Registration No. 2-90309
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ____ ____
Post-Effective Amendment No. 29 X
and ---- ----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 30 X
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CARILLON FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1876 Waycross Road, Cincinnati, Ohio 45240
(Address of Principal Executive Offices)
(513) 595-2600
(Registrant's Telephone Number)
John F. Labmeier, Esq.
The Union Central Life Insurance Company
P.O. Box 40888
Cincinnati, Ohio 45240
(Name and Address of Agent for Service)
Copy to:
Jones and Blouch L.L.P.
Suite 405 West
1025 Thomas Jefferson St., N.W.
Washington, D.C. 20007
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It is proposed that this filing will become effective (check appropriate
box)
___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on June 26, 2000 pursuant to paragraph (b) of Rule 485
---
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on (date) pursuant to paragraph (a)(1) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
___ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
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<PAGE>
This amendment No. 29 under the Securities Act of 1933, and Amendment No.
30 under the Investment Company Act of 1940, to the Registration Statement
on Form N-1A of Summit Mutual Funds, Inc. is filed solely to add a
prospectus and statement of additional information for the newly-created
Total Social Impact Fund and Money Market Fund and does not otherwise
delete, amend, or supersede any prospectus, statement of additional
information, exhibit, undertaking, or other information contained in the
Registration Statement.
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
TOTAL SOCIAL IMPACT FUND
MONEY MARKET FUND
PROSPECTUS
JUNE 26, 2000
SUMMIT MUTUAL FUNDS, INC.
SUMMIT APEX SERIES
<PAGE>
JUNE 26, 2000
SUMMIT MUTUAL FUNDS, INC.
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TABLE OF CONTENTS
INTRODUCTION...................................................2
FUND PROFILES
TOTAL SOCIAL IMPACT FUND PROFILE............................2
MONEY MARKET FUND PROFILE...................................4
FEES AND EXPENSES OF THE FUND..................................6
OTHER INVESTMENT POLICIES, STRATEGIES AND RISKS................7
FOREIGN SECURITIES..........................................7
REPURCHASE AGREEMENTS.......................................7
REVERSE REPURCHASE AGREEMENTS...............................7
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS..........7
OPTIONS ON SECURITIES INDICES...............................9
LENDING FUND SECURITIES.....................................9
OTHER INFORMATION...........................................9
FUND MANAGEMENT...............................................10
INVESTMENT ADVISER.........................................10
ADVISORY FEE...............................................10
SUBADVISER.................................................11
EXPENSES...................................................11
CAPITAL STOCK..............................................11
SHAREHOLDER INFORMATION.......................................11
PRICING OF FUND SHARES.....................................11
PURCHASE OF SHARES.........................................12
REDEMPTION OF SHARES.......................................14
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS....................17
FEDERAL TAXES.................................................18
STATE AND LOCAL TAXES.........................................18
S&P DISCLAIMER................................................19
FINANCIAL HIGHLIGHTS..........................................19
APPENDIX A: RATINGS..........................................20
CORPORATE BOND RATINGS.....................................20
COMMERCIAL PAPER RATINGS...................................21
These securities have not been approved or disapproved by the
Securities and Exchange Commission ("SEC") nor any state. Neither
the SEC nor any state has determined whether this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
<PAGE>
INTRODUCTION
This Prospectus explains the objectives, risks and strategies of
two of the twenty-two Funds comprising Summit Mutual Funds, Inc.
("Summit Mutual Funds"), formerly known as Carillon Fund, Inc.
Each Fund Profile below summarizes important facts about the Fund,
including its investment objective, strategy, risks and past
investment performance. More detailed information about some of
the Funds' investment policies and strategies is provided after
the Profiles, along with information about Fund expenses for each
Fund.
The two Funds included in this Prospectus are part of the Summit
Mutual Funds' Summit Apex Series, whose shares are offered
without sales charge to institutional and retail investors. These
Funds are also offered to The Union Central Life Insurance Company
("Union Central") and its exempt separate accounts. It is
anticipated that Union Central will have voting control of Summit
Mutual Funds. With voting control, Union Central could make
fundamental and substantial changes (such as electing a new Board
of Directors, changing the investment adviser or advisory fee,
changing a Fund's fundamental investment objectives and policies,
etc.) regardless of the views of other shareholders.
FUND PROFILES
TOTAL SOCIAL IMPACT FUND PROFILE
Investment Objective
The Fund seeks investment results that closely correspond to the
total return performance of U.S. Common Stocks, as represented by
the S&P 500 Index. To pursue this objective, the Fund will invest
in all stocks that are included in the S&P 500 Index.
The Fund also seeks to promote better business practices by
investing more in companies in the Index that conduct their
business commendably with respect to their stakeholders.
Businesses have a role to play in improving the lives
of all their customers, employees, and shareholders
("stakeholders") by sharing with them the wealth they
have created. Suppliers and competitors as well should
expect businesses to honor their obligations in a spirit
of honesty and fairness. As responsible citizens of the
legal, national, regional and global communities in
which they operate, businesses share a part in shaping
the future of their communities.
Attributed to the Caux Institute for Global Responsibility
For example:
Customers deserve high quality products, fair advertising,
remedies and respect.
Employees deserve to be treated with dignity, to be paid a living
wage on a non-discriminatory basis, to work in a safe environment
and to associate freely.
Owner/Investors deserve a fair and competitive return,
transparency in company operations, and a voice in corporate
governance.
Suppliers deserve mutual respect and long-term stability in return
for value, quality, competitiveness, reliability and employment
practices that respect human dignity.
Competitors deserve fair and respectful competition.
Communities deserve the support of public policies that promote
human development and raise the standards of health, education,
workplace safety and economic well-being.
The Environment deserves protection and improvement through
sustainable business practices.
Source: The Caux Institute For Global Responsibility
Principles For Business. The Caux Principles For
Business (published in 1994) are the first published
worldwide standard for ethical and responsible business
practices developed by global business leaders. They
are published in sixteen languages.
The use of the Caux principles for business does not in any way
constitute an endorsement by Caux of the financial prospects of
the Fund or its investment strategy.
Investment Strategies
To pursue its goals, the Fund will invest in all the stocks that
are included in the S&P 500 Index. However, the percentage
invested in each stock will vary from the S&P 500 Index weighting
to reflect the company's Total Social Impact(trademark) (TSI)
rating. The TSI rating reflects the company's scoring on a series
of benchmarks corresponding to each of its stakeholders. TSI is
a concept developed and trademarked by the The Total Social Impact
Foundation, Inc. The actual TSI ratings are the product of
collaborative research and analytical efforts conducted by The
Total Social Impact Foundation, Inc. in conjunction with a group
of academic institutions. Summit Investment Partners receives and
uses the TSI ratings from The Total Social Impact Foundation, Inc.
under an exclusive licensing agreement. TSI ratings range from 1
to 20. Companies with high TSI ratings are overweighted in the
Fund at the expense of companies with low TSI ratings, thus
encouraging better business practices.
The Fund will give stocks with a TSI rating of 10 approximately
the weight that a traditional S&P Index fund would give them;
stocks with a TSI rating of 20, about twice that weight, and ones
with a TSI rating of 1 about 1/10 of that weight. Summit
Investment Partners reserves the right to modify the weighting
scheme based on a proprietary weighting system.
The Fund may invest up to 5% of its assets in Standard & Poor's
Depositary Receipts ("SPDRs(R)"). SPDRs are units of beneficial
interest in a unit investment trust, representing proportionate
undivided interests in a portfolio of securities in substantially
the same weighting as the common stocks that comprise the S&P 500
Index.
The Fund may invest up to 20% of its assets in S&P 500 Index
futures contracts and options in order to invest uncommitted cash
balances, to maintain liquidity to meet shareholder redemptions,
or minimize trading costs. The Fund may also sell covered calls
on futures contracts or individual securities held in the Fund.
As a temporary investment strategy, until the Fund reaches $50
million in net assets, the Fund may invest up to 100% of its
assets in such futures and/or options contracts.
Investments in SPDRs, futures and options will not reflect TSI
ratings.
Although the Adviser will attempt to invest as much of the Fund's
assets as is practical in stocks included among the S&P 500 Index
and futures contracts and related options, a portion of the Fund
may be invested in money market instruments pending investment or
to meet redemption requests or other needs for liquid assets. In
addition, for temporary defensive purposes, the Fund may invest in
government securities, money market instruments, or other fixed-
income securities, or retain cash or cash equivalents.
Primary Risks
- Market risk: The Fund's total return, like stock prices
generally, will fluctuate within a wide range in response
to stock market trends, so a share of the Fund could drop
in value over short or even long periods. Stock markets
tend to move in cycles, with periods of rising prices and
periods of falling prices.
- Large company stock risk: Stocks of large companies, such
as those listed among the S&P 500 Index occasionally go
through cycles of doing worse (or better) than the stock
markets in general or other types of investments.
- Investment style risk: TSI ratings will result in
overweighting and underweighting most stocks in the S&P 500
Index. These variances might result in worse (or better)
returns.
- Correlation risk: Because the Fund has expenses, and the S&P
500 Index does not, the Fund may be unable to replicate
precisely the performance of the Index. While the Fund
remains small, it may have a greater risk that its
performance will not match that of the Index.
Since this is a new Fund, there is no bar chart or performance
table.
MONEY MARKET FUND PROFILE
Investment Objective
The Money Market Fund seeks to maintain stability of capital and,
consistent therewith, to maintain the liquidity of capital and to
provide current income.
Investment Strategies
It does this by investing exclusively in high quality short-term
securities.
The Fund may buy securities from many types of issuers, including
the U.S. government, banks (both U.S. and foreign), corporations
and municipalities. However, everything the Fund buys must meet
the rules for money market fund investments (see Money Fund Rules
below). In addition, the Fund currently intends to only buy
securities that are in the top credit grade for short-term
securities.
Working in conjunction with credit analysts, the portfolio
managers screen potential securities and develop a list of those
that the Fund may buy. The managers then decide which securities
on this list to buy, looking for attractive yield and weighing
considerations such as credit quality, economic outlook and
possible interest rate movements. The managers may adjust the
Fund's exposure to interest rate risk, typically seeking to take
advantage of possible rises in interest rates and to preserve
yield when interest rates appear likely to fall.
Money Fund Rules
To be called a money market fund, a mutual fund must operate
within strict federal rules. Designed to help maintain a stable
$1.00 share price, these rules limit money funds to particular
types of securities and strategies. Some of the rules:
- Individual securities must have remaining maturities of no
more than 397 days.
- The dollar-weighted average maturity of the Fund's holdings
cannot exceed 90 days
- All securities must be in the top two credit grades for
short-term securities and be denominated in U.S. dollars.
Primary Risks
Money market funds are generally considered to have lower risks
than other types of mutual funds. Even so, there are several risk
factors that could reduce the yield you get from the Fund or make
it perform less well than other investments.
AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY
INVESTING IN THE FUND.
- Market interest rate risk: As with most money market funds,
the most important factor affecting performance is market
interest rates. The Fund's yields tend to reflect current
interest rates, which means that when these rates fall, the
Fund's yield generally falls as well.
- Credit quality risk: If a portfolio security declines in
credit quality or goes into default, it could hurt the
Fund's performance. To the extent that the Fund emphasizes
certain sectors of the short-term securities market, the
portfolio increases its exposure to factors affecting these
sectors. For example, banks' repayment abilities could be
compromised by broad economic declines or sharp rises in
interest rates. Securities from foreign banks may have
greater credit risk than comparable U.S. securities, for
reasons ranging from political and economic uncertainties to
less stringent banking regulations.
- Other risks: Other factors that could affect performance
include:
- The managers could be incorrect in their analysis of
interest rate trends, credit quality or other matters.
- Securities that rely on outside insurers to raise their
credit quality could fall in price or go into default
if the financial condition of the insurer deteriorates.
Since this is a new Fund, there is no bar chart or performance
table.
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Funds.
Annual Fund Operating Expenses (expenses that are deducted from
Fund assets)
<TABLE>
<CAPTION>
Total Annual
Management Other Fund Operating
Fees Expenses** Expenses**
------------------------------------------------------------------------
<S> <C> <C> <C>
Total Social Impact Fund 0.45% 0.30% 0.75%*
Money Market Fund 0.35%*** 0.10% 0.45%*
</TABLE>
* Under the Investment Advisory Agreement, Total Annual
Fund Operating Expenses in excess of .75% for the Total
Social Impact Fund, and in excess of .45% for the Money
Market Fund are paid by the investment adviser.
** "Other Expenses" are based on estimates.
*** The Adviser has agreed to reduce its fee from those shown
in the table for a period of one year from the
commencement of operations by .02% percentage points for
the Money Market Fund. The Adviser may not revise or
cancel these waivers during the one year period.
Example
This Example is intended to help you compare the cost of investing
in the Funds with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The Example also assumes that your
investment has a 5% return each year and that the Funds' operating
expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Total Social Impact Fund $77 $241
Money Market Fund $46 $145
</TABLE>
This table should not be considered a representation of past or
future expenses. Actual expenses may be more or less than those
shown.
OTHER INVESTMENT POLICIES, STRATEGIES AND RISKS
FOREIGN SECURITIES
The Total Social Impact Fund may invest only in foreign securities
that are included in the S&P 500 Stock Index. The S&P has
indicated that their selection criteria for inclusion in the S&P
500 Stock Index include that all securities be U.S. publicly
traded stock on the New York or American Stock Exchange or the
Nasdaq National Market System and meet all of the same SEC
disclosure requirements as United States-based companies.
Investing in foreign securities involves risks which are not
ordinarily associated with investing in domestic securities,
including:
- political or economic instability in the foreign country;
- diplomatic developments that could adversely affect the
value of the foreign security;
- foreign government taxes;
- fluctuation in currency exchange rates;
- the possibility of imposition of currency controls,
expropriation or nationalization measures or withholding
dividends at the source;
- less publicly available information about foreign
operations than domestic operations.
REPURCHASE AGREEMENTS
Each Fund may invest in Repurchase Agreements. A repurchase
agreement is a transaction where a Fund buys a security at one
price and simultaneously agrees to sell that same security back to
the original owner at a higher price. None of the Funds engage
extensively in repurchase agreements, but each may engage in them
from time to time. The Adviser reviews the credit
worthiness of the other party to the agreement and must find it
satisfactory before engaging in a repurchase agreement. A majority
of these agreements will mature in seven days or less. In the
event of the bankruptcy of the other party, a Fund could
experience delays in recovering its money, may realize only a
partial recovery or even no recovery, and may also incur
disposition costs.
REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into reverse repurchase agreements. Under
reverse repurchase agreements, the Fund transfers possession of
Fund securities to banks in return for cash in an amount equal to
a percentage of the Fund securities' market value and agrees to
repurchase the securities at a future date by repaying the cash
with interest. The Fund retains the right to receive interest and
principal payments from the securities while they are in the
possession of the financial institutions. While a reverse
repurchase agreement is in effect, the Custodian will segregate
from other Fund assets an amount of cash or liquid high quality
debt obligations equal in value to the repurchase price (including
any accrued interest).
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
The Total Social Impact Fund may enter into futures contracts for
hedging purposes, including protecting the price or interest rate
of securities that the Fund intends to buy, that relate to
securities in which it may directly invest and indices comprised
of such securities and may purchase and write call and put options
on such contracts. The Fund may invest up to 20% of its assets in
such futures and/or options contracts.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments (such as U.S. Treasury
bills, notes and bonds, commercial paper and bank certificates of
deposit or the cash value of a financial instrument index at a
specified future date at a price agreed upon when the contract is
made). A stock index futures contract is a contract to buy or
sell specified units of a stock index at a specified future date
at a price agreed upon when the contract is made. The value of a
unit is based on the current value of the contract index. Under
such contracts no delivery of the actual stocks making up the
index takes place. Rather, upon expiration of the contract,
settlement is made by exchanging cash in an amount equal to the
difference between the contract price and the closing price of the
index at expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures contract
is closed out by buying or selling an identical offsetting futures
contract. Upon entering into a futures contract, the Fund is
required to deposit an initial margin with the Custodian for the
benefit of the futures broker. The initial margin serves as a
"good faith" deposit that the Fund will honor their futures
commitments. Subsequent payments (called "variation margin") to
and from the broker are made on a daily basis as the price of the
underlying investment fluctuates. In the event of the bankruptcy
of the futures broker that holds margin on behalf of the Fund, the
Fund may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other customers.
