SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 811-4000
--------
SUMMIT MUTUAL FUNDS, INC.
(Exact name of registrant as specified in charter)
1876 Waycross Road, Cincinnati, Ohio 45240
(Address of principal executive offices) Zip code)
John F. Labmeier, Esq.
The Union Central Life Insurance Company
P.O. Box 40888
1876 Waycross Road
Cincinnati, Ohio 45240
(Name and address of agent for service)
Registrant's telephone number, including area code: (513) 595-2600
Date of fiscal year end: September 30, 2003
Date of reporting period: March 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS
SUMMIT MUTUAL FUNDS
SEMIANNUAL REPORT
SUMMIT APEX SERIES
NASDAQ-100 INDEX FUND
TOTAL SOCIAL IMPACT FUND
EVEREST FUND
BOND FUND
SHORT-TERM GOVERNMENT FUND
HIGH YIELD BOND FUND
MONEY MARKET FUND
MARCH 31, 2004
[SUMMIT MUTUAL FUNDS LOGO]
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SEMI ANNUAL REPORT - TABLE OF CONTENTS
<Table>
Message from the President 1
Fund Managers' Reports and Financial Statements:
Nasdaq-100 Index Fund 2
Total Social Impact Fund 8
Everest Fund 17
Bond Fund 22
Short-term Government Fund 29
High Yield Bond Fund 34
Money Market Fund 40
Notes to Financial Statements 45
</Table>
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF SHAREHOLDERS AND BENEFICIAL
OWNERS AND IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS UNLESS
IT IS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS FOR SUMMIT MUTUAL
FUNDS, INC.
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
MESSAGE FROM THE PRESIDENT
We are pleased to send you Summit Mutual Funds' 2004 Semiannual Report for the
period ended March 31, 2004. We welcome new investors and thank existing
shareholders as we strive to help you reach your financial goals.
The fiscal year began with encouraging economic news about strong GDP growth
rates. Continued concerns about the rate of jobs growth allowed the Federal
Reserve to maintain historically low interest rates and perpetuate a favorable
environment for both fixed income and equity investors. By the end of the
reporting period in March, positive GDP rates continued and are now accompanied
by robust jobs growth and positive corporate earnings reports. These conditions
have caused the Federal Reserve to begin talking about the need to raise
interest rates.
This recent economic news has been accompanied by mixed signals on the
geopolitical front. A year after the start of the war in Iraq, coalition forces
had Saddam Hussein in custody and Iraqi leaders took steps toward forming a
democratic government; but violence has recently escalated. The commuter train
bombings in Madrid, Spain also exacerbated fears of renewed global terrorism.
All of this is occurring in a backdrop of a presidential election year. The
result creates uncertainty for many investors.
Equity markets responded by continuing the rally that began just over a year
ago. The S&P 500 Index advanced 14.1%, the S&P 400 MidCap Index returned 18.9%
and the Russell 2000 Index soared by 21.7% during the six month period ended
March 31, 2004. In other market sectors, the Nasdaq-100 Index increased 10.5%
while, in international arenas, the EAFE Index advanced 22.2%, helped by a weak
U.S. dollar. It should be noted, that most of these positive equity returns
occurred during the fourth quarter of 2003, prior to reports of accelerated jobs
growth, interest rate increases, and greater international unrest.
Fixed income markets ended the six months close to where they began, but
experienced a reasonable level of volatility throughout the period. Rates on the
10 year U.S. Treasury Note opened the fiscal year yielding 3.9% and ended the
six month period nearly unchanged at 3.8%. During the period, this rate moved as
high as 4.5% and as low as 3.7%. This generally low interest yield environment
and the point-to-point rate stability contributed to the modest 3.0% return for
the Lehman Aggregate Bond Index during the six months ended March 31, 2004.
"PROPER DIVERSIFICATION OF YOUR INVESTMENTS IS A CRITICAL COMPONENT OF ACHIEVING
YOUR LONG-TERM INVESTMENT GOALS"
These events reinforce our message that the basic principles for investing
remain unchanged, even when equity and fixed income returns are positive. Our
thoughts have always been to maintain the proper perspective, have realistic
expectations and ensure that your investment strategy is appropriate for your
risk tolerance and time horizon. Concepts such as asset allocation and portfolio
rebalancing remain as important as ever. Proper diversification of your
investments, both within and across asset sectors, (or specifically stocks,
bonds and cash) is a critical component of achieving your long-term investment
goals. With three equity, three fixed income and a money market fund, Summit
Mutual Funds is able to provide the foundation of a diversified investment plan.
RECENT HIGHLIGHTS:
- - Summit's Everest Fund continued its excellent performance (up 15.3%)
ranking it as a top performer by leading rating agencies.
- - The Bond Fund's recent performance ranked it highly by leading ratings
agencies.
Thank you for choosing Summit Funds during these challenging times for investors
and for the trust that you have placed in us.
Best regards,
/s/ Steven R. Sutermeister
Steven R. Sutermeister
President
1
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
NASDAQ-100 INDEX FUND
OBJECTIVE - Seeks investment results that correspond to the investment
performance of U.S. common stocks, as represented by the Nasdaq-100 Index (the
"Index").
STRATEGY - The Nasdaq-100 Index Fund (the "Fund") will remain fully invested in
stocks included in the Index and in futures contracts on the Index. The cash
position will be held in highly liquid money market instruments to meet
redemptions and to provide cash for future stock purchases.
MANAGER'S COMMENTS:
For the six-month period ended March 31, 2004, the Fund's (Class I) total return
was 9.91% (before the impact of any product or contract-level fees). This
compares to a 10.48% total return for the Index. The difference of 0.57% is
referred to as "tracking error" and is largely attributed to the Fund's
operating expense ratio. These expenses represent the Fund's costs for advisory,
administration, accounting, custody and other services that are detailed in the
Statement of Operations. The remaining difference can be caused by a number of
factors, including the timing and size of cash flows into and out of the Fund;
broker's commissions or other trading costs; and holding security positions in
amounts that are different than the weightings in the Index, among others. While
an exact replication of the capitalization weightings of securities in the Index
is not feasible, the Fund's objectives and strategies call for a correlation of
at least 95% between the Fund's pre-expense total return and that of the Index.
The Fund achieved this level of correlation for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: December 29, 1999
Total Net Assets: $18.6 Million
Number of Equity Holdings: 100
Median Cap Size: $5.8 Billion
Dividend Yield: 0.23%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit Nasdaq-100 Fund Class I - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
40.01% -3.92% -20.10%
</Table>
Summit Nasdaq-100 Fund Class F - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
39.56% 18.31%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT NASDAQ-100 SUMMIT NASDAQ-100 NASDAQ-100
FUND CLASS I FUND CLASS F INDEX
12/27/99 $ 10,000 $ 10,000
12/31/99 $ 10,310 $ 10,304
1/31/2000 $ 9,970 $ 9,922
2/29/2000 $ 12,020 $ 11,859
3/31/2000 $ 12,310 $ 12,224
4/30/2000 $ 10,590 $ 10,488
5/31/2000 $ 9,310 $ 9,240
6/30/2000 $ 10,540 $ 10,462
7/31/2000 $ 10,070 $ 10,033
8/31/2000 $ 11,372 $ 11,336
9/30/2000 $ 9,938 $ 9,927
10/31/2000 $ 9,116 $ 9,125
11/30/2000 $ 6,996 $ 6,969
12/31/2000 $ 6,512 $ 6,511
1/31/2001 $ 7,167 $ 7,210
2/28/2001 $ 5,272 $ 5,306
3/31/2001 $ 4,334 $ 4,375
4/30/2001 $ 5,101 $ 5,159
5/31/2001 $ 4,949 $ 5,006
6/30/2001 $ 5,020 $ 5,090
7/31/2001 $ 4,617 $ 4,683
8/31/2001 $ 4,022 $ 4,088
9/30/2001 $ 3,195 $ 3,250
10/31/2001 $ 3,720 $ 3,797
11/30/2001 $ 4,345 $ 4,440
12/31/2001 $ 4,294 $ 4,387
1/31/2002 $ 4,224 $ 4,313
2/28/2002 $ 3,697 $ 3,782
3/31/2002 $ 3,947 $ 4,042
4/30/2002 $ 3,468 $ 3,554
5/31/2002 $ 3,276 $ 3,363
6/30/2002 $ 2,847 $ 10,000 $ 2,926
7/31/2002 $ 2,611 $ 9,171 $ 2,678
8/31/2002 $ 2,554 $ 8,973 $ 2,623
9/30/2002 $ 2,254 $ 7,911 $ 2,317
10/31/2002 $ 2,675 $ 9,391 $ 2,755
11/30/2002 $ 3,018 $ 10,595 $ 3,107
12/31/2002 $ 2,659 $ 9,334 $ 2,741
1/31/2003 $ 2,655 $ 9,313 $ 2,737
2/28/2003 $ 2,726 $ 9,561 $ 2,813
3/31/2003 $ 2,746 $ 9,632 $ 2,839
4/30/2003 $ 2,980 $ 10,446 $ 3,082
5/31/2003 $ 3,224 $ 11,303 $ 3,339
6/30/2003 $ 3,232 $ 11,331 $ 3,349
7/31/2003 $ 3,431 $ 12,018 $ 3,559
8/31/2003 $ 3,601 $ 12,613 $ 3,739
9/30/2003 $ 3,498 $ 12,252 $ 3,635
10/31/2003 $ 3,800 $ 13,300 $ 3,952
11/30/2003 $ 3,818 $ 13,364 $ 3,974
12/31/2003 $ 3,931 $ 13,761 $ 4,097
1/31/2004 $ 3,996 $ 13,980 $ 4,167
2/29/2004 $ 3,933 $ 13,761 $ 4,105
3/31/2004 $ 3,845 $ 13,442 $ 4,016
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
Microsoft Corporation 7.34%
QUALCOMM Incorporated 5.10%
Intel Corporation 4.90%
Cisco Systems, Inc. 4.56%
Amgen Inc. 2.75%
Nextel Communications, Inc. 2.69%
eBay Inc. 2.67%
Dell Inc. 2.53%
Comcast Corporation 2.15%
Oracle Corporation 2.06%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Communications 26.1%
Consumer Cyclical 7.8%
Consumer Non-Cyclical 15.4%
Industrial 3.4%
Technology 38.5%
Short-Term, Futures & Other 8.8%
</Table>
"Nasdaq" and related marks are trademarks or service marks of The Nasdaq
Stock Market, Inc. and have been licensed for use for certain purposes by
Summit Mutual Funds, Inc. and the Nasdaq-100 Index Portfolio. Nasdaq makes
no warranty, express or implied, and bears no liability with respect to
Summit Mutual Funds, its use, or any data included therein.
2
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
NASADAQ-100 INDEX FUND FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
CLASS I
-----------------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED MARCH 31, DECEMBER 29, 1999(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
-----------------------------------------------------------------------------
2004 2003 2002 2001 2000
-----------------------------------------------------------------------------
Net asset value,
beginning of period $ 17.35 $ 11.18 $ 15.85 $ 49.55 $ 50.00
--------------- --------- --------- --------- --------------------
Investment Activities:
Net investment income/(loss) (0.03) (0.04) (0.03) 0.05 0.25
Net realized and unrealized
gains / (losses) 1.75 6.21 (4.64) (33.55) (0.55)
--------------- --------- --------- --------- --------------------
Total from
Investment Activities 1.72 6.17 (4.67) (33.50) (0.30)
--------------- --------- --------- --------- --------------------
DISTRIBUTIONS:
Net investment income -- -- -- (0.15) (0.15)
Return of capital -- -- -- (0.05) --
--------------- --------- --------- --------- --------------------
Total Distributions -- -- -- (0.20) (0.15)
--------------- --------- --------- --------- --------------------
Net asset value,
end of period $ 19.07 $ 17.35 $ 11.18 $ 15.85 $ 49.55
=============== ========= ========= ========= ====================
Total return 9.91% 55.19% -29.46% -67.85% -0.62%
RATIOS/SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net(2) 0.65%(3) 0.65% 0.65% 0.65% 0.61%(3)
Ratio of expenses to
average net assets - gross 1.07%(3) 1.38% 1.35% 1.14% 1.14%(3)
Ratio of net investment
income / (loss)
to average net assets -0.32%(3) -0.33% -0.17% 0.10% 1.09%(3)
Portfolio turnover rate 6.63%(3) 7.68% 1.94% 13.94% 113.32%(3)
Net assets,
end of period (000's) $ 18,471 $ 15,847 $ 6,426 $ 7,406 $ 13,093
<Caption>
CLASS F
----------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED MARCH 31, YEAR ENDED JULY 1, 2002(1)
(UNAUDITED) SEPTEMBER 30, TO SEPTEMBER 30,
----------------------------------------------------
2004 2003 2002
----------------------------------------------------
Net asset value, beginning of period $ 17.30 $ 11.17 $ 13.41
--------------- ------------ ----------------
Investment Activities:
Net investment income / (loss) (0.05) (0.08) (0.02)
Net realized and unrealized gains / (losses) 1.73 6.21 (2.22)
--------------- ------------ ----------------
Total from Investment Activities 1.68 6.13 (2.24)
--------------- ------------ ----------------
Net asset value, end of period $ 18.98 $ 17.30 $ 11.17
=============== ============ ================
Total return 9.71% 54.88% -16.70%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets - net (2) 0.90%(3) 0.89% 0.90%(3)
Ratio of expenses to average net assets - gross 1.33%(3) 1.52% 2.01%(3)
Ratio of net investment income / (loss)
to average net assets -0.57%(3) -0.63% -0.49%(3)
Portfolio turnover rate 6.63%(3) 7.68% 1.94%
Net assets, end of period (000's) $ 112 $ 99 $ 4
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SCHEDULE OF INVESTMENTS NASADAQ-100 INDEX FUND
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
----------------------------
COMMON STOCKS - 91.71%
BASIC MATERIALS - .30%
Sigma-aldrich Corporation 1,006 $ 55,672
---------------
COMMUNICATIONS - 26.08%
Amazon.com, Inc.* 3,922 169,744
Check Point Software Technologies Ltd.* 3,598 81,926
Cisco Systems, Inc.* 36,016 847,096
Comcast Corporation* 13,872 398,681
Comverse Technology, Inc.* 2,895 52,515
eBay Inc.* 7,165 496,749
Echostar Communications Corporation* 3,759 123,107
Inter Activecorp* 10,746 339,466
Juniper Networks, Inc.* 3,734 97,121
Lamar Advertising Company* 1,233 49,591
Level 3 Communications, Inc.* 9,725 39,095
Nextel Communications, Inc.* 20,201 499,571
PanAmSat Corporation* 2,998 73,391
QUALCOMM Incorporated 14,259 947,083
Symantec Corporation* 4,812 222,796
Tellabs, Inc.* 3,490 30,119
Verisign, Inc.* 3,361 55,759
Yahoo! Inc.* 4,650 225,945
---------------
4,846,458
---------------
CONSUMER CYCLICAL - 7.82%
Bed Bath & Beyond Inc.* 5,890 245,966
CDW Corporation 1,275 86,203
Cintas Corporation 3,039 132,166
Costco Wholesale Corporation* 3,566 133,939
Dollar Tree Stores, Inc.* 1,630 50,351
Fastenal Company 1,075 57,717
PACCAR Inc. 2,904 163,321
PETsMART, Inc. 2,076 56,592
Ross Stores, Inc. 2,232 68,322
Ryanair Holdings plc* 902 30,839
Staples, Inc.* 4,881 123,929
Starbucks Corporation* 8,061 304,302
---------------
1,453,647
---------------
CONSUMER NON-CYCLICAL - 15.41%
Amgen Inc.* 8,778 510,616
Apollo Group, Inc.* 2,631 226,555
Biogen Idec Inc* 5,633 313,195
Biomet, Inc. 5,116 196,250
Career Education Corporation* 1,480 83,827
Cephalon, Inc.* 753 43,154
Chiron Corporation* 3,865 170,099
DENTSPLY International Inc. 1,123 49,783
Express Scripts, Inc.* 1,038 77,424
First Health Group Corp.* 1,460 31,916
Genzyme Corp.* 4,124 193,993
Gilead Sciences, Inc.* 2,938 163,852
Henry Schein, Inc.* 599 42,781
Invitrogen Corporation* 698 50,040
Lincare Holdings Inc.* 1,407 44,208
MedImmune, Inc.* 3,773 $ 87,081
Millennium Pharmaceuticals, Inc.* 4,851 81,982
Patterson Dental Company* 969 66,483
Paychex, Inc. 4,987 177,537
Teva Pharmaceutical Industries Limited 2,969 188,264
Whole Foods Market, Inc. 871 65,281
---------------
2,864,321
---------------
ENERGY - .24%
Patterson-UTI Energy, Inc.* 1,238 43,838
---------------
INDUSTRIAL - 3.41%
American Power Conversion Corporation 2,937 67,580
C.H. Robinson Worldwide, Inc. 1,239 51,419
Expeditors International of Washington, Inc. 1,523 60,143
Flextronics International Ltd.* 8,399 144,631
Garmin Ltd. 1,460 62,357
Gentex Corporation 1,178 51,102
Molex Incorporated 1,456 44,248
Sanmina-SCI Corporation* 8,066 88,807
Smurfit-Stone Container Corporation* 3,575 62,883
---------------
633,170
---------------
TECHNOLOGY - 38.45%
Adobe Systems Incorporated 3,127 123,298
Altera Corporation* 7,791 159,326
Apple Computer* 7,489 202,577
Applied Materials, Inc.* 13,000 277,940
ATI Technologies Inc.* 3,490 56,887
BEA Systems, Inc.* 5,512 70,333
Broadcom Corporation* 3,316 129,888
Citrix Systems, Inc.* 2,899 62,676
Compuware Corporation* 3,496 26,045
Dell Inc.* 13,997 470,579
Electronic Arts Inc.* 4,406 237,748
FIserv Inc.* 3,586 128,271
Intel Corporation 33,466 910,275
Intersil Corporation 2,040 45,472
Intuit Inc.* 3,608 161,927
KLA-Tencor Corporation* 3,567 179,598
Lam Research Corporation* 1,960 49,412
Linear Technology Corporation 6,202 229,598
Marvell Technology Group, Ltd.* 1,780 80,189
Maxim Integrated Products, Inc. 6,738 317,292
Mercury Interactive Corporation* 1,398 62,630
Microchip Technology Incorporated 2,522 66,984
Microsoft Corporation 54,638 1,364,311
Network Appliance, Inc.* 5,297 113,621
Novellus Systems, Inc.* 2,286 72,672
NVIDIA Corporation* 2,571 68,106
Oracle Corporation* 31,813 382,074
PeopleSoft, Inc.* 7,619 140,875
Pixar* 813 52,406
QLogic Corporation* 1,423 46,973
Research in Motion Limited* 1,350 125,969
SanDisk Corporation* 2,100 59,577
Siebel Systems, Inc.* 8,572 98,664
Sun Microsystems, Inc.* 20,810 86,570
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
SHARES VALUE
----------------------------
TECHNOLOGY - 38.45% (CONTINUED)
Synopsys, Inc.* 2,099 $ 60,787
VERITAS Software Corporation* 6,256 168,349
Xilinx, Inc.* 6,699 254,563
---------------
7,144,462
---------------
Total Common Stocks
(cost $19,989,330) 17,041,568
---------------
UNIT INVESTMENT TRUST(3) - .83%
Nasdaq 100 Shares* 4,318 154,800
---------------
Total Unit Investment Trust
(cost $116,301) 154,800
---------------
SHORT-TERM INVESTMENTS(3) - 7.25%
NORTHERN TRUST DIVERSIFIED ASSET
FUND - 2.42% 448,748 448,748
---------------
<Caption>
PRINCIPAL VALUE
--------------- ---------------
U.S. TREASURY BILL - 4.83%
(0.9800% due 06/17/04) $ 900,000 $ 898,210
---------------
Total Short-Term Investments
(cost $1,346,958) 1,346,958
---------------
TOTAL INVESTMENTS - 99.79%
(cost $21,452,589)(1) 18,543,326
---------------
NORTHERN INSTITUTIONAL LIQUID
ASSET PORTFOLIO(2) - 8.47% 1,574,356
---------------
OTHER ASSETS AND LIABILITIES - (8.26%) (1,534,443)
---------------
TOTAL NET ASSETS - 100.00% $ 18,583,239
===============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $21,745,155 and gross unrealized
appreciation and depreciation of securities as of March 31, 2004 was
$2,596,381 and ($5,798,210), respectively, with a net appreciation /
depreciation of ($3,201,829).
