<PAGE> 1
A commitment to excellence
in investing
The Flex-funds 1995 Annual Report
THE FLEX-FUNDS
The Muirfield Fund
The Growth Fund
The Total Return Utilities Fund
The Bond Fund
The Short-Term Global Income Fund
The Money Market Fund
<PAGE> 2
<TABLE>
<CAPTION>
FLEX-FUNDS TOTAL RETURNS 1985 to 1995
- --------------------------------------------------------------------------------------------------------------------------------
FUND TOTAL RETURNS AVERAGE ANNUAL
(Inception) TOTAL RETURNS (%)
Years Since
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 5 10 Inception
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
THE MUIRFIELD FUND 25.82 2.70 8.11 6.91 29.83 2.33 13.95 6.20(2) N/A N/A N/A 14.15 N/A 12.58
(8/10/88)
- ---------------------------------------------------------------------------------------------------------------------------------
THE GROWTH FUND 24.61 -0.69 7.21 6.35 21.46 4.31 10.17 -5.79 7.61 11.81 6.90(3) 11.38 8.36 8.40
(3/20/85)
- ---------------------------------------------------------------------------------------------------------------------------------
THE TOTAL RETURN UTILITIES
FUND 15.00(4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 15.00(4)
(6/21/95)
- ---------------------------------------------------------------------------------------------------------------------------------
THE BOND FUND 18.32 -0.99 8.21 3.26 15.30 8.35 8.75 2.74 -0.62 12.58 9.59(6) 8.58 7.41 7.86
(5/9/85)
- ---------------------------------------------------------------------------------------------------------------------------------
THE SHORT-TERM GLOBAL
INCOME FUND 5.69 2.14 0.38 0.52(5) N/A N/A N/A N/A N/A N/A N/A N/A N/A 2.31
(5/27/92)
- ---------------------------------------------------------------------------------------------------------------------------------
THE MONEY MARKET FUND 5.85 4.10 2.98 3.70 6.12 8.21 9.32 7.59 6.62 6.75 6.10(1) 4.55 6.11 6.26
(3/27/85)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
All performance figures above represent total returns and average annual total
returns for the periods ended 12/31/95. Investment performance represents total
return and assumes reinvestment of all dividend and capital gain distributions.
The performance data shown above represents past performance and does not
necessarily indicate future performance. The investment return and principal
value of an investment will fluctuate so that an investors shares, when
redeemed, may be worth more or less than their original cost. The Investment
Adviser waived a portion of its management fees to reduce the operating
expenses of The Money Market, Short-Term Global Income, Bond, and Total Return
Utilities Funds during each of the periods shown above. The Money Market Fund
will seek to maintain a constant net asset value of $1.00 per share, although
there is no guarantee that it will be able to do so. Investments in The Money
Market Fund are neither insured nor guaranteed by the U.S. Government.
(1) Represents total return from 3/27/85 to 12/31/85. (2) Represents total
return from 8/10/88 to 12/31/88. (3) Represents total return from 3/20/85 to
12/31/85. (4) Represents total return from 6/21/95 to 12/31/95. (5) Represents
total return from 5/27/92 to 12/31/92. (6) Represents total return from 5/9/85
to 12/31/85.
<PAGE> 3
1995 WAS AN EXHILARATING YEAR IN THE FINANCIAL MARKETS.
The stock and bond indexes rose soundly and investors continued to pour money
into mutual funds perhaps based on the dizzying prospect of double-digit total
returns. In response, many stock and bond mutual funds, including some members
of The Flex-funds no-load mutual fund family, turned in their best performances
of the past four years.
What is there to say after a year like 1995 except to reflect on what a good
year it was? Should we begin talking about what to do if the financial markets
collapse tomorrow? Should we pontificate about how the market is going to keep
rocketing skyward forever? In our opinion, both of these prospects are, in
equal measure, unknown and unlikely.
We believe the only constant saving grace available to investors is commitment.
As we reflect on the events of 1995, the thread that runs through all of our
actions during the year is commitment - to our shareholders and to the
investment discipline that we utilize in an effort to manage market risk on
behalf of our shareholders.
Going forward, this commitment, which is the theme of our 1995 Annual Report,
will be the standard by which we judge the impact of our actions and you judge
the measure of our success.
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
President's Letter 2
Market Review 4
PORTFOLIO COMMENTARY
The Muirfield Fund 6
The Growth Fund 7
The Total Return
Utilities Fund 8
The Bond Fund 9
The Short-Term
Global Income Fund 10
The Money
Market Fund 11
Performance Review 12
PORTFOLIOS
Mutual Fund Portfolio 13
Growth Stock Portfolio 14
Utilities Stock Portfolio 17
Short-Term Global
Portfolio 19
Bond Portfolio 20
Money Market
Portfolio 21
FINANCIAL INFORMATION
The Flex-funds
Statements of Assets
and Liabilities 24
Statements of Operations 25
Statements of Changes
in Net Assets 26
Financial Highlights 27
Notes to Financial
Statements 30
Independent Auditors'
Report 32
The Portfolios
Statements of Assets
and Liabilities 33
Statements of Operations 34
Statements of Changes
in Net Assets 35
Financial Highlights 36
Notes to Financial
Statements 37
Independent Auditors'
Report 39
</TABLE>
1
<PAGE> 4
[PHOTO]
President
Robert S. Meeder Sr.
Dear Shareholder:
Success in most worthwhile endeavors is grounded in a commitment to a set of
basic values and principles. Success in investing is no exception to this rule.