The Adviser will attempt to minimize this risk by monitoring the
creditworthiness of the futures brokers with which the Fund does
business.
Because the value of an index future depends primarily on the
value of its underlying index, the performance of the broad-
based contracts will generally reflect broad changes in market
prices. However, because a particular Fund may not be invested in
precisely the same proportion as a particular Index, it is likely
that the price changes of the Fund's index futures positions will
not match the price changes of the Fund's other investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at
any time before expiration of the option contract.
The Total Social Impact Fund may engage in certain limited options
strategies as hedging techniques as it relates to options on
futures contracts. These options strategies are limited to
selling/writing call option contracts on futures contracts on such
securities held by the Fund (covered calls). The Fund may purchase
call option contracts to close out a position acquired through the
sale of a call option. The Fund will only write options that are
traded on a domestic exchange or board of trade.
The Total Social Impact Fund may write and purchase covered put
and call options on securities in which it may directly invest.
Option transactions of the eligible Fund will be conducted so that
the total amount paid on premiums for all put and call options
outstanding will not exceed 5% of the value of the Fund's total
assets. Further, the Fund will not write put or call options or
combination thereof if, as a result, the aggregate value of all
securities or collateral used to cover its outstanding options
would exceed 25% of the value of the Fund's total assets.
A call option is a short-term contract (generally nine months or
less) which gives the purchaser of the option the right to
purchase from the seller of the option (the Fund) the underlying
security or futures contract at a fixed exercise price at any time
prior to the expiration of the option period regardless of the
market price of the underlying instrument during the period. A
futures contract obligates the buyer to purchase and the seller to
sell a predetermined amount of a security at a predetermined price
at a selected time in the future. A call option on a futures
contract gives the purchaser the right to assume a "long" position
in a futures contract, which means that if the option is exercised
the seller of the option (the Fund) would have the legal right
(and obligation) to sell the underlying security to the purchaser
at the specified price and future time.
As consideration for the call option, the buyer pays the seller
(the Fund) a premium, which the seller retains whether or not the
option is exercised. The selling of a call option will benefit the
Fund if, over the option period, the underlying security or
futures contract declines in value or does not appreciate to a
price higher than the total of the exercise price and the premium.
The Fund risks an opportunity loss of profit if the underlying
instrument appreciates to a price higher than the exercise price
and the premium. When the Adviser anticipates that interest rates
will increase, the Fund may write call options in order to hedge
against an expected decline in value of Fund securities.
The Fund may close out a position acquired through selling a call
option by buying a call option on the same security or futures
contract with the same exercise price and expiration date as the
option previously sold. A profit or loss on the transaction will
result depending on the premium paid for buying the closing call
option. If a call option on a futures contract is exercised, the
Fund intends to close out the position immediately by entering
into an offsetting transaction or by delivery of the underlying
security (or other related securities).
Options transactions may increase the Fund's portfolio turnover
rate and attendant transaction costs, and may be somewhat more
speculative than other investment strategies. It may not always be
possible to close out an options position, and with respect to
options on futures contracts there is a risk of imperfect correla-
tion between price movements of a futures contract (or option
thereon) and the underlying security.
OPTIONS ON SECURITIES INDICES
The Total Social Impact Fund may purchase or sell options on the
S&P 500 Index, subject to the limitations set forth above and
provided such options are traded on a national securities exchange
or in the over-the-counter market. Options on securities indices
are similar to options on securities except there is no transfer
of a security and settlement is in cash. A call option on a
securities index grants the purchaser of the call, for a premium
paid to the seller, the right to receive in cash an amount equal
to the difference between the closing value of the index and the
exercise price of the option times a multiplier established by the
exchange upon which the option is traded.
LENDING FUND SECURITIES
The Total Social Impact Fund may lend portfolio securities with a
value up to 10% of its total assets. Such loans may be terminated
at any time. The Fund will continuously maintain as collateral
cash or obligations issued by the U.S. government, its agencies or
instrumentalities in an amount equal to not less than 100% of the
current market value (on a daily marked-to-market basis) of the
loaned securities plus declared dividends and accrued interest.
The Fund will retain most rights of beneficial ownership,
including the right to receive dividends, interest or other
distributions on loaned securities. Should the borrower of the
securities fail financially, the Fund may experience delay in
recovering the securities or loss of rights in the collateral.
Loans will be made only to borrowers that the Adviser deems to be
of good financial standing.
OTHER INFORMATION
In addition to the investment policies described above, each
Fund's investment program is subject to further restrictions which
are described in the Statement of Additional Information. Unless
otherwise specified, each Fund's investment objectives, policies
and restrictions are not fundamental policies and may be changed
without shareholder approval. Shareholder inquiries and requests
for the Fund's annual report should be directed to Summit Mutual
Funds, c/o Firstar Mutual Fund Services, LLC, (888) 259-7565, or
at P.O. Box 701, Milwaukee, WI 53201-0701.
FUND MANAGEMENT
INVESTMENT ADVISER
The Adviser is Summit Investment Partners, Inc. (formerly Carillon
Advisers, Inc.), 312 Elm Street, Suite 2525, Cincinnati, Ohio
45202. The Adviser was incorporated under the laws of Ohio on
August 18, 1986, as successor to the advisory business of Carillon
Investments, Inc., the investment adviser for Summit Mutual Funds
since 1984. The Adviser is a wholly-owned subsidiary of The Union
Central Life Insurance Company ("Union Central"), a mutual life
insurance company organized in 1867 under the laws of Ohio.
Subject to the direction and authority of Summit Mutual Funds'
board of directors, the Adviser manages the investment and
reinvestment of the assets of each Fund and provides
administrative services and manages Summit Mutual Funds' business
affairs.
Steven J. Dillenburg, CFA and David M. Weisenburger, CFA lead the
team primarily responsible for the day-to-day management of the
Total Social Impact Fund.
Mr. Dillenburg is a Managing Partner of the Adviser and has been
affiliated with the Adviser and Union Central since November 1999.
Prior thereto, he was Director of Socially Responsible Investing
at Scudder Kemper Investments, Inc. Mr. Weisenburger is the
Assistant Fund Manager of the Adviser and has been affiliated with
the Adviser and Union Central since July, 1996. Prior thereto,
Mr. Weisenburger was a general securities trader for Ohio National
Equity Sales Corp. And a registered representative for Fidelity
Investments.
ADVISORY FEE
The Fund pays the Adviser, as full compensation for all facilities
and services furnished, a monthly fee computed separately for each
Fund on a daily basis, at an annual rate, as follows:
<TABLE>
<CAPTION>
Fund Advisory Fee
---- ------------
<S> <C>
Total Social Impact Fund .45% of the current value of the net assets.
Money Market Fund .35% of the current value of the net assets.
</TABLE>
The effective rates paid by each Fund are set forth in the "Fees
and Expenses of the Fund" section on page .
SUBADVISER
Scudder Kemper Investments, Inc., 345 Park Avenue, New York, NY,
is the investment Subadviser to the Money Market Fund. Scudder
Kemper has more than 80 years experience managing mutual funds,
and currently has more than $290 billion in assets under
management.
The Subadviser provides, subject to the Adviser's direction, a
portion of the investment advisory services for which the Adviser
is responsible. The services include investment research and
advice with respect to securities, investments and cash
equivalents in the Money Market Fund. As compensation for its
services, the Subadviser receives a monthly fee computed on a
daily basis, at an annual rate, equal to .20% of the first
$50,000,000, .15% of the next $200,000,000, .12% of the next
$750,000,000, and .10% of all over $1 billion of the current value
of the net assets. The fee is paid by the Adviser, not the Fund.
EXPENSES
The Fund's expenses are deducted from total income before
dividends are paid. These expenses, which are accrued daily,
include: the fee of the Adviser; taxes; legal, dividend
disbursing, bookkeeping and transfer agent, custodian and auditing
fees; and printing and other expenses relating to the Fund's
operations which are not expressly assumed by the Adviser under
its investment advisory agreement with the Fund. Certain expenses
are paid by the particular Fund that incurs them, while other
expenses are allocated among the Funds on the basis of their
relative size (i.e., the amount of their net assets). The Adviser
will pay any expenses of the Total Social Impact Fund, other than
the advisory fee for that Fund, to the extent that such expenses
exceed .30% of that Fund's net assets. The Adviser will pay any
expenses of the Money Market Fund, other than the advisory fee for
that Fund, to the extent that such expenses exceed .10% of that
Fund's net assets.
CAPITAL STOCK
Summit Mutual Funds currently has twenty-two classes of stock, one
for each fund, two of which are offered pursuant to this
prospectus. Shares (including fractional shares) of each fund have
equal rights with regard to voting, redemptions, dividends,
distributions, and liquidations with respect to that fund. When
issued, shares are fully paid and nonassessable and do not have
preemptive or conversion rights or cumulative voting rights.
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
The net asset value of the Funds' shares is determined once daily,
Monday through Friday at 4:00 p.m. Eastern Time, on days there are
purchases or redemptions of Fund shares. The net asset value will
not be determined when the New York Stock Exchange is closed (for
example, on national holidays), or on any day on which changes in
the value of the portfolio securities of the Funds are immaterial.
The net asset value is calculated by adding the values of all
securities and other assets of a Fund, subtracting liabilities and
expenses, and dividing the resulting figure by the number of the
Fund's outstanding shares. Expenses, including the advisory fee
payable to the Adviser, are charged to each Fund daily.
Securities held by each Fund are valued at market price.
Securities and assets for which market quotations are not readily
available are valued at fair value as determined in good faith by,
or under procedures adopted by, the Board of Directors. Money
market instruments maturing in 60 days or less are valued at the
amortized cost method.
Sometimes foreign securities markets are open on days when U.S.
markets are closed. Because some Funds holds foreign securities,
there may be days when the net asset value of Fund shares changes
even when the shares are not priced, and Fund shareholders cannot
purchase or redeem shares.
PURCHASE OF SHARES
Shares of the Funds are offered and sold on a continuous basis by
the distributor for the Funds, Carillon Investments, Inc. (the
"Distributor"), which is affiliated with the Adviser. The
Distributor is a registered broker-dealer with offices at 1876
Waycross Road, Cincinnati, Ohio 45240.
MINIMUM INVESTMENTS
The minimum initial investment for shares in a Fund is
1) $5,000; or
2) $1,000 ($500 in the case of an Individual Retirement
Account) if the purchaser of shares is any one of the
following:
a) Directors, officers, current or retired employees
("employees"), or agents of The Union Central Life
Insurance Company ("Union Central"), or affiliates
thereof, or their spouses or dependents; or
b) Directors, officers, employees, or agents of broker-
dealers that have entered into selling agreements
with the Distributor relating to the Funds, or their
spouses or dependents; or
c) Directors, officers, employees, or affiliates of
Summit Mutual Funds or investment advisers or sub-
advisers or distributors thereof, or their spouses
or dependents.
The minimum subsequent investment is $50.
BUYING SHARES
Purchase requests accompanied by a check or wire payment for any
Fund which are received by the transfer agent before 4:00 p.m.
Eastern Time on a business day for the Funds will be
executed the same day, at that day's closing price, provided that
payment is received by the close of regular trading hours. Orders
received after 4:00 p.m. Eastern Time and orders for which payment
is not received by the close of regular trading hours on the New
York Stock Exchange will be executed on the next business day
after receipt of both order and payment in proper form.
<TABLE>
<C> <C>
OPENING AN ACCOUNT ADDING TO AN ACCOUNT
BY MAIL BY MAIL
Complete an application and mail it Make your check payable to Summit
along with a check payable to Summit Mutual Funds. Please include your
Mutual Funds, to: sixteen-digit account number on your
The Summit Mutual Funds check and mail it to the address at
c/o Firstar Mutual Fund Services, LLC the left.
P.O. Box 701
Milwaukee, WI 53201-0701.
For overnight or express delivery,
mail to:
The Summit Mutual Funds
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
Milwaukee, WI 53202-5207.
AUTOMATICALLY AUTOMATICALLY
Call 1-888-259-7565 to obtain a Complete a Periodic Investment Plan
purchase application, which includes Application to automatically purchase
information for a Periodic Investment more shares.
Plan.
BY WIRE BY WIRE
Call 1-888-259-7565 prior to sending Call 1-888-259-7565 prior to sending
the wire in order to obtain a the wire in order to obtain a
confirmation number and to ensure confirmation number and to ensure
prompt and accurate handling of funds. prompt and accurate handling of funds.
Ask your bank to transmit immediately Ask your bank to transmit immediately
available funds by wire in the amount available funds by wire as descrobed
of your purchase to: at the left.
Firstar Bank, N.A.
777 East Wisconsin Avenue Please include your sixteen-digit
Milwaukee, WI 53202 account number.
ABA Number: 075000022
Credit to: Firstar Mutual Fund The Summit Mutual Funds and its
Services, LLC transfer agent are not responsible for
Account Number: 112-952-137 the consequences of delays resulting
Further credit to: Summit Mutual Funds from the banking or Federal Reserve
(account name and account number) Wire system, or from incomplete
Summit Mutual Funds and its transfer wiring instructions.
agent are not responsible for the
consequences of delays resulting from
the banking or Federal Reserve Wire
system, or from incomplete wiring
instructions.
INTERNET INTERNET
Not available at this time Not available at this time
BY TELEPHONE EXCHANGE BY TELEPHONE EXCHANGE
Call 1-888-259-7565 to exchange Call 1-888-259-7565 to exchange
from another Summit Mutual Funds from another Summit Mutual Funds
account with the same registration account with the same registration
including name, address and taxpayer including name, address and taxpayer
ID number. ID number.
</TABLE>
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PLEASE NOTE: All checks must be drawn on a bank located within the
United States and must be payable in U.S. dollars to Summit Mutual
Funds. A $25 fee will be imposed by the Funds' transfer agent if
any check used for investment in an account does not clear, and
the investor involved will be responsible for any loss incurred by
a Fund. Prior to the transfer agent receiving a completed
application, investors may make an initial investment. However,
redemptions will not be paid until the transfer agent has received
the completed application.
----------------------------------------------------------------
ADDITIONAL INFORMATION ON BUYING SHARES
The Funds will not accept payment in cash or third party
checks for the purchase of shares.
Federal regulations require that each investor provide a
Social Security number or other certified taxpayer
identification number upon opening or reopening an account.
The Funds reserve the right to reject applications without
such a number or an indication that a number has been
applied for. If a number has been applied for, the number
must be provided and certified within sixty days of the
date of the application. Any accounts opened without a
proper number will be subject to backup withholding at
a rate of 31% on all liquidations and dividend and capital
gain distributions.
Payment for shares of a Fund in the amount of $1,000,000
or more may, at the discretion of the Adviser, be made in
the form of securities that are permissible investments
for the respective Fund.
REDEMPTION OF SHARES
SELLING SHARES
Redemption requests for any of the Funds received by the transfer
agent before 4:00 p.m. Eastern Time on a business day for the
Funds will be executed the same day, at that day's closing price.
Orders received after 4:00 p.m. Eastern Time will be executed on
the next business day.
BY TELEPHONE
Call 1-888-259-7565 with your account name, sixteen-digit account
number and amount of redemption (minimum $500). Redemption
proceeds will only be sent to a shareholder's address or bank
account of a commercial bank located within the United States as
shown on the transfer agent's records. (Available only if
telephone redemptions have been authorized on the account
application and if there has been no change of address by
telephone within the preceding 15 days).
BY MAIL
Mail your instructions to Summit Mutual Funds, P.O. Box 3011,
Milwaukee, WI 53201-3011 (via overnight delivery to 615 E.
