OMB APPROVAL
OMB Number: 3235-0570
Expires: October 31, 2006
Estimated average burden
hours per response 19.3
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4000
--------
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: December 31, 2004
Date of reporting period: June 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
SUMMIT MUTUAL FUNDS
SEMIANNUAL REPORT
SUMMIT PINNACLE SERIES
ZENITH PORTFOLIO
BOND PORTFOLIO
S&P 500 INDEX PORTFOLIO
S&P MIDCAP 400 INDEX PORTFOLIO
BALANCED INDEX PORTFOLIO
NASDAQ-100 INDEX PORTFOLIO
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO
EAFE INTERNATIONAL INDEX PORTFOLIO
LEHMAN AGGREGATE BOND INDEX PORTFOLIO
JUNE 30, 2004
[SUMMIT MUTUAL FUNDS LOGO]
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
SEMIANNUAL REPORT - TABLE OF CONTENTS
<Table>
Message from the President 1
Fund Expenses 2
Portfolio Managers' Reports and Financial Statements:
Zenith Portfolio 3
Bond Portfolio 8
S&P 500 Index Portfolio 15
S&P MidCap 400 Index Portfolio 21
Balanced Index Portfolio 27
Nasdaq-100 Index Portfolio 33
Russell 2000 Small Cap Index Portfolio 39
EAFE International Index Portfolio 45
Lehman Aggregate Bond Index Portfolio 51
Notes to Financial Statements 57
</Table>
THIS REPORT CONTAINS A SUMMARY SCHEDULE OF INVESTMENTS FOR EACH PORTFOLIO. IF
YOU WOULD LIKE A COMPLETE SCHEDULE OF INVESTMENTS IN SECURITIES, PLEASE CONTACT
YOUR INSURANCE COMPANY CUSTOMER SERVICE DEPARTMENT (OR CALL SUMMIT FUNDS AT
1-888-259-7565), AND THEY WILL MAIL YOU A COPY WITHOUT CHARGE. WE WILL ALSO POST
THE SCHEDULE ON OUR WEBSITE AT www.summitfunds.com. YOU MAY ALSO RETRIEVE THE
SCHEDULE FROM THE SEC'S WEBSITE AT www.sec.gov.
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF CONTRACT OWNERS AND IS NOT
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS OF CONTRACTS UNLESS IT IS
PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS FOR SUMMIT MUTUAL FUNDS, INC.
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
MESSAGE FROM THE PRESIDENT
We are pleased to send you Summit Mutual Funds' 2004 Semiannual Report for the
period ended June 30, 2004. We welcome new and thank existing investors that
have chosen the Summit options in your insurance products. We strive to help you
reach your financial goals.
The first six months of 2004 marked a period of uncertainty for the U.S. economy
and, as a consequence, investors. There have been many hopeful signs of
continuing the strong recovery that was trumpeted by the 8.2% GDP results of the
third quarter of 2003. Employment growth, which had stubbornly avoided a
rebound, began to show signs of strength. Corporate profits have continued their
upward march into record territory, and consumer confidence has followed. In
contrast, energy prices have spiked upward on supply concerns resulting from
Mid-East tensions and increasing demand resulting from the economic rebound.
Consequently, inflation fears have resurfaced. These conditions have caused the
Federal Reserve to raise interest rates for the first time since May 2000,
signaling a period of steady, albeit measured, increases in rates.
"OUR MESSAGE RINGS TRUE IN UNCERTAIN TIMES"
This economic news has been accompanied by mixed signals on the geopolitical
front. In Iraq, insurgent violence peaked in the spring in advance of Iraqi
leaders taking back sovereignty in late June. The commuter train bombings in
Madrid, Spain and predictions of domestic terror attacks during the U.S.
election cycle also exacerbated fears and increased levels of anxiety. All of
this is occurring in a backdrop of a presidential election year. The result
creates uncertainty for many investors.
Equity markets have responded by slowing the pace of the rally, particularly
during the second quarter. During the entire six-month period ended June 30,
2004, the S&P 500 Index advanced 3.4%, the S&P 400 MidCap Index returned 6.1%
and the Russell 2000 Index gained 6.8%. In other market sectors, the Nasdaq-100
Index gained 3.4% while, in international arenas, the EAFE Index advanced 4.6%.
While all of these returns remain positive, uncertainty is never a friend to the
markets, and this transitional period may remain for some time until managers
get a better sense for how these conditions are resolved.
Fixed income markets generally ended the first six months of 2004 with break
even returns. The positive impact of current coupon income earned was nearly
erased by falling bond prices that are a result of rising interest rates.
Volatility increased throughout the period as rates rose. The Lehman Aggregate
Bond Index's return during the entire six months ended June 30, 2004 was a scant
0.2%, with a positive first quarter return of 2.7% and a negative second quarter
return of 2.4%.
"...ASSET ALLOCATION AND PORTFOLIO REBALANCING ARE CRITICAL IN PERIODS OF
UNCERTAINTY"
Our message rings true in uncertain times. 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 are critical in periods of uncertainty. Proper
diversification of your investments, both within and across asset sectors, (or
specifically stocks, bonds and cash) is an important component of achieving your
long-term investment goals. Summit Mutual Funds is able to provide the
foundation of a diversified investment plan with choices across equity and
fixed-income styles with index and managed options in keeping with our "CORE &
MORE" philosophy.
RECENT HIGHLIGHTS:
- - Summit's Zenith Portfolio has demonstrated strong long-term performance
over the last five years (with average annual returns of +7.3% compared to
+1.9% for the Russell 1000 Value Index and -2.2% for the Standard & Poor's
500) ranking it as a top performer by leading rating agencies.
- - Summit's diversified offerings, including the Russell 2000 Small Cap Index
and S&P MidCap 400 Index Portfolios, provide investors a convenient way to
diversify into sectors that can maximize returns, based on market
opportunities.
Thank you for choosing Summit Funds during these dynamic 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. - PINNACLE SERIES
2004 SEMIANNUAL REPORT - FUND EXPENSES
As a shareholder of the Fund, you incur ongoing costs, including management fees
and other Fund expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period January 1, 2004 through June 30, 2004.
ACTUAL EXPENSES
The first section of the table below provides information about actual account
values and actual net expenses. You may use the information in this section,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first section under the heading entitled "Expenses Paid" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second section of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio, net of fee waivers and expense reimbursements, and an assumed rate of
return of 5% per year before expenses, which is not the Fund's actual return.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. You may use
this information to compare the ongoing costs of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of other funds.
Please note that the second section of the table is useful in comparing ongoing
costs only, and will not help you determine the relative total costs of owning
different funds.
<Table>
<Caption>
BEGINNING ENDING ANNUALIZED
EXPENSES PAID *
ACCOUNT VALUE ACCOUNT VALUE NET EXPENSE
JAN. 1, 2004 TO
PORTFOLIO DECEMBER 31, 2003 JUNE 30, 2004 RATIO
JUNE 30, 2004
- -----------------------------------------------------------------------------------------
- -----------------
BASED ON ACTUAL RETURN
Zenith Portfolio $ 1,000 $ 1,041 0.91%
$ 5
Bond Portfolio 1,000 997 0.75%
4
S&P 500 Index Portfolio 1,000 1,030 0.42%
2
S&P MidCap 400 Index Portfolio 1,000 1,054 0.57%
3
Balanced Index Portfolio 1,000 1,016 0.60%
3
Nasdaq-100 Index Portfolio 1,000 1,027 0.65%
3
Russell 2000 Small Cap Index Portfolio 1,000 1,062 0.75%
4
EAFE International Index Portfolio 1,000 1,031 0.95%
5
Lehman Aggregate Bond Index Portfolio 1,000 996 0.60%
3
BASED ON HYPOTHETICAL RETURN
(5% return before expenses)
Zenith Portfolio $ 1,000 $ 1,020 0.91%
$ 5
Bond Portfolio 1,000 1,021 0.75%
4
S&P 500 Index Portfolio 1,000 1,023 0.42%
2
S&P MidCap 400 Index Portfolio 1,000 1,022 0.57%
3
Balanced Index Portfolio 1,000 1,022 0.60%
3
Nasdaq-100 Index Portfolio 1,000 1,021 0.65%
3
Russell 2000 Small Cap Index Portfolio 1,000 1,021 0.75%
4
EAFE International Index Portfolio 1,000 1,020 0.95%
5
Lehman Aggregate Bond Index Portfolio 1,000 1,022 0.60%
3
</Table>
* Expenses are equal to the Fund's annualized net expense ratio, multiplied
by the average account value over the period, multiplied by 182/366 (to
reflect the one-half year period).
2
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
ZENITH PORTFOLIO
OBJECTIVE - Seeks long-term appreciation of capital by investing in common
stocks and other equity securities with values that are, at present, not fully
recognized by the market.
STRATEGY - The Summit Pinnacle Zenith Portfolio (the "Portfolio") 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 Portfolio fund performance for the six-month period ended June 30, 2004 was
4.57% (before the impact of any product or contract-level fees) versus 3.94% for
the Russell 1000 Value and 3.44% for the Standard & Poor's 500 Composite Stock
(the "S&P 500 Index") Indices.
The economy continued its recovery in the first half of the year following a
strong fourth quarter of last year. The Federal Reserve's "easy money" policy of
low interest rates resuscitated corporations' and consumers' balance sheets.
With low interest rates and economic recovery, equities looked inexpensive
again-especially compared to money market accounts and fixed income instruments.
The performance of the Portfolio benefited from an overweighting in the energy
sector which tracked with the high energy prices. Energy companies owned
included: Nabors Industries, Weatherford International, ConocoPhillips, Devon
Energy, and Anadarko Petroleum. The Portfolio also benefited from specific
holdings, including: Motorola, that benefited from improving prospects in its
semiconductor and cell-phone handset business; SunTrust Banks, where we took a
short-term gain on general speculation about bank acquisitions; Darden
Restaurants, that rose from an oversold position on recovery hopes; and ConAgra
Foods and Lincoln National, that benefited from specific sector rebounds.
Detractors from performance included: SPX Industries that suffered an earnings
shortfall; Nokia that was hurt by a loss of market share in cell-phone handsets;
Union Pacific that was unable to meet heightened demand for rail service; and
Comcast that was hurt by its ill-fated acquisition attempt of Disney.
The economic recovery is signaling the end of a period of fixed-income market
dominance. The perfect scenario for bonds, an ever-lower fed funds rates with no
signs of inflation or economic recovery, is now being replaced by incipient
inflation and economic growth. The final act in the fixed-income script played
out when the fed funds rate was increased on the last day of the first half of
the year. The market now expects a "measured" increase, which can be interpreted
as a steady stream of increases that don't abort the recovery.
After last year's equity market rebound, investors' enthusiasm has risen along
with valuations. The difficulty for investors will be settling for more
historically normal levels of equity returns. Some investors may be disappointed
by returns that are modest in comparison with the go-go period of the late
1990's. However, faced with an alternative of meager money-market and
fixed-income returns, equity investors can still be satisfied. The Portfolio
will continue with its strategy of investing in companies that are temporarily
out of favor and paring those that reach full valuation to achieve its objective
and provide a compelling choice for investors.
FUND DATA
<Table>
Manager: James McGlynn
Inception Date: August 15, 1984
Total Net Assets: $48.33 Million
Number of Holdings: 55
Median Cap Size: $38.10 Billion
Average Price-to-book Ratio: 2.22x
Dividend Yield: 2.45%
Average Price-to-earnings Ratio:
Summit Pinnacle Zenith Portfolio: 16.9x
S&P 500 Index: 19.7x
</Table>
TOP 10 EQUITY HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
CSX Corp. 2.63%
Freddie Mac 2.42%
Du Pont (E.I.) 2.41%
Unilever 2.38%
The Walt Disney Co. 2.37%
Union Pacific Corp. 2.35%
Banc One Corp. 2.34%
St. Paul Cos. 2.27%
Marsh & McLennan Co. 2.22%
Johnson & Johnson Co. 2.20%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT ZENITH RUSSELL 1000 RUSSELL 2000
PORTFOLIO VALUE INDEX INDEX
Jun-1994 $ 10,000 $ 10,000 $ 10,000
Jul-1994 $ 11,132 $ 10,311 $ 10,157
Aug-1994 $ 11,659 $ 10,607 $ 10,709
Sep-1994 $ 11,525 $ 10,255 $ 10,659
Oct-1994 $ 11,596 $ 10,398 $ 10,613
Nov-1994 $ 11,233 $ 9,978 $ 10,165
Dec-1994 $ 11,321 $ 10,093 $ 10,419
Jan-1995 $ 11,439 $ 10,404 $ 10,273
Feb-1995 $ 11,819 $ 10,815 $ 10,678
Mar-1995 $ 12,000 $ 11,052 $ 10,852
Apr-1995 $ 12,283 $ 11,402 $ 11,077
May-1995 $ 12,584 $ 11,882 $ 11,247
Jun-1995 $ 12,868 $ 12,043 $ 11,804
Jul-1995 $ 13,240 $ 12,462 $ 12,473
Aug-1995 $ 13,559 $ 12,638 $ 12,706
Sep-1995 $ 13,835 $ 13,095 $ 12,917
Oct-1995 $ 13,455 $ 12,965 $ 12,329
Nov-1995 $ 13,905 $ 13,621 $ 12,842
Dec-1995 $ 14,373 $ 13,964 $ 13,150
Jan-1996 $ 14,512 $ 14,399 $ 13,125
Feb-1996 $ 14,920 $ 14,508 $ 13,522
Mar-1996 $ 15,341 $ 14,754 $ 13,765
Apr-1996 $ 15,787 $ 14,811 $ 14,494
May-1996 $ 16,224 $ 14,996 $ 15,059
Jun-1996 $ 16,106 $ 15,008 $ 14,425
Jul-1996 $ 15,265 $ 14,441 $ 13,151
Aug-1996 $ 15,942 $ 14,854 $ 13,895
Sep-1996 $ 16,290 $ 15,445 $ 14,415
Oct-1996 $ 16,758 $ 16,042 $ 14,173
Nov-1996 $ 17,354 $ 17,205 $ 14,737
Dec-1996 $ 17,897 $ 16,986 $ 15,091
Jan-1997 $ 18,366 $ 17,809 $ 15,375
Feb-1997 $ 18,182 $ 18,071 $ 14,984
Mar-1997 $ 17,511 $ 17,421 $ 14,256
Apr-1997 $ 17,396 $ 18,153 $ 14,274
May-1997 $ 18,730 $ 19,167 $ 15,846
Jun-1997 $ 19,382 $ 19,989 $ 16,495
Jul-1997 $ 20,236 $ 21,493 $ 17,249
Aug-1997 $ 20,616 $ 20,727 $ 17,622
Sep-1997 $ 22,073 $ 21,980 $ 18,886
Oct-1997 $ 21,459 $ 21,365 $ 18,031
Nov-1997 $ 21,354 $ 22,310 $ 17,892
Dec-1997 $ 21,576 $ 22,961 $ 18,187
Jan-1998 $ 21,110 $ 22,636 $ 17,897
Feb-1998 $ 22,106 $ 24,160 $ 19,220
Mar-1998 $ 23,624 $ 25,638 $ 20,004
Apr-1998 $ 24,024 $ 25,809 $ 20,096
May-1998 $ 22,897 $ 25,427 $ 19,003
Jun-1998 $ 22,268 $ 25,753 $ 19,035
Jul-1998 $ 20,577 $ 25,298 $ 17,468
Aug-1998 $ 16,491 $ 21,533 $ 14,064
Sep-1998 $ 17,219 $ 22,769 $ 15,131
Oct-1998 $ 17,806 $ 24,533 $ 15,738
Nov-1998 $ 18,111 $ 25,676 $ 16,553
Dec-1998 $ 18,273 $ 26,550 $ 17,578
Jan-1999 $ 18,101 $ 26,762 $ 17,811
Feb-1999 $ 16,690 $ 26,384 $ 16,369
Mar-1999 $ 16,972 $ 26,930 $ 16,624
Apr-1999 $ 18,501 $ 29,446 $ 18,113
May-1999 $ 18,487 $ 29,122 $ 18,378
Jun-1999 $ 19,341 $ 29,967 $ 19,209
Jul-1999 $ 19,355 $ 29,090 $ 18,682
Aug-1999 $ 19,016 $ 28,010 $ 17,991
Sep-1999 $ 18,500 $ 27,032 $ 17,995
Oct-1999 $ 18,515 $ 28,587 $ 18,068
Nov-1999 $ 18,898 $ 28,364 $ 19,147
Dec-1999 $ 18,647 $ 28,501 $ 21,315
Jan-2000 $ 18,203 $ 27,571 $ 20,969
Feb-2000 $ 17,244 $ 25,523 $ 24,433
Mar-2000 $ 19,854 $ 28,637 $ 22,826
Apr-2000 $ 19,483 $ 28,303 $ 23,867
May-2000 $ 20,173 $ 28,602 $ 22,475
Jun-2000 $ 19,738 $ 27,295 $ 24,439
Jul-2000 $ 19,573 $ 27,636 $ 23,674
Aug-2000 $ 20,533 $ 29,174 $ 25,469
Sep-2000 $ 20,728 $ 29,441 $ 24,715
Oct-2000 $ 21,643 $ 30,164 $ 23,613
Nov-2000 $ 21,403 $ 29,045 $ 21,190
Dec-2000 $ 22,709 $ 30,500 $ 23,021
Jan-2001 $ 23,656 $ 30,617 $ 24,218
Feb-2001 $ 23,324 $ 29,766 $ 22,632
Mar-2001 $ 22,691 $ 28,715 $ 21,525
Apr-2001 $ 24,139 $ 30,122 $ 23,208
May-2001 $ 24,907 $ 30,800 $ 23,779
Jun-2001 $ 24,634 $ 30,116 $ 24,600
Jul-2001 $ 24,983 $ 30,053 $ 23,269
Aug-2001 $ 23,952 $ 28,848 $ 22,517
Sep-2001 $ 22,785 $ 26,817 $ 19,486
Oct-2001 $ 23,194 $ 26,586 $ 20,626
Nov-2001 $ 24,468 $ 28,131 $ 22,223
Dec-2001 $ 25,262 $ 28,795 $ 23,594
Jan-2002 $ 25,079 $ 28,573 $ 23,349
Feb-2002 $ 25,399 $ 28,619 $ 22,709
Mar-2002 $ 26,307 $ 29,972 $ 24,532
Apr-2002 $ 25,083 $ 28,944 $ 24,756
May-2002 $ 24,940 $ 29,089 $ 23,656
Jun-2002 $ 22,937 $ 27,419 $ 22,483
Jul-2002 $ 20,300 $ 24,869 $ 19,088
Aug-2002 $ 20,616 $ 25,056 $ 19,040
Sep-2002 $ 18,132 $ 22,270 $ 17,673
Oct-2002 $ 19,141 $ 23,920 $ 18,241
Nov-2002 $ 20,935 $ 25,427 $ 19,868
Dec-2002 $ 19,428 $ 24,323 $ 18,761
Jan-2003 $ 18,952 $ 23,735 $ 18,241
Feb-2003 $ 18,689 $ 23,101 $ 17,691
Mar-2003 $ 18,822 $ 23,140 $ 17,919
Apr-2003 $ 20,749 $ 25,176 $ 19,617
May-2003 $ 22,152 $ 26,803 $ 21,722
Jun-2003 $ 22,843 $ 27,138 $ 22,116
Jul-2003 $ 23,016 $ 27,542 $ 23,500
Aug-2003 $ 23,260 $ 27,972 $ 24,576
Sep-2003 $ 23,205 $ 27,698 $ 24,122
Oct-2003 $ 24,385 $ 29,393 $ 26,148
Nov-2003 $ 24,708 $ 29,793 $ 27,076
Dec-2003 $ 26,335 $ 31,628 $ 27,626
Jan-2004 $ 26,991 $ 32,185 $ 28,825
Feb-2004 $ 27,242 $ 32,873 $ 29,084
Mar-2004 $ 26,742 $ 32,584 $ 29,355
Apr-2004 $ 26,590 $ 31,789 $ 27,858
May-2004 $ 26,689 $ 32,113 $ 28,300
Jun-2004 $ 27,540 $ 32,871 $ 29,492
</Table>
Summit Zenith Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 5-YEAR 10-YEAR
20.56% 7.32% 9.59%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Transportation 7.0%
Financials 26.9%
Utilities 11.9%
Consumer Discretionary 7.6%
Energy 10.9%
Consumer Non-Durable 5.5%
Health Care 8.8%
Industrials 3.9%
Technology 11.0%
Materials 3.5%
Short-Term & Other 3.0%
</Table>
3
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS ZENITH PORTFOLIO
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
ENDED JUNE 30,
YEAR ENDED
(UNAUDITED)
DECEMBER 31,
-------------------------------------------------
- ---------------
2004 2003 2002 2001 2000
1999
-------------------------------------------------
- -------------
Net asset value, beginning of period $ 80.76 $ 59.67 $ 82.75 $ 75.60 $
63.10 $ 74.45
------- ------- ------- ------- -----
- -- --------
Investment Activities:
Net investment income / (loss) 0.58 1.17 1.11 1.40
1.15 0.50
Net realized and unrealized
gains / (losses) 3.11 20.01 (18.92) 7.05
12.40 (0.25)
------- ------- ------- ------- -----
- -- --------
Total from Investment Activities 3.69 21.18 (17.81) 8.45
13.55 0.25
------- ------- ------- ------- -----
- -- --------
DISTRIBUTIONS:
Net investment income (1.26) (0.09) (1.39) (1.30)
(1.05) (0.60)
Return of capital -- -- (3.88) --
- -- --
Net realized gains -- -- -- --
- -- (11.00)
------- ------- ------- ------- -----
- -- --------
Total Distributions (1.26) (0.09) (5.27) (1.30)
(1.05) (11.60)
------- ------- ------- ------- -----
- -- --------
Net asset value, end of period $ 83.19 $ 80.76 59.67 $ 82.75 $
75.60 $ 63.10
======= ======= ======= =======
======= ========
Total return 4.57% 35.56% -23.10% 11.24%
21.79% 2.05%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to
average net assets - net (1) 0.91%(2) 0.93% 0.93% 0.81%
0.73% 0.69%
Ratio of expenses to
average net assets - gross 0.91%(2) 0.93% 0.93% 0.83%
0.77% 0.69%
Ratio of net investment
income / (loss) to
average net assets 1.42%(2) 1.68% 1.52% 1.74%
1.47% 0.67%
Portfolio turnover rate 80.95%(2) 71.70% 56.53% 102.03%
81.95% 86.47%
Net assets, end of period (000's) $48,329 $47,104 $38,218 $54,562
$50,485 $124,444
</Table>
(1) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(2) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
ZENITH PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES VALUE NET ASSETS
---------------------------------------
COMMON STOCKS - 97.04%
CONSUMER DISCRETIONARY - 7.65%
Sony Corp. 24,900 $ 947,445 1.96%
Take-Two Interactive Software* 25,800 790,512 1.64%
Time Warner Inc.* 46,200 812,196 1.68%
The Walt Disney Co.* 45,000 1,147,050 2.37%
---------------
3,697,203
---------------
CONSUMER NON-DURABLE - 5.45%
Altria Group Inc. 12,500 625,625 1.29%
Sara Lee Corp. 37,200 855,228 1.77%
Unilever 16,800 1,150,968 2.39%
---------------
2,631,821
---------------
ENERGY - 10.89%
Anadarko Petroleum 13,500 791,100 1.64%
ChevronTexaco Corp. 8,519 801,723 1.66%
ConocoPhillips 7,771 592,850 1.23%
Devon Energy Corp 11,300 745,800 1.54%
Royal Dutch Petroleum 12,200 630,374 1.30%
Unocal Corp. 26,500 1,007,000 2.08%
Weatherford International Ltd.* 15,400 692,692 1.44%
---------------
5,261,539
---------------
FINANCIALS - 26.95%
Alliance Capital Holdings 30,600 1,038,870 2.15%
Banc One Corp 22,200 1,132,200 2.34%
Bank of America Corp. 8,100 685,422 1.42%
BB&T Corp.* 22,500 831,825 1.72%
Citigroup Inc. 21,800 1,013,700 2.10%
Equity Residential Properties Trust 35,100 1,043,523 2.16%
First Data 15,600 694,512 1.44%
Freddie Mac 18,500 1,171,050 2.42%
Goldman Sachs Group Inc.* 8,700 819,192 1.70%
KeyCorp 26,500 792,085 1.64%
Marsh & McLennan Co. 23,600 1,070,968 2.22%
Mellon Financial Corp.* 24,500 718,585 1.49%
St. Paul Cos. 27,100 1,098,634 2.27%
Wells Fargo 16,000 915,680 1.88%
---------------
13,026,246
---------------
HEALTH CARE - 8.79%
Baxter International Inc.* 16,700 576,317 1.19%
Bristol-Meyers Squibb 33,400 818,300 1.69%
Johnson & Johnson Co. 19,100 1,063,870 2.20%
Merck & Co. 22,200 1,054,500 2.18%
The Healthcare Co. 17,700 736,143 1.53%
---------------
4,249,130
---------------
INDUSTRIALS - 3.94%
General Electric 29,300 $ 949,320 1.96%
SPX Corp. 20,600 956,664 1.98%
---------------
1,905,984
---------------
MATERIALS - 3.46%
Dow Chemical 12,500 508,750 1.05%
Du Pont (E.I.) 26,200 1,163,804 2.41%
---------------
1,672,554
---------------
TECHNOLOGY - 10.98%
Electronic Data Systems Corp. 50,200 961,330 1.99%
Hewlett-Packard 47,200 995,920 2.06%
International Business Machines 8,300 731,645 1.51%
Microsoft Corp.* 33,600 959,616 1.99%
Motorola Inc. 23,600 430,700 0.89%
Nokia Corp 60,100 873,854 1.81%
Sun Microsystems Inc.* 81,600 354,144 0.73%
---------------
5,307,209
---------------
TRANSPORTATION - 7.01%
CSX Corp. 38,800 1,271,476 2.63%
Norfolk Southern Co. 36,900 978,588 2.02%
Union Pacific Corp. 19,100 1,135,495 2.36%
---------------
3,385,559
---------------
UTILITIES - 11.92%
ALLTEL Corp. 12,300 622,626 1.29%
Ameren Corporation 22,300 958,008 1.98%
Comcast Corporation* 16,200 447,282 0.93%
Cinergy Corporation 12,800 486,400 1.01%
SBC Communications Inc 41,000 994,250 2.06%
Southern Co. 22,000 641,300 1.33%
Sprint Corp 39,800 700,480 1.45%
Verizon Communications 25,100 908,369 1.87%
---------------
5,758,715
---------------
Total Common Stocks
(cost $43,177,921) 46,895,960
---------------
SHORT-TERM INVESTMENTS - 2.71%
NORTHERN TRUST DIVERSIFIED
ASSETS FUND - 2.71% 1,311,444 1,311,444 2.71%
---------------
Total Short-Term Investments
(cost $1,311,444) 1,311,444
---------------
TOTAL INVESTMENTS - 99.75%
(cost $44,489,365)(1) 48,207,404
---------------
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(2) - 6.18% 2,988,679
---------------
OTHER ASSETS AND LIABILITIES - (5.93%) (2,866,662)
---------------
TOTAL NET ASSETS - 100.00% $ 48,329,421
===============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $44,536,641 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$4,747,387 and ($1,076,624), respectively, with a net appreciation /
depreciation of $3,670,763.
(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 $2,910,361,
$2,988,679, and $0, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL STATEMENTS ZENITH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 48,207,404
Cash 4,889
Collateral for securities loaned,
at fair value 2,988,679
Receivables:
Shares sold 5,567
Securities sold 203,354
Interest and dividends 79,537
Prepaid expenses and other 482
--------------
51,489,912
--------------
LIABILITIES
Payables:
Investment securities purchased 116,964
Shares redeemed 3,153
Payable upon return of securities loaned 2,988,679
Advisory fees 25,080
Administration expenses 3,919
Directors' fees 1,276
Custodian fees 1,839
Fund accounting fees 5,289
Professional fees 8,164
Other accrued expenses 6,128
--------------
3,160,491
--------------
NET ASSETS*
Paid-in capital 43,722,586
Accumulated undistributed net
investment income 231,347
Accumulated net realized gain / (loss)
on investments and futures contracts 657,449
Net unrealized appreciation / (depreciation)
on investments 3,718,039
--------------
$ 48,329,421
==============
Shares authorized ($.10 par value) 40,000,000
Shares outstanding 580,960
Net asset value, offering and redemption
price per share $ 83.19
Investments at cost $ 44,489,365
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 628,526
Unrealized appreciation $ 4,661,184
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2007 2008 2009 2010 2011
- -------------- -------------- -------------- -------------- --------------
$ (1,220,837) $ -- $ -- $ (859,633) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 4,830
Dividends 554,293
Foreign dividend taxes withheld (8,165)
Other income 1,463
---------------
552,421
---------------
EXPENSES
Advisory fees 152,696
Administration expenses 23,859
Custodian fees and expenses 3,307
Fund accounting fees 15,379
Professional fees 7,240
Directors' fees 3,458
Transfer agent fees 4,182
Other expenses 5,801
---------------
215,922
---------------
NET INVESTMENT INCOME / (LOSS) 336,499
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 2,785,197
---------------
Net change in unrealized appreciation /
(depreciation) on investments (990,421)
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 1,794,776
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 2,131,275
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -------------------------------
ADMINISTRATION EXPENSE
ADVISORY 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 portfolio 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.
6
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30, YEAR ENDED
(UNAUDITED) DECEMBER 31,
-------------------------------------
2004 2003
-------------------------------------
OPERATIONS
Net investment income / (loss) $ 336,499 $ 684,382
Net realized gain / (loss) on investments and futures 2,785,197 295,042
Net change in unrealized appreciation /
(depreciation) on investments (990,421) 11,507,662
------------------- ---------------
2,131,275 12,487,086
------------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (733,678) (55,856)
------------------- ---------------
(733,678) (55,856)
------------------- ---------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 986,300 1,766,692
Reinvestment of distributions 733,678 55,856
Payments for shares redeemed (1,892,502) (5,367,306)
------------------- ---------------
(172,524) (3,544,758)
------------------- ---------------
NET INCREASE / (DECREASE) IN NET ASSETS 1,225,073 8,886,472
NET ASSETS
Beginning of period 47,104,348 38,217,876
------------------- ---------------
End of period $ 48,329,421 $ 47,104,348
=================== ===============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 231,347 $ 628,526
=================== ===============
FUND SHARE TRANSACTIONS
Sold 12,010 25,129
Reinvestment of distributions 8,845 975
Redeemed (23,185) (83,327)
------------------- ---------------
Net increase / (decrease) from fund share transactions (2,330) (57,223)
=================== ===============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 18,652,371 $ 28,249,943
------------------- ---------------
$ 18,652,371 $ 28,249,943
=================== ===============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 19,453,392 $ 30,522,792
------------------- ---------------
$ 19,453,392 $ 30,522,792
=================== ===============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 733,678 $ 55,856
------------------- ---------------
$ 733,678 $ 55,856
=================== ===============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BOND PORTFOLIO
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 Summit Pinnacle Bond Portfolio (the "Portfolio") will invest at
least 80% of its asset value in fixed income securities. The Portfolio will
normally invest 75% of the value of its assets in publicly-traded straight debt
securities that fall 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 securities, convertible debt, preferred stock and other securities.
MANAGER'S COMMENTS:
The Portfolio had a total return of 0.04% (before the impact of any product or
contract-level fees) for the six-month period ended June 30, 2004 compared to a
total return of 0.15% for the Lehman Brothers Aggregate Bond Index (the
"Index"). The past six months were marked by continued volatility in the fixed
income market. Following a strong first quarter, the performance of the fixed
income market was decidedly weaker in the second quarter as interest rates rose
sharply. In the face of strong GDP growth, improving corporate earnings,
resilient consumer and housing markets, and subtle spikes in the core rate of
inflation, the Federal Reserve raised the fed funds rate at the end of June. The
fixed income market anticipates a series of future rate increases throughout
2004 continuing into 2005.
The Portfolio's slight under performance to the Index was primarily the result
of the continued overweight in the corporate bond sector. After an extended
period of excellent returns in the corporate sector, the second quarter
performance lagged all other sectors of the fixed income market. Mortgage-backed
and home equity securities generally outperformed other sectors of the fixed
income market during the period as rising interest rates decreased the
refinancing incentive to home owners. Within the corporate sector, lower rated
industrial credits continued to outperform. The more volatile industrial sectors
including automotives, basic industries, energy and consumer products, were the
largest contributors to incremental return. Interest rate sensitive sectors such
as banks, financial services, homebuilders and REITs under performed during the
period.
FUND DATA
<Table>
Managers: Gary R. Rodmaker
Michael J. Schultz
Dave Weisenburger
Inception Date: August 15, 1984
Total Net Assets: $36.80 Million
Number of Holdings: 134
Average Duration: 4.67 years
Average Maturity: 11.0 years
Average Credit Quality: A3/A-
Current Yield: 5.34%
</Table>
QUALITY BREAKDOWN
<Table>
<Caption>
(% OF PORTFOLIO)
---------------
AAA 43%
AA 1%
A 7%
BBB 38%
BB 4%
B 4%
CCC 2%
D 1%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT BOND LEHMAN BROTHERS
PORTFOLIO AGGREGATE BOND INDEX
Jun-1994 $ 10,000 $ 10,000
Jul-1994 $ 9,576 $ 10,199
Aug-1994 $ 9,576 $ 10,211
Sep-1994 $ 9,465 $ 10,061
Oct-1994 $ 9,455 $ 10,052
Nov-1994 $ 9,446 $ 10,030
Dec-1994 $ 9,569 $ 10,099
Jan-1995 $ 9,750 $ 10,299
Feb-1995 $ 9,979 $ 10,544
Mar-1995 $ 10,045 $ 10,609
Apr-1995 $ 10,191 $ 10,757
May-1995 $ 10,599 $ 11,173
Jun-1995 $ 10,658 $ 11,255
Jul-1995 $ 10,697 $ 11,230
Aug-1995 $ 10,806 $ 11,366
Sep-1995 $ 10,905 $ 11,476
Oct-1995 $ 11,066 $ 11,626
Nov-1995 $ 11,216 $ 11,800
Dec-1995 $ 11,390 $ 11,965
Jan-1996 $ 11,555 $ 12,044
Feb-1996 $ 11,431 $ 11,835
Mar-1996 $ 11,410 $ 11,752
Apr-1996 $ 11,378 $ 11,686
May-1996 $ 11,399 $ 11,662
Jun-1996 $ 11,550 $ 11,819
Jul-1996 $ 11,583 $ 11,851
Aug-1996 $ 11,615 $ 11,831
Sep-1996 $ 11,867 $ 12,036
Oct-1996 $ 12,076 $ 12,304
Nov-1996 $ 12,274 $ 12,514
Dec-1996 $ 12,209 $ 12,398
Jan-1997 $ 12,276 $ 12,436
Feb-1997 $ 12,377 $ 12,467
Mar-1997 $ 12,233 $ 12,329
Apr-1997 $ 12,359 $ 12,514
May-1997 $ 12,518 $ 12,633
Jun-1997 $ 12,689 $ 12,783
Jul-1997 $ 13,060 $ 13,128
Aug-1997 $ 12,955 $ 13,016
Sep-1997 $ 13,199 $ 13,209
Oct-1997 $ 13,329 $ 13,401
Nov-1997 $ 13,412 $ 13,462
Dec-1997 $ 13,555 $ 13,598
Jan-1998 $ 13,771 $ 13,772
Feb-1998 $ 13,771 $ 13,761
Mar-1998 $ 14,056 $ 13,808
Apr-1998 $ 14,130 $ 13,880
May-1998 $ 14,216 $ 14,012
Jun-1998 $ 14,315 $ 14,131
Jul-1998 $ 14,365 $ 14,160
Aug-1998 $ 14,327 $ 14,391
Sep-1998 $ 14,542 $ 14,728
Oct-1998 $ 14,210 $ 14,650
Nov-1998 $ 14,401 $ 14,733
Dec-1998 $ 14,439 $ 14,778
Jan-1999 $ 14,517 $ 14,883
Feb-1999 $ 14,283 $ 14,622
Mar-1999 $ 14,426 $ 14,703
Apr-1999 $ 14,452 $ 14,750
May-1999 $ 14,307 $ 14,620
Jun-1999 $ 14,281 $ 14,573
Jul-1999 $ 14,241 $ 14,512
Aug-1999 $ 14,214 $ 14,505
Sep-1999 $ 14,295 $ 14,673
Oct-1999 $ 14,281 $ 14,727
Nov-1999 $ 14,292 $ 14,726
Dec-1999 $ 14,278 $ 14,655
Jan-2000 $ 14,182 $ 14,607
Feb-2000 $ 14,333 $ 14,784
Mar-2000 $ 14,502 $ 14,978
Apr-2000 $ 14,417 $ 14,936
May-2000 $ 14,265 $ 14,929
Jun-2000 $ 14,621 $ 15,239
Jul-2000 $ 14,767 $ 15,377
Aug-2000 $ 15,026 $ 15,600
Sep-2000 $ 14,978 $ 15,698
Oct-2000 $ 14,929 $ 15,802
Nov-2000 $ 15,107 $ 16,061
Dec-2000 $ 15,334 $ 16,359
Jan-2001 $ 15,626 $ 16,627
Feb-2001 $ 15,822 $ 16,772
Mar-2001 $ 15,903 $ 16,856
Apr-2001 $ 15,854 $ 16,785
May-2001 $ 15,954 $ 16,886
Jun-2001 $ 15,903 $ 16,950
Jul-2001 $ 16,260 $ 17,329
Aug-2001 $ 16,430 $ 17,529
Sep-2001 $ 16,345 $ 17,734
Oct-2001 $ 16,702 $ 18,104
Nov-2001 $ 16,549 $ 17,855
Dec-2001 $ 16,379 $ 17,740
Jan-2002 $ 16,464 $ 17,884
Feb-2002 $ 16,529 $ 18,057
Mar-2002 $ 16,429 $ 17,758
Apr-2002 $ 16,717 $ 18,102
May-2002 $ 16,834 $ 18,256
Jun-2002 $ 16,760 $ 18,414
Jul-2002 $ 16,820 $ 18,636
Aug-2002 $ 17,043 $ 18,951
Sep-2002 $ 17,139 $ 19,258
Oct-2002 $ 16,907 $ 19,170
Nov-2002 $ 17,064 $ 19,165
Dec-2002 $ 17,317 $ 19,561
Jan-2003 $ 17,306 $ 19,577
Feb-2003 $ 17,610 $ 19,848
Mar-2003 $ 17,661 $ 19,833
Apr-2003 $ 17,933 $ 19,996
May-2003 $ 18,283 $ 20,369
Jun-2003 $ 18,361 $ 20,329
Jul-2003 $ 17,894 $ 19,645
Aug-2003 $ 18,006 $ 19,776
Sep-2003 $ 18,561 $ 20,299
Oct-2003 $ 18,459 $ 20,110
Nov-2003 $ 18,550 $ 20,158
Dec-2003 $ 18,740 $ 20,363
Jan-2004 $ 18,945 $ 20,527
Feb-2004 $ 19,146 $ 20,749
Mar-2004 $ 19,305 $ 20,905
Apr-2004 $ 18,808 $ 20,361
May-2004 $ 18,668 $ 20,279
Jun-2004 $ 18,747 $ 20,394
</Table>
Summit Bond Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 5-YEAR 10-YEAR
2.10% 5.59% 7.04%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
U.S. Treasuries & Agency Obligations 18.4%
Mortgage & Asset Backed Securities 29.2%
Corporate Bonds & Notes 46.2%
Short-Term & Other 6.2%
</Table>
8
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BOND PORTFOLIO 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
ENDED JUNE 30,
(UNAUDITED) YEAR ENDED DECEMBER
31,
------------------------------------------------
- --------------
2004 2003 2002 2001
2000 1999
-----------------------------------------------
- --------------
Net asset value, beginning of period $ 48.41 $ 47.93 $ 48.15 $ 47.30 $
51.80 $ 55.65
------- ------- ------- ------- ----
- --- -------
Investment Activities:
Net investment income / (loss) 0.89 3.44 2.70 3.15
5.20 3.60
Net realized and unrealized
gains / (losses) (0.85) 0.37 (0.04) --
(1.95) (4.20)
------- ------- ------- ------- ----
- --- -------
Total from Investment Activities 0.04 3.81 2.66 3.15
3.25 (0.60)
------- ------- -------- ------ ---
- --- ------
DISTRIBUTIONS:
Net investment income (1.33) (3.33) (2.88) (2.30)
(5.75) (3.25)
In excess of net investment income -- -- -- --
(0.30) --
Return of capital -- -- -- --
(1.70) --
------- ------- ------- ------- ----
- --- -------
Total Distributions (1.33) (3.33) (2.88) (2.30)
(7.75) (3.25)
------- ------- ------- ------- ----
- --- -------
Net asset value, end of period $ 47.12 $ 48.41 $ 47.93 $ 48.15 $
47.30 $ 51.80
======= ======= ======= =======
======= =======
Total return 0.04% 8.21% 5.73% 6.81%
7.40% -1.11%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average
net assets - net (1) 0.75%(2) 0.75% 0.76% 0.79%
0.61% 0.60%
Ratio of expenses to average
net assets - gross 0.80%(2) 0.81% 0.85% 0.87%
0.68% 0.60%
Ratio of net investment income / (loss)
to average net assets 4.37%(2) 6.72% 5.86% 6.37%
6.85% 6.62%
Portfolio turnover rate 86.03%(2) 109.52% 54.27% 65.14%
60.19% 56.07%
Net assets, end of period (000's) $36,801 $37,197 $35,415 $29,147
$22,802 $98,428
</Table>
(1) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(2) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
SUMMARY SCHEDULE OF INVESTMENTS BOND PORTFOLIO
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
---------------------
- ------------------
PREFERRED STOCKS - .31%
REAL ESTATE - .31%
Other securities(6) $
116,109 0.31%
-------
- -----
Total Preferred Stocks
(cost $93,897)
116,109
-------
- -----
COMMON STOCKS - .35%
COMMUNICATIONS & MEDIA - .35%
Other securities(6)
127,202 0.35%
-------
- -----
Total Common Stocks
(cost $224,719)
127,202
-------
- -----
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
---------------------
- ------------------
U.S. TREASURY
OBLIGATIONS - 11.03%
U.S. TREASURY NOTES & BONDS - 11.03%
5.875% due 11/15/05 $ 1,650,000 $
1,728,053 4.70%
3.125% due 09/15/08 500,000
490,645 1.33%
5.500% due 05/15/09 750,000
807,656 2.19%
5.000% due 02/15/11 250,000
261,680 0.71%
5.000% due 08/15/11 350,000
365,381 0.99%
4.000% due 11/15/12 200,000
193,633 0.53%
3.625% due 05/15/13 225,000
210,639 0.58%
-------
- -----
Total U.S. Treasury Obligations
(cost $4,009,229)
4,057,687
-------
- -----
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 1.36%
FNMA 1.875% due 12/15/04 500,000
500,698 1.36%
-------
- -----
Total U.S. Government Agency
Obligations
(cost $500,902)
500,698
-------
- -----
MORTGAGE-BACKED
SECURITIES - 17.55%
FNMA 5.000% due 11/01/09 612,406
621,585 1.69%
FNMA 6.000% due 06/01/16 253,546
264,566 0.72%
FNMA 4.500% due 03/01/17 874,299
857,883 2.33%
FNMA 5.500% due 08/01/18 1,189,099
1,219,155 3.31%
FNMA 4.500% due 09/01/18 2,776,930
2,719,701 7.39%
Other securities(6)
(5.000% to 6.500%
due 05/01/12 to 02/01/33)
776,591 2.11%
-------
- -----
Total Mortgage-Backed Securities
(cost $6,470,027)
6,459,481
-------
- -----
COLLATERALIZED
MORTGAGE OBLIGATIONS - 15.77%
AGENCY SECTOR - 5.96%
FNR 2002-48 GF
(6.500% due 10/25/31) $ 2,083,000 $
2,171,852 5.90%
Other securities(6)
(16.467% due 07/15/28)
23,348 0.06%
-------
- -----
2,195,200
-------
- -----
PRIVATE SECTOR - 9.81%
Bank of America Mortgage Securities
(5.750% to 6.750%
due 09/25/17 to 08/25/32) 450,613
452,545 1.23%
BOAA 2003-6 2B3
(4.750% due 08/25/18) 346,483
312,299 0.85%
BOAMS 01-4 2 B2
(4.750% due 04/20/31) 498,861
515,996 1.40%
NMFC 1998-4 B3
(6.250% due 10/25/28) 268,839
269,467 0.73%
Residential Accredit Loans Inc.
Mortgage Securities
(5.750% to 6.750%
due 10/25/17 to 9/25/31) 371,026
372,835 1.01%
SASC 2003-20 B2
(5.378% due 07/25/33) 303,221
287,250 0.78%
WAMMS 2001-MS14 5A9
(6.500% due 12/25/31) 54,378
54,494 0.15%
WF MBS 2002-8 2B3
(6.000% due 05/25/17) 337,972
349,497 0.95%
Other securities(6)
(4.329% to 7.360%
due 09/25/17 to 10/25/33)
997,188 2.71%
-------
- -----
3,611,571
-------
- -----
Total Collateralized Mortgage
Obligations
(cost $5,926,441)
5,806,771
-------
- -----
ASSET-BACKED SECURITIES - 1.83%
COMMERCIAL MORTGAGE-BACKED
SECURITIES - 1.83%
Chase Commercial Mortgage Sec.
(6.600% due 12/19/07) 627,885
672,530 1.83%
-------
- -----
Total Asset-Backed Securities
(cost $615,327)
672,530
-------
- -----
CORPORATE BONDS AND
NOTES - 46.24%
AIR TRANSPORTATION - 2.43%
Other securities(6)
(7.100% to 10.230%
due 09/18/06 to 04/02/21)
892,726 2.43%
-------
- -----
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
---------------------
- ------------------
BANK, BANK HOLDING COMPANIES, &
OTHER BANK SERVICES - 2.24%
Bank of Hawaii
(6.875% due 03/01/09) $ 250,000 $
274,399 0.75%
Captial One Bank
(5.750% due 09/15/10) 300,000
308,305 0.84%
Other securities(6)
(5.875% due 02/17/14)
241,250 0.65%
-------
- -----
823,954
-------
- -----
CONSUMER CYCLICAL - 8.29%
American Axle & Mfg Inc.
(5.250% due 02/11/14) 450,000
431,952 1.17%
DaimlerChrysler AG
(6.500% due 11/15/13) 250,000
256,310 0.70%
General Motors
(8.250% due 07/15/23) 300,000
314,175 0.85%
Hertz Corp.
(7.625% due 06/01/12) 250,000
263,896 0.72%
Lear Corp
(8.110% due 05/15/09) 450,000
512,572 1.39%
Other securities(6)
(5.500% to 9.250%
due 12/01/07 to 07/16/31)
1,272,659 3.46%
-------
- -----
3,051,564
-------
- -----
CONSUMER NON-DURABLE - 7.53%
Bunge Ltd Finance Corp.
(7.800% due 10/15/12) 300,000
341,666 0.93%
Dial Corp.
(7.000% due 08/15/06) 250,000
267,966 0.73%
Miller Brewing Co.(2)
(5.500% due 08/15/13) 300,000
301,046 0.82%
Sealed Air Corp.(2)
(5.625% due 07/15/13) 300,000
296,345 0.81%
Other securities(6)
(5.750% to 11.500%
due 06/01/06 to 06/15/14)
1,562,768 4.24%
-------
- -----
2,769,791
-------
- -----
ELECTRIC - 2.06%
Dominion Resources Inc.
(6.250% due 06/30/12) 361,000
378,372 1.03%
Other securities(6)
(6.450% to 9.375%
due 09/15/10 to 11/15/11)
382,103 1.03%
-------
- -----
760,475
-------
- -----
ENERGY - 5.36%
Canadian Oil Sands(2)
(5.800% due 08/15/13) $ 300,000 $
299,621 0.81%
Constellation Energy Group
(7.000% due 04/01/12) 250,000
272,242 0.74%
Kaneb Pipeline
(5.875% due 06/01/13) 300,000
290,065 0.79%
Pemex Master Trust
(8.000% due 11/15/11) 250,000
269,375 0.73%
Plains All American Pipline(2)
(5.625% due 12/15/13) 300,000
284,777 0.77%
Other securities(6)
(6.250% to 10.500%
due 05/15/06 to 07/31/16)
557,093 1.52%
-------
- -----
1,973,173
-------
- -----
HEALTH CARE - 1.86%
Beckman Coulter Inc.
(6.875% due 11/15/11) 300,000
334,221 0.91%
Other securities(6)
(7.250% to 8.750%
due 08/15/13 to 06/15/14)
351,502 0.96%
-------
- -----
685,723
-------
- -----
INSURANCE - 3.13%
American Financial Group
(7.125% due 04/15/09) 250,000
268,198 0.73%
Nationwide Financial Services
(5.625% due 02/13/15) 375,000
379,084 1.03%
USF&G Capital
(8.470% due 01/10/27) 240,000
263,338 0.72%
Other securities(6)
(8.470% to 8.500%
due 08/01/04 to 01/10/27)
240,794 0.65%
-------
- -----
1,151,414
-------
- -----
MEDIA & CABLE - 3.51%
Rogers Cable Inc.
(5.500% due 03/15/14) 300,000
265,068 0.72%
Univision Comm Inc.
(7.850% due 07/15/11) 250,000
288,301 0.78%
Other securities(6)
(4.750% to 9.875%
due 06/01/06 to 08/15/13)
736,514 2.01%
-------
- -----
1,289,883
-------
- -----
MEDIA CONGLOMERATE - 2.35%
AOL Time Warner Inc.
(6.875% due 05/01/12) 240,000
259,342 0.70%
News American Holdings Nts.
(6.625% due 01/09/08) 361,000
390,400 1.06%
Other securities(6)
(6.200% due 01/05/12)
213,219 0.59%
-------
- -----
862,961
-------
- -----
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
---------------------
- ------------------
METALS & MINING - .35%
Other securities(6)
(7.350% due 06/05/12) $
129,785 0.35%
-------
- -----
REAL ESTATE - .76%
Health Care REIT
(8.000% due 09/12/12) $ 250,000
280,758 0.76%
-------
- -----
TECHNOLOGY - 1.26%
Jabil Circuit Inc.
(5.875% due 07/15/10) 450,000
464,848 1.26%
-------
- -----
TELECOMMUNICATIONS - 5.11%
AT&T Corp.
(8.750% due 11/15/31) 300,000
292,834 0.80%
Sprint Capital Corp.
(7.625% due 01/30/11) 250,000
276,372 0.75%
TCI Communications Inc.
(8.750% due 08/01/15) 240,000
289,121 0.79%
Telus Corp.
(8.000% due 06/01/11) 250,000
284,142 0.77%
Other securities(6)
(5.500% to 7.875%
due 05/01/07 to 08/01/15)
736,543 2.00%
-------
- -----
1,879,012
-------
- -----
Total Corporate Bonds & Notes
(cost $16,996,320)
17,016,067
-------
- -----
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
---------------------
- ------------------
SHORT-TERM INVESTMENTS - 4.87%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - 2.15% 791,414 $
791,414 2.15%
-------
- -----
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
---------------------
- ------------------
U.S. TREASURY BILL - 2.72%
(.945% due 07/01/04) $ 1,000,000 $
1,000,000 2.72%
-------
- -----
Total Short-Term Investments
(cost $1,791,414)
1,791,414
-------
- -----
TOTAL INVESTMENTS - 99.31%
(cost $36,628,276)(1)
36,547,959
-------
- -----
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(3) - 19.54%
7,189,937
-------
- -----
OTHER ASSETS AND LIABILITIES - (18.85%)
(6,936,712)
-------
- -----
TOTAL NET ASSETS - 100.00% $
36,801,184
============
</Table>
"+" Illiquid securities, not specifically listed, have an aggregate value of
$54,085, or .15% of total net assets.
(1) For federal income tax purposes, cost is $36,628,276 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$802,111 and ($882,428), respectively, with a net appreciation /
depreciation of $(80,317).
(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 $7,613,227,
$7,189,937, and $557,387, respectively.
(4) These are restricted private placement shares.