(2) This security was purchased with cash collateral held from securities
lending. The market value of the securities on loan, the collateral
purchased with cash, and the noncash collateral accepted is $1,977,281,
$1,574,356, and $458,054, respectively.
(3) Securities and other assets with an aggregate value of $1,383,840 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of March 31, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------
NASDAQ-100 INDEX (06/03) 8 $ 20,120
NASDAQ-100 INDEX MINI (06/03) 8 $ 5,455
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL STATEMENTS NASADAQ-100 INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 18,543,326
Cash 68,905
Collateral for securities loaned,
at fair value 1,574,356
Receivables:
Shares sold 23,058
Interest and dividends 725
Prepaid expenses and other 11,664
--------------
20,222,034
--------------
LIABILITIES
Payables:
Payable upon return of securities loaned 1,574,356
12b-1 fees 40
Advisory fees 30,192
Administration expenses 6,676
Directors' fees 634
Custodian fees 2,424
Fund accounting fees 6,746
Professional fees 7,851
Variation margin 5,280
Other accrued expenses 4,596
--------------
1,638,795
--------------
NET ASSETS*
Paid-in capital 29,513,339
Accumulated undistributed net
investment income (29,596)
Accumulated net realized gain / (loss)
on investments and futures contracts (8,016,816)
Net unrealized appreciation / (depreciation)
on investments and futures contracts (2,883,688)
--------------
$ 18,583,239
==============
Investments at cost $ 21,452,589
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS/ OUTSTANDING
Class I $ 18,471,229 968,696 $ 19.07
Class F $ 112,010 5,901 $ 18.98
</Table>
*FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING POST-OCTOBER
SEPTEMBER 30: LOSSES DEFERRED:
- ----------------------------------------------------------------
2009 2010 2011 SEPTEMBER 30, 2003
---- ---- ---- ------------------
$ (3,158,439) $ (2,994,899) $ -- $ 1,612,336
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 7,607
Dividends 21,177
Foreign dividend taxes withheld (103)
Other income 1,474
--------------
30,155
--------------
EXPENSES
Advisory fees 32,101
Administration expenses 9,172
Custodian fees and expenses 4,536
Fund accounting fees 19,565
Professional fees 7,568
Directors' fees 1,275
Transfer agent fees 12,643
Royalty fee 2,507
12b-1 fees 135
Other expenses 8,818
--------------
98,320
Reimbursements and waivers (38,569)
--------------
59,751
--------------
NET INVESTMENT INCOME / (LOSS) (29,596)
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options (685,080)
Net realized gain / (loss) on
futures contracts 77,478
--------------
(607,602)
--------------
Net change in unrealized appreciation /
(depreciation) on investments 2,162,497
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 1,554,895
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 1,525,299
==============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ---------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- ---------------------------------------------------------------
0.35% 0.10% 0.30% $ -- $ 38,569
</Table>
(1) The Adviser has agreed to pay other expenses of the portfolio, other than
the advisory fees, to the extent that such expenses exceed the stated percentage
of their average net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
----------------------------------
2004 2003
----------------------------------
OPERATIONS
Net investment income / (loss) $ (29,596) $ (36,128)
Net realized gain / (loss)
on investments and futures (607,602) (1,569,364)
Net change in unrealized
appreciation / (depreciation)
on investments
and futures contracts 2,162,497 5,790,956
------------------ --------------
1,525,299 4,185,464
------------------ --------------
FUND SHARE TRANSACTIONS
Class I
Proceeds from shares sold 4,209,071 11,101,710
Payments for shares redeemed (3,099,925) (5,830,363)
------------------ --------------
1,109,146 5,271,347
------------------ --------------
Class F
Proceeds from shares sold 24,962 317,429
Payments for shares redeemed (22,663) (258,127)
------------------ --------------
2,299 59,302
------------------ --------------
NET INCREASE / (DECREASE) IN NET ASSETS 2,636,744 9,516,113
NET ASSETS
Beginning of period 15,946,495 6,430,382
------------------ --------------
End of period $ 18,583,239 $ 15,946,495
================== ==============
ACCUMULATED UNDISTRIBUTED / (DISTRIBUTIONS
IN EXCESS OF) NET INVESTMENT INCOME $ (29,596) $ --
================== ==============
FUND SHARE TRANSACTIONS
Class I
Sold 217,663 738,630
Redeemed (162,182) (400,319)
------------------ --------------
Net increase/(decrease)
from fund share transactions 55,481 338,311
================== ==============
Class F
Sold 1,302 21,030
Redeemed (1,140) (15,645)
------------------ --------------
Net increase/(decrease) from
fund share transactions 162 5,385
================== ==============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 4,003,264 $ 4,058,667
------------------ --------------
$ 4,003,264 $ 4,058,667
================== ==============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 528,665 $ 665,342
------------------ --------------
$ 528,665 $ 665,342
================== ==============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
TOTAL SOCIAL IMPACT FUND
OBJECTIVE - Seeks investment results that closely correspond to the total return
performance of U.S. common stocks, as represented by the Standard and Poor's 500
Composite Stock Index (the "Index"). The Total Social Impact Fund seeks to
promote better business practices by investing more in companies in the Index
that conduct their business commendably with respect to their stakeholders.
STRATEGY - The Total Social Impact Fund (the "Fund") will invest in all stocks
that are included in the Index. However, the percentage invested in each stock
will vary from the Index weighting to reflect the company's Total Social Impact
(TSI) rating. The TSI rating reflects the company's scoring on a series of
benchmarks corresponding to each of its stakeholders.
MANAGER'S COMMENTS:
The Fund is now three years old, celebrating the occasion at the end of 2003.
This three year old has experienced a wild infancy so far: market collapse,
corporate scandals, mutual fund scandals and regulatory actions at levels not
seen in over sixty years. Despite all of this anxiety, the U.S. markets posted
excellent returns recently. Are we heading back to the "what have you done for
me lately" mentality or have we meaningfully improved corporate governance and
transparency? The jury is still out.
On a total return basis, the Fund (Class I) was up 13.22% versus 14.07% for the
Index. The underperformance is in large part attributable to the Fund's
operating expense ratio and to a less than benchmark weighting in the financial
sector, 19.3% versus 21.3%. The mutual fund scandals of 2003 resulted in
significant TSI score downgrades in the fourth quarter. Reductions in ratings of
nearly 25% were applied to Bank of America, Banc One, Citigroup, Federated,
Janus, Marsh-Putnam, Merrill Lynch, Morgan Stanley and Prudential Financial.
Despite these scandals, many of these stocks turned in superior performance in
the last six months. As the Fund had reduced holdings due to the lowered scores,
performance versus the benchmark suffered.
The Fund continues in 2004 to vote for separation of the CEO and Chairman of the
Board roles. Despite the outcry for enhanced corporate governance, fewer than
10% of the companies in the Index have separation of these roles. In a critical
shareholder vote at Disney, 43% of shareholders withheld votes for Michael
Eisner resulting in him stepping down as chairman. He retains his CEO title. The
stage has been set for significant corporate governance showdowns this year. In
addition to supporting this position, TSI also supports the expensing of stock
options, limitations on excessive compensation through incentive compensation
plan awards and limitations on excessive severance payments without a
shareholder vote. The proxy voting season is well underway and TSI will vote on
every issue for every company in the Index. Should you desire to view our voting
policy or actual votes, go to our website at www.summitfunds.com.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: December 28, 2000
Total Net Assets: $4.7 Million
Number of Holdings: 500
Median Cap Size: $9.4 Billion
Dividend Yield: 1.65%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit Total Social Impact Fund Class I - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
33.52% -0.03% -4.25%
</Table>
Summit Total Social Impact Fund Class F - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
33.31% 8.61%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT TOTAL SOCIAL IMPACT SUMMIT TOTAL SOCIAL IMPACT S&P 500
FUND CLASS I FUND CLASS F INDEX
12/28/2000 $ 10,000 $ 10,000
12/31/2000 $ 9,890 $ 9,896
1/31/2001 $ 10,300 $ 10,247
2/28/2001 $ 9,300 $ 9,314
3/31/2001 $ 8,699 $ 8,724
4/30/2001 $ 9,350 $ 9,401
5/31/2001 $ 9,389 $ 9,464
6/30/2001 $ 9,159 $ 9,234
7/31/2001 $ 9,089 $ 9,144
8/31/2001 $ 8,508 $ 8,572
9/30/2001 $ 7,806 $ 7,880
10/31/2001 $ 7,956 $ 8,031
11/30/2001 $ 8,568 $ 8,647
12/31/2001 $ 8,629 $ 8,723
1/31/2002 $ 8,528 $ 8,596
2/28/2002 $ 8,345 $ 8,430
3/31/2002 $ 8,639 $ 8,747
4/30/2002 $ 8,129 $ 8,217
5/31/2002 $ 8,071 $ 8,157
6/30/2002 $ 7,481 $ 10,000 $ 7,576
7/31/2002 $ 6,923 $ 9,252 $ 6,986
8/31/2002 $ 6,953 $ 9,289 $ 7,031
9/30/2002 $ 6,202 $ 8,285 $ 6,268
10/31/2002 $ 6,738 $ 8,999 $ 6,819
11/30/2002 $ 7,131 $ 9,521 $ 7,219
12/31/2002 $ 6,711 $ 8,958 $ 6,796
1/31/2003 $ 6,540 $ 8,728 $ 6,618
2/28/2003 $ 6,446 $ 8,604 $ 6,519
3/31/2003 $ 6,501 $ 8,674 $ 6,582
4/30/2003 $ 7,032 $ 9,379 $ 7,124
5/31/2003 $ 7,394 $ 9,860 $ 7,499
6/30/2003 $ 7,475 $ 9,966 $ 7,595
7/31/2003 $ 7,612 $ 10,147 $ 7,728
8/31/2003 $ 7,758 $ 10,338 $ 7,879
9/30/2003 $ 7,667 $ 10,228 $ 7,796
10/31/2003 $ 8,100 $ 10,803 $ 8,236
11/30/2003 $ 8,169 $ 10,892 $ 8,308
12/31/2003 $ 8,573 $ 11,428 $ 8,744
1/31/2004 $ 8,719 $ 11,621 $ 8,905
2/29/2004 $ 8,816 $ 11,748 $ 9,029
3/31/2004 $ 8,680 $ 11,564 $ 8,892
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
----------------
S&P 500 Depositary Receipts 2.88%
Pfizer, Inc. 2.51%
Intel Corporation 2.51%
General Electric 2.42%
Cisco Ststems, Inc. 2.33%
Exxon Mobil Corp. 1.93%
Wal-Mart Stores 1.90%
International Business Machines 1.87%
Microsoft Corporation 1.82%
Citigroup Inc. 1.73%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Consumer Cyclical 9.60%
Consumer Non-Cyclical 22.20%
Energy 5.40%
Financial 18.30%
Industrials 10.40%
Technology 13.20%
Basic Materials 3.00%
Communications 10.60%
Utilities 2.50%
Short-Term & Other 4.80%
</Table>
The Total Social Impact Ratings were previously calculated and produced by
The Total Social Impact Foundation, Inc., which is no longer in existence.
The Total Social Impact Foundation, Inc., or its successors, or assigns
with respect ot the Total Social Impact Ratings, (collectively "TSI") makes
no representation or warranty, express or implied, to the owners of this
Fund or any member of the public regarding the advisability of investing in
securities generally or in the Fund particularly or the ability of TSI to
track general stock market performance.
8
<Page>
SUMMIT MUTUAL FUNDS, INC.- APEX SERIES
TOTAL SOCIAL IMPACT FUND FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
CLASS I
-------------------------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED MARCH 31, DECEMBER 28, 2000(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
-------------------------------------------------------------------
2004 2003 2002 2001
--------------------------------------------------------------------
Net asset value,
beginning of period $ 37.69 $ 30.80 $ 38.95 $ 50.00
--------------- ---------- ------------ --------------------
Investment Activities:
Net investment income / (loss) 0.20 0.36 0.28 0.25
Net realized and unrealized
gains / (losses) 4.77 6.87 (8.22) (11.20)
--------------- ---------- ------------ --------------------
Total from Investment Activities 4.97 7.23 (7.94) (10.95)
--------------- ---------- ------------ --------------------
DISTRIBUTIONS:
Net investment income (0.37) (0.34) (0.21) (0.10)
--------------- ---------- ------------ --------------------
Total Distributions (0.37) (0.34) (0.21) (0.10)
--------------- ---------- ------------ --------------------
Net asset value, end of period $ 42.29 $ 37.69 $ 30.80 $ 38.95
=============== ========== ============ ====================
Total return 13.22% 23.61% -20.55% -21.94%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net(2) 0.75%(3) 0.75% 0.75% 0.75%(3)
Ratio of expenses to
average net assets - gross 2.88%(3) 3.18% 2.29% 2.57%(3)
Ratio of net investment
income / (loss)
to average net assets 0.95%(3) 1.02% 0.72% 0.79%(3)
Portfolio turnover rate 3.25%(3) 2.91% 3.82% 0.62%(3)
Net assets,
end of period (000's) $ 4,496 $ 3,892 $ 3,247 $ 3,921
<Caption>
CLASS F
----------------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED MARCH 31, ENDED JULY 1, 2002(1)
(UNAUDITED) SEPTEMBER 30, TO SEPTEMBER 30,
----------------------------------------------------
2004 2003 2002
----------------------------------------------------
Net asset value, beginning of period $ 37.85 $ 30.78 $ 36.37
--------------- ------------- ----------------
Investment Activities:
Net investment income / (loss) 0.14 0.10 0.06
Net realized and unrealized gains / (losses) 4.81 7.10 (5.65)
--------------- ------------- ----------------
Total from Investment Activities 4.95 7.20 (5.59)
--------------- ------------- ----------------
DISTRIBUTIONS:
Net investment income (0.13) (0.13) --
--------------- ------------- ----------------
Total Distributions (0.13) (0.13) --
--------------- ------------- ----------------
Net asset value, end of period $ 42.67 $ 37.85 $ 30.78
=============== ============= ================
Total return 13.06% 23.44% -15.37%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets - net(2) 1.01%(3) 0.99% 1.00%(3)
Ratio of expenses to average net assets - gross 3.12%(3) 3.25% 3.72%(3)
Ratio of net investment income / (loss)
to average net assets 0.69%(3) 0.61% 0.70%(3)
Portfolio turnover rate 3.25%(3) 2.91% 3.82%
Net assets, end of period (000's) $ 227 $ 123 $ 4
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SCHEDULE OF INVESTMENTS TOTAL SOCIAL IMPACT FUND
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------------
COMMON STOCKS - 95.23%
BASIC MATERIALS - 3.04%
Air Products & Chemicals 190 $ 9,523
Alcoa Inc 521 18,073
Allegheny Technologies Inc 28 339
Ashland Inc. 28 1,302
Boise Cascade 19 658
Dow Chemical 393 15,830
Du Pont (E.I.) 619 26,134
Eastman Chemical 28 1,195
Ecolab Inc. 112 3,195
Engelhard Corp. 53 1,584
Freeport-McMoRan Copper & Gold 53 2,072
Georgia-Pacific Group 85 2,864
Great Lakes Chemical 17 405
Hercules, Inc.* 38 436
International Flavors and Fragrances 39 1,385
International Paper 171 7,226
Louisiana Pacific 35 903
MeadWestvaco Corporation 81 2,291
Newmont Mining Corp. 144 6,715
Nucor Corp. 32 1,967
Phelps Dodge* 27 2,205
Plum Creek Timber Co. 80 2,598
PPG Industries 145 8,454
Praxair, Inc. 138 5,123
Rohm & Haas 96 3,825
Sherwin-Williams 62 2,383
Sigma-Aldrich Corporation 33 1,826
Temple-Inland 20 1,267
United States Steel Corp. 33 1,230
Weyerhaeuser Corp. 162 10,611
---------------
143,619
---------------
COMMUNICATIONS - 10.63%
ADC Telecommunications* 331 960
ALLTEL Corp. 129 6,436
Andrew Corp.* 33 578
AT&T Corp. 297 5,812
AT&T Wireless Services* 1,045 14,222
Avaya Inc.* 115 1,826
BellSouth 768 21,266
Century Telephone 58 1,594
CIENA Corp.* 125 621
Cisco Systems, Inc.* 4,678 110,027
Citizens Communications* 99 1,281
Clear Channel Communications 243 10,291
Comcast Corporation* 751 21,584
Comverse Technology, Inc.* 89 1,614
Corning Inc.* 385 4,304
Dow Jones & Co. 36 1,725
eBay Inc.* 240 16,639
Gannett Co. 104 9,167
Interpublic Group* 130 1,999
JDS Uniphase Corporation* 525 2,137
Knight-Ridder Inc. 25 1,831
Lucent Technologies* 2,041 $ 8,389
McGraw-Hill 85 6,472
Meredith Corp. 11 556
Monster Worldwide* 36 943
Motorola Inc. 1,487 26,171
New York Times 68 3,006
Nextel Communications, Inc.* 371 9,175
Omnicom Group 75 6,019
QUALCOMM Incorporated 318 21,122
Qwest Communications International* 666 2,870
SBC Communications Inc. 1,283 31,485
Scientific-Atlanta 63 2,037
Sprint Corp. FON 323 5,953
Sprint Corp. PCS* 362 3,330
Symantec Corporation* 100 4,630
Tellabs, Inc.* 168 1,450
Time Warner Inc.* 1,570 26,470
Tribune Co. 157 7,919
Univision Communications* 83 2,740
Verizon Communications 1,116 40,779
Viacom Inc. 631 24,742
Walt Disney Co. 786 19,642
Yahoo! Inc.* 210 10,204
---------------
502,018
---------------
CONSUMER CYCLICAL - 9.60%
AutoNation, Inc.* 100 1,705
AutoZone Inc.* 52 4,470
Bed Bath & Beyond Inc.* 114 4,761
Best Buy Co., Inc. 126 6,517
Big Lots, Inc.* 45 653
Brunswick Corp. 34 1,388
Carnival Corp. 221 9,925
Centex Corp. 50 2,703
Cintas Corporation 67 2,914
Circuit City Group 85 961
Cooper Tire & Rubber 30 605
Costco Wholesale Corporation* 201 7,550
CVS Corp. 138 4,871
Dana Corp. 61 1,211
Darden Restaurants 79 1,958
Delphi Corporation 242 2,410
Delta Air Lines 39 309
Dillard Inc. 35 671
Dollar General 264 5,069
Family Dollar Stores 75 2,696
Federated Deptarment Stores 72 3,892
Ford Motor 1,297 17,600
Gap (The) 347 7,606
General Motors 375 17,663
Genuine Parts 71 2,323
Goodyear Tire & Rubber* 55 470
Grainger (W.W.) Inc. 44 2,112
Harley-Davidson 222 11,841
Harrah's Entertainment 47 2,580
Hasbro Inc. 69 1,501
Hilton Hotels 126 2,048
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------------
CONSUMER CYCLICAL - 9.60% (CONTINUED)
Home Depot 1,023 $ 38,219
International Game Technology 112 5,036
Johnson Controls 72 4,259
Jones Apparel Group 40 1,446
KB Home 18 1,454
Kohl's Corp.* 138 6,670
Leggett & Platt 76 1,802
Limited Brands, Inc. 147 2,940
Liz Claiborne, Inc. 144 5,283
Lowe's Cos. 352 19,758
Marriott International 113 4,808
Mattel, Inc. 135 2,489
May Deptarment Stores 115 3,977
Maytag Corp. 31 979
McDonald's Corp. 790 22,570
Navistar International Corp.* 25 1,146
Newell Rubbermaid Co. 104 2,413
NIKE Inc. 171 13,316
Nordstrom 49 1,955
Office Depot* 105 1,976