Michigan Street, Milwaukee, WI 53202).Include the number of shares
or the amount to be redeemed, your sixteen-digit account number
and Social Security number or other taxpayer identification
number. Your instructions must be signed by all persons required
to sign for transactions exactly as their names appear on the
account. If the redemption amount exceeds $50,000, or if the
proceeds are to be sent elsewhere than the address of record, or
the address of record has been changed by telephone within the
preceding 15 days, each signature must be guaranteed in writing by
either a commercial bank that is a member of the FDIC, a trust
company, a credit union, a
savings association, a member firm of a national securities
exchange or other eligible guarantor institution.
INTERNET
Not available at this time.
AUTOMATICALLY
Call 1-888-259-7565 for a Systematic Withdrawal Plan application
($5,000 account minimum and $50 minimum per transaction).
----------------------------------------------------------------
Guarantees must be signed by an eligible guarantor institution and
"Signature Guaranteed" must appear with the signature.
----------------------------------------------------------------
The Funds may require additional supporting documents for
redemptions made by corporations, executors, administrators,
trustees and guardians. A redemption request will not be deemed to
be properly received until the transfer agent receives all
required documents in proper form.
----------------------------------------------------------------
ADDITIONAL TRANSACTION INFORMATION
TELEPHONE REQUESTS
In order to arrange for telephone redemptions after you have
opened your account or to change the bank or account designated to
receive redemption proceeds, send a written request to the Firstar
Mutual Fund Services, LLC or contact your registered
representative. Each shareholder of the account must sign the
request. The Funds may request further documentation from
corporations, executors, administrators, trustees and guardians.
The Funds reserve the right to refuse a telephone redemption if
they believe it is advisable to do so. Procedures for redeeming
shares by telephone may be modified or terminated by the Funds at
any time upon notice to shareholders.
DURING PERIODS OF SUBSTANTIAL ECONOMIC OR MARKET CHANGE, TELEPHONE
REDEMPTIONS MAY BE DIFFICULT TO IMPLEMENT. IF A SHAREHOLDER IS
UNABLE TO CONTACT THE TRANSFER AGENT BY TELEPHONE, SHARES MAY ALSO
BE REDEEMED BY DELIVERING THE REDEMPTION REQUEST TO THE TRANSFER
AGENT.
In an effort to prevent unauthorized or fraudulent purchase and
redemption requests by telephone, Firstar employs reasonable
procedures to confirm that such instructions are genuine. Among
the procedures used to determine authenticity, investors electing
to transact by telephone will be required to provide their account
number (unless opening a new account). All telephone transactions
will be recorded and confirmed in writing. Statements of accounts
shall be conclusive if not objected to in writing within 10 days
after transmitted by mail. Summit Mutual Funds may implement other
procedures from time to time. If reasonable procedures are not
implemented, Summit Mutual Funds may be liable for any loss due to
unauthorized or fraudulent transactions. In all other cases, the
shareholder is liable for any loss for unauthorized transactions.
ADDITIONAL REDEMPTION INFORMATION
The Funds will make payment for redeemed shares typically within
one or two business days, but no later than the seventh day after
receipt by the transfer agent of a request in proper form, except
as provided by SEC rules. HOWEVER, IF ANY PORTION OF THE SHARES
TO BE REDEEMED REPRESENTS AN INVESTMENT MADE BY CHECK, THE FUNDS
WILL DELAY THE PAYMENT OF THE REDEMPTION PROCEEDS UNTIL THE
TRANSFER AGENT IS REASONABLY SATISFIED THAT THE CHECK HAS BEEN
COLLECTED, WHICH MAY TAKE TWELVE DAYS FROM THE PURCHASE DATE. An
investor must have filed a purchase application before any
redemption requests can be paid.
ACCOUNTS BELOW THE MINIMUM BALANCE
If your account falls below $1,000, the Funds may redeem your
account. The Fund will impose no charge and will give you sixty
days' written notice prior to any redemption.
REDEMPTION IN KIND
Each Fund intends to pay cash for all shares redeemed, unless the
redemption request is for more than $250,000 or 1% of the net
assets of a Fund by a single shareholder over any 90-day period.
If such a redemption request is presented and the Fund deems it to
be detrimental to existing shareholders, to pay the redemption in
cash, the Fund may pay all or part of the redemption in the Fund's
portfolio securities at their then-current market value equal to
the redemption price. If you received securities in kind and
converted them to cash, you would incur brokerage costs.
Redemptions in kind are taxable transactions.
EXCHANGE OF SHARES
Without a sales charge, you may exchange shares of a Fund for
shares of another Fund.Telephone exchange privileges automatically
apply to each shareholder of record unless the transfer agent
receives written instructions canceling the privilege.
For federal income tax purposes, an exchange of shares is a
taxable event and, accordingly, an investor may realize a capital
gain or loss. Before making an exchange request, an investor
should consult a tax or other financial adviser to determine the
tax consequences of a particular exchange. No exchange fee is
currently imposed by Summit Mutual Funds on exchanges. However,
Summit Mutual Funds reserves the right to impose a charge in the
future. Summit Mutual Funds reserves the right to reject any
exchange request with prior notice to a shareholder and the
exchange privilege may be modified or terminated at any time. At
least sixty days' notice will be given to shareholders of any
material modification or termination except where notice is not
required under SEC regulations. Also keep in mind:
Exchanges are available only in states where exchanges may
be legally made.
The minimum amount which may be exchanged is the lesser of
$1,000 or all the shares of that Fund.
If any portion of the shares to be exchanged represents an
investment made by check, a Fund will delay the acquisition
of new shares in an exchange until the transfer agent is
reasonably satisfied that the check has been collected,
which may take up to twelve days from the purchase date.
It may be difficult to make telephone exchanges in times of
drastic economic or market changes.
EXCESSIVE TRADING
The Adviser may bar excessive traders from purchasing shares of a
Fund. Frequent trades, involving either substantial Fund assets
or a substantial portion of your account or accounts controlled by
you, can disrupt management of the Fund and raise its expenses.
The Fund defines "excessive trading" as exceeding one purchase and
sale involving the Funds within any 120-day period. For example,
assume you are invested in a Fund. You can move substantial assets
from that Fund to another Fund and, within the next 120 days, sell
your shares in that Fund to return to the first Fund. If you
exceed the number of trades described above, you may be barred
indefinitely from further purchases of shares of the Funds. Two
types of transactions are exempt from the excessive trading
guidelines: (1) redemptions that are not part of exchanges; and
(2) systematic purchases or redemptions made through an automatic
investment plan or an automatic withdrawal plan.
SHAREHOLDER REPORTS
Shareholders will be provided with a report showing portfolio
investments and other information at least semiannually; and after
the close of a Fund's fiscal year with an annual report containing
audited financial statements. To eliminate unnecessary
duplication, only one copy of shareholder reports will be sent to
shareholders with the same mailing address. Shareholders may
request duplicate copies free of charge.
Account statements will be mailed after each purchase,
reinvestment of dividends and redemption. Statements of accounts
shall be conclusive if not objected to in writing within 10 days
after transmitted by mail. Generally, the Fund does not send
statements for Funds held in brokerage, retirement or other
similar accounts.
AUTOMATED TELERESPONSE SERVICE
Shareholders using a touch-tone telephone can access information
on the Funds twenty four hours a day, seven days a week. When
calling Firstar Mutual Fund Services, LLC at 1-888-259-7565,
shareholders may choose to use the automated information feature
or, during regular business hours (8:00 a.m. to 7:00 p.m. Central
time, Monday through Friday), speak with a Firstar representative.
RETIREMENT PLANS
The Fund offers individual retirement accounts including SIMPLE
and SEP IRAs. For details concerning Retirement Accounts
(including service fees), please call Firstar Mutual Fund
Services, LLC at 1-888-259-7565.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
Dividends from net investment income of the Total Social Impact
Fund are declared and paid quarterly. Dividends from net
investment income of the Money Market Fund are declared daily and
paid monthly.
Any capital gains are distributed annually. Your dividends and
capital gains distributions will be reinvested automatically in
additional shares unless you notify Summit Mutual Funds that you
elect to receive distributions in cash.
If you have elected to receive dividends and/or capital gain
distributions in cash and the postal or other delivery service is
unable to deliver checks to your address of record, your
distribution option will automatically be converted to having all
dividend and other distributions reinvested in additional shares.
No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
FEDERAL TAXES
Each Fund contemplates declaring as dividends each year all, or
substantially all, of its taxable income, including its net
capital gain (the excess of long-term capital gain over short-term
capital loss). You will be subject to income tax on these
distributions regardless of whether they are paid in cash or
reinvested in additional Fund shares. Distributions attributable
to the net capital gain of a Fund will be taxable to you as
long-term capital gain, regardless of how long you have held your
Fund shares. Other Fund distributions will generally be taxable as
ordinary income. You will be notified annually of the tax status
of distributions to you.
You should note that if you purchase Fund shares just prior to a
capital gain distribution, the purchase price will reflect the
amount of the upcoming distribution, but you will be taxable on
the entire amount of the distribution received, even though, as an
economic matter, the distribution simply constitutes a return of
capital. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or
redemption of your Fund shares, including an exchange for Fund
shares of another Fund, based on the difference between your tax
basis in the Fund shares and the amount you receive for them. (To
aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held Fund
shares.) Any loss realized on Fund shares held for six months or
less will be treated as a long-term capital loss to the extent of
any capital gain dividends that were received on the Fund shares.
The one major exception to these tax principles is that
distributions on, and sales, exchanges and redemptions of, Fund
shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
The foregoing is only a summary of certain tax considerations
under current law, which may be subject to change in the future.
You should consult your tax adviser for further information
regarding federal, state, local and/or foreign tax consequences
relevant to your specific situation.
STATE AND LOCAL TAXES
Shareholders may also be subject to state and local taxes on
distributions and redemptions. State income taxes may not apply,
however, to the portions of each Fund's distributions, if any,
that are attributable to interest on Federal securities or
interest on securities of the particular state. Shareholders
should consult their tax advisers regarding the tax status of
distributions in their state and locality.
<PAGE>
S&P DISCLAIMER
The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "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. Summit Mutual
Funds is not sponsored, endorsed, sold or promoted by Standard &
Poor's ("S&P"). S&P makes no representation or warranty, express
or implied, to the beneficial owners of Summit Mutual Funds or any
member of the public regarding the advisability of investing in
securities generally or in Summit Mutual Funds particularly or the
ability of the S&P 500 Index or the S&P MidCap 400 Index to track
general stock market performance. S&P's only relationship to
Summit Mutual Funds is the licensing of certain trademarks and
trade names of S&P and of the S&P 500 Index and the S&P MidCap 400
Index which is determined, composed and calculated by S&P without
regard to Summit Mutual Funds or the Funds. S&P has no obligation
to take the needs of Summit Mutual Funds or the beneficial owners
of the Funds into consideration in determining, composing or
calculating the S&P 500 Index and the S&P MidCap 400 Index. S&P is
not responsible for and has not participated in the determination
of the prices and amount of the Funds or the timing of the
issuance or sale of the Funds or in the determination or
calculation of the equation by which the Funds are to be converted
into cash. S&P has no obligation or liability in connection with
the administration, marketing or trading of Summit Mutual Funds.
FINANCIAL HIGHLIGHTS
Since these are new funds, no financial highlights are available.
APPENDIX A: RATINGS
CORPORATE BOND RATINGS
Moody's Investors Services, Inc.
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt-edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
Aa Bonds which are rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what
are generally known as high-grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-
grade obligations. Factors giving security to principal and
interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very
moderate and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds
in this class.
B Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
Standard & Poor's Rating Services
AAA This is the highest rating assigned by Standard & Poor's
to a debt obligation and indicates an extremely strong capacity to
pay principal and interest.
AA Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very
strong, and in the majority of instances they differ from AAA
issues only in a small degree.
A Bonds rated A have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to the
adverse effect of changes in circumstances and economic
conditions.
BBB Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally
exhibit protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB, B, CCC, CC Bonds rated BB, B, CCC, and CC are regarded,
on balance, as predominately speculative with respect to the
issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
COMMERCIAL PAPER RATINGS
Moody's Investors Services, Inc.
A Prime rating is the highest commercial paper rating assigned by
Moody's Investors Services, Inc. Issuers rated Prime are further
referred to by use of numbers 1, 2 and 3 to denote relative
strength within this highest classification. Among the factors
considered by Moody's in assigning ratings for an issuer are the
following:
- management;
- economic evaluation of the industry and an appraisal
of speculative type
risks which may be inherent in certain areas;
- competition and customer acceptance of products;
- liquidity;
- amount and quality of long-term debt;
- ten-year earnings trends;
- financial strength of a parent company and the
relationships
which exist with the issuer; and
- recognition by management of obligations which may be
present
or may arise as a result of public interest questions and
preparations to meet such obligations.
Standard & Poor's Rating Services
Commercial paper rated A by Standard & Poor's Rating Services has
the following characteristics:
- Liquidity ratios are better than the industry average.
- Long-term senior debt rating is "A" or better. In some
cases, BBB credits may be acceptable.
- The issuer has access to at least two additional channels
of borrowing.
- Basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances.
- Typically, the issuer's industry is well established, the
issuer has a strong position within its industry and the
reliability and quality of management is unquestioned.
Issuers rated A are further referred to by use of numbers 1, 2 and
3 to denote relative strength within this classification.
<PAGE>
[Back Cover Page]
A Statement of Additional Information dated June 26, 2000, which
contains further information about the Funds, has been filed with
the Securities and Exchange Commission and is incorporated by
reference into this Prospectus. Additional information about the
Funds' investments is available in Summit Mutual Funds' annual and
semi-
annual reports to shareholders. In Summit Mutual Funds' annual
report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Funds'
performance during its last fiscal year. A copy of the Statement
of Additional Information or its annual and semi-
annual reports may be obtained without charge by calling Summit
Mutual Funds, c/o Firstar Mutual Fund Services, LLC, (888) 259-
7565, or by writing Summit Mutual Funds, c/o Firstar Mutual Fund
Services, LLC, at P.O. Box 701, Milwaukee, WI 53201-0701.
Summit Mutual Funds' Statement of Additional Information, annual
and semi-annual reports and certain other information about the
Funds can be reviewed and copied at the SEC's public reference
room (which will send copies of these documents upon request and
for a fee). Information about the operation of the SEC's public
reference room may be obtained by calling the SEC at 1-800-SEC-
0330. Copies of Fund documents may be requested by writing to the
Public reference Section of the SEC, Washington, D.C. 20549-
6009.
These fund Documents and other information about the Funds are
also available without charge at the SEC's web site:
http://www.sec.gov.
File 811-04000
<PAGE>
PART B
INFORMATION REQUIRED IN A
STATEMENT OF ADDITIONAL INFORMATION
(page)
SUMMIT MUTUAL FUNDS, INC.
Summit Apex Series
----------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
June 26, 2000
This Statement of Additional Information regarding two of the
twenty-two Funds of Summit Mutual Funds, Inc. ("Summit Mutual
Funds"), formerly Carillon Fund, Inc., is not a prospectus. Much
of the information contained in this Statement of Additional
Information expands upon subjects discussed in the Prospectus.
Accordingly, this Statement should be read in conjunction with
Summit Mutual Funds' current Prospectus, dated June 26, 2000,
which may be obtained by calling Summit Mutual Funds, c/o Firstar
Mutual Fund Services, LLC, (888) 259-7565, or by writing Summit
Mutual Funds, c/o Firstar Mutual Fund Services, LLC, at P.O. Box
701, Milwaukee, WI 53201-0701.
Summit Mutual Funds is an open-end management investment
company.