(5) Securities in default, not specifically listed, have an aggregate value of
$291,688, or .79% of total net assets.
(6) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BOND PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 36,547,959
Collateral for securities loaned,
at fair value 7,189,937
Receivables:
Shares sold 2,506
Securities sold 372,185
Interest and dividends 426,822
Prepaid expenses and other 511
---------------
44,539,920
---------------
LIABILITIES
Payables:
Investment securities purchased 174,681
Shares redeemed 14,907
Payable upon return of securities
loaned 7,189,937
Bank overdraft 200,496
Advisory fees 14,116
Administration expenses 6,500
Directors' fees 937
Custodian fees 1,179
Fund accounting fees 7,872
Professional fees 9,017
Deferred director's compensation 115,618
Other accrued expenses 3,476
---------------
7,738,736
---------------
NET ASSETS*
Paid-in capital 43,045,142
Accumulated undistributed
net investment income 52,923
Accumulated net realized gain / (loss)
on investments and futures contracts (6,216,564)
Net unrealized appreciation / (depreciation)
on investments (80,317)
---------------
$ 36,801,184
===============
Shares authorized ($.10 par value) 30,000,000
Shares outstanding 781,025
Net asset value, offering and redemption
price per share $ 47.12
Investments at cost $ 36,628,276
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 361,814
Unrealized appreciation $ 499,125
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2006 2007 2008 2009 2010 2011
- ---------- ---------- ------------ ----------- ------------ -----------
$ -- $ -- $ (4,635,701) $ (119,441) $ (1,273,958) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 917,780
Dividends 3,827
Other income 9,997
---------------
931,604
---------------
EXPENSES
Advisory fees 85,892
Administration expenses 18,275
Custodian fees and expenses 2,452
Fund accounting fees 23,273
Professional fees 7,976
Directors' fees 1,688
Transfer agent fees 3,846
Other expenses 1,103
---------------
144,505
---------------
Reimbursements and waivers (7,375)
---------------
137,130
---------------
NET INVESTMENT INCOME / (LOSS) 794,474
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options (42,686)
---------------
Net change in unrealized appreciation /
(depreciation) on investments (579,442)
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) (622,128)
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 172,346
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -------------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE(2) LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.47% 0.10% 1.00% $ 7,375 $ --
</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 portfolio for such excess, up to the amount of the
advisory fee for that year.
(2) The Advisor has agreed to temporarily waive administration fees for the
Bond Portfolio, to the extent that the Portfolio's total expense ratio
exceeds .75%.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30,
YEAR ENDED
(UNAUDITED)
DECEMBER 31,
---------------------------
- ----------
2004
2003
---------------------------
- ----------
OPERATIONS
Net investment income / (loss) $ 794,474 $
2,522,301
Net realized gain / (loss) on investments and futures (42,686)
427,740
Net change in unrealized appreciation /
(depreciation) on investments (579,442)
14,057
------------------- -----
- ----------
172,346
2,964,098
------------------- -----
- ----------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (1,136,466)
(2,562,272)
------------------- -----
- ----------
(1,136,466)
(2,562,272)
------------------- -----
- ----------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 4,025,351
5,892,089
Reinvestment of distributions 989,361
2,562,272
Payments for shares redeemed (4,446,424)
(7,074,608)
------------------- -----
- ----------
568,288
1,379,753
------------------- -----
- ----------
NET INCREASE / (DECREASE) IN NET ASSETS (395,832)
1,781,579
NET ASSETS
Beginning of period 37,197,016
35,415,437
------------------- -----
- ----------
End of period $ 36,801,184 $
37,197,016
===================
===============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 52,923 $
392,742
===================
===============
FUND SHARE TRANSACTIONS
Sold 84,163
122,015
Reinvestment of distributions 20,559
53,566
Redeemed (92,003)
(146,128)
------------------- -----
- ----------
Net increase / (decrease) from fund
share transactions 12,719
29,453
===================
===============
TOTAL COST OF PURCHASES OF:
Preferred and Common Stocks $ 99,733 $
125,000.00
U.S. Government Securities 2,109,568
14,239,719
Corporate Bonds 12,734,992
26,229,778
------------------- -----
- ----------
$ 14,944,293 $
40,594,497
===================
===============
TOTAL PROCEEDS FROM SALES OF:
U.S. Government Securities $ 2,316,148 $
14,548,061
Corporate Bonds 12,720,540
25,368,093
------------------- -----
- ----------
$ 15,036,688 $
39,916,154
===================
===============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 1,136,466 $
2,562,272
------------------- -----
- ----------
$ 1,136,466 $
2,562,272
===================
===============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P 500 INDEX PORTFOLIO
OBJECTIVE - Seeks investment results that correspond to the total return
performance of U.S. common stocks, as represented by the Standard & Poor's 500
Composite Stock Index (the "Index").
STRATEGY - The Summit Pinnacle S&P 500 Index Portfolio (the "Portfolio") 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 June 30, 2004, the Portfolio's total return was
3.20% (before the impact of any product or contract-level fees). This compares
to a 3.44% total return for the Index. The difference of 0.24% is referred to as
"tracking error" and is largely attributed to the Portfolio's operating expense
ratio. These expenses represent the Portfolio'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
Portfolio; brokers' 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 Portfolio's objectives and
strategies call for a correlation of at least 95% between the Portfolio's
pre-expense total return and that of the Index. Accordingly, the Portfolio met
its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: December 29, 1995
Total Net Assets: $262.38 Million
Number of Equity Holdings: 500
Median Cap Size: $9.54 Billion
Average Price-to-book Ratio: 2.99x
Dividend Yield: 1.70%
</Table>
TOP 10 EQUITY HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
General Electric 3.20%
Microsoft Corporation 2.89%
Exxon Mobil Corp. 2.73%
Pfizer, Inc. 2.45%
Citigroup, Inc. 2.25%
Wal-Mart Stores 2.14%
American International Group 1.74%
Intel Corporation 1.68%
Bank of America Corp. 1.62%
Johnson & Johnson 1.55%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT S&P S&P 500
500 INDEX PORTFOLIO INDEX
Dec-1995 $ 10,000 $ 10,000
Jan-1996 $ 10,400 $ 10,340
Feb-1996 $ 10,490 $ 10,436
Mar-1996 $ 10,600 $ 10,537
Apr-1996 $ 10,740 $ 10,692
May-1996 $ 11,021 $ 10,968
Jun-1996 $ 11,072 $ 11,010
Jul-1996 $ 10,598 $ 10,523
Aug-1996 $ 10,820 $ 10,745
Sep-1996 $ 11,405 $ 11,350
Oct-1996 $ 11,739 $ 11,663
Nov-1996 $ 12,600 $ 12,545
Dec-1996 $ 12,337 $ 12,296
Jan-1997 $ 13,110 $ 13,065
Feb-1997 $ 13,221 $ 13,167
Mar-1997 $ 12,669 $ 12,626
Apr-1997 $ 13,421 $ 13,379
May-1997 $ 14,224 $ 14,195
Jun-1997 $ 14,852 $ 14,830
Jul-1997 $ 16,040 $ 16,009
Aug-1997 $ 15,110 $ 15,113
Sep-1997 $ 15,947 $ 15,941
Oct-1997 $ 15,419 $ 15,408
Nov-1997 $ 16,124 $ 16,121
Dec-1997 $ 16,373 $ 16,398
Jan-1998 $ 16,570 $ 16,579
Feb-1998 $ 17,756 $ 17,774
Mar-1998 $ 18,662 $ 18,684
Apr-1998 $ 18,855 $ 18,872
May-1998 $ 18,523 $ 18,548
Jun-1998 $ 19,274 $ 19,300
Jul-1998 $ 19,081 $ 19,095
Aug-1998 $ 16,322 $ 16,337
Sep-1998 $ 17,361 $ 17,384
Oct-1998 $ 18,773 $ 18,797
Nov-1998 $ 19,916 $ 19,936
Dec-1998 $ 21,050 $ 21,084
Jan-1999 $ 21,914 $ 21,965
Feb-1999 $ 21,233 $ 21,283
Mar-1999 $ 22,065 $ 22,134
Apr-1999 $ 22,905 $ 22,991
May-1999 $ 22,349 $ 22,449
Jun-1999 $ 23,582 $ 23,695
Jul-1999 $ 22,850 $ 22,955
Aug-1999 $ 22,740 $ 22,843
Sep-1999 $ 22,117 $ 22,217
Oct-1999 $ 23,517 $ 23,623
Nov-1999 $ 23,975 $ 24,103
Dec-1999 $ 25,369 $ 25,523
Jan-2000 $ 24,074 $ 24,241
Feb-2000 $ 23,616 $ 23,782
Mar-2000 $ 25,920 $ 26,108
Apr-2000 $ 25,145 $ 25,323
May-2000 $ 24,624 $ 24,803
Jun-2000 $ 25,227 $ 25,415
Jul-2000 $ 24,825 $ 25,017
Aug-2000 $ 26,356 $ 26,571
Sep-2000 $ 24,959 $ 25,168
Oct-2000 $ 24,858 $ 25,062
Nov-2000 $ 22,892 $ 23,086
Dec-2000 $ 23,004 $ 23,199
Jan-2001 $ 23,808 $ 24,023
Feb-2001 $ 21,623 $ 21,834
Mar-2001 $ 20,250 $ 20,452
Apr-2001 $ 21,823 $ 22,039
May-2001 $ 21,955 $ 22,187
Jun-2001 $ 21,407 $ 21,648
Jul-2001 $ 21,194 $ 21,435
Aug-2001 $ 19,858 $ 20,096
Sep-2001 $ 18,242 $ 18,474
Oct-2001 $ 18,576 $ 18,827
Nov-2001 $ 19,993 $ 20,271
Dec-2001 $ 20,154 $ 20,449
Jan-2002 $ 19,846 $ 20,151
Feb-2002 $ 19,462 $ 19,762
Mar-2002 $ 20,181 $ 20,505
Apr-2002 $ 18,950 $ 19,262
May-2002 $ 18,801 $ 19,122
Jun-2002 $ 17,452 $ 17,760
Jul-2002 $ 16,083 $ 16,377
Aug-2002 $ 16,183 $ 16,483
Sep-2002 $ 14,420 $ 14,693
Oct-2002 $ 15,681 $ 15,985
Nov-2002 $ 16,593 $ 16,924
Dec-2002 $ 15,610 $ 15,931
Jan-2003 $ 15,195 $ 15,515
Feb-2003 $ 14,960 $ 15,282
Mar-2003 $ 15,102 $ 15,431
Apr-2003 $ 16,335 $ 16,701
May-2003 $ 17,186 $ 17,579
Jun-2003 $ 17,397 $ 17,804
Jul-2003 $ 17,699 $ 18,117
Aug-2003 $ 18,035 $ 18,471
Sep-2003 $ 17,836 $ 18,275
Oct-2003 $ 18,835 $ 19,307
Nov-2003 $ 18,993 $ 19,477
Dec-2003 $ 19,978 $ 20,498
Jan-2004 $ 20,336 $ 20,875
Feb-2004 $ 20,611 $ 21,165
Mar-2004 $ 20,293 $ 20,846
Apr-2004 $ 19,967 $ 20,518
May-2004 $ 20,233 $ 20,800
Jun-2004 $ 20,616 $ 21,203
</Table>
Summit S&P 500 Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 5-YEAR SINCE INCEPTION
18.51% -2.65% 8.87%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Consumer Discretionary 10.9%
Consumer Staples 11.1%
Energy 6.5%
Financials 20.3%
Health Care 13.4%
Industrials 11.6%
Information Technology 17.1%
Materials 2.9%
Telecommunication Services 3.4%
Utilities 2.6%
Short-Term, Futures, & Other 0.2%
</Table>
"Standard & Poor's", "S&P", "S&P 500", "Standard & Poor's 500", "500", "S&P
MidCap 400 Index", and "Standard & Poor's MidCap 400 Index" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by Summit Mutual
Funds, Inc. The Product is not sponsored, endorsed, sold or promoted by Standard
& Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Product.
15
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS S&P 500 INDEX PORTFOLIO
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
ENDED JUNE 30,
(UNAUDITED) YEAR ENDED DECEMBER
31,
-----------------------------------------------
- -------------------
2004 2003 2002 2001
2000 1999
-----------------------------------------------
- -------------------
Net asset value, beginning of period $ 73.21 $ 57.82 $ 75.15 $102.95
$115.60 $ 97.45
------- ------- ------- -------
- ------- -------
Investment Activities:
Net investment income / (loss) 0.03 0.81 0.69 0.80
1.05 1.05
Net realized and unrealized
gains / (losses) 2.31 15.17 (17.53) (12.15)
(11.75) 18.75
------- ------- ------- -------
- ------- -------
Total from Investment Activities 2.34 15.98 (16.84) (11.35)
(10.70) 19.80
------- ------- ------- -------
- ------- -------
DISTRIBUTIONS:
Net investment income (0.30) (0.59) (0.38) (0.55)
(1.15) (0.95)
Net realized gains -- -- (0.11) (15.90)
(0.80) (0.70)
------- ------- ------- -------
- -------- ------
Total Distributions (0.30) (0.59) (0.49) (16.45)
(1.95) (1.65)
------- ------- ------- -------
- ------- -------
Net asset value, end of period $ 75.25 $ 73.21 $ 57.82 $ 75.15
$102.95 $115.60
======= ======= ======= =======
======= =======
Total return 3.20% 27.98% -22.55% -12.39%
- -9.32% 20.52%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets - net (1) 0.42%(2) 0.52% 0.57% 0.46%
0.41% 0.39%
Ratio of expenses to average net
assets - gross 0.49%(2) 0.54% 0.61% 0.47%
0.43% 0.39%
Ratio of net investment
income / (loss) to average net assets 1.24%(2) 1.25% 1.04% 0.88%
0.81% 1.10%
Portfolio turnover rate 1.20%(2) 0.84% 10.51% 3.30%
21.36% 3.45%
Net assets, end of period (000's) $262,385 $79,766 $64,338 $92,639
$114,103 $284,132
</Table>
(1) NET EXPENSES REPRESENT GROSS EXPENSES REDUCED BY FEES WAIVED AND/OR
REIMBURSED BY THE ADVISER.
(2) ANNUALIZED.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P 500 INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
-----------------------
- -----------------
COMMON STOCKS - 99.79%
CONSUMER DISCRETIONARY - 10.91%
Comcast Corp.* 55,396 $
1,552,750 0.59%
eBay Inc.* 15,898
1,461,820 0.56%
Home Depot 56,023
1,972,010 0.75%
Time Warner Inc.* 111,282
1,956,338 0.75%
Viacom Inc* 43,060
1,538,103 0.59%
Walt Disney Co. 50,356
1,283,574 0.49%
Other securities(3)
18,872,972 7.18%
---------
- ---
28,637,567
---------
- ---
CONSUMER STAPLES - 11.14%
Altria Group, Inc. 50,356
2,520,318 0.96%
Coca Cola Co. 60,381
3,048,033 1.16%
PepsiCo Inc. 42,249
2,276,376 0.87%
Procter & Gamble 63,592
3,461,948 1.32%
Wal-Mart Stores 106,526
5,620,312 2.14%
Other securities(3)
12,308,637 4.69%
---------
- ---
29,235,624
---------
- ---
ENERGY - 6.51%
ChevronTexaco Corp. 26,313
2,476,316 0.94%
ConocoPhillips 16,754
1,278,163 0.49%
Exxon Mobil Corp. 161,289
7,162,844 2.73%
Other securities(3)
6,169,698 2.35%
---------
- ---
17,087,021
---------
- ---
FINANCIALS - 20.29%
American Express 31,661
1,626,743 0.62%
American International Group 64,182
4,574,893 1.74%
Banc One Corp. 27,512
1,403,112 0.53%
Bank of America Corp. 50,257
4,252,748 1.62%
Citigroup Inc. 126,722
5,892,573 2.25%
Fannie Mae 23,925
1,707,288 0.65%
J.P. Morgan Chase & Co. 50,643
1,963,429 0.75%
Merrill Lynch 23,877
1,288,880 0.49%
Morgan Stanley 26,988
1,424,157 0.54%
U.S. Bancorp 47,483
1,308,631 0.50%
Wachovia Corp. 32,578
1,449,721 0.55%
Wells Fargo 41,648
2,383,515 0.91%
Other securities(3)
23,963,981 9.14%
---------
- ---
53,239,671
---------
- ---
HEALTH CARE - 13.35%
Abbott Labs 38,483 $
1,568,567 0.60%
Amgen Inc.* 31,736
1,731,834 0.66%
Lilly (Eli) & Co. 27,638
1,932,173 0.74%
Johnson & Johnson 73,060
4,069,442 1.55%
Medtronic Inc. 29,829
1,453,269 0.55%
Merck & Co. 54,769
2,601,528 0.99%
Pfizer, Inc. 187,814
6,438,264 2.45%
Wyeth 32,792
1,185,759 0.45%
Other securities(3)
14,056,598 5.36%
---------
- ---
35,037,434
---------
- ---
INDUSTRIALS - 11.55%
3M Company 19,321
1,739,083 0.66%
General Electric 259,045
8,393,058 3.20%
Tyco International 49,214
1,630,952 0.62%
United Parcel Service 27,672
2,080,104 0.79%
Other securities(3)
16,462,809 6.28%
---------
- ---
30,306,006
---------
- ---
INFORMATION TECHNOLOGY - 17.06%
Cisco Systems, Inc.* 169,044
4,006,343 1.53%
Dell Inc.* 63,032
2,257,806 0.86%
Hewlett-Packard 75,073
1,584,040 0.60%
Intel Corporation 159,540
4,403,303 1.68%
International Business Machines 41,804
3,685,023 1.40%
Microsoft Corporation 265,509
7,582,937 2.89%
Oracle Corporation* 128,639
1,534,663 0.58%
QUALCOMM Incorporated 19,693
1,437,195 0.55%
Other securities(3)
18,267,075 6.97%
---------
- ---
44,758,385
---------
- ---
MATERIALS - 2.93%
Other securities(3)
7,677,432 2.93%
---------
- ---
TELECOMMUNICATIONS SERVICES - 3.41%
BellSouth 45,498
1,192,958 0.45%
SBC Communications Inc. 81,476
1,975,793 0.75%
Verizon Communications 67,962
2,459,545 0.94%
Other securities(3)
3,314,979 1.27%
---------
- ---
8,943,275
---------
- ---
UTILITIES - 2.64%
Other securities(3)
6,913,178 2.64%
---------
- ---
Total Common Stocks
(cost $235,871,357)
261,835,593
---------
- ---
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
17
<Page>
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
-----------------------
- -----------------
SHORT-TERM INVESTMENTS(4) - .98%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - .83% 2,183,496 $
2,183,496 0.83%
----------
- ---
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- -----------------
U.S. TREASURY BILL - .15%
(.870% due 12/31/31) $ 400,000 $
398,930 0.15%
----------
- ---
Total Short-Term Investments
(cost $2,582,359)
2,582,426
----------
- ---
<Caption>
VALUE
----------
- ---
TOTAL INVESTMENTS - 100.77%
(cost $238,453,716)(1) $
264,418,019
----------
- ---
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(2) - 2.49%
6,532,177
----------
- ---
OTHER ASSETS AND LIABILITIES - (3.26%)
(8,565,558)
----------
- ---
TOTAL NET ASSETS - 100.00% $
262,384,638
=============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $238,831,706 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$38,885,490 and ($13,299,177), respectively, with a net appreciation /
depreciation of $25,586,313.
(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 $7,978,184,
$6,532,177, and $1,606,198, respectively.
(3) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
(4) Securities and other assets with an aggregate value of $570,200 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------
S&P 500 Index (09/04) 2 $ 4,188
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P 500 INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 264,418,019
Cash 9,649
Collateral for securities loaned,
at fair value 6,532,177
Receivables:
Shares sold 13,718
Interest and dividends 296,745
Variation margin 10,763
Prepaid expenses and other 844
--------------
271,281,915
--------------
LIABILITIES
Payables:
Investment securities purchased 573,842
Shares redeemed 1,671,056
Payable upon return of securities
loaned 6,532,177
Advisory fees 52,620
Administration expenses 21,535
Directors' fees 3,567
Custodian fees 5,612
Fund accounting fees 5,270
Professional fees 12,462
Royalty fees 11,305
Other accrued expenses 7,831
--------------
8,897,277
--------------
NET ASSETS*
Paid-in capital 238,146,685
Accumulated undistributed net
investment income 993,342
Accumulated net realized gain / (loss)
on investments and futures contracts (2,723,880)
Net unrealized appreciation / (depreciation)
on investments and futures contracts 25,968,491
--------------
$ 262,384,638
==============
Shares authorized ($.10 par value) 30,000,000
Shares outstanding 3,486,694
Net asset value, offering and redemption
price per share $ 75.25
Investments at cost $ 238,453,716
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 768,917
Unrealized appreciation $ 24,980,973
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2010 2011
---- ----
$ (2,785,889) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 15,967
Dividends 1,689,224
Other income (1,105)
--------------
1,704,086
--------------
EXPENSES
Advisory fees 309,144
Administration expenses 103,048
Custodian fees and expenses 7,423
Fund accounting fees 21,882
Professional fees 12,086
Directors' fees 16,498
Transfer agent fees 4,513
Royalty fee 7,378
Other expenses 21,341
--------------
503,313
Reimbursements and waivers (69,118)
--------------
434,195
--------------
NET INVESTMENT INCOME / (LOSS) 1,269,891
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 222,985
Net realized gain / (loss) on
futures contracts 353,351
--------------
576,336
--------------
Net change in unrealized appreciation /
(depreciation) on investments and
futures contracts 473,190
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 1,049,526
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 2,319,417
==============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -------------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE LIMIT(1)(2) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.30% 0.10% 0.30% $ 69,118 $ --
</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.
(2) Effective July 1, 2003, the Adviser has voluntarily agreed to waive its
fees and/or reimburse expenses of the portfolio to the extent necessary, to
limit all expenses to 0.48% of the average daily net assets of the
portfolio until March 31, 2004, then to 0.39% of the average daily net
assets effective April 1, 2004 until December 31, 2004.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
19
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30,
YEAR ENDED
(UNAUDITED)
DECEMBER 31,
------------------
- ----------------
2004
2003
------------------
- ----------------
OPERATIONS
Net investment income / (loss) $ 1,269,891
$ 857,853
Net realized gain / (loss) on investments and futures 576,336
(76,498)
Net change in unrealized appreciation / (depreciation) on investments
and futures contracts 473,190
16,453,104
------------
- ------------
2,319,417
17,234,459
------------
- ------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income
(1,045,466) (639,600)
------------
- ------------
(1,045,466) (639,600)
------------
- ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 190,816,462
5,202,483
Reinvestment of distributions 1,045,466
639,600
Payments for shares redeemed
(10,517,377) (7,008,986)
------------
- ------------
181,344,551
(1,166,903)
------------
- ------------
NET INCREASE / (DECREASE) IN NET ASSETS 182,618,502
15,427,956
NET ASSETS
Beginning of period 79,766,136
64,338,180
------------
- ------------
End of period $262,384,638
$ 79,766,136
============
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 993,342
$ 768,917
============
============
FUND SHARE TRANSACTIONS
Sold 2,524,817
80,322
Reinvestment of distributions 13,866
11,667
Redeemed
(141,498) (115,207)
------------
- ------------
Net increase / (decrease) from fund share transactions 2,397,185
(23,218)
============
============
TOTAL COST OF PURCHASES OF:
Common Stocks $187,372,404
$ 549,229
------------
- ------------
$187,372,404
$ 549,229
============
============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 1,211,800
$ 3,535,197
------------
- ------------
$ 1,211,800
$ 3,535,197
============
============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 1,045,466
$ 639,600
------------
- ------------
$ 1,045,466
$ 639,600
============
============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
20
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P MIDCAP 400 INDEX PORTFOLIO
OBJECTIVE - Seeks investment results that correspond to the total return
performance of U.S. common stocks, as represented by the Standard & Poor's
MidCap 400 Composite Stock Index (the "Index").
STRATEGY - The Summit Pinnacle S&P MidCap 400 Index Portfolio (the "Portfolio")
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 June 30, 2004, the Portfolio's total return was
5.74% (before the impact of any product or contract-level fees). This compares
to a 6.08% total return for the Index. The difference of 0.34% is referred to as
"tracking error" and is largely attributed to the Portfolio's operating expense
ratio. These expenses represent the Portfolio'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
Portfolio; brokers' 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 Portfolio's objectives and
strategies call for a correlation of at least 95% between the Portfolio's
pre-expense total return and that of the Index. Accordingly, the Portfolio met
its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: May 3, 1999
Total Net Assets: $84.97 Million
Number of Equity Holdings: 400
Median Cap Size: $2.22 Billion
Average Price-to-book Ratio: 2.43x
Dividend Yield: 1.10%
</Table>
TOP 10 EQUTIY HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
Washington Post 0.79%
Coach, Inc. 0.75%
XTO Energy Inc. 0.67%
Tyson Foods 0.66%
L-3 Communications Holdings 0.63%
Lennar Corp. 0.62%
Murphy Oil 0.61%
National Commerce Financial 0.60%
D.R. Horton 0.59%
Microchip Technology Incorporated 0.59%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT S&P MIDCAP 400 INDEX PORTFOLIO S&P MIDCAP 400 INDEX
Apr-1999 $ 10,000 $ 10,000
May-1999 $ 9,930 $ 10,043
Jun-1999 $ 10,430 $ 10,580
Jul-1999 $ 10,180 $ 10,354
Aug-1999 $ 9,830 $ 9,999
Sep-1999 $ 9,500 $ 9,691
Oct-1999 $ 9,960 $ 10,184
Nov-1999 $ 10,480 $ 10,719
Dec-1999 $ 11,114 $ 11,355
Jan-2000 $ 10,782 $ 11,036
Feb-2000 $ 11,556 $ 11,808
Mar-2000 $ 12,513 $ 12,796
Apr-2000 $ 11,992 $ 12,349
May-2000 $ 11,851 $ 12,196
Jun-2000 $ 12,003 $ 12,375
Jul-2000 $ 12,187 $ 12,570
Aug-2000 $ 13,551 $ 13,974
Sep-2000 $ 13,443 $ 13,878
Oct-2000 $ 12,966 $ 13,408
Nov-2000 $ 12,003 $ 12,396
Dec-2000 $ 12,891 $ 13,343
Jan-2001 $ 13,172 $ 13,641
Feb-2001 $ 12,405 $ 12,863
Mar-2001 $ 11,480 $ 11,908
Apr-2001 $ 12,731 $ 13,221
May-2001 $ 13,029 $ 13,529
Jun-2001 $ 12,961 $ 13,475
Jul-2001 $ 12,756 $ 13,274
Aug-2001 $ 12,334 $ 12,840
Sep-2001 $ 10,807 $ 11,243
Oct-2001 $ 11,271 $ 11,741
Nov-2001 $ 12,102 $ 12,614
Dec-2001 $ 12,729 $ 13,265
Jan-2002 $ 12,661 $ 13,198
Feb-2002 $ 12,666 $ 13,213
Mar-2002 $ 13,561 $ 14,158
Apr-2002 $ 13,487 $ 14,092
May-2002 $ 13,254 $ 13,854
Jun-2002 $ 12,270 $ 12,839
Jul-2002 $ 11,067 $ 11,595
Aug-2002 $ 11,116 $ 11,653
Sep-2002 $ 10,215 $ 10,715
Oct-2002 $ 10,658 $ 11,179
Nov-2002 $ 11,271 $ 11,825
Dec-2002 $ 10,801 $ 11,339
Jan-2003 $ 10,482 $ 11,008
Feb-2003 $ 10,226 $ 10,746
Mar-2003 $ 10,307 $ 10,836
Apr-2003 $ 11,049 $ 11,622
May-2003 $ 11,961 $ 12,584
Jun-2003 $ 12,104 $ 12,744
Jul-2003 $ 12,527 $ 13,197
Aug-2003 $ 13,085 $ 13,794
Sep-2003 $ 12,880 $ 13,583
Oct-2003 $ 13,848 $ 14,610
Nov-2003 $ 14,321 $ 15,119
Dec-2003 $ 14,553 $ 15,374
Jan-2004 $ 14,860 $ 15,708
Feb-2004 $ 15,209 $ 16,085
Mar-2004 $ 15,258 $ 16,152
Apr-2004 $ 14,756 $ 15,623
May-2004 $ 15,053 $ 15,946
Jun-2004 $ 15,388 $ 16,308
</Table>
Summit S&P MidCap 400 Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 5-YEAR SINCE INCEPTION
27.13% 8.09% 8.70%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Utilities 5.8%
Consumer Discretionary 16.9%
Consumer Staples 4.4%
Energy 6.4%
Financials 16.4%
Health Care 8.9%
Industrials 11.6%
Information Technology 14.3%
Materials 4.0%
Short-Term, Futures, & Other 11.3%
</Table>
21
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS S&P MIDCAP 400 INDEX PORTFOLIO
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>
PERIOD
FROM
MAY 3,
SIX MONTHS
1999(1)
ENDED JUNE 30,
TO
(UNAUDITED) YEAR ENDED DECEMBER 31,
DECEMBER 31,
------------------------------------------------
- ------------------
2004 2003 2002 2001
2000 1999
------------------------------------------------
- ----------------
Net asset value, beginning of period $ 52.62 $ 39.29 $ 46.70 $ 59.55 $
55.20 $ 50.00
-------- ------- ------- ------- ----
- --- -------
Investment Activities:
Net investment income / (loss) 0.13 0.29 0.22 0.30
1.10 0.50
Net realized and unrealized gains /
(losses) 2.89 13.28 (7.25) (1.00)
7.20 5.05
-------- ------- ------- ------- ----
- --- -------
Total from Investment Activities 3.02 13.57 (7.03) (0.70)
8.30 5.55
-------- ------- ------- ------- ----
- --- -------
DISTRIBUTIONS:
Net investment income (0.14) (0.24) (0.23) (0.20)
(1.20) (0.35)
Net realized gains -- -- (0.15) (11.95)
(2.75) --
-------- ------- ------- ------- ----
- --- -------
Total Distributions (0.14) (0.24) (0.38) (12.15)
(3.95) (0.35)
-------- ------- ------- ------- ----
- --- -------
Net asset value, end of period $ 55.50 $ 52.62 $ 39.29 $ 46.70 $
59.55 $ 55.20
======== ======= ======= =======
======= =======
Total return 5.74% 34.74% -15.15% -1.25%
15.99% 11.14%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets
- net (2) 0.57%(3) 0.60% 0.60% 0.60%
0.60% 0.60%(3)
Ratio of expenses to average net assets
- gross 0.57%(3) 0.67% 0.81% 0.82%
0.77% 0.69%(3)
Ratio of net investment income/(loss)
to average net assets 0.67%(3) 0.58% 0.53% 0.65%
1.44% 1.69%(3)
Portfolio turnover rate 18.42%(3) 8.54% 27.73% 18.57%
146.33% 47.55%(3)
Net assets, end of period (000's) $84,974 $39,944 $23,180 $20,588
$15,054 $23,963
</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.
22
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P MIDCAP 400 INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
---------------------
- ------------------
COMMON STOCKS - 89.16%
CONSUMER DISCRETIONARY - 16.86%
Caesars Entertainment, Inc.* 23,076 $
346,140 0.41%
Coach, Inc.* 14,144
639,167 0.75%
D.R. Horton 17,634
500,806 0.59%
Harman International Industries 5,004
455,364 0.54%
Lennar Corp 11,793
527,383 0.62%
Mandalay Resort Group 4,939
339,013 0.40%
Mohawk Industries* 5,060
371,050 0.44%
Patterson Dental Company* 5,186
396,677 0.47%
PETsMART, Inc. 10,861
352,439 0.41%
Washington Post 726
675,187 0.79%
Other securities(3)
9,721,879 11.44%
--------
- -----
14,325,105
--------
- -----
CONSUMER STAPLES - 4.41%
Dean Foods* 11,873
442,981 0.52%
Hormel Foods Corp. 10,543
327,887 0.39%
Tyson Foods 26,662
558,569 0.66%
Whole Foods Market, Inc. 4,557
434,966 0.51%
Other securities(3)
1,977,740 2.33%
--------
- -----
3,742,143
--------
- -----
ENERGY - 6.37%
ENSCO International 11,402
331,798 0.39%
Murphy Oil 6,991
515,237 0.61%
Pioneer Natural Resources 8,982
315,089 0.37%
Smith International* 7,870
438,831 0.52%
XTO Energy Inc. 19,031
566,933 0.67%
Weatherford International Ltd.* 9,900
445,302 0.52%
Other securities(3)
2,802,252 3.29%
--------
- -----
5,415,442
--------
- -----
FINANCIALS - 16.43%
Banknorth Group Inc 12,999
422,208 0.50%
Commerce Bancorp 5,773
317,573 0.37%
Compass Bancshares 9,265
398,395 0.47%
Everest Re Group 4,235
340,325 0.40%
Fidelity National Financial 13,032
486,615 0.57%
Greenpoint Financial Corp. 10,152
403,034 0.47%
Legg Mason 5,037
458,417 0.54%
National Commerce Financial 15,612
507,390 0.60%
New York Community Bancorp 20,569
403,769 0.48%
Old Republic International 13,804
327,431 0.39%
Radian Group 7,147
342,341 0.40%
Other securities(3)
9,548,336 11.24%
--------
- -----
13,955,834
--------
- -----
HEALTH CARE - 8.87%
Coventry Health Care Inc.* 6,855 $
335,210 0.39%
IVAX Corp.* 14,951
358,674 0.42%
Millennium Pharmaceuticals, Inc.* 22,910
316,158 0.37%
Omnicare, Inc. 7,795
333,704 0.39%
Oxford Health Plans 6,162
339,156 0.40%
Sepracor Inc.* 6,455
341,470 0.40%
Varian Medical Systems* 5,175
410,636 0.48%
Other securities(3)
5,100,546 6.02%
--------
- -----
7,535,554
--------
- -----
INDUSTRIALS - 11.64%
Career Education Corporation* 7,619
347,122 0.41%
Expeditors International of
Washington, Inc. 7,989
394,736 0.46%
Fastenal Company 5,777
328,307 0.39%
L-3 Communications Holdings 7,960
531,728 0.63%
Manpower Inc. 6,602
335,184 0.39%
Republic Services 11,702
338,656 0.40%
Other securities(3)
7,620,323 8.96%
--------
- -----
9,896,056
--------
- -----
INFORMATION TECHNOLOGY - 14.35%
CDW Corporation 6,336
403,983 0.48%
Microchip Technology Incorporated 15,782
497,764 0.59%
Synopsys, Inc.* 11,820
336,043 0.40%
Other securities(3)
10,954,280 12.88%
--------
- -----
12,192,070
--------
- -----
MATERIALS - 3.97%
Other securities(3)
3,372,245 3.97%
--------
- -----
TELCOMMUNICATIONS SERVICES - .46%
Other securities(3)
393,644 0.46%
--------
- -----
UTILITIES - 5.80%
Other securities(3)
4,930,488 5.80%
--------
- -----
Total Common Stocks
(cost $69,068,092)
75,758,581
--------
- -----
UNIT INVESTMENT TRUST(4) - .51%
S&P MidCap 400 Depositary Receipts 3,913
434,734 0.51%
--------
- -----
Total Unit Investment Trust
(cost $316,101)
434,734
--------
- -----
SHORT-TERM INVESTMENTS(4) - 9.10%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - 4.70% 3,994,393
3,994,393 4.70%
--------
- -----
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
23
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- ----------------
U.S. TREASURY BILL - 4.40%
(1.000% due 09/16/04) $ 3,750,000 $
3,739,973 4.40%
----------
- ---
Total Short-Term Investments
(cost $7,733,733)
7,734,366
----------
- ---
TOTAL INVESTMENTS - 98.77%
(cost $77,117,926)(1)
83,927,681
----------
- ---
<Caption>
VALUE
----------
- ---
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(2) - 18.77% $
15,946,343
----------
- ---
OTHER ASSETS AND LIABILITIES - (17.54%)
(14,900,010)
----------
- ---
TOTAL NET ASSETS - 100.00% $
84,974,014
=============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $77,867,303 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$11,066,453 and ($5,006,076), respectively, with a net appreciation /
depreciation of $6,060,377.
(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 $16,814,845,
$15,946,343, and $1,197,996, respectively.
(3) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
(4) Securities and other assets with an aggregate value of $8,515,500 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------------------------
S&P MidCap 400 Index (03/04) 27 $ 186,050
S&P MidCap 400 Index Mini (03/04) 5 $ 9,825
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P MIDCAP 400 INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 83,927,680
Cash 77,555
Collateral for securities loaned,
at fair value 15,946,343
Receivables:
Shares sold 83,436
Securities sold 1,924,491
Interest and dividends 50,497
Variation margin 69,125
Prepaid expenses and other 324
--------------
102,079,451
--------------
LIABILITIES
Payables:
Investment securities purchased 663,607
Shares redeemed 420,372
Payable upon return of securities loaned 15,946,343
Advisory fees 36,108
Administration expenses 4,609
Directors' fees 3,251
Custodian fees 4,367
Fund accounting fees 6,820
Professional fees 9,395
Royalty fees 5,095
Other accrued expenses 5,470
--------------
17,105,437
--------------
NET ASSETS*
Paid-in capital 77,643,988
Accumulated undistributed net
investment income 171,104
Accumulated net realized gain / (loss)
on investments and futures contracts 153,293
Net unrealized appreciation / (depreciation)
on investments and futures contracts 7,005,629
--------------
$ 84,974,014
==============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 1,530,973
Net asset value, offering and redemption
price per share $ 55.50
Investments at cost $ 77,117,926
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 144,166
Unrealized appreciation $ 4,825,485
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2010 2011
---- ----
$ (690,502) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 18,897
Dividends 397,488
Other income 7,098
--------------
423,483
--------------
EXPENSES
Advisory fees 103,314
Administration expenses 34,438
Custodian fees and expenses 8,798
Fund accounting fees 18,310
Professional fees 7,430
Directors' fees 7,408
Transfer agent fees 5,434
Royalty fee 2,800
Other expenses 7,963
--------------
195,895
--------------
NET INVESTMENT INCOME / (LOSS) 227,588
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 1,470,841
Net realized gain / (loss) on
futures contracts 134,186
--------------
1,605,027
--------------
Net change in unrealized appreciation /
(depreciation) on investments and
futures contracts 1,418,913
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 3,023,940
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 3,251,528
==============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ---------------------------------
ADVISORY ADMINISTRATION EXPENSE
FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.30% 0.10% 0.30% $ -- $ --
</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.
25
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30,
YEAR ENDED
(UNAUDITED)
DECEMBER 31,
-------------------
- ---------------
2004
2003
-------------------
- ---------------
OPERATIONS
Net investment income / (loss) $ 227,588
$ 164,286
Net realized gain / (loss) on investments and futures 1,605,027
427,834
Net change in unrealized appreciation / (depreciation) on investments
and futures contracts 1,418,913
8,257,240
------------
- ------------
3,251,528
8,849,360
------------
- ------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income
(200,651) (145,257)
------------
- ------------
(200,651) (145,257)
------------
- ------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 45,280,364
11,661,518
Reinvestment of distributions 200,651
145,257
Payments for shares redeemed
(3,502,352) (3,746,612)
------------
- ------------
41,978,663
8,060,163
------------
- ------------
NET INCREASE / (DECREASE) IN NET ASSETS 45,029,540
16,764,266
NET ASSETS
Beginning of period 39,944,474
23,180,208
------------
- ------------
End of period $ 84,974,014
$ 39,944,474
============
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 171,104
$ 144,166
============
============
FUND SHARE TRANSACTIONS
Sold 832,756
254,665
Reinvestment of distributions 3,608
3,648
Redeemed
(64,563) (89,109)
------------
- ------------
Net increase / (decrease) from fund share transactions 771,801
169,204
============
============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 40,978,570
$ 12,157,278
------------
- ------------
$ 40,978,570
$ 12,157,278
============
============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 5,856,986
$ 2,216,071
------------
- ------------
$ 5,856,986
$ 2,216,071
============
============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 200,651
$ 145,257
------------
- ------------
$ 200,651
$ 145,257
============
============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BALANCED INDEX PORTFOLIO
OBJECTIVE - Seeks investment results, with respect to 60% of its assets, that
correspond to the total return performance of U.S. common stocks, as represented
by the Standard & Poor's 500 Composite Stock Index (the "Index") and, with
respect to 40% of its assets, that correspond to the total return performance of
investment grade bonds, as represented by the Lehman Brothers Aggregate Bond
Index.
STRATEGY - The Summit Pinnacle Balanced Index Portfolio (the "Portfolio") will
invest approximately 60% of its nets assets in a portfolio of stocks included in
the Index and in futures of the Index, and approximately 40% of its net assets
in a portfolio of investment grade bonds designed to track the Lehman Brothers
Aggregate Bond Index.
MANAGER'S COMMENTS:
For the six-month period ended June 30, 2004, the Portfolio's total return was
1.89% (before the impact of any product or contract-level fees). This compares
to a 2.20% total return for the hypothetical Balanced Index. The difference of
0.31% is referred to as "tracking error" and is largely attributed to the
Portfolio's operating expense ratio. These expenses represent the Portfolio'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 Portfolio; brokers' 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 Portfolio's
objectives and strategies call for a correlation of at least 95% between the
Portfolio's pre-expense total return and that of the Index. Accordingly, the
Portfolio met its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: May 3, 1999
Total Net Assets: $33.78 Million
Number of Equity Holdings: 500
Median Cap Size: $9.54 Billion
Average Price-to-book Ratio: 3.00x
Dividend Yield: 1.71%
Number of Fixed Income Holdings: 35
Average Duration: 4.34 years
Average Maturity: 10.9 years
Average Credit Quality: AAA/Aaa
Current Yield: 3.89%
</Table>
TOP 10 EQUITY HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
General Electric 1.93%
Microsoft Corporation 1.74%
Exxon Mobil Corp. 1.65%
Pfizer, Inc. 1.48%
Citigroup Inc. 1.36%
Wal-Mart Stores 1.28%
American International Group 1.05%
Intel Corporation 1.01%
Bank of America Corp. 0.98%
Johnson & Johnson 0.94%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT BALANCED INDEX PORTFOLIO LEHMAN BROTHERS AGGREGATE BOND INDEX
S&P 500 INDEX
Apr-1999 $ 10,000 $ 10,000
$ 10,000
May-1999 $ 9,740 $ 9,764
$ 9,912
Jun-1999 $ 10,050 $ 10,306
$ 9,880
Jul-1999 $ 9,840 $ 9,985
$ 9,839
Aug-1999 $ 9,810 $ 9,936
$ 9,834
Sep-1999 $ 9,690 $ 9,663
$ 9,948
Oct-1999 $ 10,076 $ 10,275
$ 9,985
Nov-1999 $ 10,197 $ 10,484
$ 9,984
Dec-1999 $ 10,531 $ 11,101
$ 9,936
Jan-2000 $ 10,187 $ 10,544
$ 9,903
Feb-2000 $ 10,108 $ 10,344
$ 10,023
Mar-2000 $ 10,743 $ 11,356
$ 10,155
Apr-2000 $ 10,559 $ 11,014
$ 10,126
May-2000 $ 10,418 $ 10,788
$ 10,121
Jun-2000 $ 10,678 $ 11,054
$ 10,332
Jul-2000 $ 10,613 $ 10,881
$ 10,426
Aug-2000 $ 11,067 $ 11,557
$ 10,577
Sep-2000 $ 10,743 $ 10,947
$ 10,643
Oct-2000 $ 10,743 $ 10,901
$ 10,714
Nov-2000 $ 10,299 $ 10,041
$ 10,889
Dec-2000 $ 10,397 $ 10,090
$ 11,091
Jan-2001 $ 10,678 $ 10,449
$ 11,273
Feb-2001 $ 10,112 $ 9,497
$ 11,371
Mar-2001 $ 9,742 $ 8,896
$ 11,428
Apr-2001 $ 10,168 $ 9,586
$ 11,380
May-2001 $ 10,234 $ 9,650
$ 11,448
Jun-2001 $ 10,088 $ 9,416
$ 11,492
Jul-2001 $ 10,133 $ 9,323
$ 11,749
Aug-2001 $ 9,793 $ 8,741
$ 11,884
Sep-2001 $ 9,363 $ 8,035
$ 12,023
Oct-2001 $ 9,544 $ 8,189
$ 12,274
Nov-2001 $ 9,907 $ 8,817
$ 12,105
Dec-2001 $ 9,941 $ 8,894
$ 12,028
Jan-2002 $ 9,884 $ 8,765
$ 12,125
Feb-2002 $ 9,807 $ 8,595
$ 12,243
Mar-2002 $ 9,939 $ 8,919
$ 12,039
Apr-2002 $ 9,599 $ 8,378
$ 12,273
May-2002 $ 9,581 $ 8,317
$ 12,377
Jun-2002 $ 9,141 $ 7,725
$ 12,484
Jul-2002 $ 8,763 $ 7,123
$ 12,635
Aug-2002 $ 8,854 $ 7,169
$ 12,848
Sep-2002 $ 8,319 $ 6,391
$ 13,056
Oct-2002 $ 8,723 $ 6,953
$ 12,997
Nov-2002 $ 9,060 $ 7,361
$ 12,993
Dec-2002 $ 8,820 $ 6,929
$ 13,262
Jan-2003 $ 8,674 $ 6,748
$ 13,273
Feb-2003 $ 8,641 $ 6,647
$ 13,457
Mar-2003 $ 8,689 $ 6,712
$ 13,446
Apr-2003 $ 9,154 $ 7,264
$ 13,557
May-2003 $ 9,503 $ 7,646
$ 13,810
Jun-2003 $ 9,553 $ 7,744
$ 13,782
Jul-2003 $ 9,527 $ 7,880
$ 13,319
Aug-2003 $ 9,659 $ 8,034
$ 13,408
Sep-2003 $ 9,683 $ 7,949
$ 13,762
Oct-2003 $ 9,966 $ 8,398
$ 13,634
Nov-2003 $ 10,024 $ 8,472
$ 13,667
Dec-2003 $ 10,381 $ 8,916
$ 13,806
Jan-2004 $ 10,531 $ 9,080
$ 13,917
Feb-2004 $ 10,654 $ 9,206
$ 14,068
Mar-2004 $ 10,583 $ 9,067
$ 14,173
Apr-2004 $ 10,375 $ 8,925
$ 13,804
May-2004 $ 10,439 $ 9,047
$ 13,749
Jun-2004 $ 10,577 $ 9,222
$ 13,827
</Table>
Summit Balanced Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 5-YEAR SINCE INCEPTION
10.72% 1.59% 1.09%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
U.S. Stocks 59.8%
Treasuries & Agency Notes 18.2%
Mortgage-Backed Securities 11.0%
Corporate Bonds 8.8%
Short-Term, Futures, & Other 2.2%
</Table>
27
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS BALANCED INDEX PORTFOLIO
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 JUNE 30,
MAY 3, 1999(1)
(UNAUDITED) YEAR ENDED DECEMBER 31,
TO DECEMBER 31,
--------------------------------------------------
- -------------------
2004 2003 2002 2001
2000 1999
--------------------------------------------------
- -------------------
Net asset value, beginning of period $ 43.05 $ 37.50 $ 43.85 $ 48.05 $
52.05 $ 50.00
------- ------- ------- ------- ----
- --- -------
Investment Activities:
Net investment income / (loss) 0.56 0.95 1.13 1.10
1.95 0.90
Net realized and unrealized 0.25 5.57 (6.01) (3.15)
(2.65) 1.70
gains / (losses)
------- ------- ------ ------- ----
- --- -------
Total from Investment Activities 0.81 6.52 (4.88) (2.05)
(0.70) 2.60
------- ------- ------- ------- ----
- ---- ------
DISTRIBUTIONS:
Net investment income (0.26) (0.97) (1.47) (0.60)
(2.30) (0.55)
Net realized gains -- -- -- (1.55)
(1.00) --
------- ------- ------- ------- ----
- --- -------
Total Distributions (0.26) (0.97) (1.47) (2.15)
(3.30) (0.55)
------- ------- ------- ------- ----
- --- -------
Net asset value, end of period $ 43.60 $ 43.05 $ 37.50 $ 43.85 $
48.05 $ 52.05
======= ======= ======= =======
======= =======
Total return 1.89% 17.70% -11.27% -4.38% -
1.28% 5.31%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to 0.60%(3) 0.60% 0.60% 0.60%
0.60% 0.47%(3)
average net assets - net(2)
Ratio of expenses to 0.68%(3) 1.01% 1.10% 0.81%
0.68% 0.50%(3)
Average net assets - gross
Ratio of net investment
income / (loss) to
average net assets 2.00%(3) 2.31% 2.78% 2.47%
2.95% 2.94%(3)
Portfolio turnover rate 17.02%(3) 25.45% 15.34% 35.84%
9.60% 141.58%(3)
Net assets, end of period (000's) $33,781 $11,667 $10,638 $13,004
$14,334 $55,708
</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.
28
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BALANCED INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
------------------------
- -----------------
COMMON STOCKS - 59.80%
CONSUMER DISCRETIONARY - 6.55%
Ford Motor 3,497 $
54,727 0.16%
Union Planter Corp.* 364
10,851 0.03%
Other securities(4)
2,146,861 6.36%
---------
- ---
2,212,439
---------
- ---
CONSUMER STAPLES - 6.70%
Altria Group, Inc. 3,914
195,896 0.58%
Coca Cola Co. 4,662
235,338 0.70%
PepsiCo Inc. 3,266
175,972 0.52%
Procter & Gamble 4,913
267,464 0.79%
Wal-Mart Stores 8,211
433,212 1.28%
Other securities(4)
956,567 2.83%
---------
- ---
2,264,449
---------
- ---
ENERGY - 3.89%
ChevronTexaco Corp. 2,043
192,267 0.57%
Exxon Mobil Corp. 12,517
555,880 1.65%
Other securities(4)
563,952 1.67%
---------
- ---
1,312,099
---------
- ---
FINANCIALS - 12.14%
American International Group 4,984
355,260 1.05%
Bank of America Corp. 3,902
330,187 0.98%
Citigroup Inc. 9,872
459,048 1.36%
Wells Fargo 3,228
184,738 0.55%
Other securities(4)
2,772,160 8.20%
---------
- ---
4,101,393
---------
- ---
HEALTH CARE - 8.05%
Amgen Inc.* 2,430
132,605 0.39%
Johnson & Johnson 5,671
315,875 0.94%
Merck & Co. 4,246
201,685 0.60%
Pfizer, Inc. 14,605
500,659 1.48%
Other securities(4)
1,567,700 4.64%
---------
- ---
2,718,524
---------
- ---
INDUSTRIALS - 6.92%
General Electric 20,125
652,050 1.93%
Honeywell International Inc. 1,635
59,890 0.18%
Other securities(4)
1,626,834 4.81%
---------
- ---
2,338,774
---------
- ---
INFORMATION TECHNOLOGY - 10.19%
Cisco Systems, Inc.* 12,982
307,673 0.91%
Dell Inc.* 4,833
173,118 0.51%
Intel Corporation 12,391
341,992 1.01%
International Business Machines 3,229
284,636 0.84%
Microsoft Corporation 20,608
588,564 1.74%
Other securities(4)
1,746,610 5.18%
---------
- ---
3,442,593
---------
- ---
MATERIALS - 1.77%
Weyerhaeuser Corp. 449
28,341 0.08%
Other securities(4)
570,957 1.69%
---------
- ---
599,298
---------
- ---
TELECOMMUNICATIONS SERVICES- 2.05%
Verizon Communications 5,286 $
191,300 0.57%
Other securities(4)
499,699 1.48%
---------
- ---
690,999
---------
- ---
UTILITIES - 1.54%
Other securities(4)
521,224 1.54%
---------
- ---
Total Common Stocks
(cost $20,618,966)
20,201,792
---------
- ---
UNIT INVESTMENT TRUST(3) - .32%
S&P 500 Depositary Receipts 961
110,063 0.32%
---------
- ---
Total Unit Investment Trust
(cost $110,409)
110,063
---------
- ---
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- -----------------
U.S. TREASURY OBLIGATIONS - 13.05%
U.S. TREASURY NOTES - 13.05%
5.875% due 11/15/04 $ 300,000 $
304,734 0.90%
6.500% due 05/15/05 400,000
415,312 1.23%
5.750% due 11/15/05 1,075,000
1,124,005 3.33%
7.000% due 07/15/06 250,000
270,869 0.80%
6.125% due 08/15/07 100,000
108,488 0.32%
5.500% due 02/15/08 200,000
214,164 0.63%
4.750% due 11/15/08 200,000
208,875 0.62%
6.000% due 08/15/09 50,000
54,943 0.16%
5.750% due 08/15/10 180,000
196,256 0.58%
4.375% due 08/15/12 275,000
273,722 0.81%
6.250% due 08/15/23 250,000
276,836 0.82%
6.125% due 11/15/27 500,000
547,910 1.62%
5.250% due 11/15/28 200,000
195,945 0.58%
6.125% due 08/15/29 195,000
214,500 0.65%
---------
- ---
Total U.S. Treasury Obligations
(cost $4,482,084)
4,406,559
---------
- ---
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 5.17%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 5.17%
3.500% due 09/15/07 1,750,000
1,745,021 5.17%
---------
- ---
Total U.S. Government Agency
Obligations
(cost $1,800,848)
1,745,021
---------
- ---
MORTGAGE-BACKED SECURITIES - 10.97%
FNCL (7.000% due 07/01/29) 667,984
707,156 2.09%
FNCL (6.500% due 08/01/32) 252,071
262,655 0.78%
FNCL (6.000% due 08/01/33) 444,148
453,958 1.34%
FNCL (5.500% due 07/01/33) 444,997
444,154 1.31%
FNCL (5.500% due 11/01/33) 715,348
713,992 2.11%
FGCI (5.000% due 05/01/18) 938,455
941,487 2.79%
FGCI (4.500% due 09/01/18) 185,129
181,313 0.55%
---------
- ---
Total Mortgage-Backed Securities
(cost $3,761,258)
3,704,715
---------
- ---
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
29
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- -----------------
CORPORATE BONDS - 8.85%
BANK, BANK HOLDING COMPANIES &
OTHER BANK SERVICES - 1.51%
Key Bank (5.000% due 07/17/07) $ 315,000 $
327,859 0.97%
UPC (4.375% due 12/01/10) 190,000
184,036 0.54%
---------
- ---
511,895
---------
- ---
CAPITAL GOODS - 1.29%
Burlington Resources
(6.500% due 12/01/11) 150,000
163,863 0.49%
Honeywell International
(7.500% due 03/01/10) 125,000
142,986 0.42%
Other securities(4)
(5.875% to 7.500%
due 03/01/10 to 07/15/12)
129,826 0.38%
---------
- ---
436,675
---------
- ---
CONSUMER CYCLICALS - 1.73%
Amgen
(6.500% due 12/01/07) 150,000
163,560 0.48%
Ford Motor Credit Corp.