PACCAR Inc. 72 4,049
Penney (J.C.) 97 3,374
Pulte Homes, Inc. 34 1,890
RadioShack Corp 74 2,454
Reebok International 25 1,034
Sabre Holding Corp. 53 1,315
Sears, Roebuck & Co. 137 5,886
Southwest Airlines 315 4,476
Staples, Inc.* 193 4,900
Starbucks Corporation* 162 6,116
Starwood Hotels & Resorts 76 3,078
Target Corp. 387 17,430
Tiffany & Co. 61 2,328
TJX Companies Inc. 232 5,698
Toys R Us, Inc.* 79 1,327
V.F. Corp. 47 2,195
Visteon Corp. 52 498
Walgreen Co. 359 11,829
Wal-Mart Stores 1,502 89,654
Wendy's International 48 1,953
Whirlpool Corp. 30 2,064
Yum! Brands, Inc* 112 4,255
---------------
453,282
---------------
CONSUMER NON-CYCLICAL - 22.19%
Abbott Labs 540 22,194
Aetna Inc. 52 4,665
Alberto-Culver 36 1,579
Albertson's 180 3,987
Allergan, Inc. 55 4,629
Altria Group, Inc. 729 39,694
American Greetings* 25 569
AmerisourceBergen Corp. 40 2,187
Amgen Inc.* 746 43,395
Anheuser-Busch 363 18,513
Anthem, Inc.* 55 4,985
Apollo Group, Inc.* 75 6,458
Archer-Daniels-Midland 185 $ 3,121
Avery Dennison Corp. 47 2,924
Avon Products 111 8,422
Bard (C.R.) Inc. 19 1,855
Bausch & Lomb 19 1,139
Baxter International Inc. 434 13,406
Becton, Dickinson 104 5,042
Biogen Idec Inc* 174 9,674
Biomet, Inc. 112 4,296
Block H&R 72 3,674
Boston Scientific* 306 12,968
Bristol-Myers Squibb 877 21,250
Brown-Forman Corp. 60 2,860
Campbell Soup 180 4,909
Cardinal Health, Inc. 172 11,851
Caremark Rx* 200 6,650
Cendant Corporation 306 7,463
Chiron Corporation* 75 3,301
Clorox Co. 105 5,136
Coca Cola Co. 1,053 52,966
Coca-Cola Enterprises 155 3,746
Colgate-Palmolive 243 13,389
ConAgra Foods, Inc. 140 3,772
Convergys Corp.* 65 988
Coors (Adolph) 75 5,209
Deluxe Corp. 33 1,323
Donnelley (R.R.) & Sons 50 1,513
Equifax Inc. 59 1,523
Express Scripts, Inc.* 50 3,730
Forest Laboratories* 136 9,740
Fortune Brands, Inc. 63 4,828
General Mills 172 8,029
Genzyme Corp.* 80 3,763
Gillette Co. 647 25,298
Guidant Corp. 134 8,492
HCA Inc. 139 5,646
Health Management Assoc. 100 2,321
Heinz (H.J.) 122 4,549
Hershey Foods 66 5,468
Humana Inc.* 53 1,008
Johnson & Johnson 1,319 66,900
Kellogg Co. 181 7,102
Kimberly-Clark 211 13,314
King Pharmaceuticals* 93 1,566
Kroger Co.* 295 4,909
Lilly (Eli) & Co. 394 26,359
Manor Care Inc. 39 1,376
McCormick & Co. 50 1,676
McKesson Corp. 92 2,768
Medco Health Solutions Inc.* 130 4,420
MedImmune, Inc.* 87 2,008
Medtronic Inc. 688 32,852
Merck & Co. 1,082 47,814
Millipore Corp.* 19 976
Monsanto Co. 95 3,484
Moody's Corp 69 4,885
Paychex, Inc. 160 5,696
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------------
CONSUMER NON-CYCLICAL - 22.19% (CONTINUED)
Pepsi Bottling Group 108 $ 3,213
PepsiCo Inc. 957 51,534
Pfizer, Inc. 3,381 118,504
Procter & Gamble 748 78,450
Quest Diagnostics 50 4,142
RJ Reynolds Tobacco 50 3,025
Robert Half International* 71 1,677
Safeway Inc.* 191 3,931
Sara Lee Corp. 321 7,017
Schering-Plough 479 7,769
St Jude Medical* 68 4,903
Stryker Corp. 77 6,817
Supervalu Inc. 57 1,741
Sysco Corp. 269 10,504
Tenet Healthcare Corp.* 184 2,053
United Health Group Inc. 262 16,883
UST Inc. 57 2,058
Watson Pharmaceuticals* 41 1,754
WellPoint Health Networks* 80 9,098
Winn-Dixie 52 395
Wrigley (Wm) Jr. 189 11,174
Wyeth 492 18,476
Zimmer Holdings* 65 4,796
---------------
1,048,116
---------------
ENERGY - 5.37%
Amerada Hess 32 2,089
Anadarko Petroleum 98 5,082
Apache Corp. 110 4,749
Baker Hughes 100 3,648
BJ Services* 275 11,899
Burlington Resources 81 5,154
ChevronTexaco Corp. 410 35,990
ConocoPhillips 302 21,083
Devon Energy Corp. 53 3,082
Dynegy Inc.* 133 527
El Paso Corp. 191 1,358
EOG Resources 46 2,111
Exxon Mobil Corp. 2,195 91,290
Halliburton Co. 153 4,650
Kerr-McGee 36 1,854
Kinder Morgan 45 2,836
Marathon Oil Corp. 117 3,939
Nabors Industries Ltd.* 60 2,745
Noble Corporation* 54 2,075
Occidental Petroleum 131 6,033
Rowan Cos.* 36 759
Schlumberger Ltd. 217 13,855
Sunoco., Inc. 207 12,913
Transocean Inc.* 85 2,371
Unocal Corp. 275 10,251
Williams Cos. 162 1,550
---------------
253,893
---------------
FINANCIAL - 18.33%
ACE Limited 100 4,266
AFLAC Corporation 214 8,590
Allstate Corp. 284 12,911
Ambac Financial Group 41 $ 3,025
American Express 507 26,288
American International Group 1,064 75,916
AmSouth Bancorporation 155 3,644
Aon Corp. 106 2,958
Apartment Investment & Management 75 2,332
Bank of America Corp. 491 39,761
Bank of New York 253 7,970
Bank One Corp. 321 17,501
BB&T Corporation 163 5,754
Bear Stearns Cos. 33 2,893
Capital One Financial 80 6,034
Charles Schwab 556 6,455
Charter One Financial 93 3,288
Chubb Corp. 71 4,937
CIGNA Corp. 62 3,659
Cincinnati Financial 66 2,868
Citigroup Inc. 1,580 81,686
Comerica Inc. 67 3,639
Countrywide Financial Corp. 64 6,138
Equity Office Properties 150 4,334
Equity Residential 100 2,985
Fannie Mae 603 44,833
Federal Home Loan Mortgage 300 17,718
Federated Investors Inc. 50 1,572
Fifth Third Bancorp 237 13,123
First Tennessee National 50 2,385
Fleet Boston Financial Group 408 18,319
Franklin Resources 204 11,359
Golden West Financial 67 7,501
Goldman Sachs Group 141 14,713
Hartford Financial Svc.Gp. 83 5,287
Huntington Bancshares 101 2,241
J.P. Morgan Chase & Co. 725 30,414
Janus Capital Group 88 1,441
Jefferson-Pilot 63 3,466
John Hancock Financial 115 5,024
KeyCorp 181 5,482
Lehman Bros. 85 7,044
Lincoln National 81 3,833
Loews Corp. 58 3,425
M&T Bank Corp. 50 4,493
Marsh & McLennan 180 8,334
Marshall & Ilsley Corp. 100 3,781
MBIA Inc. 79 4,953
MBNA Corp. 556 15,362
Mellon Bank Corp. 311 9,731
Merrill Lynch 267 15,903
MetLife Inc. 300 10,704
MGIC Investment 44 2,826
Morgan Stanley 306 17,534
National City Corp. 253 9,002
North Fork Bancorporation 65 2,751
Northern Trust Corp. 148 6,895
PNC Bank Corp. 119 6,595
Principal Financial Group 150 5,345
Progressive Corp. 90 7,884
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------------
FINANCIAL - 18.33% (CONTINUED)
ProLogis 100 $ 3,587
Providian Financial Corp.* 116 1,520
Prudential Financial 200 8,956
Regions Financial Corp. 89 3,250
SAFECO Corp. 52 2,245
Simon Property Group, Inc 70 4,091
SLM Corporation 192 8,035
SouthTrust Corp. 134 4,443
St. Paul Cos. 84 3,361
State Street Corp. 136 7,090
SunTrust Banks 117 8,156
Synovus Financial 118 2,885
T. Rowe Price Group 49 2,638
Torchmark Corp. 45 2,421
Travelers Property Casualty Corp. 395 6,822
U.S. Bancorp 694 19,189
Union Planters Corporation 78 2,328
UnumProvident Corp. 98 1,434
Wachovia Corp. 863 40,561
Washington Mutual 401 17,127
Wells Fargo 687 38,932
XL Capital 48 3,650
Zions Bancorp 35 2,001
---------------
865,827
---------------
INDUSTRIAL - 10.38%
3M Company 362 29,637
Agilent Technologies* 340 10,754
Allied Waste Industries* 73 972
American Power Conversion Corporation 82 1,887
American Standard* 20 2,275
Applera Corp-Applied Biosystems Group 94 1,859
Ball Corp. 24 1,627
Bemis Company 44 1,144
Black & Decker Corp. 34 1,936
Boeing Company 322 13,225
Burlington Northern Santa Fe 157 4,946
Caterpillar Inc. 134 10,595
Cooper Industries, Ltd. 43 2,459
Crane Company 24 792
CSX Corp. 69 2,090
Cummins Inc. 200 11,690
Danaher Corp. 58 5,415
Deere & Co. 169 11,713
Dover Corp. 82 3,179
Eastman Kodak 431 11,279
Eaton Corp. 58 3,259
Emerson Electric 176 10,546
FedEx Corporation 127 9,545
Fluor Corp. 30 1,161
General Dynamics 79 7,057
General Electric 3,742 114,206
Goodrich Corporation 42 1,179
Honeywell International Inc. 323 10,934
Illinois Tool Works 133 10,538
Ingersoll-Rand Co. Ltd. 67 4,533
ITT Industries, Inc. 137 10,457
Jabil Circuit* 85 $ 2,502
Lockheed Martin Corp. 156 7,120
Masco Corp. 181 5,510
Molex Incorporated 74 2,249
Norfolk Southern Corp. 166 3,667
Northrop Grumman Corp. 54 5,315
Pactiv Corp.* 64 1,424
Pall Corp. 46 1,044
Parker-Hannifin 53 2,995
PerkinElmer 40 828
Power-One Inc.* 32 354
Raytheon Co. 139 4,356
Rockwell Automation, Inc. 69 2,392
Rockwell Collins 169 5,342
Ryder System 23 891
Sanmina-SCI Corporation* 120 1,321
Sealed Air Corp.* 34 1,691
Snap-On Inc. 23 744
Solectron* 314 1,736
Stanley Works 34 1,450
Symbol Technologies 85 1,172
Tektronix Inc. 39 1,275
Textron Inc. 58 3,083
Thermo Electron* 69 1,951
Thomas & Betts 24 524
Tyco International 783 22,432
Union Pacific 91 5,444
United Parcel Service 801 55,942
United Technologies 267 23,042
Vulcan Materials 41 1,945
Waste Management Inc. 163 4,919
Waters Corporation* 50 2,042
Worthington Ind. 35 671
---------------
490,262
---------------
TECHNOLOGY - 13.20%
Adobe Systems Incorporated 101 3,982
Advanced Micro Devices* 312 5,064
Altera Corporation* 159 3,252
Analog Devices 146 7,009
Apple Computer* 127 3,435
Applied Materials, Inc.* 684 14,624
Applied Micro Circuits* 116 667
Autodesk, Inc. 50 1,581
Automatic Data Processing Inc. 258 10,836
BMC Software* 101 1,975
Broadcom Corporation* 93 3,643
Citrix Systems, Inc.* 77 1,665
Computer Associates International 245 6,581
Computer Sciences Corp.* 67 2,702
Compuware Corporation* 153 1,140
Dell Inc.* 1,123 37,755
Electronic Arts Inc.* 150 8,094
Electronic Data Systems 207 4,005
EMC Corp.* 807 10,983
First Data 328 13,828
FIserv Inc.* 75 2,683
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------------
TECHNOLOGY - 13.20% (CONTINUED)
Gateway Inc.* 134 $ 708
Hewlett-Packard 1,265 28,893
IMS Health Inc. 117 2,721
Intel Corporation 4,350 118,320
International Business Machines 963 88,442
Intuit Inc.* 81 3,635
KLA-Tencor Corporation* 77 3,877
Lexmark International Inc* 50 4,600
Linear Technology Corporation 129 4,776
LSI Logic* 129 1,205
Maxim Integrated Products, Inc. 114 5,368
Mercury Interactive Corporation* 32 1,434
Micron Technology* 239 3,994
Microsoft Corporation 3,434 85,747
National Semiconductor* 69 3,066
NCR Corp.* 38 1,674
Network Appliance, Inc.* 133 2,853
Novell Inc.* 140 1,593
Novellus Systems, Inc.* 53 1,685
NVIDIA Corporation* 50 1,325
Oracle Corporation* 2,242 26,926
Parametric Technology* 112 506
PeopleSoft, Inc.* 117 2,163
Pitney-Bowes 266 11,334
PMC-Sierra Inc.* 58 984
QLogic Corporation* 36 1,188
Siebel Systems, Inc.* 178 2,049
Sun Microsystems, Inc.* 1,504 6,257
SunGard Data Systems* 130 3,562
Teradyne Inc.* 71 1,692
Texas Instruments 1,157 33,808
Unisys Corp.* 125 1,785
VERITAS Software Corporation* 159 4,279
Xerox Corp.* 715 10,417
Xilinx, Inc.* 131 4,977
---------------
623,347
---------------
UTILITIES - 2.49%
AES Corp.* 198 1,689
Allegheny Energy* 43 590
Ameren Corporation 58 2,673
American Electric Power 134 4,411
Calpine Corp.* 111 518
CenterPoint Energy 110 1,257
CINergy Corp. 120 4,907
CMS Energy* 48 $ 430
Consolidated Edison 78 3,440
Constellation Energy Group 61 2,437
Dominion Resources 101 6,494
DTE Energy Co. 56 2,304
Duke Energy 296 6,690
Edison International 135 3,279
Entergy Corp. 85 5,058
Exelon Corp. 109 7,507
FirstEnergy Corp. 123 4,807
FPL Group 74 4,947
Keyspan Energy 55 2,102
NICOR Inc. 19 669
NiSource Inc. 80 1,700
Peoples Energy 15 670
PG&E Corp.* 126 3,650
Pinnacle West Capital 227 8,932
PPL Corp. 57 2,599
Progress Energy, Inc. 83 3,908
Public Service Enterprise Inc. 83 3,899
Sempra Energy 86 2,735
Southern Co. 274 8,356
TECO Energy 650 9,510
TXU Corp. 107 3,067
Xcel Energy Inc 132 2,351
---------------
117,586
---------------
Total Common Stocks
(cost $4,847,664) 4,497,950
---------------
UNIT INVESTMENT TRUST - 2.88%
S&P 500 Depositary Receipts 1,200 135,792
---------------
Total Unit Investment Trust
(cost $126,082) 135,792
---------------
SHORT-TERM INVESTMENTS - .07%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - .07% 3,554 3,554
---------------
Total Short-Term Investments
(cost $3,554) 3,554
---------------
TOTAL INVESTMENTS - 98.18%
(cost $4,977,300)(1) 4,637,296
---------------
OTHER ASSETS AND LIABILITIES - 1.82% 86,043
---------------
TOTAL NET ASSETS - 100.00% $ 4,723,339
===============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $4,978,311 and gross unrealized
appreciation and depreciation of securities as of March-31, 2004 was
$544,357 and ($885,372), respectively, with a net appreciation /
depreciation of ($341,015).The accompanying notes are an integral part of
the financial statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
TOTAL SOCIAL IMPACT FUND FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 4,637,296
Cash 32,260
Receivables:
Shares sold 674
Interest and dividends 5,982
Receivable from Adviser 71,394
Prepaid expenses and other 4,817
--------------
4,752,423
--------------
LIABILITIES
Payables:
12b-1 fees 72
Directors' fees 404
Custodian fees 376
Fund accounting fees 7,227
Professional fees 8,517
Royalty fees 8,236
Other accrued expenses 4,252
--------------
29,084
--------------
NET ASSETS*
Paid-in capital 5,321,445
Accumulated undistributed net
investment income 8,841
Accumulated net realized gain / (loss)
on investments and futures contracts (266,943)
Net unrealized appreciation / (depreciation)
on investments and futures contracts (340,004)
--------------
$ 4,723,339
==============
Investments at cost $ 4,977,300
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS OUTSTANDING
Class I $ 4,495,794 106,299 $ 42.29
Class F $ 227,545 5,332 $ 42.67
</Table>
*FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
Undistributed ordinary income $ 26,405
<Caption>
POST-OCTOBER
CAPITAL LOSS CARRYFORWARD EXPIRING SEPTEMBER 30: LOSSES DEFERRED:
- -----------------------------------------------------------------------------
2009 2010 2011 SEPTEMBER 30, 2003
---- ---- ---- ------------------
$ (75,198) $ (118,795) $ (405) $ 42,013
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 76
Dividends 37,407
Other income 12
--------------
37,495
--------------
EXPENSES
Advisory fees 9,943
Administration expenses 2,210
Custodian fees and expenses 494
Fund accounting fees 20,892
Professional fees 7,995
Directors' fees 384
Transfer agent fees 12,820
Royalty fee 2,651
12b-1 fees 184
Other expenses 6,086
--------------
63,659
Reimbursements and waivers (46,886)
--------------
16,773
--------------
NET INVESTMENT INCOME / (LOSS) 20,722
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options (29,520)
Net change in unrealized appreciation /
(depreciation) on investments 531,510
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 501,990
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 522,712
==============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ------------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- ----------------------------------------------------------------------------
0.45% 0.10% 0.30% $ -- $ 46,886
</Table>
(1) The Adviser has agreed to pay other expenses of the portfolio, other than
the advisory fees, to the extent that such expenses exceed the stated percentage
of their average net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
---------------------------------------
2004 2003
---------------------------------------
OPERATIONS
Net investment income / (loss) $ 20,722 $ 37,121
Net realized gain / (loss) on investments and futures (29,520) (42,409)
Net change in unrealized appreciation/(depreciation)
on investments and futures contracts 531,510 760,049
------------------ ------------------
522,712 754,761
------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS*
Class I
Net investment income (37,911) (35,929)
Class F
Net investment income (375) (18)
------------------ ------------------
(38,286) (35,947)
------------------ ------------------
FUND SHARE TRANSACTIONS
Class I
Proceeds from shares sold 249,508 3,709,468
Reinvestment of distributions 4,067 35,894
Payments for shares redeemed (119,877) (3,819,417)
------------------ ------------------
133,698 (74,055)
------------------ ------------------
Class F
Proceeds from shares sold 95,000 124,410
Reinvestment of distributions 375 18
Payments for shares redeemed (5,245) (5,241)
------------------ ------------------
90,130 119,187
------------------ ------------------
NET INCREASE / (DECREASE) IN NET ASSETS 708,254 763,946
NET ASSETS
Beginning of period 4,015,085 3,251,139
------------------ ------------------
End of period $ 4,723,339 $ 4,015,085
================== ==================
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 8,841 $ 26,405
================== ==================
FUND SHARE TRANSACTIONS
Class I
Sold 5,932 98,841
Reinvestment of distributions 99 1,069
Redeemed (2,994) (102,061)
------------------ ------------------
Net increase / (decrease)
from fund share transactions 3,037 (2,151)
================== ==================
Class F
Sold 2,206 3,250
Reinvestment of distributions 9 --
Redeemed (133) (135)
------------------ ------------------
Net increase / (decrease) from
fund share transactions 2,082 3,115
================== ==================
TOTAL COST OF PURCHASES OF:
Common Stocks $ 339,197 $ 112,899
------------------ ------------------
$ 339,197 $ 112,899
================== ==================
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 67,013 $ 100,456
------------------ ------------------
$ 67,013 $ 100,456
================== ==================
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 38,286 $ 35,947
------------------ ------------------
$ 38,286 $ 35,947
================== ==================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
EVEREST FUND
OBJECTIVE - Seeks primarily long-term appreciation of capital, without incurring
unduly high risk, by investing primarily in common stocks and other equity
securities. Current income is a secondary objective.
STRATEGY - The Everest Fund (the "Fund") will remain in a highly invested
position ranging from 86% to 98%. The cash position will be held in highly
liquid money market instruments to meet redemptions and to provide cash for
future stock purchases as new opportunities arise.
MANAGER'S COMMENTS:
The Fund's (Class I) performance for the period October 1, 2003 to March 31,
2004 was 15.25% versus 17.64% for the Russell 1000 Value Index (the "Index") and
14.07% for the S & P 500 Index.
After three negative return years in the equity indices, 2003 rebounded smartly
with investors returning with plenty of firepower. The economy started to
recover in earnest during the second half of 2003 after three years of
lackluster performance. The Federal Reserve's "easy money" policy of low
interest rates started to kick-start the economy and resuscitate corporations'
and consumers' balance sheets. With low interest rates and economic recovery,
equities looked inexpensive again.