TABLE OF CONTENTS
Page
Investment Policies (7)........................................2
Money Market Instruments, Other Securities and
Investment Techniques.................................2
Futures Contracts...........................................4
Options.....................................................8
Lending Portfolio Securities...............................12
Additional Investment Policies - Money Market Fund............12
Investment Restrictions.......................................14
Portfolio Turnover............................................17
Management of the Fund (10)...................................18
Directors and Officers.....................................18
Investment Adviser.........................................20
Payment of Expenses........................................21
Advisory Fee ..............................................21
Investment Advisory Agreement..............................22
Investment Subadvisory Agreement...........................22
Service Agreement..........................................23
License Agreement..........................................22
Securities Activities of Adviser...........................23
Code of Ethics.............................................24
Determination of Net Asset Value (11).........................24
Purchase and Redemption of Shares (12)........................25
Taxes (18)....................................................25
Fund Transactions and Brokerage...............................25
Distributor...................................................26
General Information (2).......................................27
Capital Stock..............................................27
Voting Rights..............................................28
Additional Information.....................................28
Independent Auditors..........................................29
Appendix A: S&P Disclaimer....................................30
Appendix A: TSI Disclaimer....................................31
( ) indicates page on which the corresponding section appears in
the Prospectus.
SMFI 516 APEX 6/00
<page)
SUMMIT MUTUAL FUNDS, INC.
INVESTMENT POLICIES
The following specific policies supplement the Fund's
"Investment Objectives and Policies" set forth in the Prospectus.
Money Market Instruments, Other Securities and Investment
Techniques
Each Fund may invest in money market instruments whose
characteristics are consistent with the Fund's investment program
and are described below unless explicitly excluded in the text.
Small Bank Certificates of Deposit. Each Fund may invest in
certificates of deposit issued by commercial banks, savings banks,
and savings and loan associations having assets of less than $1
billion, provided that the principal amount of such certificates
is insured in full by the Federal Deposit Insurance Corporation
("FDIC"). The FDIC presently insures accounts up to $100,000, but
interest earned above such amount is not insured by the FDIC.
Repurchase Agreements. A repurchase agreement is an instrument
under which the purchaser (i.e., one of the Funds) acquires
ownership of the obligation (the underlying security) and the
seller (the "issuer" of the repurchase agreement) agrees, at the
time of sale, to repurchase the obligation at a mutually agreed
upon time and price, thereby determining the yield during the
purchaser's holding period. This results in a fixed rate of
return insulated from market fluctuations during such period.
Repurchase agreements usually are for short periods, normally
under one week, and are considered to be loans under the
Investment Company Act of 1940. Funds will not enter into a
repurchase agreement which does not provide for payment within
seven days if, as a result, more than 10% of the value of each
Fund's net assets would then be invested in such repurchase
agreements and other illiquid securities. The Funds will enter
into repurchase agreements only where: (I) the underlying
securities are of the type (excluding maturity limitations) which
the Funds' investment guidelines would allow it to purchase
directly, either in normal circumstances or for temporary
defensive purposes; (ii) the market value of the underlying
securities, including interest accrued, will at all times equal or
exceed the value of the repurchase agreement; and (iii) payment
for the underlying security is made only upon physical delivery or
evidence of book-entry transfer to the account of the custodian or
a bank acting as agent. The investments by a Fund in repurchase
agreements may at times be substantial when, in the view of the
Adviser, unusual market, liquidity, or other conditions warrant.
If the issuer of the repurchase agreement defaults and does not
repurchase the underlying security, the Fund might incur a loss if
the value of the underlying security declines, and the Fund might
incur disposition costs in liquidating the underlying security.
In addition, if the issuer becomes involved in bankruptcy
proceedings, the Fund may be delayed or prevented from obtaining
the underlying security for its own purposes. In order to minimize
any such risk, the Fund will only engage in repurchase agreements
with recognized securities dealers and banks determined to present
minimal credit risk by the Adviser, under the direction and
supervision of the Board of Directors.
Reverse Repurchase Agreements
Each Fund may enter into reverse repurchase agreements. Under
reverse repurchase agreements, the Fund transfers possession of
Fund securities to banks in return for cash in an amount equal to
a percentage of the Fund securities' market value and agrees to
repurchase the securities at a future date by repaying the cash
with interest. The Fund retains the right to receive interest and
principal payments from the securities while they are in the
possession of the financial institutions. While a reverse
repurchase agreement is in effect, the Custodian will segregate
from other Fund assets an amount of cash or liquid high quality
debt obligations equal in value to the repurchase price (including
any accrued interest).
U.S. Government Obligations. Securities issued and guaranteed as
to principal and interest by the United States Government include
a variety of Treasury securities, which differ only in their
interest rates, maturities and times of issuance. Treasury bills
have a maturity of one year or less. Treasury notes have
maturities of one to ten years at the time they are issued and
Treasury bonds generally have a maturity of greater than ten years
at the time they are issued.
Government Agency Securities. Government agency securities that
are permissible investments consist of securities either issued or
guaranteed by agencies or instrumentalities of the United States
Government. Agencies of the United States Government which issue
or guarantee obligations include, among others, Export-Import
Banks of the United States, Farmers Home Administration, Federal
Housing Administration, Government National Mortgage Association
("GNMA"), Maritime Administration, Small Business Administration
and The Tennessee Valley Authority. Obligations of
instrumentalities of the United States Government include
securities issued or guaranteed by, among others, the Federal
National Mortgage Association ("FNMA"), Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Intermediate Credit Banks, Banks for Cooperatives, and the U.S.
Postal Service. Some of these securities, such as those
guaranteed by GNMA, are supported by the full faith and credit of
the U.S. Treasury; others, such as those issued by The Tennessee
Valley Authority, are supported by the right of the issuer to
borrow from the Treasury; while still others, such as those issued
by the Federal Land Banks, are supported only by the credit of the
instrumentality. The Fund's primary usage of these types of
securities will be GNMA certificates and FNMA and FHLMC mortgage-
backed obligations which are discussed in more detail below.
Certificates of Deposit. Each Fund may invest in certificates of
deposit. Certificates of deposit are generally short-term,
interest-bearing negotiable certificates issued by banks or
savings and loan associations against funds deposited in the
issuing institution.
Time Deposits. Each Fund may invest in time deposits. Time
Deposits are deposits in a bank or other financial institution for
a specified period of time at a fixed interest rate for which a
negotiable certificate is not received.
Bankers' Acceptance. Each Fund may invest in bankers'
acceptances. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an
international commercial transaction (to finance the import,
export, transfer or storage of goods). The borrower is liable for
payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most
acceptances have maturities of six months or less and are traded
in secondary markets prior to maturity.
Commercial Paper. Each Fund may invest in commercial paper.
Commercial paper refers to short-term, unsecured promissory notes
issued by corporations to finance short-term credit needs.
Commercial paper is usually sold on a discount basis and has a
maturity at the time of issuance not exceeding nine months.
Short Term Corporate Debt Securities. Each Fund may invest in
investment grade short term corporate debt securities with a
remaining maturity of one year or less. Corporate debt securities
with a remaining maturity of less than one year tend to become
extremely liquid and are traded as money market securities. Such
issues tend to have greater liquidity and considerably less market
value fluctuations than longer-term issues.
When-issued and Delayed-delivery Securities. From time to time,
in the ordinary course of business, each Fund may purchase
securities on a when-issued or delayed-delivery basis - i.e.,
delivery and payment can take place a month or more after the date
of the transactions. The securities so purchased are subject to
market fluctuation and no interest accrues to the purchaser during
this period. At the time a Fund makes the commitment to purchase
securities on a when-issued or delayed-delivery basis, the Fund
will record the transaction and thereafter reflect the value, each
day, of such security in determining the net asset value of such
Fund. At the time of delivery of the securities, the value may be
more or less than the purchase price. Each Fund will also
establish a segregated account with the Summit Mutual Funds'
custodian bank in which it will maintain cash or cash equivalents
or other Fund securities equal in value to commitments for such
when-issued or delayed-delivery securities.
Equity Securities. The Total Social Impact Fund may invest in
equity securities without restriction.
Unit Investment Trusts. The Total Social Impact Fund may invest
in Standard & Poor's Depositary Receipts ("SPDRs(R)"). SPDRs are
units of beneficial interest in a unit investment trust ("UIT"),
representing proportionate undivided interests in a portfolio of
securities in substantially the same weighting as the component
common stocks of the S&P 500 Index. While the investment
objective of SPDRs is to provide investment results that
generally correspond to the price and yield performance of the
component common stocks of the S&P 500 Index, there can be no
assurance that this investment objective will be met fully. As
SPDRs are securities issued by an investment company, non-
fundamental restriction (5) below restricts their purchases to 10%
of the Fund's assets.
Futures Contracts
For hedging purposes, including protecting the price or interest
rate of securities that the Fund intends to buy, the Total Social
Impact Fund may enter into futures contracts that relate to
securities in which it may directly invest and indices comprised
of such securities and may purchase. As a temporary investment
strategy, until the Fund reaches $50 million in net assets, the
Total Social Impact Fund may invest up to 100% of its assets in
such futures and/or options contracts. Thereafter, the Fund may
invest up to 20% of the Fund's assets in such futures and/or
options contracts. The Fund does not intend to enter into futures
contracts that are not traded on exchanges or boards of trade.
A financial futures contract is a contract to buy or sell a
specified quantity of financial instruments such as U.S. Treasury
bills, notes and bonds, commercial paper and bank certificates of
deposit or the cash value of a financial instrument index at a
specified future date at a price agreed upon when the contract is
made. A stock index futures contract is a contract to buy or sell
specified units of a stock index at a specified future date at a
price agreed upon when the contract is made. The value of a unit
is based on the current value of the contract index. Under such
contracts no delivery of the actual stocks making up the index
takes place. Rather, upon expiration of the contract, settlement
is made by exchanging cash in an amount equal to the difference
between the contract price and the closing price of the index at
expiration, net of variation margin previously paid.
Substantially all futures contracts are closed out before
settlement date or called for cash settlement. A futures contract
is closed out by buying or selling an identical offsetting futures
contract. Upon entering into a futures contract, the Fund is
required to deposit an initial margin with the Custodian for the
benefit of the futures broker. The initial margin serves as a
"good faith" deposit that the Fund will honor their futures
commitments. Subsequent payments (called "variation margin") to
and from the broker are made on a daily basis as the price of the
underlying investment fluctuates. In the event of the bankruptcy
of the futures broker that holds margin on behalf of the Fund, the
Fund may be entitled to return of margin owed to it only in
proportion to the amount received by the broker's other customers.
The Adviser will attempt to minimize this risk by monitoring the
creditworthiness of the futures brokers with which the Fund does
business.
Because the value of index futures depends primarily on the value
of their underlying indexes, the performance of the broad-
based contracts will generally reflect broad changes in common
stock prices. However, because a Fund may not be invested in
precisely the same proportion as an Index, it is likely that the
price changes of the Fund's index futures positions will not match
the price changes of the Fund's other investments.
Options on futures contracts give the purchaser the right to
assume a position at a specified price in a futures contract at
any time before expiration of the option contract.
The Fund will enter into futures contracts which are traded on
national futures exchanges and are standardized as to maturity
date and underlying financial instrument. The principal financial
futures exchanges in the United States are the Board of Trade of
the City of Chicago, the Chicago Mercantile Exchange, the New York
Futures Exchange and the Kansas City Board of Trade. Futures
exchanges and trading in the United States are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission
("CFTC"). Although techniques other than the sale and purchase of
futures contracts could be used for the above-referenced purposes,
futures contracts offer an effective and relatively low cost means
of implementing the Fund's objectives in these areas.
Regulatory Limitations. The Total Social Impact Fund will engage
in transactions in futures contracts and options thereon only for
bona fide hedging, risk management and other permissible purposes,
in each case in accordance with the rules and regulations of the
CFTC, and not for speculation.
In instances involving the purchase of futures contracts or call
options thereon or the writing of put options thereon by the Fund,
an amount of cash, U.S. Government securities or other liquid
securities, equal to the market value of the futures contracts and
options thereon (less any related margin deposits), will be
deposited in a segregated account with the Fund's custodian to
cover the position, or alternative cover will be employed thereby
insuring that the use of such futures contracts and options is
unleveraged.
In addition, CFTC regulations may impose limitations on the Fund's
ability to engage in certain yield enhancement and risk management
strategies. If the CFTC or other regulatory authorities adopt
different (including less stringent) or additional restrictions,
the Fund would comply with such new restrictions.
SPECIAL RISKS OF FUTURES CONTRACTS
Volatility And Leverage. The prices of futures contracts are
volatile and are influenced, among other things, by actual and
anticipated changes in the market and interest rates, which in
turn are affected by fiscal and monetary policies and national and
international policies and economic events.
Most United States futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single
trading day. The daily limit establishes the minimum amount that
the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading
session. Once the daily limit has been reached in a particular
type of futures contract, no trades may be made on that day at a
price beyond that limit. The daily limit governs only price
movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices
have occasionally moved to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt
liquidation of futures positions and subjecting some futures
traders to substantial losses.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage. As a result, a
relatively small price movement in a futures contract may result
in immediate and substantial loss, as well as gain, to the
investor. For example, if at the time of purchase, 10% of the
value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in
a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original
margin deposit, if the contract were closed out. Thus, a purchase
or sale of a futures contract may result in losses in excess of
the amount invested in the futures contract. However, a Fund
would presumably have sustained comparable losses if, instead of
the futures contract, it had invested in the underlying instrument
and sold it after the decline. Furthermore, in the case of a
futures contract purchase, in order to be certain that a Fund has
sufficient assets to satisfy its obligations under a futures
contract, the Fund earmarks to the futures contract money market
instruments equal in value to the current value of the underlying
instrument less the margin deposit.
Liquidity. The Fund may elect to close some or all of its
futures positions at any time prior to their expiration. A Fund
would do so to reduce exposure represented by long futures
positions or increase exposure represented by short futures
positions. A Fund may close its positions by taking opposite
positions which would operate to terminate the Fund's position in
the futures contracts. Final determinations of variation margin
would then be made, additional cash would be required to be paid
by or released to the Fund, and the Fund would realize a loss or
a gain.
Futures contracts may be closed out only on the exchange or board
of trade where the contracts were initially traded. Although the
Fund intends to purchase or sell futures contracts only on
exchanges or boards of trade where there appears to be an active
market, there is no assurance that a liquid market on an exchange
or board of trade will exist for any particular contract at any
particular time. In such event, it might not be possible to close
a futures contract, and in the event of adverse price movements,
the Fund would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have
been used to hedge the underlying instruments, the Fund would
continue to hold the underlying instruments subject to the hedge
until the futures contracts could be terminated. In such
circumstances, an increase in the price of the underlying
instruments, if any, might partially or completely offset losses
on the futures contract. However, as described below, there is no
guarantee that the price of the underlying instruments will in
fact correlate with the price movements in the futures contract
and thus provide an offset to losses on a futures contract.
Hedging Risk. A decision of whether, when, and how to hedge
involves skill and judgment, and even a well-conceived hedge may
be unsuccessful to some degree because of unexpected market
behavior, or market or interest rate trends. There are several
risks in connection with the use by the Fund of futures contract
as a hedging device. One risk arises because of the imperfect
correlation between movements in the prices of the futures
contracts and movements in the prices of the underlying
instruments which are the subject of the hedge. The Adviser will,
however, attempt to reduce this risk by entering into futures
contracts whose movements, in its judgment, will have a
significant correlation with movements in the prices of the Fund's
underlying instruments sought to be hedged.
Successful use of futures contracts by the Fund for hedging
purposes is also subject to the Adviser's ability to correctly
predict movements in the direction of the market. It is possible
that, when a Fund has sold futures to hedge its portfolio against
a decline in the market, the index, indices, or underlying
instruments on which the futures are written might advance and the
value of the underlying instruments held in the Fund's portfolio
might decline. If this were to occur, the Fund would lose money
on the futures and also would experience a decline in value in its
underlying instruments. However, while this might occur to a
certain degree, the Adviser believes that over time the value of
a Fund's portfolio will tend to move in the same direction as the
market indices which are intended to correlate to the price
movements of the underlying instruments sought to be hedged. It
is also possible that if a Fund were to hedge against the
possibility of a decline in the market (adversely affecting the
underlying instruments held in its portfolio) and prices instead
increased, the Fund would lose part or all of the benefit of
increased value of those underlying instruments that it has
hedged, because it would have offsetting losses in its futures
positions. In addition, in such situations, if a Fund had
insufficient cash, it might have to sell underlying instruments to
meet daily variation margin requirements. Such sales of
underlying instruments might be, but would not necessarily be, at
increased prices (which would reflect the rising market). The
Fund might have to sell underlying instruments at a time when it
would be disadvantageous to do so.
