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 811-10201
The Appleton Funds
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
45 Milk Street, Boston, Massachusetts 02109
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
James I. Ladge, 45 Milk Street, Boston, Massachusetts 02109
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (513) 362-8000
Date of fiscal year end: 12/31
Date of reporting period: 06/30/05
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
Item 1. Reports to Stockholders.
================================================================================
APPLETON EQUITY GROWTH FUND
---------------------------
Semi-Annual Report
June 30, 2005
(Unaudited)
Investment Adviser Administrator
------------------ -------------
Appleton Partners, Inc. Integrated Fund Services, Inc.
45 Milk Street, Eighth Floor 221 East Fourth Street
Boston, MA 02109 Suite 300
Cincinnati, OH 45202
1-877-712-7753
================================================================================
Dear Fellow Shareholders:
Through June 30, 2005 the Dow Jones Industrial Average, Russell 1000 Growth and
S&P 500 indices have declined 3.6%, 1.7% and 0.8%, respectively. Last year, fear
of another controversial Presidential election kept investors on the sidelines
through the first three quarters of the year. After a smooth election and a late
year rally in 2004, investor anxiety has now shifted to such issues as rising
energy prices, inflation, decelerating corporate earnings growth, geo-political
tension and a Federal Reserve intent on raising short-term interest rates.
Despite these obstacles, recent data continue to demonstrate the resiliency of
both the US consumer and the corporate sector. In the first quarter of this
year, S&P corporate earnings growth registered 14%, easily surpassing analysts'
expectations. Corporate earnings growth in both the second and third quarters of
this year is expected in the range of 10 to 15 percent. While this rate of
growth does represent a noticeable slowdown from last year's 21%, it is still
very respectable and indicative of a healthy economy. On the economic front,
first quarter GDP growth of 3.8% is solidly above our long-term trend of 3.4%,
while inflation expectations have declined from 3% to a relatively benign 2.3%.
Additionally, the housing market continues to surge and the economy has added an
average of 180,000 jobs per month this year.
While the recent data point to steady economy growth, stubbornly high energy
prices and uncertainty over the future path of interest rates may be weighing
most heavily on investors' minds. Oil prices declined over 20% towards the end
of May, only to rebound to $60 by the end of the second quarter. Despite the
relatively benign inflation data, Chairman Greenspan has indicated that the Fed,
after raising rates nine consecutive times, will continue to raise rates at a
measured pace. At 3.25%, the Federal Funds rate is now moderately above the
inflation rate. We believe that the Fed will end its tightening cycle sometime
in fourth quarter when the Fed Funds rate is at or near 4% and comfortably above
the rate of inflation.
As we progress throughout 2005, Appleton Equity Growth Fund continues to
overweight the more defensive sectors that are expected to outperform in a
slower growth environment. Allocations to such sectors as Healthcare, Energy and
Consumer Staples were increased while allocations to the Financial sector were
reduced. We have also slightly increased our exposure to the Technology sector
as we feel that tech spending is poised to accelerate and valuations levels have
declined to attractive levels. We will continue to monitor economic and market
conditions and we are prepared to alter the portfolio as conditions warrant.
Through June 30, 2005, the Fund returned -1.90% compared to the S&P 500 Index,
the Fund's benchmark, which returned -0.8% during the same period.
We expect that equity markets in 2005, much like in 2004, will remain flat to
slightly positive for most of the year until a significant catalyst emerges.
Last year, a Presidential election without controversy propelled equity markets
higher. This year, we believe that catalyst will be the Federal Reserve
signaling an end to its rate tightening cycle. We feel that investors will
respond favorably to this event, driving equity returns in the mid-to-high
single digit range for the year.