The performance of the Fund benefited from the acquisition of Fleetbank by
BankAmerica, recovery in Motorola and Nokia, consumer staple rebound by Conagra
and Altria, and a surge in energy holdings and energy service firms. The Fund's
underperformance compared to the Index primarily was a result of underweighting
the financial sector (24% to 36% at March 31, 2004) that outperformed the
overall Index. Additionally, the Fund over-weighted the healthcare sector (11%
to 3%) that underperformed the overall Index.
With the economic recovery, the fixed income markets' dominance over equity
markets may be ending. The perfect scenario, ever-lower fed funds rates, no
signs of inflation or economic recovery are now being replaced by incipient
inflation and economic growth. The missing ingredient - a rising fed funds
rate-is now held in check only by political expedience. Does Greenspan want to
be the whipping boy for either political party by choking off economic growth
without a robust jobs market?
The Fund believed that a fourth down year was unacceptable politically and
invested with the belief that the market would rebound, while purchasing
companies with sufficient economic heft to survive if our timing was premature.
Fortunately a declining stock market makes most value securities more attractive
as prices decline. After this years' market rebound investors' enthusiasm has
risen along with valuations. The Fund will continue to invest in companies that
are temporarily out-of-favor and pare those that we believe have reached full
valuation now that the investor has regained a modicum of confidence in the
stock market.
FUND DATA
Managers: James McGlynn
Inception Date: December 29, 1999
Total Net Assets: $58.9 Million
Number of Holdings: 57
Median Cap Size: $39.0 Billion
Average Price-to-earnings Ratio: 16.90x
Average Price-to-book Ratio: 2.26x
Dividend Yield: 2.32%
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit Everest Fund Class I - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
41.69% 5.18% 6.42%
</Table>
Summit Everest Fund Class F - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
41.33% 8.37%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT EVEREST SUMMIT EVEREST RUSSELL 1000
FUND CLASS I FUND CLASS F VALUE INDEX
12/28/99 $ 10,000 $ 10,000
12/31/99 $ 10,040 $ 10,109
1/31/2000 $ 9,450 $ 9,779
2/29/2000 $ 8,760 $ 9,053
3/31/2000 $ 9,860 $ 10,157
4/30/2000 $ 9,670 $ 10,039
5/31/2000 $ 10,040 $ 10,145
6/30/2000 $ 9,780 $ 9,681
7/31/2000 $ 9,720 $ 9,802
8/31/2000 $ 10,230 $ 10,348
9/30/2000 $ 10,321 $ 10,443
10/31/2000 $ 10,723 $ 10,699
11/30/2000 $ 10,643 $ 10,302
12/31/2000 $ 11,285 $ 10,818
1/31/2001 $ 11,730 $ 10,860
2/28/2001 $ 11,538 $ 10,558
3/31/2001 $ 11,203 $ 10,185
4/30/2001 $ 11,913 $ 10,684
5/31/2001 $ 12,297 $ 10,924
6/30/2001 $ 12,162 $ 10,682
7/31/2001 $ 12,338 $ 10,659
8/31/2001 $ 11,841 $ 10,232
9/30/2001 $ 11,251 $ 9,512
10/31/2001 $ 11,458 $ 9,430
11/30/2001 $ 12,069 $ 9,978
12/31/2001 $ 12,464 $ 10,213
1/31/2002 $ 12,375 $ 10,135
2/28/2002 $ 12,527 $ 10,151
3/31/2002 $ 12,958 $ 10,631
4/30/2002 $ 12,349 $ 10,266
5/31/2002 $ 12,275 $ 10,318
6/30/2002 $ 11,270 $ 10,000 $ 9,725
7/31/2002 $ 9,947 $ 8,824 $ 8,821
8/31/2002 $ 10,098 $ 8,958 $ 8,887
9/30/2002 $ 8,862 $ 7,861 $ 7,899
10/31/2002 $ 9,347 $ 8,289 $ 8,484
11/30/2002 $ 10,229 $ 9,069 $ 9,019
12/31/2002 $ 9,497 $ 8,418 $ 8,627
1/31/2003 $ 9,261 $ 8,208 $ 8,418
2/28/2003 $ 9,132 $ 8,091 $ 8,194
3/31/2003 $ 9,200 $ 8,150 $ 8,208
4/30/2003 $ 10,122 $ 8,965 $ 8,930
5/31/2003 $ 10,802 $ 9,565 $ 9,507
6/30/2003 $ 11,136 $ 9,857 $ 9,626
7/31/2003 $ 11,217 $ 9,929 $ 9,769
8/31/2003 $ 11,333 $ 10,030 $ 9,921
9/30/2003 $ 11,310 $ 10,009 $ 9,824
10/31/2003 $ 11,875 $ 10,506 $ 10,425
11/30/2003 $ 12,029 $ 10,639 $ 10,567
12/31/2003 $ 12,812 $ 11,329 $ 11,218
1/31/2004 $ 13,141 $ 11,617 $ 11,416
2/29/2004 $ 13,268 $ 11,726 $ 11,660
3/31/2004 $ 13,036 $ 11,519 $ 11,557
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
Bank One Corp. 2.57%
Norfolk Southern Co. 2.51%
CSX Corp. 2.46%
Union Pacific Corp. 2.39%
Wells Fargo 2.29%
St. Paul Cos. 2.29%
General Electric 2.28%
Johnson & Johnson Co. 2.26%
Microsoft Corp. 2.25%
Du Pont (E.I.) 2.23%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Consumer Discretionary 8.0%
Consumer Non-Cyclical 7.0%
Energy 11.1%
Financials 24.3%
Healthcare 10.7%
Industrials 5.1%
Materials 3.2%
Technology 10.1%
Telecommunication Services 6.2%
Transportation 7.3%
Utilities 4.8%
Short-Term & Other 2.2%
</Table>
17
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL HIGHLIGHTS EVEREST FUND
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
CLASS I
--------------- ---------------------------------------------------
SIX MONTHS PERIOD FROM
ENDED MARCH 31, DECEMBER 29, 1999(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
--------------------------------------------------------------------
2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value,
beginning of period $ 49.88 $ 39.85 $ 54.35 $ 51.30 $ 50.00
------------ -------- -------- -------- -----------
Investment Activities:
Net investment income/(loss) 0.42 0.74 0.74 0.95 0.40
Net realized and unrealized
gains / (losses) 7.15 10.13 (11.12) 3.80 1.20
------------ -------- -------- -------- -----------
Total from Investment Activities 7.57 10.87 (10.38) 4.75 1.60
------------ -------- -------- -------- -----------
DISTRIBUTIONS:
Net investment income (0.80) (0.80) (0.53) (0.70) (0.30)
Net realized gains -- (0.04) (3.59) (1.00) --
------------ -------- -------- -------- -----------
Total Distributions (0.80) (0.84) (4.12) (1.70) (0.30)
------------ -------- --------- -------- -----------
Net asset value, end of period $ 56.65 $ 49.88 $ 39.85 $ 54.35 $ 51.30
============ ======== ======== ======== ===========
Total return 15.25% 27.63% -21.24% 9.01% 3.21%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets - net (2) 0.95%(3) 0.98% 0.96% 0.78% 0.81%(3)
Ratio of expenses to
average net assets - gross 0.95%(3) 0.98% 0.96% 0.80% 0.85%(3)
Ratio of net investment
income/(loss) to average
net assets 1.55%(3) 1.64% 1.33% 1.67% 1.51%(3)
Portfolio turnover rate 81.97%(3) 58.23% 66.74% 105.91% 138.39%(3)
Net assets,
end of period (000's) $ 58,843 $ 48,821 $ 42,194 $ 57,497 $ 49,440
<Caption>
CLASS F
-------------------------------------------------------
SIX MONTHS YEAR PERIOD FROM
ENDED MARCH 31, ENDED JULY 1, 2002(1)
(UNAUDITED) SEPTEMBER 30, TO SEPTEMBER 30,
-------------------------------------------------------
2004 2003 2002
-------------------------------------------------------
Net asset value,
beginning of period $ 50.34 $ 39.84 $ 49.73
--------------- ------------- ----------------
Investment Activities:
Net investment income / (loss) 0.41 0.61 0.15
Net realized and unrealized
gains / (losses) 7.23 10.22 $ (10.04)
--------------- ------------- ----------------
Total from Investment Activities 7.64 10.83 (9.89)
--------------- ------------- ----------------
DISTRIBUTIONS:
Net investment income (0.80) (0.29) --
Net realized gains -- (0.04) --
--------------- ------------- ----------------
Total Distributions (0.80) (0.33) --
--------------- ------------- ----------------
Net asset value, end of period $ 57.18 $ 50.34 $ 39.84
=============== ============= ================
Total return 15.23% 27.32% -19.89%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses t
average net assets - net (2) 1.23%(3) 1.23% 1.24%(3)
Ratio of expenses
to average net assets - gross 1.23%(3) 1.23% 1.24%(3)
Ratio of net investment
income/(loss) to
average net assets 1.26%(3) 1.39% 1.37%(3)
Portfolio turnover rate 81.97%(3) 58.23% 66.74%
Net assets, end of period (000's) $ 16 $ 5 $ 4
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
EVEREST FUND SCHEDULE OF INVESTMENTS
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------------
COMMON STOCKS - 97.80%
CONSUMER DISCRETIONARY - 7.96%
AOL Time Warner Inc.* 55,400 $ 934,044
McDonald's Corp. 29,400 839,958
Sony Corp. 30,800 1,287,748
Take-Two Interactive Software* 31,900 1,173,282
The Walt Disney Co. 17,900 447,321
---------------
4,682,353
---------------
CONSUMER NON-CYCLICAL - 6.98%
Altria Group Inc. 19,100 1,039,995
Conagra Foods Inc. 42,900 1,155,726
Sara Lee Corp. 59,900 1,309,414
Unilever 8,700 604,128
---------------
4,109,263
---------------
ENERGY - 11.08%
Anadarko Petroleum 20,800 1,078,688
ChevronTexaco Corp. 10,228 897,814
ConocoPhillips 13,277 926,867
Devon Energy Corp. 18,400 1,069,960
Royal Dutch Petroleum 14,700 699,426
Unocal Corp. 22,800 849,984
Weatherford International* 23,800 1,000,314
---------------
6,523,053
---------------
FINANCIALS - 24.30%
Alliance Capital Holdings 24,100 886,880
American Express 11,100 575,535
Banc One Corp. 27,700 1,510,204
Bank of America Corp. 9,300 753,114
Citigroup Inc 22,000 1,137,400
First Data 29,300 1,235,288
Freddie Mac 20,100 1,187,106
J.P. Morgan Chase & Co. 14,650 614,568
KeyCorp 39,700 1,202,513
Lincoln National 19,200 908,544
Marsh & McLennan Co. 25,400 1,176,020
Merrill Lynch 6,900 410,964
St. Paul Cos. 33,700 1,348,337
Wells Fargo 23,800 1,348,746
---------------
14,295,219
---------------
HEALTH CARE - 10.68%
Amerisourcebergen Corp. 18,700 1,022,516
Baxter International Inc. 38,700 1,195,443
Bristol-Myers Squibb 29,200 707,516
Johnson & Johnson Co. 26,200 1,328,864
Merck & Co. 25,900 1,144,521
The Healthcare Co. 21,900 889,578
---------------
6,288,438
---------------
INDUSTRIALS - 5.16%
General Dynamics Corp. 6,000 $ 535,980
General Electric 44,000 1,342,880
SPX Corp. 25,500 1,159,740
---------------
3,038,600
---------------
MATERIALS - 3.22%
Dow Chemical 14,400 580,032
Du Pont (E.I.) 31,100 1,313,042
---------------
1,893,074
---------------
TECHNOLOGY - 10.07%
Electronic Data Systems Corp. 61,000 1,180,350
Hewlett-Packard Co. 48,000 1,096,320
International Business Machines 9,600 881,664
Microsoft Corp. 53,000 1,323,410
Motorola Inc. 46,400 816,640
Sun Microsystems Inc.* 151,700 631,072
---------------
5,929,456
---------------
TELECOMMUNICATION SERVICES - 6.21%
AllTell Corp 15,200 758,328
Nokia Corp. 28,700 582,036
SBC Communications, Inc. 49,100 1,204,914
Verizon Communications 30,400 1,110,816
---------------
3,656,094
---------------
TRANSPORTATION - 7.36%
CSX Corp. 47,800 1,447,861
Norfolk Southern Co. 67,000 1,480,030
Union Pacific Corp. 23,500 1,405,770
---------------
4,333,661
---------------
UTILITIES - 4.78%
Ameren Corporation 17,100 788,139
Comcast Corporation* 35,200 981,376
Southern Co. 34,300 1,046,150
---------------
2,815,665
---------------
Total Common Stocks
(cost $53,137,664) 57,564,876
---------------
SHORT-TERM INVESTMENTS - 2.16%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - 2.16% 1,273,719 1,273,719
---------------
Total Short-Term Investments
(cost $1,273,719) 1,273,719
---------------
TOTAL INVESTMENTS - 99.96%
(cost $54,411,383)(1) 58,838,595
---------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(2) - 5.07% 2,982,195
---------------
OTHER ASSETS AND LIABILITIES - (5.03%) (2,961,953)
---------------
TOTAL NET ASSETS - 100.00% $ 58,858,837
===============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $54,630,124 and gross unrealized
appreciation and depreciation of securities as of March 31, 2004 was
$5,996,035 and ($1,787,564), respectively, with a net appreciation /
depreciation of $4,208,471.
(2) This security was purchased with cash collateral held from securities
lending. The market value of the securities on loan, the collateral
purchased with cash, and the noncash collateral accepted is $2,915,058,
$2,982,195, and $2,982,195, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
19
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL STATEMENTS EVEREST FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 58,838,595
Collateral for securities loaned,
at fair value 2,982,195
Receivables:
Shares sold 22,339
Securities sold 315,598
Interest and dividends 115,333
Prepaid expenses and other 7,369
---------------
62,281,429
---------------
LIABILITIES
Payables:
Payable upon return of securities
loaned 2,982,195
Bank overdraft --
12b-1 fees 25
Advisory fees 32,065
Administration expenses 5,010
Directors' fees 1,867
Custodian fees 1,002
Fund accounting fees 6,752
Professional fees 7,890
Other accrued expenses 6,550
---------------
3,422,592
---------------
NET ASSETS*
Paid-in capital 53,504,915
Accumulated undistributed net
investment income 133,732
Accumulated net realized gain / (loss)
on investments and futures contracts 792,978
Net unrealized appreciation / (depreciation)
on investments and futures contracts 4,427,212
---------------
$ 58,858,837
===============
Investments at cost $ 54,411,383
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS OUTSTANDING
Class I $ 58,843,212 1,038,657 $ 56.65
Class F $ 15,625 273 $ 57.18
</Table>
*FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
Undistributed ordinary income $ 500,795
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING SEPTEMBER 30: POST-OCTOBER LOSSES DEFERRED:
- ------------------------------------------------------------------------------
2011 SEPTEMBER 30, 2003
---- ------------------
$ (937,374) $ 729,108
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 8,491
Dividends 690,084
Foreign dividend taxes withheld (3,442)
---------------
695,133
---------------
EXPENSES
Advisory fees 178,095
Administration expenses 27,827
Custodian fees and expenses 2,774
Fund accounting fees 18,699
Professional fees 8,959
Directors' fees 1,989
Transfer agent fees 13,189
12b-1 fees 11
Other expenses 12,771
---------------
264,314
---------------
NET INVESTMENT INCOME / (LOSS) 430,819
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 2,678,201
Net change in unrealized appreciation /
(depreciation) on investments 4,382,243
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 7,060,444
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 7,491,263
===============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- --------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- ---------------------------------------------------------------
0.64% 0.10% 1.00% $ -- $ --
</Table>
(1) If total operating expenses, exclusive of advisory fees and certain other
expenses, for any fiscal quarter exceed the indicated limit, the Adviser will
reimburse the fund for such excess, up to the amount of the advisory fee for
that year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
20
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
-----------------------------------
2004 2003
-----------------------------------
OPERATIONS
Net investment income / (loss) $ 430,819 $ 736,631
Net realized gain / (loss) on investments and futures 2,678,201 (1,663,867)
Net change in unrealized appreciation/(depreciation)
on investments 4,382,243 11,729,736
------------------ -------------
7,491,263 10,802,500
------------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS*
Class I
Net investment income (797,813) (805,652)
Net realized gain on investments -- (44,014)
Class F
Net investment income (71) (29)
Net realized gain on investments -- (4)
------------------ -------------
(797,884) (849,699)
------------------ -------------
FUND SHARE TRANSACTIONS
Class I
Proceeds from shares sold 5,114,804 6,352,167
Reinvestment of distributions 797,813 848,603
Payments for shares redeemed (2,583,432) (10,525,811)
------------------ -------------
3,329,185 (3,325,041)
------------------ -------------
Class F
Proceeds from shares sold 10,010 5,051
Reinvestment of distributions 71 33
Payments for shares redeemed (5) (5,133)
------------------ -------------
10,076 (49)
------------------ -------------
NET INCREASE / (DECREASE) IN NET ASSETS 10,032,640 6,627,711
NET ASSETS
Beginning of period 48,826,197 42,198,486
------------------ -------------
End of period $ 58,858,837 $ 48,826,197
================== =============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 133,732 $ 500,795
================== =============
FUND SHARE TRANSACTIONS
Class I
Sold 91,649 138,696
Reinvestment of distributions 14,591 19,739
Redeemed (46,301) (238,452)
------------------ -------------
Net increase / (decrease) from fund share transactions 59,939 (80,017)
================== =============
Class F
Sold 174 99
Reinvestment of distributions 1 --
Redeemed -- (100)
------------------ -------------
Net increase / (decrease) from fund share transactions 175 (1)
================== =============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 25,296,121 $ 25,032,907
------------------ -------------
$ 25,296,121 $ 25,032,907
================== =============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 21,836,817 $ 27,666,190
------------------ -------------
$ 21,836,817 $ 27,666,190
================== =============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 797,884 $ 805,681
Long-term capital gains -- 44,018
------------------ -------------
$ 797,884 $ 849,699
================== =============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
21
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
BOND FUND
OBJECTIVE - Seeks a high level of current income, without undue risk to
principal, by investing in long-term, fixed-income, investment-grade corporate
bonds.
STRATEGY - The Bond Fund (the "Fund") intends to invest at least 75% of the
value of its assets in publicly-traded straight debt securities which have a
rating within the four highest grades as rated by a national rating agency. Up
to 25% of the portfolio may be invested in below investment grade debt
securities or convertible debt securities. Up to 20% of the portfolio may be
invested in convertible preferred and preferred stock or other securities.
MANAGER'S COMMENTS:
The Fund had a total return of 4.59% (before contract fees and expenses) for the
six month period ended March 31, 2004 compared to a total return of 2.98% for
the Lehman Brothers Aggregate Index (the "Index"). The past six months were
marked by continued volatility in the fixed income market. While interest rates
ended relatively unchanged from six months earlier, both short and long-term
interest rates moved over a range of 65 to 80 basis points during the period.
Robust GDP growth was offset by slow job growth and continued low inflation,
allowing the Federal Reserve to maintain an accommodative monetary policy.
The Fund's out performance to the Index was primarily the result of the
continued overweight in the corporate bond sector. Corporate bonds, both
investment grade and high yield, were the best performing sector of the fixed
income market during the period. In general, lower rated credits, lead by high
yield bonds, provided the largest contribution to the incremental return.
Mortgage-backed securities outperformed similar duration U.S. Treasury
Securities but generally lagged corporate bonds. Individual sectors that
provided the largest positive performance during the period were commercial
mortgage-backed securities, financial institutions, manufactured housing,
telecom and utilities. Over the last six months, the U.S. Treasury sector, while
providing positive returns, underperformed all other sectors of the fixed income
market.