In addition to the possibility that there might be an imperfect
correlation, or no correlation at all, between price movements in
the futures contracts and the portion of the portfolio being
hedged, the price movements of futures contracts might not
correlate perfectly with price movements in the underlying
instruments due to certain market distortions. First, all
participants in the futures market are subject to margin deposit
and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors might close futures
contracts through offsetting transactions which could distort the
normal relationship between the underlying instruments and futures
markets. Second, the margin requirements in the futures market
are less onerous than margin requirements in the securities
markets, and as a result the futures market might attract more
speculators than the securities markets do. Increased
participation by speculators in the futures market might also
cause temporary price distortions. Due to the possibility of
price distortion in the futures market and also because of the
imperfect correlation between price movements in the underlying
instruments and movements in the prices of futures contracts, even
a correct forecast of general market trends by the Adviser might
not result in a successful hedging transaction over a very short
time period
Options
The Total Social Impact Fund may sell (write) listed options on
U.S. Treasury Securities and options on contracts for the future
delivery of U.S. Treasury Securities as a means of hedging the
value of such securities owned by the Fund. The Fund may enter
into options on 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. In addition, the Fund may write covered call options
on any security in which it is eligible to invest.
As a writer of a call option, a Fund may terminate its obligation
by effecting a closing purchase transaction. This is accomplished
by purchasing an option of the same series as the option
previously written. However, once the Fund has been assigned an
exercise notice, the Fund will be unable to effect a closing
purchase transaction. There can be no assurance that a closing
purchase transaction can be effected when the Fund so desires.
The Fund will realize a profit from a closing transaction if the
price of the transaction is less than the premium received from
writing the option; the Fund will realize a loss from a closing
transaction if the price of the transaction is more than the
premium received from writing the option. Since the market value
of call options generally reflects increases in the value of the
underlying security, any loss resulting from the closing
transaction may be wholly or partially offset by unrealized
appreciation of the underlying security. Conversely, any gain
resulting from the closing transaction may be wholly or partially
offset by unrealized depreciation of the underlying security. The
principal factors affecting the market value of call options
include supply and demand, the current market price and price
volatility of the underlying security, and the time remaining
until the expiration date.
Although the Fund will write only options and options on futures
contracts with respect to such securities which are traded on a
national exchange or Board of Trade, there is no assurance that a
liquid secondary market will exist for any particular option. In
the event it is not possible to effect a closing transaction, the
Fund will not be able to sell the underlying security, until the
option expires or the option is exercised by the holder.
Possible reasons for the absence of a liquid secondary market on
an exchange include the following: (a) insufficient trading
interest in certain options; (b) restrictions on transactions
imposed by an exchange; (c) trading halts, suspensions or other
restrictions imposed with respect to particular classes or series
of options or underlying securities; (d) inadequacy of the
facilities of an exchange or the Clearing Corporation to handle
trading volume; or (e) a decision by one or more exchanges to
discontinue the trading of options or impose restrictions on types
of orders. There can be no assurance that higher than anticipated
trading activity or order flow or other unforeseen events might
not at times render the trading facilities inadequate and thereby
result in the institution of special trading procedures or
restrictions which could interfere with the Fund's ability to
effect closing transactions.
The Total Social Impact Fund may write call options on futures
contracts on U.S. Treasury Securities as a hedge against the
adverse effect of expected increases in interest rates on the
value of Portfolio securities, in order to establish more
definitely the effective return on securities held by the
Portfolio. The Fund may write call options on futures contracts
on the S&P 500 Index or securities included therein, only for
hedging purposes to protect the price of securities it intends to
buy and when such transactions enable it to better meet its
investment objectives. The Fund will not write options on futures
contracts for speculative purposes.
A futures contract on a debt security is a binding contractual
commitment which will result in an obligation to make or accept
delivery, during a specified future time, of securities having
standardized face value and rate of return. Selling a futures
contract on debt securities (assuming a short position) would give
the Portfolio a legal obligation and right as seller to make
future delivery of the security against payment of the agreed
price.
Upon the exercise of a call option on a futures contract, the
writer of the option (the Fund) is obligated to sell the futures
contract (to deliver a long position to the option holder) at the
option exercise price, which will presumably be lower than the
current market price of the contract in the futures market.
However, as with the trading of futures, most participants in the
options markets do not seek to realize their gains or losses by
exercise of their option rights. Instead, the holder of an option
will usually realize a gain or loss by buying or selling an
offsetting option at a market price that will reflect an increase
or a decrease from the premium originally paid. Nevertheless, if
an option on a futures contract written by the Fund is exercised,
the Fund intends to either close out the futures contract by
purchasing an offsetting futures contract, or deliver the
underlying securities immediately, in order to avoid assuming a
short position. There can be no assurance that the Fund will be
able to enter into an offsetting transaction with respect to a
particular contract at a particular time, but it may always
deliver the underlying security.
As a writer of options on futures contracts, the Fund will receive
a premium but will assume a risk of adverse movement in the price
of the underlying futures contract. If the option is not
exercised, the Portfolio will gain the amount of the premium,
which may partially offset unfavorable changes in the value of
securities held in the Fund. If the option is exercised, the Fund
might incur a loss in the option transaction which would be
reduced by the amount of the premium it has received.
While the holder or writer of an option on a futures contract may
normally terminate its position by selling or purchasing an
offsetting option, the Fund's ability to establish and close out
options positions at fairly established prices will be subject to
the maintenance of a liquid market. The Fund will not write
options on futures contracts unless, in the Adviser's opinion, the
market for such options has sufficient liquidity that the risks
associated with such options transactions are not at unacceptable
levels.
Risks. While options will be sold in an effort to reduce certain
risks, those transactions themselves entail certain other risks.
Thus, while the Fund may benefit from the use of options,
unanticipated changes in interest rates or security price
movements may result in a poorer overall performance for the Fund
than if it had not entered into any options transactions. The
price of U.S. Treasury Securities futures are volatile and are
influenced, among other things, by changes in prevailing interest
rates and anticipation of future interest rate changes. The price
of S&P 500 Index futures is also volatile and is influenced, among
other things, by changes in conditions in the securities markets
in general.
In the event of an imperfect correlation between a futures
position (and a related option) and the Portfolio position which
is intended to be protected, the desired protection may not be
obtained. The correlation between changes in prices of futures
contracts and of the securities being hedged is generally only
approximate. The amount by which such correlation is imperfect
depends upon many different circumstances, such as variations in
speculative market demand for futures and for debt securities
(including technical influences in futures trading) and
differences between the financial instruments being hedged and the
instruments underlying the standard options on futures contracts
available for trading.
Due to the imperfect correlation between movements in the prices
of futures contracts and movements in the prices of the underlying
debt securities, the price of a futures contract may move more
than or less than the price of the securities being hedged. If
the price of the future moves less than the price of the
securities which are the subject of the hedge, the hedge will not
be fully effective and if the price of the securities being hedged
has moved in an unfavorable direction, the Fund would be in a
better position than if it had not hedged at all. If the price of
the futures moves more than the price of the security, the Fund
will experience either a gain or loss on the option on the future
which will not be completely offset by movements in the price of
the securities which are the subject of the hedge.
The market prices of futures contracts and options thereon may be
affected by various factors. If participants in the futures
market elect to close out their contracts through offsetting
transactions rather than meet margin deposit requirements,
distortions in the normal relationship between the debt securities
and futures markets could result. Price distortions could also
result if investors in futures contracts make or take delivery of
underlying securities rather than engage in closing transactions.
This could occur, for example, if there is a lack of liquidity in
the futures market. From the point of view of speculators, the
deposit requirements in the futures markets are less onerous than
margins requirements in the securities markets; accordingly,
increased participation by speculators in the futures market could
cause temporary price distortions. A correct forecast of interest
rate trends by the adviser may still not result in a successful
hedging transaction because of possible price distortions in the
futures market and because of the imperfect correlation between
movements in the prices of debt securities and movements in the
prices of futures contracts. A well-conceived hedge may be
unsuccessful to some degree because of market behavior or
unexpected interest rate trends.
Limitations on the Use of Options on Futures. The Fund will only
write options on futures that are traded on exchanges and are
standardized as to maturity date and underlying financial
instrument. The principal exchanges in the United States for
trading options on Treasury Securities are the Board of Trade of
the City of Chicago and the Chicago Mercantile Exchange. These
exchanges and trading options on futures are regulated under the
Commodity Exchange Act by the Commodity Futures Trading Commission
("CFTC").
It is the Fund's opinion that it is not a "commodity pool" as
defined under the Commodity Exchange Act and in accordance with
rules promulgated by the CFTC.
The Fund will not write options on futures contracts for which the
aggregate premiums exceed 5% of the fair market value of the
Fund's assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into
(except that, in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount generally may be
excluded in computing the 5%).
All of the futures options transactions employed by a Fund will be
bona fide hedging transactions, as that term is used in the
Commodity Exchange Act and has been interpreted and applied by the
CFTC. To ensure that its futures options transactions meet this
standard, the Fund will enter into such transactions only for the
purposes and with the intent that CFTC has recognized to be
appropriate.
Custodial Procedures and Margins. Summit Mutual Funds' Custodian
acts as its escrow agent as to securities on which a Fund has
written call options and with respect to margin which the Fund
must deposit in connection with the writing of call options on
futures contracts. The Clearing Corporation (CC) will release the
securities or the margin from escrow on the expiration of the
call, or when the Fund enters into a closing purchase transaction.
In this way, assets of the Fund will never be outside the control
of Summit Mutual Funds' custodian, although such control might be
limited by the escrow receipts issued.
At the time the Fund sells a call option on a contract for future
delivery of U.S. Treasury Securities ("Treasury futures
contract"), it is required to deposit with its custodian, in an
escrow account, a specified amount of cash or U.S. Government
securities ("initial margin"). The account will be in the name of
the CC. The amount of the margin generally is a small percentage
of the contract amount. The margin required is set by the
exchange on which the contract is traded and may be modified
during the term of the contract. The initial margin is in the
nature of a performance bond or good faith deposit, and it is
released from escrow upon termination of the option assuming all
contractual obligations have been satisfied. The Fund will earn
interest income on its initial margin deposits.
In accordance with the rules of the exchange on which the option
is traded, it might be necessary for the Fund to supplement the
margin held in escrow. This will be done by placing additional
cash or U.S. Government securities in the escrow account. If the
amount of required margin should decrease, the CC will release the
appropriate amount from the escrow account.
The assets in the margin account will be released to the CC only
if the Fund defaults or fails to honor its commitment to the CC
and the CC represents to the custodian that all conditions
precedent to its right to obtain the assets have been satisfied.
Lending Portfolio Securities
The Total Social Impact Fund may lend portfolio securities with a
value up to 10% of their total assets. Such loans may be
terminated at any time. The Fund will continuously maintain as
collateral cash or obligations issued by the U.S. government, its
agencies or instrumentalities in an amount equal to not less than
100% of the current market value (on a daily marked-to-market
basis) of the loaned securities plus declared dividends and
accrued interest. While portfolio securities are on loan, the
borrower will pay the Fund any income accruing thereon, and the
Fund may invest or reinvest the collateral (depending on whether
the collateral is cash or U.S. Government securities) in portfolio
securities, thereby earning additional income. Loans are
typically subject to termination by the Fund in the normal
settlement time, currently five business days after notice, or by
the borrower on one day's notice. Borrowed securities must be
returned when the loan is terminated. Any gain or loss in the
market price of the borrowed securities which occurs during the
term of the loan inures to the Fund and its shareholders. The
Fund may pay reasonable finders', borrowers', administrative, and
custodial fees in connection with a loan of its securities. The
Adviser will review and monitor the creditworthiness of such
borrowers on an ongoing basis.
ADDITIONAL INVESTMENT POLICIES - MONEY MARKET FUND
The Money Market Fund seeks to maintain the stability of
capital and, consistent therewith, to maintain the liquidity of
capital and to provide current income. The Fund seeks to maintain
a constant net asset value of $1.00 per share, although there can
be no assurance that this will be achieved. The Fund uses the
amortized cost method of securities valuation.
The Money Market Fund purchases U.S. Treasury bills, notes
and bonds; obligations of agencies and instrumentalities of the
U.S. Government; domestic and foreign bank certificates of
deposit; bankers' acceptances; finance company and corporate
commercial paper; and repurchase agreements and corporate
obligations. Investments are limited to those that are U.S.
dollar-denominated and at the time of purchase are rated, or
judged by the Adviser, subject to the supervision of the
Directors, to be equivalent to those rated high quality (i.e.,
rated in the two highest short-term rating categories) by any two
nationally-recognized statistical rating services such as Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P"). In addition, the Adviser seeks through its
own credit analysis to limit investments to high quality
instruments presenting minimal credit risks. Securities eligible
for investment by Money Market Fund which are rated in the highest
short-term rating category by at least two rating services (or by
one rating service, if no other rating service has issued a rating
with respect to that security) are known as "first tier
securities." Securities eligible for investment by Money Market
Fund rated in the top two categories which are not first tier
securities are known as "second tier securities." Investments in
commercial paper and finance company paper will be limited to
securities which, at the time of purchase, will be rated A-1 or A-
2 by S&P or Prime 1 or Prime 2 by Moody's or the equivalent by any
nationally-recognized statistical rating service or judged to be
equivalent by the Adviser. Obligations which are subject to
repurchase agreements will be limited to those of the type and
quality described above. The Money Market Fund may also hold
cash. Shares of the Fund are not insured by an agency of the U.S.
Government. Securities and instruments in which the Fund may
invest may be issued by the U.S. Government, its agencies and
instrumentalities, corporations, trusts, banks, finance companies
and other business entities.
The Money Market Fund may invest in certificates of deposit
and bankers' acceptances of large domestic or foreign banks (i.e.,
banks which at the time of their most recent annual financial
statements show total assets in excess of $1 billion) including
foreign branches of such domestic banks, which involve different
risks than those associated with investments in certificates of
deposit of domestic banks, and of smaller banks as described
below. The Fund will invest in U.S. dollar-denominated
certificates of deposit and bankers' acceptances of foreign banks
if such banks meet the stated qualifications. Although the Fund
recognizes that the size of a bank is important, this fact alone
is not necessarily indicative of its creditworthiness. Investment
in certificates of deposit and bankers' acceptances issued by
foreign banks and foreign branches of domestic banks involves
investment risks that are different in some respects from those
associated with investments in certificates of deposit and
bankers' acceptances issued by domestic banks.
The Money Market Fund may also invest in certificates of
deposit issued by banks and savings and loan institutions which
had at the time of their most recent annual financial statements
total assets of less than $1 billion, provided that (I) the
principal amounts of such certificates of deposit are insured by
an agency of the U.S. Government, (ii) at no time will the Fund
hold more than $100,000 principal amount of certificates of
deposit of any one such bank, and (iii) at the time of
acquisition, no more than 10% of the Fund's assets (taken at
current value) are invested in certificates of deposit of such
banks having total assets not in excess of $1 billion.
The assets of the Money Market Fund consist entirely of cash
items and investments having a remaining maturity date of 397
calendar days or less from date of purchase. The Fund will be
managed so that the average maturity of all instruments in the
portfolio (on a dollar-weighted basis) will be 90 days or less.
The average maturity of the Fund's investments varies according to
the Adviser's appraisal of money market conditions.
The Fund may invest more than 5% but not more than 25% of its
total assets in the first tier securities of a single issuer for
a period of up to three business days after purchase, although the
Fund may not make more than one such investment at any time. The
Fund may not invest more than 5% of its total assets in securities
which were second tier securities when acquired by the Fund.
Further, the Fund may not invest more than the greater of (1) 1%
of its total assets, or (2) one million dollars, in the securities
of a single issuer which were second tier securities when acquired
by the Fund.
