividends and interest payments that have been earned, but not yet received. The fund's liabilities typically include payables for securities purchased and shareholder redemptions, and expenses owed but not yet paid. The statement also reports the fund's net asset value (NAV) per share on the last day of the reporting period. The NAV is calculated by dividing the fund's net assets (assets minus liabilities) by the number of shares outstanding. This statement is accompanied by a Schedule of Investments. Alternatively, if certain conditions are met, a Statement of Net Assets may be presented in lieu of this statement and the Schedule of Investments.
Statement of Net Assets
The Statement of Net Assets provides a detailed list of the fund's holdings, including each security's market value on the last day of the reporting period. The Statement of Net Assets includes a Schedule of Investments. Other assets are added and other liabilities subtracted from the investments total to calculate the fund's net assets. Finally, net assets are divided by the outstanding shares of the fund to arrive at its share price, or Net Asset Value (NAV) per share.
At the end of the Statement of Net Assets is a table displaying the composition of the fund's net assets. Paid in Capital is the money invested by shareholders and represents the bulk of net assets. Undistributed Net Investment Income and Accumulated Net Realized Gains usually approximate the amounts the fund had available to distribute to shareholders as of the statement date. Accumulated Realized Losses will appear as negative balances. Unrealized Appreciation (Depreciation) is the difference between the market value of the fund's investments and their cost, and reflects the gains (losses) that would be realized if the fund were to sell all of its investments at their statement-date values.
Statement of Operations
The Statement of Operations summarizes the fund's investment income earned and expenses incurred in operating the fund. Investment income includes dividends earned from stocks and interest earned from interest-bearing securities in the fund. Expenses incurred in operating the fund include the advisory fee paid to the investment advisor, administrative services fees, distribution plan expenses (if applicable), transfer agent fees, shareholder servicing expenses, custodial, legal, and audit fees, and the printing and postage expenses related to shareholder reports. Expense offsets (fees paid indirectly) are also shown. Credits earned from offset arrangements are used to reduce the fund's expenses. This statement also shows net gains (losses) realized on the sale of investments and the increase or decrease in the unrealized appreciation (depreciation) on investments held during the period.
Statement of Changes in Net Assets
The Statement of Changes in Net Assets shows how the fund's total net assets changed during the two most recent reporting periods. Changes in the fund's net assets are attributable to investment operations, distributions and capital share transactions.
The Operations section of the report summarizes information detailed in the Statement of Operations. The Distribution section shows the dividend and capital gain distributions made to shareholders. The amounts shown as distributions in this section may not match the net investment income and realized gains amounts shown in the Operations section because distributions are determined on a tax basis and certain investments or transactions may be treated differently for financial statement and tax purposes. The Capital Share Transactions section shows the amount shareholders invested in the fund, either by purchasing shares or by reinvesting distributions, and the amounts redeemed. The corresponding numbers of shares issued, reinvested and redeemed are shown at the end of the report.
Financial Highlights
The Financial Highlights table provides a per-share breakdown by class of the components that affect the fund's net asset value for current and past reporting periods. The table provides total return, total distributions, expense ratios, portfolio turnover and net assets for the applicable period. Total return is a measure of a fund's performance that encompasses all elements of return: dividends, capital gain distributions and changes in net asset value. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gain distributions, expressed as a percentage of the initial investment. Total distributions include distributions from net investment income and net realized gains. Long-term gains are earned on securities held in the fund more than one year. Short-term gains, on the sale of securities held less than one year, are treated as ordinary dividend income for tax purposes. The expense ratio is a fund's cost of doing business, expres sed as a percentage of net assets. These expenses directly reduce returns to shareholders. Portfolio turnover measures the trading activity in a fund's investment portfolio -- how often securities are bought and sold by a fund. Portfolio turnover is affected by market conditions, changes in the size of the fund, the nature of the fund's investments and the investment style of the portfolio manager.
Proxy Voting
The Proxy Voting Guidelines that the Portfolio uses to determine how to vote proxies relating to portfolio securities is provided as an Appendix to the Fund's Statement of Additional Information. The Statement of Additional Information can be obtained free of charge by calling the Fund at 1-800-368-2745 or by visiting the SEC's website at www.sec.gov.
Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available by calling the Fund or visiting the SEC's website at www.sec.gov.
Availability of Quarterly Portfolio Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund's Form N-Q is available on the SEC's website at www.sec.gov. The Fund's Form N-Q may be reviewed and copied at the SEC'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.