Sincerely,
/s/ James I. Ladge
James I. Ladge, CFA
President
APPLETON EQUITY GROWTH FUND
Tabular Presentation of Portfolio
As of June 30, 2005
(Unaudited)
Sector (% of Net Assets)
Consumer, Cyclical 3.0%
Consumer, Non-Cyclical 17.0%
Energy 12.1%
Financial Services 12.4%
Healthcare 20.8%
Industrial 10.7%
Materials 5.4%
Technology 17.2%
Money Markets 1.4%
------
100.0%
------
APPLETON EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 2005
(Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS -- 98.6%
CONSUMER, CYCLICAL -- 3.0%
1,800 Carnival Corp. $ 98,190
1,750 Starwood Hotels & Resorts Worldwide, Inc. 102,498
----------
200,688
----------
CONSUMER, NON-CYCLICAL -- 17.0%
4,000 Avon Products, Inc. 151,400
2,200 Clorox Co. 122,584
2,000 Gillette Co. 101,260
2,800 Hershey Co. 173,880
3,950 Kellogg Co. 175,538
3,000 PepsiCo, Inc. 161,790
1,500 Procter & Gamble Co. 79,125
3,400 Target Corp. 184,994
----------
1,150,571
----------
ENERGY -- 12.1%
3,300 Apache Corp. 213,180
3,750 Baker Hughes, Inc. 191,850
4,400 Exxon Mobil Corp. 252,868
2,550 Smith International, Inc. 162,435
----------
820,333
----------
FINANCIAL SERVICES -- 12.4%
3,100 American Express Co. 165,013
3,596 Bank of America Corp. 164,014
3,500 Citigroup, Inc. 161,805
3,575 SAFECO Corp. 194,265
2,500 Wells Fargo & Co. 153,950
----------
839,047
----------
APPLETON EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 2005
(Unaudited)
Market
Shares Value
------ -----
HEALTHCARE -- 20.8%
2,800 Becton, Dickinson & Co. $ 146,916
3,250 C.R. Bard, Inc. 216,157
2,600 Cerner Corp.* 176,722
3,250 Johnson & Johnson 211,249
3,400 Patterson Companies, Inc.* 153,272
5,400 Pfizer, Inc. 148,932
3,850 Quest Diagnostics, Inc. 205,090
2,050 Zimmer Holdings, Inc.* 156,149
----------
1,414,487
----------
INDUSTRIAL -- 10.7%
1,800 3M Co. 130,140
4,200 Burlington Northern Santa Fe Corp. 197,736
7,450 General Electric Co. 258,143
4,500 Masco Corp. 142,920
----------
728,939
----------
MATERIALS -- 5.4%
1,975 Potash Corp. of Saskatchewan, Inc. 188,771
3,825 Praxair, Inc. 178,245
----------
367,016
----------
TECHNOLOGY -- 17.2%
4,100 Amphenol Corp. 164,697
2,800 Diebold, Inc. 126,308
11,500 EMC Corp.* 157,665
8,400 Intel Corp. 218,903
2,100 International Business Machines Corp. 155,820
6,350 Jabil Circuit, Inc.* 195,136
6,000 Microsoft Corp. 149,040
----------
1,167,569
----------
TOTAL COMMON STOCKS $6,688,650
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APPLETON EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
June 30, 2005
(Unaudited)
Market
Shares Value
------ -----
MONEY MARKETS -- 1.4%
96,714 First American Treasury Fund $ 96,714
----------
TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $6,163,334) $6,785,364
LIABILITIES IN EXCESS OF OTHER ASSETS -- 0.0% (1,051)
----------
NET ASSETS -- 100.0% $6,784,313
==========
* Non-income producing security.
See accompanying notes to financial statements.
APPLETON EQUITY GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2005
(Unaudited)
ASSETS
Investment securities:
At acquisition cost $ 6,163,334
===========
At market value $ 6,785,364
Dividends receivable 3,341
Receivable for capital shares sold 200
Receivable from Adviser 8,755
Other assets 3,412
-----------
TOTAL ASSETS 6,801,072
-----------
LIABILITIES
Payable to affiliates 6,175
Payable to Trustees 4,922
Other accrued expenses and liabilities 5,662
-----------
TOTAL LIABILITIES 16,759
-----------
NET ASSETS $ 6,784,313
===========
NET ASSETS CONSIST OF
Paid-in capital $ 8,447,590
Accumulated net investment loss (2,371)
Accumulated net realized losses from security transactions (2,282,936)
Net unrealized appreciation on investments 622,030
-----------
NET ASSETS $ 6,784,313
===========
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 1,012,849
===========
Net asset value, offering price and redemption price per share $ 6.70
===========
See accompanying notes to financial statements.