(6.375% due 02/01/29) 500,000
422,556 1.25%
---------
- ---
586,116
---------
- ---
CONSUMER NON-DURABLE - .71%
Campbell Soup Co.
(5.875% due 10/01/08) 225,000
239,111 0.71%
---------
- ---
ENERGY - .43%
Other securities(4)
(7.750% due 11/01/10)
144,236 0.43%
---------
- ---
MANUFACTURING - 2.24%
Champion International Corp.
(7.200% due 11/01/26) 450,000
502,292 1.49%
Weyerhauser Co.
(5.250% due 12/15/09) 250,000
254,728 0.75%
---------
- ---
757,020
---------
- ---
TELECOMMUNICATION - .94%
Public Services Inc.
(6.625% due 02/15/11) $ 150,000 $
164,297 0.49%
Other securities(4)
(4.125% due 11/15/07)
151,693 0.45%
---------
- ---
315,990
---------
- ---
Total Corporate Bonds
(cost $3,029,662)
2,991,043
---------
- ---
SHORT-TERM INVESTMENTS(5) - 5.77%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - 5.47% 1,848,762
1,848,762 5.47%
U.S. TREASURY BILL - 0.30%
(.870% due 03/18/04) 100,000
99,733 0.30%
- ------------
Total Short-Term Investments
(cost $1,948,492)
1,948,495
- ------------
TOTAL INVESTMENTS - 103.93%
(cost $35,751,719)(1)
35,107,688
- ------------
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(3) - 13.29%
4,488,568
- ------------
OTHER ASSETS AND LIABILITIES - (17.22%)
(5,815,539)
- ------------
TOTAL NET ASSETS - 100.00%
$ 33,780,717
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $35,790,879 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$1,606,048 and ($2,289,239), respectively, with a net appreciation /
depreciation of ($683,191).
(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 $6,549,503,
$4,488,568, and $2,170,479, respectively.
(4) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
(5) Securities and other assets with an aggregate value of $456,030 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- ------------------------------------------------------------------
S&P 500 Index (09/04) 1 $ 1,888
S&P 500 Index Mini (09/04) 1 $ 2,243
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BALANCED INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 35,107,688
Collateral for securities loaned,
at fair value 4,488,568
Receivables:
Interest and dividends 158,986
Variation margin 5,467
Prepaid expenses and other 142
---------------
39,760,851
---------------
LIABILITIES
Payables:
Investment securities purchased 43,005
Shares redeemed 1,406,003
Payable upon return of securities loaned 4,488,568
Bank overdraft 15,808
Advisory fees 2,813
Administration expenses 2,891
Directors' fees 865
Custodian fees 1,496
Fund accounting fees 6,731
Professional fees 8,331
Royalty fees 1,047
Other accrued expenses 2,576
---------------
5,980,134
---------------
NET ASSETS*
Paid-in capital 34,889,228
Accumulated undistributed net
investment income 118,564
Accumulated net realized gain / (loss)
on investments and futures contracts (587,174)
Net unrealized appreciation /
(depreciation) on investments and
futures contracts (639,901)
---------------
$ 33,780,717
===============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 774,869
Net asset value, offering and
redemption price per share $ 43.60
Investments at cost $ 35,751,719
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 38,853
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2009 2010 2011
---- ---- ----
$ -- $ (350,093) $ --
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 221,005
Dividends 139,685
Other income 1,689
---------------
362,379
---------------
EXPENSES
Advisory fees 41,989
Administration expenses 13,996
Custodian fees and expenses 1,968
Fund accounting fees 20,407
Professional fees 6,517
Directors' fees 2,557
Transfer agent fees 3,947
Royalty fee 1,050
Other expenses 2,658
---------------
95,089
Reimbursements and waivers (11,107)
---------------
83,982
---------------
NET INVESTMENT INCOME / (LOSS) 278,397
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options (195,883)
Net realized gain / (loss) on
futures contracts 19,006
---------------
(176,877)
---------------
Net change in unrealized appreciation /
(depreciation) on investments and
futures contracts 1,277
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) (175,600)
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 102,797
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ------------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.30% 0.10% 0.30% $ -- $ 11,107
</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.
31
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30, YEAR
ENDED
(UNAUDITED)
DECEMBER 31,
---------------------------
- -------
2004
2003
---------------------------
- -------
OPERATIONS
Net investment income / (loss) $ 278,397 $
251,950
Net realized gain / (loss) on investments and futures (176,877)
221,827
Net change in unrealized appreciation / (depreciation)
on investments and futures contracts 1,277
1,311,205
------------------ ------
- -------
102,797
1,784,982
------------------ ------
- -------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (209,225)
(266,449)
------------------ ------
- -------
(209,225)
(266,449)
------------------ ------
- -------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 25,250,085
977,184
Reinvestment of distributions 209,225
266,449
Payments for shares redeemed (3,239,653)
(1,733,072)
------------------ ------
- -------
22,219,657
(489,439)
------------------ ------
- -------
NET INCREASE / (DECREASE) IN NET ASSETS 22,113,229
1,029,094
NET ASSETS
Beginning of period 11,667,488
10,638,394
------------------ ------
- -------
End of period $ 33,780,717 $
11,667,488
==================
=============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 118,564 $
38,835
==================
=============
FUND SHARE TRANSACTIONS
Sold 573,522
24,635
Reinvestment of distributions 4,850
6,880
Redeemed (74,506)
(44,231)
------------------ ------
- -------
Net increase / (decrease) from fund share transactions 503,866
(12,716)
==================
=============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 13,979,841 $
28,482
U.S. Government Securities 7,934,415
2,631,308
Corporate Bonds 2,022,165
215,287
------------------ ------
- -------
$ 23,936,421 $
2,875,077
==================
=============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 1,057,565 $
34,615
U.S. Government Securities 1,176,449
1,797,524
Corporate Bonds 58,942
686,851
------------------ ------
- -------
$ 2,292,956 $
2,518,990
==================
=============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 209,225 $
266,449
Long-term capital gains --
- --
------------------ ------
- -------
$ 209,225 $
266,449
==================
=============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
NASDAQ-100 INDEX PORTFOLIO
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 Summit Pinnacle Nasdaq-100 Index Portfolio (the "Portfolio") will
remain fully invested in stocks included in the Nasdaq-100 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 June 30, 2004, the Portfolio's total return was
3.04% (before the impact of any product or contract-level fees). This compares
to a 3.41% total return for the Index. The difference of 0.37% is referred to as
"tracking error" and is largely attributed to the Portfolio's operating expense
ratio. These expenses represent the Portfolio'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
Portfolio; brokers' 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 Portfolio's objectives and
strategies call for a correlation of at least 95% between the Portfolio's
pre-expense total return and that of the Index. Accordingly, the Portfolio met
its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: April 27, 2000
Total Net Assets: $26.00 Million
Number of Equity Holdings: 100
Median Cap Size: $6.37 Billion
Average Price-to-book Ratio: 4.35x
Dividend Yield: 0.23%
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
Microsoft Corporation 7.70%
QUALCOMM Incorporated 5.16%
Intel Corporation 4.55%
Cisco Systems, Inc. 4.12%
eBay Inc. 3.25%
Nextel Communicaitons, Inc. 2.65%
Dell Inc. 2.41%
Amgen Inc. 2.38%
Comcast Corporation 1.93%
Oracle Corporation 1.88%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT NASDAQ-100 INDEX PORTFOLIO NASDAQ-100 INDEX
Mar-2000 $ 10,000 $ 10,000
Apr-2000 $ 10,760 $ 10,763
May-2000 $ 9,470 $ 9,482
Jun-2000 $ 10,730 $ 10,737
Jul-2000 $ 10,300 $ 10,296
Aug-2000 $ 11,630 $ 11,633
Sep-2000 $ 10,170 $ 10,187
Oct-2000 $ 9,360 $ 9,365
Nov-2000 $ 7,150 $ 7,152
Dec-2000 $ 6,670 $ 6,681
Jan-2001 $ 7,380 $ 7,399
Feb-2001 $ 5,420 $ 5,446
Mar-2001 $ 4,470 $ 4,490
Apr-2001 $ 5,270 $ 5,295
May-2001 $ 5,110 $ 5,137
Jun-2001 $ 5,190 $ 5,224
Jul-2001 $ 4,770 $ 4,806
Aug-2001 $ 4,160 $ 4,195
Sep-2001 $ 3,310 $ 3,335
Oct-2001 $ 3,860 $ 3,896
Nov-2001 $ 4,520 $ 4,557
Dec-2001 $ 4,460 $ 4,503
Jan-2002 $ 4,380 $ 4,426
Feb-2002 $ 3,836 $ 3,881
Mar-2002 $ 4,096 $ 4,149
Apr-2002 $ 3,600 $ 3,647
May-2002 $ 3,406 $ 3,451
Jun-2002 $ 2,958 $ 3,003
Jul-2002 $ 2,718 $ 2,748
Aug-2002 $ 2,662 $ 2,692
Sep-2002 $ 2,350 $ 2,378
Oct-2002 $ 2,794 $ 2,827
Nov-2002 $ 3,162 $ 3,189
Dec-2002 $ 2,788 $ 2,813
Jan-2003 $ 2,786 $ 2,809
Feb-2003 $ 2,864 $ 2,887
Mar-2003 $ 2,888 $ 2,913
Apr-2003 $ 3,136 $ 3,163
May-2003 $ 3,394 $ 3,426
Jun-2003 $ 3,404 $ 3,437
Jul-2003 $ 3,614 $ 3,653
Aug-2003 $ 3,794 $ 3,837
Sep-2003 $ 3,686 $ 3,730
Oct-2003 $ 4,004 $ 4,055
Nov-2003 $ 4,026 $ 4,079
Dec-2003 $ 4,144 $ 4,204
Jan-2004 $ 4,214 $ 4,277
Feb-2004 $ 4,148 $ 4,213
Mar-2004 $ 4,056 $ 4,122
Apr-2004 $ 3,950 $ 4,016
May-2004 $ 4,132 $ 4,203
Jun-2004 $ 4,270 $ 4,348
</Table>
Summit Nasdaq-100 Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
25.44% -6.30% -18.43%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Communication 26.1%
Consumer Cyclical 7.6%
Consumer Non-Cyclical 14.5%
Industrial 3.0%
Technology 37.1%
Short-Term, Futures, & Other 11.7%
</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.
33
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS NASDAQ-100 INDEX PORTFOLIO
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 JUNE 30,
APRIL 27, 2000(1)
(UNAUDITED) YEAR ENDED DECEMBER 31,
TO DECEMBER 31,
----------------------------------------------------
- -----------------
2004 2003 2002 2001
2000
------------------------------------------------
- ---------------------
Net asset value, beginning of period $ 20.72 $ 13.94 $ 22.30 $ 33.35
$ 50.00
-------- -------- -------- --------
- --------
Investment Activities:
Net investment income / (loss) (0.04) (0.04) (0.07) --
(0.05)
Net realized and unrealized gains
/ (losses) 0.67 6.82 (8.29) (11.05)
(16.60)
-------- -------- -------- --------
- --------
Total from Investment Activities 0.63 6.78 (8.36) (11.05)
(16.65)
-------- -------- -------- --------
- --------
Net asset value, end of period $ 1.35 $ 20.72 $ 13.94 $ 22.30
$ 33.35
======== ======== ======== ========
========
Total return 3.04% 48.64% -37.49% -33.13%
- -33.30%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net
assets - net (2) 0.65%(3) 0.65% 0.65% 0.65%
0.64%(3)
Ratio of expenses to average net
assets - gross 0.78%(3) 0.91% 1.11% 0.97%
0.88%(3)
Ratio of net investment income
/ (loss) to average net assets -0.41%(3) -0.31% -0.43% -0.21%
- -0.17%(3)
Portfolio turnover rate 1.23%(3) 3.97% 11.79% 5.49%
14.69%(3)
Net assets, end of period (000's) $ 25,998 $ 23,350 $ 9,583 $ 14,560
$ 8,577
</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.
34
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
NASDAQ-100 INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES VALUE
NET ASSETS
------------------------
- --------------
COMMON STOCKS - 88.71%
BASIC INDUSTRIES - .29%
Other securities(3) $ 74,751
0.29%
------------
COMMUNICATIONS - 26.11%
Amazon.com, Inc.* 5,002 272,109
1.05%
Cisco Systems, Inc.* 45,145 1,069,937
4.12%
Comcast Corp.* 17,891 501,485
1.93%
eBay Inc.* 9,185 844,561
3.25%
EchoStar Communications Corporation* 4,785 147,139
0.57%
InterActiveCorp* 13,914 419,368
1.61%
Juniper Networks, Inc.* 6,770 166,339
0.64%
Nextel Communications, Inc.* 25,802 687,881
2.65%
QUALCOMM Incorporated 18,378 1,341,226
5.16%
Symantec Corporation* 6,068 265,657
1.02%
Yahoo! Inc.* 11,916 432,908
1.67%
Other securities(3) 640,544
2.44%
------------
6,789,154
------------
CONSUMER CYCLICAL - 7.47%
Bed Bath & Beyond Inc.* 7,499 288,337
1.11%
Cintas Corporation 3,860 184,006
0.71%
Costco Wholesale Corporation 4,541 186,499
0.72%
PACCAR Inc. 3,694 214,215
0.82%
Staples, Inc. 6,265 183,627
0.71%
Starbucks Corporation* 10,308 448,192
1.72%
Other securities(3) 437,842
1.68%
------------
1,942,718
------------
CONSUMER NON-CYCLICAL - 14.55%
Amgen Inc.* 11,324 617,950
2.38%
Apollo Group, Inc.* 3,360 296,654
1.14%
Biomet, Inc. 6,483 288,105
1.11%
Biogen Idec Inc* 6,881 435,223
1.67%
Chiron Corporation* 4,944 220,700
0.85%
Genzyme Corp.* 5,293 250,518
0.96%
Gilead Sciences, Inc.* 3,755 251,585
0.97%
Paychex, Inc. 6,386 216,358
0.83%
Teva Pharmaceutical Industries Limited 4,213 283,493
1.09%
Other securities(3) 921,974
3.55%
------------
3,782,560
------------
ENERGY - .20%
Other securities(3) 52,587
0.20%
------------
INDUSTRIAL - 3.03%
Flextronics International Ltd.* 10,784 $ 172,005
0.66%
------------
Other securities(3) 616,892
2.37%
------------
788,897
------------
TECHNOLOGY - 37.06%
Adobe Systems 4,383 203,810
0.78%
Altera Corporation* 10,036 223,000
0.86%
Apple Computer* 9,912 322,535
1.24%
Applied Materials, Inc.* 16,674 327,144
1.26%
Broadcom Corporation* 4,242 198,398
0.76%
Dell Inc.* 17,461 625,453
2.41%
Electronic Arts Inc.* 5,656 308,535
1.19%
Fiserv, Inc.* 4,563 177,455
0.68%
Intel Corporation 42,896 1,183,930
4.55%
Intuit Inc.* 4,710 181,712
0.70%
KLA-Tencor Corporation* 4,572 225,765
0.87%
Linear Technology Corporation 7,863 310,353
1.19%
Maxim Integrated Products, Inc. 8,474 444,207
1.71%
Microsoft Corporation 70,104 2,002,170
7.70%
Network Appliance, Inc.* 6,801 146,426
0.56%
Oracle Corporation* 41,040 489,607
1.88%
PeopleSoft, Inc.* 9,976 184,556
0.71%
Research in Motion Limited* 3,422 234,202
0.90%
VERITAS Software Corporation* 8,012 221,932
0.85%
Xilinx, Inc. 8,552 284,866
1.10%
Other securities(3) 1,336,920
5.16%
------------
9,632,976
------------
Total Common Stocks
(cost $23,240,447) 23,063,643
------------
UNIT INVESTMENT TRUST - 1.22%
Nasdaq 100 Shares 8,374 316,370
1.22%
------------
Total Unit Investment Trust
(cost $197,984) 316,370
------------
SHORT-TERM INVESTMENTS(4) - 10.08%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - 4.52% 1,174,874 1,174,874
4.52%
------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
35
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL VALUE
NET ASSETS
--------------------------
- --------------
U.S. TREASURY BILL - 5.56%
(1.000% due 09/16/04) $ 1,450,000 $ 1,446,123
5.56%
------------
Total Short-Term Investments
(cost $2,620,842) 2,620,997
------------
TOTAL INVESTMENTS - 100.01%
(cost $26,059,273)(1) 26,001,010
------------
<Caption>
VALUE
------------
NORTHERN INSTITUTIONAL
LIQUID ASSET PORTFOLIO(2) - 5.66% $ 1,470,981
------------
OTHER ASSETS AND LIABILITIES - (5.67%)
(1,473,942)
------------
TOTAL NET ASSETS - 100.00% $ 25,998,049
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $26,872,024 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$3,688,371 and ($4,559,385), respectively, with a net appreciation /
depreciation of ($871,014).
(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 $1,547,143,
$1,470,981, and $112,263, respectively.
(3) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
(4) Securities and other assets with an aggregate value of $2,555,280 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------------
Nasdaq-100 Index (09/04) 14 $ 58,850
Nasdaq-100 Index Mini (09/04) 3 $ 15,400
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
NASDAQ-100 INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 26,001,010
Cash 18
Collateral for securities loaned,
at fair value 1,470,981
Receivables:
Shares sold 15,402
Interest and dividends 1,172
Variation margin 22,680
Prepaid expenses and other 2,676
---------------
27,513,939
---------------
LIABILITIES
Payables:
Shares redeemed 18,063
Payable upon return of securities loaned 1,470,981
Advisory fees 1,246
Administration expenses 6,029
Directors' fees 661
Custodian fees 2,753
Fund accounting fees 5,454
Professional fees 7,741
Other accrued expenses 2,962
---------------
1,515,890
---------------
NET ASSETS*
Paid-in capital 33,313,447
Accumulated net investment income / (loss) (49,463)
Accumulated net realized gain / (loss)
on investments and futures contracts (7,281,922)
Net unrealized appreciation / (depreciation)
on investments and futures contracts 15,987
---------------
$ 25,998,049
===============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 1,217,703
Net asset value, offering and
redemption price per share $ 21.35
Investments at cost $ 26,059,273
</Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2008 2009 2010 2011
---- ---- ---- ----
$ (905,274) $ (1,618,824) $ (3,618,754) $ (235,075)
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 7,322
Dividends 20,509
Other income 1,888
---------------
29,719
---------------
EXPENSES
Advisory fees 42,636
Administration expenses 12,182
Custodian fees and expenses 6,219
Fund accounting fees 15,825
Professional fees 6,088
Directors' fees 1,732
Transfer agent fees 4,195
Royalty fee 2,493
Other expenses 2,676
---------------
94,046
Reimbursements and waivers (14,864)
---------------
79,182
---------------
NET INVESTMENT INCOME / (LOSS) (49,463)
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options (12,665)
Net realized gain / (loss) on
futures contracts (69,820)
---------------
(82,485)
---------------
Net change in unrealized appreciation /
(depreciation) on investments
and futures contracts 825,772
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 743,287
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 693,824
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- ------------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- --------------------------------------------------------------------------------
0.35% 0.10% 0.30% $ -- $ 14,864
</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.
37
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30, YEAR
ENDED
(UNAUDITED)
DECEMBER 31,
---------------------------
- -------
2004
2003
---------------------------
- -------
OPERATIONS
Net investment income / (loss) $ (49,463) $
(47,918)
Net realized gain / (loss) on investments and futures (82,485)
(335,435)
Net change in unrealized appreciation /
(depreciation) on investments
and futures contracts 825,772
6,386,730
------------------ ------
- -------
693,824
6,003,377
------------------ ------
- -------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 5,489,923
15,025,665
Payments for shares redeemed (3,535,315)
(7,262,288)
------------------ ------
- -------
1,954,608
7,763,377
------------------ ------
- -------
NET INCREASE / (DECREASE) IN NET ASSETS 2,648,432
13,766,754
NET ASSETS
Beginning of period 23,349,617
9,582,863
------------------ ------
- -------
End of period $ 25,998,049 $
23,349,617
==================
=============
ACCUMULATED NET INVESTMENT INCOME / (LOSS) $ (49,463) $
- --
==================
=============
FUND SHARE TRANSACTIONS
Sold 264,409
887,236
Redeemed (173,557)
(447,781)
------------------ ------
- -------
Net increase / (decrease) from fund share
transactions 90,852
439,455
==================
=============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 209,489 $
9,016,870
------------------ ------
- -------
$ 209,489 $
9,016,870
==================
=============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 135,307 $
529,604
------------------ ------
- -------
$ 135,307 $
529,604
==================
=============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO
OBJECTIVE - Seeks investment results that correspond to the investment
performance of U.S. common stocks, as represented by the Russell 2000 Index (the
"Index").
STRATEGY - The Summit Pinnacle Russell 2000 Small Cap Index Portfolio (the
"Portfolio") 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
market instruments to meet redemptions and to provide cash for future stock
purchases.
MANAGER'S COMMENTS:
For the six-month period ended June 30, 2004, the Portfolio's total return was
6.60% (before the impact of any product or contract-level fees). This compares
to a 6.76% total return for the Index. The difference of 0.16% is referred to as
"tracking error". One component of the difference is attributed to the
Portfolio's operating expense ratio. These expenses represent the Portfolio'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 Portfolio; brokers' 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 Portfolio's
objectives and strategies call for a correlation of at least 95% between the
Portfolio's pre-expense total return and that of the Index. Accordingly, the
Portfolio met its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: April 27, 2000
Total Net Assets: $57.85 Million
Number of Equity Holdings: 2,008
Median Capitalization Size: $513 Million
Average Price-to-book Ratio: 2.26x
Dividend Yield: 1.04%
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
iShares Russell 2000 Index Fund 1.17%
Tesoro Petroleum Corp. 0.16%
Calpine Corp. 0.16%
Techne Corp 0.16%
Cytec Industries Inc. 0.16%
Park National Corp. 0.16%
Energen Corp. 0.16%
Bancorpsouth Inc. 0.16%
IDEX Corp. 0.16%
Pediatrix Medical Group Inc. 0.15%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT RUSSELL 2000 SMALL CAP
INDEX PORTFOLIO RUSSELL 2000 INDEX
Mar-2000 $ 10,000 $ 10,000
Apr-2000 $ 10,440 $ 10,456
May-2000 $ 9,850 $ 9,846
Jun-2000 $ 10,650 $ 10,707
Jul-2000 $ 10,330 $ 10,372
Aug-2000 $ 11,101 $ 11,158
Sep-2000 $ 10,770 $ 10,828
Oct-2000 $ 10,299 $ 10,345
Nov-2000 $ 9,265 $ 9,283
Dec-2000 $ 10,039 $ 10,086
Jan-2001 $ 10,562 $ 10,610
Feb-2001 $ 9,886 $ 9,915
Mar-2001 $ 9,412 $ 9,430
Apr-2001 $ 10,128 $ 10,168
May-2001 $ 10,369 $ 10,418
Jun-2001 $ 10,718 $ 10,777
Jul-2001 $ 10,105 $ 10,194
Aug-2001 $ 9,767 $ 9,865
Sep-2001 $ 8,437 $ 8,537
Oct-2001 $ 8,933 $ 9,036
Nov-2001 $ 9,610 $ 9,736
Dec-2001 $ 10,193 $ 10,337
Jan-2002 $ 10,087 $ 10,229
Feb-2002 $ 9,812 $ 9,949
Mar-2002 $ 10,590 $ 10,748
Apr-2002 $ 10,689 $ 10,846
May-2002 $ 10,209 $ 10,364
Jun-2002 $ 9,697 $ 9,850
Jul-2002 $ 8,218 $ 8,363
Aug-2002 $ 8,188 $ 8,342
Sep-2002 $ 7,597 $ 7,743
Oct-2002 $ 7,826 $ 7,991
Nov-2002 $ 8,523 $ 8,704
Dec-2002 $ 8,047 $ 8,219
Jan-2003 $ 7,818 $ 7,992
Feb-2003 $ 7,580 $ 7,750
Mar-2003 $ 7,673 $ 7,850
Apr-2003 $ 8,399 $ 8,594
May-2003 $ 9,299 $ 9,517
Jun-2003 $ 9,478 $ 9,689
Jul-2003 $ 10,060 $ 10,295
Aug-2003 $ 10,508 $ 10,767
Sep-2003 $ 10,302 $ 10,568
Oct-2003 $ 11,163 $ 11,455
Nov-2003 $ 11,546 $ 11,862
Dec-2003 $ 11,766 $ 12,103
Jan-2004 $ 12,264 $ 12,628
Feb-2004 $ 12,376 $ 12,742
Mar-2004 $ 12,491 $ 12,860
Apr-2004 $ 11,856 $ 12,204
May-2004 $ 12,038 $ 12,399
Jun-2004 $ 12,541 $ 12,920
</Table>
Summit Russell 2000 Small Cap Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR 3-YEAR SINCE INCEPTION
32.31% 5.38% 5.57%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Basic Materials 8.8%
Capital Goods 11.6%
Consumer Cyclical 17.3%
Consumer Staples 1.6%
Energy 4.3%
Financial 20.9%
Industrial 0.4%
Technology 12.8%
Health Care 12.0%
Utilities 3.8%
Short-Term, Futures, & Other 6.5%
</Table>
The Russell 2000 Index is a trademark/service mark of the Frank Russell Company.
Russell is a trademark of the Frank Russell Company. Summit Mutual Funds and the
Russell 2000 Small Cap Index Portfolio are not promoted, sponsored or endorsed
by, nor in any way affiliated with Frank Russell Company. Frank Russell is not
responsible for and has not reviewed the Prospectus, and Frank Russell makes no
representation or warranty, express or implied, as to its accuracy, or
completeness, or otherwise.
39
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS RUSSELL 2000 SMALL CAP INDEX PORTFOLIO
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>
PERIOD
FROM
APRIL 27,
SIX MONTHS
2000(1)
ENDED JUNE 30,
TO
(UNAUDITED) YEAR ENDED DECEMBER 31,
DECEMBER 31,
----------------------------------------
- -----------------
2004 2003 2002 2001
2000
----------------------------------------
- -----------------
Net asset value, beginning of period $ 54.40 $ 37.52 $ 48.10 $
49.95 $ 50.00
------- ------- ------- -----
- -- -------
Investment Activities:
Net investment income / (loss) 0.02 0.22 0.29
0.40 0.40
Net realized and unrealized gains/(losses) 3.57 16.95 (10.31)
0.35 (0.20)
------- ------- ------- -----
- -- -------
Total from Investment Activities 3.59 17.17 (10.02)
0.75 0.20
------- ------- ------- -----
- -- -------
DISTRIBUTIONS:
Net investment income (0.11) (0.29) (0.09)
(0.45) (0.25)
Net realized gains -- -- (0.47)
(2.15) --
------- ------- ------- -----
- -- -------
Total Distributions (0.11) (0.29) (0.56)
(2.60) (0.25)
------- ------- ------- -----
- -- -------
Net asset value, end of period $ 57.88 $ 54.40 $ 37.52 $
48.10 $ 49.95
======= ======= =======
======= =======
Total return 6.60% 46.19% -21.05%
1.54% 0.39%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets - net(2) 0.75%(3) 0.75% 0.75%
0.75% 0.74%(3)
Ratio of expenses to average net assets - gross 0.76%(3) 1.12% 1.33%
1.10% 1.35%(3)
Ratio of net investment income / (loss)
to average net assets 0.44%(3) 0.57% 0.65%
0.90% 1.11%(3)
Portfolio turnover rate 55.80%(3) 23.87% 30.78%
32.70% 82.19%(3)
Net assets, end of period (000's) $57,849 $25,794 $13,863
$21,503 $16,105
------- ------- ------- -----
- -- -------
</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.
40
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
---------------------
- ------------------
COMMON STOCKS - 93.48%
CAPITAL GOODS - 11.58%
Cognex Corp. 2,085 $
80,231 0.14%
Cooper Tire & Rubber Co 3,443
79,189 0.14%
IDEX Corp. 2,619
89,963 0.16%
Joy Global Inc. 2,655
79,491 0.14%
Kennametal Inc. 1,905
87,249 0.15%
Landstar System Inc.* 1,556
82,266 0.14%
Terex Corp.* 2,575
87,885 0.15%
Thomas & Betts Corp. 3,068
83,542 0.14%
Other securities(3)
6,030,992 10.42%
---------
- ---
6,700,808
---------
- ---
CONSUMER CYCLICALS - 17.34%
CBRL Group 2,590
79,902 0.14%
Reader's Digest Association 5,170
82,668 0.14%
SCP Pool Corp. 1,857
83,565 0.14%
Strayer Education Inc. 727
81,111 0.14%
Toro Co. 1,264
88,568 0.15%
Valassis Communication* 2,721
82,909 0.14%
Other securities(3)
9,528,260 16.49%
---------
- ---
10,026,983
---------
- ---
CONSUMER STAPLES - 1.62%
Other securities(3)
938,848 1.62%
---------
- ---
ENERGY - 4.28%
Calpine Corp.* 21,728
93,865 0.16%
Tesoro Petroleum Corp.* 3,422
94,447 0.16%
Other securities(3)
2,288,164 3.96%
---------
- ---
2,476,476
---------
- ---
FINANCIAL - 20.88%
American Financial Realty 5,727
81,839 0.14%
Amerus Group Co 2,054
85,036 0.15%
Bancorpsouth Inc. 4,032
90,841 0.16%
BISYS Group* 6,286
88,381 0.15%
Carramerica Realty Corp 2,838
85,793 0.15%
East West Bancorp Inc. 2,612
80,188 0.14%
Essex Property Trust Inc. 1,195
81,678 0.14%
First Industrial Realty Trust Inc 2,153
79,403 0.14%
First Midwest Bancorp Inc/II 2,431
85,596 0.15%
Healthcare Realty Trust Inc. 2,248
84,255 0.15%
La Quinta Corp.* 9,810
82,404 0.14%
Old National Bancorp 3,466
86,061 0.15%
Park National Corp 715
91,313 0.16%
Realty Income Corp.* 2,069
86,339 0.15%
The MONY Group* 2,618
81,943 0.14%
Westamerica Bancorp 1,658
86,962 0.15%
Other securities(3)
10,722,348 18.52%
---------
- ---
12,080,380
---------
- ---
HEALTH CARE - 12.00%
Pediatrix Medical Group Inc.* 1,279 $
89,338 0.15%
STERIS Corp.* 3,646
82,254 0.14%
Techne Corp.* 2,146
93,244 0.16%
Valeant Pharmaceuticals International 4,375
87,500 0.15%
Other securities(3)
6,590,871 11.40%
---------
- ---
6,943,207
---------
- ---
INDUSTRIAL - .37%
Other securities(3) 212,963
0.37%
---------
- ---
MATERIALS - 8.80%
Aptargroup Inc. 1,909
83,404 0.14%
Corn Products International Inc. 1,904
88,631 0.15%
Crown Holdings Inc.* 8,625
85,990 0.15%
Cytec Industries Inc. 2,031
92,309 0.16%
FMC Corp.* 1,899
81,866 0.14%
IMC Global Inc 6,049
81,057 0.14%
York International 2,159
88,670 0.15%
Other securities(3)
4,485,319 7.77%
---------
- ---
5,087,246
---------
- ---
TECHNOLOGY - 12.78%
Brocade Communications Systems* 13,547
81,011 0.14%
Hyperion Solutions Corp.* 2,037
89,058 0.15%
Other securities(3)
7,224,924 12.49%
---------
- ---
7,394,993
---------
- ---
UTILITIES - 3.83%
Energen Corp. 1,898
91,085 0.16%
Peoples Energy 1,961
82,656 0.14%
Piedmont Natural Gas Co. 1,988
84,888 0.15%
Other securities(3)
1,955,625 3.38%
---------
- ---
2,214,254
---------
- ---
Total Common Stocks
(cost $49,130,560)
54,076,158
---------
- ---
CORPORATE BONDS - 0.01%
MATERIALS - 0.01%
Other securities(3)
(12.000% due 06/30/20)
3,098 0.01%
---------
- ---
Total Corporate Bonds
(cost $3,000)
3,098
---------
- ---
UNIT INVESTMENT TRUST - 1.17%
iShares Russell 2000 Index Fund* 5,755
679,032 1.17%
---------
- ---
Total Unit Investment Trust
(cost $471,652)
679,032
---------
- ---
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
41
<Page>
<Table>
<Caption>
PERCENT OF
SHARES VALUE
NET ASSETS
-----------------------
- ----------------
SHORT-TERM INVESTMENTS(4) - 8.21%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - 7.18% 4,152,759 $
4,152,759 7.18%
- ------------
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- ----------------
U.S. TREASURY BILL - 1.03%
(.870% due 03/18/04) $ 600,000 $
598,396 1.03%
---------
- ---
<Caption>
VALUE
---------
- ---
Total Short-Term Investments
(cost $4,751,054) $
4,751,155
---------
- ---
TOTAL INVESTMENTS - 102.87%
(cost $54,356,266)(1)
59,509,443
---------
- ---
NORTHERN INSTITUTIONAL LIQUID
ASSET PORTFOLIO(2) - .01%
3,849
---------
- ---
OTHER ASSETS AND LIABILITIES - (2.88%)
(1,664,116)
---------
- ---
TOTAL NET ASSETS - 100.00% $
57,849,176
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $54,619,020 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$7,642,142 and ($2,751,718), respectively, with a net appreciation /
depreciation of $4,890,424.
(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 $3,184, $3,849,
and $0, respectively.
(3) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
(4) Securities and other assets with an aggregate value of $2,961,750 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------------------------
Russell 2000 Index (09/04) 10 $ 134,000
Russell 2000 Index Mini (09/04) 5 $ 17,650
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 59,509,443
Collateral for securities loaned,
at fair value 3,849
Receivables:
Shares sold 23,623
Securities sold 35,851
Interest and dividends 50,061
Variation margin 19,438
Prepaid expenses and other 212
--------------
59,642,477
--------------
LIABILITIES
Payables:
Investment securities purchased 67,916
Shares redeemed 275,787
Payable upon return of securities loaned 3,849
Bank overdraft 1,383,855
Advisory fees 18,441
Administration expenses 4,597
Directors' fees 1,035
Custodian fees 9,705
Fund accounting fees 10,963
Professional fees 8,248
Royalty fees 5,599
Other accrued expenses 3,306
--------------
1,793,301
--------------
NET ASSETS*
Paid-in capital 53,324,900
Accumulated undistributed net
investment income 92,371
Accumulated net realized gain / (loss)
on investments and futures contracts (872,922)
Net unrealized appreciation / (depreciation)
on investments and futures contracts 5,304,827
--------------
$ 57,849,176
==============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 999,430
Net asset value, offering and redemption
price per share $ 57.88
Investments at cost $ 54,356,266
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 96,391
Unrealized appreciation $ 3,112,569
</Table>
Capital Loss Carryforward Expiring December 31,
<Table>
<Caption>
2010 2011
---- ----
$ (858,626) $ (158,661)
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 19,062
Dividends 248,542
Foreign dividend taxes withheld (14)
Other income 8,273
--------------
275,863
--------------
EXPENSES
Advisory fees 81,996
Administration expenses 23,427
Custodian fees and expenses 16,370
Fund accounting fees 30,717
Professional fees 7,024
Directors' fees 3,898
Transfer agent fees 4,873
Royalty fee 2,822
Other expenses 5,077
--------------
176,204
Reimbursements and waivers (1,801)
--------------
174,403
--------------
NET INVESTMENT INCOME / (LOSS) 101,460
--------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 842,748
Net realized gain / (loss) on
futures contracts (428,055)
--------------
414,693
--------------
Net change in unrealized appreciation /
(depreciation) on investments and
futures contracts 1,921,930
--------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 2,336,623
--------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 2,438,083
==============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -------------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- -----------------------------------------------------------------------------
0.35% 0.10% 0.40% $ -- $ 1,801
</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>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL STATEMENTS RUSSELL 2000 SMALL CAP INDEX PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
ENDED JUNE 30, YEAR
ENDED
(UNAUDITED)
DECEMBER 31,
---------------------------
- -------
2004
2003
---------------------------
- -------
OPERATIONS
Net investment income / (loss) $ 101,460 $
98,386
Net realized gain / (loss) on investments and futures 414,693
(215,741)
Net change in unrealized appreciation/(depreciation)
on investments and futures contracts 1,921,930
6,714,656
------------------ -----
- -------
2,438,083
6,597,301
------------------ -----
- -------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (105,479)
(103,286)
------------------ -----
- -------
(105,479)
(103,286)
------------------ -----
- -------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 34,204,430
13,037,142
Reinvestment of distributions 105,479
103,286
Payments for shares redeemed (4,587,259)
(7,703,184)
------------------ -----
- -------
29,722,650
5,437,244
------------------ -----
- -------
NET INCREASE / (DECREASE) IN NET ASSETS 32,055,254
11,931,259
NET ASSETS
Beginning of period 25,793,922
13,862,663
------------------ -----
- -------
End of period $ 57,849,176 $
25,793,922
==================
============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 92,371 $
96,391
==================
============
FUND SHARE TRANSACTIONS
Sold 605,564
279,445
Reinvestment of distributions 1,825
2,947
Redeemed (82,086)
(177,778)
------------------ -----
- -------
Net increase / (decrease) from
fund share transactions 525,303
104,614
==================
============
TOTAL COST OF PURCHASES OF:
Common Stocks $ 38,914,958 $
10,708,607
Corporate Bonds 3,150
- --
------------------ -----
- -------
$ 38,918,108 $
10,708,607
==================
============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 11,780,254 $
3,567,071
Corporate Bonds 150
- --
------------------ -----
- -------
$ 11,780,404 $
3,567,071
==================
============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 105,479 $
103,286
------------------ -----
- -------
$ 105,479 $
103,286
==================
============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
EAFE INTERNATIONAL INDEX PORTFOLIO
OBJECTIVE - Seeks investment results that correspond to the total return
performance of common stocks as represented by the Morgan Stanley Capital
International ("MSCI") EAFE Index (the "Index"). The Index emphasizes the stock
of companies in major markets in Europe, Australasia, and the Far East.
STRATEGY - The Summit Pinnacle EAFE International Index Portfolio (the
"Portfolio") will invest primarily in common stocks of the companies that
compose the Index.
MANAGER'S COMMENTS:
For the six-month period ended June 30, 2004, the Portfolio's total return was
3.61% (before the impact of any product or contract-level fees). This compares
to a 4.56% total return for the Index. The difference of 0.95% is referred to as
"tracking error." One component of the difference is attributed to the
Portfolio's operating expense ratio. These expenses represent the Portfolio'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 Portfolio; brokers' commissions or other trading costs; and
holding a sample of the security positions in the Index or holding them 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 Portfolio's objectives and strategies call for it to seek
investment results that correspond to the pre-expense total return of the Index.
FUND DATA
Manager: Subadvised by World Asset
Management, L.L.C.
A division of Munder Capital Management
<Table>
Inception Date: November 12, 2002
Total Net Assets: $27.69 Million
Number of Holdings: 592
Median Cap Size: $3.38 Billion
Average Price-to-book Ratio: 2.09x
Dividend Yield: 2.55%
</Table>
TOP 10 HOLDINGS
<Table>
<Caption>
(% OF NET ASSETS)
-----------------
BP Amoco Plc 2.59%
HSBC Holdings Plc 2.16%
iShares MSCI EAFE Index Fund 2.15%
Vodafone Group Plc 1.98%
Glaxo SmithKline Plc 1.59%
Toyota Motor Corporation 1.55%
Total FinaElf SA 1.44%
Nestle SA 1.41%
Royal Dutch Petroleum Company 1.41%
Novartis 1.39%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT EAFE INTERNATIONAL INDEX PORTFOLIO MSCI EAFE INTERNATIONAL
INDEX
Oct-2002 $ 10,000 $ 10,000
Nov-2002 $ 10,400 $ 10,454
Dec-2002 $ 9,918 $ 10,103
Jan-2003 $ 9,478 $ 9,681
Feb-2003 $ 9,261 $ 9,460
Mar-2003 $ 9,034 $ 9,274
Apr-2003 $ 9,880 $ 10,183
May-2003 $ 10,471 $ 10,800
Jun-2003 $ 10,655 $ 11,062
Jul-2003 $ 10,806 $ 11,329
Aug-2003 $ 10,988 $ 11,602
Sep-2003 $ 11,287 $ 11,960
Oct-2003 $ 11,962 $ 12,705
Nov-2003 $ 12,232 $ 12,987
Dec-2003 $ 13,170 $ 14,001
Jan-2004 $ 13,321 $ 14,199
Feb-2004 $ 13,597 $ 14,527
Mar-2004 $ 13,629 $ 14,608
Apr-2004 $ 13,330 $ 14,278
May-2004 $ 13,359 $ 14,326
Jun-2004 $ 13,645 $ 14,640
</Table>
Summit EAFE International Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
28.06% 20.97%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
Australia 4.4%
France 9.6%
Germany 6.9%
Italy 3.9%
Japan 23.3%
Netherlands 5.2%
Sweden 2.0%
United Kingdom 25.2%
Switzerland 7.0%
Spain 3.3%
Short-Term & Other 9.2%
</Table>
The EAFE International Index Portflio is not sponsored, endorsed, sold or
promoted by MSCI or any affiliate of MSCI. Neither MSCI nor any other party
makes any representation or warranty, express or implied to Summit Mutual Funds,
Inc. or any member to the public regarding the advisability of investing in
funds generally or in this fund particularly or the ability of the EAFE Index to
track general stock market performance.
45
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS EAFE INTERNATIONAL INDEX PORTFOLIO
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
PERIOD FROM
ENDED JUNE 30, YEAR ENDED
NOVEMBER 12, 2002(1)
(UNAUDITED) DECEMBER 31,
TO DECEMBER 31,
--------------------------------
- -------------------
2004 2003
2002
--------------------------------
- -------------------
Net asset value, beginning of period $ 64.41 $ 49.59
$ 50.00
-------- --------
- --------
Investment Activities:
Net investment income / (loss) 0.07 1.34
0.19
Net realized and unrealized gains / (losses) 2.27 14.49
(0.60)
-------- --------
- --------
Total from Investment Activities 2.34 15.83
(0.41)
-------- --------
- --------
DISTRIBUTIONS:
Net investment income (0.69) (0.19)
- --
Net realized gains (0.80) (0.82)
- --
-------- --------
- --------
Total Distributions (1.49) (1.01)
- --
-------- --------
- --------
Net asset value, end of period $ 65.26 $ 64.41
$ 49.59
======== ========
========
Total return 3.61% 32.79%
- -0.82%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets - net (2) 0.95%(3) 0.65%
0.65%(3)
Ratio of expenses to average net assets - gross 1.68%(3) 2.46%
1.99%(3)
Ratio of net investment income / (loss)
to average net assets 2.62%(3) 2.14%
2.24%(3)
Portfolio turnover rate 104.98%(3) 75.27%
449.05%(3)
Net assets, end of period (000's) $ 27,693 $ 16,565
$ 22,234
</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.
46
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
EAFE INTERNATIONAL INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
-----------------------
- -----------------
COMMON STOCKS - 97.36%
AUSTRALIA - 4.43%
BHP Billiton Ltd 13,736 $
119,893 0.43%
Other securities(2)
1,107,679 4.00%
---------
- ---
1,227,572
---------
- ---
AUSTRIA - .17%
Other securities(2)
45,966 0.17%
---------
- ---
BELGIUM - 1.02%
Other securities(2)
281,681 1.02%
---------
- ---
DENMARK - .95%
Other securities(2)
262,358 0.95%
---------
- ---
FINLAND - 1.31%
Nokia Oyj 17,634
254,449 0.92%
Other securities(2)
108,156 0.39%
---------
- ---
362,605
---------
- ---
FRANCE - 9.62%
Aventis SA 2,485
187,600 0.68%
BNP Paribas 3,010
185,120 0.67%
Total FinaElf SA 2,093
399,029 1.44%
Other securities(2)
1,892,675 6.83%
---------
- ---
2,664,424
---------
- ---
GERMANY - 6.88%
Allianz AG 1,125
121,817 0.44%
DaimlerChrysler AG 3,124
146,331 0.53%
Deutsche Bank AG 1,937
152,358 0.55%
Deutsche Telekom 9,196
161,671 0.58%
E.ON AG 2,322
167,244 0.60%
SAP AG 732
122,011 0.44%
Siemens AG 2,960
213,016 0.77%
Other securities(2)
819,888 2.96%
---------
- ---
1,904,336
---------
- ---
GREECE - .27%
Other securities(2)
76,011 0.27%
---------
- ---
HONG KONG - 1.39%
Other securities(2)
385,260 1.39%
---------
- ---
ITALY - 3.92%
ENI-Ente Nazionale Idrocarburi SpA 9,565
189,920 0.69%
Other securities(2)
894,875 3.23%
---------
- ---
1,084,795
---------
- ---
JAPAN - 23.33%
Canon Inc 3,100
163,360 0.59%
East Japan Railway Company 22
123,393 0.45%
Honda Motor Co Ltd 2,900
139,797 0.50%
Mitsubishi Tokyo Financial 26
240,664 0.87%
Nippon Telegraph & Telephone Corp. 54
288,521 1.04%
Sony Corporation 3,400
128,067 0.46%
Sumitomo Mitsui Financial 39
267,351 0.97%
Takeda Chemical Industries Ltd 3,300
144,866 0.52%
Toyota Motor Corporation 10,600 $
429,382 1.55%
Other securities(2)
4,534,817 16.38%
---------
- ---
6,460,218
---------
- ---
NETHERLANDS - 5.19%
ABN Amro Holding NV 5,735
125,455 0.45%
ING Groep NV 6,426
151,673 0.55%
Philips Electronics NV 4,834
130,153 0.47%
Royal Dutch Petroleum Company 7,603
390,173 1.41%
Unilever NV 2,127
145,176 0.52%
Other securities(2)
493,673 1.79%
---------
- ---
1,436,303
---------
- ---
NEW ZEALAND - .09%
Other securities(2)
26,139 0.09%
---------
- ---
NORWAY - .42%
Other securities(2)
115,945 0.42%
---------
- ---
PORTUGAL - .28%
Other securities(2)
78,060 0.28%
---------
- ---
SINGAPORE - .61%
Other securities(2)
167,688 0.61%
---------
- ---
SPAIN - 3.34%
Banco Bilbao Vizcaya Argentaria SA 11,799
157,621 0.57%
Banco Santander Central Hispano SA 15,747
163,423 0.59%
Telefonica SA 17,293
255,630 0.92%
Other securities(2)
347,538 1.26%
---------
- ---
924,212
---------
- ---
SWEDEN - 1.97%
*Ericsson Lm-B Shares 53,918
158,899 0.57%
Other securities(2)
387,631 1.40%
---------
- ---
546,530
---------
- ---
SWITZERLAND - 6.96%
Credit Suisse Group 4,138
147,031 0.53%
Nestle SA 1,468
391,498 1.41%
Novartis 8,730
385,127 1.39%
Roche Holding AG 2,582
255,644 0.92%
UBS AG 4,149
292,358 1.06%
Other securities(2)
456,319 1.65%
---------
- ---
1,927,977
---------
- ---
UNITED KINGDOM - 25.21%
AstraZeneca Plc 6,266
281,130 1.02%
Barclay Plc 24,002
204,471 0.74%
BP Amoco Plc 81,100
716,254 2.59%
Diageo Plc 11,287
152,187 0.55%
GlaxoSmithKline Plc 21,816
441,527 1.59%
HBOS Plc 14,060
174,023 0.63%
HSBC Holdings Plc 40,181
597,519 2.16%
Lloyds TSB Group Plc 20,557
160,957 0.58%
Royal Bank of Scotland Group Plc 10,895
313,758 1.13%
Shell Transport & Trading Co 35,476
260,238 0.94%
Tesco Plc 27,968
135,042 0.49%
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
47
<Page>
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
-----------------------
- -----------------
UNITED KINGDOM - 25.21% (CONTINUED)
Vodafone Group Plc 250,225 $
547,944 1.98%
Other securities(2)
2,997,660 10.81%
---------
- ---
6,982,710
---------
- ---
Total Common Stocks
(cost $23,133,339)
26,960,790
---------
- ---
UNIT INVESTMENT TRUST - 2.15%
*iShares MSCI EAFE Index Fund 4,161
595,023 2.15%
---------
- ---
Total Unit Investment Trust
(cost $509,329)
595,023
---------
- ---
SHORT-TERM INVESTMENTS - 1.27%
NORTHERN TRUST DIVERSIFIED
ASSETS FUND - 1.27% 352,757 $
352,757 1.27%
---------
- ---
Total Short-Term Investments
(cost $352,757)
352,757
---------
- ---
TOTAL INVESTMENTS - 100.78%
(cost $23,995,425)(1)
27,908,570
---------
- ---
OTHER ASSETS AND LIABILITIES - (0.78%)
(215,365)
---------
- ---
TOTAL NET ASSETS - 100.00% $
27,693,205
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $24,591,391 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$3,942,590 and ($625,411), respectively, with a net appreciation /
depreciation of $3,317,179.