The Money Market Fund may occasionally purchase securities
other than in the open market. While such purchases may often
offer attractive opportunities for investment not otherwise
available on the open market, the securities so purchased are
often "restricted securities", i.e., securities which cannot be
sold to the public without registration under the Securities Act
of 1933 or the availability of an exemption from registration
(such as Rules 144 or 144A), or which are "not readily marketable"
because they are subject to other legal or contractual delays in
or restrictions on resale. It is the Fund's policy that illiquid
securities (including repurchase agreements of more than seven
days duration, certain restricted securities, and other securities
which are not readily marketable) may not constitute, at the time
of purchase, more than 10% of the value of the Fund's net assets.
Summit Mutual Funds' Board of Directors has approved guidelines
for use by the Adviser in determining whether a security is
illiquid.
Generally speaking, restricted securities may be sold (i)
only to qualified institutional buyers; (ii) in a privately
negotiated transaction to a limited number of purchasers; or (ii)
in limited quantities after they have been held for a specified
period of time and other conditions are met pursuant to an
exemption from registration. Issuers of restricted securities may
not be subject to the disclosure and other investor protection
requirements that would be applicable if their securities were
publicly traded. If adverse market conditions were to develop
during the period between the Fund's decision to sell a restricted
or illiquid security and the point at which the Fund is permitted
or able to sell such security, the Fund might obtain a price less
favorable than the price that prevailed when it decided to sell.
Where a registration statement is required for the resale of
restricted securities, the Fund may be required to bear all or
part of the registration expenses. The Fund may be deemed to be
an "underwriter" for purposes of the 1933 Act when selling
restricted securities to the public and, in such event, the Fund
may be liable to purchasers of such securities if the registration
statement prepared by the issuer is materially inaccurate or
misleading.
The Adviser will monitor the liquidity of such restricted
securities subject to the supervision of Summit Mutual Funds'
Board of Directors. In reaching liquidity decisions, the Adviser
will consider the following factors: (1) the frequency of trades
and quotes for the security, (2) the number of dealers wishing to
purchase or sell the security and the number of their potential
purchasers; (3) dealer undertakings to make a market in the
security; and (4) the nature of the security and the nature of the
marketplace trades (i.e., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of
transfer).
The Money Market Fund may also invest in asset back
securities, which may include pools of mortgages, loans,
receivables or other assets. Payment of principal and interest
may be largely dependent upon the cash flows generated by the
assets backing the securities.
For purposes of determining the percentage of the Fund's
total assets invested in securities of issuers having their
principal business activities in a particular industry, asset
backed securities will be classified separately, based on the
nature of the underlying assets, according to the following
categories: captive auto, diversified, retail and consumer loans,
captive equipment and business, business trade receivables,
nuclear fuel and capital and mortgage lending.
The net investment income of the Fund is declared as a
dividend to shareholders daily and distributed monthly in cash or
reinvested in additional shares.
INVESTMENT RESTRICTIONS
Summit Mutual Funds has adopted the following fundamental
restrictions relating to the investment of assets of the Funds and
other investment activities. These are fundamental policies and
may not be changed without the approval of holders of the majority
of the outstanding voting shares of each Fund affected (which for
this purpose means the lesser of: [I] 67% of the shares
represented at a meeting at which more than 50% of the outstanding
shares are represented, or [ii] more than 50% of the outstanding
shares). A change in policy affecting only one Fund may be
effected with the approval of the majority of the outstanding
voting shares of that Fund only. Summit Mutual Funds'
fundamental investment restrictions provide that no Fund is
allowed to:
(1) Issue senior securities (except that each Fund may
borrow money as described in restriction [9] below).
(2) With respect to 75% of the value of its total assets,
invest more than 5% of its total assets in securities (other than
securities issued or guaranteed by the United States Government or
its agencies or instrumentalities) of any one issuer.
(3) Purchase more than either: (I) 10% in principal amount
of the outstanding debt securities of an issuer, or (ii) 10% of
the outstanding voting securities of an issuer, except that such
restrictions shall not apply to securities issued or guaranteed by
the United States Government or its agencies or
instrumentalities.
(4) Invest more than 25% of its total assets in the
securities of issuers primarily engaged in the same industry. For
purposes of this restriction, gas, gas transmission, electric,
water, and telephone utilities each will be considered a separate
industry. This restriction does not apply to obligations of banks
or savings and loan associations or to obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities.
(5) Purchase or sell commodities, commodity contracts, or
real estate, except that each Fund may purchase securities of
issuers which invest or deal in any of the above, and except that
each Fund may invest in securities that are secured by real
estate. This restriction does not apply to obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities or to futures contracts or options purchased by
the Total Social Impact Fund in compliance with non-fundamental
restrictions [7 and 8] below.
(6) Purchase any securities on margin (except that the Fund
may obtain such short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities) or make
short sales of securities or maintain a short position.
(7) Make loans, except through the purchase of obligations
in private placements or by entering into repurchase agreements
(the purchase of publicly traded obligations not being considered
the making of a loan).
(8) Lend its securities, except that the Fund may lend
securities in compliance with non-fundamental restriction [6]
below.
(9) Borrow amounts in excess of 10% of its total assets
taken at market value at the time of the borrowing, and then only
from banks (and by entering into reverse repurchase agreements) as
a temporary measure for extraordinary or emergency purposes, or to
meet redemption requests that might otherwise require the untimely
disposition of securities, and not for investment or leveraging.
The Fund will not purchase additional securities when money
borrowed exceeds 5% of total assets. For purposes of this
restriction, entering into futures contracts or reverse repurchase
agreements will not be deemed a borrowing.
(10) Underwrite securities of other issuers except insofar as
the Fund may be deemed an underwriter under the Securities Act of
1933 in selling shares of each Fund and except as it may be deemed
such in a sale of restricted securities.
(11) Invest more than 10% of its total assets in repurchase
agreements maturing in more than seven days, "small bank"
certificates of deposit that are not readily marketable, and other
illiquid investments.
(12) Enter into reverse repurchase agreements if the total of
such investments would exceed 5% of the total assets of the Fund.
Summit Mutual Funds has also adopted the following additional
investment restrictions that are not fundamental and may be
changed by the Board of Directors without shareholder approval.
Under these restrictions, no Fund may:
(1) Participate on a joint (or a joint and several) basis in
any trading account in securities (but this does not prohibit the
"bunching" of orders for the sale or purchase of Fund securities
with the other Funds or with other accounts advised or sponsored
by the Adviser or any of its affiliates to reduce brokerage
commissions or otherwise to achieve best overall execution).
(2) Purchase or retain the securities of any issuer, if, to
the knowledge of the Fund, officers and directors of the Fund, the
Adviser or any affiliate thereof each owning beneficially more
than 1/2% of one of the securities of such issuer, own in the
aggregate more than 5% of the securities of such issuer.
(3) Purchase or sell interests in oil, gas, or other mineral
exploration or development programs, or real estate mortgage
loans, except that each Fund may purchase securities of issuers
which invest or deal in any of the above, and except that each
Fund may invest in securities that are secured by real estate
mortgages. This restriction does not apply to obligations or
other securities issued or guaranteed by the United States
Government, its agencies or instrumentalities.
(4) Invest in companies for the purpose of exercising
control (alone or together with the other Funds).
(5) Purchase securities of other investment companies with
an aggregate value in excess of 5% of the Fund's total assets,
except in connection with a merger, consolidation, acquisition or
reorganization, or by purchase in the open market of securities of
closed-end investment companies where no underwriter or dealer's
commission or profit, other than customary broker's commission, is
involved, or by purchase of UITs designed to track an Index and
only if immediately thereafter not more than 10% of such Fund's
total assets, taken at market value, would be invested in such
securities.
Summit Mutual Funds has also adopted the following additional
investment restrictions that are not fundamental and may be
changed by the Board of Directors without shareholder approval.
Under these restrictions:
The Total Social Impact Fund may not:
(6) Lend portfolio securities with an aggregate value of
more than 10% of its total assets.
(7) Invest more than 20% of its assets in futures contracts
and/or options on futures contracts, except as a temporary
investment strategy until the Fund reaches $50 million in net
assets, the Fund may invest up to 100% of its assets in such
futures and/or options contracts.
(8) Invest in options unless no more than 5% of its assets
is paid for premiums for outstanding put and call options
(including options on futures contracts) and unless no more than
25% of the Fund's assets consist of collateral for outstanding
options.
If a percentage restriction (for either fundamental or
nonfundamental policies) is adhered to at the time of investment,
a later increase or decrease in percentage beyond the specified
limit resulting from a change in values of portfolio securities or
amount of net assets shall not be considered a violation.
PORTFOLIO TURNOVER
Portfolio turnover is calculated by dividing the lesser of
purchases or sales of Fund securities during the fiscal year by
the monthly average of the value of the Fund's securities
(excluding from the computation all securities, including options,
with maturities at the time of acquisition of one year or less).
Under the above definition, the Money Market Fund will have no
portfolio turnover.
A high rate of portfolio turnover generally involves
correspondingly greater brokerage commission expenses, which must
be borne directly by the Fund. Turnover rates may vary greatly
from year to year as well as within a particular year and may also
be affected by cash requirements for redemptions of a Fund's
shares and by requirements which enable the Fund to receive
certain favorable tax treatments. The portfolio turnover rates
will, of course, depend in large part on the level of purchases
and redemptions of shares of the Fund. Higher portfolio turnover
can result in corresponding increases in brokerage costs to a Fund
and its shareholders. However, because rate of portfolio turnover
is not a limiting factor, particular holdings may be sold at any
time, if investment judgment or Fund operations make a sale
advisable. The annual portfolio turnover rate for the Total
Social Impact Fund is expected to be 20%.
MANAGEMENT OF THE FUND
Directors and Officers
The directors and executive officers of Summit Mutual Funds and
their principal occupations during the past five years are set
forth below. Unless otherwise noted, the address of each
executive officer and director is 1876 Waycross Road, Cincinnati,
Ohio 45240.
Directors and Officers
The directors and executive officers of the Fund and their
principal occupations during the past five years are set forth
below. Unless otherwise noted, the address of each executive
officer and director is 1876 Waycross Road, Cincinnati, Ohio
45240.
<TABLE>
<CAPTION>
Position(s)
Name, Address with Principal Occupation(s)
and Age the Fund During Past Five Years
------------- ----------- -----------------------
<S> <C> <C>
George M. Callard, M.D. Director Professor of Clinical Surgery,
3021 Erie Avenue University of Cincinnati
Cincinnati, Ohio 45208
(Age 66)
Theodore H. Emmerich Director Consultant; former Partner,
1201 Edgecliff Place Ernst & Whinney, Accountants
Cincinnati, Ohio 45206
(73)
Richard H. Finan Director Attorney at Law; President of
11137 Main Street the Ohio State Senate
Cincinnati, Ohio 45241
(65)
Yvonne L. Gray Director Chief Operating Officer, United
2400 Reading Road Way and Community Chest; prior
Cincinnati, Ohio 45202 thereto, Vice President/Trust
(49) Operations Officer, Fifth Third
Bank
Jean Patrice Director Former Interim President, Cincinnati
Harrington, S.C. State Technical and Community College;
3217 Whitfield Avenue Former Executive Director, Cincinnati
Cincinnati, Ohio 45220 Youth Collaborative; President
(77) Emeritus (formerly, President) College
of Mount St. Joseph
John H. Jacobs* Director President and Chief Executive Officer,
(53) Union Central; Director, Summit
Investment Partners, Inc. ("Adviser")
and Carillon Investments, Inc.;
prior to May, 2000, Officer and
employee, Union Central
Charles W. McMahon Director Retired Senior Vice President and
19 Iron Woods Drive Director, Union Central
Cincinnati, Ohio 45239
(80)
Harry Rossi* Director Director Emeritus, Union Central;
8548 Wyoming Club Drive Director, Adviser and Carillon
Cincinnati, Ohio 45215 Investments, Inc.; former Chairman,
(80) President and Chief Executive Officer,
Union Central
Steven R. Sutermeister* Director, Senior Vice President,Union Central;
(47) President President, Director and Chief
and Chief Executive Officer, Adviser;
Executive Director, Carillon
Officer Investments, Inc.
John F. Labmeier Vice President Vice President, Associate General
(51) and Secretary Counsel and Assistant Secretary, Union
Central; Vice President and Secretary,
Carillon Investments, Inc.; Secretary,
Adviser
Thomas G. Knipper Controller Treasurer, Adviser; prior to July,
(43) and Treasurer 1995, Treasurer of The Gateway Trust
and Vice President and Controller of
Gateway Advisers, Inc.
John M. Lucas Assistant Counsel and Assistant to Secretary,
(49) Secretary Union Central
</TABLE>
---------------
* Messrs. Jacobs, Rossi and Sutermeister are considered to be
"interested persons" of Summit Mutual Funds, Inc.(within the
meaning of the Investment Company Act of 1940) because of
their affiliation with the Adviser.
All directors who are not "interested persons" of the Company are
members of the Audit Committee.
As of the date of this Statement of Additional Information, no
officers and directors of Summit Mutual Funds owned 5% or more of
any of the outstanding shares of any Fund. Directors who are not
officers or employees of Union Central or Adviser are paid a fee
plus actual out-of-pocket expenses by Summit Mutual Funds for each
meeting of the Board of Directors attended. Total fees and
expenses incurred for 1999 were $68,200.
<TABLE>
<CAPTION>
Compensation Table
(1) (2) (3) (4) (5)
Name of Person, Aggregate Pension or Estimated Total
Position Compensation Retirement Annual Compensation
From Benefits Benefits From
Registrant Accrued As Upon Registrant
Part of Fund Retirement and Fund
Expenses Complex*
Paid to
Directors
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
George M. Callard, $14,800** -- -- $14,800
M.D.
Director
Theodore H. Emmerich $15,900 -- -- $15,900
Director
James M. Ewell $15,300 -- -- $15,300
Director
Richard H. Finan $15,300 -- -- $15,300
Director
Jean Patrice
Harrington, S.C. $15,500 -- -- $15,500
Director
John H. Jacobs N/A N/A N/A N/A
Director
Charles W. McMahon $14,800 -- -- $14,800
Director
Harry Rossi N/A N/A N/A N/A
Director
</TABLE>
** Messrs. Callard and McMahon have deferred their compensation in past
years. As of December 31, 1999, the total amount deferred, including interest,
was as follows: Dr. Callard - $100,978; Mr. McMahon - $29,371.
Investment Adviser
Summit Mutual Funds has entered into an Investment Advisory
Agreement ("Agreement") with Summit Investment Partners, Inc.
("Adviser"), formerly known as Carillon Advisers, Inc., whose
principal business address is 312 Elm Street, Suite 2525,
Cincinnati, Ohio 45202. The Adviser was incorporated under the
laws of Ohio on August 18, 1986, and is a wholly-owned subsidiary
of Union Central. Executive officers and directors of the Adviser
who are affiliated with the Fund are: Steven R. Sutermeister,
Director, President and Chief Executive Officer; John H. Jacobs,
Director; Harry Rossi, Director; Thomas G. Knipper, Treasurer;
and John F. Labmeier, Secretary. Pursuant to the Agreement,
Summit Mutual Funds has retained the Adviser to manage the
investment of each Fund's assets, including the placing of orders
for the purchase and sale of Fund securities. The Adviser is at
all times subject to the direction and supervision of the Board of
Directors of Summit Mutual Funds. The Adviser continuously
furnishes an investment program for each Fund, is responsible for
the actual management of each Fund and has responsibility for
making decisions to buy, sell or hold any particular security.
The Adviser obtains and evaluates such information and advice
relating to the economy, securities markets, and specific
securities as it considers necessary or useful to continuously
manage the assets of the Funds in a manner consistent with their
investment objectives, policies and restrictions. The Adviser
considers analyses from various sources, makes necessary
investment decisions and effects transactions accordingly. The
Adviser also performs certain administrative functions for Summit
Mutual Funds. The Adviser may utilize the advisory services of
subadvisers for one or more of the Funds.