FUND DATA
<Table>
Managers: Gary R. Rodmaker
Michael J. Schultz
Dave Weisenburger
Inception Date: April 3, 2000
Total Net Assets: $94.0 Million
Number of Holdings: 131
Average Duration: 4.91 years
Average Maturity: 10.90 years
Weighted Average Maturity: 6.66 years
Average Credit Quality: A-/A3
Current Yield: 5.11%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit Bond Fund - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
10.54% 7.14% 7.75%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT BOND LEHMAN BROTHERS AGGREGATE
FUND BOND INDEX
3/31/2000 $ 10,000 $ 10,000
4/30/2000 $ 9,920 $ 9,971
5/31/2000 $ 9,810 $ 9,967
6/30/2000 $ 10,052 $ 10,174
7/31/2000 $ 10,152 $ 10,266
8/31/2000 $ 10,335 $ 10,415
9/30/2000 $ 10,304 $ 10,481
10/31/2000 $ 10,284 $ 10,550
11/30/2000 $ 10,409 $ 10,723
12/31/2000 $ 10,555 $ 10,922
1/31/2001 $ 10,755 $ 11,101
2/28/2001 $ 10,893 $ 11,197
3/31/2001 $ 10,957 $ 11,253
4/30/2001 $ 10,914 $ 11,206
5/31/2001 $ 10,975 $ 11,273
6/30/2001 $ 10,953 $ 11,316
7/31/2001 $ 11,191 $ 11,570
8/31/2001 $ 11,323 $ 11,703
9/30/2001 $ 11,312 $ 11,840
10/31/2001 $ 11,543 $ 12,087
11/30/2001 $ 11,431 $ 11,920
12/31/2001 $ 11,317 $ 11,844
1/31/2002 $ 11,385 $ 11,940
2/28/2002 $ 11,428 $ 12,056
3/31/2002 $ 11,360 $ 11,856
4/30/2002 $ 11,554 $ 12,086
5/31/2002 $ 11,621 $ 12,188
6/30/2002 $ 11,580 $ 12,294
7/31/2002 $ 11,610 $ 12,442
8/31/2002 $ 11,752 $ 12,652
9/30/2002 $ 11,797 $ 12,857
10/31/2002 $ 11,647 $ 12,798
11/30/2002 $ 11,771 $ 12,795
12/31/2002 $ 11,933 $ 13,059
1/31/2003 $ 11,929 $ 13,070
2/28/2003 $ 12,137 $ 13,251
3/31/2003 $ 12,190 $ 13,241
4/30/2003 $ 12,396 $ 13,350
5/31/2003 $ 12,635 $ 13,599
6/30/2003 $ 12,718 $ 13,572
7/31/2003 $ 12,409 $ 13,116
8/31/2003 $ 12,501 $ 13,203
9/30/2003 $ 12,884 $ 13,552
10/31/2003 $ 12,839 $ 13,426
11/30/2003 $ 12,919 $ 13,458
12/31/2003 $ 13,059 $ 13,595
1/31/2004 $ 13,209 $ 13,704
2/29/2004 $ 13,351 $ 13,853
3/31/2004 $ 13,475 $ 13,957
</Table>
QUALITY BREAKDOWN
<Table>
<Caption>
(% OF PORTFOLIO)
----------------
AAA 37%
AA 1%
A 6%
BBB 44%
BB 5%
B 3%
CCC 3%
D 1%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
U.S. Treasury Obligations and Agencies 14.70%
Mortgage & Asset Backed Securities 28.10%
Corporate Bonds & Notes 54.70%
Short-Term & Other 2.50%
</Table>
22
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
BOND FUND FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
SIX MONTHS PERIOD FROM
ENDED MARCH 31, APRIL 3, 2000(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
--------------------------------------------------------------------
2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value,
beginning of period $ 51.73 $ 50.35 $ 51.45 $ 50.20 $ 50.00
---------- --------- --------- --------- ----------------
Investment Activities:
Net investment income/(loss) 1.88 3.34 3.10 3.35 1.80
Net realized and unrealized
gains/(losses) 0.41 1.12 (0.98) 1.40 (0.30)
---------- --------- --------- --------- ----------------
Total from Investment Activities 2.29 4.46 2.12 4.75 1.50
---------- --------- --------- --------- ----------------
Distributions:
Net investment income (2.39) (3.08) (3.13) (3.40) (1.30)
Net realized gains -- -- (0.09) (0.10) --
---------- --------- --------- --------- ----------------
Total Distributions (2.39) (3.08) (3.22) (3.50) (1.30)
---------- --------- --------- --------- ----------------
Net asset value, end of period $ 51.63 $ 51.73 $ 50.35 $ 51.45 $ 50.20
========== ========= ========= ========= ================
Total return 4.59% 9.22% 4.29% 9.78% 3.04%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net (2) 0.71%(3) 0.69% 0.71% 0.61% 0.64%(3)
Ratio of expenses to
average net assets - gross 0.71%(3) 0.69% 0.71% 0.62% 0.66%(3)
Ratio of net investment
income / (loss)
to average net assets 7.30%(3) 6.53% 6.17% 6.72% 7.19%(3)
Portfolio turnover rate 90.19%(3) 125.15% 51.52% 76.96% 80.03%(3)
Net assets, end of period (000's) $ 94,018 $ 91,745 $ 103,505 $ 102,056 $ 69,875
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
23
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SCHEDULE OF INVESTMENTS BOND FUND
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------------
PREFERRED STOCKS - .77%
INSURANCE - .42%
Conseco Inc. 10.5% PIK Dividend 15,748 $ 399,369
---------------
REAL ESTATE - .35%
Logian Inc. 12.25% PIK Dividend 12,398 325,448
---------------
Total Preferred Stocks
(cost $654,945) 724,817
---------------
COMMON STOCKS - .17%
COMMUNICATIONS & MEDIA - .17%
Evercom Inc.(2)(4)+* 19,089 162,256
---------------
Total Common Stocks
(cost $349,228) 162,256
---------------
<Caption>
PRINCIPAL VALUE
---------------------------------
U.S. TREASURY OBLIGATIONS - 8.41%
U.S. TREASURY NOTES & BONDS - 8.41%
5.875% due 11/15/05 $ 300,000 $ 321,481
2.000% due 05/15/06 2,000,000 2,016,016
7.000% due 07/15/06 2,000,000 2,237,188
2.625% due 11/15/06 1,000,000 1,019,688
6.250% due 02/15/07 100,000 111,984
3.875% due 02/15/13 1,125,000 1,140,293
5.250% due 11/15/28 1,000,000 1,055,781
---------------
Total U.S. Treasury Obligations
(cost $7,589,271) 7,902,431
---------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 3.21%
FNMA 1.875% due 12/15/04 3,000,000 3,015,216
---------------
Total U.S. Government Agency Obligations
(cost $3,008,343) 3,015,216
---------------
MORTGAGE-BACKED SECURITIES - 15.08%
FHLMC 5.000% due 05/01/18 640,802 659,542
FNMA 5.500% due 05/01/12 834,875 876,207
FNMA 6.000% due 06/01/16 1,138,296 1,199,625
FNMA 4.500% due 03/01/17 2,265,008 2,295,547
FNMA 5.500% due 08/01/18 3,753,126 3,913,104
FNMA 4.500% due 09/01/18 3,818,555 3,872,854
FNMA 6.500% due 02/01/29 412,974 434,542
FNMA 5.000% due 02/01/33 370,717 372,844
GNMA 6.500% due 10/15/28 521,871 551,696
---------------
Total Mortgage-Backed Securities
(cost $13,740,415) 14,175,961
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 12.57%
AGENCY SECTOR - 3.13%
FHR 2439 SC
(16.824% due 07/15/28) 119,149 122,102
FNR 2002-48 GF
(6.500% due 10/25/31) 2,700,000 2,823,703
---------------
2,945,805
---------------
PRIVATE SECTOR - 9.44%
ABN Amro Mortgage Corp.
(6.600% due 09/25/16) $ 190,649 $ 190,448
AMAC 2002-2 B2
(6.000% due 03/25/17) 290,193 304,257
AMSI 2003-6 AF4
(4.329% due 08/25/33) 300,000 301,706
BOAA 2003-5 2B3
(5.000% due 07/25/18) 628,850 606,074
BOAMS 2002-6 2B1
(6.000% due 07/25/32) 369,508 374,169
BOAMS 2002-7 2B1
(6.000% due 08/25/32) 586,509 604,944
BOAMS 2002-8 2B1
(5.750% due 09/25/17) 651,562 664,306
CMSI 2001-14 B2
(6.613% due 09/25/31) 617,429 616,664
Chase 1999-S3 B3(2)
(6.250% due 03/25/14) 254,716 258,674
CS First Boston
(6.250% due 09/25/32) 589,584 607,251
CXHE 2001-B M2
(7.360% due 07/25/32) 450,000 474,024
HS 1994-2 M2
(6.500% due 07/25/09) 75,542 76,003
NMFC 1998-4 B3
(6.250% due 10/25/28) 893,155 898,715
MASTR 2003-9 2a12
(5.500% due 10/25/33) 353,072 371,669
RALI 2001-QS15 M3
(6.750% due 09/25/31) 525,889 537,859
RALI 2002-QS16 M2
(5.750% due 10/25/17) 302,309 319,262
RALI 2002-QS16 M3
(5.750% due 10/25/17) 302,309 315,585
RFMSI 1993-S45 M2
(6.500% due 12/25/23) 232,753 239,107
SUMT 2003-1(2)
(4.875% due 01/25/33) 5,698,842 10,685
WAMMS 2001-MS14 5A9
(6.500% due 12/25/31) 266,732 268,925
WAMU 2001-S8 1B3
(6.500% due 08/25/16) 346,125 345,415
WF MBS 2002-8 2B3
(6.000% due 05/25/17) 484,414 487,443
---------------
8,873,185
---------------
Total Collateralized Mortgage Obligations
(cost $12,744,099) 11,818,990
---------------
ASSET-BACKED SECURITIES - 3.57%
COMMERCIAL MORTGAGE-BACKED SECURITIES - 2.34%
Chase Commercial Mortgage Sec.
(6.600% due 12/19/07) 1,982,000 2,199,262
---------------
MANUFACTURED HOUSING - 1.23%
Greentree 1999-5 M1
(8.050% due 04/01/31) 1,500,000 480,000
Vanderbilt Acquisition Loan Trust
(5.700% due 09/07/23) 650,000 680,903
---------------
1,160,903
---------------
Total Asset-Backed Securities
(cost $4,015,554) 3,360,165
---------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------------
CORPORATE BONDS AND NOTES - 54.68%
AIR TRANSPORTATION - 3.40%
American Airlines
(9.710% due 01/02/07)
America West Airlines, AMBAC Insured
(7.100% due 04/02/21) $ 675,727 $ 744,797
Continental Airlines
(7.820% due 10/15/13) 478,008 412,244
Continental Airlines Inc.
(7.875% due 07/02/18) 750,000 746,955
Delta Airlines
(7.299% due 09/18/06) 150,000 125,333
Jet Equipment(2)(5)*
(7.630% due 08/15/12) 805,625 652,339
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 554,215 510,571
---------------
3,192,239
---------------
BANK, BANK HOLDING COMPANIES, &
OTHER BANK SERVICES - 2.54%
Banco Mercantile Norte
(5.875% due 02/17/14) 750,000 766,875
Bank of Hawaii
(6.875% due 03/01/09) 750,000 861,577
Captial One Bank
(5.750% due 09/15/10) 700,000 757,707
---------------
2,386,159
---------------
CONSUMER CYCLICAL - 10.96%
American Axle & Mfg Inc.
(5.250% due 02/11/14) 1,050,000 1,073,430
Cytec Industries Inc.
(4.600% due 07/01/13) 1,050,000 1,046,804
DaimlerChrysler AG
(7.300% due 01/15/12) 750,000 864,772
Ford Motor Company
(7.450% due 07/16/31) 750,000 749,005
General Motors
(8.250% due 07/15/23) 700,000 781,344
GMAC
(5.850% due 01/14/09) 750,000 796,229
Hertz Corp.
(7.625% due 06/01/12) 750,000 825,581
ICI Wilmington
(5.625% due 12/01/13) 750,000 783,157
Lear Corp
(8.110% due 05/15/09) 1,050,000 1,241,625
MDC Holdings Inc.
(5.500% due 05/15/13) 350,000 359,567
Park-Ohio Industries
(9.250% due 12/01/07) 188,000 188,000
Service Corp. International
(7.700% due 04/15/09) 375,000 402,188
Tech Olympic USA Inc.
(9.000% due 07/01/10) 375,000 407,813
UPM-Kymmene Corp.(2)
(5.625% due 12/01/14) 750,000 789,001
---------------
10,308,516
---------------
CONSUMER NON-DURABLE - 8.66%
Allied Waste North America(2)
(5.750% due 02/15/11) 375,000 362,813
American Restaurant Group Inc.
(11.500% due 11/01/06) 500,000 275,000
Amerigas Partner
(8.875% due 05/20/11) $ 187,000 $ 207,103
Aztar Corp.
(9.000% due 08/15/11) 375,000 421,405
Bunge Ltd Finance Corp.
(7.800% due 10/15/12) 700,000 842,178
Dial Corp.
(7.000% due 08/15/06) 750,000 829,304
Dimon Inc.
(9.625% due 10/15/11) 375,000 405,000
Dole Food Inc.
(8.875% due 03/15/11) 187,000 203,830
Fresh Food, Inc.
(10.750% due 06/01/06) 562,000 514,230
GTECH Holdings Corp.
(4.750% due 10/15/10) 1,000,000 1,042,353
Hexcel Corp.
(9.750% due 01/15/09) 375,000 390,000
Hexcel Corp.
(9.875% due 10/01/08) 37,000 41,163
Miller Brewing Co.(2)
(5.500% due 08/15/13) 700,000 744,155
Resolution Performance(2)
(8.000% due 12/15/09) 187,000 190,740
RH Donnelley Finance Corp.
(8.875% due 12/15/10) 187,000 210,375
RH Donnelley Finance Corp.
(10.875% due 12/15/12) 187,000 222,998
Sealed Air Corp.(2)
(5.625% due 07/15/13) 700,000 733,690
Station Casinos(2)
(6.000% due 04/01/12) 188,000 194,580
Syratech Corp
(11.000% due 04/15/07) 375,000 315,000
---------------
8,145,917
---------------
ELECTRIC - 3.52%
AES Corporation
(9.375% due 09/15/10) 375,000 408,750
Centerpoint Energy Resources
(7.875% due 04/01/13) 700,000 810,253
Dominion Resources Inc.
(6.250% due 06/30/12) 1,139,000 1,259,220
First Energy Corp.
(6.450% due 11/15/11) 760,000 832,071
---------------
3,310,294
---------------
ENERGY - 7.13%
Canadian Oil Sands
(5.800% due 08/15/13) 700,000 736,648
Colorado Gas
(10.000% due 06/15/05) 375,000 397,500
Constellation Energy Group
(7.000% due 04/01/12) 750,000 864,380
Kaneb Pipeline
(5.875% due 06/01/13) 700,000 740,865
Kern River Funding Corp.(2)
(6.676% due 07/31/16) 135,245 155,640
Northwest Pipeline Corp.
(8.125% due 03/01/10) 187,000 206,635
Pacific Gas & Electric
(6.050% due 03/01/34) 700,000 708,011
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
25
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------------
ENERGY - 7.13% (CONTINUED)
Pemex Master Trust
(8.000% due 11/15/11) $ 750,000 $ 872,625
Plains All American Pipline(2)
(5.625% due 12/15/13) 700,000 728,875
Western Oil Sands Inc.
(8.375% due 05/01/12) 750,000 894,375
Williams Co.
(7.125% due 09/01/11) 375,000 393,750
---------------
6,699,304
---------------
FINANCE - .14%
DVI Inc.(5)*
(9.875% due 02/01/34) 562,000 134,880
---------------
HEALTH CARE - 1.29%
Beckman Coulter Inc.
(6.875% due 11/15/11) 700,000 814,059
Medco Health Solutions
(7.250% due 08/15/13) 350,000 394,589
---------------
1,208,648
---------------
INSURANCE - 3.02%
Farmers Insurance Exchange(2)
(8.500% due 08/01/04) 760,000 771,321
Nationwide Financial Services
(5.625% due 02/13/15) 1,125,000 1,212,390
USF&G Capital
(8.470% due 01/10/27) 760,000 859,970
---------------
2,843,681
---------------
MEDIA & CABLE - 4.19%
Comcast Corp.
(5.850% due 01/15/10) 250,000 272,327
Comcast Corp.
(5.300% due 01/15/14) 760,000 778,053
Corning Inc.
(5.900% due 03/15/14) 94,000 93,060
Gray Television Inc.
(9.250% due 12/15/11) 375,000 419,063
Liberty Media Corp.
(5.700% due 05/15/13) 750,000 783,034
Rogers Cable Inc.
(5.500% due 03/15/14) 700,000 679,875
Univision Comm Inc.
(7.850% due 07/15/11) 755,000 915,344
---------------
3,940,756
---------------
MEDIA CONGLOMERATE - 2.29%
AOL Time Warner Inc.
(6.875% due 05/01/12) 760,000 869,451
News American Holdings Nts.
(6.625% due 01/09/08) 1,139,000 1,280,477
---------------
2,149,928
---------------
METALS & MINING - .47%
Falconbridge LTD
(7.350% due 06/05/12) $ 375,000 $ 438,696
---------------
REAL ESTATE - .94%
Health Care REIT
(8.000% due 09/12/12) 750,000 888,632
---------------
TECHNOLOGY - 1.20%
Jabil Circuit Inc.
(5.875% due 07/15/10) 1,050,000 1,126,455
---------------
TELECOMMUNICATIONS - 4.93%
AT&T Corp.
(8.750% due 11/15/31) 700,000 825,696
AT&T Wireless Services
(7.875% due 03/01/11) 375,000 447,201
Nextel Communications
(7.375% due 08/01/15) 375,000 405,938
Qwest Capital Funding
(7.900% due 08/15/10) 375,000 337,500
Qwest Communications International
(7.250% due 02/15/11) 375,000 357,189
Sprint Capital Corp.
(7.625% due 01/30/11) 750,000 875,756
Standard Commercial(2)
(8.000% due 04/15/12) 188,000 195,050
Telus Corp.
(8.000% due 06/01/11) 750,000 903,459
WorldCom Inc.(5)*
(7.500% due 05/15/11) 900,000 288,000
---------------
4,635,789
---------------
Total Corporate Bonds & Notes
(cost $48,821,111) 51,409,894
---------------
<Caption>
SHARES VALUE
---------------------------------
SHORT-TERM INVESTMENTS - .64%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - .64% 598,627 $ 598,627
---------------
Total Short-Term Investments
(cost $598,627) 598,627
---------------
TOTAL INVESTMENTS - 99.10%
(cost $91,521,593)(1) 93,168,357
---------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(3) - 12.41% 11,672,279
---------------
OTHER ASSETS AND LIABILITIES - (11.51%) (10,822,744)
---------------
TOTAL NET ASSETS - 100.00% $ 94,017,892
===============
</Table>
* Non-income producing
+ Illiquid
(1) For federal income tax purposes, cost is $92,166,722 and gross unrealized
appreciation and depreciation of securities as of March 31, 2004 was
$3,873,030 and ($2,871,395), respectively, with a net appreciation /
depreciation of $1,001,635.
(2) Security exempt from registration under Rule 144(a) of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) This security was purchased with cash collateral held from securities
lending. The market value of the securities on loan, the collateral
purchased with cash, and the noncash collateral accepted is $14,019,081,
$11,672,279, and $2,567,329, respectively.
(4) These are restricted private placement shares.