Since the beginning of The Flex-funds in 1982 we have been governed by the same
basic set of guidelines for investing. We believed then, as we do now, that if
we were to succeed on behalf of our shareholders, our commitment to these
guidelines must be complete; our adherence to them must be constant.
Thus, the theme of the The 1995 Flex-funds Annual Report is COMMITMENT. During
the past 12 months we have worked to provide solid investment results. In doing
so, we have sought to remain committed not only to the various funds'
investment disciplines, but also to your expectations . . . that we participate
in advancing markets, yet be flexible so risk can be recognized and minimized.
The need for flexibility will likely arise sooner rather than later. The
challenges of '96 and '97 probably become critical to protect values in the
Funds as many forces of change develop.
Some of the economic and political factors that can have a significant
influence on the health of the securities markets are well-covered in the media
at this time. A partial listing of these factors includes:
a) What will be the sustained trend of interest rates? The historical
evidence is conclusive that a trend reversal of the last two years
(declining rates) will automatically drive bond prices down and,
similarly, have a negative influence on stock prices.
b) For the last twelve to fifteen months, corporate earnings have, on
balance, significantly increased and have exceeded expectations in many
instances. The level of earnings has reduced the ratio of stock prices
from "over-priced" to "reasonably priced." But if negative earning
surprises develop in the coming months, the stock market is vulnerable.
c) The amount of new money flowing into mutual funds in the U.S. has set
all-time records. This flow of over ten billion dollars a month into
equity funds created an imbalance of demand for the supply and demand
equation . . . and conse-
2
<PAGE> 5
quently pushed stock prices higher. If this flow of money declines, or if
for some reason this new money becomes uneasy with the risk of the
market, a reversal of the supply/demand ratio could become nasty.
History suggests that the momentum of a pendulum does not last forever,
and a change is but a matter of time.
d) And, of course, we are in an election year. What will be concluded and
what the impact of it will be on the attitude of investors is not clear
in our crystal ball. I don't know what impact 1996 politics will have on
the markets, but I tend to believe it will probably create chaos rather
than tranquility.
This list could continue with challenging questions. There are always
uncertainties in the investment world, but it seems we have a few more than
normal at this time. Since the direction of the markets has been basically
positive for several years, a change in investment psychology can be more
detrimental to shareholder values after significant gains have developed.
I would like to express another thought to all our shareholders. As you will
recall, The Flex-funds added a new fund to its family: The Total Return
Utilities Fund. In its short life, this Fund has produced significant
investment results . . . and we believe it will continue to provide
shareholders with a return superior to its industry competitors. By the nature
of its portfolio strategy, The Total Return Utilities Fund is more conservative
than many popular growth funds that have received (or paid for) so much
publicity in the last few years. A change of market environment could make our
utility fund (as well as the Muirfield Fund) a better vehicle for investment
than the XYZ Super Growth Fund... and still offer the opportunity for growth
during a positive environment like the last twelve months. I suggest you take a
hard look at your mutual fund holdings and evaluate whether an adjustment may
be prudent at this time.
Sincerely,
By: /s/ Robert S. Meeder, Sr.
Robert S. Meeder, Sr.
President
January 31, 1996
3
<PAGE> 6
There is a world of market forces out there, changes in which can have a
profound impact on the markets, and ultimately, on the value of your
investments from one year to the next. We believe, therefore, that it is
important to view the events affecting the performance of your investments as
part of a larger picture.
In previous reports, we have included commentary about the financial markets
within letters written by the portfolio managers of each of our mutual funds.
Each letter was limited to a discussion of the factors affecting a particular
mutual fund. As a result, the investor who didn't read every portfolio manager
commentary missed a view of the markets from one, overarching perspective.
This new section of The Flex-funds 1995 Annual Report will attempt to ensure
that everyone who reads it will be able to review the market forces that held
sway during 1995. Each portfolio manager's letter still contains a discussion
of the markets, but most of that content is now outlined here, for your
information.
INTEREST RATES
In response to continued low inflation and a sluggish economy, The Federal
Reserve Board cut the Federal Funds Rate twice in 1995 and lowered its target
on short-term interest rates again early in 1996. As a result, yields on
short-term, money market securities declined from 5.76% at the beginning of the
year to 5.59% by December.
The Federal Funds Rate is a short-term interest rate benchmark that governs
the rates banks and other financial institutions charge one another for
overnight loans. Changes in this rate may affect not only short-term interest
rates, but also interest rates on long-term securities and consumer debt - like
credit cards, car loans, and home mortgages.
Longer-term interest rates - like those on government bonds with maturities
of 10- to 30-years - declined overall during 1995, sliding approximately 2 1/3
percent.
As interest rates decline, the value of bonds and other fixed income
instruments increases. Conversely, rising interest rates mean declining bond
prices.
The charts at left illustrate the events of 1995 in the bond market.
Short-term interest rates (91-Day Treasury Bill Yields) declined throughout the
year in concert with interest rates on longer-term fixed income securities. As
a consequence of these rate declines, the price of 10-year and 30-year bonds
rose significantly.
Our bond discipline remained positive for much of 1995. The overall
declining interest rate environment of 1995 meant a solid year in terms of
total returns for The Flex-funds Bond Fund. In addition, The Short-Term Global
Income Fund also benefited from the changes in interest rates in the U.S.
thanks to its investment in 3-year U.S. Treasuries.
<TABLE>
<CAPTION>
91-Day Treasury Bill Yield 10-year Treasury Bond Index 30-year Treasury Bond Index
<S> <C> <C>
1995
</TABLE>
4
<PAGE> 7
THE STOCK MARKET
Declining interest rates were also a positive development for the stock
market during 1995 as interest-sensitive common stocks and preferred stocks
benefited from falling rates.