(2) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
48
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
EAFE INTERNATIONAL INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 27,908,570
Receivables:
Shares sold 2,403
Interest and dividends 79,326
Receivable from Adviser 212,792
Prepaid expenses and other 31,544
---------------
28,234,635
---------------
LIABILITIES
Payables:
Investment securities purchased 284,954
Shares redeemed 109,303
Bank overdraft 34,009
Directors' fees 800
Custodian fees 50,545
Fund accounting fees 17,700
Professional fees 9,537
Royalty fees 30,992
Other accrued expenses 3,591
---------------
541,431
---------------
NET ASSETS*
Paid-in capital 23,917,460
Accumulated undistributed net
investment income 320,775
Accumulated net realized gain / (loss)
on investments and futures contracts (455,810)
Net unrealized appreciation / (depreciation)
on investments, futures contracts, and
foreign currency translations 3,910,779
---------------
$ 27,693,204
===============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 424,360
Net asset value, offering and redemption
price per share $ 65.26
Investments at cost $ 23,995,425
</Table>
<Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
Undistributed ordinary income $ 773,273
Undistributed long-term gains $ 1,847
Unrealized appreciation $ 3,141,384
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ (169)
Dividends 530,499
Foreign dividend taxes withheld (66,356)
Other income 2,321
---------------
466,295
---------------
EXPENSES
Advisory fees 73,492
Administration expenses 13,124
Custodian fees and expenses 58,020
Fund accounting fees 47,739
Professional fees 7,886
Directors' fees 1,927
Transfer agent fees 5,112
Royalty fee 9,464
Other expenses 2,081
---------------
218,845
Reimbursements and waivers (94,394)
---------------
124,451
---------------
NET INVESTMENT INCOME / (LOSS) 341,844
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 140,322
---------------
Net change in unrealized appreciation /
(depreciation) on investments,
futures contracts, and foreign
currency translations 175,794
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) 316,116
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ 657,960
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -----------------------------
ADMINISTRATION EXPENSE
ADVISORY FEE FEE LIMIT(1) WAIVER REIMBURSEMENT
- -----------------------------------------------------------------
0.56% 0.10% 0.69%(2) $ -- $ 94,394
</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.
(2) The Adviser agreed to temporarily waive its fees and/or reimburse expenses
of the portfolio, to the extent necessary to limit all expenses to 0.95% of
the average daily net assets of the portfolio until December 31, 2004.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
49
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE
SIX MONTHS
ENDED JUNE 30, YEAR
ENDED
(UNAUDITED)
DECEMBER 31,
---------------------------
- ---------
2004 2003
---------------------------
- ---------
OPERATIONS
Net investment income / (loss) $ 341,844 $
346,251
Net realized gain / (loss) on investments and futures 140,322
(113,522)
Net change in unrealized appreciation/(depreciation)
on investments, futures contracts, and
foreign currency translations 175,794
3,703,209
----------- --------
- ---
657,960
3,935,938
----------- --------
- ---
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (369,685)
(85,175)
Net realized gain on investments (427,028)
(368,895)
----------- --------
- ---
(796,713)
(454,070)
----------- --------
- ---
FUND SHARE TRANSACTIONS
Proceeds from shares sold 20,467,714
13,109,321
Reinvestment of distributions 796,713
454,070
Payments for shares redeemed (9,996,971)
(22,714,310)
----------- --------
- ---
11,267,456
(9,150,919)
----------- --------
- ---
NET INCREASE / (DECREASE) IN NET ASSETS 11,128,703
(5,669,051)
NET ASSETS
Beginning of period 16,564,501
22,233,552
----------- --------
- ---
End of period $27,693,204
$16,564,501
===========
===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 320,775 $
346,251
===========
===========
FUND SHARE TRANSACTIONS
Sold 306,877
265,111
Reinvestment of distributions 12,104
10,026
Redeemed (151,796)
(466,317)
----------- --------
- ---
Net increase / (decrease) from
fund share transactions 167,185
(191,180)
===========
===========
TOTAL COST OF PURCHASES OF:
Common Stocks $25,463,577
$11,664,501
----------- --------
- ---
$25,463,577
$11,664,501
===========
===========
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $13,122,133
$21,514,240
----------- --------
- ---
$13,122,133
$21,514,240
===========
===========
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 794,865 $
454,070
Long-term capital gains 1,848
- --
----------- --------
- ---
$ 796,713 $
454,070
===========
===========
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
50
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
LEHMAN AGGREGATE BOND INDEX PORTFOLIO
OBJECTIVE - Seeks investment results that correspond to the total return
performance of the bond market, as represented by the Lehman Brothers Aggregate
Bond Index (the "Index").
STRATEGY - The Summit Pinnacle Lehman Aggregate Bond Index Portfolio (the
"Portfolio") will invest at least 80% of the value of its assets in obligations
issued or guaranteed by the U.S. Government, publicly-traded debt securities
rated BBB- or BAA3 or higher by a national rating agency, or cash and cash
equivalents. Up to 20% of the Portfolio's total assets may be invested in
financial futures or options contracts. The Portfolio will not purchase bonds
rated below investment grade.
MANAGER'S COMMENTS:
For the six-month period ended June 30, 2004, the Portfolio's total return since
inception was -0.14% (before the impact of any product or contract-level fees).
This compares to a 0.15% total return for the Index. The difference of 0.29% is
referred to as "tracking error" and is largely attributed to the Portfolio's
operating expense ratio for the period. These expenses represent the Portfolio'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 Portfolio; brokers' commissions or other trading costs; holding
security positions in amounts that are different than the weightings in the
Index; and the fact that the Portfolio is only a sample of the Index verses a
complete replica, among others. While an exact replication of the capitalization
weightings of securities in the Index is not feasible, the Portfolio's
objectives and strategies call for a correlation of at least 95% between the
Portfolio's pre-expense total return and that of the Index. Accordingly, the
Portfolio met its objectives for the period presented.
FUND DATA
<Table>
Manager: Team Managed
Inception Date: April 1, 2003
Total Net Assets: $28.68 Million
Number of Holdings: 77
Average Duration: 4.8 years
Average Maturity: 13.3 years
Average Credit Quality: AAA/Aaa
Current Yield: 4.46%
</Table>
QUALITY BREAKDOWN
<Table>
<Caption>
(% OF PORTFOLIO)
----------------
AAA 76%
AA 3%
A 13%
BBB 8%
</Table>
[CHART]
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
<Table>
<Caption>
SUMMIT LEHMAN AGGREGATE BOND INDEX PORTFOLIO LEHMAN BROTHERS AGGREGATE
BOND INDEX
Mar-2003 $ 10,000 $ 10,000
Apr-2003 $ 10,074 $ 10,083
May-2003 $ 10,272 $ 10,270
Jun-2003 $ 10,244 $ 10,250
Jul-2003 $ 9,853 $ 9,905
Aug-2003 $ 9,901 $ 9,971
Sep-2003 $ 10,172 $ 10,235
Oct-2003 $ 10,061 $ 10,140
Nov-2003 $ 10,076 $ 10,164
Dec-2003 $ 10,170 $ 10,267
Jan-2004 $ 10,249 $ 10,350
Feb-2004 $ 10,349 $ 10,462
Mar-2004 $ 10,419 $ 10,541
Apr-2004 $ 10,154 $ 10,266
May-2004 $ 10,110 $ 10,225
Jun-2004 $ 10,155 $ 10,283
</Table>
Summit Lehman Aggregate Bond Index Portfolio - Average Annual Total Return
<Table>
<Caption>
1-YEAR SINCE INCEPTION
0.87% 1.24%
</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.
Separate account expenses are not included.
[CHART]
SECTOR ALLOCATIONS
<Table>
U.S. Treasuries & Agency Obligations 24.4%
Mortgage & Asset Backed Securities 48.6%
Corporate Bonds & Notes 24.3%
Short-Term & Other 2.7%
</Table>
51
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS LEHMAN AGGREGATE BOND INDEX PORTFOLIO
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SIX MONTHS
PERIOD FROM
ENDED JUNE 30,
APRIL 1, 2003(1)
(UNAUDITED) TO
DECEMBER 31,
--------------------------
- -------------
2004
2003
--------------------------
- -------------
Net asset value, beginning of period $ 49.78 $
50.00
---------------- ---
- -------------
Investment Activities:
Net investment income / (loss) 1.18
1.32
Net realized and unrealized gains / (losses) (1.25)
(0.49)
---------------- ---
- -------------
Total from Investment Activities (0.07)
0.83
---------------- ---
- -------------
DISTRIBUTIONS:
Net investment income (0.54)
(1.05)
---------------- ---
- -------------
Total Distributions (0.54)
(1.05)
---------------- ---
- -------------
Net asset value, end of period $ 49.17 $
49.78
================
================
Total return -0.14%
1.70%
RATIOS / SUPPLEMENTAL DATA:
Ratio of expenses to average net assets - net(2) 0.60%(3)
0.60%(3)
Ratio of expenses to average net assets - gross 0.73%(3)
1.10%(3)
Ratio of net investment income / (loss) to average net assets 3.30%(3)
2.83%(3)
Portfolio turnover rate 71.69%(3)
31.94%(3)
Net assets, end of period (000's) $ 28,683 $
10,296
</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.
52
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
LEHMAN AGGREGATE BOND INDEX PORTFOLIO SUMMARY SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- -----------------
U.S. TREASURY OBLIGATIONS - 24.44%
U.S. TREASURY NOTES & BONDS - 24.44%
6.500% due 05/15/05 $ 700,000 $
726,797 2.53%
5.750% due 11/15/05 155,000
162,066 0.57%
4.625% due 05/15/06 350,000
362,401 1.26%
6.500% due 10/15/06 475,000
512,759 1.79%
2.250% due 02/15/07 450,000
441,229 1.54%
6.250% due 02/15/07 350,000
378,219 1.32%
6.125% due 08/15/07 500,000
542,442 1.89%
5.500% due 02/15/08 250,000
267,705 0.93%
5.625% due 05/15/08 300,000
322,922 1.13%
3.125% due 10/15/08 800,000
783,969 2.73%
5.500% due 05/15/09 200,000
215,375 0.75%
6.000% due 08/15/09 200,000
219,773 0.77%
5.750% due 08/15/10 300,000
327,094 1.14%
6.250% due 08/15/23 300,000
332,203 1.16%
6.125% due 11/15/27 100,000
109,582 0.38%
5.500% due 08/15/28 500,000
506,543 1.77%
5.250% due 11/15/28 290,000
284,121 0.99%
5.250% due 02/15/29 300,000
294,141 1.03%
6.125% due 08/15/29 200,000
220,000 0.76%
---------
- ---
Total U.S. Treasury Obligations
(cost $7,162,387)
7,009,341
---------
- ---
SOVEREIGN GOVERNMENT BONDS - 1.05%
Republic of Italy
(2.500% due 07/15/08) 200,000
189,597 0.66%
Other securities(4)
(6.750% due 08/15/13)
112,930 0.39%
---------
- ---
Total Sovereign Government Bonds
(cost $193,450)
302,527
---------
- ---
MORTGAGE-BACKED SECURITIES - 45.99%
FHLMC 2.500% due 03/15/06 500,000
497,670 1.74%
FHLMC 2.375% due 04/15/06 500,000
495,647 1.73%
FHLMC 5.500% due 07/15/06 800,000
837,185 2.92%
FHMLC 3.500% due 09/15/07 1,300,000
1,296,302 4.52%
FHLMC 5.750% due 03/15/09 200,000
213,339 0.74%
FHLMC 5.000% due 05/01/18 2,033,319
2,039,888 7.11%
FHLMC 4.500% due 09/01/18 740,515
725,254 2.53%
FNMA 5.000% due 11/01/17 342,792
344,354 1.20%
FNMA 5.500% due 08/01/18 808,587
829,025 2.89%
FNMA 6.500% due 04/01/23 95,616
101,105 0.35%
FNMA 6.500% due 08/01/32 1,372,386
1,430,010 4.99%
FNMA 5.000% due 02/01/33 1,188,220
1,150,675 4.01%
FNMA 5.500% due 07/01/33 1,612,829
1,609,772 5.61%
FNMA 6.000% due 08/01/33 363,394
371,420 1.29%
FNMA 5.500% due 11/01/33 1,251,858
1,249,485 4.36%
---------
- ---
Total Mortgage-Backed Securities
(cost $13,468,077)
13,191,131
---------
- ---
ASSET-BACKED SECURITIES - 2.64%
PRIVATE SECTOR - 2.64%
AMSI 2003-6 AF4
(4.329% due 08/25/33) $ 250,000 $
239,074 0.83%
BSCMS 2000-WF2 A1
(7.110% due 10/15/32) 440,102
475,066 1.66%
Other securities(4)
(6.815% due 01/25/29)
44,157 0.15%
---------
- ---
Total Asset-Backed Securities
(cost $782,795)
758,297
---------
- ---
CORPORATE BONDS AND NOTES - 24.24%
BANK, BANK HOLDING COMPANIES, &
OTHER BANK SERVICES - 2.05%
Key Bank
(5.000% due 07/17/07) 185,000
192,552 0.67%
Residential Asset Corp.
(4.610% due 06/25/33) 298,000
286,544 1.00%
Other securities(4)
(7.750% due 12/01/36)
107,466 0.38%
---------
- ---
586,562
---------
- ---
CAPITAL GOODS - 3.06%
Other securities(4)
(2.900% to 7.500%
due 3/15/08 to 10/01/12)
877,532 3.06%
---------
- ---
CONSUMER NON-DURABLE - 3.25%
Campbell Soup Co.
(5.875% due 10/01/08) 230,000
244,424 0.85%
Cargill Inc.(2)
(6.250% due 05/01/06) 230,000
242,873 0.85%
Other securities(4)
(3.375% to 5.875%
due 06/01/07 to 07/15/12)
445,322 1.55%
---------
- ---
932,619
---------
- ---
ENERGY - 5.28%
Colonial Pipeline Co.(2)
(7.750% due 11/01/10) 175,000
201,930 0.70%
Colonial Pipeline Co.(2)
(6.580% due 08/28/32) 100,000
104,145 0.36%
Devon Financing Corp.
(6.875% due 09/30/11) 180,000
195,958 0.68%
Exelon Generation Co.(2)
(5.350% due 01/15/14) 230,000
223,042 0.78%
Keyspan Corp.
(7.250% due 11/15/05) 330,000
349,814 1.22%
Public Service Inc.
(6.625% due 02/15/11) 180,000
197,156 0.69%
Other securities(4)
(6.350% due 04/15/09 to 10/15/11)
242,438 0.85%
---------
- ---
1,514,483
---------
- ---
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
53
<Page>
<Table>
<Caption>
PERCENT OF
PRINCIPAL
VALUE NET ASSETS
-----------------------
- -----------------
FINANCE - 1.74%
American General Finance
(5.375% due 09/01/09) $ 210,000 $
215,953 0.75%
Other securities(4)
(4.125% to 5.875%
due 11/15/07 to 11/30/12)
283,108 0.99%
---------
- ---
499,061
---------
- ---
HEALTH CARE - .68%
Amgen Inc.
(6.500% due 12/01/07) 180,000
196,272 0.68%
---------
- ---
MEDIA & CABLE - .74%
Other securities(4)
(5.850% to 6.200%
due 01/15/10 to 01/05/12)
210,957 0.74%
---------
- ---
MANUFACTURING - 5.21%
Champion International Corp.
(7.200% due 11/01/26) 200,000
223,240 0.78%
Ford Motor Co.
(6.375% due 02/01/29) 500,000
422,556 1.47%
Westvaco Corp.
(7.950% due 02/15/31) 500,000
552,618 1.93%
Other securities(4)
(5.250% to 7.375%
due 12/15/09 to 08/01/10)
296,931 1.03%
---------
- ---
1,495,345
---------
- ---
TELECOMMUNICATIONS - 1.60%
Sprint Capital Corp.
(6.000% due 01/15/07) 180,000
188,501 0.66%
Other securities(4)
(5.375% to 6.940%
due 12/15/06 to 4/15/28)
269,299 0.94%
---------
- ---
457,800
---------
- ---
TRANSPORTATION - .63%
Other securities(4)
(4.875% due 11/01/09) $
180,944 0.63%
---------
- ---
Total Corporate Bonds & Notes
(cost $7,285,158)
6,951,575
---------
- ---
</Table>
<Table>
<Caption>
PERCENT OF
SHARES
VALUE NET ASSETS
-----------------------
- -----------------
SHORT-TERM INVESTMENTS - 1.27%
NORTHERN TRUST DIVERSIFIED
ASSETS 365,373 $
365,373 1.27%
---------
- ---
Total Short-Term Investments
(cost $365,373)
365,373
---------
- ---
TOTAL INVESTMENTS - 99.63%
(cost $29,257,240)(1)
28,578,244
---------
- ---
NORTHERN INSTITUTIONAL LIQUID
ASSET PORTFOLIO(3) - 18.35%
5,264,244
---------
- ---
OTHER ASSETS AND LIABILITIES - (17.98%)
(5,159,065)
---------
- ---
TOTAL NET ASSETS - 100.00% $
28,683,423
============
</Table>
(1) For federal income tax purposes, cost is $29,257,240 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was $7,733
and ($686,729), respectively, with a net appreciation / depreciation of
($678,996).
(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 $9,597,889,
$5,264,244, and $4,488,258, respectively.
(4) "Other securities" represent, by subcategory, those issues that
individually, or when aggregated with other issues of the same issuer, are
not within the Portfolio's 50 largest holdings in unaffiliated issuers and
have an aggregate market value of no more than 1.00% of the Portfolio's
total net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
54
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
LEHMAN AGGREGATE BOND INDEX PORTFOLIO FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2004 (UNAUDITED)
<Table>
ASSETS
Investments in securities, at value $ 28,578,244
Collateral for securities loaned,
at fair value 5,264,244
Receivables:
Shares sold 5,629
Securities sold 468,127
Interest and dividends 305,839
Receivable from Adviser 3,779
Prepaid expenses and other 41
---------------
34,625,903
---------------
LIABILITIES
Payables:
Shares redeemed 657,532
Payable upon return of securities loaned 5,264,244
Directors' fees 908
Custodian fees 707
Fund accounting fees 7,600
Professional fees 8,134
Other accrued expenses 3,355
---------------
5,942,480
---------------
NET ASSETS*
Paid-in capital 29,288,992
Accumulated undistributed net
investment income 159,818
Accumulated net realized gain / (loss)
on investments and futures contracts (86,391)
Net unrealized appreciation / (depreciation)
on investments (678,996)
---------------
$ 28,683,423
===============
Shares authorized ($.10 par value) 20,000,000
Shares outstanding 583,302
Net asset value, offering and redemption
price per share $ 49.17
Investments at cost $ 29,257,240
</Table>
*FEDERAL TAX DATA AS OF DECEMBER 31, 2003
<Table>
Undistributed ordinary income $ 55,143
</Table>
<Table>
<Caption>
CAPITAL LOSS CARRYFORWARD EXPIRING DECEMBER 31,
- --------------------------------------------------------------------------------
2011
----
$ (65,139)
</Table>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
INVESTMENT INCOME
Interest $ 479,654
Dividends 613
Other income 1,990
---------------
482,257
---------------
EXPENSES
Advisory fees 37,271
Administration expenses 12,423
Custodian fees and expenses 1,092
Fund accounting fees 21,693
Professional fees 7,580
Directors' fees 2,112
Transfer agent fees 4,720
Other expenses 3,794
---------------
90,685
Reimbursements and waivers (16,144)
---------------
74,541
---------------
NET INVESTMENT INCOME / (LOSS) 407,716
---------------
REALIZED AND UNREALIZED GAIN / (LOSS)
Net realized gain / (loss) on investments
and options 21,093
---------------
Net change in unrealized
appreciation / (depreciation)
on investments (647,704)
---------------
NET REALIZED AND UNREALIZED
GAIN / (LOSS) (626,611)
---------------
NET INCREASE / (DECREASE)
IN NET ASSETS FROM OPERATIONS $ (218,895)
===============
</Table>
TRANSACTIONS WITH AFFILIATES
<Table>
<Caption>
PERCENT OF CURRENT
NET ASSET VALUE
- -----------------------------
ADMINISTRATION EXPENSE(1)
ADVISORY FEE FEE LIMIT WAIVER REIMBURSEMENT
- -------------------------------------------------------------------
0.30% 0.10% 0.30% $ -- $ 16,144
</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.
55
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
FINANCIAL HIGHLIGHTS LEHMAN AGGREGATE BOND INDEX PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE SIX MONTHS
PERIOD FROM
ENDED JUNE 30,
APRIL 1, 2003 TO
(UNAUDITED)
DECEMBER 31,
-------------------
- -----------------
2004
2003
-------------------
- -----------------
OPERATIONS
Net investment income / (loss) $ 407,716
$ 219,221
Net realized gain / (loss) on investments and futures 21,093
(11,332)
Net change in unrealized appreciation/(depreciation)
on investments (647,704)
(31,292)
------------------
- ---------------
(218,895)
176,597
------------------
- ---------------
DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income (345,387)
(217,885)
------------------
- ---------------
(345,387)
(217,885)
------------------
- ---------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold 31,116,134
10,766,846
Reinvestment of distributions 345,387
217,885
Payments for shares redeemed (12,509,791)
(647,468)
------------------
- ---------------
18,951,730
10,337,263
------------------
- ---------------
NET INCREASE / (DECREASE) IN NET ASSETS 18,387,448
10,295,975
NET ASSETS
Beginning of period 10,295,975
- --
------------------
- ---------------
End of period $ 28,683,423
$ 10,295,975
==================
===============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME $ 159,818
$ 55,143
==================
===============
FUND SHARE TRANSACTIONS
Sold 618,822
215,438
Reinvestment of distributions 6,977
4,423
Redeemed (249,309)
(13,049)
------------------
- ---------------
Net increase / (decrease) from fund share transactions 376,490
206,812
==================
===============
TOTAL COST OF PURCHASES OF:
Common Stocks $ (452,975)
$ --
U.S. Government Securities 20,696,294
9,445,137
Corporate Bonds 7,404,836
3,118,814
------------------
- ---------------
$ 27,648,155
$ 12,563,951
==================
===============
TOTAL PROCEEDS FROM SALES OF:
Common Stocks $ 14,621
$ --
U.S. Government Securities 6,096,341
1,695,122
Corporate Bonds 2,526,396
708,215
------------------
- ---------------
$ 8,637,358
$ 2,403,337
==================
===============
*TAX CHARACTER OF DISTRIBUTIONS PAID
Ordinary income $ 345,387
$ 217,885
------------------
- ---------------
$ 345,387
$ 217,885
==================
===============
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
56
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 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 an open-end management investment
company. Summit Mutual Funds is offered in two series, the Pinnacle Series and
the Apex Series. The shares of the Pinnacle Series (the "Series") are sold to
insurance companies and their separate accounts to fund the benefits under
certain variable insurance products. The results of the Series presented exclude
the additional fees and expenses of variable annuity or variable life insurance
contracts. The Series' shares are offered in nine different portfolios - Zenith
Portfolio, Bond Portfolio, S&P 500 Index Portfolio, S&P MidCap 400 Index
Portfolio, Balanced Index Portfolio, Nasdaq-100 Index Portfolio, Russell 2000
Small Cap Index Portfolio, EAFE International Index Portfolio, and Lehman
Aggregate Bond Index Portfolio (individually "Portfolio", collectively
"Portfolios"). The Zenith Portfolio seeks long-term appreciation of capital by
investing primarily in common stocks and other equity securities. The Bond
Portfolio seeks a high level of current income as is consistent with reasonable
investment risk by investing primarily in long-term, fixed-income,
investment-grade corporate bonds. The S&P 500 Index Portfolio, S&P MidCap 400
Index Portfolio, Russell 2000 Small Cap Index Portfolio, Nasdaq-100 Index
Portfolio, and EAFE International Index Portfolio seek investment results that
correspond to the total return performance of common stocks as represented by
their respective index. The Balanced Index Portfolio seeks investment results,
with respect to 60% of its assets, that correspond to the total return
performance of U.S. common stocks, as represented by the S&P 500 Index and, with
respect to 40% of its assets, that correspond to the total return performance of
investment grade bonds, as represented by the Lehman Brothers Aggregate Bond
Index. The Lehman Aggregate Bond Index Portfolio seeks investment results that
correspond to the total return performance of the bond market, as represented by
the Lehman Brothers Aggregate Bond Index. The results of the Portfolio(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 Portfolio, 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 with a remaining
maturity of 60 days or less held in each Portfolio 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 - 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. Regulated investment companies owned
by the segregated asset accounts of a life insurance company, held in connection
with variable insurance products, are exempt from excise tax on undistributed
income. Therefore, no provision for income or excise taxes has been recorded.
DISTRIBUTIONS - Distributions from net investment income in all fixed income
Portfolios generally are declared and paid quarterly. Equity Portfolios
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 Portfolio at the net asset value per share.
57
<Page>
The amount 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
Portfolio based on the ratio of the net assets of each Portfolio to the combined
net assets of Summit Mutual Funds. Nonallocable expenses are charged to each
Portfolio based on specific identification.
FOREIGN CURRENCY - Summit Mutual Funds' accounting records are maintained in
U.S. dollars. All Portfolios 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 PORTFOLIO SECURITIES LOANED - S&P 500 Index Portfolio, S&P
MidCap 400 Index Portfolio, Balanced Index Portfolio, Nasdaq-100 Index
Portfolio, Russell 2000 Small Cap Index Portfolio, and EAFE International Index
Portfolio (collectively, the "Index Portfolios") may enter into futures
contracts that relate to securities in which it may directly invest and indices
comprised of such securities and may purchase and write call and put options on
such contracts. The Index Portfolios may invest up to 20% of their assets in
such futures and/or options, except that until each Portfolio reaches $25
million (or $50 million in the case of the Nasdaq-100 Index Portfolio, the
Russell 2000 Small Cap Index Portfolio, and the EAFE International Index
Portfolio), it may invest up to 100% in such futures and/or options. These
contracts provide for the sale of a specified quantity of a financial instrument
at a fixed price at a future date. When the Index Portfolios enter into a
futures contract, they are required to deposit and maintain as collateral such
initial margin as required by the exchange on which the contract is traded.
Under terms on the contract, the Index Portfolios 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 Index Portfolios invest in futures
as a substitute to investing in the common stock positions in the Index that
they intend to match. The potential risk to the Index Portfolios is that the
change in the value in the underlying securities may not correlate to the value
of the contracts.
The Portfolios currently 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 Portfolios 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 Portfolios may accept noncash collateral
consisting of government securities and irrevocable letters of credit from
domestically domiciled banks.
NOTE 2 - TRANSACTIONS WITH AFFILIATES
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 the Fund. The Fund pays the Adviser, as full compensation for
all services and facilities furnished, a monthly fee computed separately for
each Portfolio on a daily basis.
58
<Page>
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 Scudder Money Market Fund.
Summit Investment Partners, Inc. is a wholly-owned subsidiary of The Union
Central Life Insurance Company ("Union Central").
59
<Page>
(This page has been left blank intentionally.)
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
MANAGEMENT OF THE FUND
DIRECTORS AND OFFICERS
INDEPENDENT DIRECTORS
<Table>
<Caption>
NUMBER
OF
PORTFOLIOS
IN
FUND
TERM OF
COMPLEX OTHER
POSITION(S) OFFICE AND
OVERSEEN DIRECTORSHIPS
WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) 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 (78) Director Director Consultant; former Partner,
Ernst & 16 American
since 1987 Whinney, Accountants
Financial Group
Yvonne L. Gray (53) Director Director Chief Operating Officer,
United Way of 16
since 1999 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 (65) Director Director Co-Founder and Treasurer,
Cincinnati 16 Meridian
since 2001 Works Inc. (Job Placement);
prior Bioscience,
thereto, Chief Executive
Officer, Inc.; Cintas,
Downtown Cincinnati Inc.
(Economic Inc.
Revitalization of Cincinnati)
Mary W. Sullivan (47) Director Director Attorney, Peck, Shaffer &
Williams LLP 16 Franklin
since 2001 (Law Firm)
Savings and
Loan Co.; First
Franklin
Corporation
</Table>
INTERESTED DIRECTORS AND OFFICERS
<Table>
<Caption>
NUMBER
OF
PORTFOLIOS
IN
FUND
TERM OF
COMPLEX OTHER
POSITION(S) OFFICE AND
OVERSEEN DIRECTORSHIPS
WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) 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
Central; 16 Carillon
(50) President and since 1999 President and Chief Executive
Officer, Investments,
Chief Executive Adviser.
Inc.; Summit
Officer
Investment
Partners, Inc.;
Union Central
Mortgage
Funding, Inc.
John F. Labmeier Vice President Officer Vice President, Associate General NA
NA
1876 Waycross Rd. and Secretary since 1990 Counsel and Assistant Secretary, Union
(55) Central; Vice President and Secretary,
Carillon Investments, Inc.; Secretary,
Adviser
Thomas G. Knipper (46) Vice President, Officer Treasurer, Adviser NA
NA
Controller and since 1995
Chief
Compliance
Officer
John M. Lucas Assistant Officer Second Vice President, Counsel and NA
NA
1876 Waycross Rd. Secretary since 1990 Assistant Secretary, Union Central
Cincinnati, OH 45240
(53)
Patrick J. Reardon (36) Treasurer Officer Controller, Adviser NA
NA
since
2004
</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>
SMFI 231PINNACLE 6/04
The Summit Pinnacle Series is distributed to insurance company 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 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 Stakeholder 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]
<page>
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semiannual report.
ITEM 6. SCHEDULE OF INVESTMENTS
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
ZENITH PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------
COMMON STOCKS - 97.04%
CONSUMER DISCRETIONARY - 7.65%
Sony Corp. 24,900 $ 947,445
Take-Two Interactive Software* 25,800 790,512
Time Warner Inc.* 46,200 812,196
The Walt Disney Co.* 45,000 1,147,050
------------
3,697,203
------------
CONSUMER NON-DURABLE - 5.45%
Altria Group Inc. 12,500 625,625
Sara Lee Corp. 37,200 855,228
Unilever 16,800 1,150,968
------------
2,631,821
------------
ENERGY -10.89%
Anadarko Petroleum 13,500 791,100
ChevronTexaco Corp. 8,519 801,723
ConocoPhillips 7,771 592,850
Devon Energy Corp 11,300 745,800
Royal Dutch Petroleum 12,200 630,374
Unocal Corp. 26,500 1,007,000
Weatherford International Ltd.* 15,400 692,692
------------
5,261,539
------------
FINANCIALS - 26.95%
Alliance Capital Holdings 30,600 1,038,870
Banc One Corp 22,200 1,132,200
Bank of America Corp. 8,100 685,422
BB&T Corp.* 22,500 831,825
Citigroup Inc. 21,800 1,013,700
Equity Residential Properties Trust 35,100 1,043,523
First Data 15,600 694,512
Freddie Mac 18,500 1,171,050
Goldman Sachs Group Inc.* 8,700 819,192
KeyCorp 26,500 792,085
Marsh & McLennan Co. 23,600 1,070,968
Mellon Financial Corp.* 24,500 718,585
St. Paul Cos 27,100 1,098,634
Wells Fargo 16,000 915,680
------------
13,026,246
------------
HEALTH CARE - 8.79%
Baxter International Inc.* 16,700 576,317
Bristol-Meyers Squibb 33,400 818,300
Johnson & Johnson Co. 19,100 1,063,870
Merck & Co. 22,200 1,054,500
The Healthcare Co. 17,700 736,143
------------
4,249,130
------------
INDUSTRIALS - 3.94%
General Electric 29,300 $ 949,320
SPX Corp. 20,600 956,664
------------
1,905,984
------------
MATERIALS - 3.46%
Dow Chemical 12,500 508,750
Du Pont (E.I.) 26,200 1,163,804
------------
1,672,554
------------
TECHNOLOGY- 10.98%
Electronic Data Systems Corp. 50,200 961,330
Hewlett-Packard 47,200 995,920
International Business Machines 8,300 731,645
Microsoft Corp.* 33,600 959,616
Motorola Inc. 23,600 430,700
Nokia Corp 60,100 873,854
Sun Microsystems Inc.* 81,600 354,144
------------
5,307,209
------------
TRANSPORTATION - 7.01%
CSX Corp. 38,800 1,271,476
Norfolk Southern Co. 36,900 978,588
Union Pacific Corp. 19,100 1,135,495
------------
3,385,559
------------
UTILITIES - 11.92%
ALLTEL Corp. 12,300 622,626
Ameren Corporation 22,300 958,008
Comcast Corporation* 16,200 447,282
Cinergy Corporation 12,800 486,400
SBC Communications Inc 41,000 994,250
Southern Co. 22,000 641,300
Sprint Corp 39,800 700,480
Verizon Communications 25,100 908,369
------------
5,758,715
------------
Total Common Stocks
(cost $43,177,921) 46,895,960
------------
<Caption>
PRINCIPAL VALUE
---------------------------
SHORT-TERM INVESTMENTS - 2.71%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - 2.71% $ 1,311,444 $ 1,311,444
------------
Total Short-Term Investments
(cost $1,311,444) 1,311,444
------------
TOTAL INVESTMENTS - 99.75%
(cost $44,489,365)(1) 48,207,404
------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(2) - 6.18% 2,988,679
OTHER ASSETS AND LIABILITIES - (5.93%) (2,866,662)
------------
TOTAL NET ASSETS - 100.00% $ 48,329,421
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $44,536,641 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$4,747,387 and ($1,076,624), respectively, with a net appreciation /
depreciation of $3,670,763.
(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 $2,910,361,
$2,988,679, and $0, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BOND PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------
PREFERRED STOCKS - .31%
REAL ESTATE - .31%
Logian Inc. 12.25% PIK Dividend 4,132 $ 116,109
------------
Total Preferred Stocks
(cost $93,897) 116,109
------------
COMMON STOCKS - .35%
COMMUNICATIONS & MEDIA - .35%
Evercom Inc.(2) (4)"+"* 6,363 54,085
MCI Inc. 5,067 73,117
------------
Total Common Stocks
(cost $224,719) 127,202
------------
<Caption>
PRINCIPAL VALUE
---------------------------
U.S. TREASURY OBLIGATIONS - 11.03%
U.S. TREASURY NOTES & BONDS - 11.03%
5.875% due 11/15/05 $ 1,650,000 $ 1,728,053
3.125% due 09/15/08 500,000 490,645
5.500% due 05/15/09 750,000 807,656
5.000% due 02/15/11 250,000 261,680
5.000% due 08/15/11 350,000 365,381
4.000% due 11/15/12 200,000 193,633
3.625% due 05/15/13 225,000 210,639
------------
Total U.S. Treasury Obligations
(cost $4,009,229) 4,057,687
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 1.36%
FNMA 1.875% due 12/15/04 500,000 500,698
------------
Total U.S. Government Agency Obligations
(cost $500,902) 500,698
------------
MORTGAGE-BACKED SECURITIES - 17.55%
FHLMC 5.000% due 05/01/18 195,511 196,143
FNMA 5.000% due 11/01/09 612,406 621,585
FNMA 5.500% due 05/01/12 245,487 254,863
FNMA 6.000% due 06/01/16 253,546 264,566
FNMA 4.500% due 03/01/17 874,299 857,883
FNMA 5.500% due 08/01/18 1,189,099 1,219,155
FNMA 4.500% due 09/01/18 2,776,930 2,719,701
FNMA 6.500% due 02/01/29 102,018 106,506
FNMA 5.000% due 02/01/33 79,056 76,558
GNMA 6.500% due 10/15/28 136,045 142,521
------------
Total Mortgage-Backed Securities
(cost $6,470,027) 6,459,481
------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 15.77%
AGENCY SECTOR - 5.96%
FHR 2439 SC
(16.467% due 07/15/28) 22,721 23,348
FNR 2002-48 GF
(6.500% due 10/25/31) 2,083,000 2,171,852
------------
2,195,200
------------
PRIVATE SECTOR - 9.81%
AMSI 2003-6 AF4
(4.329% due 08/25/33) 100,000 95,630
BAFC 2003-2 B3
(6.365% due 06/25/32) $ 219,448 $ 221,023
BOAA 2003-6 2B3
(4.750% due 08/25/18) 346,483 312,299
BOAA 2003-8 3B3
(4.750% due 10/25/18) 146,510 132,389
BOAMS 01-4 2B2
(4.750% due 04/20/31) 498,861 515,996
BOAMS 2002-4 1A4
(6.500% due 04/25/32) 16,314 16,284
BOAMS 2002-6 2B1
(6.000% due 07/25/32) 113,983 113,869
BOAMS 2002-7 2B1
(6.000% due 08/25/32) 124,617 126,256
BOAMS 2002-8 2B1
(5.750% due 09/25/17) 195,699 196,136
CS First Boston
(6.250% due 09/25/32) 158,901 161,046
CXHE 2001-B M2
(7.360% due 07/25/32) 150,000 154,980
NMFC 1998-4 B3
(6.250% due 10/25/28) 268,839 269,467
MASTR 2003-9 2a12
(5.500% due 10/25/33) 107,849 109,106
RALI 2001-QS15 M3
(6.750% due 09/25/31) 185,870 187,679
RALI 2002-QS16 M2
(5.750% due 10/25/17) 92,578 93,548
RALI 2002-QS16 M3
(5.750% due 10/25/17) 92,578 91,607
RFMSI 1993-S45 M2
(6.500% due 12/25/23) 123,120 123,015
SASC 2003-20 B2
(5.378% due 07/25/33) 303,221 287,250
WAMMS 2001-MS14 5A9
(6.500% due 12/25/31) 54,378 54,494
WF MBS 2002-8 2B3
(6.000% due 05/25/17) 337,972 349,497
------------
3,611,571
------------
Total Collateralized Mortgage Obligations
(cost $5,926,441) 5,806,771
------------
ASSET-BACKED SECURITIES - 1.83%
COMMERCIAL MORTGAGE-BACKED SECURITIES - 1.83%
Chase Commercial Mortgage Sec
(6.600% due 12/19/07) 627,885 672,530
------------
Total Asset-Backed Securities
(cost $615,327) 672,530
------------
CORPORATE BONDS AND NOTES - 46.24%
AIR TRANSPORTATION - 2.43%
America West Airlines, AMBAC Insured
(7.100% due 04/02/21) 218,746 230,650
Continental Airlines
(7.820% due 10/15/13) 150,950 116,627
Continental Airlines Inc.
(7.875% due 07/02/18) 250,000 234,918
Delta Airlines
(7.299% due 09/18/06) 50,000 31,878
Jet Equipment (2)(5)*
(7.630% due 08/15/12) 201,406 129,188
NWA Trust No. 2 Class B
(10.230% due 06/21/14) 169,846 149,465
------------
892,726
------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------
BANK, BANK HOLDING COMPANIES, &
OTHER BANK SERVICES - 2.24%
Banco Mercantile Norte(2)
(5.875% due 02/17/14) $ 250,000 $ 241,250
Bank of Hawaii
(6.875% due 03/01/09) 250,000 274,399
Captial One Bank
(5.750% due 09/15/10) 300,000 308,305
------------
823,954
------------
CONSUMER CYCLICAL - 8.29%
American Axle & Mfg Inc.
(5.250% due 02/11/14) 450,000 431,952
DaimlerChrysler AG
(6.500% due 11/15/13) 250,000 256,310
Ford Motor Company
(7.450% due 07/16/31) 250,000 238,305
General Motors
(8.250% due 07/15/23) 300,000 314,175
GMAC
(5.850% due 01/14/09) 250,000 253,330
Hertz Corp.
(7.625% due 06/01/12) 250,000 263,896
ICI Wilmington
(5.625% due 12/01/13) 250,000 244,372
Lear Corp
(8.110% due 05/15/09) 450,000 512,572
MDC Holdings Inc.
(5.500% due 05/15/13) 150,000 145,392
Mirage Resorts Inc.
(6.750% due 02/01/08) 70,000 71,925
Park-Ohio Industries
(9.250% due 12/01/07) 62,000 63,085
Service Corp. International
(7.700% due 04/15/09) 125,000 128,125
Tech Olympic USA Inc.
(9.000% due 07/01/10) 125,000 128,125
------------
3,051,564
------------
CONSUMER NON-DURABLE - 7.53%
Allied Waste North America(2)
(5.750% due 02/15/11) 125,000 118,438
American Restaurant Group Inc.(5)
(11.500% due 11/01/06) 250,000 162,500
Amerigas Partner
(8.875% due 05/20/11) 63,000 67,095
Aztar Corp.
(9.000% due 08/15/11) 125,000 138,438
Bunge Ltd Finance Corp.
(7.800% due 10/15/12) 300,000 341,666
Cadmus Corp.(2)
(8.375% due 06/15/14) 63,000 63,000
Dial Corp.
(7.000% due 08/15/06) 250,000 267,966
Dole Food Inc.
(8.875% due 03/15/11) 63,000 66,623
Fresh Food, Inc.
(10.750% due 06/01/06) 188,000 188,705
Hexcel Corp.
(9.750% due 01/15/09) 125,000 131,094
Hexcel Corp.
(9.875% due 10/01/08) 13,000 14,268
Horizon Lines
(9.000% due 11/01/12) 18,000 18,000
KB Home(2)
(6.375% due 08/15/11) 62,000 61,380
Miller Brewing Co.(2)
(5.500% due 08/15/13) 300,000 301,046
Pride International Inc.
(9.375% due 05/01/07) $ 150,000 $ 153,000
RH Donnelley Finance Corp.(2)
(8.875% due 12/15/10) 63,000 69,142
RH Donnelley Finance Corp.(2)
(10.875% due 12/15/12) 63,000 73,080
Sealed Air Corp. (2)
(5.625% due 07/15/13) 300,000 296,345
Speedway Motorsports Inc.(2)
(6.750% due 06/01/13) 125,000 126,250
Station Casinos
(6.000% due 04/01/12) 62,000 59,985
Werner Holdings Co. Inc.
(10.000% due 11/15/07) 62,000 51,770
------------
2,769,791
------------
ELECTRIC - 2.06%
AES Corporation
(9.375% due 09/15/10) 125,000 133,281
Dominion Resources Inc.
(6.250% due 06/30/12) 361,000 378,372
First Energy Corp.
(6.450% due 11/15/11) 240,000 248,822
------------
760,475
------------
ENERGY - 5.36%
Calpine Corp.
(10.500% due 05/15/06) 125,000 112,500
Canadian Oil Sands(2)
(5.800% due 08/15/13) 300,000 299,621
Constellation Energy Group
(7.000% due 04/01/12) 250,000 272,242
Ferrellgas Partners(2)
(6.750% due 05/01/14) 62,000 59,830
Kaneb Pipeline
(5.875% due 06/01/13) 300,000 290,065
Kern River Funding Corp.(2)
(6.676% due 07/31/16) 62,257 68,331
Nevada Power Co.(2)
(6.500% due 04/15/12) 31,000 29,450
Northwest Pipeline Corp.
(8.125% due 03/01/10) 63,000 67,882
Pemex Master Trust
(8.000% due 11/15/11) 250,000 269,375
Plains All American Pipline(2)
(5.625% due 12/15/13) 300,000 284,777
Plains E&P Co.(2)
(7.125% due 06/15/14) 62,000 63,085
Sierra Power (2)
(6.250% due 04/15/12) 31,000 29,140
Williams Co.
(7.125% due 09/01/11) 125,000 126,875
------------
1,973,173
------------
HEALTH CARE - 1.86%
Beckman Coulter Inc.
(6.875% due 11/15/11) 300,000 334,221
Genesis Healthcare Corp.(2)
(8.000% due 10/15/13) 125,000 127,500
Iasis Healthcare Corp.(2)
(8.750% due 06/15/14) 62,000 63,395
Medco Health Solutions
(7.250% due 08/15/13) 150,000 160,607
------------
685,723
------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------
INSURANCE - 3.13%
American Financial Group
(7.125% due 04/15/09) $ 250,000 $ 268,198
Farmers Insurance(2)
(8.500% due 08/01/04) 240,000 240,794
Nationwide Financial Services
(5.625% due 02/13/15) 375,000 379,084
USF&G Capital
(8.470% due 01/10/27) 240,000 263,338
------------
1,151,414
------------
MEDIA & CABLE - 3.51%
Charter Inc,
(4.750% due 06/01/06) 63,000 58,118
Charter(2)
(8.000% due 04/30/12) 63,000 60,953
Comcast Corp.
(5.850% due 01/15/10) 100,000 104,347
Dex Media West
(9.875% due 08/15/13) 62,000 68,045
Emmis Operating Co.(2)
(6.875% due 05/15/12) 63,000 61,740
Gray Television Inc.
(9.250% due 12/15/11) 125,000 137,031
Liberty Media Corp.
(5.700% due 05/15/13) 250,000 246,280
Rogers Cable Inc.
(5.500% due 03/15/14) 300,000 265,068
Univision Comm Inc.
(7.850% due 07/15/11) 250,000 288,301
------------
1,289,883
------------
MEDIA CONGLOMERATE - 2.35%
AOL Time Warner Inc.
(6.875% due 05/01/12) 240,000 259,342
News American Holdings Nts.
(6.625% due 01/09/08) 361,000 390,400
Thomson Corp.
(6.200% due 01/05/12) 200,000 213,219
------------
862,961
------------
METALS & MINING - .35%
Falconbridge LTD
(7.350% due 06/05/12) 125,000 129,785
------------
REAL ESTATE - .76%
Health Care REIT
(8.000% due 09/12/12) 250,000 280,758
------------
TECHNOLOGY - 1.26%
Jabil Circuit Inc.
(5.875% due 07/15/10) 450,000 464,848
------------
TELECOMMUNICATIONS - 5.11%
America Movil(2)
(5.500% due 03/01/14) $ 250,000 $ 230,297
AT&T Corp.
(8.750% due 11/15/31) 300,000 292,834
AT&T Wireless Services
(7.875% due 03/01/11) 125,000 142,183
MCI Inc.
(5.908% due 05/01/07) 125,000 121,250
Nextel Communications
(7.375% due 08/01/15) 125,000 126,250
Qwest Communications International(2)
(7.250% due 02/15/11) 125,000 116,563
Sprint Capital Corp.
(7.625% due 01/30/11) 250,000 276,372
TCI Communications Inc.
(8.750% due 08/01/15) 240,000 289,121
Telus Corp.
(8.000% due 06/01/11) 250,000 284,142
------------
1,879,012
------------
Total Corporate Bonds & Notes
(cost $16,996,320) 17,016,067
------------
<Caption>
SHARES VALUE
---------------------------
SHORT-TERM INVESTMENTS - 4.87%
NORTHERN TRUST DIVERSIFIED
ASSETS FUND - 2.15% 791,414 $ 791,414
------------
<Caption>
PRINCIPAL VALUE
---------------------------
U.S. TREASURY BILL - 2.72%
(.945% due 07/01/04) $ 1,000,000 $ 1,000,000
------------
Total Short-Term Investments
(cost $1,791,414) 1,791,414
------------
TOTAL INVESTMENTS - 99.31%
(cost $36,628,276)(1) 36,547,959
------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(3) - 19.54% 7,189,937
------------
OTHER ASSETS AND LIABILITIES - (18.85%) (6,936,712)
------------
TOTAL NET ASSETS - 100.00% $ 36,801,184
============
</Table>
* Non-income producing
"+" Illiquid
(1) For federal income tax purposes, cost is $36,628,276 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$802,111 and ($882,428), respectively, with a net appreciation /
depreciation of $(80,317).
(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 $7,613,227, $7,189,937, and $557,387,
respectively.
(4) These are restricted private placement shares.