Basis for Board's Approval of Investment Advisory ContractS
At a meeting held on December 10, 2009, the Board of Directors, and by a separate vote, the disinterested Directors, approved the continuance of the Investment Advisory Agreement between the Portfolio and the Advisor and the Investment Subadvisory Agreement between the Advisor and the Subadvisor with respect to the Portfolio.
In evaluating the Investment Advisory Agreement, the Board considered a variety of information relating to the Portfolio and the Advisor. The disinterested Directors reviewed a report prepared by the Advisor regarding various services provided to the Portfolio by the Advisor and its affiliates. Such report included, among other data, information regarding the Advisor's personnel and the Advisor's revenue and cost of providing services to the Portfolio, and a separate report prepared by an independent third party, which provided a statistical analysis comparing the Portfolio's investment performance, expenses, and fees to comparable mutual funds.
The disinterested Directors were separately represented by independent legal counsel with respect to their consideration of the reapproval of the Investment Advisory Agreement and the Investment Subadvisory Agreement. Prior to voting, the disinterested Directors reviewed the proposed continuance of the Investment Advisory Agreement and Investment Subadvisory Agreement with management and also met in private sessions with their counsel at which no representatives of management were present.
In the course of its deliberations regarding the Investment Advisory Agreement, the Board considered the following factors, among others: the nature, extent and quality of the services provided by the Advisor, including the personnel providing such services; the Advisor's financial condition; the level and method of computing the Portfolio's advisory fee; comparative performance, fee and expense information for the Portfolio; the profitability of the Calvert Group of Funds to the Advisor and its affiliates; the allocation of the Portfolio's brokerage, including the Advisor's process for monitoring "best execution"; the direct and indirect benefits, if any, derived by the Advisor and its affiliates from their relationship with the Portfolio; the effect of the Portfolio's growth and size on the Portfolio's performance and expenses; the Advisor's compliance programs and policies; the Advisor's performance of substantially similar duties for other funds; and any possible conflicts of interest.
In considering the nature, extent and quality of the services provided by the Advisor under the Investment Advisory Agreement, the Board reviewed information provided by the Advisor relating to its operations and personnel, including, among other information, biographical information on the Advisor's supervisory and professional staff and descriptions of its organizational and management structure. The Board also took into account similar information provided periodically throughout the previous year by the Advisor as well as the Board's familiarity with the Advisor's management through Board of Directors' meetings, discussions and other reports. The Board considered the Advisor's current level of staffing and overall resources. The Advisor's administrative capabilities, including its ability to supervise the other service providers for the Portfolio, were also considered. The Board discussed the Advisor's effectiveness in monitoring the performance of the Subadvisor and its timeliness in responding to pe rformance issues. The Board concluded that it was satisfied with the nature, extent and quality of services provided to the Portfolio by the Advisor under the Investment Advisory Agreement.
In considering the Portfolio's performance, the Board noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. In addition, the Board took into account overall financial market conditions. The Board also reviewed various comparative data provided to it in connection with its consideration of the renewal of the Investment Advisory Agreement, including, among other information, a comparison of the Portfolio's total return with its Lipper index and with that of other mutual funds deemed to be in its peer universe by an independent third party in its report. This comparison indicated that the Portfolio performed above the median of its peer universe for the one-year period ended June 30, 2009. The data also indicated that the Portfolio outperformed its Lipper index for the one-year period ended June 30, 2009. Based upon its review, the Board concluded that the Portfolio's performance was satisfactory.
In considering the Portfolio's fees and expenses, the Board compared the Portfolio's fees and total expense ratio with various comparative data for the funds in its peer group. Among other findings, the data indicated that the Portfolio's management fee (after taking into account expense reimbursements), which includes the advisory fee paid to the Advisor and the administrative fee paid to an affiliate of the Advisor, was at the median of its peer group and that total expenses (net of expense reimbursements) were above the median of its peer group. The Board noted that the allocation of advisory and administrative fees may vary among the Portfolio's peer group. In addition, the Board took into account the fees the Advisor charged to its other clients and considered these fee comparisons in light of the differences in managing these other accounts. The Board noted that the Advisor paid the Subadvisor's subadvisory fee under the Investment Subadvisory Agreement with respect to the Portfolio and that the Adv isor had agreed to limit the Portfolio's net annual operating expenses through December 12, 2010. The Board also took into account management's discussion of the Portfolio's expenses and certain factors that affected the level of such expenses, including the current size of the Portfolio. Based upon its review, the Board determined that the advisory fee was reasonable in view of the quality of services provided by the Advisor and the other factors considered.