One group of interest-sensitive common stocks are utility stocks. As
interest rates decline, yields on utility stocks often appear more attractive.
In a sluggish economy, utilities may also receive support from the redeployment
of funds by investors who typically invest in the broader stock market. This
redeployment is based on the perception that utility companies may be
"recession proof" - because the public always has to pay for utility use no
matter what is happening in the economy. The strength of the utility stock
market during 1995 in general, and during the fourth quarter in particular,
benefited our new mutual fund, The Total Return Utilities Fund.
Domestic stock market indexes across the board rose significantly during
1995. As shown by the charts at right, various internal measurements of the
stock market confirmed this strength. History has shown that when the stock
market is rising, many underlying indicators should be confirming that
strength. Among those considerations are measurements of the strength of
individual securities as they relate to the market as a whole. For example, in
a rising market environment, more stocks should be gaining value than losing
value and the number of stocks that are making new highs each day should be
increasing.
As the S&P 500 rose during 1995, its momentum was confirmed by a steady
increase in the number of stocks making new highs (NYSE Daily New Highs). Also
an indication of the underlying strength of the market during 1995 was a steady
advance in the number of stocks advancing in relation to those declining (The
NYSE Advances/Declines).
The bull market in stocks continued through the fourth quarter of 1995 and
into 1996, but began to draw much of its strength from a relatively small
number of stocks. The broad-based strength that the market enjoyed during the
first nine months of 1995 subsided during the fourth quarter and it appears
that the last three months of the year were either a pause to digest the gains
of the first nine months of 1995 or an early indication that the level of risk
present in the stock market was growing.
We remain committed to our Defensive Investing philosophy and to a diligent
review of those factors that will help us detect changes in the market
environment. Be assured that when changes occur, we will strive to protect the
value of your Flex-funds investment.
<TABLE>
<CAPTION>
S&P 500 Index NYSE Daily New Highs NYSE Advances/Declines
<S> <C> <C>
1995
</TABLE>
5
<PAGE> 8
THE MUIRFIELD FUND
The Mutual Fund Portfolio
Strategic fund selection which achieved exposure to critical sectors of the
stock market during 1995 helped The Muirfield Fund to join in the stock
market's most significant advance since 1991.
For the 12 months ended December 31, 1995, The Muirfield Fund provided a
total return of 25.82%. The average Asset Allocation fund monitored by
Morningstar, Inc. rose 23.84% for the year, and the average Balanced Fund rose
24.80%.
A table showing the percentile ranking of The Muirfield Fund versus
Morningstar's average Asset Allocation Funds is shown below.
From its inception in 1988 through the end of 1995, The Muirfield Fund
provided a total return of 140.10%, which equates to an average annual compound
rate of return of 12.58%.
1 year 3 years
top 32% top 34%
of 145 funds of 55 funds
5 years Since 1990
top 26% top 27%
of 43 funds of 37 funds
1995 - AN INVESTMENT HISTORY
How The Muirfield Fund and The Growth Fund were invested
Shareholders in The Muirfield Fund and The Growth Fund were exposed to the
stock market for much of the market's climb during 1995.
Technology stocks, which served as a catalyst for the market's 1995 rise,
played a large role in the Portfolio of The Muirfield Fund through much of
1995. The Muirfield Fund gained exposure to those securities by investing in
mutual funds like the Fidelity Equity Portfolio Growth, Fidelity
Over-The-Counter Fund, the Founders Growth Fund, the Twentieth Century Ultra
and Vista funds, and the Weingarten Fund.
As technology issues cooled during the fourth quarter, The Muirfield Fund
adjusted its portfolio accordingly, reducing exposure to funds with significant
high-tech exposure. Further, the Fund emphasized exposure to the S&P 500 Index
and mutual funds with exposure to large capitalization stocks.
One notable development during 1995 deals with a particularly strong fund
selection in the shape of the T. Rowe Price New Horizons Fund, whose portfolio
manager was named Morningstar's 1995 "Manager of the Year." A fund whose
performance had been lagging for several years going into 1995, The New
Horizons Fund, was a mainstay of The Muirfield Fund's portfolio and contributed
significantly to the Fund's performance during 1995.
The Growth Fund's exposure to large capitalization stocks during 1995 meant
[PHOTO]
PORTFOLIO MANAGER
ROBERT S. MEEDER JR.
<TABLE>
<CAPTION>
PORTFOLIO EXPOSURE(1) AS OF 12/31/95
THE MUTUAL FUND PORTFOLIO
Money Market Mutual Fund/Stock
Instruments Exposure
<S> <C>
3% 97%
</TABLE>
<TABLE>
<CAPTION>
RECENT TOTAL RETURNS
for the periods ended 12/31/95
The Muirfield The Average Asset
fund Allocation fund
<S> <C> <C>
1 Year 25.82 23.84
3 Year 11.79 10.81
5 Year 14.15 12.37
</TABLE>
(Source: Moringstar, Inc. See inside front cover for more disclosure and
performance information. (1) Portfolio Exposure reflects the efect of futures
contracts in Portfolio investments.
6
<PAGE> 9
THE GROWTH FUND
The Growth Stock Portfolio
The stock market experienced its most significant gains in four years during
1995, helping The Growth Fund to achieve the largest annual total return in its
history.
The Portfolio of The Growth Fund during 1995 was dominated by exposure to
large captialization stocks, achieved either through investment in the Dow
Jones Industrials or the S&P 500.
The Growth Fund was fully exposed to the stock market for much of the year
(for a detailed account of the Fund's market exposure during 1995, see below).