(5) Security in default.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
S&P 500 INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
-----------------------------
COMMON STOCKS - 99.79%
CONSUMER DISCRETIONARY - 10.91%
AutoNation, Inc.* 6,769 $ 115,750
AutoZone Inc.* 2,229 178,543
Bed Bath & Beyond Inc.* 7,290 280,301
Best Buy Co., Inc. 7,966 404,195
Big Lots, Inc.* 2,876 41,587
Black & Decker Corp. 1,914 118,917
Boise Cascade 2,129 80,136
Brunswick Corp. 2,252 91,882
Carnival Corp. 15,505 728,735
Centex Corp. 3,058 139,904
Circuit City Group 5,159 66,809
Clear Channel Communications 15,156 560,014
Comcast Corp.* 55,396 1,552,750
Cooper Tire & Rubber 1,817 41,791
Dana Corp. 3,659 71,716
Darden Restaurants 4,058 83,392
Delphi Corporation 13,801 147,395
Dillard Inc. 2,049 45,693
Dollar General 8,297 162,289
Dow Jones & Co. 2,008 90,561
Eastman Kodak 7,057 190,397
eBay Inc.* 15,898 1,461,820
Family Dollar Stores 4,244 129,102
Federated Dept. Stores 4,449 218,446
Ford Motor 45,094 705,721
Fortune Brands, Inc. 3,590 270,794
Gannett Co. 6,674 566,288
Gap (The) 22,046 534,616
General Motors 13,797 642,801
Genuine Parts 4,283 169,949
Goodyear Tire & Rubber* 4,319 39,260
Harley-Davidson 7,456 461,825
Harrah's Entertainment 2,722 147,260
Hasbro Inc. 4,294 81,586
Hilton Hotels 9,336 174,210
Home Depot 56,023 1,972,010
International Game Technology 8,522 328,949
Interpublic Group* 10,210 140,183
Johnson Controls 4,446 237,327
Jones Apparel Group 3,110 122,783
KB Home 1,140 78,238
Knight-Ridder Inc. 1,966 141,552
Kohl's Corp.* 8,367 353,757
Leggett & Platt 4,729 126,312
Limited Brands, Inc. 12,709 237,658
Liz Claiborne, Inc. 2,687 96,678
Lowe's Cos 19,352 1,016,948
Marriott International 5,693 283,967
Mattel, Inc. 10,579 193,067
May Dept. Stores 7,104 195,289
Maytag Corp. 1,933 47,378
McDonald's Corp. 31,245 812,370
McGraw-Hill 4,717 361,181
Meredith Corp. 1,234 67,821
New York Times 3,666 $ 163,907
Newell Rubbermaid Co. 6,753 158,696
NIKE Inc. 6,459 489,269
Nordstrom 3,384 144,192
Office Depot* 7,710 138,086
Omnicom Group 4,676 354,862
Penney (J.C.) 6,721 253,785
Pulte Homes, Inc. 3,055 158,952
RadioShack Corp 4,037 115,579
Reebok International 1,449 52,135
Sears, Roebuck & Co. 5,476 206,774
Sherwin-Williams 3,588 149,081
Snap-On Inc. 1,433 48,077
Stanley Works 1,994 90,887
Staples, Inc. 12,162 356,468
Starbucks Corporation* 9,697 421,626
Starwood Hotels & Resorts 4,972 222,994
Target Corp. 22,436 952,857
Tiffany & Co. 3,612 133,102
Time Warner Inc.* 111,282 1,956,338
TJX Companies Inc. 12,390 299,095
Toys R Us, Inc.* 5,257 83,744
Tribune Co. 7,686 350,020
Univision Communications* 7,941 253,556
V.F. Corp. 2,660 129,542
Viacom Inc* 43,060 1,538,103
Visteon Corp. 3,217 37,542
Walt Disney Co. 50,356 1,283,574
Wendy's International 2,803 97,657
Whirlpool Corp. 1,714 117,580
Yum! Brands, Inc* 7,243 269,584
-------------
28,637,567
-------------
CONSUMER STAPLES - 11.14%
Alberto-Culver 2,171 108,854
Albertson's 9,033 239,737
Altria Group, Inc. 50,356 2,520,318
Anheuser-Busch 20,051 1,082,754
Archer-Daniels-Midland 15,914 267,037
Avon Products 11,646 537,346
Brown-Forman Corp. 2,989 144,279
Campbell Soup 10,102 271,542
Clorox Co. 5,196 279,441
Coca Cola Co. 60,381 3,048,033
Coca-Cola Enterprises 11,200 324,688
Colgate-Palmolive 13,224 772,943
ConAgra Foods, Inc. 13,218 357,943
Coors (Adolph) 895 64,744
Costco Wholesale Corporation 11,268 462,777
CVS Corp. 9,719 408,392
General Mills 9,190 436,801
Gillette Co. 24,911 1,056,226
Heinz (H.J.) 8,661 339,511
Hershey Foods 6,406 296,406
Kellogg Co. 10,047 420,467
Kimberly-Clark 12,418 818,098
Kroger Co.* 18,337 333,733
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
CONSUMER STAPLES - 11.14% (CONTINUED)
McCormick & Co. 3,416 $ 116,144
Pepsi Bottling Group 6,469 197,563
PepsiCo Inc. 42,249 2,276,376
Procter & Gamble 63,592 3,461,948
RJ Reynolds Tobacco 2,085 140,925
Safeway Inc.* 10,890 275,953
Sara Lee Corp. 19,458 447,339
Supervalu Inc. 3,301 101,044
Sysco Corp. 15,930 571,409
UST Inc. 4,081 146,916
Walgreen Co. 25,230 913,578
Wal-Mart Stores 106,526 5,620,312
Winn-Dixie 3,490 25,128
Wrigley (Wm) Jr. 5,534 348,919
-------------
29,235,624
-------------
ENERGY - 6.51%
Amerada Hess 2,211 175,089
Anadarko Petroleum 6,175 361,855
Apache Corp. 7,979 347,485
Ashland Inc. 1,688 89,142
Baker Hughes 8,245 310,424
BJ Services* 3,896 178,593
Burlington Resources 9,776 353,696
ChevronTexaco Corp. 26,313 2,476,316
ConocoPhillips 16,754 1,278,163
Devon Energy Corp. 5,724 377,784
El Paso Corp. 14,968 117,948
EOG Resources 2,832 169,099
Exxon Mobil Corp. 161,289 7,162,844
Halliburton Co. 10,784 326,324
Kerr-McGee 3,632 195,293
Kinder Morgan 3,034 179,886
Marathon Oil Corp. 7,637 288,984
Nabors Industries Ltd.* 3,608 163,154
Noble Corporation* 3,293 124,772
Occidental Petroleum 9,480 458,927
Rowan Cos.* 2,562 62,333
Schlumberger Ltd. 14,412 915,306
Sunoco., Inc. 1,901 120,942
Transocean Inc.* 7,872 227,816
Unocal Corp. 6,376 242,288
Valero Energy 3,125 230,500
Williams Cos. 12,778 152,058
-------------
17,087,021
-------------
FINANCIALS - 20.29%
ACE Limited 6,871 290,506
AFLAC Inc. 12,624 515,185
Allstate Corp. 17,319 806,199
Ambac Financial Group 2,629 193,075
American Express 31,661 1,626,743
American International Group 64,182 4,574,893
AmSouth Bancorporation 8,643 220,137
Aon Corp. 7,718 219,731
Apartment Investment & Management 2,319 72,190
Banc One Corp. 27,512 1,403,112
Bank of America Corp. 50,257 4,252,748
Bank of New York 19,038 $ 561,240
BB&T Corporation 13,441 496,914
Bear Stearns Cos. 2,414 203,524
Capital One Financial 5,685 388,740
Charles Schwab 33,413 321,099
Charter One Financial 5,478 242,073
Chubb Corp. 4,621 315,060
Cincinnati Financial 4,148 180,499
Citigroup Inc. 126,722 5,892,573
Comerica Inc. 4,316 236,862
Countrywide Financial Corp. 6,799 477,630
E*Trade Financial Corp.* 9,100 101,465
Equity Office Properties 9,841 267,675
Equity Residential 6,785 201,718
Fannie Mae 23,925 1,707,288
Federated Investors Inc. 2,676 81,190
Fifth Third Bancorp 14,011 753,512
First Horizon National 3,089 140,457
Franklin Resources 6,177 309,344
Federal Home Loan Mortgage 17,129 1,084,266
Golden West Financial 3,740 397,749
Goldman Sachs Group 11,896 1,120,127
Hartford Financial Services Group 7,172 493,003
Huntington Bancshares 5,632 128,973
Janus Capital Group 5,923 97,670
Jefferson-Pilot 3,472 176,378
J.P. Morgan Chase & Co. 50,643 1,963,429
KeyCorp 10,318 308,405
Lehman Bros. 6,682 502,821
Lincoln National 4,380 206,955
Loews Corp. 4,565 273,717
M&T Bank Corp. 2,954 257,884
Marsh & McLennan 13,057 592,527
Marshall & Ilsley Corp. 5,575 217,927
MBIA Inc. 3,547 202,605
MBNA Corp. 31,455 811,224
Mellon Bank Corp. 10,591 310,634
Merrill Lynch 23,877 1,288,880
MetLife Inc. 18,713 670,861
MGIC Investment 2,423 183,809
Moody's Corp 3,662 236,785
Morgan Stanley 26,988 1,424,157
National City Corp. 16,640 582,567
North Fork Bancorporation 3,731 141,965
Northern Trust Corp. 5,424 229,327
Plum Creek Timber Co. 4,503 146,708
PNC Bank Corp. 6,823 362,165
Principal Financial Group 7,948 276,431
Progressive Corp. 5,315 453,370
ProLogis 4,429 145,803
Providian Financial Corp.* 7,142 104,773
Prudential Financial 13,307 618,376
Regions Financial Corp. 5,467 199,819
SAFECO Corp. 3,411 150,084
Simon Property Group, Inc 4,708 242,085
SLM Corporation 11,092 448,671
SouthTrust Corp. 8,166 316,922
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
FINANCIALS - 20.29% (CONTINUED)
Soverign Bancorp 7,550 $ 166,855
St. Paul Travelers Cos. 16,316 661,451
State Street Corp. 8,225 403,354
SunTrust Banks 6,930 450,381
Synovus Financial 7,426 188,026
T. Rowe Price Group 3,063 154,375
Torchmark Corp. 2,785 149,833
Union Planters Corporation 4,640 138,318
UnumProvident Corp. 7,291 115,927
U.S. Bancorp 47,483 1,308,631
Wachovia Corp. 32,578 1,449,721
Washington Mutual 22,133 855,219
Wells Fargo 41,648 2,383,515
XL Capital 3,378 254,904
Zions Bancorp 2,212 135,927
-------------
53,239,671
-------------
HEALTH CARE - 13.35%
Abbott Labs 38,483 1,568,567
Aetna Inc. 3,757 319,345
Allergan, Inc. 3,211 287,449
AmerisourceBergen Corp. 2,754 164,633
Amgen Inc.* 31,736 1,731,834
Anthem, Inc.* 3,403 304,773
Applera Corp-Applied Biosystems Group 5,115 111,250
Bard (C.R.) Inc. 2,552 144,571
Bausch & Lomb 1,291 84,004
Baxter International Inc. 15,029 518,651
Becton, Dickinson 6,249 323,698
Biogen Idec Inc* 8,064 510,048
Biomet, Inc. 6,293 279,661
Boston Scientific* 20,168 863,190
Bristol-Myers Squibb 47,743 1,169,704
Cardinal Health, Inc. 10,654 746,313
Caremark Rx* 11,100 365,634
Chiron Corporation* 4,619 206,192
CIGNA Corp. 3,459 238,014
Lilly (Eli) & Co. 27,638 1,932,173
Express Scripts, Inc.* 1,932 153,072
Forest Laboratories* 9,004 509,897
Genzyme Corp.* 5,531 261,782
Guidant Corp. 7,653 427,650
HCA Inc. 12,197 507,273
Health Management Assoc. 5,904 132,368
Hospira Inc.* 3,848 106,205
Humana Inc.* 3,966 67,025
IMS Health Inc. 5,895 138,179
Johnson & Johnson 73,060 4,069,442
King Pharmaceuticals* 5,937 67,979
Manor Care Inc. 2,245 73,367
McKesson Corp. 7,174 246,283
Medco Health Solutions Inc.* 6,656 249,600
MedImmune, Inc.* 6,094 142,600
Medtronic Inc. 29,829 1,453,269
Merck & Co. 54,769 2,601,528
Millipore Corp.* 1,201 67,700
Mylan Laboratories 6,300 127,575
Pfizer, Inc. 187,814 $ 6,438,264
Quest Diagnostics 2,558 217,302
Schering-Plough 36,183 668,662
St Jude Medical* 4,247 321,286
Stryker Corp. 9,818 539,990
Tenet Healthcare Corp.* 11,438 153,384
Thermo Electron* 4,008 123,206
United Health Group Inc. 15,401 958,712
Waters Corporation* 2,989 142,814
Watson Pharmaceuticals* 2,657 71,473
WellPoint Health Networks* 3,741 419,029
Wyeth 32,792 1,185,759
Zimmer Holdings* 5,953 525,055
-------------
35,037,434
-------------
INDUSTRIALS - 11.55%
3M Company 19,321 1,739,083
Allied Waste Industries* 7,880 103,857
American Power Conversion Corporation 4,886 96,010
American Standard* 5,376 216,707
Apollo Group, Inc.* 4,338 383,002
Avery Dennison Corp. 2,719 174,043
Boeing Company 20,703 1,057,716
Burlington Northern Santa Fe 9,141 320,575
Caterpillar Inc. 8,545 678,815
Cendant Corporation 24,946 610,678
Cintas Corporation 4,201 200,262
Cooper Industries, Ltd. 2,298 136,524
Crane Company 1,462 45,892
CSX Corp. 5,267 172,600
Cummins Inc. 1,042 65,125
Danaher Corp. 7,558 391,882
Deere & Co. 5,906 414,247
Delta Air Lines* 3,038 21,631
Deluxe Corp. 1,404 61,074
Donnelley (R.R.) & Sons 5,272 174,081
Dover Corp. 4,985 209,869
Eaton Corp. 3,740 242,128
Emerson Electric 10,359 658,314
Equifax Inc. 3,422 84,695
FedEx Corporation 7,342 599,768
Fluor Corp. 2,019 96,246
General Dynamics 4,868 483,392
General Electric 259,045 8,393,058
Gilead Sciences 5,200 348,400
Goodrich Corporation 2,895 93,595
Grainger (W.W.) Inc. 2,246 129,145
Block H&R 4,389 209,268
Honeywell International Inc. 21,227 777,545
Illinois Tool Works 7,583 727,134
Ingersoll-Rand Co. Ltd. 4,270 291,684
ITT Industries, Inc. 2,270 188,410
Lockheed Martin Corp. 11,098 577,984
Masco Corp. 11,398 355,390
Monster Worldwide* 2,775 71,373
Navistar International Corp.* 1,691 65,543
Norfolk Southern Corp. 9,612 254,910
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
INDUSTRIALS - 11.55% (CONTINUED)
Northrop Grumman Corp. 9,012 $ 483,944
PACCAR Inc. 4,307 249,763
Pall Corp. 3,078 80,613
Parker-Hannifin 2,918 173,504
Pitney-Bowes 5,750 254,438
Power-One Inc.* 2,049 22,498
Raytheon Co. 10,240 366,285
Robert Half International 4,215 125,481
Rockwell Collins 4,356 145,142
Rockwell Automation, Inc. 4,591 172,208
Ryder System 1,578 63,230
Southwest Airlines 19,386 325,103
Textron Inc. 3,347 198,644
Thomas & Betts 1,439 39,184
Tyco International 49,214 1,630,952
Union Pacific 6,282 373,465
United Parcel Service 27,672 2,080,104
United Technologies 12,682 1,160,149
Waste Management Inc. 14,344 439,644
-------------
30,306,006
-------------
INFORMATION TECHNOLOGY - 17.06%
ADC Telecommunications* 19,807 56,252
Adobe Systems 5,759 267,793
Advanced Micro Devices* 8,584 136,486
Affiliated Computer* 3,325 176,026
Agilent Technologies* 11,702 342,635
Altera Corporation* 9,358 207,935
Analog Devices 9,039 425,555
Andrew Corp.* 3,781 75,658
Apple Computer* 8,924 290,386
Applied Materials, Inc.* 40,930 803,047
Applied Micro Circuits* 7,555 40,192
Autodesk, Inc. 2,745 117,513
Automatic Data Processing Inc. 14,632 612,788
Avaya Inc.* 10,266 162,100
BMC Software* 5,573 103,101
Broadcom Corporation* 7,454 348,624
CIENA Corp.* 11,660 43,375
Cisco Systems, Inc.* 169,044 4,006,343
Citrix Systems, Inc.* 4,041 82,275
Computer Associates International 14,256 400,023
Computer Sciences Corp.* 4,611 214,089
Compuware Corporation* 9,464 62,462
Comverse Technology, Inc.* 4,750 94,715
Convergys Corp.* 3,907 60,168
Corning Inc.* 32,751 427,728
Dell Inc.* 63,032 2,257,806
Electronic Arts Inc.* 7,330 399,852
Electronic Data Systems 11,827 226,487
EMC Corp.* 59,143 674,230
First Data 22,114 984,515
Fiserv, Inc.* 4,769 185,466
Gateway Inc.* 7,997 35,987
Hewlett-Packard 75,073 1,584,040
Intel Corporation 159,540 4,403,303
International Business Machines 41,804 3,685,023
Intuit Inc.* 4,885 188,463
Jabil Circuit* 4,915 $ 123,760
JDS Uniphase Corporation* 35,314 133,840
KLA-Tencor Corporation* 4,793 236,678
Lexmark International Inc* 3,162 305,228
Linear Technology Corporation 7,690 303,524
LSI Logic* 9,337 71,148
Lucent Technologies* 103,455 391,060
Maxim Integrated Products, Inc. 8,090 424,078
Mercury Interactive Corporation* 2,215 110,373
Micron Technology* 15,036 230,201
Microsoft Corporation 265,509 7,582,937
Molex Incorporated 4,686 150,327
Motorola Inc. 57,318 1,046,054
National Semiconductor* 9,122 200,593
NCR Corp.* 2,328 115,446
Network Appliance, Inc.* 8,495 182,897
Novell Inc.* 9,198 77,171
Novellus Systems, Inc.* 3,751 117,931
NVIDIA Corporation* 4,003 82,062
Oracle Corporation* 128,639 1,534,663
Parametric Technology* 6,566 32,830
Paychex, Inc. 9,281 314,440
PeopleSoft, Inc.* 9,236 170,866
PerkinElmer 3,123 62,585
PMC-Sierra Inc.* 4,254 61,045
QLogic Corporation* 2,326 61,848
QUALCOMM Incorporated 19,693 1,437,195
Sabre Holding Corp. 3,532 97,872
Sanmina-SCI Corporation* 12,741 115,943
Scientific-Atlanta 3,740 129,030
Siebel Systems, Inc.* 12,203 130,328
Solectron* 23,606 152,731
Sun Microsystems, Inc.* 80,422 349,031
SunGard Data Systems* 7,072 183,872
Symantec Corporation* 7,579 331,809
Symbol Technologies 5,674 83,635
Tektronix Inc. 2,080 70,762
Tellabs, Inc.* 10,278 89,830
Teradyne Inc.* 4,710 106,917
Texas Instruments 42,604 1,030,165
Unisys Corp.* 8,137 112,942
VERITAS Software Corporation* 10,522 291,459
Xerox Corp.* 19,487 282,562
Xilinx, Inc. 8,425 280,637
Yahoo! Inc.* 32,360 1,175,639
-------------
44,758,385
-------------
MATERIALS - 2.93%
Air Products & Chemicals 5,591 293,248
Alcoa Inc 21,302 703,605
Allegheny Technologies Inc 1,983 35,792
Ball Corp. 1,387 99,933
Bemis Company 2,615 73,874
Dow Chemical 22,686 923,320
Du Pont (E.I.) 24,536 1,089,889
Eastman Chemical 1,904 88,022
Ecolab Inc. 6,340 200,978
Engelhard Corp. 3,090 99,838
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
MATERIALS - 2.93% (CONTINUED)
Freeport-McMoRan Copper & Gold 4,802 $ 159,186
Georgia-Pacific Group 6,254 231,273
Great Lakes Chemical 1,245 33,690
Hercules, Inc.* 2,731 33,291
International Paper 11,829 528,756
International Flavors & Fragrances 2,306 86,244
Louisiana Pacific 2,607 61,656
MeadWestvaco Corporation 4,937 145,098
Monsanto Co. 6,449 248,287
Newmont Mining Corp. 10,635 412,213
Nucor Corp. 1,927 147,917
Pactiv Corp.* 3,871 96,543
Phelps Dodge* 2,198 170,367
PPG Industries 4,182 261,333
Praxair, Inc. 8,004 319,440
Rohm & Haas 5,479 227,817
Sealed Air Corp.* 2,092 111,441
Sigma-Aldrich Corporation 1,707 101,754
Temple-Inland 1,336 92,518
United States Steel Corp. 2,740 96,229
Vulcan Materials 2,504 119,065
Weyerhaeuser Corp. 5,408 341,353
Worthington Ind. 2,117 43,462
-------------
7,677,432
-------------
TELECOMMUNICATIONS SERVICES - 3.41%
ALLTEL Corp. 7,680 388,762
AT&T Corp. 19,448 284,525
AT&T Wireless Services* 66,804 956,633
BellSouth 45,498 1,192,958
Century Telephone 3,548 106,582
Citizens Communications* 6,994 84,627
Nextel Communications, Inc.* 27,059 721,393
Qwest Communications International* 43,611 156,563
SBC Communications Inc. 81,476 1,975,793
Sprint Corp. FON 34,994 615,894
Verizon Communications 67,962 2,459,545
-------------
8,943,275
-------------
UTILITIES - 2.64%
AES Corp.* 15,342 152,346
Allegheny Energy* 3,124 48,141
Ameren Corporation 4,468 191,944
American Electric Power 9,724 311,168
Calpine Corp.* 10,186 44,003
CenterPoint Energy 7,539 86,699
CINergy Corp. 4,384 166,592
CMS Energy* 3,965 $ 36,200
Consolidated Edison 5,548 220,588
Constellation Energy Group 4,117 156,034
Dominion Resources 7,985 503,694
DTE Energy Co. 4,143 167,957
Duke Energy 22,334 453,157
Dynegy Inc.* 9,299 39,614
Edison International 8,014 204,918
Entergy Corp. 5,634 315,560
Exelon Corp. 16,100 535,969
FirstEnergy Corp. 8,117 303,657
FPL Group 4,527 289,502
Keyspan Energy 3,914 143,644
NICOR Inc. 1,083 36,790
NiSource Inc. 6,465 133,308
Peoples Energy 905 38,146
PG&E Corp.* 10,214 285,379
Pinnacle West Capital 2,246 90,716
PPL Corp. 4,364 200,308
Progress Energy, Inc. 6,032 265,710
Public Serv. Enterprise Inc. 5,788 231,693
Sempra Energy 5,569 191,741
Southern Co. 18,025 525,429
TECO Energy 4,625 55,454
TXU Corp. 7,976 323,108
Xcel Energy Inc 9,815 164,009
-------------
6,913,178
-------------
Total Common Stocks
(cost $235,871,357) 261,835,593
-------------
<Caption>
PRINCIPAL VALUE
-----------------------------
SHORT-TERM INVESTMENTS(3) - .98%
NORTHERN TRUST DIVERSIFIED ASSETS
PORTFOLIO - .83% $ 2,183,496 $ 2,183,496
-------------
U.S. TREASURY BILL - .15%
(.870% due 12/31/31) 400,000 $ 398,930
-------------
Total Short-Term Investments
(cost $2,582,359) 2,582,426
-------------
TOTAL INVESTMENTS - 100.77%
(cost $238,453,716)(1) 264,418,019
-------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(2) - 2.49% 6,532,177
-------------
OTHER ASSETS AND LIABILITIES - (3.26%) (8,565,558)
-------------
TOTAL NET ASSETS - 100.00% $ 262,384,638
=============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $238,831,706 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$38,885,490 and ($13,299,177), respectively, with a net appreciation /
depreciation of $25,586,313.
(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 $7,978,184,
$6,532,177, and $1,606,198, respectively.
(3) Securities and other assets with an aggregate value of $570,200 have been
segregated with the custodian or designated to cover margin requirements for
the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- -----------------------------------------------------------------------------
S&P 500 Index (09/04) 2 $ 4,188
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
SUMMIT MUTUAL FUNDS, INC. -- PINNACLE SERIES
S&P MIDCAP 400 INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
------------------------------
COMMON STOCKS - 89.16%
CONSUMER DISCRETIONARY - 16.86%
Abercrombie & Fitch Co. 7,354 $ 284,968
American Eagle Outfitters* 5,424 156,808
American Greetings* 5,200 120,536
AnnTaylor Stores Corp.* 5,164 149,653
Applebee's International 6,273 144,404
Arvinmeritor Inc 5,213 102,018
Bandag, Inc. 1,466 65,281
Barnes & Noble* 5,068 172,211
Belo Corp. 8,708 233,810
Blyth Inc 3,464 119,473
Bob Evans Farms 2,659 72,803
Borders Group 5,891 138,085
Borg Warner Inc. 4,172 182,608
Boyd Gaming Corp. 4,914 130,565
Brinker International* 7,358 251,055
CBRL Group 3,765 116,150
Caesars Entertainment, Inc.* 23,076 346,140
Callaway Golf Co. 5,748 65,182
CarMax Inc.* 7,891 172,576
Catalina Marketing* 4,069 74,422
Cheesecake Factory* 3,939 156,733
Chico's FAS* 6,628 299,320
Claire's Stores 7,447 161,600
Coach, Inc.* 14,144 639,167
D.R. Horton 17,634 500,806
Dollar Tree Stores, Inc.* 8,756 240,177
Emmis Communications* 4,164 87,361
Entercom Communications* 3,909 145,806
Furniture Brands International 4,251 106,488
Gentex Corporation 5,840 231,731
GTECH Holdings Corp. 4,486 207,747
Harman International Industries 5,004 455,364
Harte-Hanks, Inc. 6,652 162,375
Hovnanian Enterprises Inc.* 4,570 158,625
Inamed Corp.* 2,775 174,353
International Speedway 4,050 196,992
Krispy Kreme Doughnuts* 4,587 87,566
Lear Corporation 5,145 303,504
Lee Enterprises 3,395 162,994
Lennar Corp 11,793 527,383
Mandalay Resort Group 4,939 339,013
Media General 1,791 115,018
Michaels Stores 5,099 280,445
Modine Mfg. 2,600 82,810
Mohawk Industries* 5,060 371,050
Moneygram International* 6,750 139,050
99(Cents) Only Stores* 5,486 83,662
O'Reilly Automotive* 4,132 186,766
Outback Steakhouse 5,692 235,421
Pacific Sunwear of California* 6,000 117,420
Patterson Dental Company* 5,186 396,677
Payless ShoeSource* 5,181 77,249
PETsMART, Inc. 10,861 352,439
Pier 1 Imports 6,777 119,885
Reader's Digest Association 7,537 120,517
Regis Corp. 3,323 148,173
Rent-A-Center* 6,156 184,249
Ross Stores, Inc. 11,565 $ 309,479
Ruby Tuesday, Inc. 4,950 135,878
Ryland Group 1,900 148,580
SAKS Inc.* 10,438 156,570
Scholastic Corp.* 2,993 89,640
Six Flags Inc.* 7,046 51,154
Superior Industries 2,036 68,104
Thor Industries 4,400 147,224
Timberland Co* 2,664 172,068
Toll Brothers* 5,557 235,172
Tupperware Corp. 4,450 86,464
Valassis Communication* 3,960 120,661
Washington Post 726 675,187
Westwood One, Inc.* 7,609 181,094
Williams-Sonoma Inc.* 8,894 293,146
---------------
14,325,105
---------------
CONSUMER STAPLES - 4.41%
BJ's Wholesale Club* 5,309 132,725
Church & Dwight 3,077 140,865
Constellation Brands* 8,002 297,113
Dean Foods* 11,873 442,981
Energizer Holdings Inc.* 6,171 277,695
Hormel Foods Corp. 10,543 327,887
Interstate Bakeries 3,410 36,999
Lancaster Colony 2,720 113,261
PepsiAmericas, Inc. 10,417 221,257
Ruddick Corp. 3,526 79,159
Smithfield Foods* 8,428 247,783
Smucker (J.M.) 4,411 202,509
Tootsie Roll 4,041 131,333
Tyson Foods 26,662 558,569
Universal Corp. 1,905 97,041
Whole Foods Market, Inc. 4,557 434,966
---------------
3,742,143
---------------
ENERGY - 6.37%
Cooper Cameron Corp* 4,108 200,060
ENSCO International 11,402 331,798
FMC Technologies* 5,041 145,180
Forest Oil* 4,415 120,617
Grant Prideco* 9,243 170,625
Hanover Compressor* 5,603 66,676
Helmerich & Payne 3,812 99,684
Murphy Oil 6,991 515,237
National-Oilwell Inc.* 6,473 203,835
Newfield Exploration* 4,250 236,895
Noble Energy, Inc 4,317 220,167
Overseas Shipholding Group 2,958 130,537
Patterson-UTI Energy, Inc. 6,161 205,839
Pioneer Natural Resources 8,982 315,089
Plains Exploration & Production* 5,650 103,678
Pogo Producing 4,853 239,738
Pride International* 10,325 176,661
Smith International* 7,870 438,831
Tidewater Inc. 4,610 137,378
Varco International* 7,428 162,599
Western Gas Resources 5,606 182,083
XTO Energy Inc. 19,031 566,933
Weatherford International Ltd.* 9,900 445,302
---------------
5,415,442
---------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
<Page>
<Table>
<Caption>
SHARES VALUE
------------------------------
FINANCIALS - 16.43%
AMB Property Corp 6,222 $ 215,468
Allmerica Financial* 4,035 136,383
American Financial Group 5,555 169,816
AmeriCredit Corp.* 11,912 232,641
AmerUs Group Co. 2,981 123,413
Associated Banc-Corp 8,365 247,855
Astoria Financial 6,042 221,016
Bank of Hawaii Corp. 4,255 192,411
Banknorth Group Inc 12,999 422,208
W. R. Berkley Corp. 6,345 272,518
Brown & Brown Inc. 5,226 225,241
City National Corp. 3,725 244,733
Colonial BancGroup 9,471 172,088
Commerce Bancorp 5,773 317,573
Compass Bancshares 9,265 398,395
Cullen Frost Bankers 3,945 176,539
Dime Bancorp Inc. 1,500 165
Eaton Vance 5,245 200,411
A.G. Edwards 5,988 203,772
Everest Re Group 4,235 340,325
Fidelity National Financial 13,032 486,615
First American Corp. 6,757 174,939
FirstMerit Corp. 6,420 169,295
GATX Corp. 3,741 101,755
Gallagher (Arthur J.) 6,854 208,704
Greater Bay Bancorp 3,985 115,167
Greenpoint Financial Corp. 10,152 403,034
HCC Insurance Holdings 4,856 162,239
Hibernia Corp. 11,813 287,056
Highwoods Properties 4,043 95,011
Horace Mann Educators 3,254 56,880
Hospitality Properties Trust 5,067 214,334
Independence Community Bank 6,181 224,988
IndyMac Bancorp 4,232 133,731
Investors Financial Services 4,963 216,288
Jefferies Group, Inc. 4,148 128,256
LaBranche & Co. 4,552 38,328
Legg Mason 5,037 458,417
Leucadia National Corp. 5,303 263,559
Liberty Property Trust 6,359 255,695
Mack-Cali Realty 4,435 183,520
Mercantile Bankshares 6,057 283,589
The MONY Group* 3,592 112,430
National Commerce Financial 15,612 507,390
New Plan Excel Realty Trust 7,437 173,728
New York Community Bancorp 20,569 403,769
Ohio Casualty* 4,635 93,303
Old Republic International 13,804 327,431
PMI Group 7,224 314,388
Protective Life Corp. 5,252 203,095
Radian Group 7,147 342,341
Raymond James Financial 5,550 146,798
Rayonier Inc. 3,718 165,265
SEI Investments 8,020 232,901
Silicon Valley Bancshares* 2,643 104,795
StanCorp Financial Group 2,221 148,807
TCF Financial 5,399 313,412
United Dominion Realty Trust 9,667 191,213
Unitrin, Inc. 5,142 219,049
Waddell & Reed Financial Investment 6,269 138,608
Washington Federal Inc. 5,836 $ 140,064
Webster Financial Corp. 3,945 185,494
Westamerica Bancorp 2,485 130,338
Wilmington Trust Corp. 5,020 186,844
---------------
13,955,834
---------------
HEALTH CARE - 8.87%
Apogent Technologies* 6,882 220,224
Apria Healthcare Group* 3,884 111,471
Barr Pharmaceuticals, Inc.* 7,674 258,614
Beckman Coulter Inc. 4,692 286,212
Cephalon, Inc.* 4,233 228,582
Charles River Labs* 3,482 170,165
Community Health Systems* 7,496 200,668
Covance Inc.* 4,718 182,020
Coventry Health Care Inc.* 6,855 335,210
Cytyc Corp.* 8,345 211,713
DENTSPLY International Inc. 6,017 313,486
Edwards Lifesciences Corp.* 4,512 157,243
First Health Group* 7,182 112,111
Health Net, Inc.* 8,650 229,225
Hillenbrand Industries 4,702 284,236
IVAX Corp.* 14,951 358,674
LifePoint Hospitals* 2,868 106,747
Lincare Holdings* 7,485 245,957
Millennium Pharmaceuticals, Inc.* 22,910 316,158
Omnicare, Inc. 7,795 333,704
Oxford Health Plans 6,162 339,156
PacifiCare Health Systems Inc.* 6,358 245,800
Par Pharmaceutical Cos.* 2,592 91,264
Perrigo Co. 5,316 100,845
Protein Design Labs* 7,133 136,454
Renal Care Group* 5,250 173,933
Henry Schein, Inc.* 3,321 209,688
Sepracor Inc.* 6,455 341,470
STERIS Corp.* 5,284 119,207
Triad Hospitals* 5,732 213,402
Universal Health Services 4,411 202,421
Valeant Pharmaceuticals International 6,324 126,480
Varian Medical Systems* 5,175 410,636
Vertex Pharmaceuticals* 5,911 64,075
VISX Inc.* 3,679 98,303
---------------
7,535,554
---------------
INDUSTRIALS - 11.64%
AGCO Corp.* 6,642 135,298
Alaska Air Group* 2,032 48,504
Alexander & Baldwin 3,181 106,404
Allete, Inc. 6,619 220,412
Alliant Techsystems* 3,000 190,020
Ametek, Inc. 5,081 157,003
Banta Corp. 1,944 86,332
The Brink's Company 4,129 141,418
C.H. Robinson Worldwide, Inc. 6,428 294,660
CNF Inc. 3,784 157,263
Career Education Corporation* 7,619 347,122
Carlisle Companies 2,348 146,163
ChoicePoint Inc.* 6,652 303,730
Copart Inc.* 6,771 180,786
Corinthian Colleges* 6,736 166,649
DeVRY Inc.* 5,330 146,149
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<Page>
<Table>
<Caption>
SHARES VALUE
------------------------------
INDUSTRIALS - 11.64% (CONTINUED)
Donaldson Co. 6,600 $ 193,380
Dun & Bradstreet* 5,531 298,176
Dycom Industries* 3,674 102,872
Education Management* 5,506 180,927
Expeditors International of Washington, Inc. 7,989 394,736
Fastenal Company 5,777 328,307
Federal Signal 3,658 68,075
Flowserve Corporation* 4,211 105,022
Graco Inc. 5,254 163,137
Granite Construction 3,162 57,643
HNI Corporation 4,429 187,480
Harsco Corp. 3,108 146,076
Hubbell Inc. 4,545 212,297
Hunt(J.B.) Transport Serv Inc. 6,095 235,145
ITT Educational Services* 3,447 131,055
Jacobs Engineering Group* 4,219 166,144
JetBlue Airways Corp.* 7,720 226,814
Kelly Services 2,640 78,672
Kennametal Inc. 2,743 125,629
Korn/Ferry International* 2,863 55,456
L-3 Communications Holdings 7,960 531,728
Laureate Education Inc.* 3,316 126,804
Manpower Inc. 6,602 335,184
Miller (Herman) 5,560 160,906
Nordson Corporation 2,577 111,764
Pentair Inc. 7,518 252,906
Precision Castparts 4,908 268,419
Quanta Services* 8,880 55,234
Republic Services 11,702 338,656
Rollins, Inc. 3,440 79,154
SPX Corp. 5,795 269,120
Sequa Corp.* 797 46,601
Sotheby's Holdings* 4,703 75,060
Stericycle Inc.* 3,199 165,516
Swift Transportation* 6,364 114,234
Tecumseh Products Co. 1,405 57,872
Teleflex 3,022 151,553
Trinity Industries 3,527 112,123
United Rentals* 5,865 104,925
Werner Enterprises 6,070 128,077
York International 3,050 125,264
---------------
9,896,056
---------------
INFORMATION TECHNOLOGY - 14.35%
Activision, Inc.* 10,119 160,892
Acxiom Corp. 6,451 160,178
Adtran Inc. 6,026 201,087
Advanced Fibre Communications* 6,613 133,582
Advent Software, Inc.* 2,496 45,103
Alliance Data Systems* 6,075 256,668
Arrow Electronics* 8,591 230,411
Ascential Software Corp.* 4,519 72,259
Atmel Corp.* 35,922 212,658
Avnet, Inc* 9,116 206,933
Avocent Corp* 3,570 131,162
BISYS Group* 8,997 126,498
CDW Corporation 6,336 403,983
CSG Systems International* 3,982 82,427
Cabot Micro-Electronics* 1,884 57,669
Cadence Design Systems* 20,026 292,980
Ceridian Corp.* 11,366 255,735
Certegy, Inc. 4,935 $ 191,478
Checkfree Corp* 6,060 181,800
Cognizant Technology Solutions* 9,720 246,985
CommScope, Inc.* 4,511 96,761
Credence Systems* 7,334 101,209
Cree Inc.* 5,648 131,485
Cypress Semiconductor* 9,149 129,824
DST Systems Inc.* 6,350 305,372
Diebold, Inc. 5,525 292,107
Fair, Isaac Corporation 5,497 183,490
Fairchild Semiconductor* 8,964 146,741
Gartner, Inc.* 9,843 130,124
Harris Corp. 5,066 257,100
Henry (Jack) & Assoc. 6,778 136,238
Imation Corp. 2,711 115,516
Integrated Device Technology* 7,975 110,374
Integrated Circuit Systems Inc.* 5,490 149,108
Intl Rectifier* 4,904 203,124
Intersil Corporation 10,574 229,033
Keane Inc.* 4,886 66,889
KEMET Corp.* 6,580 80,408
LTX Corp.* 4,519 48,850
Lam Research Corporation* 9,935 266,258
Lattice Semconductor* 8,597 60,265
MPS Group, Inc.* 7,952 96,378
Macrovision Corporation* 3,724 93,212
Macromedia Inc.* 5,110 125,451
McData Corp.* 8,780 47,236
Mentor Graphics* 5,188 80,258
Micrel Inc.* 7,010 85,172
Microchip Technology Incorporated 15,782 497,764
National Instruments 5,935 181,908
Neiman-Marcus Group Inc.* 3,728 207,463
Network Associates Inc.* 12,295 222,908
Newport Corporation* 2,966 47,960
Plantronics Inc.* 3,380 142,298
Plexus Corp* 3,236 43,686
Polycom Inc.* 7,552 169,240
Powerwave Technologies* 7,802 60,075
Quantum Corp.* 13,649 42,312
RSA Security Inc.* 4,581 93,773
RF Micro Devices, Inc.* 14,110 105,825
Retek Inc.* 4,162 25,555
Reynolds & Reynolds 5,101 117,986
SanDisk Corporation* 12,071 261,820
Semtech Corp* 5,627 132,460
Silicon Laboratories Inc.* 3,785 175,435
Storage Technology* 8,431 244,499
Sybase Inc.* 7,370 132,660
Synopsys, Inc.* 11,820 336,043
Tech Data Corp.* 4,321 169,081
3Com Corp.* 28,418 177,613
Titan Corp.* 6,197 80,437
Transaction Systems* 2,907 62,588
TriQuint Semiconductor* 10,225 55,829
UTStarcom* 8,600 260,150
Varian Inc.* 2,630 110,855
Vishay Intertechnology* 12,207 226,806
Wind River Systems* 6,409 75,370
Zebra Technologies* 3,600 313,200
---------------
12,192,070
---------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
<Table>
<Caption>
SHARES VALUE
------------------------------
MATERIALS - 3.97%
Airgas Inc. 5,625 $ 134,494
Albemarle Corp. 3,130 99,065
Arch Coal 4,009 146,688
Bowater Inc. 4,217 175,385
Cabot Corp. 4,696 191,127
Crompton Corporation 8,487 53,467
Cytec Industries 2,970 134,987
FMC Corp.* 2,685 115,750
Ferro Corp. 3,142 83,828
Glatfelter 3,332 46,915
IMC Global Inc. 8,756 117,330
Longview Fibre* 3,892 57,329
Lubrizol Corp. 3,925 143,734
Lyondell Chemical Co. 13,461 234,087
Martin Marietta 3,722 164,996
Minerals Technologies 1,550 89,900
Olin Corp. 5,225 92,065
Packaging Corp. of America 8,025 191,798
Peabody Energy 4,628 259,122
Potlatch Corp. 2,187 91,067
RPM International Inc. 8,798 133,730
Scotts Co* 2,453 156,698
Sensient Technologies 3,554 76,340
Sonoco Products 7,382 188,241
Valspar Corp 3,852 194,102
---------------
3,372,245
---------------
TELCOMMUNICATIONS SERVICES - .46%
Cincinnati Bell Inc.* 18,581 82,500
Telephone & Data Systems 4,370 311,144
---------------
393,644
---------------
UTILITIES - 5.80%
AGL Resources 4,894 142,170
Airtan Holdings Inc.* 6,625 93,677
Alliant Energy 8,430 219,854
Aqua America, Inc. 7,054 141,432
Aquila, Inc.* 14,885 52,991
Black Hills 2,447 77,081
DPL Incorporated 9,629 186,995
Duquesne Light Holdings, Inc. 5,731 110,665
Energy East 11,115 269,539
Equitable Resources 4,737 244,950
Great Plains Energy Inc. 5,619 166,884
Hawaiian Electric Industries 5,742 149,866
IDACORP Inc. Holding Co. 2,908 78,516
MDU Resources 8,626 207,283
National Fuel Gas 6,187 154,675
Northeast Utilities 9,642 187,730
NSTAR 4,034 $ 193,148
OGE Energy Corp. 6,615 168,484
ONEOK Inc. 7,727 169,917
PNM Resources, Inc. 4,595 95,428
Pepco Holdings, Inc. 13,045 238,464
Puget Energy, Inc. 7,568 165,815
Questar Corp. 6,323 244,321
SCANA Corp . 8,425 306,417
Sierra Pacific* 8,915 68,735
Vectren Corporation 5,755 144,393
WGL Holdings, Inc. 3,697 106,178
WPS Resources 2,753 127,602
Westar Energy, Inc 6,296 125,353
Wisconsin Energy 8,952 291,925
---------------
4,930,488
---------------
Total Common Stocks
(cost $69,068,092) 75,758,581
---------------
UNIT INVESTMENT TRUST(3) - .51%
S&P MidCap 400 Depositary Receipts 3,913 434,734
---------------
Total Unit Investment Trust
(cost $316,101) 434,734
---------------
SHORT-TERM INVESTMENTS(3) - 9.10%
NORTHERN TRUST DIVERSIFIED
ASSETS PORTFOLIO - 4.70% 3,994,393 $ 3,994,393
---------------
<Caption>
PRINCIPAL VALUE
------------------------------
U.S. TREASURY BILL - 4.40%
(1.000% due 09/16/04) $ 3,750,000 $ 3,739,973
---------------
Total Short-Term Investments
(cost $7,733,733) 7,734,366
---------------
TOTAL INVESTMENTS - 98.77%
(cost $77,117,926)(1) 83,927,681
---------------
NORTHERN INSTITUTIONAL LIQUID
ASSET PORTFOLIO(2) - 18.77% 15,946,343
---------------
OTHER ASSETS AND LIABILITIES - (17.54%) (14,900,010)
---------------
TOTAL NET ASSETS - 100.00% $ 84,974,014
===============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $77,867,303 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$11,066,453 and ($5,006,076), respectively, with a net
appreciation/depreciation of $6,060,377.
(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 $16,814,845,
$15,946,343, and $1,197,996, respectively.