The Board reviewed the Advisor's profitability on a portfolio-by-portfolio basis. In reviewing the overall profitability of the advisory fee to the Portfolio's Advisor, the Board also considered the fact that affiliates of the Advisor provided shareholder servicing and administrative services to the Portfolio for which they received compensation. The information considered by the Board included Calvert's operating profit margin information both before and after tax expenses with respect to the services that the Advisor and its affiliates provided to the Calvert Group of Funds complex. The Board reviewed the profitability of the Advisor's relationship with the Portfolio in terms of the total amount of annual advisory fees it received with respect to the Portfolio and whether the Advisor had the financial wherewithal to continue to provide a high level of services to the Portfolio. The Board also considered that the Advisor derived benefits to its reputation and other indirect benefits from its relationship with the Portfolio. In addition, the Board took into account that affiliates of the Advisor may benefit from certain indirect tax benefits relating to dividend received deductions and foreign tax credits. The Board also noted that the Advisor paid the subadvisory fee to the Subadvisor, an affiliate of the Advisor, and that the Advisor had reimbursed expenses of the Portfolio. Based upon its review, the Board concluded that the Advisor's and its affiliates' level of profitability from their relationship with the Portfolio was reasonable.
The Board considered the effect of the Portfolio's current size and potential growth on its performance and fees. Although the Portfolio's advisory fee did not have breakpoints that reduced the fee rate on assets above specified levels, the Board noted that if the Portfolio's assets increased over time, the Portfolio might realize other economies of scale if assets increased proportionally more than certain other expenses. The Board also noted that given the Portfolio's current level of assets, the Portfolio would be unlikely to recognize economies of scale by implementing a breakpoint in the advisory fee at this time.
In reapproving the Investment Advisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
In evaluating the Investment Subadvisory Agreement, the disinterested Directors reviewed information provided by the Subadvisor relating to its operations, personnel, investment philosophy, strategies and techniques. Among other information, the Subadvisor provided biographical information on portfolio management and other professional staff, performance information for itself, and descriptions of its investment philosophies, strategies and techniques, organizational and management structures and brokerage policies and practices.
The Board reapproved the Investment Subadvisory Agreement between the Subadvisor and the Advisor based on a number of factors relating to the Subadvisor's ability to perform under the Investment Subadvisory Agreement. In the course of its deliberations, the Board evaluated, among other factors: the nature, extent and the quality of the services to be provided by the Subadvisor; the Subadvisor's management style and long-term performance record; the Portfolio's performance record and the Subadvisor's performance in employing its investment strategies; the Subadvisor's current level of staffing and its overall resources; the qualifications and experience of the Subadvisor's personnel; the Subadvisor's financial condition with respect to its ability to perform the services required under the Investment Subadvisory Agreement; the Subadvisor's compliance systems, including those related to personal investing; and any disciplinary history. Based upon its review, the Board concluded that it was satisfied with th e nature, extent and quality of services provided to the Portfolio by the Subadvisor under the Investment Subadvisory Agreement.
As noted above, the Board considered, among other information, the Portfolio's performance during the one-year period ended June 30, 2009 as compared to the Portfolio's peer universe and noted that it reviewed on a quarterly basis detailed information about the Portfolio's performance results, portfolio composition and investment strategies. The Board noted the Advisor's expertise and resources in monitoring the performance, investment style and risk adjusted performance of the Subadvisor.
In considering the cost of services to be provided by the Subadvisor and the profitability to the Subadvisor of its relationship with the Portfolio, the Board noted that the Advisor and Subadvisor were affiliated and the subadvisory fee under the Investment Subadvisory Agreement was paid by the Advisor out of the advisory fee that the Advisor received under the Investment Advisory Agreement. Based upon its review, the Board determined that the subadvisory fee was reasonable. Because the Advisor would pay the Subadvisor's subadvisory fee, the cost of services to be provided by the Subadvisor and the level of profitability to the Subadvisor from its relationship with the Portfolio were not material factors in the Board's deliberations. For similar reasons, the Board did not consider the potential economies of scale in the Subadvisor's management of the Portfolio to be a material factor in its consideration.
In reapproving the Investment Subadvisory Agreement, the Board, including the disinterested Directors, did not identify any single factor as controlling, and each Director may have attributed different weight to various factors.