For the 12 months ended December 31, 1995, The Growth Fund provided
a total return of 24.61%. The average Asset Allocation fund monitored by
independent mutual fund monitor, Morningstar, Inc. provided a total return of
23.84% for the year. The average Balanced Fund provided a total return of
24.80% during 1995, according to Morningstar, Inc.
From its inception in 1985 through December 31, 1995, The Growth Fund
provided a total return of 138.69%, which equates to an average annual total
return of 8.40%.
that the Fund was also in a position to take advantage of the overall strength
of the stock market. The Portfolio of The Growth Fund was dominated by large
cap stocks throughout 1995, either through exposure to The Dow Jones
Industrials, or the S&P 500.
Fully defensive as 1995 began, The Growth Fund and The Muirfield Fund were
fully exposed to the stock market in early January. In mid-March, The
Flex-funds equity funds adopted a 50% defensive position. By the first week in
June, The Growth and Muirfield Funds were again fully exposed to the stock
market, where they remained until the fourth quarter of 1995.
By October, certain technical and fundamental questions about the market's
continued advance began to indicate that the most prudent posture was to again
adopt a partially defensive position. The Funds remained partialy defensive
until the first week in December when we returned to a fully invested position.
In hindsight, we were somewhat overcautious in our adoption of partially
defensive postures in March and late in 1995. However, we took the actions that
we did based on our evaluation of the level of risk and reward present in the
stock market. Based on the events that we saw unfolding in the stock market,
our only course was to be true to our investment discipline and to the
commitment we have made to the objectives of our shareholders.
[PHOTO]
PORTFOLIO MANAGER
ROBERT S. MEEDER JR.
<TABLE>
<CAPTION>
PORTFOLIO EXPOSURE(1) AS OF 12/31/95
THE GROWTH STOCK PORTFOLIO
Money Market Stock Market
Instruments Exposure
<S> <C>
1% 99%
</TABLE>
RECENT TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/95
<TABLE>
<CAPTION>
The Growth Fund The Average Asset
Allocation Fund
<S> <C> <C>
1 Year 24.61 23.84
3 Years 9.88 10.81
5 Years 11.38 12.37
</TABLE>
Source: Moringstar, Inc. See inside front cover for more disclosure and
performance information. (1) Portfolio Exposure reflects the effects of futures
contracts in Portfolio investments.
7
<PAGE> 10
THE TOTAL RETURN UTILITIES FUND
The Utilities Stock Portfolio
The Total Return Utilities Fund experienced an outstanding fourth quarter,
thanks to exceptional performance from nearly all of our largest holdings.
Finishing the quarter with a total return of 10.29%, The Total Return
Utilities Fund was the second best performing utility fund during the quarter,
of 85 utility funds monitored by Morningstar, Inc. (The top utility fund in the
nation offered a return that was just .01 percent better than The Total Return
Utilities Fund).
From its inception on June 21, 1995 to December 31, 1995, The Total Return
Utilties Fund provided a total return of 15.00%.
During the fourth quarter, The Total Return Utilties Fund significantly
outperformed the Lehman Brothers Government/Corporate index (a key fixed-income
benchmark) which rose only 4.66%, and The Dow Jones Utility Index, which rose
8.71%. While our Fund does not share the same investment objectives as the
broader industrial equity markets, it is interesting to note that, during the
fourth quarter, we also outperformed the S&P 500 Index and the Dow Jones
Industrial Average.
The entire utilities market was strong during the fourth quarter for many
reasons. First, interest rates not only remained low but also declined
substantially, particularly at the long end of the bond market. There was
little show of strength in the economy -- a circumstance which is typically met
with rate declines. Second, though the telecommunications legislation we
thought would pass in the fourth quarter was caught in the budget bottleneck,
investors continued to focus on the benefits for the Regional Bell stocks, and
these performed extremely well. Third, the spread between utility yields and
bond yields, which had become inverted, made progress back to normalcy--thus
permitting utilities to overcome even a strong bond market in terms of
performance. Fourth, both demand and pricing for natural gas boomed as "normal"
winter returned to the land, helping our substantial gas industry position to
recover previous lost ground and show fine gains.
We believe passage of the Telecommunications Bill, which occurred early in
1996, will be a positive for the utility stock market. A reduction in income
taxes would also make our yields more valuable, and thus support utility
stocks. A reversion to the mean of the utility/bond yield spread is in
progress and should provide some help as well, but, as with the fall in
interest rates, there is less of an anomaly now than there was before, so the
impact of a reversion to historical averages will be dampened. In sum, there
are many factors which can propel utilities higher over the next quarter, but
none loom as large as they did at the beginning of the third quarter.
Realistically, not every quarter can offer double-digit returns, but conditions
remain favorable for our strategy.
[PHOTO]
PORTFOLIO MANAGER
LOWELL G. MILLER
MILLER/HOWARD INVESTMENTS, INC.
PORTFOLIO EXPOSURE AS OF 12/31/95
THE UTILTIES STOCK PORTFOLIO
<TABLE>
<CAPTION>
Mony
Market Water
Electric Natural Instru- Oil Diversified
Gas Telephones Gas Electrics ments Gas Utilities
<S> <C> <C> <C> <C> <C> <C>
6.9% 35.1% 19.8% 15.0% 8.4% 7.3% 7.5%
</TABLE>
RECENT TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/95
<TABLE>
<CAPTION>
The Total Return The Average
Utilities Fund Utilities Fund
<S> <C> <C>
3 Months 10.29 6.83
</TABLE>
Source: Moringstar, Inc. See inside front cover for more disclosure and
performance information.