(5) Security in default.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
BOND FUND FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 93,168,357
Collateral for securities loaned, at fair value 11,672,279
Receivables:
Shares sold 114,474
Securities sold 877,415
Interest and dividends 1,192,336
Prepaid expenses and other 4,769
---------------
107,029,630
---------------
LIABILITIES
Payables:
Investment securities purchased 1,048,745
Payable upon return of securities loaned 11,672,279
Bank overdraft 215,634
Advisory fees 37,124
Administration expenses 7,899
Directors' fees 5,709
Custodian fees 2,440
Fund accounting fees 7,918
Professional fees 8,810
Other accrued expenses 5,180
---------------
13,011,738
---------------
NET ASSETS*
Paid-in capital 91,638,921
Accumulated undistributed
net investment income 309,329
Accumulated net realized gain / (loss)
on investments and futures contracts 422,878
Net unrealized appreciation / (depreciation)
on investments and futures contracts 1,646,764
---------------
$ 94,017,892
===============
Investments at cost $ 91,521,593
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS OUTSTANDING
Class I $ 94,017,892 1,821,065 $ 51.63
</Table>
* FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
Undistributed ordinary income $ 1,206,829
Unrealized appreciation $ 1,732,176
<Caption>
CAPITAL LOSS CARRYFORWARD
EXPIRING SEPTEMBER 30: POST-OCTOBER LOSSES DEFERRED:
- --------------------------------------------------------------------------
2011 SEPTEMBER 30, 2003
---- ------------------
$ (443,746) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 3,623,677
Other income 26,929
---------------
3,650,606
---------------
EXPENSES
Advisory fees 214,740
Administration expenses 45,689
Custodian fees and expenses 5,941
Fund accounting fees 23,323
Professional fees 9,483
Directors' fees 7,977
Transfer agent fees 7,949
Other expenses 10,428
---------------
325,530
---------------
NET INVESTMENT INCOME / (LOSS) 3,325,076
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 1,500,879
Net change in unrealized appreciation /
(depreciation) on investments (730,542)
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 770,337
---------------
NET INCREASE / (DECREASE) IN
NET ASSETS FROM OPERATIONS $ 4,095,413
===============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- --------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- ---------------------------------------------------------------
0.47% 0.10% 1.00% $ -- $ --
</Table>
(1) If total operating expenses, exclusive of advisory fees and certain other
expenses, for any fiscal quarter exceed the indicated limit, the Adviser will
reimburse the fund for such excess, up to the amount of the advisory fee for
that year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
27
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
-----------------------------------
2004 2003
-----------------------------------
OPERATIONS
Net investment income / (loss) $ 3,325,076 $ 6,437,298
Net realized gain / (loss) on investments and futures 1,500,879 823,876
Net change in unrealized appreciation/(depreciation)
on investments (730,542) 1,167,675
------------------ -------------
4,095,413 8,428,849
------------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (4,211,702) (5,955,186)
------------------ -------------
(4,211,702) (5,955,186)
------------------ -------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 6,530,059 21,552,012
Reinvestment of distributions 4,211,067 5,953,096
Payments for shares redeemed (8,351,501) (41,739,209)
------------------ -------------
2,389,625 (14,234,101)
------------------ -------------
NET INCREASE / (DECREASE) IN NET ASSETS 2,273,336 (11,760,438)
NET ASSETS
Beginning of period 91,744,556 103,504,994
------------------ -------------
End of period $ 94,017,892 $ 91,744,556
================== =============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 309,329 $ 1,206,829
================== =============
FUND SHARE TRANSACTIONS
Sold 127,215 427,895
Reinvestment of distributions 83,108 119,035
Redeemed (162,954) (828,960)
------------------ -------------
Net increase/(decrease) from fund share transactions 47,369 (282,030)
================== =============
TOTAL COST OF PURCHASES OF:
Preferred and Common Stocks $ 472,144 $ 532,040
U.S. Government Securities 9,260,174 41,520,732
Corporate Bonds 33,883,848 76,643,617
------------------ -------------
$ 43,616,166 $ 118,696,389
================== =============
TOTAL PROCEEDS FROM SALES OF:
Preferred and Common Stocks $ 3 $ --
U.S. Government Securities 7,080,861 55,345,928
Corporate Bonds 31,651,751 74,180,471
------------------ -------------
$ 38,732,615 $ 129,526,399
================== =============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 4,211,702 $ 5,955,186
------------------ -------------
$ 4,211,702 $ 5,955,186
================== =============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SHORT-TERM GOVERNMENT FUND
OBJECTIVE - Seeks to provide a high level of current income and preservation of
capital by investing 100% of total net assets in bonds issued by the U.S.
government or its agencies or instrumentalities.
STRATEGY - The Short-term Government Fund (the "Fund") intends to invest 100% of
the value of its assets in bonds issued by the U.S. government and its agencies.
MANAGER'S COMMENTS:
The Fund had a total return of 1.00% (before contract fees and expenses) for the
six month period ended March 31, 2004 compared to a total return of 1.53% for
the Salomon 1-5 Year Treasury Index (the "Index"). Over the last six months, the
fixed income sector was marked by continued volatility. The range for the 2-year
Treasury was 65 basis points while the range for longer maturities was
approximately 80 basis points. The Treasury yield curve flattened with the
2-year Treasury rising 11 basis points and the 10-year Treasury declining 10
basis points during the period. Inflation remained low which along with slow job
growth allowed the Federal Reserve to maintain its target interest rate of 1% in
the face of robust GDP growth.
The Fund's underperformance to the Index was primarily a result of a shorter
duration and asset allocation. During the period, interest rates rose on the
short end of the curve while decreasing on the longer end resulting in longer
maturities outperforming. The Fund was over-weighted in the shorter maturity
sector versus the longer sector resulting in underperformance during the period.
The U.S. Treasury notes with a maturity longer than 3 years and the mortgage
pass-through securities provided the largest incremental returns. The U.S.
Agency sector generally outperformed similar maturity U.S. Treasury Securities.
The sectors that provided the largest negative contribution to the Fund included
very short maturity agency and U.S. Treasury Notes along with the short maturity
collateralized mortgage obligations (CMOs).
FUND DATA
<Table>
Manager Michael J. Schultz
Inception Date: April 3, 2000
Total Net Assets: $27.8 Million
Number of Holdings: 20
Average Duration: 1.75 years
Average Maturity: 2.28 years
Average Credit Quality: GOV/AGN
Current Yield: 2.04%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit Short-term Government Fund - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
1.68% 4.24% 5.67%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT SHORT-TERM SALOMON 1-5 YEAR
GOVERNMENT FUND TREASURY
3/31/2000 $ 10,000 $ 10,000
4/30/2000 $ 10,020 $ 10,013
5/31/2000 $ 10,040 $ 10,054
6/30/2000 $ 10,161 $ 10,179
7/31/2000 $ 10,261 $ 10,244
8/31/2000 $ 10,352 $ 10,332
9/30/2000 $ 10,414 $ 10,415
10/31/2000 $ 10,465 $ 10,475
11/30/2000 $ 10,578 $ 10,593
12/31/2000 $ 10,732 $ 10,812
1/31/2001 $ 10,857 $ 10,947
2/28/2001 $ 10,931 $ 11,032
3/31/2001 $ 11,005 $ 11,107
4/30/2001 $ 11,005 $ 11,106
5/31/2001 $ 11,047 $ 11,161
6/30/2001 $ 11,069 $ 11,198
7/31/2001 $ 11,207 $ 11,360
8/31/2001 $ 11,283 $ 11,444
9/30/2001 $ 11,466 $ 11,660
10/31/2001 $ 11,596 $ 11,795
11/30/2001 $ 11,498 $ 11,722
12/31/2001 $ 11,465 $ 11,700
1/31/2002 $ 11,498 $ 11,730
2/28/2002 $ 11,587 $ 11,806
3/31/2002 $ 11,476 $ 11,674
4/30/2002 $ 11,614 $ 11,841
5/31/2002 $ 11,679 $ 11,911
6/30/2002 $ 11,761 $ 12,032
7/31/2002 $ 11,900 $ 12,231
8/31/2002 $ 12,013 $ 12,308
9/30/2002 $ 12,122 $ 12,475
10/31/2002 $ 12,124 $ 12,486
11/30/2002 $ 12,076 $ 12,406
12/31/2002 $ 12,201 $ 12,578
1/31/2003 $ 12,187 $ 12,557
2/28/2003 $ 12,263 $ 12,649
3/31/2003 $ 12,259 $ 12,664
4/30/2003 $ 12,279 $ 12,691
5/31/2003 $ 12,335 $ 12,806
6/30/2003 $ 12,333 $ 12,807
7/31/2003 $ 12,214 $ 12,650
8/31/2003 $ 12,221 $ 12,654
9/30/2003 $ 12,341 $ 12,840
10/31/2003 $ 12,284 $ 12,755
11/30/2003 $ 12,287 $ 12,747
12/31/2003 $ 12,339 $ 12,837
1/31/2004 $ 12,367 $ 12,877
2/29/2004 $ 12,424 $ 12,968
3/31/2004 $ 12,464 $ 13,036
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Treasuries & Agencies Notes 68.5%
Mortgage-Backed Securities 28.1%
Short-Term & Other 3.4%
</Table>
29
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL HIGHLIGHTS SHORT-TERM GOVERNMENT FUND
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
SIX MONTHS PERIOD FROM
ENDED MARCH 31, APRIL 3, 2000(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
--------------------------------------------------------------------
2004 2003 2002 2001 2000
--------------------------------------------------------------------
Net asset value,
beginning of period $ 52.56 $ 53.48 $ 53.10 $ 50.95 $ 50.00
-------- -------- -------- -------- --------
Investment Activities:
Net investment income/(loss) 0.65 1.37 1.74 2.55 1.50
Net realized and
unrealized gains/(losses) (0.13) (0.42) 1.18 2.45 0.55
-------- -------- -------- -------- --------
Total from Investment Activities 0.52 0.95 2.92 5.00 2.05
-------- -------- -------- -------- --------
DISTRIBUTIONS:
Net investment income (0.68) (1.58) (1.79) (2.60) (1.10)
Net realized gains -- (0.29) (0.75) (0.25) --
-------- -------- -------- -------- --------
Total Distributions (0.68) (1.87) (2.54) (2.85) (1.10)
-------- -------- -------- -------- --------
Net asset value, end of period $ 52.40 $ 52.56 $ 53.48 $ 53.10 $ 50.95
======== ======== ======== ======== ========
Total return 1.00% 1.81% 5.72% 10.11% 4.14%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets - net (2) 0.73%(3) 0.73% 0.73% 0.73% 0.73%(3)
Ratio of expenses to average
net assets - gross 0.84%(3) 0.81% 0.97% 0.91% 1.25%(3)
Ratio of net investment
income/(loss) to average
net assets 2.11%(3) 2.00% 3.55% 5.08% 5.89%(3)
Portfolio turnover rate 33.68%(3) 55.57% 64.75% 48.30% 99.38%(3)
Net assets, end of period (000's) $ 27,801 $ 31,664 $ 25,646 $ 16,826 $ 10,199
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SHORT-TERM GOVERNMENT FUND SCHEDULE OF INVESTMENTS
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------------
U.S. TREASURY OBLIGATIONS - 33.83%
U.S. TREASURY NOTES & BONDS - 33.83%
5.750% due 11/15/05 $ 2,000,000 $ 2,139,296
4.625% due 05/15/06 2,000,000 2,124,922
2.375% due 08/15/06 1,000,000 1,014,727
4.375% due 05/15/07 1,000,000 1,069,688
3.250% due 08/15/07 1,000,000 1,035,430
3.000% due 02/15/09 2,000,000 2,021,717
---------------
Total U.S. Treasury Obligations
(cost $9,158,795) 9,405,780
---------------
U.S. AGENCY OBLIGATIONS - 34.69%
FHLB 3.625% due 10/15/04 1,500,000 1,520,207
FHLB 3.700% due 12/24/07 2,000,000 2,024,440
FHLMC 2.875% due 10/15/05 2,500,000 2,551,743
FNMA 1.875% due 12/15/04 1,500,000 1,507,608
FNMA 2.875% due 09/15/05 2,000,000 2,040,394
---------------
Total U.S. Agency Obligations
(cost $9,522,620) 9,644,392
---------------
MORTGAGE-BACKED SECURITIES - 16.71%
FHLMC 5.000% due 05/01/18 598,082 615,572
FNMA 4.500% due 03/01/17 1,510,006 1,530,364
FNMA 5.500% due 05/01/12 602,965 632,816
FNMA 7.000% due 12/01/29 1,736,280 1,851,277
GNMA 9.500% due 09/15/09 14,549 16,067
---------------
Total Mortgage-Backed Securities
(cost $4,516,970) 4,646,096
---------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 11.36%
FHR 2447 LG 5.500% due 12/15/13 31,245 31,229
FHR 2439 SC 16.824% due 07/15/28 134,042 137,363
FHR 2534 MF 1.490% due 09/15/30 1,330,845 1,331,486
FHR 2550 FI 1.444% due 11/15/32 1,655,164 1,656,194
---------------
Total Collateralized Mortgage Obligations
(cost $3,165,833) 3,156,272
---------------
<Caption>
SHARES VALUE
---------------------------------
SHORT-TERM INVESTMENTS - 2.88%
VARIABLE RATE DEMAND NOTES - 2.88%
Northern Institutional Government
(0.834% due 12/31/31) 800,434 $ 800,434
---------------
Total Short-Term Investments
(cost $800,434) 800,434
---------------
TOTAL INVESTMENTS - 99.47%
(cost $27,164,652)(1) 27,652,974
---------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(2) - 38.59% 10,728,814
---------------
OTHER ASSETS AND LIABILITIES - (38.06%) (10,580,972)
---------------
TOTAL NET ASSETS - 100.00% $ 27,800,816
===============
</Table>
(1) For federal income tax purposes, cost is $27,164,652 and gross unrealized
appreciation and depreciation of securities as of March 31, 2004 was
$503,967 and ($15,645), respectively, with a net appreciation / depreciation
of $488,322.
(2) This security was purchased with cash collateral held from securities
lending. The market value of the securities on loan, the collateral
purchased with cash, and the noncash collateral accepted is $13,119,629,
$10,728,814, and $2,635,133, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
31
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL STATEMENTS SHORT-TERM GOVERNMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 27,652,974
Collateral for securities loaned,
at fair value 10,728,814
Receivables:
Interest and dividends 223,641
Prepaid expenses and other 1,392
--------------
38,606,821
--------------
LIABILITIES
Payables:
Shares redeemed 48,137
Payable upon return of securities loaned 10,728,814
Advisory fees 5,398
Administration expenses 3,822
Directors' fees 1,705
Custodian fees 856
Fund accounting fees 7,148
Professional fees 6,701
Other accrued expenses 3,424
--------------
10,806,005
--------------
NET ASSETS*
Paid-in capital 27,471,456
Accumulated undistributed
net investment income 15,090
Accumulated net realized gain / (loss)
on investments and futures contracts (174,052)
--------------
Net unrealized appreciation / (depreciation)
on investments and futures contracts 488,322
--------------
$ 27,800,816
==============
Investments at cost $ 27,164,652
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS/ OUTSTANDING
Class I $ 27,800,816 530,532 $ 52.40
</Table>
* FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
Undistributed ordinary income $ 33,055
Unrealized appreciation $ 598,030
<Caption>
CAPITAL LOSS CARRYFORWARD
EXPIRING SEPTEMBER 30: POST-OCTOBER LOSSES DEFERRED:
- ------------------------------------------------------------------
2011 SEPTEMBER 30, 2003
---- ------------------
$ (174,980) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 414,079
Other income 4,459
--------------
418,538
--------------
EXPENSES
Advisory fees 66,489
Administration expenses 14,775
Custodian fees and expenses 1,660
Fund accounting fees 20,882
Professional fees 7,061
Directors' fees 2,379
Transfer agent fees 7,130
Other expenses 3,163
--------------
123,539
Reimbursements and waivers (16,029)
--------------
107,510
--------------
NET INVESTMENT INCOME / (LOSS) 311,028
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 77,525
Net change in unrealized appreciation/
(depreciation) on investments (109,710)
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) (32,185)
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 278,843
==============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -----------------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.45% 0.10% 0.28% $ -- $ 16,029
</Table>
(1) The Adviser has agreed to pay other expenses of the portfolio, other than
the advisory fees, to the extent that such expenses exceed the stated percentage
of their average net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
----------------------------------
2004 2003
----------------------------------
OPERATIONS
Net investment income / (loss) $ 311,028 $ 632,380
Net realized gain / (loss) on investments and futures 77,525 35,190
Net change in unrealized appreciation/(depreciation)
on investments (109,710) (84,407)
-------------- --------------
278,843 583,163
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (382,702) (927,882)
Net realized gain on investments -- (172,800)
-------------- --------------
(382,702) (1,100,682)
-------------- --------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 2,167,373 14,326,369
Reinvestment of distributions 382,702 1,100,516
Payments for shares redeemed (6,309,743) (8,890,674)
-------------- --------------
(3,759,668) 6,536,211
-------------- --------------
NET INCREASE / (DECREASE) IN NET ASSETS (3,863,527) 6,018,692
NET ASSETS
Beginning of period 31,664,343 25,645,651
-------------- --------------
End of period $ 27,800,816 $ 31,664,343
============== ==============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 15,090 $ 33,055
============== ==============
FUND SHARE TRANSACTIONS
Sold 41,442 270,220
Reinvestment of distributions 7,335 20,873
Redeemed (120,660) (168,240)
-------------- --------------
Net increase/(decrease) from fund share transactions (71,883) 122,853
============== ==============
TOTAL COST OF PURCHASES OF:
U.S. Government Securities $ 3,998,281 $ 23,508,758
-------------- --------------
$ 3,998,281 $ 23,508,758
============== ==============
TOTAL PROCEEDS FROM SALES OF:
U.S. Government Securities $ 4,518,284 $ 14,468,915
-------------- --------------
$ 4,518,284 $ 14,468,915
============== ==============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 382,702 $ 927,882
Long-term capital gains -- 172,800
-------------- --------------
$ 382,702 $ 1,100,682
============== ==============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
33
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
HIGH YIELD BOND FUND
OBJECTIVE - Seeks high current income and capital appreciation, secondarily.
STRATEGY - The High Yield Bond Fund (the "Fund") intends to invest primarily in
high yield, high risk bonds, with intermediate maturities.
MANAGER'S COMMENTS:
The high yield market continued its impressive performance over the last six
months, with interest rates moderately lower, spreads moderately tighter and the
economy showing continued signs of improvement. Not surprisingly, these factors
have lead to increased cash flows into high yield mutual funds by the investing
public. After the tremendous tightening in high yield bond spreads over the last
18 months, we have now reached levels that are closer to the historical
averages.
The Fund had a total return of 8.75% for the six months ended March 31, 2004,
including the reinvestment of dividends. This compares favorably to a return of
8.25% for the Merrill Lynch High Yield Master II Index (the "Index") during the
same period. The Fund's outperformance to the Index was primarily due to its
investments in lower quality and distressed investments during the period. Some
of the sectors included airlines, power generators and lodging.
Looking forward, on the positive side, corporate profitability appears to be
improving, generally. While each sector of the economy, and each individual
company, has its own profit dynamics, the overall picture on profitability is
improving. Lower interest rates have allowed many companies to refinance debt at
substantial savings, which has helped improve credit statistics. In addition,
default rates continue to decline from their very high levels of 2001 and 2002.
On the negative side, the general level of interest rates may rise in the
future, as the economy strengthens, which would provide a head-wind for the high
yield bond market. In addition, the large cash flows into high yield mutual
funds have slowed significantly during 2004, at least for the time being. These
countervailing forces will play themselves out during the balance of the year
and determine the ultimate return for the high yield market in 2004.
FUND DATA
<Table>
Managers: Team Managed
Inception Date: July 9, 2001
Total Net Assets: $18.5 Million
Number of Holdings: 41
Average Duration: 4.17 years
Average Maturity: 6.20 years
Average Credit Quality: B/B2
Current Yield: 9.34%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
Summit High Yield Bond Fund - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
21.65% 5.39%
</Table>
Past performance is not predictive of future results. Performance does not
reflect the deduction of taxes that a shareholder would pay on fund
distributions or redemption of fund shares.
<Table>
<Caption>
SUMMIT HIGH YIELD MERRILL LYNCH HIGH YIELD
BOND FUND MASTER II INDEX
7/9/2001 $ 10,000 $ 10,000
7/31/2001 $ 10,000 $ 10,117
8/31/2001 $ 10,033 $ 10,197
9/30/2001 $ 9,169 $ 9,493
10/31/2001 $ 9,551 $ 9,796
11/30/2001 $ 9,955 $ 10,141
12/31/2001 $ 9,838 $ 10,061
1/31/2002 $ 9,561 $ 10,116
2/28/2002 $ 9,302 $ 9,983
3/31/2002 $ 9,646 $ 10,234
4/30/2002 $ 9,772 $ 10,398
5/31/2002 $ 9,812 $ 10,318
6/30/2002 $ 9,087 $ 9,520
7/31/2002 $ 8,776 $ 9,150
8/31/2002 $ 8,939 $ 9,378
9/30/2002 $ 8,563 $ 9,232
10/31/2002 $ 8,370 $ 9,155
11/30/2002 $ 9,015 $ 9,727
12/31/2002 $ 9,011 $ 9,869
1/31/2003 $ 9,136 $ 10,165
2/28/2003 $ 9,257 $ 10,302
3/31/2003 $ 9,487 $ 10,574
4/30/2003 $ 9,958 $ 11,188
5/31/2003 $ 9,989 $ 11,316
6/30/2003 $ 10,297 $ 11,633
7/31/2003 $ 10,137 $ 11,476
8/31/2003 $ 10,282 $ 11,622
9/30/2003 $ 10,612 $ 11,938
10/31/2003 $ 10,879 $ 12,185
11/30/2003 $ 10,899 $ 12,354
12/31/2003 $ 11,107 $ 12,647
1/31/2004 $ 11,288 $ 12,851
2/29/2004 $ 11,341 $ 12,837
3/31/2004 $ 11,541 $ 12,922
</Table>
QUALITY BREAKDOWN
<Table>
<Caption>
(% OF PORTFOLIO)
---------------
BBB 2%
BB 44%
B 29%
CCC 18%
D 7%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Common Stock 6.3%
Preferred Stock 5.2%
Corporate Bonds & Notes 87.0%
Short-Term & Other 1.5%
</Table>
34
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
HIGH YIELD BOND FUND FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period. Share amounts and net asset values have been adjusted as a result of the
1-for-5 reverse stock split on February 15, 2002.