Conclusions
The Board reached the following conclusions regarding the Investment Advisory Agreement and the Investment Subadvisory Agreement, among others: (a) the Advisor has demonstrated that it possesses the capability and resources to perform the duties required of it under the Investment Advisory Agreement; (b) the Subadvisor is qualified to manage the Portfolio's assets in accordance with the Portfolio's investment objective and policies; (c) the Advisor and Subadvisor maintain appropriate compliance programs; (d) the Subadvisor is likely to execute its investment strategies consistently over time; (e) the performance of the Portfolio is satisfactory in relation to the performance of funds with similar investment objectives and to relevant indices; and (f) the Portfolio's advisory and subadvisory fees are reasonable in relation to those of similar funds and to the services to be provided by the Advisor and the Subadvisor. Based on its conclusions, the Board determined that reapproval of the Investment Advis ory Agreement and the Investment Subadvisory Agreement would be in the best interests of the Portfolio and its shareholders.
This report is intended to provide fund information to shareholders. It is not authorized for distribution to prospective investors unless preceded or accompanied by a prospectus.
Note: The information on our website is not incorporated by reference into this report; our website address is included as an inactive textual reference only.
Director and Officer Information Table
Name &
Age |
Position
with
Fund
|
Position
Start
Date
| Principal Occupation
During Last 5 Years | (Not Applicable to Officers) |
# of Calvert
Portfolios
Overseen | Other
Directorships |
INDEPENDENT DIRECTORS |
FRANK H. BLATZ, JR., Esq. AGE: 74 | Director | 1982 CVS 2008 Summit | Of counsel to firm of Schiller & Pittenger, P.C. Mr. Blatz was an attorney in private practice in Fanwood, NJ from 1999 to 2004. | 24 | |
ALICE GRESHAM AGE: 59 | Director | 1999 CVS 2008 Summit | Dean and Professor at Howard University School of Law. She was formerly Deputy Director of the Association of American Law Schools. | 25 | |
M. CHARITO KRUVANT AGE: 64 | Director | 1999 CVS 2008 Summit | President and CEO of Creative Associates International, Inc., a firm that specializes in human resources development, information management, public affairs and private enterprise development. | 37 | - Acacia Federal Savings Bank
- Summit Foundation
- The Community Foundation for the National Capital Region
|
CYNTHIA MILLIGAN AGE: 63 | Director | 1999 CVS 2008 Summit | Dean Emeritus (as of May 2009), College of Business Administration, University of Nebraska, Lincoln. Formerly, she was the President and Chief Executive Officer for CMA, a consulting firm for financial institutions. | 25 | - Wells Fargo Company- NYSE
- Gallup, Inc.
- W.K. Kellogg Foundation
- Raven Industries - NASDAQ
- Colonial Williamsburg Foundation (Non-Profit)
- Prison Fellowship Ministries (Non-Profit)
|
ARTHUR J. PUGH AGE: 72 | Director | 1982 CVS 2008 Summit | Retired executive. | 24 | - Acacia Federal Savings Bank
|
INTERESTED DIRECTORS |
BARBARA J. KRUMSIEK AGE: 57 | Director & Chair-person | 1997 CVS 2008 Summit | President, Chief Executive Officer and Chair of Calvert Group, Ltd. | 54 | - Calvert Social Investment Foundation
- Pepco Holdings, Inc.
- Acacia Life Insurance Company (Chair)
|
WILLIAM LESTER AGE: 52 | Director & President | 2004 CVS 2008 Summit | As of May 2009, Executive Vice President Finance/Investments and Corporate Treasurer of UNIFI Companies. Mr. Lester also continues to serve as President and Chair of Summit Investment Advisors, Inc. | 24 | - Acacia Federal Savings Bank
- Summit Investment Advisors, Inc.
- Ameritas Investment Corp.