8
<PAGE> 11
THE BOND FUND
The Bond Portfolio
The bond market offered its largest gains in 10 years during 1995 and
shareholders in The Bond Fund joined in those gains.
The Bond Fund provided a total return of 18.32% during 1995, the largest
single-year return in the 10-year history of the Fund. For the 12 months ended
December 31, 1995, the Lehman Brothers Intermediate Government/Corporate Bond
Index (which includes government and corporate bonds with maturities of 1-10
years) rose 15.33%.
As a result of this performance, The Bond Fund finished in the top third of
all the General Corporate Bond Funds monitored by Morningstar, Inc. for the 12
months ended December 31, 1995. Note that though The Bond Fund usually invests
in U.S. government bonds, Morningstar classifies the Fund as a Corporate Bond
Fund due to its ability to invest in high-grade corporate bonds, at the
discretion of the portfolio manager.
We believe a more accurate comparison of The Bond Fund's performance can be
derived by comparing its investment results to those of Morningstar's average
General Government Bond Fund. This is due to the simple fact that over the past
seven years, when the Fund has been exposed to the bond market, The Bond Fund
has invested only in government bonds. A table showing the percentile ranking
of The Bond Fund versus Morningstar's General Government Bond Funds is shown
below:
1 YEAR
Top 15%
of 366 funds
3 YEARS
Top 6%
of 182 funds
5 YEARS
Top 24%
of 90 funds
The yield on 10-year U.S. government bonds declined significantly during
1995 -- from 7.88% at the beginning of the year to 5.58% at year's end. This
decline in interest rates pushed bond prices higher and led to the overall
strength of the bond market during 1995.
For the fourth quarter and for much of the year, The Bond Fund remained
fully invested in 10-year U.S. Treasuries.
The elements of our fixed income discipline remained generally positive
throughout the year. Our Interest Rate Trend indicator was largely positive
based on declining interest rates (rising bond prices). Our Real Rates of
Return indicator was positive based on continued low levels of inflation
relative to bond yields. At the close of the year, our Yield Ratio indicator
was positive based on a continued yield advantage in owning intermediate-term
bonds over short-term Treasury bills.
As 1996 began, the bond market remained in a stable to positive trend as
yields continued to decline following another Federal Reserve rate cut. While
we cannot guarantee that rates will continue to decline, we remain optimistic
regarding the opportunities to profit from the bond market in 1996.
[PHOTO]
PORTFOLIO MANAGER
G. ROBERT KINCHELOE
PORTFOLIO EXPOSURE(1) as of 12/31/95
THE BOND PORTFOLIO
Money Market Instruments 1%
10-Year U.S. Treasuries 99%
RECENT TOTAL RETURNS
for the periods ended 12/31/95
The Average
General Government
The Bond Fund Bond Fund
1 year 18.32 14.88
3 years 8.23 6.11
5 years 8.58 7.75
Source: Morningstar, Inc. See inside front cover for more disclosure and
performance information.(1) Portfolio Exposure reflects the effects of futures
contracts on Portfolio investments.
9
<PAGE> 12
THE SHORT-TERM GOLBAL INCOME FUND
The Short-Term Global Portfolio
Exposure to the domestic bond market was again an advantage for The
Short-Term Global Income Fund during 1995.
Falling domestic interest rates and a relatively strong U.S. dollar resulted
in limited opportunities during 1995 for mutual funds that rely solely on
short-term overseas fixed income investments. However, the ability of The
Short-Term Global Income Fund to invest in U.S. Treasury Notes enabled the Fund
to overcome a difficult year in the foreign currency markets.
For the 12 months ended December 31, 1995, the average Short-Term World
Income Fund monitored by Morningstar, Inc. provided a return of 7.22%. Over
that same period, The Flex-funds Short-Term Global Income Fund provided a total
return of 5.69%. The return of the average Short-Term World Income Fund for the
period was likely bouyed by the fact that most funds in the category may
purchase foreign fixed income securities with maturities of up to three years,
while The Short-Term Global Income fund invests only in foreign fixed income
securities with maturities of one year or less. Longer maturities may mean
larger gains during periods of falling interest rates, but may hold added risk
when interest rates rise.
Unlike many Short-Term World Income Funds, The Flex-funds Short-Term Global
Income Fund may be fully invested in short- to intermediate-term U.S.
government securities. Therefore, the Fund is able to invest in the domestic
bond market during times when there is not a sufficient advantage in yield to
warrant overseas exposure.
Such was the case during 1995. The only major upward movement in the foreign
currency markets took place early in 1995 on weakness in the U.S. dollar, while
the remainder of the year's foreign currency markets moved sideways to lower.
During the year, the Portfolio of The Short-Term Global Income Fund was
invested in only three countries. Previously, the Fund has had exposure to
fixed income securities from as many as six countries. By the close of the
fourth quarter, only Canadian fixed income securities were part of the
Portfolio.
The Short-Term Global Income Fund purchases fixed income securities from
countries: 1.) that offer a significant advantage in yield over U.S. interest
rates, 2.) that are major trading partners with the U.S., and 3.) whose
currencies are experiencing a positive trend relative to the U.S. dollar.
If there are continued low yields overseas relative to U.S. yields,
shareholders in The Short-Term Global Income Fund may expect minimal overseas
exposure during the first half of 1996. Fund investments during that time will
likely be in domestic fixed income securities with maturities of three years or
less. Regardless of the securities we choose, we remain committed to investing
only in securities which, in our evaluation, can provide the most competitive
yield with the least amount of risk.