<Table>
<Caption>
SIX MONTHS PERIOD FROM
ENDED MARCH 31, JULY 9, 2001(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
-------------------------------------------------------------
2004 2003 2002 2001
-------------------------------------------------------------
Net asset value, beginning of period $ 26.67 $ 23.48 $ 27.60 $ 30.30
--------- --------- ----------- -----------
Investment Activities:
Net investment income / (loss) 1.09 2.20 2.39 0.65
Net realized and unrealized
gains/(losses) 1.19 3.13 (3.98) (3.15)
--------- --------- ----------- -----------
Total from Investment Activities 2.28 5.33 (1.59) (2.50)
--------- --------- ----------- -----------
DISTRIBUTIONS:
Net investment income (1.27) (2.14) (2.53) (0.20)
--------- --------- ----------- -----------
Total Distributions (1.27) (2.14) (2.53) (0.20)
--------- --------- ----------- -----------
Net asset value, end of period $ 27.68 $ 26.67 $ 23.48 $ 27.60
========= ========= =========== ===========
Total return 8.75% 23.92% -6.61% -8.31%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net(2) 1.20%(3) 1.18% 1.22% 1.30%(3)
Ratio of expenses to
average net assets - gross 1.20%(3) 1.18% 1.22% 1.30%(3)
Ratio of net investment
income/(loss) to average net assets 7.85%(3) 8.80% 8.86% 9.11%(3)
Portfolio turnover rate 168.53%(3) 214.02% 185.02% 111.21%(3)
Net assets, end of period (000's) $ 18,483 $ 18,519 $ 16,420 $ 18,850
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SCHEDULE OF INVESTMENTS HIGH YIELD BOND FUND
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------
PREFERRED STOCKS - 5.23%
INSURANCE - 2.88%
Conseco Inc. 10.5% PIK Dividend 20,997 $ 532,484
------------
REAL ESTATE - 2.35%
Lodgain Inc. 12.25% PIK Dividend 16,531 433,939
------------
Total Preferred Stocks
(cost $873,260) 966,423
------------
COMMON STOCKS - 6.30%
CONSUMER NON-DURABLE - .60%
Simonds Industries Inc.(2)(4)+* 2,746 111,000
------------
COMMUNICATIONS & MEDIA - 1.17%
Evercom Inc.(2)(4)+* 25,452 216,341
------------
ENERGY - 3.03%
Nrgev Energy Inc. 25,188 559,174
------------
INSURANCE - 1.50%
Conseco Inc. 12,000 277,920
------------
Total Common Stocks
(cost $2,290,268) 1,164,435
------------
<Caption>
PRINCIPAL VALUE
---------------------------
CORPORATE BONDS AND NOTES - 86.99%
CHEMICAL - 1.38%
Resolution Performance(2)
(8.000% due 12/15/09) $ 250,000 $ 255,000
------------
CONSUMER NON-DURABLE - 17.38%
American Restaurant Group Inc.
(11.500% due 11/01/06) 750,000 412,500
Dimon Inc.
(9.625% due 10/15/11) 500,000 540,000
Dole Food Inc.
(8.875% due 03/15/11) 250,000 272,500
Fresh Food, Inc.
(10.750% due 06/01/06) 750,000 686,250
Service Corp. International
(7.700% due 04/15/09) 500,000 536,250
Standard Commercial(2)
(8.000% due 04/15/12) 250,000 259,375
Syratech Corp.
(11.000% due 04/15/07) 600,000 504,000
------------
3,210,875
------------
ELECTRIC - 2.95%
AES Corporation
(9.375% due 09/15/10) 500,000 545,000
------------
ENERGY - 13.49%
Amerigas Partner
(8.875% due 05/20/11) 500,000 553,750
Chesapeake Energy
(9.000% due 08/15/12) 250,000 289,063
Colorado International Gas
(10.000% due 06/15/05) 500,000 530,000
Western Oil Sands Inc.
(8.375% due 05/01/12) 500,000 596,250
Williams Co.
(7.125% due 09/01/11) $ 500,000 $ 525,000
------------
2,494,063
------------
ENTERAINMENT & LEISURE - 4.66%
Aztar Corp.
(9.000% due 08/15/11) 500,000 561,875
Vivendi Universal
(9.250% due 04/15/10) 250,000 298,750
------------
860,625
------------
FINANCE - 2.63%
DVI Inc.(5)*
(9.875% due 02/01/34) 750,000 180,000
NRG Finance Residual Claim+* 306,566 306,566
------------
486,566
------------
HOMEBUILDING - 5.96%
Tech Olympic USA Inc.
(9.000% due 07/01/10) 500,000 543,750
WCI Communities Inc. Sr. Sub Nts.
(9.125% due 05/01/12) 500,000 557,500
------------
1,101,250
------------
HOTEL & GAMING - 4.52%
MGM Mirage
(8.375% due 02/01/11) 500,000 577,500
Station Casinos(2)
(6.000% due 04/01/12) 250,000 258,750
------------
836,250
------------
INDUSTRIAL - 1.35%
Park-Ohio Industries
(9.250% due 12/01/07) 250,000 250,000
------------
MEDIA & BROADCASTING - 3.02%
Gray Television Inc.
(9.250% due 12/15/11) 500,000 558,750
------------
MEDIA & PUBLISHING - 4.34%
Dex Media Finance/West(2)
(8.500% due 08/15/10) 100,000 110,250
Dex Media West(2)
(9.875% due 08/15/13) 100,000 111,000
RH Donnelley Financial Corp.
(8.875% due 12/15/10) 250,000 281,250
(10.875% due 12/15/12) 250,000 298,125
------------
800,625
------------
REAL ESTATE - 2.85%
Corrections Corp. of America
(7.500% due 05/01/11) 500,000 526,875
------------
SERVICES - 2.62%
Allied Waste North America(2)
(5.750% due 02/15/11) 500,000 483,750
------------
TELECOMMUNICATIONS - 9.67%
Nextel Communications
(7.375% due 08/01/15) 500,000 541,250
Qwest Capital Funding
(7.900% due 08/15/10) 500,000 450,000
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------
TELECOMMUNICATIONS - 9.67% (CONTINUED)
Qwest Communincations International
(7.250% due 02/15/11) $ 500,000 $ 476,250
WorldCom Inc.(5)*
(7.500% due 05/15/11) 1,000,000 320,000
------------
1,787,500
------------
TECHNOLOGY - .67%
Corning Inc.
(5.900% due 03/15/14) 125,000 123,750
------------
TRANSPORTATION - 8.01%
Atlas Air Inc.
(7.380% due 01/02/18) 90,788 86,182
Delta Airlines
(7.299% due 09/18/06) 200,000 167,111
Hexcel Corp.
(9.875% due 10/01/08) 50,000 55,625
Hexcel Corp.
(9.750% due 01/15/09) 500,000 520,000
Jet Equipment (2)(5)*
(7.630% due 08/15/12) 805,625 652,339
------------
1,481,257
------------
UTILITY - 1.49%
Northwest Pipeline Corp.
(8.125% due 03/01/10) $ 250,000 $ 276,250
------------
Total Corporate Bonds and Notes
(cost $15,362,851) 16,078,386
------------
<Caption>
SHARES VALUE
---------------------------
SHORT-TERM INVESTMENTS - .45%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - .45% 83,586 $ 83,586
------------
Total Short-Term Investments
(cost $83,586) 83,586
------------
TOTAL INVESTMENTS - 98.97%
(cost $18,609,965)(1) 18,292,830
------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(3) - 25.42% 4,698,714
------------
OTHER ASSETS AND LIABILITIES - (24.39%) (4,508,441)
------------
TOTAL NET ASSETS - 100.00% $ 18,483,103
============
</Table>
* Non-income producing
+ Illiquid
(1) For federal income tax purposes, cost is $18,609,965 and gross unrealized
appreciation and depreciation of securities as of March 31, 2004 was
$1,344,046 and ($1,661,181), respectively, with a net appreciation /
depreciation of ($317,135).
(2) Security exempt from registration under Rule 144(a) of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) This security was purchased with cash collateral held from securities
lending. The market value of the securities on loan, the collateral
purchased with cash, and the noncash collateral accepted is $5,087,795,
$4,698,714, and $463,799, respectively.
(4) These are restricted private placement shares.
(5) Security in default.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
37
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
FINANCIAL STATEMENTS HIGH YIELD BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 18,292,830
Collateral for securities loaned,
at fair value 4,698,714
Receivables:
Shares sold 58,224
Interest and dividends 412,762
Prepaid expenses and other 861
--------------
23,463,391
--------------
LIABILITIES
Payables:
Investment securities purchased 250,000
Payable upon return of securities loaned 4,698,714
Advisory fees 10,181
Administration expenses 1,566
Directors' fees 940
Custodian fees 856
Fund accounting fees 7,500
Professional fees 7,324
Other accrued expenses 3,207
--------------
4,980,288
--------------
NET ASSETS*
Paid-in capital 41,396,948
Accumulated undistributed net
investment income 125,011
Accumulated net realized gain / (loss)
on investments and futures contracts (22,721,721)
Net unrealized appreciation / (depreciation) on
investments and futures contracts (317,135)
--------------
$ 18,483,103
==============
Investments at cost $ 18,609,965
Shares authorized per class ($.10 par value) 20,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS OUTSTANDING
Class I $ 18,483,103 667,765 $ 27.68
</Table>
* FEDERAL TAX DATA AS OF SEPTEMBER 30, 2003
<Table>
Undistributed ordinary income $ 255,421
<Caption>
CAPITAL LOSS CARRYFORWARD POST-OCTOBER
EXPIRING SEPTEMBER 30: LOSSES DEFERRED:
- ----------------------------------------------------------------------------
2009 2010 2011 SEPTEMBER 30, 2003
---- ---- ---- ------------------
$ (19,121,451) $ (1,527,322) $ (1,025,886) $ 1,448,677
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 809,134
Other income 35,013
--------------
844,147
--------------
EXPENSES
Advisory fees 60,801
Administration expenses 9,355
Custodian fees and expenses 1,916
Fund accounting fees 22,295
Professional fees 7,171
Directors' fees 1,482
Transfer agent fees 7,275
Other expenses 1,941
--------------
112,236
--------------
NET INVESTMENT INCOME / (LOSS) 731,911
--------------
REALIZED AND UNREALIZED GAIN/(LOSS)
Net realized gain/(loss) on investments
and options 400,534
Net change in unrealized appreciation /
(depreciation) on investments 429,306
--------------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) 829,840
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 1,561,751
==============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ---------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- ------------------------------------------------------------------
0.65% 0.10% -- $ -- $ --
</Table>
(1) The Adviser has agreed to pay other expenses of the portfolio, other than
the advisory fees, to the extent that such expenses exceed the stated percentage
of their average net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
--------------------------------------
2004 2003
------------------------------------
OPERATIONS
Net investment income / (loss) $ 731,911 $ 1,568,613
Net realized gain / (loss) on investments and futures 400,534 (2,319,809)
Net change in unrealized appreciation / (depreciation)
on investments 429,306 4,573,320
------------------ ---------------
1,561,751 3,822,124
------------------ ---------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (861,240) (1,520,445)
------------------ ---------------
(861,240) (1,520,445)
------------------ ---------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 1,346,522 2,857,166
Reinvestment of distributions 173,067 282,951
Payments for shares redeemed (2,256,469) (3,342,568)
------------------ ---------------
(736,880) (202,451)
------------------ ---------------
NET INCREASE / (DECREASE) IN NET ASSETS (36,369) 2,099,228
NET ASSETS
Beginning of period 18,519,472 16,420,244
------------------ ---------------
End of period $ 18,483,103 $ 18,519,472
================== ===============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 125,011 $ 255,421
================== ===============
FUND SHARE TRANSACTIONS
Sold 49,481 113,379
Reinvestment of distributions 6,419 11,559
Redeemed (82,403) (130,015)
----------------- ---------------
Net increase / (decrease) from fund share transactions (26,503) (5,077)
================== ===============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 1,419,793 $ 743,750
U.S. Government Securities -- 6,852,870
Corporate Bonds 13,808,633 29,587,582
------------------ ---------------
$ 15,228,426 $ 37,184,202
================== ===============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 19 $ --
U.S. Government Securities -- 6,855,357
Corporate Bonds 16,631,206 29,419,956
------------------ ---------------
$ 16,631,225 $ 36,275,313
================== ===============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 861,240 $ 1,520,445
------------------ ---------------
$ 861,240 $ 1,520,445
================== ===============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
39
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
MONEY MARKET FUND
OBJECTIVE - Seeks to maintain stability of capital and to maintain the liquidity
of capital and to provide current income.
STRATEGY - The Money Market Fund intends to invest 100% of the value of its
assets in high quality short-term securities.
MANAGER'S COMMENTS:
The U.S. economy continued its momentum for the most recent semiannual period.
The positive flow of data, including strong durable goods orders, a healthy
housing market, lower weekly jobless claims, as well as an improving
manufacturing sector all suggest that the current recovery is sustainable. The
improving economy was reflected in the 4% growth in GDP over the 4th quarter.
With the economy showing marked improvement and corporate profits up, the focus
turned to job growth for assurance that the recovery was sustainable.
Unfortunately investors were disappointed in the new year. Job growth in the
first quarter was negligible as payrolls averaged less than 50,000 jobs per
month despite the expectation of a steady 4% GDP growth for the 1st quarter. The
dollar continued to weaken against the Euro touching a record low in February
and consumer sentiment, which in January hit at a three-year high, suffered
substantially over the subsequent months.
The Federal Reserve shifted their risk assessment to balanced in December as the
fear of disinflation faded. It also acknowledged the lack of jobs growth but
made statements expressing optimism. The Federal Reserve's language also shifted
regarding interest rates, suggesting that while the current target of 1% may be
accommodative, rates will eventually rise.
Early in the 3rd quarter we continued to extend the portfolio. As the
progressively disappointing labor data were reported throughout the first
quarter, the yield curve flattened. Once this occurred, we began to change our
strategy in anticipation of higher rates and a steeper yield curve. Most of our
purchases were focused in the shorter end of the curve as we felt that longer
purchases were too expensive. We have also added more floating rate securities
to the portfolio. Should the labor market turn around, floaters will provide
protection in an increasing rate environment. We are anticipating an improvement
in the labor market in the months to come and expect the yield curve to steepen
accordingly.
<Table>
<Caption>
FUND DATA
Manager: Subadvised by
Deutsche Investment
Management Americas Inc.
Inception Date: June 28, 2000
Total Net Assets: $100.7 Million
7-day Yield: 0.76%
</Table>
[CHART]
SECTOR ALLOCATIONS
<Table>
Short-Term Investments and Other 100.0%
</Table>
40
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
MONEY MARKET FUND FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Computed on the basis of a share of capital stock outstanding throughout the
period.
<Table>
<Caption>
SIX MONTHS PERIOD FROM
ENDED MARCH 31, JUNE 28, 2000(1)
(UNAUDITED) YEAR ENDED SEPTEMBER 30, TO SEPTEMBER 30,
-------------------------------------------------------------------
2004 2003 2002 2001 2000
-------------------------------------------------------------------
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ --------- --------- --------- ---------
Investment Activities:
Net investment income / (loss) -- 0.01 0.02 0.05 0.02
------------ --------- --------- --------- ---------
Total from Investment Activities -- 0.01 0.02 0.05 0.02
------------ --------- --------- --------- ---------
DISTRIBUTIONS:
Net investment income -- (0.01) (0.02) (0.05) (0.02)
------------ --------- --------- --------- ---------
Total Distributions -- (0.01) (0.02) (0.05) (0.02)
------------ --------- --------- --------- ---------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ========= ========= ========= =========
Total return 0.36% 0.95% 1.64% 4.99% 1.64%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net (2) 0.45%(3) 0.45% 0.44% 0.43% 0.45%(3)
Ratio of expenses to
average net assets - gross 0.59%(3) 0.56% 0.60% 0.48% 0.54%(3)
Ratio of net investment income/(loss)
to average net assets 0.82%(3) 0.95% 1.62% 4.78% 6.41%(3)
Net assets, end of period (000's) $ 100,748 $ 112,651 $ 120,401 $ 86,889 $ 64,489
</Table>
(1) COMMENCEMENT OF OPERATIONS.
(2) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(3) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
SCHEDULE OF INVESTMENTS MONEY MARKET FUND
MARCH 31, 2004 (UNAUDITED)
<Table>
<Caption>
PRINCIPAL VALUE
--------------------------------
SHORT-TERM INVESTMENTS - 101.94%
COMMERCIAL PAPER - 101.94%
American Honda Finance
(1.260% due 09/10/04) $ 1,000,000 $ 1,000,871
Bayerische Landesbk
(1.050% due 08/25/04) 2,000,000 1,999,997
Bear Stearns Companies
(1.570% due 10/22/04) 2,500,000 2,506,826
Blue Heron Funding
(1.130% due 05/19/04) 1,000,000 1,000,000
Cancara Asset Securitization
(1.040% due 06/15/04) 2,000,000 1,995,667
Canadian Imperial Bank
(1.045% due 05/28/04) 2,000,000 1,999,953
CC Inc.
(1.046% due 07/21/04) 4,000,000 3,999,939
Charta Corporation
(1.030% due 04/01/04) 2,800,000 2,800,000
CIT Group Inc
(1.200% due 12/01/04) 3,000,000 3,001,414
CIT Group Inc
(5.625% due 05/17/04) 1,000,000 1,005,398
Credit Agricole
(1.120% due 06/30/04) 4,000,000 4,000,777
Dorada Finance
(1.170% due 04/19/04) 3,000,000 2,998,245
Dresdner Bank
(1.130% due 05/05/04) 2,000,000 2,000,000
Federal National Mortgage Corp.
(1.200% due 08/06/04) 1,000,000 1,000,000
Federal National Mortgage Corp.
(1.470% due 11/12/04) 1,000,000 990,813
Federal National Mortgage Corp.
(1.190% due 02/14/05) 1,000,000 1,000,000
Federal National Mortgage Corp.
(1.110% due 10/07/05) 4,000,000 4,000,000
Federal National Mortgage Assistance Notes
(3.750% due 04/15/04) 1,000,000 1,000,978
Federal National Mortgage Assistance Notes
(3.000% due 07/15/04) 4,000,000 4,021,165
Federal National Mortgage Assistance Notes
(4.500% due 08/15/04) 1,000,000 1,011,694
Federal National Mortgage Assistance Notes
(1.500% due 11/16/04) 2,000,000 2,000,000
General Electric International
(1.040% due 04/22/04) 2,000,000 1,998,787
Giro Funding US Corp.
(1.040% due 05/05/04) $ 1,000,000 $ 999,018
Giro Funding US Corp.
(1.050% due 05/06/04) 3,000,000 2,996,938
Goldman Sachs Group
(1.250% due 10/25/04) 3,000,000 3,000,000
Greyhawk Funding
(1.040% due 06/07/04) 2,000,000 1,996,129
Jupiter Securitization Corp.
(1.020% due 04/13/04) 3,500,000 3,498,769
K2 (USA)
(1.150% due 04/23/04) 1,000,000 999,297
K2 (USA)
(1.160% due 04/26/04) 1,000,000 999,194
K2 (USA)
(1.100% due 08/16/04) 3,000,000 2,987,442
Lake Constance Funding
(1.100% due 08/1104) 3,000,000 2,987,900
Merrill Lynch& Co.
(1.044% due 02/17/05) 4,000,000 3,999,825
Nationwide Building Society
(1.100% due 09/09/04) 4,000,000 4,000,178
Sheffield Receivables Corp.
(1.050% due 04/06/04) 4,100,000 4,099,402
South Trust Bank
(1.200% due 07/16/04) 1,800,000 1,800,644
Swedbank
(1.052% due 10/12/04) 1,000,000 999,822
Tango Finance Corp.