Payment of Expenses
Under the terms of the Agreement, in addition to managing Summit
Mutual Funds' investments, the Adviser, at its expense, maintains
certain of Summit Mutual Funds' books and records (other than
those provided by Firstar Mutual Fund Services, LLC, by agreement)
and furnishes such office space, facilities, equipment, and
clerical help as Summit Mutual Funds may reasonably require in the
conduct of business. In addition, the Adviser pays for the
services of all executive, administrative, clerical, and other
personnel, including officers of Summit Mutual Funds, who are
employees of Union Central. The Adviser also bears the cost of
telephone service, heat, light, power and other utilities provided
to Summit Mutual Funds. Expenses not expressly assumed by the
Adviser under the Agreement will be paid by Summit Mutual Funds.
Each Fund pays all other expenses incurred in its operation and a
portion of Summit Mutual Funds' general administration expenses
allocated on the basis of the asset size of the respective Funds.
Expenses other than the Adviser's fee that are borne directly and
paid individually by a Fund include, but are not limited to,
brokerage commissions, dealer markups, expenses incurred in the
acquisition of Fund securities, transfer taxes, transaction
expenses of the custodian, royalty or license fees, pricing
services used by only one or more Funds, and other costs properly
payable by only one or more Funds. Expenses which are allocated
on the basis of size of the respective Funds include custodian
(portion based on asset size), dividend disbursing agent, transfer
agent, bookkeeping services (except annual per Fund base charge),
pricing, shareholder's and directors' meetings, directors' fees,
proxy statement and Prospectus preparation, registration fees and
costs, fees and expenses of legal counsel not including employees
of the Adviser, membership dues of industry associations, postage,
insurance premiums including fidelity bond, and all other costs of
Summit Mutual Funds' operation properly payable by Summit Mutual
Funds and allocable on the basis of size of the respective Funds.
The Adviser will pay any expenses of the Total Social Impact Fund,
other than the advisory fees for the Fund, to the extent that such
expenses exceed .30% of that Fund's net assets. The Adviser will
pay any expenses of the Money Market Fund, other than the advisory
fee for the Fund, to the extent that such expenses exceed .10% of
that Fund's net assets.
Depending on the nature of a legal claim, liability or lawsuit,
litigation costs, payment of legal claims or liabilities and any
indemnification relating thereto may be directly applicable to a
Fund or allocated on the basis of the size of the respective
Funds. The Directors have determined that this is an appropriate
method of allocation of expenses.
Advisory Fee
As full compensation for the services and facilities furnished to
the Funds and expenses of the Funds assumed by the Adviser, the
Funds pay the Adviser monthly compensation calculated daily as
described on page 10 of the Prospectus.
Investment Advisory Agreement
The Investment Advisory Agreement was initially approved by Summit
Mutual Funds' Board of Directors, including a majority of the
directors who are not interested persons of the Adviser, on March
22, 1984. Unless earlier terminated as described below, the
Agreement will continue in effect from year to year if approved
annually: (a) by the Board of Directors of Summit Mutual Funds or
by a majority of the outstanding shares of Summit Mutual Funds,
including a majority of the outstanding shares of each Fund; and
(b) by a majority of the directors who are not parties to such
contract or interested persons (as defined by the Investment
Company Act of 1940) of any such party. The Agreement is not
assignable and may be terminated without penalty by Summit Mutual
Funds on 60 days notice, and by the Adviser on 90 days notice. On
February 25, 2000 the Agreement was approved for continuance for
one (1) year by the Board of Directors by unanimous vote of those
present, including a majority of the directors who are not parties
to such contract or interested persons of any such party.
On August 30, 1999, the Board of Directors took steps to activate
the Total Social Impact Fund and the Money Market Fund by
authorizing the issuance of shares of those Funds. On May 8,
2000, the Board of Directors also approved an amendment to the
Investment Advisory Agreement making the Agreement applicable to
these Funds, and specifying the advisory fee payable by it. The
board determined that the amendment did not affect the interests
of the classes of Summit Mutual Funds shares other than the shares
of the Total Social Impact Fund and Money Market Fund and that
therefore only the holders of shares of those Funds were entitled
to vote on the amendment. It is anticipated that the sole
shareholder of those Funds will approve the Agreement as amended
on or about June 30, 2000.
The Investment Advisory Agreement provides that the Adviser shall
not be liable to Summit Mutual Funds or to any shareholder for any
error of judgment or mistake of law or for any loss suffered by
Summit Mutual Funds or by any shareholder in connection with
matters to which the Investment Advisory Agreement relates, except
a loss resulting from willful misfeasance, bad faith, gross
negligence, or reckless disregard on the part of the Adviser in
the performance of its duties thereunder. In the case of
administration services, the Adviser will be held to a normal
standard of liability.
The Agreement in no way restricts the Adviser from acting as
investment manager or adviser to others.
If the question of continuance of the Agreement (or adoption of
any new Agreement) is presented to shareholders, continuance (or
adoption) with respect to a Fund shall be effective only if
approved by a majority vote of the outstanding voting securities
of that Fund. If the shareholders of any one or more of the Funds
should fail to approve the Agreement, the Adviser may nonetheless
serve as an adviser with respect to any Fund whose shareholders
approved the Agreement.
Investment Subadvisory Agreement
The Agreement between the Adviser and Scudder Kemper Investments,
Inc. as subadviser for the Money Market Fund was approved by the
Fund's Board of Directors on May 8, 2000, including an affirmative
vote of a majority of the disinterested directors. Although the
Fund is not a party to this Subadvisory Agreement, the Agreement
provides that continuation and termination are subject to the same
requirements as the Investment Advisory Agreement between the
Adviser and the Fund. Scudder is subject to the same control and
supervision by the Fund's Board of Directors as is the Adviser.
The Adviser will pay Scudder a monthly fee computed on a daily
basis, at an annual rate, equal to .20% of the first $50,000,000,
.15% of the next $200,000,000, .12% of the next $750,000,000, and
.10% of all over $1 billion of the current value of the net
assets. The fee is paid by the Adviser, not the Fund.
Service Agreement
Under a Service Agreement between the Adviser and Union Central,
Union Central has agreed to make available to the Adviser the
services of certain employees of Union Central on a part-time
basis for the purpose of better enabling the Adviser to fulfill
its obligations to Summit Mutual Funds under the Agreement.
Pursuant to the Service Agreement, the Adviser shall reimburse
Union Central for all costs allocable to the time spent on the
affairs of the Adviser by the employees provided by Union Central.
In performing their services for the Adviser pursuant to the
Service Agreement, the specified employees shall report and be
solely responsible to the officers and directors of the Adviser or
persons designated by them. Union Central shall have no
responsibility for the investment recommendations or decisions of
the Adviser. The obligation of performance under the Agreement is
solely that of the Adviser and Union Central undertakes no
obligation in respect thereto except as otherwise expressly
provided in the Service Agreement. The Service Agreement was
approved by the shareholders of the Funds on June 30, 2000.
License Agreement
As stated in the Prospectus, the Total Social Impact(trademark)
(TSI) ratings are the product of collaborative research and
analytical efforts conducted by The Total Social Impact
Foundation, Inc. in conjunction with a group of academic
institutions. The Adviser receives and uses the TSI ratings from
The Total Social Impact Foundation, Inc. under an exclusive
licensing agreement, and has agreed to pay The Total Social Impact
Foundation, Inc. an initial one-time license fee not to exceed
$100,000, plus an annual fee equal to .10% of the average net
assets of the Total Social Impact Fund. The fee is paid by the
Adviser, not the Fund.
Securities Activities of Adviser
Securities held by Summit Mutual Funds may also be held by Union
Central or by other separate accounts or mutual funds for which
the Adviser acts as an adviser. Because of different investment
objectives or other factors, a particular security may be bought
by Union Central or by the Adviser or for one or more of its
clients, when one or more other clients are selling the same
security. If purchases or sales of securities for one or more of
the Funds or other clients of the Adviser or Union Central arise
for consideration at or about the same time, transactions in such
securities will be made, insofar as feasible, for the Funds, Union
Central, and other clients in a manner deemed equitable to all.
To the extent that transactions on behalf of more than one client
of the Adviser during the same period may increase the demand for
securities being purchased or the supply of securities being sold,
there may be an adverse effect on price.
On occasions when the Adviser deems the purchase or sale of a
security to be in the best interests of the Fund as well as other
accounts or companies, it may, to the extent permitted by
applicable laws and regulations, but will not be obligated to,
aggregate the securities to be sold or purchased for the Fund (or
for two or more Funds) with those to be sold or purchased for
other accounts or companies in order to obtain more favorable
execution and low brokerage commissions. In that event,
allocation of the securities purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser
in the manner it considers to be most equitable and consistent
with its fiduciary obligations to the Fund(s) and to such other
accounts or companies. In some cases this procedure may adversely
affect the size of the position obtainable for a Fund.
Code of Ethics
The Adviser, as well as Summit Mutual Funds, Inc., has adopted a
code of ethics under Rule 17j-1 of the Investment Company Act of
1940. Employees of the Adviser are permitted to make personal
securities transactions, subject to the requirements and
restrictions set forth in the Adviser's code of ethics. The code
of ethics contains provisions and requirements designed to
identify and address certain conflicts of interest between
personal investment activities and the interests of investment
advisory clients such as the Funds. Among other things, the code
of ethics, which generally complies with standards recommended by
the Investment Company Institute's Advisory Group on Personal
Investing, prohibits certain types of transactions absent prior
approval, imposes time periods during which personal transactions
may not be made in certain securities, and requires the submission
of duplicate broker confirmations and monthly reporting of
securities transactions. Additional restrictions apply to
portfolio managers, traders, research analysts and others involved
in the investment advisory process. Exceptions to these and other
provisions of the code of ethics may be granted in particular
circumstances after review by appropriate personnel.
DETERMINATION OF NET ASSET VALUE
As described on page 11 of the Prospectus, the net asset
value of shares of the Fund is determined once daily, Monday
through Friday as of the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m., Eastern Time), when there are
purchases or redemptions of Fund shares, except: (I) when the New
York Stock Exchange is closed (currently New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day); and (ii) any day
on which changes in the value of the Fund securities of the Fund
will not materially affect the current net asset value of the
shares of a Fund.
Securities held by the Funds, except for money market
instruments maturing in 60 days or less, will be valued as
follows: Securities which are traded on stock exchanges
(including securities traded in both the over-the-counter market
and on 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. Securities traded
only in the over-the-counter market are valued at the last bid
prices quoted by brokers that make markets in the securities at
the close of trading on the New York Stock Exchange. Securities
and assets for which market quotations are not readily available
are valued at fair value as determined in good faith by or under
the direction of the Board of Directors.
Money market instruments with a remaining maturity of 60 days
or less are valued on an amortized cost basis. Under this method
of valuation, the instrument is initially valued at cost (or in
the case of instruments initially valued at market value, at the
market value on the day before its remaining maturity is such that
it qualifies for amortized cost valuation); thereafter, the Fund
assumes a constant proportionate amortization in value until
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.
While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is
higher or lower than the price that would be received upon sale of
the instrument.
PURCHASE AND REDEMPTION OF SHARES
The Fund offers its shares, without sales charge, to Union
Central and its exempt separate accounts, as well as to other
investors.
Payment for shares redeemed will generally be made within
seven days after receipt of a proper notice of redemption. The
right to redeem shares or to receive payment with respect to any
redemption may only be suspended for any period during which: (a)
trading on the New York Stock Exchange is restricted as determined
by the Securities and Exchange Commission or such exchange is
closed for other than weekends and holidays; (b) an emergency
exists, as determined by the Securities and Exchange Commission,
as a result of which disposal of Fund securities or determination
of the net asset value of a Fund is not reasonably practicable;
and the Securities and Exchange Commission by order permits
postponement for the protection of shareholders.
TAXES
Each Fund of the Fund will be treated as a separate entity
for federal income tax purposes. Each Fund has qualified and has
elected to be taxed as a "regulated investment company" under the
provisions of Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). If a Fund qualifies as a "regulated
investment company" and complies with the provisions of the Code
by distributing substantially all of its net income (both ordinary
income and capital gain), the Fund will be relieved from federal
income tax on the amounts distributed.
The discussion of "Taxes" in the Prospectus, in conjunction
with the foregoing, is a general and abbreviated summary of the
applicable provisions of the Code and Treasury Regulations
currently in effect as interpreted by the Courts and the Internal
Revenue Service.
FUND TRANSACTIONS AND BROKERAGE
The Adviser is primarily responsible for the investment
decisions of each Fund, including decisions to buy and sell
securities, the selection of brokers and dealers to effect the
transactions, the placing of investment transactions, and the
negotiation of brokerage commissions, if any. No Fund has any
obligation to deal with any dealer or group of dealers in the
execution of transactions in Fund securities. In placing orders,
it is the policy of the Funds to obtain the most favorable net
results, taking into account various factors, including price,
dealer spread or commission, if any, size of the transaction, and
difficulty of execution. While the Adviser generally seeks
reasonably competitive spreads or commissions, the Funds will not
necessarily be paying the lowest spread or commission available.
If the securities in which a particular Fund of Summit Mutual
Funds invests are traded primarily in the over-the-
counter market, where possible the Fund will deal directly with
the dealers who make a market in the securities involved unless
better prices and execution are available elsewhere. Such dealers
usually act as principals for their own account. On occasion,
securities may be purchased directly from the issuer. Bonds and
money market instruments are generally traded on a net basis and
do not normally involve either brokerage commissions or transfer
taxes. The cost of Fund securities transactions of each Fund will
consist primarily of brokerage commission or dealer or underwriter
spreads.
While the Adviser seeks to obtain the most favorable net
results in effecting transactions in the Fund securities, brokers
who provide supplemental investment research to the Adviser may
receive orders for transactions by the Funds. Such supplemental
research service ordinarily consists of assessments and analyses
of the business or prospects of a company, industry, or economic
sector. If, in the judgment of the Adviser, the Funds will be
benefited by such supplemental research services, the Adviser is
authorized to pay commissions to brokers furnishing such services
which are in excess of commissions which another broker may charge
for the same transaction. Information so received will be in
addition to and not in lieu of the services required to be
performed by the Adviser under its Investment Advisory Agreement.
The expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such supplemental information. In some
cases, the Adviser may use such supplemental research in providing
investment advice to its other advisory accounts.
DISTRIBUTOR
Carillon Investments, Inc. serves as the Funds' Distributor
or principal underwriter pursuant to a Distribution Agreement with
Summit Mutual Funds dated February 25, 2000. Carillon
Investments, a wholly owned subsidiary of Union Central and an
affiliate of the Adviser, is registered as a broker-dealer under
the 1934 Act and is a member of the NASD. The offering of Fund
shares is continuous. The Distribution Agreement provides that
Carillon Investments, as agent in connection with the distribution
of Fund shares, will use appropriate efforts to solicit orders for
the sale of Fund shares and undertake such advertising and
promotion as it deems reasonable.
Carillon Investments has also entered into a shareholder
services agreement with the Adviser under which it supervises and
monitors shareholder fulfillment services provided by Firstar
Mutual Fund Services, LLC ("Firstar"), and provides certain
shareholder services relative to the Summit Apex Series of Funds.
In consideration for its services, the Adviser pays Carillon
Investments an annual fee of $12,000, and pays or reimburses it
for any actual out-of-pocket expenses, as well as for the fees
charged by Firstar for providing shareholder fulfillment services.
GENERAL INFORMATION
Capital Stock
Summit Mutual Funds is a mutual fund. Its board of directors is
responsible for supervising its business affairs and investments,
which are managed on a daily basis by the Adviser. Summit Mutual
Funds was incorporated under the laws of the State of Maryland on
January 30, 1984. Summit Mutual Funds is a series fund with
twenty two classes of stock, one for each Fund. The authorized
capital stock of Summit Mutual Funds consists of 490,000,000
shares of common stock, par value ten cents ($0.10) per share.