[PHOTO]
PORTFOLIO MANAGER
JOSEPH A. ZARR
PORTFOLIO EXPOSURE(1) as of 12/31/95
THE SHORT-TERM GLOBAL PORTFOLIO
Canadian Treasuries 11%
3-Year U.S. Treasuries 40%
Money Market Instruments 49%
RECENT TOTAL RETURNS
for the periods ended 12/31/95
The Short-Term The Average Short-Term
Global Income Fund World Income Fund
1 year 5.69 7.22
3 years 2.60 3.45
Source: Morningstar, Inc. See inside front cover for more disclosure and
performance information.(1) Portfolio Exposure reflects the effects of futures
contracts on Portfolio investments.
10
<PAGE> 13
THE MONEY MARKET FUND
The Money Market Portfolio
Money market funds continued their resurgence in 1995, and The Flex-funds
Money Market Fund remained one of the nation's leading performers.
The January issue of IBC's Money Market Insight, which monitors money market
fund performance, ranked The Money Market Fund eighth of 268 General Purpose
Money Market Funds in the nation based on 12-month total returns through
December 31, 1995.
The Fund maintained its commitment to place among the top 10% of all General
Purpose Money Market Funds, a goal the Fund has achieved during every 12-month
period since its inception.
For the 12 months ended December 31, 1995, The Money Market Fund provided a
total return of 5.85%. The average General Purpose fund provided a return of
5.44% for the same period, according to IBC.
The 30-day compound yield of The Money Market Fund on December 31, 1995 was
5.61%. From its inception in 1985 through December 31, 1995, The Money Market
Fund has provided a total return of 92.23%, which equates to an average annual
return of 6.26%.
Short-term interest rates, as measured by 91-day T-Bill yields, declined
slightly during 1995, beginning the year at approximately 5.76% and finishing
at approximately 5.59%. Due to this declining interest rate trend, the average
maturity of the Fund was approximately 58 days. Over the course of the year,
however, the average maturity was as high as 82 days. This relatively long
average maturity comes in marked contrast to 1994 when, as short-term interest
rates climbed from 3% to 6%, the fund maintained an average maturity of
approximately 44 days.
The Portfolio of The Money Market Fund changed somewhat during the fourth
quarter of 1995 as the percentage of Fund assets devoted to Corporate
Obligations again increased and the number of different issues owned also
increased. Nevertheless, the Fund maintained an investment in "first tier"
issues (rated A1,P1 by the financial industry) throughout the year.
The Federal Reserve Board cut the Federal Funds Rate, the rate banks charge
one another for overnight loans, during 1995, perhaps based on continued low
inflation and a sluggish economy. Even though short-term interest rates
declined for the year, the Money Market Fund's total return during 1995 was its
best since 1991.
As evidenced by our placement among the top 3% of IBC's money market funds
during 1995, The Flex-funds Money Market Fund remains one of the nation's
leading General Purpose Money Market Funds.
In 1996, our challenge and our commitment is to strive not only to offer
interest rates comparable with those offered by the marketplace as a whole, but
to maintain the position of leadership we have established througout the Fund's
history.
[PHOTO]
PORTFOLIO MANAGER
PHILIP A. VOELKER
PORTFOLIO EXPOSURE(1) as of 12/31/95
THE MONEY MARKET PORTFOLIO
U.S. Gov't. Obligations 4.7%
Repurchase Agreements 8.3%
Commercial Paper 39.1%
RECENT TOTAL RETURNS
for the periods ended 12/31/95
IBC/Donoghue Money
The Money Market Fund Fund Average
1 year 5.85 5.44
3 years 4.31 3.92
5 years 4.55 4.15
Source: IBC's Money Market Insight. See inside front cover for more disclosure
and performance information.
11
<PAGE> 14
OUR PERFORMANCE SO FAR THIS DECADE
Shown below is the cumulative total return of each of The Flex-funds as
compared to various benchmarks for the period from January 1, 1990 through
December 31, 1995. The Short-Term Global Income Fund and The Total Return
Utilities Fund are not included in this chart because they were not in
existence in 1990.
<TABLE>
<S> <C>
The Muirfield Fund 97.69%
The Growth Fund 78.78%
Avg. Asset Allocation Fund* 82.30%
Avg. Balanced Fund* 81.32%
The Bond Fund 63.51%
L/B Int. Gov't./Corp. Bond Index 65.09%
Avg. Gen. Corporate Bond Fund 64.40%
Avg. Gen. Government Bond Fund 56.40%
The Money Market Fund 35.13%
Money Market Fund Avg. 32.05%
CPI 21.81%
</TABLE>
Morningstar, Inc. defines an ASSET ALLOCATION FUND as seeking income and
capital appreciation by determining the optimal percentage of assets to
place in stocks bonds and cash.
Morningstar, Inc defines a BALANCED FUND as seeking both income and capital
appreciation by investing in a generally fixed combination of stocks and bonds.
LEHMAN BROTHERS INTERMEDIATE GOVERNMENT/CORPORATE BOND INDEX is a market-value
weighted index of bonds with maturities of one to ten years.
Morningstar, Inc. defines a GENERAL CORPORATE BOND FUND as a mutual fund that
seeks income through investment in corporate fixed-income securities, at least
65% of which are rated A or higher.
Morningstar, Inc. defines a GENERAL GOVERNMENT BOND FUND as a mutual fund that
seeks income through investment in a blend of mortgage-backed securities,
Treasuries, and agency securities.
IBC's GENERAL PURPOSE MONEY MARKET FUND AVERAGE consists of taxable General
Purpose Money Market Funds.