APPLETON EQUITY GROWTH FUND
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2005
(Unaudited)
INVESTMENT INCOME
Dividends $ 48,180
---------
EXPENSES
Investment advisory fees 33,695
Accounting services fees 14,876
Administration fees 12,000
Transfer agent fees 12,000
Trustees' fees and expenses 10,396
Professional fees 8,431
Distribution expenses 8,424
Compliance fees and expenses 5,100
Custodian fees 3,703
Registration fees 1,739
Postage and supplies 1,721
Insurance expense 1,689
Reports to shareholders 1,488
Pricing expense 595
---------
TOTAL EXPENSES 115,857
Fees waived and expenses reimbursed by Adviser (65,306)
---------
NET EXPENSES 50,551
---------
NET INVESTMENT LOSS (2,371)
---------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS
Net realized losses from security transactions (14,165)
Net change in unrealized appreciation/depreciation
on investments (119,608)
---------
NET REALIZED AND UNREALIZED LOSSES ON INVESTMENTS (133,773)
---------
NET DECREASE IN NET ASSETS FROM OPERATIONS $(136,144)
=========
See accompanying notes to financial statements.
APPLETON EQUITY GROWTH FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the
Six Months
Ended For the
June 30, Year Ended
2005 December 31,
(Unaudited) 2004
----------- -----------
FROM OPERATIONS
Net investment income (loss) $ (2,371) $ 19,940
Net realized gains (losses) from security transactions (14,165) 2,927
Net change in unrealized appreciation/depreciation on investments (119,609) 395,805
----------- -----------
Net increase (decrease) in net assets from operations (136,145) 418,672
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income -- (19,940)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 549,942 1,139,428
Proceeds from shares reinvested -- 12,224
Payments for shares redeemed (255,078) (468,821)
----------- -----------
Net increase in net assets from capital share transactions 294,864 682,831
----------- -----------
TOTAL INCREASE IN NET ASSETS 158,719 1,081,563
NET ASSETS
Beginning of period 6,625,594 5,544,031
----------- -----------
End of period $ 6,784,313 $ 6,625,594
=========== ===========
ACCUMULATED NET INVESTMENT LOSS $ (2,371) $ --
----------- -----------
CAPITAL SHARE ACTIVITY
Sold 80,866 172,476
Reinvested -- 1,790
Redeemed (37,557) (70,462)
----------- -----------
Net increase in shares outstanding 43,309 103,804
Shares outstanding, beginning of period 969,540 865,736
----------- -----------
Shares outstanding, end of period 1,012,849 969,540
=========== ===========
See accompanying notes to financial statements.
APPLETON EQUITY GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding
Throughout Each Period
For the
Six Months
Ended For the For the For the For the
June 30, Year Ended Year Ended Year Ended Year Ended
2005 December 31, December 31, December 31, December 31,
(Unaudited) 2004 2003 2002 2001(a)
------------ ------------ ------------ ------------ ------------
Net asset value at beginning of period $ 6.83 $ 6.40 $ 5.16 $ 7.56 $ 10.00
------------ ------------ ------------ ------------ ------------
Income (loss) from investment operations:
Net investment income (loss) 0.00(b) 0.02 (0.01) (0.03) (0.03)
Net realized and unrealized gains
(losses) on investments (0.13) 0.43 1.25 (2.37) (2.41)
------------ ------------ ------------ ------------ ------------
Total from investment operations (0.13) 0.45 1.24 (2.40) (2.44)
------------ ------------ ------------ ------------ ------------
Less distributions:
Dividends from net investment income -- (0.02) -- -- --
------------ ------------ ------------ ------------ ------------
Net asset value at end of period $ 6.70 $ 6.83 $ 6.40 $ 5.16 $ 7.56
============ ============ ============ ============ ============
Total return (1.90%)(c) 7.04% 24.03% (31.75%) (24.40%)
============ ============ ============ ============ ============
Net assets at end of period $ 6,784,313 $ 6,625,594 $ 5,544,031 $ 4,099,021 $ 4,781,914
============ ============ ============ ============ ============
Ratio of net expenses to average net assets 1.50%(d) 1.50% 1.50% 1.50% 1.50%
Ratio of net investment income (loss) to
average net assets (0.07%)(d) 0.33% (0.22%) (0.56%) (0.47%)
Portfolio turnover rate 82%(d) 40% 58% 56% 34%
(a) The Fund commenced operations on December 31, (2000.)