|
OFFICERS |
KAREN BECKER AGE: 57 | Chief Compliance Officer | 2005 CVS 2008 Summit | Chief Compliance Officer for the Calvert Funds. In March 2009, Ms. Becker also became Head of the Securities Operations Department for Calvert Asset Management Company, Inc. Prior to 2005, Ms. Becker was Senior Vice President of Calvert Group, Ltd. and Head of Calvert Client Services. |
SUSAN WALKER BENDER, Esq. AGE: 51 | Assistant Vice President & Assistant Secretary | 1988 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
JENNIFER BERG AGE: 36 | Assistant Fund Controller | 2009 | Fund Administration Manager for Calvert Group Ltd. |
THOMAS DAILEY AGE: 45 | Vice President | 2004 CVS 2008 Summit | Vice President of Calvert Asset Management Company, Inc. |
IVY WAFFORD DUKE, Esq. AGE: 41 | Assistant Vice President & Assistant Secretary | 1996 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Deputy General Counsel of Calvert Group, Ltd., and Chief Compliance Officer for Calvert Asset Management Company, Inc. and Calvert Distributors, Inc. |
TRACI L. GOLDT AGE: 36 | Assistant Secretary | 2004 CVS 2008 Summit | Executive Assistant to General Counsel, Calvert Group, Ltd. |
GREGORY B. HABEEB AGE: 60 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. |
HUI PING HO, CPA Age: 45 | Assistant Treasurer | 2000 CVS 2008 Summit | Tax Compliance Manager of Calvert Group, Ltd. |
LANCELOT A. KING, Esq. AGE: 39 | Assistant Vice President & Assistant Secretary | 2002 CVS 2008 Summit | Assistant Vice President, Assistant Secretary and Associate General Counsel of Calvert Group, Ltd. |
EDITH LILLIE AGE: 53 | Assistant Secretary | 2007 CVS 2008 Summit | Assistant Secretary (since 2007) and Regulatory Matters Manager of Calvert Group, Ltd. |
AUGUSTO DIVO MACEDO, Esq. AGE: 47 | Assistant Vice President & Assistant Secretary | 2007 CVS 2008 Summit | Assistant Vice President, Assistant Secretary, and Assistant Counsel Compliance of Calvert Group, Ltd. Prior to joining Calvert in 2005, Mr. Macedo served as 2nd Vice President at Acacia Life Insurance Company and The Advisors Group, Acacia's broker-dealer and federally registered investment adviser. |
JANE B. MAXWELL Esq. AGE: 57 | Assistant Vice President & Assistant Secretary | 2005 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Assistant General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2004, Ms. Maxwell was an associate with Sullivan & Worcester LLP. |
JAMES R. MCGLYNN, CFA AGE: 50 | Vice President | 2009 | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in December 2008, Mr. McGlynn was the large cap value manager of Summit Investment Partners. |
ANDREW K. NIEBLER, Esq. AGE: 42 | Assistant Vice President & Assistant Secretary | 2006 CVS 2008 Summit | Assistant Vice President, Assistant Secretary & Associate General Counsel of Calvert Group, Ltd. Prior to joining Calvert in 2006, Mr. Niebler was an associate with Cleary, Gottlieb, Steen & Hamilton LLP. |
CATHERINE P. ROY AGE: 54 | Vice President | 2004 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc. Prior to joining Calvert in 2004, Ms. Roy was Senior Vice President of US Fixed Income for Baring Asset Management, and SVP and Senior Portfolio Manager of Scudder Insurance Asset Management. |
WILLIAM M. TARTIKOFF, Esq. AGE: 62 | Vice President & Secretary | 1990 CVS 2008 Summit | Senior Vice President, Secretary, and General Counsel of Calvert Group, Ltd. |
NATALIE TRUNOW AGE: 42 | Vice President | 2008 CVS 2008 Summit | Senior Vice President of Calvert Asset Management Company, Inc., and Chief Investment Officer - Equities. Prior to joining Calvert in August 2008, Ms. Trunow was the Section Head (2005-2008) and Portfolio Manager (2001-2008) for the Global Public Markets Group of General Motors Asset Management. |
RONALD M. WOLFSHEIMER, CPA AGE: 57 | Treasurer | 1982 CVS 2008 Summit | Senior Vice President and Chief Financial and Administrative Officer of Calvert Group, Ltd. |
MICHAEL V. YUHAS JR., CPA AGE: 48 | Fund Controller | 1999 CVS 2008 Summit | Vice President of Fund Administration of Calvert Administrative Services Company. |
The address of Directors and Officers is 4550 Montgomery Avenue, Suite 1000N, Bethesda, Maryland 20814. Ms. Krumsiek is an interested person of the Fund since she is an officer and director of the Fund's Advisor and its affiliates. Mr. Lester is an interested person of the Fund since he is an officer and director of the parent company of the Fund's Advisor.
Additional information about the Fund's Directors can be found in the Statement of Additional Information (SAI). You can get a free copy of the SAI by contacting your broker, or the Fund at 1-800-368-2745.
<PAGE>
Item 2. Code of Ethics.
(a) The registrant has adopted a code of ethics (the "Code of Ethics") that applies to its principal executive officer and principal financial officer (also referred to as "principal accounting officer").
(b) No information need be disclosed under this paragraph.
(c) The registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(d) The registrant has not granted a waiver or implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(e) Not applicable.