The CONSUMER PRICE INDEX is a measure of the average change in prices for a
fixed market basket of goods and services, based on the spending habits of
urban wage earners and clerical workers, who represent about 40 percent of the
total civilian population of the U.S.
12
<PAGE> 15
MUTUAL FUND PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
=============================================================================================================================
SHARES OR VALUE
FACE AMOUNT (Notes 1 and 2)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS - 81.6%
Acorn International Fund 60 $1,000
Charles Schwab Money Market Fund 8,376,894 8,376,894
Constellation Fund 83 1,879
Fidelity Core Money Market Fund 5,549,983 5,549,983
Fidelity Equity Portfolio Growth Fund 333,197 12,628,156
Fidelity Growth & Income Fund 267,791 7,243,753
Founders Growth Fund 897,745 13,259,700
Neuberger & Berman Focus Fund 387,385 10,819,650
Neuberger & Berman Guardian Fund 457,705 10,540,947
Neuberger & Berman Manhattan Fund 173,284 2,103,666
PBNG Growth Fund 50,605 1,210,472
Pin Oak Aggressive Stock Fund (1) 23,041 384,793
T.Rowe Price New Era Fund 122 2,771
T.Rowe Price New Horizons Fund 724,089 14,843,822
Twentieth Century Ultra Fund 52,948 1,382,468
Twentieth Century Vista Fund 114,172 1,666,912
Weingarten Equity Fund 477,272 8,462,030
White Oak Growth Stock Fund 14,307 256,096
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(Cost $93,054,647) 98,734,992
- -----------------------------------------------------------------------------------------------------------------------------
U.S.TREASURY BILLS - 1.2%
*U.S..Treasury Bill, 5.29%, due 1/04/96 $150,000 149,912
*U.S. Treasury Bill, 5.22%, due 1/04/96 250,000 249,891
*U.S. Treasury Bill, 5.26%, due 1/04/96 1,000,000 999,486
U.S. Treasury Bill, 6.66%, due 1/11/96 25,200 25,149
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $1,424,438) 1,424,438
- ----------------------------------------------------------------------------------------------------------------------------
*Pledged $1,400,000 face amount as collateral on futures contracts
REPURCHASE AGREEMENTS - 17.2%
(Collateralized by U.S. government obligations -
market value $21,328,465)
Everen Securities, dated 12/29/95, 5.90%, due 1/02/96 2,550,000 2,550,000
Smith Barney, dated 12/28/95, 5.90%, due 1/02/96 18,250,000 18,250,000
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $20,800,000) 20,800,000
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost $115,279,085) $120,959,430
- ----------------------------------------------------------------------------------------------------------------------------
FUTURES CONTRACTS
CONTRACTS
- ----------------------------------------------------------------------------------------------------------------------------
Long, S&P 500 futures contracts
face amount $32,468,625 expiring in March, 1996. 105 36,750
Long, Midcap futures contracts
face amount $1,962,450 expiring in March, 1996. 18 9,000
- ----------------------------------------------------------------------------------------------------------------------------
NET RECEIVABLE FOR FUTURES CONTRACTS SETTLEMENTS 45,750
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No dividend paid on security in 1995.
See accompanying notes to financial statements
13
<PAGE> 16
GROWTH STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
===========================================================================================================================
SHARES OR VALUE
INDUSTRIES/CLASSIFICATIONS FACE AMOUNT (Notes 1 and 2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 36.7%
AEROSPACE/DEFENSE - (1.6%)
Boeing Company 6,300 $493,763
- ---------------------------------------------------------------------------------------------------------------------------
ALUMINUM - (1.1%)
Aluminum Company of America 6,300 333,113
- ---------------------------------------------------------------------------------------------------------------------------
AUTO AND TRUCK - (1.1%)
General Motors Corporation 6,300 333,113
- ---------------------------------------------------------------------------------------------------------------------------
BANKING - (1.7%)
J.P. Morgan & Company 6,300 505,575
- ---------------------------------------------------------------------------------------------------------------------------
BEVERAGE - (1.5%)
Coca Cola Company 6,300 467,775
- ---------------------------------------------------------------------------------------------------------------------------
CHEMICAL (BASIC) - (2.2%)
Dupont E.I. Nemours 6,300 440,212
Union Carbide Corporation 6,300 236,250
- ---------------------------------------------------------------------------------------------------------------------------
676,462
- ---------------------------------------------------------------------------------------------------------------------------
CHEMICAL (DIVERSIFIED) - (1.4%)
Minnesota Mining & Manufacturing 6,300 417,375
- ---------------------------------------------------------------------------------------------------------------------------
COMPUTER AND PERIPHERALS - (1.9%)
International Business Machines 6,300 578,025
- ---------------------------------------------------------------------------------------------------------------------------
DRUG - (1.4%)
Merck & Co., Incorporated 6,300 414,225
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - (1.8%)
General Electric Company 6,300 453,600
Westinghouse Electric Corporation 6,300 103,950
- ---------------------------------------------------------------------------------------------------------------------------
557,550
- ---------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - (.9%)
American Express Company 6,300 260,663
- ---------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS - (1.7%)
Proctor & Gamble Company 6,300 522,900
- ---------------------------------------------------------------------------------------------------------------------------
MACHINERY (CONSTRUCTION & MINING) - (1.2%)
Caterpillar Incorporated 6,300 370,125
- ---------------------------------------------------------------------------------------------------------------------------
MULTIFORM - (3.0%)
Allied-Signal Incorporated 6,300 299,250
United Technologies Corporation 6,300 597,712
- ---------------------------------------------------------------------------------------------------------------------------
896,962