(b) Amount rounds to less than $0.01.
(c) Not annualized.
(d) Annualized.
See accompanying notes to financial statements.
APPLETON EQUITY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 2005
(Unaudited)
1. Significant Accounting Policies
The Appleton Funds (the Trust) is registered under the Investment Company Act of
1940, as amended, (the 1940 Act), as a diversified, no-load, open-end management
investment company. The Trust was organized as an Ohio business trust on October
31, 2000. The Trust currently offers one series of shares to investors: the
Appleton Equity Growth Fund (the Fund). The Trust was capitalized on December
29, 2000, when the initial shares of the Fund were purchased at $10 per share.
The Fund commenced operations on December 31, 2000.
The Fund seeks long-term growth of capital by investing primarily in common
stocks.
The following is a summary of the Fund's significant accounting policies:
Securities valuation - The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(normally 4:00 p.m., Eastern time). Portfolio securities traded on stock
exchanges are valued at their last sales price as of the close of the regular
session of trading on the day the securities are being valued. Securities quoted
by NASDAQ are valued at the NASDAQ Official Closing Price. Securities for which
market quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees. Money
market instruments are valued at amortized cost, which approximates market
value.
Share valuation - The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding, rounded to the nearest cent. The offering and
redemption price per share are equal to the net asset value per share.
Investment income and distributions to shareholders - Interest income is accrued
as earned. Dividend income is recorded on the ex-dividend date. Dividends
arising from net investment income are declared and paid annually. Net realized
short-term capital gains, if any, may be distributed throughout the year and net
realized long-term capital gains, if any, are distributed at least once each
year. Income dividends and capital gain distributions are determined in
accordance with income tax regulations. Differences between book and tax
distributions are considered temporary or permanent in nature. To the extent
these differences are permanent in nature, such amounts are reclassified within
the composition of net assets based on their federal tax basis treatment;
temporary differences do not require reclassifications.
Security transactions - Security transactions are accounted for on trade date.
Securities sold are determined on a specific identification basis.
Estimates - The preparation of financial statements in conformity with U.S.
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 income and expenses during the reporting
period. Actual results could differ from those estimates.
Federal income tax - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which the Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund (but
not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare and pay as
dividends in each calendar year at least 98% of its net investment income
(earned during the calendar year) and 98% of its net realized capital gains
(earned during the twelve months ended October 31) plus undistributed amounts
from prior years.
The tax character of distributions paid for the years ended December 31, 2004
and 2003 was as follows:
2004 2003
---- ----
From ordinary income $19,940 $ --
The following information is computed on a tax basis as of December 31, 2004:
Cost of portfolio investments $ 5,923,998
===========
Gross unrealized appreciation on investments $ 1,002,816
Gross unrealized depreciation on investments (261,177)
-----------
Net unrealized appreciation on investments $ 741,639
Post-October loss (3,959)
Capital loss carryforwards (2,264,812)
-----------
Total accumulated deficit $(1,527,132)
===========
The gross unrealized appreciation, gross unrealized depreciation and Federal
income tax cost of the Fund's portfolio investments as of June 30, 2005 are
$855,766, $233,736 and $6,163,334, respectively.