(3) Securities and other assets with an aggregate value of $8,515,500 have been
segregated with the custodian or designated to cover margin requirements for
the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- --------------------------------------------------------------------
S&P MidCap 400 Index (03/04) 27 $ 186,050
S&P MidCap 400 Index Mini (03/04) 5 $ 9,825
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
BALANCED INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
---------------------------
COMMON STOCKS - 59.80%
CONSUMER DISCRETIONARY - 6.55%
AutoNation, Inc.* 512 $ 8,755
AutoZone Inc.* 166 13,297
Bed Bath & Beyond Inc.* 571 21,955
Best Buy Co., Inc. 618 31,357
Big Lots, Inc.* 222 3,210
Black & Decker Corp. 152 9,444
Boise Cascade 124 4,667
Brunswick Corp. 189 7,711
Carnival Corp. 1,205 56,635
Centex Corp. 237 10,843
Circuit City Group 382 4,947
Clear Channel Communications 1,170 43,232
Comcast Corp.* 4,289 120,221
Cooper Tire & Rubber 143 3,289
Dana Corp. 285 5,586
Darden Restaurants 312 6,412
Delphi Corporation 1,071 11,438
Dillard Inc. 161 3,590
Walt Disney Co. 3,925 100,048
Dollar General 631 12,342
Dow Jones & Co. 157 7,081
Eastman Kodak 549 14,812
eBay Inc.* 1,140 104,823
Family Dollar Stores 332 10,099
Federated Dept. Stores 347 17,038
Ford Motor 3,497 54,727
Fortune Brands, Inc. 282 21,271
Gannett Co. 520 44,122
Gap (The) 1,714 41,565
General Motors 1,079 50,271
Genuine Parts 333 13,213
Goodyear Tire & Rubber* 337 3,063
Harley-Davidson 566 35,058
Harrah's Entertainment 217 11,740
Hasbro Inc. 337 6,403
Hilton Hotels 730 13,622
Home Depot 4,265 150,128
International Game Technology 640 24,704
Interpublic Group* 650 8,925
Johnson Controls 355 18,950
Jones Apparel Group 242 9,554
KB Home 91 6,245
Knight-Ridder Inc. 152 10,944
Kohl's Corp.* 650 27,482
Leggett & Platt 367 9,803
Limited Brands, Inc. 904 16,905
Liz Claiborne, Inc. 219 7,880
Lowe's Cos. 1,499 78,772
Marriott International 434 21,648
Mattel, Inc. 808 14,746
May Dept. Stores 557 15,312
Maytag Corp. 152 3,726
McDonald's Corp. 2,411 62,686
McGraw-Hill 365 27,948
Meredith Corp. 97 $ 5,331
New York Times 288 12,876
Newell Rubbermaid Co. 524 12,314
NIKE Inc. 505 38,254
Nordstrom 273 11,633
Office Depot* 598 10,710
Omnicom Group 362 27,472
Penney (J.C.) 538 20,315
Pulte Homes, Inc. 178 9,261
RadioShack Corp 312 8,933
Reebok International 122 4,390
Sears, Roebuck & Co. 425 16,048
Sherwin-Williams 277 11,509
Snap-On Inc. 113 3,791
Stanley Works 157 7,156
Staples, Inc. 948 27,786
Starbucks Corporation* 754 32,784
Starwood Hotels & Resorts 392 17,581
TJX Companies Inc. 955 23,054
Target Corp. 1,743 74,025
Tiffany & Co. 280 10,318
Time Warner Inc.* 8,686 152,700
Toys R Us, Inc.* 409 6,515
Tribune Co. 623 28,371
Union Planter Corp.* 364 10,851
Univision Communications* 459 14,656
V.F. Corp. 210 10,227
Viacom Inc.* 3,317 118,483
Visteon Corp. 248 2,894
Wendy's International 218 7,595
Whirlpool Corp. 142 9,741
Yum! Brands, Inc* 554 20,620
------------
2,212,439
------------
CONSUMER STAPLES - 6.70%
Alberto-Culver 180 9,025
Albertson's 707 18,764
Altria Group, Inc. 3,914 195,896
Anheuser-Busch 1,546 83,484
Archer-Daniels-Midland 1,242 20,841
Avon Products 901 41,572
Brown-Forman Corp. 234 11,295
CVS Corp. 758 31,851
Campbell Soup 786 21,128
Clorox Co. 407 21,888
Coca Cola Co. 4,662 235,338
Coca-Cola Enterprises 884 25,627
Colgate-Palmolive 1,020 59,619
ConAgra Foods, Inc. 1,011 27,378
Coors (Adolph) 79 5,715
Costco Wholesale Corporation 875 35,936
General Mills 726 34,507
Gillette Co. 1,925 81,620
Heinz (H.J.) 672 26,342
Hershey Foods 497 22,996
Kellogg Co. 783 32,769
Kimberly-Clark 962 63,377
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------
CONSUMER STAPLES - 6.70% (CONTINUED)
Kroger Co.* 1,426 $ 25,953
McCormick & Co. 266 9,044
Pepsi Bottling Group 495 15,117
PepsiCo Inc. 3,266 175,972
Procter & Gamble 4,913 267,464
RJ Reynolds Tobacco 164 11,085
Safeway Inc.* 856 21,691
Sara Lee Corp. 1,509 34,692
Supervalu Inc. 267 8,173
Sysco Corp. 1,224 43,905
UST Inc. 316 11,376
Wal-Mart Stores 8,211 433,212
Walgreen Co. 1,955 70,791
Winn-Dixie 272 1,958
Wrigley (Wm) Jr 429 27,048
------------
2,264,449
------------
ENERGY - 3.89%
Amerada Hess 181 14,333
Anadarko Petroleum 480 28,128
Apache Corp. 604 26,304
Ashland Inc. 136 7,182
BJ Services* 308 14,119
Baker Hughes 636 23,945
Burlington Resources 760 27,497
ChevronTexaco Corp. 2,043 192,267
ConocoPhillips 1,306 99,635
Devon Energy Corp. 260 17,160
EOG Resources 230 13,733
El Paso Corp. 1,065 8,392
Exxon Mobil Corp. 12,517 555,880
Halliburton Co. 840 25,418
Kerr-McGee 194 10,431
Kinder Morgan 217 12,866
Marathon Oil Corp. 620 23,461
Nabors Industries Ltd.* 285 12,888
Noble Corporation* 258 9,776
Occidental Petroleum 744 36,017
Rowan Cos.* 202 4,915
Schlumberger Ltd. 1,122 71,258
Sunoco., Inc. 146 9,289
Transocean Inc.* 611 17,682
Unocal Corp. 507 19,266
Valero Energy 250 18,440
Williams Cos. 993 11,817
------------
1,312,099
------------
FINANCIALS - 12.14%
ACE Limited 539 22,789
AFLAC Inc. 974 39,749
Allstate Corp. 1,345 62,610
Ambac Financial Group 214 15,716
American Express 2,445 125,624
American International Group 4,984 355,260
AmSouth Bancorporation 676 17,218
Aon Corp. 552 15,715
Apartment Investment & Management 182 5,666
BB&T Corporation 895 33,088
Bank of America Corp. 3,902 $ 330,187
Bank of New York 1,480 43,630
Banc one Corp. 2,147 109,497
Bear Stearns Cos. 201 16,946
Capital One Financial 422 28,856
Charter One Financial 429 18,958
Chubb Corp. 362 24,681
Cincinnati Financial 322 14,018
Citigroup Inc. 9,872 459,048
Comerica Inc. 337 18,495
Countrywide Financial Corp. 489 34,352
E*Trade Financial Corp.* 701 7,816
Equity Office Properties 771 20,971
Equity Residential 536 15,935
Federal Home Loan Mortgage 1,316 83,303
Fannie Mae 1,854 132,301
Federated Investors Inc. 200 6,068
Fifth Third Bancorp 1,076 57,867
First Horizon National 240 10,913
Franklin Resources 479 23,988
Golden West Financial 292 31,054
Goldman Sachs Group 916 86,251
Hartford Financial Services Group 464 31,895
Huntington Bancshares 440 10,076
J.P. Morgan Chase & Co. 3,962 153,607
Janus Capital Group 458 7,552
Jefferson-Pilot 270 13,716
KeyCorp 787 23,523
Lehman Bros. 522 39,281
Lincoln National 344 16,254
Loews Corp. 357 21,406
M&T Bank Corp. 227 19,817
MBIA Inc. 276 15,765
MBNA Corp. 2,443 63,005
MGIC Investment 190 14,413
Marsh & McLennan 1,002 45,472
Marshall & Ilsley Corp. 424 16,574
Mellon Bank Corp. 817 23,963
Merrill Lynch 1,828 98,675
MetLife Inc. 1,446 51,839
Moody's Corp 289 18,688
Morgan Stanley 2,098 110,711
National City Corp. 1,283 44,917
North Fork Bancorporation 324 12,328
Northern Trust Corp. 421 17,800
PNC Bank Corp. 539 28,610
Plum Creek Timber Co. 351 11,436
T. Rowe Price Group 243 12,247
Principal Financial Group 609 21,181
Progressive Corp. 416 35,485
ProLogis 347 11,423
Providian Financial Corp.* 556 8,157
Prudential Financial 1,007 46,795
Regions Financial Corporation 422 15,424
SLM Corporation 843 34,099
SAFECO Corp. 275 12,100
Sovereign Bancorp Inc. 575 12,705
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------
FINANCIALS - 12.14% (CONTINUED)
St. Paul Travelers Cos. 1,257 $ 50,959
Charles Schwab 2,609 25,072
Simon Property Group, Inc 370 19,025
SouthTrust Corp. 631 24,489
State Street Corp. 640 31,386
SunTrust Banks 541 35,160
Synovus Financial 580 14,686
Torchmark Corp. 216 11,621
U.S. Bancorp 3,624 99,877
UnumProvident Corp. 519 8,252
Wachovia Corp. 2,516 111,963
Washington Mutual 1,659 64,104
Wells Fargo 3,228 184,738
XL Capital 264 19,921
Zions Bancorp 173 10,631
------------
4,101,393
------------
HEALTH CARE - 8.05%
Abbott Labs 2,980 121,465
Aetna Inc. 291 24,735
Allergan, Inc. 251 22,470
AmerisourceBergen Corp. 220 13,152
Amgen Inc.* 2,430 132,605
Anthem, Inc.* 265 23,733
Applera Corp-Applied Biosystems Group 387 8,416
Bard (C.R.) Inc. 201 11,387
Bausch & Lomb 103 6,702
Baxter International Inc. 1,167 40,273
Becton, Dickinson 484 25,071
Biomet, Inc. 488 21,687
Biogen Idec Inc* 649 41,049
Boston Scientific* 1,590 68,052
Bristol-Myers Squibb 3,716 91,042
CIGNA Corp. 274 18,854
Cardinal Health, Inc. 821 57,511
Caremark Rx* 872 28,724
Chiron Corporation* 367 16,383
Express Scripts, Inc.* 150 11,885
Forest Laboratories* 707 40,037
Genzyme Corp.* 440 20,825
Guidant Corp. 598 33,416
HCA Inc. 935 38,887
Health Management Assoc. 466 10,448
Hospira Inc.* 299 8,252
Humana Inc.* 309 5,222
IMS Health Inc. 455 10,665
Johnson & Johnson 5,671 315,875
King Pharmaceuticals* 462 5,290
Lilly (Eli) & Co. 2,155 150,655
Manor Care Inc. 172 5,621
McKesson Corp. 558 19,156
Medco Health Solutions Inc.* 518 19,425
MedImmune, Inc.* 450 10,530
Medtronic Inc. 2,316 112,836
Merck & Co. 4,246 201,685
Millipore Corp.* 99 5,581
Mylan Laboratories 500 10,125
Pfizer, Inc. 14,605 $ 500,659
Quest Diagnostics 200 16,990
St Jude Medical* 341 25,797
Schering-Plough 2,813 51,984
Stryker Corp. 763 41,965
Tenet Healthcare Corp.* 891 11,948
Thermo Electron* 318 9,775
United Health Group Inc. 1,174 73,082
Waters Corporation* 233 11,133
Watson Pharmaceuticals* 208 5,595
WellPoint Health Networks* 268 30,019
Wyeth 2,547 92,100
Zimmer Holdings* 428 37,750
------------
2,718,524
------------
INDUSTRIALS - 6.92%
3M Company 1,494 134,475
Allied Waste Industries* 408 5,377
American Power Conversion Corporation 382 7,506
American Standard* 414 16,688
Apollo Group, Inc.* 340 30,019
Avery Dennison Corp. 212 13,570
Block H&R 337 16,068
Boeing Company 1,614 82,459
Burlington Northern Santa Fe 711 24,935
CSX Corp. 412 13,501
Caterpillar Inc. 654 51,954
Cendant Corporation 1,940 47,491
Cintas Corporation 328 15,636
Cooper Industries, Ltd. 179 10,634
Crane Company 116 3,641
Cummins Inc. 89 5,563
Danaher Corp. 588 30,488
Deere & Co. 476 33,387
Delta Air Lines* 247 1,759
Deluxe Corp. 99 4,307
Donnelley (R.R.) & Sons 410 13,538
Dover Corp. 388 16,335
Eaton Corp. 290 18,775
Emerson Electric 806 51,221
Equifax Inc. 263 6,509
FedEx Corporation 570 46,563
Fluor Corp. 164 7,818
General Dynamics 381 37,833
General Electric 20,125 652,050
Gilead Sciences Inc. 400 26,800
Goodrich Corporation 219 7,080
Grainger (W.W.) Inc. 174 10,005
Honeywell International Inc. 1,635 59,890
ITT Industries, Inc. 178 14,774
Illinois Tool Works 591 56,671
Ingersoll-Rand Co. Ltd. 332 22,679
Lockheed Martin Corp. 856 44,580
Masco Corp. 841 26,222
Monster Worldwide* 206 5,298
Navistar International Corp.* 134 5,194
Norfolk Southern Corp. 748 19,837
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------
INDUSTRIALS - 6.92% (CONTINUED)
Northrop Grumman Corp. 584 $ 31,361
PACCAR Inc. 338 19,601
Pall Corp. 239 6,259
Parker-Hannifin 229 13,616
Pitney-Bowes 444 19,647
Power-One Inc.* 153 1,680
Raytheon Co. 734 26,255
Robert Half International 328 9,765
Rockwell Automation, Inc. 356 13,354
Rockwell Collins 340 11,329
Ryder System 128 5,129
Southwest Airlines 1,506 25,256
Textron Inc. 265 15,728
Thomas & Betts 114 3,104
Tyco International 3,825 126,761
Union Pacific 494 29,368
United Parcel Service 2,149 161,540
United Technologies 938 85,808
Waste Management Inc. 1,112 34,083
------------
2,338,774
------------
INFORMATION TECHNOLOGY - 10.19%
ADC Telecommunications* 1,543 4,382
Adobe Systems 455 21,158
Advanced Micro Devices* 660 10,494
Affiliated Computer* 261 13,817
Agilent Technologies* 916 26,820
Altera Corporation* 718 15,954
Analog Devices 715 33,662
Andrew Corp.* 174 3,482
Apple Computer* 702 22,843
Applied Materials, Inc.* 3,207 62,921
Applied Micro Circuits* 595 3,165
Autodesk, Inc. 217 9,290
Automatic Data Processing Inc. 1,131 47,366
Avaya Inc.* 685 10,816
BMC Software* 428 7,918
Broadcom Corporation* 497 23,245
CIENA Corp.* 695 2,585
Cisco Systems, Inc.* 12,982 307,673
Citrix Systems, Inc.* 327 6,658
Computer Associates International 1,116 31,315
Computer Sciences Corp.* 361 16,761
Compuware Corporation* 735 4,851
Comverse Technology, Inc.* 359 7,159
Convergys Corp.* 276 4,252
Corning Inc.* 2,317 30,260
Dell Inc.* 4,833 173,118
EMC Corp.* 4,565 52,041
Electronic Arts Inc.* 578 31,530
Electronic Data Systems 923 17,675
First Data 1,520 67,670
Fiserv, Inc.* 380 14,778
Gateway Inc.* 646 2,907
Hewlett-Packard 5,830 123,013
Intel Corporation 12,391 341,992
International Business Machines 3,229 284,636
Intuit Inc.* 368 $ 14,197
JDS Uniphase Corporation* 2,744 10,400
Jabil Circuit* 387 9,745
KLA-Tencor Corporation* 384 18,963
LSI Logic* 728 5,547
Lexmark International Inc* 248 23,939
Linear Technology Corporation 592 23,366
Lucent Technologies* 8,025 30,335
Maxim Integrated Products, Inc. 613 32,134
Mercury Interactive Corporation* 172 8,570
Microsoft Corporation 20,608 588,564
Micron Technology* 1,162 17,790
Molex Incorporated 365 11,709
Motorola Inc. 4,463 81,450
NCR Corp.* 190 9,422
National Semiconductor* 687 15,107
Network Appliance, Inc.* 657 14,145
Novell Inc.* 711 5,965
Novellus Systems, Inc.* 281 8,835
NVIDIA Corporation* 300 6,150
Oracle Corporation* 9,966 118,894
PMC-Sierra Inc.* 331 4,750
Parametric Technology* 512 2,560
Paychex, Inc. 720 24,394
PeopleSoft, Inc.* 595 11,008
PerkinElmer 212 4,248
QLogic Corporation* 170 4,520
QUALCOMM Incorporated 1,539 112,316
Sabre Holding Corp. 266 7,371
Sanmina-SCI Corporation* 995 9,055
Scientific-Atlanta 294 10,143
Siebel Systems, Inc.* 942 10,061
Solectron* 1,680 10,870
Sun Microsystems, Inc.* 6,338 27,507
SunGard Data Systems* 553 14,378
Symantec Corporation* 600 26,268
Symbol Technologies 450 6,633
Tektronix Inc. 163 5,545
Tellabs, Inc.* 793 6,931
Teradyne Inc.* 373 8,467
Texas Instruments 3,308 79,987
Unisys Corp.* 635 8,814
VERITAS Software Corporation* 827 22,908
Xilinx, Inc. 668 22,251
Xerox Corp.* 1,437 20,837
Yahoo! Inc.* 2,404 87,337
------------
3,442,593
------------
MATERIALS - 1.77%
Air Products & Chemical 435 22,816
Alcoa Inc 1,658 54,764
Allegheny Technologies Inc 164 2,960
Ball Corp. 110 7,926
Bemis Company 207 5,848
Dow Chemical 1,781 72,487
Du Pont (E.I.) 1,912 84,931
Eastman Chemical 150 6,935
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
SHARES VALUE
---------------------------
MATERIALS - 1.77% (CONTINUED)
Ecolab Inc. 491 $ 15,565
Engelhard Corp. 238 7,690
Freeport-McMoRan Copper & Gold 330 10,940
Georgia-Pacific Group 493 18,231
Great Lakes Chemical 99 2,679
Hercules, Inc.* 212 2,584
International Flavors & Fragrances 181 6,769
International Paper 926 41,392
Louisiana Pacific 209 4,943
MeadWestvaco Corporation 385 11,315
Monsanto Co. 481 18,519
Newmont Mining Corp. 837 32,442
Nucor Corp. 152 11,668
PPG Industries 328 20,497
Pactiv Corp.* 295 7,356
Phelps Dodge* 170 13,176
Praxair, Inc. 620 24,744
Rohm & Haas 428 17,796
Sealed Air Corp.* 163 8,683
Sigma-Aldrich Corporation 134 7,988
Temple-Inland 113 7,825
United States Steel Corp. 190 6,673
Vulcan Materials 197 9,366
Weyerhaeuser Corp. 449 28,341
Worthington Ind. 168 3,449
------------
599,298
------------
TELECOMMUNICATIONS SERVICES- 2.05%
AT&T Corp. 1,511 22,105
AT&T Wireless Services* 5,202 74,493
ALLTEL Corp. 590 29,866
BellSouth 3,512 92,085
Century Telephone 267 8,021
Citizens Communications* 552 6,678
Nextel Communications, Inc.* 1,986 52,947
Qwest Communications International* 3,403 12,217
SBC Communications Inc. 6,330 153,503
Sprint Corp. FON 2,715 47,784
Verizon Communications 5,286 191,300
------------
690,999
------------
UTILITIES - 1.54%
AES Corp.* 1,163 11,549
Allegheny Energy* 233 3,591
Ameren Corporation 296 12,716
American Electric Power 740 23,680
CMS Energy* 260 2,374
Calpine Corp.* 757 3,270
CenterPoint Energy 586 6,739
CINergy Corp. 343 13,034
Consolidated Edison 441 17,534
Constellation Energy Group 323 12,242
DTE Energy Co. 320 12,973
Dominion Resources 513 32,360
Duke Energy 1,692 34,332
Dynegy Inc.* 689 2,935
Edison International 623 15,930
Entergy Corp. 441 24,700
Exelon Corp. 1,260 $ 41,945
FPL Group 353 22,574
FirstEnergy Corp. 629 23,531
Keyspan Energy 304 11,157
NICOR Inc. 86 2,921
NiSource Inc. 447 9,217
PG&E Corp.* 797 22,268
PPL Corp. 311 14,275
Peoples Energy 76 3,203
Pinnacle West Capital 183 7,391
Progress Energy, Inc. 450 19,823
Public Serv. Enterprise Inc. 451 18,054
Sempra Energy 441 15,184
Southern Co. 1,404 40,927
TECO Energy 300 3,597
TXU Corp. 569 23,050
Xcel Energy Inc 727 12,148
------------
521,224
------------
Total Common Stocks
(cost $20,618,966) 20,201,792
------------
UNIT INVESTMENT TRUST - .32%
S&P 500 Depositary Receipts 961 110,063
------------
Total Unit Investment Trust
(cost $110,409) 110,063
------------
<Caption>
PRINCIPAL VALUE
---------------------------
U.S. TREASURY OBLIGATIONS - 13.05%
U.S. TREASURY NOTES - 13.05%
5.875% due 11/15/04 $ 300,000 $ 304,734
6.500% due 05/15/05 400,000 415,312
5.750% due 11/15/05 1,075,000 1,124,005
7.000% due 07/15/06 250,000 270,869
6.125% due 08/15/07 100,000 108,488
5.500% due 02/15/08 200,000 214,164
4.750% due 11/15/08 200,000 208,875
6.000% due 08/15/09 50,000 54,943
5.750% due 08/15/10 180,000 196,256
4.375% due 08/15/12 275,000 273,722
6.250% due 08/15/23 250,000 276,836
6.125% due 11/15/27 500,000 547,910
5.250% due 11/15/28 200,000 195,945
6.125% due 08/15/29 195,000 214,500
------------
Total U.S. Treasury Obligations
(cost $4,482,084) 4,406,559
------------
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 5.17%
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 5.17%
3.500% due 09/15/07 1,750,000 1,745,021
------------
Total U.S. Government Agency Obligations
(cost $1,800,848) 1,745,021
------------
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
---------------------------
MORTGAGE-BACKED SECURITIES - 10.97%
FNCL (7.000% due 07/01/29) $ 667,984 $ 707,156
FNCL (6.500% due 08/01/32) 252,071 262,655
FNCL (6.000% due 08/01/33) 444,148 453,958
FNCL (5.500% due 07/01/33) 444,997 444,154
FNCL (5.500% due 11/01/33) 715,348 713,992
FGCI (5.000% due 05/01/18) 938,455 941,487
FGCI (4.500% due 09/01/18) 185,129 181,313
------------
Total Mortgage-Backed Securities
(cost $3,761,258) 3,704,715
------------
CORPORATE BONDS - 8.85%
BANK, BANK HOLDING COMPANIES&
OTHER BANK SERVICES - 1.51%
Key Bank (5.000% due 07/17/07) 315,000 327,859
UPC (4.375% due 12/01/10) 190,000 184,036
------------
511,895
------------
CAPITAL GOODS - 1.29%
Burlington Resources (6.500% due 12/01/11) 150,000 163,863
Honeywell International (7.500% due 03/01/10) 125,000 142,986
Masco Corp. ( 5.875% due 07/15/12) 125,000 129,826
------------
436,675
------------
CONSUMER CYCLICALS -1.73%
Amgen (6.500% due 12/01/07) 150,000 163,560
Ford Motor Credit Corp. (6.375% due 02/01/29) 500,000 422,556
------------
586,116
------------
CONSUMER NON-DURABLE - .71%
Campbell Soup Co. (5.875% due 10/01/08) 225,000 239,111
------------
ENERGY - .43%
Colonial Pipeline Co. (7.750% due 11/01/10)(2) 125,000 144,236
------------
MANUFACTURING - 2.24%
Champion International Corp.(7.200% due 11/01/26) 450,000 502,292
Weyerhauser Co. (5.250% due 12/15/09) 250,000 254,728
------------
757,020
------------
TELECOMMUNICATION - .94%
Public Services Inc. (6.625% due 02/15/11) $ 150,000 $ 164,297
TIAA Global Market (4.125% due 11/15/07)(2) 150,000 151,693
------------
315,990
------------
Total Corporate Bonds (cost $3,029,662) 2,991,043
------------
<Caption>
SHARES VALUE
---------------------------
SHORT-TERM INVESTMENTS(4) - 5.77%
NORTHERN TRUST DIVERSIFIED ASSETS
PORTFOLIO - 5.47% 1,848,762 $ 1,848,762
------------
<Caption>
PRINCIPAL VALUE
---------------------------
U.S. TREASURY BILL - 0.30%
(.870% due 03/18/04) $ 100,000 $ 99,733
------------
Total Short-Term Investments
(cost $1,948,492) 1,948,495
------------
TOTAL INVESTMENTS - 103.93%
(cost $35,751,719)(1) 35,107,688
------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(3) - 13.29% 4,488,568
------------
OTHER ASSETS AND LIABILITIES - (17.22%) (5,815,539)
------------
TOTAL NET ASSETS - 100.00% $ 33,780,717
============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $35,790,879 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$1,606,048 and ($2,289,239), respectively, with a net appreciation /
depreciation of ($683,191).
(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 $6,549,503,
$4,488,568, and $2,170,479, respectively.
(4) Securities and other assets with an aggregate value of $456,030 have been
segregated with the custodian or designated to cover margin requirements for
the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- ----------------------------------------------------------------
S&P 500 Index (09/04) 1 $ 1,888
S&P 500 Index Mini (09/04) 1 $ 2,242
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
NASDAQ-100 INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
SHARES VALUE
-----------------------------
COMMON STOCKS - 88.71%
BASIC INDUSTRIES - .29%
Sigma-Aldrich Corporation 1,254 $ 74,751
-------------
COMMUNICATIONS - 26.11%
Amazon.com, Inc.* 5,002 272,109
Check Point Software Technologies Ltd.* 4,588 123,830
Cisco Systems, Inc.* 45,145 1,069,937
Comcast Corp.* 17,891 501,485
Comverse Technology, Inc.* 3,761 74,994
eBay Inc.* 9,185 844,561
EchoStar Communications Corporation* 4,785 147,139
InterActiveCorp* 13,914 419,368
JDS Uniphase Corporation* 30,679 116,273
Juniper Networks, Inc.* 6,770 166,339
Lamar Advertising Company* 1,569 68,016
Level 3 Communications, Inc.* 12,594 44,709
Nextel Communications, Inc.* 25,802 687,881
PanAmSat Corporation* 3,799 88,213
QUALCOMM Incorporated 18,378 1,341,226
Symantec Corporation* 6,068 265,657
Tellabs, Inc.* 4,478 39,138
VeriSign, Inc.* 4,290 85,371
Yahoo! Inc.* 11,916 432,908
-------------
6,789,154
-------------
CONSUMER CYCLICAL - 7.47%
Bed Bath & Beyond Inc.* 7,499 288,337
CDW Corporation 1,630 103,929
Cintas Corporation 3,860 184,006
Costco Wholesale Corporation 4,541 186,499
Dollar Tree Stores, Inc.* 2,086 57,219
Fastenal Company 1,365 77,573
PACCAR Inc. 3,694 214,215
PETsMART, Inc. 2,665 86,479
Ross Stores, Inc. 2,808 75,142
Ryanair Holdings plc* 1,144 37,500
Staples, Inc. 6,265 183,627
Starbucks Corporation* 10,308 448,192
-------------
1,942,718
-------------
CONSUMER NON-CYCLICAL - 14.55%
Amgen Inc.* 11,324 617,950
Apollo Group, Inc.* 3,360 296,654
Biomet, Inc. 6,483 288,105
Biogen Idec Inc* 6,881 435,223
Career Education Corporation* 1,919 87,430
Cephalon, Inc.* 959 51,786
Chiron Corporation* 4,944 220,700
DENTSPLY International Inc. 1,431 74,555
Express Scripts, Inc.* 1,321 104,663
First Health Group* 1,846 28,816
Genzyme Corp.* 5,293 250,518
Gilead Sciences, Inc.* 3,755 251,585
Invitrogen Corporation* 903 65,007
Lincare Holdings* 1,785 58,655
MedImmune, Inc.* 4,990 116,766
Millennium Pharmaceuticals, Inc.* 6,224 $ 85,891
Patterson Dental Company* 1,233 94,312
Paychex, Inc. 6,386 216,358
Henry Schein, Inc.* 764 48,239
Teva Pharmaceutical Industries Limited 4,213 283,493
Whole Foods Market, Inc. 1,109 105,854
-------------
3,782,560
-------------
ENERGY - .20%
Patterson-UTI Energy, Inc. 1,574 52,587
-------------
INDUSTRIAL - 3.03%
American Power Conversion Corporation 3,760 73,884
C.H. Robinson Worldwide, Inc. 1,572 72,060
Expeditors International of Washington, Inc. 1,942 95,954
Flextronics International Ltd.* 10,784 172,005
Garmin Ltd. 1,887 69,894
Gentex Corporation 1,504 59,679
Molex Incorporated 1,858 59,605
Sanmina-SCI Corporation* 10,407 94,704
Smurfit-Stone Container Corporation* 4,567 91,112
-------------
788,897
-------------
TECHNOLOGY - 37.06%
ATI Technologies Inc.* 4,523 85,304
Adobe Systems 4,383 203,810
Altera Corporation* 10,036 223,000
Apple Computer* 9,912 322,535
Applied Materials, Inc.* 16,674 327,144
BEA Systems, Inc.* 7,043 57,893
Broadcom Corporation* 4,242 198,398
Citrix Systems, Inc.* 3,671 74,742
Compuware Corporation* 4,468 29,489
Dell Inc.* 17,461 625,453
Electronic Arts Inc.* 5,656 308,535
Fiserv, Inc.* 4,563 177,455
Intel Corporation 42,896 1,183,930
Intersil Corporation 2,641 57,204
Intuit Inc.* 4,710 181,712
KLA-Tencor Corporation* 4,572 225,765
Lam Research Corporation* 2,539 68,045
Linear Technology Corporation 7,863 310,353
Marvell Technology Group, Ltd.* 4,558 121,699
Maxim Integrated Products, Inc. 8,474 444,207
Mercury Interactive Corporation* 1,805 89,943
Microsoft Corporation 70,104 2,002,170
Microchip Technology Incorporated 3,248 102,442
Network Appliance, Inc.* 6,801 146,426
Novellus Systems, Inc.* 2,925 91,962
NVIDIA Corporation* 3,302 67,691
Oracle Corporation* 41,040 489,607
PeopleSoft, Inc.* 9,976 184,556
Pixar* 1,047 72,777
QLogic Corporation* 1,815 48,261
Research in Motion Limited* 3,422 234,202
SanDisk Corporation* 2,748 59,604
Siebel Systems, Inc.* 10,938 116,818
Sun Microsystems, Inc.* 26,761 116,143
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
TECHNOLOGY - 37.06% (CONTINUED)
Synopsys, Inc.* 2,705 $ 76,903
VERITAS Software Corporation* 8,012 221,932
Xilinx, Inc. 8,552 284,866
-------------
9,632,976
-------------
Total Common Stocks
(cost $23,240,447) 23,063,643
-------------
UNIT INVESTMENT TRUST - 1.22%
Nasdaq 100 Shares 8,374 316,370
-------------
Total Unit Investment Trust
(cost $197,984) 316,370
-------------
SHORT-TERM INVESTMENTS(3) - 10.08%
NORTHERN TRUST DIVERSIFIED ASSETS
PORTFOLIO - 4.52% 1,174,874 1,174,874
-------------
<Caption>
PRINCIPAL VALUE
-----------------------------
U.S. TREASURY BILL - 5.56%
(1.000% due 09/16/04) $ 1,450,000 $ 1,446,123
-------------
Total Short-Term Investments
(cost $2,620,842) 2,620,997
-------------
TOTAL INVESTMENTS - 100.01%
(cost $26,059,273)(1) 26,001,010
-------------
NORTHERN INSTITUTIONAL LIQUID
ASSET PORTFOLIO(2) - 5.66% 1,470,981
-------------
OTHER ASSETS AND LIABILITIES - (5.67%) (1,473,942)
-------------
TOTAL NET ASSETS - 100.00% $ 25,998,049
=============
</Table>
* Non-income producing
(1) For federal income tax purposes, cost is $26,872,024 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$3,688,371 and ($4,559,385), respectively, with a net
appreciation/depreciation of ($871,014).
(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 $1,547,143,
$1,470,981, and $112,263, respectively.
(3) Securities and other assets with an aggregate value of $2,555,280 have been
segregated with the custodian or designated to cover margin requirements for
the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- -----------------------------------------------------------------
Nasdaq-100 Index (09/04) 14 $ 58,850
Nasdaq-100 Index Mini (09/04) 3 $ 15,400
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
RUSSELL 2000 SMALL CAP INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
COMMON STOCKS - 93.48%
CAPITAL GOODS - 11.58%
A.O. Smith Corp. 889 $
28,261
A.S.V. Inc* 407
12,743
AAR Corp.* 1,684
19,112
Actuant Corp.* 1,238
48,270
ADE Corp.* 494
10,675
Advanced Energy Industries Inc.* 1,106
17,386
Aftermarket Technology Corp.* 611
10,082
AirTran Holdings Inc.* 4,413
62,400
Alaska Air Group Inc.* 1,400
33,418
Alexander & Baldwin Inc. 2,220
74,259
America West Holdings Corp* 1,834
16,653
American Superconductor Corp.* 1,274
16,664
Applied Films Corp.* 770
22,345
Applied Industrial Technologies Inc. 894
26,927
Applied Signal Technology 513
17,981
Arctic Cat Inc. 719
19,794
Arkansas Best Corp. 1,150
37,858
Arris Group Inc.* 4,542
26,979
Artesyn Technologies Inc.* 1,795
16,155
Arvinmeritor Inc 3,623
70,902
Astec Industries Inc.* 718
13,520
Asyst Technologies Inc.* 2,453
25,364
Atlantic Coast Airlines Holdings Inc.* 2,368
13,592
ATMI Inc.* 1,630
44,515
Audiovox Corporation* 899
15,175
August Technology Corp.* 927
11,625
Aviall Inc.* 1,233
23,439
Axcelis Technologies Inc.* 5,192
64,588
Baldor Electric Co. 1,720
40,162
Bandag Inc 586
26,095
BE Aerospace Inc.* 1,933
14,652
Beazer Homes USA Inc. 715
71,722
Belden Inc. 1,348
28,888
BHA Group Holdings Inc 224
8,478
Blount International Inc* 223
2,839
Brooks Automation Inc.* 2,328
46,909
C&D Technologies Inc. 1,327
23,660
Cable Design Technologies Corp.* 2,196
23,278
Cascade Corp. 556
17,375
C-COR.net Corp.* 2,246
23,111
Central Freight Lines Inc* 448
3,584
Champion Enterprises Inc.* 3,678
33,764
Coachmen Industries Inc. 736
11,769
Cognex Corp. 2,085
80,231
Cohu Inc. 1,120
21,325
Collins & Aikman Corp.* 2,000
11,180
Continental Airlines* 3,457
39,306
Cooper Tire & Rubber Co 3,443
79,189
Covenant Transport Inc.* 455
7,776
Credence Systems Corp* 5,026
69,359
CTS Corp. 1,884
22,721
Cuno Inc.* 885
47,215
Curtiss-Wright Corp. 1,096
61,584
Cymer Inc* 1,920 $
71,885
Darling International Inc* 3,334
14,003
Ddi Corp* 1,362
11,209
Delta Air Lines* 5,593
39,822
Dionex Corp.* 969
53,460
Dominion Homes Inc.* 208
4,805
Ducommun Inc.* 380
8,124
DuPont Photomasks Inc.* 765
15,552
Duratek Inc* 532
8,039
EGL Inc.* 1,867
49,662
Electro Scientific Industries Inc.* 1,467
41,531
Engineered Support Systems Inc. 1,163
68,047
Enpro Industries Inc* 1,083
24,887
Entegris Inc.* 2,276
26,333
ESCO Technologies Inc.* 676
36,071
Esterline Technologies Corp.* 1,106
32,660
ExpressJet Holdings Inc.* 1,956
23,746
Faro Technologies Inc* 552
14,170
Federal Signal Corp. 2,513
46,767
FEI Co.* 1,245
29,768
Flanders Corporation* 683
5,648
Fleetwood Enterprises Inc.* 2,801
40,755
Florida East Coast Industries Inc. 1,125
43,481
Flowserve Corporation* 2,833
70,655
Forward Air Corp.* 1,123
42,000
Franklin Electric Co. Inc. 839
31,681
Frontier Airlines Inc.* 1,855
20,182
FSI International Inc.* 1,560
12,184
Gardner Denver Inc.* 1,032
28,793
General Binding Corp.* 312
4,833
General Cable Corp.* 2,052
17,545
Genesee & Wyoming Inc.* 806
19,102
Genlyte Group Inc.* 634
39,866
GoodYear Tire & Rubber Co* 7,949
72,256
Gorman-Rupp Co. 383
10,406
Greenbrier Companies Inc* 296
5,639
GulfMark Offshore Inc.* 755
11,914
Hayes Lemmerz International* 1,970
29,747
Headwaters Inc.* 1,753
45,455
Heartland Express Inc. 1,580
43,229
Heico Corp. 1,017
18,560
Helix Technology Corp. 1,364
29,094
Hub Group Inc* 304
10,366
IDEX Corp. 2,619
89,963
Imagistics International Inc.* 870
30,798
Intac International* 411
5,051
InterDigital Communications Corp.* 2,901
54,568
Intevac, Inc.* 874
7,752
Ionics Inc.* 961
27,148
Itron Inc.* 1,089
24,982
JLG Industries Inc. 2,282
31,697
Joy Global Inc. 2,655
79,491
Kadant Inc.* 747
17,278
Kansas City Southern* 3,272
50,716
Keithley Instruments Inc. 657
14,553
Kennametal Inc. 1,905
87,249
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
CAPITAL GOODS - 11.58% (CONTINUED)
Keystone Automotive Industries Inc.* 793 $
22,117
Kimball International Inc 1,131
16,682
Kirby Corp.* 1,132
44,035
Knight Transportation Inc.* 1,275
36,631
Kulicke & Soffa Industries Inc.* 2,654
29,088
Laidlaw International Inc* 5,421
70,256
Landstar System Inc.* 1,556
82,266
Levitt Corporation* 800
20,608
Lincoln Electric Holdings Inc. 1,755
59,828
Lindsay Manufacturing Co. 614
14,748
Littelfuse Inc.* 1,152
48,856
LTX Corp.* 3,180
34,376
M/I Schottenstein Homes Inc. 633
25,700
MagneTek Inc.* 1,236
10,308
Manitowoc Co. 1,395
47,221
Marine Products Corp. 452
8,385
Marten Transport Ltd* 477
8,896
MasTec Inc.* 1,226
6,657
Mattson Technology Inc.* 2,083
25,038
Measurement Specialties Inc* 558
12,053
Meritage Corp.* 553
38,046
Mesa Air Group Inc.* 1,656
13,397
Metrologic Instruments Inc* 548
10,927
Middleby Corp 233
12,726
Milacron Inc.* 2,001
8,004
Mine Safety Appliances Co.* 1,126
37,946
Mks Instruments Inc* 1,693
38,634
Modine Manurfacturing Co 1,240
39,494
Monaco Coach Corp. 1,363
38,396
Moog Inc 1,359
50,432
Mtc Technologies Inc* 378
9,760
MTS Systems Corp 1,106
25,936
Mykrolis Corp.* 2,155
37,540
NACCO Industries Inc. 245
23,275
Noble International Ltd 331
8,199
Nordson Corporation 1,386
60,111
Northwest Airlines Corp* 3,905
43,424
Offshore Logistics Inc.* 1,055
29,667
Old Dominion Freight Line* 860
25,353
Orbital Sciences Corp.* 2,542
35,105
Orleans Homebuilders Inc* 127
2,447
Overnite Corp 1,463
43,012
Overseas Shipholding Group Inc 1,405
62,003
P.A.M. Transportation Services Inc.* 333
6,360
Pacer International Inc* 1,443
26,696
Palm Harbor Homes Inc.* 496
8,794
Paxar Corp.* 1,805
35,234
Photon Dynamics Inc.* 869
30,476
Photronics Inc.* 1,698
32,160
Pinnacle Airlines Corporatio* 1,013
11,447
Powell Industries Inc.* 355
6,063
Power-One Inc.* 3,335
36,618
Powerwave Technologies Inc.* 5,484
42,227
Presstek Inc.* 1,342
14,104
Quality Distribution Inc* 400
4,412
Quixote Corp. 392
7,860
Rae Systems Inc* 1,803 $
9,736
RailAmerica Inc.* 1,786
26,076
Rayovac Corp.* 1,799
50,552
Regal-Beloit Corp. 1,277
28,426
Republic Airways Holdings Inc* 261
3,719
Robbins & Myers Inc.* 568
12,752
Rofin-Sinar Technologies Inc* 779
19,779
Rudolph Technologies Inc.* 671
12,205
Sauer-Danfoss Inc. 525
8,962
Sba Communications Corp* 2,126
9,461
SCS Transportation, Inc.* 776
20,479
Seabulk International Inc* 303
2,500
Semitool Inc.* 850
9,622
Skyline Corp.* 356
14,471
Skywest Inc 3,032
52,787
Sonic Solutions* 911
19,359
Spatialight Inc* 1,226
7,417
SpectraLink Corp. 994
14,811
Sports Resorts International Inc.* 73
277
Standard Motor Products Inc. 656
9,663
Standex International Corp. 637
17,326
Stewart & Stevenson Services 1,500
26,880
Stoneridge Inc.* 812
13,804
Strattec Security Corp.* 200
13,686
Superior Industries 1,166
39,003
Swift Transportation* 2,591
46,508
Symmetricom Inc* 2,344
20,862
Taser International Inc* 1,258
54,509
TBC Corp.* 1,033
24,585
Technical Olympic USA Inc. 480
10,694
Technitrol Inc.* 2,107
46,143
Tecumseh Products Co. 859
35,382
Teledyne Technologies Inc.* 1,695
33,934
Tennant Co. 397
16,456
Tenneco Automotive Inc.* 2,188
28,947
Terayon Communication Systems Inc.* 3,488
8,162
Terex Corp.* 2,575
87,885
Thomas & Betts Corp. 3,068
83,542
Thomas Industries Inc. 758
25,166
Thomas Nelson Inc. 524
11,916
Thor Industries Inc. 1,870
62,570
Tower Automotive Inc.* 3,031
11,033
Transact Technologies, Inc.* 446
14,103
TRC Cos. Inc.* 475
7,923
Triumph Group Inc.* 828
26,438
U S Xpress Enterprises Inc* 300
4,719
Ultratech Stepper Inc.* 1,107
18,022
United Industrial Corp. 554
12,936
USFreightways Corp. 1,448
50,868
Varian Semiconductor Equipment Associates Inc.* 1,896
73,110
Veeco Instruments Inc.* 1,349
34,818
Vicor Corp.* 998
18,233
Viisage Technology Inc* 1,194
10,412
Visteon Corp. 6,760
78,889
Wabash National Corp.* 1,415
38,983
Wabtec 2,074
37,415
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
CAPITAL GOODS - 11.58% (CONTINUED)
Watts Industries Inc. 1,252 $
33,741
Werner Enterprises Inc. 2,504
52,834
William Lyon Homes Inc.* 219
20,181
Winnebago Industries Inc. 1,356
50,552
Woodhead Industries Inc. 632
9,771
Woodward Governor Co. 507
36,560
X-Rite Inc. 1,083
15,747
Zygo Corp.* 933
10,440
---------
- -----
6,700,808
---------
- -----
CONSUMER CYCLICALS - 17.34%
1-800 Contacts Inc.* 380
5,637
1-800-FLOWERS.COM Inc.* 1,157
9,418
24/7 Real Media Inc* 1,135
6,367
4 Kids Entertainment Inc.* 722
17,270
99(Cents) Only Stores* 2,557
38,994
A.C. Moore Arts & Crafts Inc.* 717
19,725
Aaron Rents Inc. 1,320
43,745
ABM Industries Inc. 1,961
38,181
Action Performance Cos. 808
12,177
Administaff Inc.* 1,130
18,758
Advanced Marketing Services Inc. 743
9,592
Advisory Board Co.* 924
32,894
Advo Inc. 1,584
52,145
Aeropostale Inc.* 2,895
77,904
Alderwoods Group Inc.* 2,089
25,486
Alliance Gaming Corp.* 2,686
46,092
Alloy Inc.* 1,719
10,572
Ambassadors Group Inc. 418
9,827
AMC Entertainment Inc.* 1,633
25,099
Amerco* 486
11,543
American Greetings Corp* 3,314
76,819
American Woodmark Corp. 280
16,758
Americas Car-Mart Inc* 293
8,798
Ameristar Casinos Inc. 596
20,014
Amn Healthcare Services Inc* 599
9,159
Angelica Corp. 466
11,701
Applica Inc.* 1,023
9,105
Aquantive Inc.* 2,479
24,493
Arbitron Inc.* 1,615
58,980
Argosy Gaming Co.* 1,361
51,174
Asbury Automotive Group Inc.* 585
8,775
Atari Inc* 481
1,159
Autobytel Inc* 2,169
19,695
Aztar Corp.* 1,804
50,512
Banta Corp 1,300
57,733
Bassett Furniture Industries Inc. 538
11,707
Beasley Broadcast Group Inc.* 281
4,204
bebe Stores Inc.* 314
6,280
Big 5 Sporting Goods Corp* 1,061
27,788
Blair Corp. 425
12,283
Blue Nile Inc* 196
7,372
BLYTH Inc. 1,675
57,771
Bob Evans Farms Inc 1,839
50,352
Boca Resorts Inc.* 1,135
22,496
Bombay Co.* 1,856
11,377
Bon-Ton Stores 270 $
3,957
Bowne & Co. 1,827
28,958
Boyd Gaming Corp. 1,824
48,464
Bright Horizons Family Solutions Inc.* 689
36,937
Brightpoint Inc* 1,008
13,860
Brookstone Inc.* 1,047
20,992
Brown Shoe Co. Inc. 945
38,679
Buckle Inc. 396
11,187
Buffalo Wild Wings Inc* 297
8,212
Burlington Coat Factory Warehouse Corp. 956
18,451
Cache Inc.* 333
4,499
California Pizza Kitchen Inc.* 999
19,141
Callaway Golf Co 3,512
39,826
Carmike Cinemas Inc.* 400
15,780
Carter'S Inc* 344
10,014
Casella Waste Systems Inc.* 1,026
13,492
Casual Male Retail Group Inc* 1,468
10,716
Catalina Marketing Corp* 2,723
49,804
Cato Corp. 1,018
22,854
CBRL Group 2,590
79,902
CDI Corp. 643
22,248
Cec Entertainment Inc* 1,951
57,574
Central European Distribution Corp* 640
16,582
Central Garden & Pet Co.* 880
31,477
Central Parking Corp. 966
18,055
Century Business Services Inc.* 3,300
14,387
Charles River Associates Inc.* 531
16,434
Charlotte Russe Holding Inc.* 606
12,956
Charming Shoppes Inc.* 6,008
53,651
Charter Communications* 14,064
55,130
Chemed Corp 633
30,701
Cherokee Inc. 354
8,882
Chicago Pizza & Brewery Inc.* 561
8,533
Children's Place Retail Stores Inc.* 884
20,792
Christopher & Banks Corp 1,962
34,747
Churchill Downs Inc. 399
16,239
CKE Restaurants Inc.* 2,702
36,018
Clark Inc* 842
15,619
Cmgi Inc* 19,679
38,374
CNET Networks Inc.* 6,659
73,715
Coinstar Inc.* 1,113
24,453
Coldwater Creek Inc.* 764
20,223
Cole National Corp.* 705
16,462
Conn'S Inc* 362
5,705
Consolidated Graphics Inc.* 589
25,945
Cornell Cos. Inc.* 695
9,452
Corrections Corp. of America* 1,835
72,464
Cosi Inc* 1,074
6,412
Cost Plus Inc.* 1,141
37,025
CoStar Group Inc.* 838
38,489
Courier Corp. 337
14,066
Cross Country Healthcare Inc* 1,199
21,762
Crown Media Holdings Inc.* 759
6,467
CSK Auto Corp.* 2,429
41,633
CSS Industries Inc. 363
12,720
Cumulus Media Inc* 2,572
43,235
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
CONSUMER CYCLICALS - 17.34% (CONTINUED)
Dave & Buster's Inc.* 580 $
10,898
Deb Shops Inc. 222
5,341
Deckers Outdoor Corp* 468
13,801
Del Laboratories Inc.* 256
7,941
DiamondCluster International Inc.* 1,375
11,949
Dicks Sporting Goods Inc* 1,573
52,460
Digital Theater Stystems Inc* 878
22,960
Dollar Thrifty Automotive Group Inc.* 1,318
36,166
DoubleClick Inc.* 6,314
49,060
Dover Downs Gaming & Entertainment Inc. 530
5,963
Dover Motorsports Inc. 815
3,260
Dress Barn Inc.* 1,071
18,336
drugstore.com inc.* 2,312
8,069
EarthLink Inc.* 7,233
74,862
Electronics Boutique Holdings Corp.* 607
15,988
Elizabeth Arden Inc.* 1,051
22,113
Emmis Communications Corp* 2,559
53,688
Empire Resorts Inc* 447
6,280
Entravision Communications* 2,518
19,338
Escalade Inc. 410
9,475
Ethan Allen Interiors 1,721
61,801
Exponent Inc* 314
8,437
Exult Inc.* 2,630
14,149
Findwhat.Com* 1,015
23,487
Finish Line Inc.* 980
29,567
First Advantage Corp* 161
3,043
Fisher Communications Inc.* 340
17,112
Forrester Research Inc.* 713
13,297
Fred's Inc. 2,043
45,130
FreeMarkets Inc.* 1,962
12,792
FTI Consulting Inc.* 2,223
36,680
Furniture Brands International 2,720
68,136
G&K Services Inc. 911
36,613
Gamestop Corp* 770
11,719
Gander Mountain Co* 299
6,862
Gaylord Entertainment Co.* 1,592
49,973
Genesco Inc.* 1,138
26,891
Geo Group Inc* 433
8,833
Gevity HR Inc 1,237
32,397
Global Imaging Systems Inc.* 1,145
41,976
Goody's Family Clothing Inc. 983
10,194
Gray Television, Inc. 2,343
32,544
Grey Global Group Inc. 45
44,325
Group 1 Automotive Inc.* 1,017
33,775
GSI Commerce Inc.* 1,010
9,726
Guess? Inc.* 778
12,526
Guitar Center Inc.* 1,271
56,521
Gymboree Corp.* 1,595
24,499
Hancock Fabrics Inc. 986
12,572
Handleman Co. 1,246
28,857
Harris Interactive Inc.* 2,558
17,190
Hartmax Corp 1,194
7,522
Haverty Furniture Cos. Inc. 969
16,938
Heidrick & Struggles International Inc.* 874
25,940
Hibbett Sporting Goods Inc.* 1,222
33,422
Hollinger International Inc. 2,997
50,320
Hollywood Entertainment Corp.* 2,747 $
36,700
Hooker Furniture Corp 358
7,221
Hot Topic Inc.* 2,519
51,614
Hudson Highland Group Inc* 520
15,943
IHOP Corp. 1,118
39,980
Information Holdings Inc.* 619
16,942
Infospace Inc* 1,666
63,375
InfoUSA Inc.* 1,660
16,832
Insight Communications Co. Inc.* 2,325
21,530
Insight Enterprises Inc.* 2,526
44,862
Insurance Auto Auctions Inc.* 451
7,667
Inter Parfums Inc. 264
5,504
Internap Network Services* 12,347
14,940
Ipass Inc* 2,307
24,431
Isle of Capri Casinos Inc.* 704
12,285
Ivillage Inc.* 1,389
8,820
J. Jill Group Inc.* 927
21,868
Jack in the Box Inc.* 1,906
56,608
JAKKS Pacific Inc.* 1,323
27,505
Jarden Corp.* 1,420
51,106
Jo-Ann Stores Inc* 985
28,959
John H. Harland Co.* 1,471
43,174
Jos A Bank Clothiers Inc* 427
13,404
Journal Communications Inc 1,054
19,847
Journal Register Co.* 2,190
43,800
K2 Inc.* 1,656
25,999
Kellwood Co. 1,418
61,754
Kelly Services 919
27,386
Kenneth Cole Productions Inc. 435
14,907
Kforce Inc.* 1,333
12,584
Kirklands Inc* 578
6,896
Korn/Ferry International* 1,633
31,631
Krispy Kreme Doughnuts* 2,866
54,712
Kroll Inc.* 1,868
68,892
K-Swiss Inc. 1,351
27,304
Labor Ready Inc.* 2,161
33,496
Lakes Entertainment Inc* 800
9,272
Landry's Restaurants Inc. 1,124
33,596
Lawson Products Inc. 256
9,766
La-Z-Boy Chair Co 2,746
49,373
Leapfrog Enterprises Inc* 1,434
28,522
Learning Tree International Inc.* 460
6,675
Lecg Corp* 681
11,788
Libbey Inc. 713
19,793
Liberty Corp. 820
38,499
Lifeline Systems Inc.* 578
13,675
Lifetime Hoan Corp 373
8,501
LIN TV Corp* 1,402
29,722
Linens 'N Things Inc.* 2,355
69,025
Lithia Motors Inc. 745
18,461
Lkq Corp.* 762
14,120
LodgeNet Entertainment Corp.* 523
8,630
Lone Star Steakhouse & Saloon Inc. 829
22,541
LookSmart Ltd.* 4,986
10,820
Magna Entertainment Corp.* 1,968
11,611
Mannatech Inc 741
7,114
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
CONSUMER CYCLICALS - 17.34% (CONTINUED)
Manning (Greg) Auctions Inc* 263 $
4,024
Marchex Inc* 214
2,388
Marcus Corp. 1,030
17,768
MarineMax Inc.* 608
17,437
MarketWatch.Com Inc* 545
6,393
Martha Stewart Living Omnimedia Inc.* 608
5,472
Matthews International Corp. 1,681
55,372
Maximus Inc.* 974
34,538
Maxwell Shoe Co.* 775
18,011
Medical Staffing Networks Holdings Inc.* 633
4,077
MemberWorks Inc.* 307
9,093
Men's Wearhouse Inc.* 1,650
43,544
Midas Inc.* 807
14,042
Midway Games Inc.* 1,952
22,487
Monro Muffler Brake Inc.* 490
11,887
Movado Group Inc. 794
13,697
Movie Gallery Inc. 1,389
27,155
MPS Group Inc* 5,489
66,527
MTR Gaming Group Inc.* 1,212
13,271
Multimedia Games Inc.* 1,235
33,123
National Presto Industries Inc. 245
10,101
Nautilus Group Inc. 1,495
29,167
Navarre Corp* 1,092
15,714
Navigant Consulting Inc.* 2,397
51,392
Navigant International Inc.* 734
13,058
Neoforma Inc.* 481
5,839
NetRatings Inc.* 641
10,442
Nevada Gold & Casinos Inc* 390
5,246
Nexstar Broadcasting Group* 526
5,775
NIC Inc.* 1,626
11,658
Nu Skin Enterprises Inc. 2,744
69,478
Oakley Inc. 1,080
13,975
O'Charley's Inc.* 1,108
19,047
Orbitz Inc* 639
13,815
Oshkosh B'Gosh Inc 348
8,690
Overstock.com Inc.* 568
22,197
Oxford Industries Inc. 693
30,187
P.F. Chang's China Bistro Inc.* 1,336
54,976
Panera Bread Co.* 1,482
53,174
Pantry Inc* 606
13,211
Papa John's International Inc.* 607
17,931
Party City Corp.* 596
7,444
Paxson Communications Corp. 2,368
7,696
Payless Shoesource Inc.* 3,553
52,975
PC Connection Inc.* 376
2,474
Pc Mall Inc* 406
7,665
PDI Inc.* 440
13,345
Pegasus Solutions Inc.* 1,214
15,940
Penn National Gaming Inc.* 1,672
55,510
Pep Boys-Manny Moe & Jack 3,015
76,430
Perry Ellis International* 283
7,149
Petmed Express Inc* 489
3,921
Phillips-Van Heusen Corp. 1,266
24,371
Pinnacle Entertainment Inc.* 1,855
23,392
PLATO Learning Inc.* 1,200
11,892
Playboy Enterprises Inc.* 1,020
11,842
Playtex Products Inc.* 1,816 $
14,201
Pre-Paid Legal Services Inc.* 546
13,011
Priceline.Com Inc* 1,246
33,555
Prime Hospitality Corp.* 1,973
20,953
PRIMEDIA Inc.* 6,891
19,157
Princeton Review Inc.* 861
6,518
ProQuest Co.* 1,249
34,035
Pulitzer Inc. 437
21,369
Quiksilver Inc.* 2,908
69,239
R.H. Donnelley Corp.* 1,176
51,438
Rare Hospitality International Inc.* 1,775
44,198
RC2 Corp* 742
26,341
Reader's Digest Association 5,170
82,668
Red Robin Gourmet Burgers* 625
17,106
Regent Communications Inc.* 1,820
11,266
Renaissance Learning Inc. 397
8,901
Rent-Way Inc.* 1,369
12,321
Resources Connection Inc.* 1,208
47,245
Restoration Hardware Inc.* 1,373
10,037
Retail Ventures Inc* 691
5,348
Revlon Inc.* 7,621
22,482
Rewards Networks Inc.* 834
7,506
Rollins Inc. 1,020
23,470
Rush Enterprises Inc* 305
3,935
Russ Berrie & Co. 418
8,122
Russell Corp. 1,493
26,814
Ryan'S Restaurant Group Inc* 2,196
34,697
Saga Communications Inc.* 853
15,567
Salem Communications Corp.* 501
13,592
Schawk Inc. 474
6,622
Scholastic Corp.* 1,576
47,201
School Specialty Inc.* 992
36,020
Scientific Games Corp.* 2,897
55,449
SCP Pool Corp. 1,857
83,565
Select Comfort Corporation* 1,901
53,988
Sharper Image Corp.* 612
19,211
Shoe Carnival Inc.* 385
5,779
Shopko Stores Inc.* 1,533
21,677
Shuffle Master Inc.* 1,211
43,971
Sinclair Broadcast Group Inc. 2,338
24,011
SITEL Corp.* 3,043
12,841
Six Flags Inc.* 4,859
35,276
Skechers USA Inc.* 1,036
13,468
Sohu.Com Inc* 1,153
22,922
Sonic Automotive Inc 1,446
32,029
Sonic Corp.* 3,100
70,525
Source Interlink Cos Inc* 1,027
11,420
SOURCECORP, Incorporated* 841
23,144
Spanish Broadcasting System Inc.* 1,930
17,968
Speedway Motorsports Inc. 773
25,849
Spherion Corp.* 3,153
31,971
Sports Authority Inc* 1,163
41,752
Stage Stores Inc.* 979
36,869
Stamps.Com Inc* 877
8,937
Stanley Furniture Co. 292
12,296
StarTek Inc. 568
20,334
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
9
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
CONSUMER CYCLICALS - 17.34% (CONTINUED)
Steak N Shake Co. 1,269 $
23,121
Stein Mart Inc.* 1,292
21,008
Steinway Musical Instruments Inc. 351
12,317
Steven Madden Ltd.* 606
12,102
Stewart Enterprises Inc.* 5,608
45,649
Strayer Education Inc. 727
81,111
Stride Rite Corp. 2,040
22,501
Sturm Ruger & Co. 1,106
13,394
Systemax Inc* 503
3,370
Take-Two Interactive Software Inc.* 2,329
71,361
Teletech Holdings Inc.* 1,965
17,233
Tempur-Pedic International* 982
13,758
Tetra Tech Inc.* 2,919
47,638
THQ Inc.* 1,988
45,525
TiVo Inc.* 2,383
16,895
Too Inc.* 1,798
30,027
Topps Co. 1,851
17,955
Toro Co. 1,264
88,568
Tractor Supply Co.* 1,624
67,916
Trans World Entertainment Corp.* 1,213
12,154
Travelzoo* 81
2,413
Tuesday Morning Corp.* 1,344
38,976
Tupperware Corp 2,724
52,927
UniFirst Corp. 472
13,730
United Auto Group Inc. 1,000
30,650
United Natural Foods Inc.* 2,068
59,786
United Online Inc.* 2,780
48,956
United Stationers Inc.* 1,768
70,225
Universal Electronics Inc.* 704
12,341
Universal Technical Institute* 738
29,498
Usana Health Sciences Inc* 549
17,063
Vail Resorts Inc.* 1,025
19,639
Valassis Communication* 2,721
82,909
ValueClick Inc.* 4,129
49,465
ValueVision Media Inc.* 938
12,213
Vans Inc.* 938
19,276
Ventiv Health Inc* 964
14,923
Volt Information Sciences Inc.* 413
13,014
Warnaco Group Inc (The)* 2,397
50,984
Waste Connections Inc.* 2,279
67,595
Water Pik Technologies Inc.* 518
8,578
Watson Wyatt & Co. Holdings 1,682
44,825
Wesco International Inc.* 936
17,222
West Marine Inc.* 701
18,822
Weyco Group Inc 142
4,869
Wireless Facilities Inc.* 2,474
24,319
WMS Industries Inc.* 1,014
30,217
Wolverine World Wide Inc. 2,076
54,495
World Fuel Services Corp. 586
26,417
World Wrestling Entertainment Inc. 697
8,887
Yankee Candle Co. Inc.* 2,596
75,933
Young Broadcasting Inc* 845
11,112
Zale Corp* 2,770
75,510
---------
- -----
10,026,983
---------
- -----
CONSUMER STAPLES - 1.62%
American Italian Pasta Co. 838 $
25,542
Arden Group Inc 73
6,542
Boston Beer Co.* 411
8,278
Cal-Maine Foods Inc 783
10,962
Casey's General Stores Inc. 2,611
47,781
Chiquita Brands International Inc.* 2,127
44,497
Coca-Cola Bottling Co. Consolidated 207
11,983
DIMON Inc. 2,356
13,476
Duane Reade Inc.* 1,278
20,870
Farmer Bros. Co. 351
9,417
Flowers Foods Inc. 1,855
48,508
Great Atlantic & Pacific Tea Co.* 863
6,611
Hain Celestial Group Inc.* 1,342
24,290
Hansen Natural Corp* 314
7,954
Ingles Markets Inc. 533
5,954
Interstate Bakeries Corp 2,370
25,715
J&J Snack Foods Corp.* 316
12,902
J.M. Smucker Co. 1
45
John B. Sanfilippo & Son* 329
8,791
Lance Inc. 1,340
20,636
Longs Drug Stores Corp 1,578
37,667
M & F Worldwide Corp* 531
7,275
Maui Land & Pineapple Co. Inc.* 168
5,712
Nash Finch Co 642
16,069
National Beverage Corp.* 376
3,734
Nature's Sunshine Products Inc. 541
7,704
Nutraceutical Intl Corp* 411
8,758
Omega Protein Corp* 311
3,017
Pathmark Stores Inc.* 1,570
11,963
Peet's Coffee and Tea Inc.* 613
15,319
Performance Food Group Co* 2,421
64,253
Provide Commerce Inc* 228
4,494
Ralcorp Holdings Inc.* 1,526
53,715
Riviana Foods Inc. 320
8,374
Robert Mondavi Corp.* 511
18,917
Ruddick Corp. 1,725
38,726
Sanderson Farms Inc. 538
28,849
Seaboard Corp. 18
8,963
Sensient Technologies Corp 2,443
52,476
Smart & Final Inc.* 652
7,837
Standard Commercial Corp. 527
9,512
Star Scientific Inc* 1,339
5,302
Universal Corp. 1,313