(1.060% due 04/06/04) 3,000,000 2,999,558
Toronto Dominion Holdings
(1.250% due 12/31/04) 1,000,000 1,000,896
UBS Finance
(.950% due 04/01/04) $ 12,000,000 12,000,000
Unicredito Italiano
(1.100% due 08/17/04) 1,000,000 1,000,019
Westlb
(1.320% due 04/15/04) 3,000,000 2,999,988
---------------
Total Short-Term Investments
(cost $102,697,543) 102,697,543
---------------
TOTAL INVESTMENTS - 101.94%
(cost $102,697,543) 102,697,543
---------------
OTHER ASSETS AND LIABILITIES - (1.94%) (1,949,728)
---------------
TOTAL NET ASSETS - 100.00% $ 100,747,815
===============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
MONEY MARKET FUND FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 102,697,543
Receivables:
Shares sold 4,289
Interest and dividends 244,796
Prepaid expenses and other 4,607
--------------
102,951,235
--------------
LIABILITIES
Payables:
Investment securities purchased 57,109
Shares redeemed 392,173
Bank overdraft 1,688,769
Advisory fees 24,994
Administration expenses 8,285
Directors' fees 6,078
Custodian fees 5,146
Fund accounting fees 7,439
Professional fees 7,322
Other accrued expenses 6,105
--------------
2,203,420
--------------
NET ASSETS
Paid-in capital 100,747,815
--------------
$ 100,747,815
==============
Investments at cost $ 102,697,543
Shares authorized per class ($.10 par value) 200,000,000
</Table>
NET ASSET VALUE (NAV) BY SHARE CLASS
<Table>
<Caption>
SHARES
SHARE CLASS NET ASSETS OUTSTANDING
Class I $ 100,747,815 100,747,815 $ 1.00
</Table>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 656,614
--------------
656,614
--------------
EXPENSES
Advisory fees 180,833
Administration expenses 51,666
Custodian fees and expenses 13,477
Fund accounting fees 21,022
Professional fees 10,307
Directors' fees 8,166
Transfer agent fees 8,747
Other expenses 9,821
--------------
304,039
--------------
Reimbursements and waivers (71,540)
--------------
232,499
--------------
NET INVESTMENT INCOME / (LOSS) 424,115
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 592
--------------
Net change in unrealized appreciation /
(depreciation) on investments --
NET REALIZED AND UNREALIZED GAIN / (LOSS) 592
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 424,707
==============
</Table>
TRANSACTIONS WITH AFFILIATES:
<Table>
<Caption>
PERCENT OF CURRENT NET ASSET VALUE
- ---------------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------
0.35% 0.10% 0.10% $ -- $ 71,540
</Table>
(1) The Adviser has agreed to pay other expenses of the portfolio, other than
the advisory fees, to the extent that such expenses exceed the stated percentage
of their average net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
43
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED MARCH 31, YEAR ENDED
(UNAUDITED) SEPTEMBER 30,
---------------------------------------
2004 2003
---------------------------------------
OPERATIONS
Net investment income / (loss) $ 424,115 $ 1,163,145
Net realized gain / (loss)
on investments and futures 592 4,439
------------------ ------------------
424,707 1,167,584
------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (424,115) (1,163,145)
Net realized gain on investments (592) (4,439)
------------------ ------------------
(424,707) (1,167,584)
------------------ ------------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 25,260,262 68,522,931
Reinvestment of distributions 367,424 1,167,250
Payments for shares redeemed (37,530,831) (77,439,855)
------------------ ------------------
(11,903,145) (7,749,674)
------------------ ------------------
NET INCREASE / (DECREASE) IN NET ASSETS (11,903,145) (7,749,674)
NET ASSETS
Beginning of period 112,650,960 120,400,634
------------------ ------------------
End of period $ 100,747,815 $ 112,650,960
================== ==================
FUND SHARE TRANSACTIONS
Sold 25,260,262 68,522,931
Reinvestment of distributions 367,424 1,167,250
Redeemed (37,530,831) (77,439,855)
------------------ ------------------
Net increase / (decrease)
from fund share transactions (11,903,145) (7,749,674)
================== ==================
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 424,707 $ 1,167,519
------------------ ------------------
$ 424,707 $ 1,167,519
================== ==================
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2004 (UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Summit Mutual Funds, Inc. ("Summit Mutual Funds") is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified, open-end
management investment company. Summit Mutual Funds is offered in two series, the
Pinnacle Series and the Apex Series. The shares of the Apex Series (the
"Series") are offered without sales charge to institutional and retail
investors. These funds are also offered to insurance company exempt separate
accounts, including The Union Central Life Insurance Company (parent company of
Summit Investment Partners Inc., the Adviser). The Series' shares are offered in
seven different funds - Nasdaq-100 Index Fund, Total Social Impact Fund, Everest
Fund, Bond Fund, Short-term Government Fund, High Yield Bond Fund, and Money
Market Fund (individually "Fund", collectively "Funds"). The Nasdaq-100 Index
Fund seeks investment results that correspond to the total return performance of
common stocks as represented by its respective index. The Total Social Impact
Fund seeks investment results that closely correspond to the total return
performance of U.S. common stocks, as presented by the S&P 500 Index. The Total
Social Impact Fund also seeks to promote better business practices by investing
more in companies in the S&P 500 Index that conduct their business commendably
with respect to their stakeholders. The Everest Fund seeks long-term
appreciation of capital, without incurring unduly high risk, by investing
primarily in common stocks and other equity securities. Current income is a
secondary objective. The Bond Fund seeks as high a level of current income as is
consistent with reasonable investment risk, by investing primarily in long-term,
fixed-income, investment-grade corporate bonds. The Short-term Government Fund
seeks to provide a high level of current income and preservation of capital by
investing 100% of its total assets in bonds issued by the U.S. government and
its agencies. The High Yield Bond Fund seeks high current income and capital
appreciation, secondarily, by investing primarily in high yield, high risk
bonds, with intermediate maturities. The Money Market Fund seeks to maintain
stability of capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. The results of the Fund(s) for your
investment product are included herein.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("generally accepted
accounting principles") 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SECURITIES VALUATION - Securities held in each Fund, except for money market
instruments maturing in 60 days or less, are valued as follows: Securities
traded on stock exchanges (including securities traded in both the
over-the-counter market and on an exchange), or listed on the NASDAQ National
Market System, are valued at the last sales price as of the close of the
New York Stock Exchange on the day the securities are being valued, or, lacking
any sales, at the closing bid prices. Alternatively, NASDAQ listed securities
may be valued on the basis of the NASDAQ Official Closing Price. Securities
traded only in the over-the-counter market are valued at the last bid price, as
of the close of trading on the New York Stock Exchange, quoted by brokers that
make markets in the securities. Other securities for which market quotations are
not readily available are valued at fair value as determined in good faith under
procedures adopted by the Board of Directors. Money market instruments maturing
in 60 days or less are valued at amortized cost, which approximates market.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
recorded on the trade date (the date the order to buy or sell is executed).
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. All amortization of discount and premium is
recognized currently under the effective interest method. Gains and losses on
sales of investments are calculated on the identified cost basis for financial
reporting and tax purposes. Paydown gains and losses on mortgage and
asset-backed securities are presented as interest income.
FEDERAL TAXES - Each Fund contemplates declaring as dividends each year all, or
substantially all, of its taxable income, including net capital gains (the
excess of long-term capital gains over short-term capital losses). Shareholders
will be subject to income taxes on these distributions regardless of whether
they are paid in cash or reinvested in additional Fund shares. Distributions
attributable to the net capital gains of a Fund will be taxable to the
shareholder as long-term capital gains, regardless of how long the shareholder
has held the Fund shares. Other Fund distributions will generally be taxable as
ordinary income. The one major exception to these tax principles is that
distributions on, and sales, exchanges and redemptions of, Fund shares held in
an IRA (or other tax-qualified plan) will not be currently taxable. The
following percentages of fund dividends are
45
<Page>
eligible for the reduced rate attributed to qualified dividend income under the
Jobs and Growth Tax Relief & Reconciliation Act of 2003: Total Social Impact
(100%).
Shareholders may also be subject to state and local taxes on distributions and
redemptions. State income taxes may not apply, however, to the portions of each
Funds' distributions, if any, that are attributable to interest on Federal
securities or interest on securities of the particular state. Shareholders
should consult their tax advisers regarding the tax status of distributions in
their state and locality.
It is the intent of Summit Mutual Funds to comply with the requirements under
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its net investment income and any net
realized capital gains. Accordingly, no provision for federal or state income
taxes has been recorded.
DISTRIBUTIONS - Distributions from net investment income in all fixed income
Funds, except Money Market Fund, are generally declared and paid quarterly.
Distributions from net investment income of the Money Market Fund are declared
daily and paid monthly. Equity Funds generally declare and pay dividends
annually. Net realized capital gains are distributed periodically, no less
frequently than annually. Distributions are recorded on the ex-dividend date.
All distributions are reinvested in additional shares of the respective Fund at
the net asset value per share unless you notify Summit Mutual Funds that you
elect to receive distributions in cash.
The amounts of distributions are determined in accordance with federal income
tax regulations, which may differ from generally accepted accounting principles
in the United States of America. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax-basis treatment; temporary differences do not require
reclassification. Distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax purposes
are reported as distributions in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of paid-in-capital.
EXPENSES - Allocable expenses of Summit Mutual Funds are charged to each Fund
based on the ratio of the net assets of each Fund to the combined net assets of
Summit Mutual Funds. Nonallocable expenses are charged to each Fund based on
specific identification.
FOREIGN CURRENCY - Summit Mutual Funds' accounting records are maintained in
U.S. dollars. Funds may purchase foreign securities within certain limitations
set forth in the Prospectus. Amounts denominated in or expected to settle in
foreign currencies are translated into U.S. dollars at the spot rate at the
close of the London Market. Summit Mutual Funds does not isolate that portion of
the results of operations resulting from changes in foreign exchange rates on
investments from the underlying fluctuation in the securities resulting from
market prices. All are included in net realized and unrealized gain or loss for
investments.
Foreign security and currency transactions may involve certain risks not
typically associated with those of U.S. companies including the level of
governmental supervision and regulations of foreign securities markets and the
possibility of political and economic instability.
FUTURES CONTRACTS AND FUND SECURITIES LOANED - Certain Funds may enter into
futures contracts for hedging purposes, including protecting the price or
interest rate of securities that the Fund intends to buy, that relate to
securities in which it may directly invest and indices comprised of such
securities may purchase and write call and put options on such contracts. Each
eligible Fund may invest up to 20% of its assets in such futures and/or options.
The Nasdaq-100 Index, Total Social Impact, and Everest Fund may invest up to
100% of their assets in such futures and/or options until each Fund reaches $50
million in net assets. These contracts provide for the sale of a specified
quantity of a financial instrument at a fixed price at a future date. When the
Funds enter into a futures contract, they are required to deposit, or designate
and maintain as collateral such initial margin as required by the exchange on
which the contract is traded. Under terms of the contract, the Funds agree to
receive from or pay to the broker an amount equal to the daily fluctuation in
the value of the contract (known as the variation margin). The variation margin
is recorded as unrealized gain or loss until the contract expires or is
otherwise closed, at which time the gain or loss is realized. The Funds invest
in futures as a substitute to investing in the common stock positions in the
Index that they intend to
46
<Page>
match. The potential risk to the Funds is that the change in the value in the
underlying securities may not correlate to the value of the contracts.
The Funds (except the Total Social Impact and Money Market Funds) lend their
securities to approved brokers to earn additional income and receive cash and/or
securities as collateral to secure the loans. Income from securities lending is
included in "Other Income" on the Statement of Operations. Collateral is
maintained at not less than 100% of the value of loaned securities. Although the
risk of lending is mitigated by the collateral, the Funds could experience a
delay in recovering its securities and a possible loss of income or value if the
borrower fails to return them. In addition to cash collateral, the Funds may
accept noncash collateral consisting of government securities and irrevocable
letters of credit from domestically domiciled banks.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES - Summit Mutual Funds pays investment advisory fees to
Summit Investment Partners, Inc. (the "Adviser"), under terms of an Investment
Advisory Agreement (the "Agreement"). Certain officers and directors of the
Adviser are affiliated with Summit Mutual Funds. Summit Mutual Funds pays the
Adviser, as full compensation for all services and facilities furnished, a
monthly fee computed separately for each Fund on a daily basis.
ADMINISTRATION FEES - Summit Mutual Funds pays the Adviser to perform certain
administration services. The Fund shall pay the Adviser as full compensation for
all facilities and services furnished a fee computed separately for each
portfolio of the Fund.
DIRECTORS' FEES - Each director who is not affiliated with the Adviser receives
fees from Summit Mutual Funds for service as a director. Members of the Board of
Directors who are not affiliated with the Adviser are eligible to participate in
a deferred compensation plan. The value of each director's deferred compensation
account will increase or decrease at the same rate as if it were invested in
shares of the Summit Money Market Fund.
Summit Investment Partners, Inc. is a wholly-owned subsidiary of Union Central.
NOTE 3 - MULTIPLE CLASSES OF SHARES
The Nasdaq-100 Index, Total Social Impact, and Everest Funds began offering a
second class of shares (Class F). The Class F shares are subject to a
Distribution and Shareholder Service Plan ("12b-1 Plan"), which was approved by
the Funds' Board of Directors on March 1, 2002. The 12b-1 Plan provides that
each Distribution Plan Class shall pay to the Funds' Distributor, Carillon
Investments, Inc., a fee for payments the Distributor makes to banks, financial
planners, retirement plan service providers, broker/dealers and other
institutions for distribution assistance and/or shareholder services in
connection with the Distribution Plan Class shares. The fee shall be in an
amount not to exceed on an annual basis 0.25% of the average daily net asset
value of each Distribution Plan Class. Since the fee is paid out of the assets
or income of the Distribution Plan Class on an ongoing basis, over time the fee
will increase the cost and reduce the return of an investment.
The two classes of shares represent interests in the same portfolio of
investments, have the same rights, and are generally identical in all respects
except that each class bears its separate class-specific expenses, and has
exclusive voting rights with respect to any matter on which a separate vote of
any class is required. Income, non-class specific expenses and
realized/unrealized gains and losses are allocated to the respective classes on
the basis of the relative daily net assets.
47
<Page>
SUMMIT MUTUAL FUNDS, INC. - APEX SERIES
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
INDEPENDENT DIRECTORS
<Table>
<Caption>
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
POSITION(S) OFFICE AND FUND COMPLEX DIRECTORSHIPS
WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME, AGE AND ADDRESS(1) FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ----------------------------------------------------------------------------------------------------------------------
George M. Callard, M.D. Director Director Professor of Clinical Surgery, 16
(Age 70) since 1987 University of Cincinnati
Theodore H. Emmerich Director Director Consultant; former Partner, 16 American Financial
(77) since 1987 Ernst & Whinney, Accountants Group
Yvonne L. Gray Director Director Executive Vice President/COO, 16
(53) since 1999 United Way of Greater
Cincinnati (Social Services
Provider); prior thereto, Vice
President / Trust Operations
Officer, Fifth Third Bank;
former Audit Manager, Price
Waterhouse (Accounting Firm)
David C. Phillips Director Director Co-Founder, Cincinnati Works 16 Meridian Bioscience,
(65) since 2001 Inc. (Job Placement); prior Inc.; Cintas, Inc.
thereto, Chief Executive
Officer, Downtown Cincinnati
Inc. (Economic Revitalization
of Cincinnati)
Mary W. Sullivan Director Director Attorney, Peck, Shaffer & 16 Franklin Savings and
(47) since 2001 Williams LLP (Law Firm) Loan Co.;
First Franklin
Corporation
</Table>
INTERESTED DIRECTORS AND OFFICERS
<Table>
<Caption>
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
POSITION(S) OFFICE AND FUND COMPLEX DIRECTORSHIPS
WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY
NAME, AGE AND ADDRESS(1) FUND TIME SERVED DURING PAST FIVE YEARS DIRECTOR DIRECTOR
- ------------------------------------------------------------------------------------------------------------------
Steven R. Sutermeister* Director, Director Senior Vice President, Union 16 Carillon
(50) President and since 1999 Central; President and Chief Investments, Inc.;
Chief Executive Executive Officer, Adviser. Summit Investment
Officer Partners, Inc.;
Union Central
Mortgage Funding,
Inc.
John F. Labmeier Vice President Officer Vice President, Associate NA NA
1876 Waycross Rd. and Secretary since 1990 General Counsel and Assistant
(55) Secretary, Union Central; Vice
President and Secretary,
Carillon Investments, Inc.;
Secretary, Adviser
Thomas G. Knipper Controller and Officer Treasurer, Adviser
(46) Treasurer since 1995
John M. Lucas Assistant Officer Second Vice President, Counsel NA NA
1876 Waycross Rd. Secretary since 1990 and Assistant Secretary, Union
Cincinnati, OH 45240 Central
(53)
</Table>
- ----------
(1) Except as otherwise indicated, the business of each listed person is 312 Elm
St., Ste. 1212, Cincinnati, OH 45202
* Mr. Sutermeister may be considered to be an "interested person" of the Fund
(within the meaning of the Investment Company Act of 1940) because of his
affiliation with the Adviser.
<Page>
THE SUMMIT PINNACLE SERIES IS DISTRIBUTED TO INSURANCE COMPANY'S SEPARATE
ACCOUNTS AVAILABLE IN VARIABLE ANNUITY AND VARIABLE UNIVERSAL LIFE INSURANCE
PRODUCTS. THE PINNACLE SERIES CONSISTS OF THE FOLLOWING PORTFOLIOS:
EQUITY INDEX ACCOUNTS
S&P 500 INDEX PORTFOLIO
S&P MIDCAP 400 INDEX PORTFOLIO
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO
NASDAQ-100 INDEX PORTFOLIO
EAFE INTERNATIONAL INDEX PORTFOLIO
FIXED INCOME & BALANCED INDEX ACCOUNT
BALANCED INDEX PORTFOLIO
LEHMAN AGGREGATE BOND INDEX PORTFOLIO
MANAGED ACCOUNTS
ZENITH PORTFOLIO
BOND PORTFOLIO
THE SUMMIT APEX SERIES IS A NO-LOAD FAMILY OF MUTUAL FUNDS INTENDED FOR
INSTITUTIONAL AND RETAIL ACCOUNTS. FOR MORE COMPLETE INFORMATION ABOUT THE
SUMMIT MUTUAL FUNDS' APEX SERIES, INCLUDING CHARGES AND EXPENSES, CALL
888-259-7565 FOR A PROSPECTUS. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR
SEND MONEY. SUMMIT MUTUAL FUNDS ARE DISTRIBUTED BY CARILLON INVESTMENTS, INC.,
CINCINNATI, OHIO, MEMBER SIPC.
THE APEX SERIES CONSISTS OF THE FOLLOWING FUNDS:
EQUITY INDEX ACCOUNTS
NASDAQ-100 INDEX FUND
TOTAL SOCIAL IMPACT FUND
MANAGED ACCOUNTS
EVEREST FUND
BOND FUND
SHORT-TERM GOVERNMENT FUND
HIGH YIELD BOND FUND
STABLE VALUE ACCOUNT
MONEY MARKET FUND
PLEASE VISIT OUR WEBSITE AT www.summitfunds.com TO LEARN MORE ABOUT THE SUMMIT
MUTUAL FUNDS.
[SUMMIT MUTUAL FUNDS LOGO]
SMFI 573APEX 5/04
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ITEM 2. CODE OF ETHICS
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable.
ITEM 5. [RESERVED]
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) The Registrant's President and Treasurer have evaluated
the Registrant's disclosure controls and procedures
within 90 days of this filing and have concluded that
the Registrant's disclosure controls and procedures
were effective, as of that date, in ensuring that
information required to be disclosed by the Registrant
in this form N-CSR was recorded, processed, summarized,
and reported timely.
(b) There were no significant changes in Registrant's
internal controls or other factors that could
significantly affect these controls subsequent
to the date of their evaluation, including any
corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 10. EXHIBITS
(a) Code of Ethics. Not applicable to semiannual reports.
(b) Certifications as required by Rule 30a-2(a) under the
Act filed herewith.
(c) Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SUMMIT MUTUAL FUNDS, INC.
Date: May 27, 2004 /S/ Steven R. Sutermeister
----------------- By: -------------------------------
Steven R. Sutermeister,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: /S/ Steven R. Sutermeister By: /S/ Thomas G. Knipper
---------------------------- --------------------------
Steven R. Sutermeister Thomas G. Knipper
President and Chief Executive Officer Controller and Treasurer
Date: May 27, 2003 Date: May 27, 2004
----------------- -------------------