During the year ended December 31, 2004, the Fund utilized $6,886 of capital
loss carryforwards. The remaining capital loss carryforwards in the above table
expire as follows:
Amount December 31,
---------- ------------
$ 247,566 2009
$1,650,125 2010
$ 367,121 2011
----------
$2,264,812
==========
The Fund elected to defer until its subsequent tax year capital losses incurred
after October 31, 2004. These capital loss carryforwards and post-October losses
may be utilized in future years to offset gains, if any, prior to distributing
such gains to shareholders.
2. Investment Transactions
For the six months ended June 30, 2005, the cost of purchases and proceeds from
sales of portfolio securities, other than short-term investments, amounted to
$2,906,970 and $2,694,011, respectively.
3. Transactions with Affiliates
Certain trustees and officers of the Trust are also officers of Appleton
Partners, Inc. (the Adviser), Integrated Fund Services, Inc. (IFS), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Trust, and/or of IFS Fund Distributors, Inc.
(the Distributor), the Trust's principal underwriter.
INVESTMENT ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement between the Trust and the Adviser,
the Adviser manages the Fund's investments. For these services, the Fund pays
the Adviser an advisory fee, which is computed and accrued daily and paid
monthly, at an annual rate of 1.00% of its average daily net assets.
Pursuant to a written contract between the Adviser and the Fund, the Adviser has
agreed to waive a portion of its advisory fees and/or assume certain expenses of
the Fund, other than brokerage commissions, extraordinary items, interest and
taxes, to the extent annual Fund operating expenses exceed 1.50% of the Fund's
average daily net assets. The Adviser has agreed to maintain these expense
limitations with regard to the Fund through December 31, 2005. For the six
months ended June 30, 2005, the Adviser waived $33,694 of advisory fees and
reimbursed the Fund for $31,612 of other operating expenses.
ADMINISTRATION, ACCOUNTING AND TRANSFER AGENCY AGREEMENT
Under the terms of an Administration, Accounting and Transfer Agency Agreement
between the Trust and IFS, IFS supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services for the Fund. IFS supervises the preparation of tax
returns, reports to shareholders of the Fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For these administrative
services, IFS receives a monthly fee based on the Fund's average daily net
assets, subject to a monthly minimum fee.
IFS maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
other shareholder service functions. For these transfer agency and shareholder
services, IFS receives a monthly fee per shareholder account, subject to a
monthly minimum fee. In addition, the Fund pays IFS out-of-pocket expenses
including, but not limited to, postage and supplies.
IFS also calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these accounting services, IFS
receives a monthly fee, based on current average daily net assets, from the
Fund. In addition, the Fund pays IFS certain out-of-pocket expenses incurred by
IFS in obtaining valuations of the Fund's portfolio securities.
DISTRIBUTION PLAN
The Fund has adopted a plan of distribution (the Plan) pursuant to Rule 12b-1
under the 1940 Act. The Plan permits the Fund to pay for expenses incurred in
the distribution and promotion of the Fund's shares including but not limited
to, the printing of prospectuses, statements of additional information and
reports used for sales purposes, advertisements, expenses of preparation and
printing of sales literature, promotion, marketing and sales expenses and other
distribution-related expenses, including any distribution fees paid to
securities dealers or other firms who have executed a distribution or service
agreement with the Trust.
The Plan limits payment of distribution expenses in any fiscal year to a maximum
of 0.25% of the Fund's average daily net assets. For the six months ended June
30, 2005, the Fund accrued and the Adviser subsequently reimbursed $8,424 of
distribution expenses under the Plan.
UNDERWRITING AGREEMENT
The Trust has entered into an Underwriting Agreement on behalf of the Fund with
the Distributor. Pursuant to the Underwriting Agreement, the Distributor acts as
principal underwriter and, as such, is the exclusive agent for distribution of
shares of the Fund. The Distributor receives no compensation for its services
and is an affiliate of IFS.
COMPLIANCE SERVICES AGREEMENT
Under the terms of the Compliance Services Agreement between the Trust and IFS,
IFS provides certain compliance services to the Trust, including developing and
assisting in implementing a compliance program for IFS on behalf of the funds
and providing administrative support services to the Funds' Compliance Program
and Chief Compliance Officer.