The shares of the authorized capital stock are currently divided
into the following classes:
<TABLE>
<CAPTION>
Fund Authorized Capital Stock
---- ------------------------
<S> <C>
Summit Pinnacle Series
Zenith Portfolio 40,000,000 shares
Bond Portfolio 30,000,000 shares
S&P 500 Index Portfolio 30,000,000 shares
Total Social Impact Portfolio 20,000,000 shares
S&P MidCap 400 Index Portfolio 20,000,000 shares
Balanced Index Portfolio 20,000,000 shares
Lehman Aggregate Bond Index Portfolio 20,000,000 shares
Russell 2000 Small Cap Index Portfolio 20,000,000 shares
Nasdaq-100 Index Portfolio 20,000,000 shares
Summit Apex Series
S&P 500 Index Fund 20,000,000 shares
S&P MidCap 400 Index Fund 20,000,000 shares
Russell 2000 Small Cap Index Fund 20,000,000 shares
Balanced Index Fund 20,000,000 shares
Nasdaq-100 Index Fund 20,000,000 shares
Lehman Aggregate Bond Index Fund 20,000,000 shares
Bond Fund 20,000,000 shares
Everest Fund 20,000,000 shares
Total Social Impact Fund 20,000,000 shares
Short-term Government Fund 20,000,000 shares
High Yield Bond Fund 20,000,000 shares
Emerging Markets Bond Fund 20,000,000 shares
Money Market Fund 150,000,000 shares
</TABLE>
The Board of Directors may change the designation of any Fund and
may increase or decrease the number of authorized shares of any
Fund, but may not decrease the number of authorized shares of any
Fund below the number of shares then outstanding.
Each issued and outstanding share is entitled to participate
equally in dividends and distributions declared by the respective
Fund and, upon liquidation or dissolution, in net assets of such
Fund remaining after satisfaction of outstanding liabilities.
Voting Rights
In accordance with an amendment to the Maryland General
Corporation Law, the Board of Directors of Summit Mutual Funds has
adopted an amendment to its Bylaws providing that unless otherwise
required by the Investment Company Act of 1940, Summit Mutual
Funds shall not be required to hold an annual shareholder meeting
unless the Board of Directors determines to hold an annual
meeting. Summit Mutual Funds intends to hold shareholder meetings
only when required by law and such other times as may be deemed
appropriate by its Board of Directors.
All shares of common stock have equal voting rights (regardless of
the net asset value per share) except that on matters affecting
only one Fund, only shares of the respective Fund are entitled to
vote. The shares do not have cumulative voting rights.
Accordingly, the holders of more than 50% of the shares of Summit
Mutual Funds voting for the election of directors can elect all of
the directors of Summit Mutual Funds if they choose to do so and
in such event the holders of the remaining shares would not be
able to elect any directors.
Matters in which the interests of all Funds are substantially
identical (such as the election of directors or the approval of
independent public accountants) will be voted on by all
shareholders without regard to the separate Funds. Matters that
affect all Funds but where the interests of the Funds are not
substantially identical (such as approval of the Investment
Advisory Agreement) would be voted on separately by each Fund.
Matters affecting only one Fund, such as a change in its
fundamental policies, are voted on separately by that Fund.
Matters requiring separate shareholder voting by Fund shall have
been effectively acted upon with respect to any Fund if a majority
of the outstanding voting securities of that Fund votes for
approval of the matter, notwithstanding that: (1) the matter has
not been approved by a majority of the outstanding voting
securities of any other Fund; or (2) the matter has not been
approved by a majority of the outstanding voting securities of
Summit Mutual Funds.
The phrase "a majority of the outstanding voting securities" of a
Fund (or of Summit Mutual Funds) means the vote of the lesser of:
(1) 67% of the shares of the Fund (or Summit Mutual Funds) present
at a meeting if the holders of more than 50% of the outstanding
shares are present in person or by proxy; or (2) more than 50% of
the outstanding shares of the Fund (or Summit Mutual Funds).
It is anticipated that Union Central will have voting control of
the Fund. With voting control, Union Central could make
fundamental and substantial changes (such as electing a new Board
of Directors, changing the investment adviser or advisory fee,
changing a Fund's fundamental investment objectives and policies,
etc.) regardless of the views of shareholders.
Additional Information
This Statement of Additional Information and the Prospectus do not
contain all the information set forth in the registration
statement and exhibits relating thereto, which Summit Mutual Funds
has filed with the Securities and Exchange Commission, Washington,
D.C., under the Securities Act of 1933 and the Investment Company
Act of 1940, to which reference is hereby made.
INDEPENDENT AUDITORS
The financial statements of Summit Mutual Funds have been
audited by Deloitte & Touche LLP, 1700 Courthouse Plaza NE,
Dayton, Ohio 45402.
<PAGE>
APPENDIX A: S&P DISCLAIMER
The S&P 500 is an unmanaged index of common stocks comprised of
500 industrial, financial, utility and transportation companies.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "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. The Funds are
not sponsored, endorsed, sold or promoted by Standard & Poor's
("S&P"). S&P makes no representation or warranty, express or
implied, to the beneficial owners of the Funds or any member of
the public regarding the advisability of investing in securities
generally or in the Funds particularly or the ability of the S&P
500 Index or the S&P Midcap 400 Index to track general stock
market performance. S&P's only relationship to Summit Mutual Funds
is the licensing of certain trademarks and trade names of S&P, the
S&P 500 Index and the S&P MidCap 400 Index which is determined,
composed and calculated by S&P without regard to Summit Mutual
Funds or the Funds. S&P has no obligation to take the needs of the
Funds or the beneficial owners of the Funds into consideration in
determining, composing or calculating the S&P 500 Index and the
S&P Midcap 400 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of the
Funds or the timing of the issuance or sale of the Funds or in the
determination or calculation of the equation by which the Funds
are to be converted into cash. S&P has no obligation or liability
in connection with the administration, marketing or trading of the
Funds.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
S&P 500 OR S&P 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED,
AS TO RESULTS TO BE OBTAINED BY SUMMIT MUTUAL FUNDS, BENEFICIAL
OWNERS OF THE FUNDS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF
THE S&P 500 INDEX, S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 OR S&P 400
INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH
DAMAGES.
<PAGE>
APPENDIX B: TSI DISCLAIMER
The Product is not sponsored, endorsed, sold or promoted by the
Total Social Impact Foundation ("TSIF"). TSIF makes no
representation or warranty, express or implied, to the owners of
the Product or any member of the public regarding the advisability
of investing in securities generally or in the Product
particularly or the ability of the Total Social Impact Ratings
("TSI Ratings") to track general stock market performance. TSIF's
only relationship to Summit Mutual Funds is the licensing of
certain trademarks and trade names of the TSIF and of the TSI
Ratings which is determined, composed and calculated by TSIF
without regard to the Licensee or the Product. TSIF has no
obligation to take the needs of the Summit Mutual Funds or the
owners of the Product into consideration in determining,
encompassing or calculating the TSI Ratings. TSIF is not
responsible for and has not participated in the determination of
the prices and amount of the Product or the timing of the issuance
or sale of the Product or in the determination or calculation of
the equation by which the Product is to be converted into cash.
TSIF has no obligation or liability in connection with the
administration, marketing or trading of the Product.
TSIF DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE TSI RATINGS OR ANY DATA INCLUDED THEREIN AND TSIF SHALL HAVE
NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
TSIF MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE
OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY OTHER PERSON
OR ENTITY FROM THE USE OF THE TSI RATINGS OR ANY DATA INCLUDED
THEREIN. TSIF MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE TSI RATINGS OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING,
IN NO EVENT SHALL TSIF HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
<PAGE>
SUMMIT MUTUAL FUNDS, INC.
PART C - OTHER INFORMATION
Item 23. Exhibits
All references are to Registrant's Registration Statement on Form
N-1A (Registration No. 2-90309)
(a) Articles of Incorporation of Summit Mutual Funds, Inc. -
previously filed (initial filing on April 3, 1984)
(b) By-laws of Summit Mutual Funds, Inc. - previously filed
(initial filing on April 3 1984)
(c) Not Applicable
(d) (1) Investment Advisory Agreement - previously filed
(initial filing on April 3, 1984)
(2) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 3 -
May 1, 1987)
(3) Amendment to Investment Advisory Agreement -
previously filed (Post-Effective Amendment No. 15 -
May 1, 1996)
(4) Subadvisory Agreement - filed herewith
(e) Distribution Agreement - previously filed (Post-Effective
Amendment No. 26 - April 12, 2000)
(f) Not Applicable
(g) (1) Custodian Agreement - previously filed (Post-Effective
Amendment No. 6 - May 1, 1990)
(2) Portfolio Accounting Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(h) (1) Transfer Agency Agreement - previously filed
(Post-Effective Amendment No. 6 - May 1, 1990)
(2) Service Agreement - previously filed (Post-Effective
Amendment No. 9 - May 1, 1992)
(i) Opinion and consent of counsel - previously filed
(Pre-Effective Amendment No. 1 - July 2 , 1984)
(j) Not applicable
(k) Not Applicable
(l) Letter regarding initial capital - previously filed
(Pre-Effective Amendment No. 1 - July 2, 1984)
(m) Not Applicable
(n) Not applicable
(o) Not Applicable
(p) Code of Ethics - previously filed (Post-Effective Amendment
No. 27 - April 28, 2000)
Item 24. Persons Controlled by or Under Common Control with
Registrant
The Union Central Life Insurance Company ("Union Central")
provided the initial investment in Summit Mutual Funds, Inc. Union
Central votes the shares of the Fund held with respect to
registered variable contracts in accordance with instructions
received from such variable contract owners. Shares of the Fund
held in unregistered separate accounts and in its general assets
are voted by Union Central in its discretion.
Set forth below is a chart showing the entities controlled by
Union Central, the jurisdictions in which such entities are
organized, and the percentage of voting securities owned by the
person immediately controlling each such entity.
THE UNION CENTRAL LIFE INSURANCE COMPANY,
its Subsidiaries and Affiliates
I. The Union Central Life Insurance Company (Ohio)
A. Carillon Investments, Inc. (Ohio) -100% owned
B. Carillon Marketing Agency, Inc. (Delaware) -100% owned
a. Carillon Marketing Agency of Alabama, Inc. (Alabama) -
100% owned
b. Carillon Marketing Agency of Idaho, Inc. (Idaho) -100%
owned
c. Carillon Marketing Agency of Kentucky, Inc. (Kentucky)
- 100 owned
d. Carillon Marketing Agency of Maine, Inc. (Maine) - 100%
owned
e. Carillon Insurance Agency of Massachusetts, Inc.
(Massachusetts) 100% owned
f. Carillon Marketing Agency of New Mexico, Inc. (New
Mexico) - 100% owned
g. Carillon Marketing Agency of Ohio, Inc. (Ohio) -100%
owned
h. Carillon Marketing Agency of Pennsylvania, Inc.
(Pennsylvania) 100% owned
i. Carillon Marketing Agency of Texas, Inc. (Texas) - 100%
owned
j. Carillon Marketing Agency of Wyoming, Inc. (Wyoming) -
100% owned
C. Summit Investment Partners, Inc. (Ohio) -100% owned
<PAGE>
D. Family Enterprise Institute, Inc. (Delaware) -100% owned
E. PRBA, Inc. (California) - 100% owned
a. Price, Raffel & Browne Administrators, Inc. (Delaware) -
100% owned
F. B&B Benefits Administration, Inc. (California) - 100%
owned
G. Summit Investment Partners, LLC (Ohio) - 100% owned
a. First Summit Capital Management (Ohio) - 51% owned
II. Summit Mutual Funds, Inc. (Maryland) - At January 31,
2000, The Union Central Life Insurance Company owned 100%
of the outstanding shares of Summit Mutual Funds, Inc.
III. Summit Investment Trust (Massachusetts) - a mutual fund
whose investment adviser is First Summit Capital
Management.
Item 25. Indemnification
See Exhibits (a) and (b).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 26. Business and other Connections of Investment Adviser
Information regarding the officers and directors of Summit
Investment Partners, Inc. ("SIPI") and their business, profession
or employment of a substantial nature during the last two years is
set forth below. The address of all the persons listed below is
1876 Waycross Road, Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name and Position with Principal Occupation(s)
Address the Adviser During Past Two Years
-------- ------------- -----------------------
<S> <C> <C>
Harry Rossi Director Director Emeritus, The Union Central
Life Insurance Company ("Union
Central"); Director, Summit Group of
Mutual Funds
Steven R.
Sutermeister Director, Senior Vice President, Union Central;
President, Director, President and Chief Executive
and Chief Officer, Summit Group of Mutual Funds;
Executive prior thereto, Vice President, Union
Officer Union Central
John H. Jacobs Director President and Chief Executive Officer,
Union Central; Director, Summit Group of
Mutual Funds; prior thereto, Executive
Vice President, Union Central
D. Stephen Cole Vice President Vice President, Union Central
Thomas G. Knipper Treasurer Controller and Treasurer, Summit Group
of Mutual Funds
John F. Labmeier Secretary Vice President, Associate General
Counsel and Assistant Secretary, Union
Central; Vice President and Secretary,
Summit Group of Mutual Funds and
Carillon Investments, Inc.
</TABLE>
Item 27. Principal Underwriters
(a) Carillon Investments, Inc., the principal underwriter for
Summit Mutual Funds, Inc., also acts as principal
underwriter for Carillon Account and Carillon Life Account.
(b) The officers and directors of Carillon Investments, Inc.
and their positions, if any, with Registrant are shown
below. The business address of each is 1876 Waycross Road,
Cincinnati, Ohio 45240.
<TABLE>
<CAPTION>
Name and Position with
Carillon Investments, Inc. Position with Registrant
-------------------------- ------------------------
<C> <C>
John H. Jacobs Director
Director
Elizabeth G. Monsell None
Director and President
Harry Rossi Director
Director
Steven R. Sutermeister Director, President and Chief
Director Executive Officer
Lothar A. Vasholz None
Director
Kevin W. O'Toole None
Vice President
Connie S. Grosser None
Vice President, Operations
and Treasurer
Bernard A. Breton None
Vice President and
Compliance Officer
John F. Labmeier Vice President and Secretary
Vice President and Secretary
John M. Lucas Assistant Secretary
Assistant Secretary
</TABLE>
(c) Not applicable.
Item 28. Location of Accounts and Records
All accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act and the Rules thereunder will be
maintained at the offices of the Fund or at Firstar Mutual Fund
Services, LLC, P.O. Box 701, Milwaukee, WI 53201-0701.
Item 29. Management Services
All management-related service contracts are discussed in Part A
or B of this Registration Statement.
Item 30. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of its latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933 and the Investment Company Act of 1940, the
Registrant, Summit Mutual Funds, Inc., certifies that it meets all
of the requirements for effectiveness of this Post-effective
Amendment to the Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Post-
effective Amendment to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Cincinnati, State of Ohio on the 23rd day of June, 2000.
SUMMIT MUTUAL FUNDS, INC.
(SEAL)
Attest: /s/ John F. Labmeier By: /s/ Steven R. Sutermeister
Steven R. Sutermeister, President
Pursuant to the requirements of the Securities Act of 1933,
this Post-effective Amendment to the Registration Statement has
been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Steven R. Sutermeister President and 6/23/00
Steven R. Sutermeister Director
(Principal
Executive Officer)
Controller and 6/23/00
/s/ Thomas G. Knipper Treasurer
Thomas G. Knipper (Principal Financial
and Accounting Officer)
*/ /s/ George M. Callard, M.D. Director 6/23/00
George M. Callard, M.D.
*/ /s/ Theodore H. Emmerich Director 6/23/00
Theodore H. Emmerich
*/ /s/ Richard H. Finan Director 6/23/00
Richard H. Finan
*/ /s/Jean Patrice Harrington, S.C. Director 6/23/00
Jean Patrice Harrington, S.C.
*/ /s/ John H. Jacobs Director 6/23/00
John H. Jacobs
*/ /s/ Charles W. McMahon Director 6/23/00
Charles W. McMahon
*/ /s/ Harry Rossi Director 6/23/00
Harry Rossi
</TABLE>
*/ By John F. Labmeier, pursuant to Power of Attorney
previously filed.
<PAGE>
TABLE OF EXHIBITS
(d)(4) Subadvisory Agreement