66,884
Vector Group Ltd. 1,197
18,853
Weis Markets Inc. 586
20,539
Wild Oats Markets Inc.* 1,584
22,287
Winn-Dixie 4,291
30,895
---------
- -----
938,848
---------
- -----
ENERGY - 4.28%
Atlas America Inc* 120
2,401
Atwood Oceanics Inc.* 567
23,672
Berry Petroleum Co. 945
27,792
Brigham Exploration Co* 1,159
10,640
Cabot Oil & Gas Corp. 1,718
72,671
Cal Dive International Inc.* 1,996
60,519
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
ENERGY - 4.28% (CONTINUED)
Callon Petroleum Company* 537 $
7,658
Calpine Corp.* 21,728
93,865
Capstone Turbine Corp.* 4,347
9,461
Carbo Ceramics Inc. 663
45,250
Cheniere Energy Inc* 986
19,296
Cimarex Energy Co* 2,161
65,327
Clayton Williams Energy Inc* 231
5,521
Comstock Resources Inc.* 1,811
35,242
Crosstex Energy Inc 124
4,972
Delta Petroleum Corp* 829
11,150
Denbury Resources Inc.* 2,855
59,812
Department 56 Inc.* 691
10,641
Dril-Quip Inc.* 340
6,358
Edge Petroleum Corp* 676
11,492
Encore Acquisition Co.* 1,170
32,643
Energy Partners Ltd.* 1,261
19,293
Forest Oil Corp* 2,398
65,514
Frontier Oil Corp. 1,386
29,369
FuelCell Energy Inc.* 2,205
25,755
Fx Energy Inc* 1,396
12,438
Giant Industries Inc* 555
12,210
Glimcher Realty Trust* 1,854
41,010
Global Industries Ltd.* 4,242
24,265
Global Power Equipment Group Inc.* 1,766
14,164
Grey Wolf Inc.* 9,730
41,255
Gulf Island Fabrication Inc. 418
9,041
Hanover Compressor Co.* 4,012
47,743
Harvest Natural Resources Inc.* 1,877
27,986
Helmerich & Payne 2,632
68,827
Holly Corp. 531
19,859
Hornbeck Offshore Services* 317
4,143
Houston Exploration Co.* 749
38,828
Hydril Co.* 832
26,208
Input/Output Inc.* 2,322
19,249
Kcs Energy Inc* 2,553
34,006
Key Energy Services Inc.* 6,818
64,362
KFX Inc* 2,193
16,711
Lufkin Industries Inc. 353
11,289
Magnum Hunter Resources Inc.* 3,624
37,617
Matrix Service Co* 895
8,189
Mcmoran Exploration Co* 691
10,766
Meridian Resource Corp.* 2,736
18,988
Mission Resources Corp* 2,119
12,078
Newpark Resources Inc.* 4,377
27,137
Oceaneering International Inc.* 1,303
44,628
Oil States International Inc.* 1,517
23,210
Parker Drilling Co.* 4,924
18,810
Penn Virginia Corp. 952
34,377
Petroleum Development Corp* 848
23,252
Plains Exploration & Production Co* 4,021
73,785
Plains Resources Inc.* 1,274
21,594
Plug Power Inc.* 2,529
18,917
Prima Energy Corp.* 486
19,231
Quicksilver Resources Inc.* 771
51,711
Range Resources Corp. 3,528
51,509
Remington Oil & Gas Corp.* 1,128
26,621
Resource America Inc. 776 $
18,314
RPC Inc. 498
7,863
SEACOR SMIT Inc.* 969
42,568
Spinnaker Exploration Co.* 1,310
51,588
St. Mary Land & Exploration Co. 1,491
53,154
Stone Energy Corp.* 1,203
54,953
Superior Energy Services Inc.* 2,832
28,462
Swift Energy Co.* 1,447
31,921
Syntroleum Corp.* 1,466
9,705
Tesoro Petroleum Corp.* 3,422
94,447
Tetra Technologies Inc.* 1,165
31,280
Todco* 630
9,746
Transmontaigne Inc.* 1,134
6,102
Unit Corp.* 1,970
61,957
Universal Compression Holdings Inc.* 898
27,551
Veritas DGC Inc.* 1,776
41,114
Vintage Petroleum Inc. 2,655
45,055
W-H Energy Services Inc* 1,277
25,029
Whiting Petroleum Corp* 928
23,339
---------
- -----
2,476,476
---------
- -----
FINANCIAL - 20.88%
1st Source Corp. 615
15,363
21st Century Insurance Group 1,156
14,958
ABC Bancorp 510
10,373
Acadia Realty Trust 1,280
17,587
Accredited Home Lenders* 854
24,040
Ace Cash Express Inc.* 471
12,100
Advanta Corp 1,026
23,516
Advent Software Inc* 1,233
22,280
Affiliated Managers Group* 1,272
64,071
Affordable Residential Communities Inc. 1,290
21,414
Alabama National BanCorp 624
34,613
Alexander's Inc.* 100
16,774
Alexandria Real Estate Equities Inc. 1,012
57,461
Alfa Corp. 1,724
24,136
Amcore Financial Inc. 1,310
39,510
American Equity Invt Life* 1,060
10,547
American Financial Realty 5,727
81,839
American Home Mortgage Investment Corp 1,813
47,011
American Physicians Capital Inc.* 444
10,279
Americanwest Bancorporation* 533
10,207
Amerus Group Co 2,054
85,036
AMLI Residential Properties Trust 1,321
38,758
Anchor Bancorp Wisconsin Inc. 1,028
27,180
Anthracite Capital Inc. 2,641
31,639
Anworth Mortgage Asset Corp. 2,331
27,691
Apollo Investment Corp* 3,238
44,587
Arbor Realty Trust Inc 366
7,302
Argonaut Group Inc.* 1,222
22,521
Arrow Financial Corp. 439
13,368
Ashford Hospitality Trust 1,046
8,734
Asset Acceptance Capital* 410
6,970
Asta Funding Inc 485
8,439
Baldwin & Lyons Inc 418
11,219
BancFirst Corp. 167
9,978
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
11
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
FINANCIAL - 20.88% (CONTINUED)
Bancorpsouth Inc. 4,032 $
90,841
Banctrust Financial Group Inc 446
7,814
Bank Mutual Corporation 4,115
44,854
Bank of Granite Corp. 707
14,783
Bank of the Ozarks Inc. 556
12,955
BankAtlantic Bancorp Inc. 2,222
40,996
BankUnited Financial Corp* 1,389
35,836
Banner Corp. 528
15,344
Bedford Property Investors Inc. 756
22,105
Berkshire Hills Bancorp Inc. 278
10,314
Bfc Financial Corporation* 361
4,260
BISYS Group* 6,286
88,381
BKF Capital Group Inc. 320
9,296
Boston Private Financial Holdings Inc. 1,426
33,026
Brandywine Realty Trust 2,137
58,104
Bristol West Holdings Inc 790
14,370
Brookline Bancorp Inc. 3,082
45,213
Bryn Mawr Bank Corp. 368
8,372
BSB Bancorp Inc. 437
15,535
Camden National Corp. 404
13,360
Capital Automotive REIT 1,625
47,661
Capital City Bank Group Inc. 463
18,330
Capital Corp Of The West 263
10,215
Capital Crossing Bank* 110
6,141
Capital Lease Funding* 1,182
12,293
Capital Southwest Corp 143
11,301
Capital Trust 321
8,577
Capstead Mortgage Corp. 776
10,437
Carramerica Realty Corp 2,838
85,793
Carreker Corp.* 1,056
10,581
Cascade Bancorp 869
16,059
Cash America International Inc. 1,480
34,040
Cathay Bancorp Inc. 1,132
75,504
CB Bancshares Inc. 230
21,436
CCC Information Services Group Inc.* 662
11,115
Cedar Shopping Centers 859
9,870
Center Financial Corp 503
7,620
Central Coast Bancorp* 468
8,563
Central Pacific Financial Co 841
23,128
Century Bancorp Inc 182
5,986
Ceres Group Inc.* 1,575
9,671
Charter Financial Corporation 207
7,038
Charter Municipal Mortgage Acceptance Co. 2,062
40,539
Chemical Financial Corp. 1,250
46,113
Chittenden Corp. 1,922
67,558
Circle Group Holdings* 1,049
5,402
Citizens Banking Corp 2,263
70,266
Citizens First Bancorp Inc. 445
10,595
Citizens Inc.* 1,530
12,546
City Bank 403
12,904
City Holding Co. 873
27,569
Clark/Bardes Inc. 531
13,811
Clifton Savings Bancorp Inc 718
8,480
CNA Surety Corp.* 813
8,902
Coastal Financial Corp. 609
9,105
CoBiz Inc. 673
9,308
Colonial Properties Trust 989 $
38,106
Columbia Bancorp 303
8,854
Columbia Banking System Inc. 733
16,273
Commerce Group Inc. 1,267
62,552
Commercial Capital Bancorp* 1,897
32,951
Commercial Federal Corp. 2,128
57,669
Commercial Net Lease Realty Inc. 2,697
46,388
Community Bank System Inc. 1,316
29,992
Community Banks Inc. 558
16,388
Community First Bankshares Inc. 1,926
61,998
Community Trust Bancorp Inc. 565
17,233
CompuCredit Corp.* 975
16,868
Corillian Corp* 1,694
8,538
Cornerstone Realty Income Trust Inc. 2,619
22,969
Corporate Office Properties Trust 1,774
44,084
Correctional Properties Trust 573
16,760
Corus Bankshares Inc. 813
33,422
Cousins Properties Inc 1,876
61,814
Crawford & Co 672
3,313
Credit Acceptance Corp.* 557
8,394
CVB Financial Corp. 1,914
41,687
Cybersource Corp* 1,427
11,930
Danielson Holding Corp* 2,383
16,467
Delphi Financial Group Inc. 1,290
57,405
Digital Insight Corp.* 1,832
37,977
Dime Community Bancshares 1,615
28,230
Direct General Corp 827
26,679
Donegal Group Inc 145
2,906
Donegal Group Inc Class A 182
3,656
Downey Financial Corp 1,023
54,475
East West Bancorp Inc. 2,612
80,188
EastGroup Properties Inc. 1,094
36,835
Education Lending Group Inc* 653
11,591
eFunds Corp.* 2,499
43,733
Electro Rent Corp.* 941
9,852
EMC Insurance Group Inc. 116
2,710
Encore Capital Group Inc* 633
8,362
Enstar Group Inc* 166
8,844
Entertainment Properties Trust 1,229
43,924
Equity Inns Inc. 2,373
22,045
Equity One Inc. 1,774
32,074
eSpeed Inc.* 1,258
22,204
Essex Property Trust Inc. 1,195
81,678
Euronet Worldwide Inc.* 1,175
27,178
Exchange National Bancshares Inc 1
15
FactSet Research Systems Inc. 1,063
50,248
Farmers Capital Bank Corp. 316
11,297
FBL Financial Group Inc. 650
18,369
Federal Agricultural Mortgage Corp.* 440
10,529
FelCor Lodging Trust Inc.* 2,576
31,170
Fidelity Bankshares Inc. 688
24,390
Financial Federal Corp.* 901
31,769
Financial Institutions Inc. 420
10,374
First Bancorp (North Carolina) 388
12,971
First Bancorp Of Puerto Rico 1,796
73,187
First Busey Corp. 461
13,480
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
FINANCIAL - 20.88% (CONTINUED)
First Cash Finl Svcs Inc* 613 $
13,045
First Charter Corp. 1,554
33,862
First Citizens Bancshares Inc NC 317
38,674
First Commonwealth Financial Corp. (Pennsylvania) 3,632
47,107
First Community Bancorp Inc. 679
26,101
First Community Bancshares, Inc. 524
17,554
First Federal Capital Corp. 1,041
28,971
First Financial Bancorp 1,831
32,445
First Financial Bankshares Inc. 714
29,938
First Financial Corp 706
22,521
First Financial Holdings Inc. 657
18,928
First Indiana Corp. 617
11,754
First Industrial Realty Trust Inc 2,153
79,403
First Merchants Corp. 968
25,120
First Midwest Bancorp Inc 2,431
85,596
First National Bankshares of Florida 2,498
47,332
First Niagara Financial Group Inc. 4,395
52,740
First Oak Brook Bancshares Inc. 350
10,605
First Place Financial Corp. 619
11,495
First Republic Bank 679
29,251
First Sentinel Bancorp Inc. 1,207
24,804
First State Bancorp 399
12,257
FirstFed Financial Corp.* 886
36,858
Flagstar Bancorp Inc. 1,662
33,041
Flushing Financial Corp. 883
15,585
FNB Corp. (VA) 379
10,923
FNB Corp. (PA) 2,417
49,307
FPIC Insurance Group Inc.* 419
10,345
Franklin Bank Corp/Houston* 555
8,780
Frontier Financial Corporation 846
29,559
Gabelli Asset Management Inc. 344
14,620
Gables Residential Trust 1,528
51,921
GATX Corp. 2,574
70,013
Gb&T Bancshares Inc 316
7,540
German American Bancorp 483
8,114
Getty Realty Corp. 915
23,021
Glacier Bancorp Inc. 1,279
36,029
Gladstone Capital Corp. 452
9,108
Glenborough Realty Trust Inc. 1,454
26,681
Gold Banc Corp. 2,093
32,442
Government Properties Trust 1,008
10,534
Great American Financial Resources Inc. 379
6,026
Great Southern Bancorp Inc. 542
15,854
Greater Bay Bancorp 2,682
77,510
Greenhill & Co Inc* 262
5,478
Hancock Holding Co. 1,452
42,195
Hanmi Financial Corp. 448
13,216
Harbor Florida Bancshares Inc. 1,086
29,876
Harleysville Group Inc. 675
12,724
Harleysville National Corp. 1,302
33,331
Harris & Harris Group Inc* 649
7,937
Healthcare Realty Trust Inc. 2,248
84,255
HealthExtras Inc.* 867
14,366
Heartland Financial USA Inc 480
8,808
Heritage Property Investment Trust Inc. 1,418
38,371
Highland Hospitality Corp* 1,806
18,150
Highwoods Properties Inc 2,801 $
65,824
Hilb, Rogal & Hamilton Co. 1,608
57,373
Home Properties of New York Inc. 1,709
66,617
Homestore Inc.* 4,973
19,842
Horace Mann Educators Corp. 2,231
38,998
Horizon Financial Corp 544
10,826
Hudson River Bancorp Inc. 1,585
27,056
Humboldt Bancorp 798
16,686
Hypercom Corp.* 2,662
22,494
IBERIABANK Corp. 327
19,352
IMPAC Mortgage Holdings Inc. 3,273
73,708
Independence Holding Co. 133
4,522
Independent Bank Corp. (Massachusetts) 767
22,205
Independent Bank Corp. (Michigan) 923
23,444
Infinity Property & Casualty 1,079
35,607
Innkeepers USA Trust 1,707
17,599
Integra Bank Corp. 799
17,602
Interactive Data Corporation* 1,920
33,446
InterCept Inc.* 865
14,169
Interchange Financial Services Corp. 576
14,331
International Bancshares Corp. 35
1,419
Intersections Inc.* 370
8,876
Investment Technology Group* 2,289
29,276
Investors Real Estate Trust* 2,148
22,296
Ipayment Inc* 548
22,468
Irwin Financial Corp. 914
24,130
ITLA Capital Corp.* 279
11,319
Jones Lang LaSalle Inc.* 1,665
45,122
K Fed Bancorp* 297
3,787
Kansas City Life Insurance Co. 192
8,081
Keystone Property Trust Corp. 1,429
34,339
Kilroy Realty Corp. 1,483
50,570
Knbt Bancorp Inc 1,595
26,637
Knight Trading Group Inc.* 6,059
60,711
Koger Equity Inc. 1,402
32,414
Kramont Realty Trust 1,256
20,096
Kronos Inc.* 1,622
66,826
La Quinta Corp.* 9,810
82,404
LaBranche & Co. 2,762
23,256
Lakeland Bancorp Inc. 687
11,088
Lakeland Financial Corp. 304
10,184
LandAmerica Financial Group Inc. 988
38,463
LaSalle Hotel Properties 1,447
35,307
Lexington Corporate Properties Trust 2,514
50,054
LTC Properties Inc. 770
12,782
Luminent Mortgage Capital In 1,905
22,860
Macatawa Bank Corp. 460
12,645
MAF Bancorp Inc. 1,454
62,057
Maguire Properties Inc 1,773
43,917
Main Street Banks Inc. 709
19,923
MainSource Financial Group Inc. 486
9,866
Manufactured Home Communities Inc. 973
32,294
Marlin Business Services Inc* 310
4,659
MB Financial Inc. 941
34,638
Mbt Financial Corp 754
13,738
MCG Capital Corp. 1,660
25,531
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
13
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
FINANCIAL - 20.88% (CONTINUED)
McGrath RentCorp 503 $
18,586
Mercantile Bank Corp 375
13,669
MeriStar Hospitality Corp.* 4,541
31,060
Metris Cos. Inc.* 1,685
14,643
MFA Mortgage Investments, Inc. 3,971
35,342
Mid-America Apartment Communities Inc. 930
35,238
Midland Co. 474
14,054
Mid-State Bancshares 1,232
28,964
Midwest Banc Holdings Inc. 563
12,555
Mission West Properties 927
11,226
Nara Bancorp Inc. 960
16,445
NASB Financial Inc. 161
6,796
National Financial Partners 1,743
61,476
National Health Investors Inc. 1,193
32,438
National Penn Bancshares Inc. 1,270
37,770
National Processing Inc 458
13,168
National Western Life Ins Co* 114
17,505
Nationwide Health Properties Inc. 3,472
65,621
Navigators Group Inc.* 447
12,914
NBC Capital Corp. 361
9,743
NBT Bancorp Inc. 1,718
38,380
NCO Group Inc.* 1,412
37,686
NDCHealth Corp. 1,881
43,639
Nelnet Inc* 423
7,508
Net Bank Inc. 2,420
26,451
New Century Financial Corp. 1,483
69,434
Newcastle Investment Corp 1,774
53,131
Northwest Bancorp Inc. 984
22,534
NovaStar Financial Inc. 1,305
49,538
NYMAGIC INC. 172
4,541
Oak Hill Financial Inc 107
3,371
OceanFirst Financial Corp. 488
11,688
Ocwen Financial Corp.* 2,078
25,019
Ohio Casualty Corp.* 3,203
64,476
Old National Bancorp 3,466
86,061
Old Second Bancorp Inc. 350
18,463
Omega Financial Corp. 399
13,738
Omega Healthcare Investors Inc. 2,420
24,297
Oneida Financial Corp 1
5
Oriental Financial Group Inc. 885
23,957
Origen Financial Inc* 430
3,419
Pacific Capital Bancorp 2,372
66,724
Park National Corp 715
91,313
Parkway Properties Inc. 574
25,514
Partners Trust Financial Group Inc. 344
6,742
Peapack-Gladstone Financial Corp. 347
11,146
Penn-America Group Inc 501
7,014
Pennfed Financial Services Inc. 237
8,058
Pennrock Financial Savings Corp. 400
12,080
Pennsylvania Real Estate Investment Trust 1,640
56,170
Peoples Bancorp Inc. 555
14,757
Peoples Holding Co. 428
14,792
PFF Bancorp Inc. 647
24,094
Philadelphia Consolidated Holding Co.* 931
55,925
Phoenix Companies Inc 4,941
60,527
Pico Holdings Inc.* 417
7,973
Piper Jaffray Companies Inc* 1,036 $
46,858
PMA Capital Corp 1,411
12,699
Portal Software* 1,684
6,113
Portfolio Recovery Associate* 633
17,452
Post Properties Inc. 2,077
60,545
Prentiss Properties Trust 2,323
77,867
Presidential Life Corp. 1,112
20,038
PRG-Schultz International Inc.* 2,142
11,717
Price Legacy Corporation 1,145
21,137
PrivateBancorp Inc. 857
23,533
ProAssurance Corp.* 1,367
46,628
Prosperity Bancshares Inc. 814
19,821
Provident Bancorp Inc 2,069
23,587
Provident Bankshares Corp. 1,698
48,970
Provident Financial Holdings 262
6,196
Provident Financial Services 3,141
55,125
PS Business Parks Inc. 822
33,077
Quaker City Bancorp Inc. 266
14,614
R&G Financial Corp 1,452
48,003
RAIT Investment Trust 1,213
29,900
Ramco-Gershenson Properties Trust 745
18,051
Realty Income Corp.* 2,069
86,339
Redwood Trust Inc. 835
46,493
Republic Bancorp Inc. 3,343
46,468
Republic Bancorp Ky 425
8,581
Riggs National Corp. 830
17,530
RLI Corp. 1,170
42,705
Royal Bancshares of Pennsylvania 224
5,555
S&T Bancorp Inc. 1,237
39,559
S.Y. Bancorp Inc. 617
14,444
S1 Corp.* 3,684
36,619
Safety Insurance Group Inc 524
11,224
Sanders Morris Harris Group Inc 623
9,189
Sandy Spring Bancorp Inc. 758
26,341
Santander Bancorp 250
6,180
Saul Centers Inc. 583
18,720
Saxon Capital Inc.* 1,498
34,199
Scbt Financial Corporation 403
12,150
Seacoast Banking Corp. of Florida 604
12,642
Seacoast Financial Services Corp. 1,578
54,599
Second Bancorp Inc. 426
13,330
Security Bank Corp 244
8,479
Selective Insurance Group Inc. 1,448
57,746
Senior Housing Properties Trust 2,801
47,029
Signature Bank* 292
6,938
Silicon Valley Bancshares* 1,845
73,154
Simmons First National Corp. 766
19,939
Smithtown Bancorp Inc 272
11,065
Sotheby's Holdings Inc.* 2,385
38,065
Southern Community Financial 777
8,112
Southside Bancshares Inc 463
9,723
Southwest Bancorp Inc. 559
10,202
Southwest Bancorp of Texas Inc. 1,792
79,063
Sovran Self Storage Inc. 777
29,666
State Auto Financial Corp. 703
21,596
State Bancorp Inc. 423
10,331
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
FINANCIAL - 20.88% (CONTINUED)
State Financial Services Corp 300 $
8,898
Sterling Bancorp 703
19,417
Sterling Bancshares Inc. 2,337
33,162
Sterling Financial Corp. (Pennsylvania) 1,122
29,206
Sterling Financial Corp. (Washington)* 1,180
37,607
Stewart Information Services Corp. 889
30,022
Stifel Financial Corp* 283
7,698
Suffolk Bancorp 569
18,549
Summit Properties Inc. 1,467
37,614
Sun Bancorp Inc.* 416
8,844
Sun Communities Inc. 842
31,701
Susquehanna Bancshares Inc. 2,405
60,510
SWS Group Inc. 788
12,056
Tanger Factory Outlet Centers Inc. 710
27,761
Taubman Centers Inc. 2,596
59,422
Taylor Capital Group Inc 203
4,415
Texas Capital Bancshares Inc* 1,113
18,476
Texas Regional Bancshares Inc. 1,429
65,605
The Bancorp Bank* 359
6,358
The First of Long Island Corporation 178
8,220
The MONY Group* 2,618
81,943
Tierone Corp 1,015
21,833
Tns Inc.* 232
5,058
Tompkins Trustco Inc. 378
17,955
Town & Country Trust 910
22,968
Tradestation Group Inc* 980
7,046
Triad Guaranty Inc.* 487
28,343
TriCo Bancshares 585
11,057
TrustCo Bank Corp. 3,886
50,907
Trustmark Corp 2,457
71,056
U.S. Restaurant Properties Inc. 1,178
17,894
U.S.B. Holding Co. Inc. 573
13,133
UICI* 1,971
46,930
UMB Financial Corp. 788
40,677
Umpqua Holdings Corp. 1,486
31,191
Union Bankshares Corp. 399
12,608
United Bankshares Inc. 1,956
63,570
United Community Banks Inc. 1,485
37,392
United Community Financial Corp. 1,410
18,330
United Fire & Casualty Co. 376
21,714
United Panam Financial Corp* 241
4,109
United Rentals Inc* 2,252
40,288
Universal American Financial Corp.* 1,381
15,163
Universal Health Realty Income Trust 613
17,593
Univest Corp Of Penn 396
20,196
Unizan Financial Corp. 1,136
29,650
Urstadt Biddle 1,098
16,261
Usi Holdings Corp* 1,841
29,088
Value Line Inc. 71
2,521
Vesta Insurance Group Inc. 1,884
12,189
Virginia Commerce Bancorp* 256
7,555
Virginia Financial Group Inc. 374
12,847
Washington Real Estate Investment Trust 2,181
64,078
Washington Trust Bancorp Inc. 691
17,945
Waypoint Financial Corp. 1,563
43,123
Wesbanco Inc. 921
26,829
West Bancorporation 839 $
14,674
West Coast Bancorp (Oregon) 785
16,830
Westamerica Bancorp 1,658
86,962
Western Sierra Bancorp* 334
10,344
Westfield Financial Inc. 255
5,187
Wilshire Financial Svcs Grp 690
6,410
Wilshire St Bank - La Calif* 368
9,023
Winston Hotels Inc. 1,211
12,534
Wintrust Financial Corp. 1,057
53,389
World Acceptance Corp.* 841
15,416
WSFS Financial Corp. 314
15,282
Yardville National Bancorp 439
10,975
Zenith National Insurance Corp. 556
27,022
---------
- -----
12,080,380
---------
- -----
HEALTH CARE - 12.00%
Abaxis Inc* 912
17,310
Abgenix Inc.* 4,244
49,740
Abiomed Inc.* 796
10,014
Able Laboratories Inc* 889
18,278
Accelrys Inc* 1,272
12,542
Adolor Corp.* 2,027
25,702
Advanced Medical Optics* 1,540
65,558
Advanced Neuromodulation Systems Inc.* 1,049
34,407
Advancis Pharmaceutical* 493
3,347
Aksys Ltd.* 420
2,449
Alaris Medical Inc.* 254
5,677
Albany Molecular Research Inc.* 1,213
15,684
Alexion Pharmaceuticals Inc.* 1,147
21,334
Align Technology Inc.* 2,718
51,642
Alkermes Inc.* 4,682
63,675
Alliance Imaging Inc.* 656
2,998
Allscripts Healthcare Solutions Inc.* 1,429
11,203
Alpharma Inc. 2,051
42,004
Amedisys Inc* 569
18,800
America Service Group* 370
12,858
American Healthways Inc.* 1,510
40,196
American Medical Security Group Inc.* 619
16,868
American Medical Systems Holdings Inc.* 1,318
44,416
AmeriGroup Corp.* 1,292
63,566
Amsurg Inc.* 1,579
39,680
Analogic Corp. 598
25,373
Animas Corp* 222
4,140
Antigenics Inc.* 1,325
11,342
Apria Healthcare Group Inc.* 2,606
74,792
Ariad Pharmaceuticals Inc.* 2,731
20,455
Array BioPharma Inc.* 1,247
9,914
Arrow International Inc. 1,000
29,920
ArthroCare Corp.* 1,110
32,279
Aspect Medical Systems Inc* 641
11,839
AtheroGenics Inc.* 1,933
36,785
Atrix Laboratories Inc.* 1,143
39,182
Avant Immunotherapeutics Inc* 3,880
10,321
Axonyx Inc* 2,676
14,022
Barrier Therapeutics Inc* 342
4,795
Bentley Pharmaceuticals Inc.* 802
11,019
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
HEALTH CARE - 12.00% (CONTINUED)
Beverly Enterprises Inc.* 5,601 $
48,169
Biocryst Pharmaceuticals Inc* 854
5,893
Bioenvision Inc* 1,013
8,874
Biolase Technology Inc* 1,123
15,116
BioMarin Pharmaceutical Inc.* 3,362
20,172
Bio-Rad Laboratories Inc.* 908
53,445
Bio-Reference Laboratories Inc.* 402
5,330
Biosite Inc.* 676
30,366
Bone Care International Inc.* 817
19,134
Bradley Pharmaceuticals Inc* 706
19,697
Bruker Biosciences Corp* 1,117
5,440
Cancervax Corp* 863
6,567
Candela Corp* 1,004
9,839
Caraco Pharm Labs Inc* 474
4,569
Cardiac Science Inc.* 3,587
8,788
CardioDynamics International Corp.* 1,880
9,494
Celera Genomics Group - Applera Corp.* 3,810
43,853
Cell Genesys Inc.* 2,333
24,240
Cell Therapeutics Inc.* 2,630
19,383
Centene Corp* 1,058
40,786
Cepheid* 2,178
25,134
Cerner Corp* 1,485
66,201
Chattem Inc.* 874
25,232
Cima Labs Inc.* 767
25,871
Ciphergen Biosystems Inc.* 1,209
8,850
Closure Medical Corp.* 359
9,014
Computer Programs and Systems Inc. 337
6,868
Conceptus Inc.* 1,332
14,985
CONMED Corp.* 1,552
42,525
Connetics Corp.* 1,641
33,148
Corcept Therapeutics Inc* 235
1,814
Corgentech Inc* 322
5,191
Corixa Corp.* 2,908
13,580
Corvel Corp.* 331
9,384
Cti Molecular Imaging Inc* 1,625
23,043
Cubist Pharmaceuticals Inc.* 2,101
23,321
CuraGen Corp.* 2,249
13,516
Curis Inc* 2,164
9,565
CV Therapeutics Inc.* 1,644
27,553
Cyberonics Inc.* 905
30,191
Cypress Bioscience Inc* 1,534
21,062
Cytogen Corp* 810
12,879
Cytokinetics Inc* 395
5,866
Datascope Corp. 609
24,171
deCODE genetics Inc.* 2,508
21,318
Dendreon Corp* 3,017
36,958
Depomed Inc* 1,101
5,450
Diagnostic Products Corp 1,182
51,937
Digene Corp.* 733
26,776
Discovery Laboratories Inc* 2,441
23,409
Diversa Corp.* 1,234
12,500
dj Orthopedics Inc.* 933
21,459
Dov Pharmaceutical Inc* 629
8,781
Durect Corp.* 1,585
5,532
Dusa Pharmaceuticals Inc* 782
7,429
Dyax Corp* 1,367
16,062
Dynavax Technologies Corp* 325 $
2,165
Eclipsys Corp.* 1,906
29,086
Encore Medical Corp* 1,606
10,118
Encysive Pharmaceuticals Inc* 2,757
23,435
Endocardial Solutions Inc.* 1,146
11,861
Enzo Biochem Inc.* 1,260
18,900
Enzon Inc.* 2,290
29,220
EPIX Medical Inc.* 1,190
25,109
eResearch Technology Inc.* 2,322
65,016
Exactech Inc* 318
6,901
Exelixis Inc.* 3,289
33,186
E-Z-Em Inc* 344
6,323
First Health Group Corp.* 4,783
74,663
First Horizon Pharmaceutical Corp.* 1,371
25,912
Genaera Corporation* 2,738
11,500
Genelabs Technologies* 4,597
10,619
Genencor International Inc.* 390
6,384
Genesis Healthcare Corp* 1,036
30,085
Genta Inc.* 3,167
7,918
Gentiva Health Services Inc.* 1,320
21,463
Geron Corp.* 2,355
19,052
Gtx Inc* 283
2,946
Guilford Pharmaceuticals Inc.* 1,773
8,422
Haemonetics Corp.* 1,019
30,213
Hanger Orthopedic Group Inc.* 1,118
13,103
Healthcare Services Group Inc. 776
11,873
Hollis-Eden Pharmaceuticals* 718
8,652
Hologic Inc.* 1,065
24,761
Hooper Holmes Inc. 2,990
17,163
Human Genome Sciences Inc.* 6,776
78,805
ICU Medical Inc.* 551
18,475
IDX Systems Corp.* 1,083
34,537
I-Flow Corp* 947
11,231
ILEX Oncology Inc.* 2,041
51,005
Illumina Inc.* 1,519
9,646
Immucor Inc.* 1,038
33,787
Immunicon Corp* 315
2,476
Immunogen Inc.* 1,912
11,682
Immunomedics Inc.* 2,173
10,583
Impax Laboratories Inc.* 2,540
49,225
Incyte Genomics Inc.* 3,188
24,356
Indevus Pharmaceuticals Inc.* 2,160
13,284
Inkine Pharmaceuticals* 2,542
9,838
Inspire Pharmaceuticals Inc* 1,669
27,906
Integra LifeSciences Holdings Corp.* 1,059
37,351
InterMune Inc.* 1,499
23,115
Intuitive Surgical Inc* 1,750
33,250
Invacare Corp. 1,355
60,596
Inveresk Research Group Inc* 1,533
47,278
Inverness Medical Innovations Inc.* 701
15,352
ISIS Pharmaceuticals Inc.* 2,707
15,538
Isolagen Inc* 1,155
11,873
Ista Pharmaceuticals, Inc* 385
4,023
Ivax Diagnostics Inc* 351
2,246
K V Pharmaceutical Co* 1,865
43,063
Kensey Nash Corp.* 497
17,147
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
HEALTH CARE - 12.00% (CONTINUED)
Keryx Biopharmaceuticals* 1,130 $
14,306
Kindred Healthcare Inc.* 1,376
36,258
KOS Pharmaceuticals Inc.* 623
20,540
Kosan Biosciences Inc.* 1,103
8,714
Kyphon Inc.* 1,215
34,239
LabOne Inc.* 890
28,284
Landauer Inc. 465
20,767
Lannett Co. Inc.* 361
5,422
Laserscope* 944
26,007
Lca-Vision Inc* 537
15,643
Lexicon Genetics Inc.* 3,308
25,935
Lifecell Corporation* 1,484
16,754
Lifepoint Hospitals Inc* 1,996
74,291
Ligand Pharmaceuticals Inc.* 3,858
67,052
Luminex Corporation* 1,401
14,094
Magellan Health Services Inc* 1,406
47,031
Marshall Edwards Inc* 375
2,824
Matria Healthcare Inc.* 538
13,488
Maxim Pharmaceuticals Inc* 1,479
14,272
Maxygen Inc.* 1,176
12,430
Medarex Inc.* 4,131
30,115
MedCath Corp.* 315
6,300
Medical Action Ind Inc* 426
7,838
Medicines Co.* 2,491
76,000
MedSource Technologies Inc.* 1,116
7,924
Mentor Corp MN 2,286
78,387
Merit Medical Systems Inc.* 1,224
19,498
Micro Therapeutics Inc* 612
2,589
Microtek Medical Holdings In* 2,243
11,484
Microvision Inc* 973
8,173
Molecular Devices Corp.* 658
11,699
Molina Healthcare Inc* 541
20,655
Myogen, Inc.* 729
5,657
Myriad Genetics Inc.* 1,418
21,157
Nabi Biopharmaceuticals* 3,006
42,745
Nanogen Inc* 1,777
11,941
National Healthcare Corp. 351
9,832
Neighborcare Inc* 1,962
61,469
NeoPharm Inc.* 899
9,287
Neose Technologies Inc.* 1,079
8,988
Neurogen Corp.* 1,305
9,761
Nitromed Inc* 514
3,089
Northfield Laboratories Inc* 993
14,160
Noven Pharmaceuticals Inc.* 1,221
26,886
NPS Pharmaceuticals Inc.* 1,944
40,824
Nuvasive Inc* 339
3,698
Nuvelo Inc* 1,479
14,228
Ocular Sciences Inc.* 1,016
38,608
Odyssey HealthCare Inc.* 1,912
35,984
Omnicell Inc.* 1,136
16,597
Onyx Pharmaceuticals Inc.* 1,810
76,672
Option Care Inc. 691
10,545
OraSure Technologies Inc.* 2,073
20,170
Orthodontic Centers Of America* 2,206
18,067
Orthologic Corp.* 1,803
15,632
Orthovita Inc* 2,119
10,892
Oscient Pharmaceuticals Corp* 3,170 $
16,199
Owens & Minor Inc. 2,051
53,121
Pain Therapeutics Inc.* 1,346
10,849
Palatin Technologies Inc* 2,751
11,582
Palomar Medical Technologies* 627
10,527
Par Pharmaceuticals Cos Inc* 1,788
62,955
PAREXEL International Corp.* 1,363
26,987
Pediatrix Medical Group Inc.* 1,279
89,338
Penwest Pharmaceuticals Co.* 867
11,106
Peregrine Pharmaceuticals Inc.* 6,566
9,652
Perrigo Co. 3,296
62,525
Per-Se Technologies Inc.* 1,184
17,215
Pharmacyclics Inc* 1,024
10,414
Pharmion Corp* 642
31,407
Pharmos Corp.* 4,593
18,877
PolyMedica Corp. 1,372
42,587
Possis Medical Inc.* 838
28,618
Pozen Inc.* 1,252
8,564
Praecis Pharmaceuticals Inc.* 2,733
10,385
Priority Healthcare Corp.* 1,494
34,287
Progenics Pharmaceuticals Inc.* 614
10,340
Province Healthcare Co.* 2,577
44,196
ProxyMed Inc.* 313
5,277
PSS World Medical Inc.* 3,521
39,435
Psychiatric Sloutions Inc* 518
12,914
Quality Systems Inc* 176
8,640
Quidel Corp.* 1,650
9,719
Regeneration Technologies* 1,212
13,005
Regeneron Pharmaceuticals Inc.* 1,982
20,870
RehabCare Group Inc.* 846
22,529
Renovis Inc* 311
2,849
Res-Care Inc.* 910
11,557
Rigel Pharmaceuticals Inc* 522
7,418
Salix Pharmaceuticals Ltd.* 1,253
41,286
Santarus Inc.* 362
5,340
Sciclone Pharmaceuticals Inc* 2,328
11,896
Seattle Genetics Inc.* 1,630
11,459
Select Medical Corp 4,806
64,497
Serologicals Corp.* 1,304
26,067
Sfbc International Inc* 651
20,396
Sierra Health Services Inc.* 1,201
53,685
Sola International Inc.* 1,669
28,757
Sonic Innovations Inc.* 962
5,464
SonoSite Inc.* 769
18,387
Specialty Laboratories Inc.* 417
3,736
STERIS Corp.* 3,646
82,254
Sunrise Assisted Living Inc.* 848
33,191
SuperGen Inc.* 2,313
14,919
SurModics Inc.* 741
18,258
Sybron Dental Specialties Inc.* 2,013
60,088
Symbion Inc* 432
7,543
Tanox Inc.* 1,239
23,628
Techne Corp.* 2,146
93,244
Telik Inc.* 2,282
54,471
Tercica Inc* 297
2,429
Thermogenesis Corp* 2,330
11,021
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
17
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
HEALTH CARE - 12.00% (CONTINUED)
Third Wave Technologies* 1,466 $
6,582
Thoratec Corp.* 2,636
28,284
Transkaryotic Therapies Inc.* 1,530
22,889
Trimeris Inc.* 815
11,760
TriPath Imaging Inc.* 1,436
13,513
United Surgical Partners International Inc.* 1,468
57,942
United Therapeutics Corp.* 987
25,317
Urologix Inc.* 734
11,333
US Oncology Inc.* 3,658
53,846
Valeant Pharmaceuticals International 4,375
87,500
Vaxgen Inc* 1,231
17,431
Ventana Medical Systems Inc.* 714
33,936
Vertex Pharmaceuticals Inc* 4,115
44,607
Viasys Healthcare Inc.* 1,608
33,623
Vicuron Pharmaceuticals Inc.* 2,447
30,734
Vion Pharmaceuticals Inc* 2,891
12,027
Vistacare Inc* 470
8,719
VISX Inc.* 2,544
67,976
Vital Signs Inc. 293
8,509
West Pharmaceutical Services Inc. 774
32,740
Wilson Greatbatch Technologies Inc.* 1,116
31,192
Wright Medical Group Inc.* 1,387
49,377
Young Innovations Inc. 245
6,223
Zila, Inc* 2,368
11,627
Zoll Medical Corp.* 480
16,838
ZymoGenetics Inc.* 1,013
19,247
---------
- -----
6,943,207
---------
- -----
INDUSTRIAL - .37%
GenCorp Inc. 2,067
27,677
Kaman Corp 1,103
15,431
Lancaster Colony 1,412
58,796
Raven Industries Inc 404
14,354
Sequa Corp.* 326
19,061
Trinity Industries Inc. 1,915
60,878
Walter Industries Inc. 1,231
16,766
---------
- -----
212,963
---------
- -----
MATERIALS - 8.80%
A. Schulman Inc. 1,575
33,847
AAON Inc.* 455
9,186
Aceto Corp 833
14,661
Acuity Brands Inc. 2,224
60,048
Airgas Inc. 3,142
75,125
AK Steel Holding Corp* 5,677
29,918
Albany International Corp. 1,369
45,944
Albemarle Corp 1,663
52,634
Alico Inc. 187
7,508
Allegheny Technologies Inc 4,245
76,622
AMCOL International Corp. 1,125
21,319
American Vanguard Corp 261
8,804
Ameron International Corp. 429
14,642
Anchor Glass Container Corp. 514
6,954
Apogee Enterprises Inc. 1,434
14,914
Aptargroup Inc. 1,909
83,404
Arch Chemicals Inc. 1,215
35,016
Armor Holdings Inc.* 1,491
50,694
Avatar Holdings Inc.* 240 $
9,984
Barnes Group Inc. 780
22,604
Bluegreen Corp* 849
11,716
Brady Corp. 950
43,795
Brookfield Homes Corp 779
20,402
Brush Engineered Materials Inc.* 876
16,556
Buckeye Technologies Inc.* 1,534
17,641
Building Materials Holding Corp. 700
13,251
Cabot Microelectronics Corp.* 1,296
39,671
Calgon Carbon Corp. 1,770
11,859
Cambrex Corp. 1,364
34,414
Caraustar Industries Inc.* 1,485
20,953
Carpenter Technology Corp. 1,191
40,554
Century Aluminum Co.* 928
23,005
Ceradyne Inc* 833
29,796
Chesapeake Corp. 1,019
27,187
Circor International Inc. 801
16,332
CLARCOR Inc. 1,325
60,685
Cleveland-Cliffs Inc.* 559
31,522
Coeur Dalene Mines Corp* 11,192
45,663
Comfort Systems USA Inc.* 2,008
12,831
Commercial Metals Co. 1,516
49,194
Compass Minerals Internation 788
15,271
CompX International Inc.* 177
2,655
Cons Tomoka Land Co 294
11,101
Corn Products International Inc. 1,904
88,631
Crompton Corporation 5,983
37,692
Crown Holdings Inc.* 8,625
85,990
Cytec Industries Inc. 2,031
92,309
Delta & Pine Land Co. 1,974
43,329
Deltic Timber Corp. 517
19,853
DHB Industries Inc.* 1,066
16,182
Drew Industries Inc.* 373
15,181
Dycom Industries Inc.* 2,533
70,924
Eagle Materials Inc 983
69,813
ElkCorp 1,029
24,634
EMCOR Group Inc.* 790
34,744
Encore Wire Corp.* 552
15,219
Energy Conversion Devices Inc.* 1,052
11,846
Ennis Business Forms Inc. 856
16,692
Exide Technologies* 1,221
24,969
Ferro Corp. 2,188
58,376
First Acceptance Corp* 1,068
7,476
FMC Corp.* 1,899
81,866
Georgia Gulf Corp. 1,488
53,360
Gibraltar Steel Corp. 818
26,847
Glatfelter 1,497
21,078
GrafTech International Ltd.* 5,079
53,126
Granite Construction Inc. 1,738
31,684
Graphic Packaging Intl Corp* 3,482
30,119
Great Lakes Chemical Corp. 2,650
71,708
Greif Brothers Corp 680
28,730
Griffon Corp.* 1,275
28,407
H.B. Fuller Co. 1,488
42,259
Hecla Mining Co.* 6,177
35,208
Hercules Inc* 5,743
70,007
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
MATERIALS - 8.80% (CONTINUED)
Hexcel Corp.* 1,090 $
12,622
IMC Global Inc 6,049
81,057
IMCO Recycling Inc.* 712
9,413
Infrasource Services Inc* 450
5,517
Insituform Technologies Inc.* 1,395
22,697
Integrated Electrical Services Inc.* 1,717
13,822
Interface Inc* 2,311
20,175
Jacuzzi Brands Inc* 3,936
31,724
Kaydon Corp. 1,473
45,560
Kronos Worldwide Inc 158
5,410
Layne Christensen Company* 515
8,523
Lennox International Inc. 2,313
41,865
LNR Property Corp. 894
48,500
Lone Star Technologies Inc.* 1,502
41,395
Longview Fibre Co.* 2,668
39,300
LSI Industries Inc. 1,031
11,857
MacDermid Inc. 1,410
47,729
Maverick Tube Corp.* 2,211
58,061
Medis Technologies Ltd.* 679
11,013
Metal Management Inc* 920
18,225
Metals Usa Inc* 1,054
18,846
Mgp Ingredients Inc 206
7,970
Millennium Chemicals Inc.* 3,393
58,767
Minerals Technologies Inc. 1,073
62,234
Mobile Mini Inc.* 750
21,308
Mueller Industries Inc. 1,827
65,407
Myers Industries Inc. 1,158
16,328
NCI Building Systems Inc.* 1,017
33,103
Newmarket Corp* 717
15,394
NL Industries Inc. 412
5,974
NN Inc. 873
11,096
Nuco2 Inc* 329
6,481
Octel Corp. 650
17,115
Olin Corp. 3,628
63,925
Om Group Inc* 1,481
48,888
Omnova Solutions Inc.* 2,099
12,804
Oregon Steel Mills Inc.* 1,386
20,430
Penn Engineering & Manufacturing Corp. 561
12,028
Perini Corp* 336
3,585
PolyOne Corp.* 4,783
35,586
Pope & Talbot Inc. 823
16,271
Potlatch Corp. 1,539
64,084
Quaker Chemical Corp. 430
11,877
Quanex Corp. 858
41,785
Quanta Services Inc.* 3,762
23,400
Reading International Inc* 753
6,551
Reliance Steel & Aluminum Co. 1,472
59,351
Rock-Tenn Co. 1,526
25,866
Rogers Corp.* 865
60,464
Royal Gold Inc. 857
12,144
RTI International Metals Inc.* 1,107
17,657
Ryerson Tull Inc. 1,228
19,501
Schnitzer Steel Industries Inc. 1,024
34,775
Schweitzer-Mauduit International Inc. 784
24,014
Shaw Group Inc* 3,302
33,449
Silgan Holdings Inc. 572
23,057
Simpson Manufacturing Co.* 959 $
53,819
Spartech Corp. 1,310
33,981
Standard Register Co. 612
7,283
Steel Dynamics Inc.* 1,954
55,943
Steel Technologies Inc 524
11,570
Stepan Co.* 276
7,217
Stillwater Mining Co.* 2,099
31,506
Sunterra Corp* 969
12,209
Symyx Technologies Inc.* 1,469
35,432
Tarragon Realty Investors* 349
5,148
Tejon Ranch Co.* 396
13,781
Terra Industries Inc.* 2,038
11,474
Texas Industries Inc. 1,106
45,534
Trammell Crow Co.* 1,708
24,083
Tredegar Corp. 1,447
23,340
Trex Co. Inc.* 537
20,272
Triarc Companies* 1,864
18,957
U.S. Concrete Inc.* 1,104
7,783
Ultralife Batteries Inc* 733
14,191
Universal Forest Products Inc. 823
26,542
URS Corp.* 1,638
44,881
USEC Inc. 4,379
38,404
USG Corp.* 1,683
29,587
Valence Technology Inc* 2,831
9,710
Valhi Inc. 530
6,026
Valmont Industries Inc. 751
17,198
W.R. Grace & CO.* 3,427
21,247
Washington Group International Inc* 1,317
47,267
Watsco Inc. 1,163
32,645
Wausau-Mosinee Paper Corp. 2,385
41,261
WCI Communities* 1,767
39,422
WD-40 Co. 891
26,677
Wellman Inc. 1,665
13,536
Wheeling-Pittsburgh Corp* 313
6,529
York International 2,159
88,670
---------
- -----
5,087,246
---------
- -----
TECHNOLOGY - 12.78%
Actel Corp.* 1,344
24,864
Activcard Corp* 2,204
16,001
Actuate Corp.* 2,701
10,669
Adaptec Inc* 5,697
48,197
Advanced Digital Information Corp.* 3,351
32,505
Aeroflex Inc.* 3,446
49,381
Agile Software Corp.* 2,724
23,835
Agilysys Inc. 1,500
20,685
Airspan Networks* 1,607
8,903
Alliance Semiconductor Corp.* 1,065
6,337
Altiris Inc.* 1,085
29,957
Amis Holdings Inc* 1,630
27,580
Anaren Microwave Inc.* 1,080
17,647
Anixter International Inc.* 1,548
52,678
Ansoft Corp* 374
5,707
answerthink Inc.* 2,349
13,460
Ansys Inc.* 802
37,694
Anteon International Corp.* 1,408
45,929
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
19
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
TECHNOLOGY - 12.78% (CONTINUED)
Ariba Inc* 14,324 $
28,362
Artisan Components Inc.* 1,202
31,012
Ascential Software Corp* 3,097
49,521
Asiainfo Holdings Inc.* 1,843
9,731
Aspect Communications Corp.* 2,123
30,147
Aspen Technology Inc.* 2,156
15,653
At Road Inc.* 1,783
13,640
Atheros Communications* 485
5,111
Authentidate Holding Corp* 1,510
16,503
Avanex Corp.* 4,160
16,183
BEI Technologies Inc. 579
16,391
Bel Fuse Inc 435
18,140
Benchmark Electronics Inc.* 2,144
62,390
Bioveris Corpration* 1,072
8,918
Black Box Corp. 843
39,840
Blue Coat Systems Inc* 468
15,673
Borland Software Corp.* 4,217
35,802
Brocade Communications Systems* 13,547
81,011
Caci International Inc.* 1,522
61,550
California Micro Devices Cp* 1,101
12,695
Captaris Inc* 1,677
10,833
Carrier Access Corp* 1,045
12,456
Catapult Communications Corp.* 292
6,716
Checkpoint Systems Inc.* 1,962
35,179
Cherokee International Corp* 371
4,233
ChipPAC Inc.* 3,151
19,757
Chordiant Software Inc.* 3,743
17,068
CIBER Inc.* 2,663
21,890
Cirrus Logic Inc.* 4,406
26,480
Clarus Corporation* 691
7,995
Coherent Inc.* 1,576
47,044
CommScope Inc.* 2,812
60,317
CompuCom Systems Inc.* 1,277
5,798
Comtech Telecommunications* 742
16,740
Concord Communications Inc.* 955
10,898
Concur Technologies Inc* 1,366
14,616
Corvis Corporation* 20,327
28,660
Covansys Corp.* 1,048
10,825
CRAY Inc.* 4,475
29,625
CSG Systems International Inc* 2,817
58,312
Cubic Corp. 816
17,079
Cyberguard Corp* 726
5,924
Cyberoptics Corporation* 387
10,054
Daktronics Inc.* 752
18,762
Dendrite International Inc.* 1,885
35,023
Digi International, Inc.* 1,120
12,006
Digimarc Corp.* 807
10,773
Digital River Inc.* 1,664
54,296
Digitalnet Holdings Inc* 320
6,506
Digitas Inc.* 2,803
30,917
Diodes Inc* 373
8,836
Ditech Communications Corp* 1,485
34,660
Dot Hill Systems Corp* 2,265
25,391
Drexler Technology Corp.* 509
6,785
DRS Technologies Inc.* 1,236
39,428
DSP Group Inc.* 1,523
41,487
E.piphany Inc.* 3,967 $
19,161
Eagle Broadband Inc* 10,002
9,902
Echelon Corp.* 1,461
16,348
Ecollege.Com Inc* 830
13,280
EDO Corp. 818
19,730
Electronic Compo* 154
5,538
Electronics for Imaging Inc.* 2,798
79,071
Embarcadero Technologies Inc.* 1,108
13,695
EMS Technologies Inc.* 579
11,250
Emulex Corp* 4,292
61,419
Enterasys Networks Inc.* 10,971
23,149
Entrust Inc.* 3,320
14,940
Epicor Software Corp* 1,989
27,945
EPIQ Systems Inc.* 712
10,324
Equinix Inc* 507
17,208
ESS Technology Inc.* 1,750
18,743
Exar Corp.* 2,136
31,314
Excel Technology Inc.* 626
20,815
Extreme Networks Inc.* 5,639
31,127
F5 Networks Inc.* 1,800
47,664
FalconStor Software Inc.* 1,378
10,638
FileNet Corp.* 2,034
64,213
Finisar Corp.* 8,637
17,101
Formfactor Inc* 1,448
32,508
Gartner, Inc.* 3,578
47,301
Gateway Inc* 11,630
52,335
Genesis Microchip Inc.* 1,676
23,078
Group 1 Software Inc* 650
14,918
Harmonic Inc.* 3,750
31,950
Herley Industries Inc.* 596
11,646
Hutchinson Technology Inc.* 1,362
33,492
Hyperion Solutions Corp.* 2,037
89,058
Identix Inc.* 4,607
34,414
iGATE Corp.* 1,088
4,330
II-VI Inc.* 586
17,967
Imation Corp. 1,852
78,914
Inet Technologies Inc.* 1,217
15,176
Infocrossing Inc* 819
11,057
InFocus Corp.* 2,067
17,570
Infonet Services Corp.* 3,263
5,710
Informatica Corp.* 4,478
34,167
Innovative Solutions & Supp* 364
7,105
Integrated Device Technology* 5,505
76,189
Integrated Silicon Solution Inc.* 1,863
22,747
Intergraph Corp.* 1,907
49,315
Intermagnetics General Corp.* 879
29,912
Internet Capital Group Inc* 1,988
15,387
Internet Security Systems Inc.* 2,123
32,567
Inter-Tel Inc. 1,074
26,818
Intervideo Inc* 447
5,783
Intervoice Inc* 1,876
21,518
Interwoven Inc.* 2,111
21,321
Invision Technologies Inc.* 913
45,559
Iomega Corp.* 2,691
15,016
Ixia* 1,380
13,579
IXYS Corp.* 981
7,730
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
20
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
TECHNOLOGY - 12.78% (CONTINUED)
j2 Global Communications Inc.* 983 $
27,327
JDA Software Group Inc.* 1,343
17,687
Jupitermedia Corp* 816
11,555
Keane Inc* 2,637
36,101
KEMET Corp.* 4,514
55,161
Keynote Systems Inc.* 803
11,041
Kintera Inc* 311
3,244
Komag Inc* 1,436
20,061
Kopin Corp.* 3,659
18,697
Kvh Industries Inc* 753
9,586
Lattice Semiconductor Corp.* 5,908
41,415
Lawson Software Inc.* 2,903
20,553
LeCroy Corp.* 407
7,330
Lexar Media Inc.* 3,697
24,697
Lionbridge Technologies Inc* 2,433
18,612
Macrovision Corporation* 2,575
64,451
Magma Design Automation Inc.* 1,286
24,730
Manhattan Associates Inc.* 1,576
48,668
ManTech International Corp.* 879
16,499
Manugistics Group Inc.* 2,866
9,373
MAPICS Inc.* 1,242
13,117
MapInfo Corp.* 1,055
11,183
Marimba* 1,004
8,163
MatrixOne Inc.* 2,540
17,551
Maxwell Tech Inc* 572
7,379
McData Corp.* 6,135
33,006
Mentor Graphics Corp.* 3,658
56,589
Mercury Computer Systems Inc.* 1,108
27,478
Merge Technologies Inc* 573
8,383
Merix Corp.* 940
10,660
Methode Electronics Inc 1,853
24,033
Micrel Inc* 3,573
43,412
Micromuse Inc.* 4,088
27,349
Micros Systems Inc.* 841
40,343
Microsemi Corp.* 3,105
44,122
Microstrategy Inc* 626
26,730
Microtune Inc.* 2,600
12,142
Mindspeed Technologies Inc* 5,195
25,767
MIPS Technologies Inc.* 2,139
13,091
Mobility Electronics Inc* 1,290
10,862
Monolithic System Technology Inc.* 1,219
9,179
MRO Software Inc.* 1,021
13,897
MRV Communications Inc.* 5,515
15,111
MSC.Software Corp.* 1,429
12,790
Net2Phone Inc.* 1,863
8,439
Netegrity Inc.* 1,715
14,509
Netgear Inc* 1,130
12,137
NetIQ Corp.* 2,979
39,324
NetScout Systems Inc.* 1,239
8,165
Network Equipment Tech Inc* 1,252
10,216
Newport Corporation* 2,055
33,229
Nms Communicaitons Corp* 2,428
17,919
Novatel Wireless Inc* 963
25,520
OmniVision Technologies Inc.* 2,905
46,335
ON Semiconductor Corp.* 6,284
31,546
Open Solutions Inc* 621
15,513
Openwave Systems Inc.* 3,357 $
42,634
Oplink Communications Inc.* 5,583
10,719
OPNET Technologies Inc.* 615
8,057
Opsware Inc* 2,679
21,218
Optical Communications Products Inc.* 959
2,340
OSI Systems Inc.* 687
13,692
Overland Storage Inc.* 714
9,489
Packeteer Inc.* 1,714
27,681
Palmone Inc* 2,183
75,903
PalmSource Inc* 764
13,095
Paradyne Networks Inc.* 2,056
11,308
Parametric Technology Corp.* 14,000
70,000
Park Electrochemical Corp. 903
22,801
PC-Tel Inc.* 1,093
12,897
PDF Solutions Inc.* 762
6,454
PEC Solutions Inc.* 603
7,194
Pegasystems Inc.* 590
5,163
Pericom Semiconductor Corp.* 1,157
12,391
Perot Systems Corp* 3,971
52,695
Pinnacle Systems Inc.* 3,593
25,690
Pixelworks Inc.* 2,115
32,402
Planar Systems Inc.* 764
10,230
Plexus Corp.* 2,248
30,348
PLX Technology Inc.* 1,032
17,812
Power Integrations Inc.* 1,440
35,856
Progress Software Corp.* 1,643
35,604
QAD Inc* 669
7,097
Quantum Corp.* 9,410
29,170
Quest Software Inc.* 2,597
33,500
Radisys Corp.* 979
18,180
Realnetworks Inc* 5,875
40,185
Redback Networks Inc* 1,630
10,448
Remec Inc.* 3,213
20,306
Retek Inc.* 2,913
17,886
RF Micro Devices, Inc.* 9,704
72,780
RSA Security Inc.* 3,225
66,016
Safeguard Scientifics Inc.* 6,252
14,380
Safenet Inc* 1,241
34,351
Sapient Corp.* 4,113
24,719
SBS Technologies Inc.* 797
12,808
ScanSoft Inc.* 4,215
20,864
ScanSource Inc.* 655
38,920
SeaChange International Inc.* 1,277
21,556
Secure Computing Corp.* 1,858
21,646
SeeBeyond Technology Corp.* 2,590
9,764
SERENA Software Inc.* 1,311
25,027
Si International Inc* 262
5,342
Sigmatel Inc* 1,284
37,313
Silicon Graphics Inc.* 13,633
29,993
Silicon Image Inc.* 3,866
50,761
Silicon Storage Technology Inc.* 4,240
43,672
Siliconix Inc.* 306
15,184
SimpleTech Inc.* 1,053
3,592
Sipex Corp.* 1,033
5,888
Sirf Technology Holdings Inc* 572
7,476
Skyworks Solutions Inc.* 7,817
68,242
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
21
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
TECHNOLOGY - 12.78% (CONTINUED)
SonicWALL Inc.* 3,105 $
26,703
Sonus Networks Inc.* 11,284
53,938
SPSS Inc.* 739
13,280
SRA International Inc.* 680
28,778
SS&C Technologies Inc. 709
13,258
Staktek Holdings Inc* 534
2,804
Standard Microsystems Corp.* 961
22,411
Stellent Inc* 1,060
9,052
Stratasys Inc* 479
11,860
Stratex Networks, Inc.* 4,396
12,968
Suntron Corp.* 127
733
Supertex Inc.* 466
7,614
Supportsoft Inc* 1,895
16,449
Sycamore Networks Inc.* 9,116
38,561
Sykes Enterprises Inc.* 1,306
9,873
Synaptics Inc.* 1,149
22,003
Synnex Corp* 342
5,369
Syntel Inc. 383
6,339
Sypris Solutions Inc. 353
6,774
TALX Corp. 712
17,394
Tekelec* 2,591
47,078
Terremark Worldwide Inc* 15,677
13,325
Tessera Technologies* 1,258
22,669
Tier Technologies Inc.* 866
8,435
Tippingpoint Technologies* 171
4,343
Titan Corp* 4,382
56,878
Titanium Metals* 68
6,293
Transaction Systems Architects Inc.* 1,942
41,811
Transmeta Corp.* 7,778
17,034
Trident Microsystems Inc* 979
10,975
Trimble Navigation Ltd.* 2,646
73,532
Tripath Tech* 1,786
5,805
Triquint Semiconductor Inc.* 7,108
38,810
TriZetto Group Inc.* 1,637
10,968
TTM Technologies Inc.* 2,128
25,217
Tumble Weed Communications* 2,490
10,607
Tyler Technologies Inc.* 1,917
18,135
Ulticom Inc.* 540
6,318
Ultimate Software Group Inc* 798
8,060
Universal Display Corp.* 1,086
11,664
UNOVA Inc.* 2,504
50,706
Varian Inc.* 1,811
76,334
Verint Systems Inc.* 610
20,874
Verity Inc.* 1,555
21,008
Verso Technologies Inc* 6,941
12,147
ViaSat Inc.* 1,088
27,146
Vignette Corp.* 15,079
25,031
Vitesse Semiconductor Corp.* 11,336
55,320
WatchGuard Technologies Inc.* 1,748
12,622
WebEx Communications, Inc.* 1,573
34,228
WebMethods Inc.* 2,416
20,705
Websense Inc.* 1,198
44,602
Westell Technologies Inc* 2,570
13,106
Wiltel Communications Inc"+"* 1,170
12
Wind River Systems Inc.* 3,708
43,602
Witness Systems Inc.* 1,072
13,029
Wj Communications* 1,653 $
5,852
Xicor Inc.* 1,536
23,240
Xybernaut Corporation* 9,237
15,426
Zhone Technologies Inc New* 2,362
9,200
Zix Corporation* 1,089
8,647
Zoran Corp.* 2,231
40,939
---------
- -----
7,394,993
---------
- -----
UTILITIES - 3.83%
Airgate Pcs Inc* 617
11,290
Alamosa Holdings Inc.* 3,321
24,409
Alaska Communications Systems Group Inc.* 513
3,129
American States Water Co. 796
18,499
Aquila Inc* 10,216
36,369
Arch Wireless Inc* 926
26,382
Atmos Energy Corp. 2,732
69,939
Avista Corp. 2,527
46,547
Black Hills Corp 1,693
53,330
Boston Communications Group Inc.* 957
9,809
California Water Service Group 829
22,839
Cascade Natural Gas Corp. 586
12,933
Centennial Communications Corp.* 619
4,426
Central Vermont Public Service Corp. 632
12,950
CH Energy Group Inc. 823
38,220
Cincinnati Bell Inc* 12,797
56,819
Cleco Corp. 2,483
44,644
CMS Energy* 8,541
77,979
Commonwealth Telephone Enterprises Inc.* 1,126
50,411
Connecticut Water Service Inc. 417
10,700
CT Communications Inc. 986
14,839
D & E Communications Inc 679
9,113
Dobson Communications Corp* 5,749
18,742
Duquesne Light Holdings, Inc. 3,979
76,835
El Paso Electric Co.* 2,485
38,368
Empire District Electric Co. 1,325
26,646
Energen Corp. 1,898
91,085
EnergySouth Inc. 236
9,445
General Communication Inc* 2,372
18,835
Golden Telecom Inc. 739
20,795
IDACORP Inc. 1,994
53,838
Intrado Inc.* 902
14,514
Itc Deltacom Inc* 655
3,648
Laclede Group Inc. 1,082
29,658
Mediacom Communications Corp.* 3,444
26,932
Metrocall Holdings Inc* 285
19,095
MGE Energy, Inc. 972
31,716
Middlesex Water Co. 553
10,717
New Jersey Resources Corp. 1,439
59,834
NICOR Inc. 2,301
78,165
North Pittsburgh Systems Inc. 784
15,719
Northwest Natural Gas Co. 1,426
43,493
NS Group Inc. 957
15,733
NUI Corp. 834
12,177
Otter Tail Corp. 1,351
36,288
Peoples Energy 1,961
82,656
Piedmont Natural Gas Co. 1,988
84,888
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
22
<Page>
<Table>
<Caption>
SHARES
VALUE
--------------------------
- -----
UTILITIES - 3.83% (CONTINUED)
PNM Resources Inc. 3,155 $
65,529
Price Communications Corp.* 2,094
30,907
Primus Telecommunications Group* 3,866
19,639
PTEK Holdings Inc.* 2,678
30,877
Shenandoah Telecommunications Co. 343
9,261
Sierra Pacific Resources* 6,124
47,216
SJW Corp. 337
11,458
South Jersey Industries Inc. 717
31,549
Southern Union Co.* 3,090
65,137
Southwest Gas Corp. 1,811
43,699
Southwest Water Co. 862
10,792
Southwestern Energy Co. 1,884
54,014
SureWest Communications 761
24,049
Talk America Holdings Inc.* 1,394
10,692
Time Warner Telecom Inc.* 2,592
10,860
Triton PCS Holdings Inc.* 1,993
8,689
UbiquiTel Inc.* 3,674
15,504
UIL Holdings Corp. 651
31,698
UniSource Energy Corp. 1,783
44,308
WGL Holdings, Inc. 2,541
72,978
---------
- -----
2,214,254
---------
- -----
Total Common Stocks
(cost $49,130,560)
54,076,158
---------
- -----
CORPORATE BONDS - .01%
MATERIALS - .01%
Brookfield Homes Corp.