4. Commitments and Contingencies
The Fund indemnifies the Trust's officers and Trustees for certain liabilities
that might arise from their performance of their duties to the Fund.
Additionally, in the normal course of business, the Fund enters into contracts
that contain a variety of representations and warranties and which provide
general indemnifications. The Fund's maximum exposure under these arrangements
is unknown, as this would involve future claims that may be made against the
Fund that have not yet occurred. However, based on experience, the Fund expects
the risks of loss to be remote.
APPLETON EQUITY GROWTH FUND
OTHER ITEMS
June 30, 2005
(Unaudited)
PROXY VOTING POLICIES AND PROCEDURES
The Adviser is responsible for exercising the voting rights associated with the
securities purchased and held by the Fund. A description of the policies and
procedures the Adviser uses in fulfilling this responsibility and information
regarding how those proxies were voted during the twelve month period ended June
30 are available without charge, upon request, by calling 1-617-338-0700. They
are also available on the Securities and Exchange Commission's website at
http://www.sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The Trust files a complete listing of portfolio holdings for the Fund as of the
end of the first and third quarters of each fiscal year on Form N-Q. The
complete listing (i) is available on the Commission's website; (ii) may be
reviewed and copied at the Commission's Public Reference Room in Washington, DC;
and (iii) will be made available to shareholders upon request by calling
1.800.543.0407. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.
SCHEDULE OF SHAREHOLDER EXPENSES
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including reinvested dividends or other distributions; and (2) ongoing
costs, including investment advisory fees; distribution (12b-1) 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, 2005 through June 30, 2005).
Actual Expenses
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During the Six
Months Ended June 30, 2005" to estimate the expenses you paid on your account
during this period.
Hypothetical Example for Comparison Purposes
The second line of the table below provides information about hypothetical
account values and hypothetical expenses based on the Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing costs of
investing in the Fund's and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Net Expense Ratio Beginning Ending Expenses Paid During
Annualized Account Value Account Value the Six Months Ended
June 30, 2005 January 1, 2005 June 30, 2005 June 30, 2005*
-------------------- -------------------- -------------------- ---------------------
Appleton Equity Growth Fund
Actual 1.50% $ 1,000.00 $ 981.00 $ 7.37
Hypothetical 1.50% $ 1,000.00 $ 1,017.36 $ 7.50
- ----------
* Expenses are equal to the Fund's annualized expense ratio, multiplied by the
average account value over the period, multiplied by [number of days in most
recent fiscal half-year/365] (to reflect the one-half year period).
Item 2. Code of Ethics.
Not required in semi-annual report filing.
Item 3. Audit Committee Financial Expert.
Not required in semi-annual report filing.
Item 4. Principal Accountant Fees and Services.
Not required in semi-annual report filing.
Item 5. Audit Committee of Listed Companies.
Not applicable.
Item 6. Schedule of Investments.
The schedule is included as part of the report to shareholders filed under Item
1 of this Form.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds.
Not applicable.
Item 8. Portfolio Managers of Closed-End Funds.
Not Applicable.
Item 9. Purchases of Equity Securities by Closed-End Funds.
Not Applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 11. Controls and Procedures.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of
a date within 90 days of the filing date of this report.
(b) There were no significant changes in the registrant's internal control over
financial reporting that occurred during the registrant's last fiscal half-year
that have materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) (1) Code of Ethics. Not required in semi-annual report filing.
(a) (2) The certification required by Rule 30a-2 of the Investment Company
Act of 1940, as amended (the "1940 Act") is attached hereto.
(b) The certification required by Rule 30a-2(b) of the 1940 Act and Section
906 of the Sarbanes-Oxley Act of 2002 is attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) The Appleton Funds
By (Signature and Title)
/s/ James I. Ladge
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James I. Ladge
President and Treasurer
Date: September 7, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)
/s/ James I. Ladge
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James I. Ladge
President and Treasurer
Date: September 7, 2005