(f) The registrant's Code of Ethics is attached as an Exhibit hereto.
Item 3. Audit Committee Financial Expert.
The registrant's Board of Trustees/Directors has determined that M. Charito Kruvant, an "independent" Trustee/Director serving on the registrant's audit committee, is an "audit committee financial expert," as defined in Item 3 of Form N-CSR. Under applicable securities laws, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and Board of Trustees in the absence of such designation or identification.
Item 4. Principal Accountant Fees and Services.
Services fees paid to auditing firm:
| Fiscal Year ended 12/31/08 | Fiscal Year ended 12/31/09 |
| $ | %* | $ | % * |
| | | | |
(a) Audit Fees | $211,750 | 0% | $200,805 | 0% |
(b) Audit-Related Fees | $0 | 0% | $0 | 0% |
(c) Tax Fees (tax return preparation for the registrant) | $38,967 | 0% | $36,959 | 0% |
(d) All Other Fees | $0 | 0% | $0 | 0% |
| | | | |
Total | $250,717 | 0% | $237,764 | 0% |
* Percentage of fees approved by the Audit Committee pursuant to (c)(7)(i)(C) of Rule 2-01 of Reg. S-X (statutory de minimis waiver of Committee's requirement to pre-approve)
(e) Audit Committee pre-approval policies and procedures:
The Audit Committee is required to pre-approve all audit and non-audit services provided to the registrant by the auditors, and to the registrant's investment advisor, and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant. In determining whether to pre-approve non-audit services, the Audit Committee considers whether the services are consistent with maintaining the independence of the auditors. The Committee may delegate its authority to pre-approve certain matters to one or more of its members. In this regard, the Committee has delegated authority jointly to the Audit Committee Chair together with another Committee member with respect to non-audit services not exceeding $25,000 in each instance. In addition, the Committee has pre-approved the retention of the auditors to provide tax-related services related to the tax treatment and tax accounting of newly acquired securities, upon request by the investment advisor in each inst ance.
On December 12, 2008, Calvert Asset Management Company, Inc ("CAMCO") consummated a transaction with Summit Investment Partners, Inc.("Summit") whereby CAMCO acquired Summit's mutual fund business. In connection with this transaction, Deloitte & Touche LLP ("Deloitte") resigned in the normal course of business as independent accountant to the registrant. KPMG LLP was selected as the registrant's independent accountant and principal accountant to audit the registrant's financial statements. Prior to December 2008, the registrant followed a different pre-approval policy for non-audit services, as disclosed in registrant's last report in response to this Item.
(f) Not applicable.
(g) Aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment advisor, and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the registrant for each of the last two fiscal years of the registrant:
| Fiscal Year ended 12/31/08 | Fiscal Year ended 12/31/09 |
| $ | %* | $ | % * |
| $25,500 | 0%* | $4,000 | 0%* |
* Percentage of fees approved by the Audit Committee pursuant to (c)(7)(i)(C) of Rule 2-01 of Reg. S-X (statutory de minimis waiver of Committee's requirement to pre-approve)
(h) The registrant's Audit Committee of the Board of Trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment advisor, and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c) (7)(ii) of Rule 2-01 of Reg. S-X is compatible with maintaining the principal accountant's independence and found that the provision of such services is compatible with maintaining the principal accountant's independence.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments.
- This Schedule is included as part of the report to shareholders filed under Item 1 of this Form.
- Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the registrant's Board of Directors since registrant last provided disclosure in response to this Item.
Item 11. Controls and Procedures.
(a) The principal executive and financial officers concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the 1940 Act) are effective, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Exchange Act, as of a date within 90 days of the filing date of this report.
(b) There was no change in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) A copy of the Registrant's Code of Ethics.
Attached hereto.
(a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2).
Attached hereto.
(a)(3) Not applicable.
(b) A certification for the registrant's Principal Executive Officer and Principal Financial Officer, as required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached hereto. The certification furnished pursuant to this paragraph is not deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates it by reference.
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SUMMIT MUTUAL FUNDS, INC.
By: | /s/ Barbara J. Krumsiek
Barbara J. Krumsiek
Chairman -- Principal Executive Officer |
Date: | March 4, 2010 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment 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/ Barbara J. Krumsiek
Barbara J. Krumsiek
Chairman -- Principal Executive Officer
Date: March 4, 2010
/s/ Ronald M. Wolfsheimer
Ronald M. Wolfsheimer
Treasurer -- Principal Financial Officer
Date: March 4, 2010