(12.000% due 06/30/20) 3,000
3,098
---------
- -----
Total Corporate Bonds
(cost $3,000)
3,098
---------
- -----
UNIT INVESTMENT TRUST - 1.17%
iShares Russell 2000 Index Fund* 5,755 $
679,032
---------
- -----
Total Unit Investment Trust
(cost $471,652)
679,032
---------
- -----
SHORT-TERM INVESTMENTS(3) - 8.21%
NORTHERN TRUST DIVERSIFIED ASSETS
PORTFOLIO - 7.18% 4,152,759
4,152,759
---------
- -----
<Caption>
PRINCIPAL
VALUE
--------------------------
- -----
U.S. TREASURY BILL - 1.03%
(.870% due 03/18/04) $ 600,000 $
598,396
---------
- -----
Total Short-Term Investments
(cost $4,751,054)
4,751,155
---------
- -----
TOTAL INVESTMENTS - 102.87%
(cost $54,356,266)(1)
59,509,443
---------
- -----
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(2) - .01%
3,849
---------
- -----
OTHER ASSETS AND LIABILITIES - (2.88%)
(1,664,116)
---------
- -----
TOTAL NET ASSETS - 100.00% $
57,849,176
==============
</Table>
* Non-income producing
"+" Illiquid
(1) For federal income tax purposes, cost is $54,619,020 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$7,642,142 and ($2,751,718), respectively, with a net appreciation /
depreciation of $4,890,424.
(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 $3,184, $3,849,
and $0, respectively.
(3) Securities and other assets with an aggregate value of $2,961,750 have been
segregated with the custodian or designated to cover margin requirements
for the open futures contracts as of June 30, 2004:
<Table>
<Caption>
UNREALIZED
APPRECIATION/
TYPE CONTRACTS (DEPRECIATION)
- ---------------------------------------------------------------------
Russell 2000 Index (09/04) 10 $ 134,000
Russell 2000 Index Mini (09/04) 5 $ 17,650
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
23
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
EAFE INTERNATIONAL INDEX PORTFOLIO SCHEDULE OF INVESTMENTS
JUNE 30, 2004
(UNAUDITED)
<Table>
<Caption>
SHARES VALUE
-----------------------------
COMMON STOCKS - 97.36%
AUSTRALIA - 4.43%
Alumina Ltd 4,135 $ 15,209
Amcor Limited 3,200 15,537
AMP Ltd 6,680 29,455
Australia & New Zealand Bank Group 6,647 84,642
Australian Dollars* 8 6
Australian Gas Light 1,700 14,365
BHP Billiton Ltd 13,736 119,893
BHP Steel Ltd 2,827 13,273
Boral Limited 2,100 9,450
Brambles Industries Limited 3,558 14,871
Coca-Cola Amatil Ltd 1,715 8,279
Coles Myer Limited 3,993 23,893
CSL Limited 700 10,874
Commonwealth Bank of Australia 4,640 105,306
Fairfax-John Holdings Ltd 3,300 8,574
Foster's Brewing Group Limited 7,446 24,482
General Property Trust 7,363 17,900
Insurance Australia Group Ltd 6,200 21,595
Lend Lease Corporation Limited 1,325 9,488
Macquarie Bank Limited 800 18,881
Macquarie Infrastructure Group 7,100 16,321
National Australia Bank 5,537 115,095
Newcrest Mining Limited* 1,200 11,519
News Corporation Limited 4,994 44,111
News Corporation Ltd. 9,871 80,795
Orica Limited 1,000 10,519
Origin Energy Limited 2,400 9,429
QBE Insurance Group Ltd 2,454 21,881
Rinker Group Ltd 3,500 19,627
Rio Tinto Limited 1,183 29,626
Santos Limited 2,166 10,456
Stockland Trust Group 4,648 16,772
Sumcorp Metway Limited 2,000 19,783
TABCORP Holdings Limited 1,479 14,671
Telstra Corporation Limited 7,912 27,723
Wesfarmers Limited 1,321 27,054
Westfield Holdings 1,600 17,164
Westfield Trust 7,953 24,432
Westpac Banking Corp 6,588 80,770
WMC Limited 4,135 14,172
Woodside Petroleum Limited 1,700 19,741
Woolworths Limited 3,770 29,938
-------------
1,227,572
-------------
AUSTRIA - .17%
Erste Bank* 100 15,707
OMV AG 77 14,990
Telekom Austria AG 1,000 15,269
-------------
45,966
-------------
BELGIUM - 1.02%
Belgacom SA 600 18,264
Delhaize-Le Lion 253 12,944
Dexia 2,336 38,766
Electrabel 124 $ 39,753
Fortis 4,277 94,706
Groupe Bruxelles Lambert 235 15,025
KBC Bancassurance Holding 412 23,705
Solvay SA 275 22,450
UCB S.A.* 345 16,068
-------------
281,681
-------------
DENMARK - .95%
AP Moller 17 116,872
Danisco A/S 200 10,312
Danske Bank A/S 1,695 40,161
ISS A/S 200 9,887
Novo-Nordisk A/S 984 50,656
Novozymes A/S 200 9,019
TDC A/S 512 16,636
Vestas Wind System* 600 8,815
-------------
262,358
-------------
FINLAND - 1.31%
Fortum Oyj 1,200 15,330
Kone Oyj 100 6,044
Nokia Oyj 17,634 254,449
Sampo Oyj 1,000 9,709
Stora Enso Oyj 2,331 31,622
Tietoenator Oyj 300 9,107
UMP-Kymmene Oyj 1,910 36,344
-------------
362,605
-------------
FRANCE - 9.62%
Accor SA 646 27,265
Alcatel SA* 4,427 68,296
Arcelor 1,474 24,748
Atos Origin* 200 12,848
Autoroutes Du Sud De La 300 11,913
Aventis SA 2,485 187,600
Axa 4,834 106,451
BNP Paribas 3,010 185,120
Bouygues 705 23,605
Cap Gemini SA* 455 18,262
Carrefour Supermarche 2,078 100,825
Casino Guichard Perrachon 74 6,676
Compagnie De Saint-Gobain 1,119 55,778
Credit Agricole SA* 2,400 58,399
Dassault Systems SA 200 9,273
Essilor International 320 20,887
Euronext* 400 11,145
Finmeccanica SPA 21,700 17,240
France Telecom 4,109 107,083
Groupe Danone 900 78,510
Lafarge SA 620 55,292
Lagardere S.C.A. 420 26,239
L'Air liquide 724 119,675
L'OREAL 1,155 92,253
LVMH Moet Hennessy Louis Vuitton 921 66,616
Michelin (C.G.D.E.) 538 29,750
Pernod-Ricard 167 21,354
Peugeot SA 651 36,252
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
1
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
FRANCE - 9.62% (CONTINUED)
Pinault-Printemps-Redoute 257 $ 26,406
Publicis Groupe* 400 11,840
Renault SA 690 52,552
Sanofi-Synthelabo SA 1,333 84,496
Schneider Electric SA 731 49,894
Societe Generale 1,239 105,294
Sodexho Alliance SA 364 9,592
STMicroelectronics N.V. 2,194 48,128
Suez Lyonnaise des Eaux 2,940 61,202
Technip SA* 43 5,833
Television Francaise 400 12,600
The Thales Company 287 10,500
Thomson Mulitmedia 900 17,750
Total FinaElf SA 2,093 399,029
Unibal Holding 200 20,683
Valeo SA 227 9,459
Vinci* 285 28,711
Vivendi Environment 1,000 28,214
Vivendi Universal* 3,709 102,886
-------------
2,664,424
-------------
GERMANY - 6.88%
Adidas AG 200 23,895
Allianz AG 1,125 121,817
Altana AG 300 18,067
BASF AG 2,012 107,830
Bayer AG 2,396 69,088
Bayer Hypo-Vereinsbank* 2,100 37,430
Commerzbank AG* 1,900 33,519
Continental AG* 500 24,120
DaimlerChrysler AG 3,124 146,331
Depfa Bank* 1,300 18,822
Deutsche Bank AG 1,937 152,358
Deutsche Boerse AG 400 20,415
Deutsche Lufthansa* 700 9,547
Deutsche Post AG 1,632 35,184
Deutsche Telekom 9,196 161,671
E.ON AG 2,322 167,244
Fresenius Medical Care AG 100 7,409
Greek Org of Football 600 11,329
Heidelbergcement AG* 200 9,891
Henkel KGAA 200 17,082
Hypo Real Estate Holding* 450 13,167
Infineon Technologies* 2,300 30,977
Linde AG 300 16,509
Man AG 400 14,648
Merck Kgaa 200 12,094
Metro AG 500 23,725
Muenchener Rueckversicherungs AG 585 63,558
Puma AG* 100 25,367
RWE AG 1,400 65,918
SAP AG 732 122,011
Schering AG 415 36,290
Siemens AG 2,960 213,016
ThyssenKrupp AG 1,100 18,803
TUI AG* 500 9,551
Volkswagen AG 807 34,070
Volkswagen AG - Preferred 400 $ 11,583
-------------
1,904,336
-------------
GREECE - .27%
Alpha Bank AE 820 20,851
EFG Eurobank Ergasias 700 15,262
Heelenic Telecommun* 900 11,694
National Bank of Greece 858 18,665
Public Power Corp 400 9,539
-------------
76,011
-------------
HONG KONG - 1.39%
Bank of East Asia 4,800 13,723
Boc Hong Kong Holdings Ltd 13,600 23,190
Cheung Kong Holdings 5,522 40,708
China Light & Power Holding 6,646 36,384
Esprit Holdings Limited 2,600 11,634
Hang Seng Bank 2,798 35,873
Henderson Land Development 2,700 11,631
Hikkaido Electric Power Co* 600 10,662
Hong Kong & China Gas 13,447 22,154
Hong Kong Electric Holdings 5,070 20,996
Hutchison Whampoa 7,818 53,374
Kobe Steel Ltd* 8,700 12,996
Li & Fung Ltd. 5,900 8,623
PCCW Ltd* 12,800 8,698
Sun Hung Kai Properties Ltd 4,823 39,574
Swire Pacific Ltd. 3,416 22,117
Wharf Holdings Ltd 4,500 12,923
-------------
385,260
-------------
ITALY - 3.92%
Alleanza Assicurazioni 1,700 19,401
Assicurazioni Generali 3,547 95,674
Aitostrade SpA* 600 11,789
Banca Antonveneta SpA* 800 16,439
Banca Intesa SpA 11,965 46,729
Banca Intesa SpA-RNC 3,566 10,715
Banca Monte Dei Paschi Siena 4,000 12,799
Banca Nazionale Lavoro* 4,387 10,195
Banche Popolari Unite* 1,200 19,900
Banco Popolar Di Verona 1,400 24,051
Banco Popolare Di Milano 1,400 8,993
Bank of Ireland* 3,600 48,092
Capitalia SpA 5,218 16,316
Enel SpA 8,893 71,302
ENI-Ente Nazionale Idrocarburi SpA 9,565 189,920
Fiat SpA* 1,900 15,904
Luxottica Group SpA 500 8,334
Mediaset SpA 2,163 24,658
Mediobanca SpA* 1,750 21,291
Riunione Adriatica di Sicurta SpA 1,100 19,954
San Paolo-IMI SpA 3,427 41,278
Snam Rete Gas* 3,200 13,743
South African Breweries 2,897 37,485
Telecom Italia Media SpA 21,247 46,918
Telecom Italia SpA 30,230 93,971
TIM SpA 13,956 79,125
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
ITALY - 3.92% (CONTINUED)
Unicredito Italiano SpA 16,159 $ 79,819
-------------
1,084,795
-------------
JAPAN - 23.33%
77th Bank*
Acom Co Ltd 300 19,493
Advantest Corp. 300 20,098
Aeon Co. Ltd. 900 36,127
Aiful Corp 200 20,877
Aisin Seiki Co. Ltd* 600 12,510
Ajinomoto Co Inc 2,100 25,289
Asahi Breweries Ltd. 1,400 15,435
Asahi Glass Co Ltd 2,800 29,125
Asahi Kasei Corp 4,500 23,301
Bank of Fukuoka Ltd 2,000 11,859
Bank of Yokohama Ltd 3,600 22,501
Bridgestone Corp 2,400 45,090
Canon Inc 3,100 163,360
Casio Computer 700 10,598
Central Japan Railway Co 9 76,626
Chiba Bank Ltd 2,600 15,917
Chubu Electric Power Co. 2,400 50,699
Chugai Pharmaceutical Co Ltd 1,000 15,690
Citizen Watch Co 1,000 11,328
Credit Saison Co 500 15,030
CSK Corporation 200 9,715
Dai Nippon Printing Co. Ltd. 2,400 38,338
Daiichi Pharmaceutical Co Ltd 900 16,043
Daikin Industries 700 18,797
Daito Trust Construction 300 11,547
Daiwa House 1,800 20,884
Daiwa Securities Group Inc 4,400 31,614
Denso Corp 1,900 44,229
East Japan Railway Company 22 123,393
Eisai Co Ltd 900 25,899
Fanuc 500 29,831
Fast Retailing Co Ltd 200 16,185
Fuji Photo Film Company Ltd 1,700 53,283
Fujikara Ltd 1,000 23,691
Furukawa Electric Co Ltd 100 10,988
Fujitsu Limited* 6,200 43,695
Hitachi Ltd 11,700 80,527
Honda Motor Co Ltd 2,900 139,797
Hoya Corporation 400 41,864
Isetan Co Ltd* 600 8,639
Itochu Corp 4,900 22,004
Ito-Yokado Co Ltd 1,200 51,359
Japan Tobacco Inc 6 46,630
JFE Holdings Inc. 1,900 46,579
Joyo Bank Ltd 2,500 11,112
JSR Corp 700 13,151
Kajima Corporation 3,300 12,249
Kaneka Corp 1,000 9,467
Kansai Electric Power Co 2,600 47,394
Kao Corp 2,000 48,206
Kawasaki Kisen Kaisha Ltd 1,700 8,585
Keihin Electric Express Railway 1,400 8,763
Keio Electric Railway 2,000 $ 11,419
Keyence Corporation 100 22,811
Kinki Nippon Railway Co Ltd 5,600 21,299
Kirin Brewery Co. Ltd. 2,500 24,722
Komatsu Ltd 3,500 21,202
Konami Co Ltd 1,600 22,083
Kubota Corp. 3,900 20,730
Kuraray Co Ltd 1,300 10,639
Kyocera Corp 600 50,919
Kyowa Hakko Kogyo Co Ltd 1,300 9,376
Kyushu Electric Power 1,500 27,975
Lawson Inc 200 8,248
Marubeni Corp 4,700 11,544
Marui Co 1,100 14,819
Matsushita Electric Industrial Co Ltd 8,100 114,988
Matsushita Electric Works 1,100 9,980
Millea Holdings 7 103,927
Mitsubishi Chemical Corp 6,000 15,946
Mitsubishi Corp 4,000 38,858
Mitsubishi Electric Corp 6,300 30,947
Mitsubishi Estate Co Ltd 3,600 44,672
Mitsubishi Heavy Industries Ltd 10,500 28,484
Mitsubishi Tokyo Financial 26 240,664
Mitsui & Co Ltd 4,600 34,443
Mitsui Fudosan Co Ltd 2,600 31,167
Mitsui Osk Lines Ltd 3,300 17,360
Mitsui Pertochemical 2,200 11,009
Mitsui Sumitomo Insurance Co 4,600 43,211
Mitsui Trust Holdings Inc 2,000 14,663
Mizuho Financial Group Inc* 26 117,949
Murata Manufacturing Co. Ltd 800 45,603
NEC Corporation 5,900 41,527
NEC Electronics Corp* 100 6,140
Nidec Corporation 200 20,492
Nikko Cordial Corp 5,100 24,725
Nikon Corp 1,000 11,254
Nintendo Co Ltd 400 46,373
Nippon Express Co Ltd 2,900 17,010
Nippon Mining Holdings Inc* 2,200 10,867
Nippon Oil Corp 4,700 29,592
Nippon Steel Corp 22,500 47,221
Nippon Telegraph & Telephone Corp. 54 288,521
Nippon Unipac Holding 3 15,699
Nippon Yusen Kabushiki Kaisha 3,400 15,673
Nissan Motor Co Ltd 9,100 101,162
Nitto Denko Corp 600 30,683
Nok Corp* 300 11,135
Nomura Holdings Inc. 6,900 102,126
Nomura Reaserch Institute Ltd* 100 10,658
NTT Mobile Communications 66 117,949
Obayashi Corp 2,100 11,297
OJI Paper Co Ltd 2,900 18,604
Oki Electric Ind Co Ltd* 2,400 13,021
Olympus Corp 800 15,103
Oracle Corp 800 18,733
Oriental Land Co Ltd 200 13,142
Orix Corp 300 34,367
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
JAPAN - 23.33% (CONTINUED)
Osaka Gas Co Ltd 7,400 $ 20,548
Pioneer Corp 593 15,325
Promise Co Ltd 300 20,015
Resona Holding Inc* 16,700 29,692
Ricoh Company Limited 2,500 53,155
Rohm Company Limited 400 47,876
Sankyo Co. Ltd. 1,400 30,344
Sanyo Electric Co Ltd 5,500 22,631
Secom 800 33,945
Seiko Epson Corp 400 14,553
Sekisui Chemical 1,500 12,661
Sekisui House Ltd 1,800 19,977
Seven Eleven 1,400 45,677
Sharp Corporation 3,500 55,909
Shimizu Corporation 1,900 8,602
Shin-Etsu Chemical Co Ltd 1,300 46,465
Shinsei Bank Ltd* 2,000 12,757
Shionogi & Co Ltd 1,100 18,912
Shiseido Co Ltd 1,200 15,122
Shizuoka Bank Ltd. 2,200 19,436
SMC Corporation 200 21,629
Softbank Corp 800 35,192
Sompo Japan Insurance 2,700 27,590
Sony Corporation 3,400 128,067
Stanley Electric Co Ltd 548 9,161
Sumitomo Chemical Co Ltd. 4,900 22,858
Sumitomo Corp 2,900 21,049
Sumitomo Electric Industries Ltd 2,500 25,501
Sumitomo Metal Industries 13,200 15,606
Sumitomo Metal Mining 1,900 12,398
Sumitomo Mitsui Financial 39 267,351
Sumitomo Realty 1,400 17,346
Sumitomo Trust and Banking 4,000 28,483
Taisei Corp 2,800 10,572
Taisho Pharm Co 600 13,307
Takashimaya Co Ltd 1,000 11,566
Takeda Chemical Industries Ltd 3,300 144,866
Takefuji Corp 200 14,498
T&D Holdings Inc 600 29,968
TDK Corp 400 30,353
Teijin Limited 2,900 10,844
Terumo Corporation 600 15,039
Tobu Railway Co Ltd 2,800 12,266
Tohoku Electric Power 1,600 26,951
Tokyo Electric Power 4,200 95,266
Tokyo Electron Limited 600 33,653
Tokyo Gas Co Ltd 9,300 32,984
Tokyu Corporation 3,600 18,443
Tonengeneral Sekiyu 1,100 9,426
Toppan Printing Co. Ltd. 2,100 23,768
Toray Industries Inc 4,400 20,727
Toshiba Corporation 10,600 42,647
Tosten Corp 900 19,424
Toto Ltd 1,100 11,573
Toyo Seikan Kaisha 500 8,587
Toyota Industries Corporation 700 16,807
Toyota Motor Corporation 10,600 429,382
Trend Micro 300 $ 13,307
UFJ Holdings Inc 4 17,669
Wolters Kluwer 982 17,826
Yamada Denki Corp 300 11,190
Yamaha Corporation 600 9,843
Yamaha Motor Co Ltd 600 9,342
Yamanouchi Pharmaceutical Co Ltd 1,100 36,998
Yamato Transport Co Ltd 1,500 24,483
Yokogawa Electric 800 10,668
-------------
6,460,218
-------------
NETHERLANDS - 5.19%
ABN Amro Holding NV 5,735 125,455
Aegon NV 4,990 60,164
Akzo Nobel NV 965 35,492
ASML Lithography Holding NV* 1,762 29,819
DSM NV 300 14,720
Heineken NV 1,066 35,031
Inditex* 800 18,357
ING Groep NV 6,426 151,673
Interbrew 562 17,880
Koninklijke Ahold NV* 5,730 44,966
Koninklijke KPN NV 7,297 55,576
Koninklijke Numico NV* 500 16,066
Nordea Bank AB 8,030 57,830
Philips Electronics NV 4,834 130,153
Reed Elsevier NV 2,544 35,718
Rodamco Europe NV 200 12,081
Royal Dutch Petroleum Company 7,603 390,173
TNT Post Group NV 1,107 25,294
Unilever NV 2,127 145,176
Vedior NV* 600 8,745
Vnu-Ver Ned Uitgev Ver Bezit 893 25,934
-------------
1,436,303
-------------
NEW ZEALAND - .09%
Telecom Corp 7,000 26,139
-------------
NORWAY - .42%
DNB Nor ASA 2,360 16,104
Norsk Hydro ASA 557 36,201
Orkla ASA 733 18,347
Statoil ASA 1,570 19,932
Telenor ASA 3,000 20,861
Yara International ASA* 557 4,500
-------------
115,945
-------------
PORTUGAL - .28%
Banco Comercial Portugues 6,621 15,466
Brisa-Auto Estradas de Portugal SA* 1,300 9,379
Electricidade de Portugal SA* 6,603 18,477
Portugal Telecom SGPS SA 3,219 34,738
-------------
78,060
-------------
SINGAPORE - .61%
DBS Group Holdings Ltd 4,009 33,516
Keppel Corp. 2,000 8,186
Oversea-Chinese Banking Corp 3,554 24,966
Singapore Airlines Ltd.* 2,000 13,005
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
4
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
SINGAPORE - .61% (CONTINUED)
Singapore Dollars* 4,253 $ 2,469
Singapore Press Holdings 5,772 13,939
Singapore Technologies Engineering Ltd* 22,844 29,841
UTD Overseas Bank 4,294 33,406
Venture Corporation Ltd 800 8,360
-------------
167,688
-------------
SPAIN - 3.34%
Abertis Infraestructuras SA 875 15,245
Acerinox SA 200 11,385
ACS, Actividades Cons 900 15,166
Altadis SA 1,004 31,027
Banco Bilbao Vizcaya Argentaria SA 11,799 157,621
Banco Popular Espanol 600 33,886
Banco Santander Central Hispano SA 15,747 163,423
Endesa SA 3,466 66,796
Gas Natural SDG SA 607 14,541
Grupo Ferrovial SA 200 8,327
Iberdrola SA 2,790 58,894
Repsol YPF SA 3,406 74,590
Telefonica SA 17,293 255,630
Union Electrica Fenosa SA 829 17,681
-------------
924,212
-------------
SWEDEN - 1.97%
Assa Abloy AB 1,100 14,055
Atlas Copco AB - Series A 400 14,841
Atlas Copco AB - Series B* 300 10,255
Electrolux AB 1,080 20,717
Ericsson Lm-B Shares* 53,918 158,899
Hennes & Mauritz AB 1,790 46,218
Sandvik AB 804 27,430
Scania AB-B 300 10,195
Securitas AB 1,100 13,726
Skandia Forsakrings AB 3,800 15,739
Skandinaviska Enskilda Banken (SEB) 1,700 24,599
Skanska AB 1,400 12,313
SKF AB 300 11,012
Svenska Cellulosa AB 713 27,070
Svenska Handelsbanken 2,048 41,053
Swedish Match AB 1,200 12,266
Tele2 AB 325 14,237
Telia AB 6,816 28,864
Volvo AB Class A 400 13,408
Volvo AB Class B 852 29,633
-------------
546,530
-------------
SWITZERLAND - 6.96%
ABB Ltd.* 6,700 36,646
Adecco SA 500 24,912
AGFA Aevaert NV 300 7,442
CIBA Spezialitaten 300 21,607
CIE Financ Richemont 1,961 51,201
Clariant AG-Reg 800 11,690
Credit Suisse Group 4,138 147,031
Holcim Ltd B 700 38,063
Nestle SA 1,468 391,498
Nobel Biocare* 100 15,650
Novartis 8,730 $ 385,127
Roche Holding AG 2,582 255,644
Swiss Re 1,188 77,167
Swisscom 122 40,329
Syngenta AG 407 34,122
The Swatch Group AG-B 100 13,015
UBS AG 4,149 292,358
Zurich Financial Services AG 535 84,475
-------------
1,927,977
-------------
UNITED KINGDOM - 25.21%
3I Group Plc 2,212 24,570
Alliance Unichem Plc 900 10,650
Amvescap Plc 2,603 17,749
Associated British 1,200 8,797
AstraZeneca Plc 6,266 281,130
Aviva Plc 8,239 85,017
BAA Plc 3,914 39,288
BAE Systems Plc 11,254 44,747
Barclays Plc 24,002 204,471
Barratt Developments Plc 900 9,622
BG Group Plc 12,918 79,593
Billiton Plc 9,101 78,975
BOC Group Plc 1,865 31,217
Boots Co. Plc 2,938 36,657
BP Amoco Plc 81,100 716,254
BPB Plc 1,800 13,343
Brambles Industries Plc 2,633 10,171
British Airways* 2,000 9,992
British American Tobacco Plc 5,754 89,166
British Land Company Plc 1,813 22,801
British SKY Broadcasting Plc 4,649 52,441
BT Group Plc 31,766 114,351
Bunzl Plc 1,700 14,174
Cable & Wireless Plc 8,700 20,471
Cadbury Schweppes Plc* 7,517 64,855
Capita Group Plc 2,405 13,891
Carnival Plc 615 29,868
Celltech Group Plc* 1,065 10,603
Centrica Plc 15,677 63,826
Cobham Plc 400 10,134
Compass Group Plc 7,993 48,777
Corus Group Plc* 14,600 10,458
Daily Mail & Gen Trust A 1,100 14,532
Diageo Plc 11,287 152,187
Dixons Group Plc 7,160 21,457
Elan Corporation Plc* 1,400 34,526
Electrocomponents Plc 1,619 10,482
Emap Plc 900 12,078
Enterprise Inns Plc 1,300 13,556
European Aeronautic Defense 900 25,053
European Monetary* 90 109
Exel Plc 1,105 15,370
Friends Provident Plc 6,300 16,766
General Electric Co 1 23
George Wimpey Plc 1,400 9,369
GKN Plc 2,733 12,416
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
5
<Page>
<Table>
<Caption>
SHARES VALUE
-----------------------------
UNITED KINGDOM - 25.21% (CONTINUED)
GlaxoSmithKline Plc 21,816 $ 441,527
GUS Plc 3,665 56,196
Hammerson Plc 1,000 12,631
Hanson Plc 2,707 18,618
Hays Plc 6,364 14,167
HBOS Plc 14,060 174,023
Hilton Group Plc 5,758 28,820
HSBC Holdings Plc 40,181 597,519
ICAP Plc* 1,700 8,386
IMI Plc 1,300 8,758
Imperial Chemical Industries Plc 4,339 18,138
Imperial Tobacco 2,707 58,321
Inchcape* 300 9,537
Intercontinental Hotel Group 2,697 28,490
ITV Plc 14,943 31,299
Johnson Matthey Plc 780 13,035
Kesa Electricals Plc 1,923 10,085
Kingfisher Plc 8,526 44,262
Land Securities Plc 1,674 35,185
Legal & General Group Plc 23,879 41,139
Liberty International Plc 900 12,421
Lloyds TSB Group Plc 20,557 160,957
Logicagmg Plc 2,734 9,073
Man Group Plc 1,000 25,897
Marconi Plc* 701 8,678
Marks & Spencer Plc 8,342 54,878
Mitchells & Butlers Plc 1,880 9,494
National Grid Transco Plc 11,324 87,381
National Power Plc 4,112 10,477
Next Plc 1,000 25,806
Pearson Plc 2,909 35,346
Peninsular & Orient Steam Navigation 2,712 10,820
Persimmon Plc 1,000 11,461
Provident Financial Plc 980 10,672
Prudential Plc 7,363 63,359
Punch Taverns Plc 900 8,308
Rank Group Plc 2,200 11,969
Rechitt Benckiser Plc 2,230 63,128
Reed Elsevier Plc 4,667 45,365
Rentokil Initial Plc 6,749 17,686
Reuters Group Plc 5,238 35,194
Rexam Plc 2,000 16,258
Rio Tinto Plc Reg 3,904 93,880
RMC Group Plc 935 10,292
Rolls Royce Plc 5,500 25,110
Rolls Royce Plc B"+"* 365,000 794
Royal Bank of Scotland Group Plc 10,895 313,758
Royal Sun Alliance Ins. Group 10,600 15,859
Sage Group Plc 4,700 15,896
Sainsbury (J) Plc 5,720 29,538
Scot & Newcastle 2,900 22,838
Scottish & Southern Energy 3,148 38,906
Scottish Power Plc 6,793 $ 49,122
Severn Trent Plc 1,300 18,766
Shell Transport & Trading Co 35,476 260,238
Signet Group Plc 6,300 13,082
Slough Estates Plc 1,564 12,728
Smith & Nephew Plc 3,395 36,541
Smiths Group Plc 2,046 27,698
Tate & Lyle 1,500 8,977
Taylor Woodrow Plc 2,200 10,254
Tesco Plc 27,968 135,042
Thorn EMI 2,932 12,960
Tomkins Plc 2,800 13,939
Trinity Mirror Plc* 1,100 12,967
Unilever Plc 10,151 99,592
United Business Media Plc 1,200 11,033
United Utilities Plc 2,092 19,671
Vodafone Group Plc 250,225 547,944
Whitbread Plc 1,100 16,408
William Hill Plc 1,500 15,070
Wolseley Plc 2,140 33,182
WPP Group Plc 4,091 41,547
Yell Group Plc* 2,500 15,630
Yorshire Water Plc 1,400 12,701
-------------
6,982,710
-------------
Total Common Stocks
(cost $23,133,339) 26,960,790
-------------
UNIT INVESTMENT TRUST - 2.15%
iShares MSCI EAFE Index Fund* 4,161 595,023
-------------
Total Unit Investment Trust
(cost $509,329) 595,023
-------------
SHORT-TERM INVESTMENTS - 1.27%
NORTHERN TRUST DIVERSIFIED ASSETS
FUND - 1.27% 352,757 352,757
-------------
Total Short-Term Investments
(cost $352,757) 352,757
-------------
TOTAL INVESTMENTS - 100.78%
(cost $23,995,425)(1) 27,908,570
-------------
OTHER ASSETS AND LIABILITIES - (0.78%) (215,365)
-------------
TOTAL NET ASSETS - 100.00% $ 27,693,205
=============
</Table>
* Non-income producing
"+" Illiquid
(1) For federal income tax purposes, cost is $24,591,391 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was
$3,942,590 and ($625,411), respectively, with a net appreciation /
depreciation of $3,317,179.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
6
<Page>
SUMMIT MUTUAL FUNDS, INC. - PINNACLE SERIES
SCHEDULE OF INVESTMENTS LEHMAN AGGREGATE BOND INDEX PORTFOLIO
JUNE 30,2004
(UNAUDITED)
<Table>
<Caption>
PRINCIPAL VALUE
-----------------------------
U.S. TREASURY OBLIGATIONS - 24.44%
U.S. TREASURY NOTES & BONDS - 24.44%
6.500% due 05/15/05 $ 700,000 $ 726,797
5.750% due 11/15/05 155,000 162,066
4.625% due 05/15/06 350,000 362,401
6.500% due 10/15/06 475,000 512,759
2.250% due 02/15/07 450,000 441,229
6.250% due 02/15/07 350,000 378,219
6.125% due 08/15/07 500,000 542,442
5.500% due 02/15/08 250,000 267,705
5.625% due 05/15/08 300,000 322,922
3.125% due 10/15/08 800,000 783,969
5.500% due 05/15/09 200,000 215,375
6.000% due 08/15/09 200,000 219,773
5.750% due 08/15/10 300,000 327,094
6.250% due 08/15/23 300,000 332,203
6.125% due 11/15/27 100,000 109,582
5.500% due 08/15/28 500,000 506,543
5.250% due 11/15/28 290,000 284,121
5.250% due 02/15/29 300,000 294,141
6.125% due 08/15/29 200,000 220,000
-------------
Total U.S. Treasury Obligations
(cost $7,162,387) 7,009,341
-------------
SOVEREIGN GOVERNMENT BONDS - 1.05%
New Brunswick
(6.750% due 08/15/13) 100,000 112,930
Republic of Italy
(2.500% due 07/15/08) 200,000 189,597
-------------
Total Sovereign Government Bonds
(cost $193,450) 302,527
-------------
MORTGAGE-BACKED SECURITIES - 45.99%
FHLMC 2.500% due 03/15/06 500,000 497,670
FHLMC 2.375% due 04/15/06 500,000 495,647
FHLMC 5.500% due 07/15/06 800,000 837,185
FHMLC 3.500% due 09/15/07 1,300,000 1,296,302
FHLMC 5.750% due 03/15/09 200,000 213,339
FHLMC 5.000% due 05/01/18 2,033,319 2,039,888
FHLMC 4.500% due 09/01/18 740,515 725,254
FNMA 5.000% due 11/01/17 342,792 344,354
FNMA 5.500% due 08/01/18 808,587 829,025
FNMA 6.500% due 04/01/23 95,616 101,105
FNMA 6.500% due 08/01/32 1,372,386 1,430,010
FNMA 5.000% due 02/01/33 1,188,220 1,150,675
FNMA 5.500% due 07/01/33 1,612,829 1,609,772
FNMA 6.000% due 08/01/33 363,394 371,420
FNMA 5.500% due 11/01/33 1,251,858 1,249,485
-------------
Total Mortgage-Backed Securities
(cost $13,468,077) 13,191,131
-------------
ASSET-BACKED SECURITIES - 2.64%
PRIVATE SECTOR - 2.64%
AMSI 2003-6 AF4
(4.329% due 08/25/33) $ 250,000 $ 239,074
BSCMS 2000-WF2 A1
(7.110% due 10/15/32) 440,102 475,066
Countrywide
(6.815% due 01/25/29) 42,627 44,157
-------------
Total Asset-Backed Securities
(cost $782,795) 758,297
-------------
CORPORATE BONDS AND NOTES - 24.24%
BANK, BANK HOLDING COMPANIES, &
OTHER BANK SERVICES - 2.05%
Citigroup Capital
(7.750% due 12/01/36) 100,000 107,466
Key Bank
(5.000% due 07/17/07) 185,000 192,552
Residential Asset Corp.
(4.610% due 06/25/33) 298,000 286,544
-------------
586,562
-------------
CAPITAL GOODS - 3.06%
Eaton Corp.
(5.750% due 07/15/12) 180,000 187,503
Eli Lilly
(2.900% due 03/15/08) 100,000 97,208
General Electric Capital Corp
(6.125% due 02/22/11) 100,000 107,094
Honeywell International
(7.500% due 03/01/10) 108,000 123,540
Masco Corp
(5.875% due 07/15/12) 180,000 186,948
Pitney Bowes Inc.
(4.625% due 10/01/12) 180,000 175,239
-------------
877,532
-------------
CONSUMER NON-DURABLE - 3.25%
Campbell Soup Co.
(5.875% due 10/01/08) 230,000 244,424
Cargill Inc.(2)
(6.250% due 05/01/06) 230,000 242,873
Cintas Corp.
(5.125% due 06/01/07) 68,000 71,232
Diageo Capital
(3.375% due 03/20/08) 136,000 133,188
E.W. Scripps Co
(5.750% due 07/15/12) 180,000 187,383
Pharmacia Corp.
(5.875% due 12/01/08) 50,000 53,519
-------------
932,619
-------------
ENERGY - 5.28%
Colonial Pipeline Co.(2)
(7.750% due 11/01/10) 175,000 201,930
Colonial Pipeline Co.(2)
(6.580% due 08/28/32) 100,000 104,145
Conoco Funding Co.
(6.350% due 10/15/11) 80,000 87,045
Conoco Inc. Sr. Nts.
(6.350% due 04/15/09) 143,000 155,393
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
2
<Page>
<Table>
<Caption>
PRINCIPAL VALUE
------------- -------------
ENERGY - 5.28% (CONTINUED)
Devon Financing Corp.
(6.875% due 09/30/11) $ 180,000 $ 195,958
Exelon Generation Co.(2)
(5.350% due 01/15/14) 230,000 223,042
Keyspan Corp.
(7.250% due 11/15/05) 330,000 349,814
Public Service Inc.
(6.625% due 02/15/11) 180,000 197,156
-------------
1,514,483
-------------
FINANCE - 1.74%
American General Finance
(5.375% due 09/01/09) 210,000 215,953
Camden Trust
(5.875% due 11/30/12) 100,000 101,076
TIAA Global Market(2)
(4.125% due 11/15/07) 180,000 182,032
-------------
499,061
-------------
HEALTH CARE - .68%
Amgen Inc.
(6.500% due 12/01/07) 180,000 196,272
-------------
MEDIA & CABLE - .74%
Comcast Corp.
(5.850% due 01/15/10) 100,000 104,347
Thomson Corp.
(6.200% due 01/05/12) 100,000 106,610
-------------
210,957
-------------
MANUFACTURING - 5.21%
Alcoa Inc.
(7.375% due 08/01/10) 100,000 113,527
Champion International Corp.
(7.200% due 11/01/26) 200,000 223,240
Ford Motor Co.
(6.375% due 02/01/29) 500,000 422,556
Westvaco Corp.
(7.950% due 02/15/31) 500,000 552,618
Weyerhauser Co.
(5.250% due 12/15/09) 180,000 183,404
-------------
1,495,345
-------------
TELECOMMUNICATIONS - 1.60%
GTE North Inc.
(6.940% due 04/15/28) $ 80,000 $ 81,642
Sprint Capital Corp.
(6.000% due 01/15/07) 180,000 188,501
Verizon Wireless
(5.375% due 12/15/06) 180,000 187,657
-------------
457,800
-------------
TRANSPORTATION - .63%
CSX Corp.
(4.875% due 11/01/09) 180,000 180,944
-------------
Total Corporate Bonds & Notes
(cost $7,285,158) 6,951,575
-------------
<Caption>
SHARES VALUE
-----------------------------
SHORT-TERM INVESTMENTS - 1.27%
NORTHERN TRUST DIVERSIFIED ASSETS 365,373 $ 365,373
-------------
Total Short-Term Investments
(cost $365,373) 365,373
-------------
TOTAL INVESTMENTS - 99.63%
(cost $29,257,240)(1) 28,578,244
-------------
NORTHERN INSTITUTIONAL LIQUID ASSET
PORTFOLIO(3) - 18.35% 5,264,244
-------------
OTHER ASSETS AND LIABILITIES - (17.98%) (5,159,065)
-------------
TOTAL NET ASSETS - 100.00% $ 28,683,423
=============
</Table>
* Non-income producing.
(1) For federal income tax purposes, cost is $29,257,240 and gross unrealized
appreciation and depreciation of securities as of June 30, 2004 was $7,733
and ($686,729), respectively, with a net appreciation / depreciation of
($678,996).
(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 $9,597,889,
$5,264,244, and $4,488,258, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
3
<page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. 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 11 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: August 26, 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.
<table>
<c> <c>
By: /S/ Steven R. Sutermeister By: /S/ Thomas G. Knipper
---------------------------- --------------------------
Steven R. Sutermeister Thomas G. Knipper
President and Chief Executive Officer Vice President, Controller
and Chief Compliance Officer
Date: August 26, 2004 Date: August 26, 2004
--------------- ---------------
</table>