- ---------------------------------------------------------------------------------------------------------------------------
PAPER AND FOREST PRODUCTS - (.8%)
International Paper Company 6,300 238,612
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 17
<TABLE>
<S> <C> <C>
PETROLEUM (INTEGRATED) - (4.4%)
Chevron Corporation 6,300 330,750
Exxon Corporation 6,300 504,788
Texaco 6,300 494,550
- ---------------------------------------------------------------------------------------------------------------------------
1,330,088
- ---------------------------------------------------------------------------------------------------------------------------
PRECISION INSTRUMENT - (1.4%)
Eastman Kodak Company 6,300 422,100
- ---------------------------------------------------------------------------------------------------------------------------
RECREATION - (1.2%)
Walt Disney Company 6,300 371,700
- ---------------------------------------------------------------------------------------------------------------------------
RESTAURANT - (.9%)
McDonalds Corporation 6,300 284,287
- ---------------------------------------------------------------------------------------------------------------------------
RETAIL STORE - (1.1%)
Sears Roebuck & Company 6,300 245,700
Woolworth Corporation 6,300 81,900
- ---------------------------------------------------------------------------------------------------------------------------
327,600
- ---------------------------------------------------------------------------------------------------------------------------
STEEL (INTEGRATED) - (.3%)
Bethlehem Steel Corporation (1) 6,300 88,200
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - (1.3%)
American Telephone & Telegraph Corporation 6,300 407,925
- ---------------------------------------------------------------------------------------------------------------------------
TIRE AND RUBBER - (.9%)
Goodyear Tire & Rubber Company 6,300 285,862
- ---------------------------------------------------------------------------------------------------------------------------
TOBACCO - (1.9%)
Philip Morris Companies Incorporated 6,300 570,150
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $11,071,620) 11,154,150
- ---------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS - 2.5%
*U.S. Treasury Bill, 5.19%, due 1/04/96 $600,000 599,741
*U.S. Treasury Bill, 5.26%, due 1/04/96 100,000 99,956
*U.S. Treasury Bill, 5.29%, due 1/04/96 50,000 49,978
U.S. Treasury Bill, 6.66%, due 1/11/96 6,700 6,687
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $756,362) 756,362
- ---------------------------------------------------------------------------------------------------------------------------
*Pledged $703,000 face amount as collateral on futures and options contracts
REPURCHASE AGREEMENTS - 30.8%
(Collateralized by U.S. government obligations -
market value $9,527,687)
Everen Securities, dated 12/29/95, 5.90%,
due 1/02/96 3,344,000 3,344,000
Smith Barney, dated 12/28/95, 5.90%,
due 1/02/96 6,000,000 6,000,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $9,344,000) 9,344,000
- ---------------------------------------------------------------------------------------------------------------------------
CONTRACTS
OPTIONS PURCHASED - 30.0%
CALL OPTIONS
S&P 500 futures contract expiring March, 1996 at 570 1,650 8,332,500
- ---------------------------------------------------------------------------------------------------------------------------
Continued on next page
</TABLE>
15
<PAGE> 18
<TABLE>
GROWTH STOCK PORTFOLIO
Portfolio of Investments, continued
<CAPTION>
CONTRACTS VALUE
(Notes 1 and 2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUT OPTIONS
S&P 500 futures contract expiring March, 1996 at 590 1,650 792,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED
(Cost $8,122,488) 9,124,500
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS HELD LONG - 100%
(Cost $29,294,470) $30,379,012
- --------------------------------------------------------------------------------------------------------------------------
FUTURES CONTRACTS
Long, S&P 500 futures contracts
face amount $13,527,000 expiring in March, 1996. 43 $17,650
- --------------------------------------------------------------------------------------------------------------------------
NET RECEIVABLE FOR FUTURES CONTRACTS SETTLEMENTS $17, 650
- --------------------------------------------------------------------------------------------------------------------------
WRITTEN OPTIONS OUTSTANDING AS OF DECEMBER 31, 1995.
CONTRACTS VALUE
(Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS
S&F 500 futures contract expiring March, 1996 at 590 1,650 $(5,436,750)
- --------------------------------------------------------------------------------------------------------------------------
PUT OPTIONS
S&P 500 futures contract expiring March, 1996 at 570 1,650 (420,750)
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN
(Proceeds $4,881,362) $(5,857,500)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)No dividend paid in 1995.
See accompanying notes to financial statements
16
<PAGE> 19
UTILITIES STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
==========================================================================================================================
SHARES OR VALUE
INDUSTRIES/CLASSIFICATIONS FACE AMOUNT (Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.6%
ELECTRIC/GAS UTILITY - (6.9%)
MDU Resources Group Incorporated 2,100 $41,738
Montana Power Company 1,300 29,412
Nipsco Industries Incorporated 1,700 65,025
Utilicorp United Incorporated 5,500 161,563
- --------------------------------------------------------------------------------------------------------------------------
297,738
- --------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITY - (15.0%)
AES Corporation(1) 2,600 62,075
Cinergy Corporation 3,900 119,437
Ipalco Enterprises Incorporated 2,000 76,250
KU Energy Corporation 1,300 39,000
LG&E Energy Corporation 2,300 97,175
Pacificorp 8,000 170,000
Teco Energy Incorporated 3,000 76,875
- --------------------------------------------------------------------------------------------------------------------------
640,812
- --------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED UTILITY - (3.8%)
Citizens Utilities Company Class B 12,686 160,158
- --------------------------------------------------------------------------------------------------------------------------
NATURAL GAS (DISTRIBUTOR) - (19.8%)
Bay State Gas Company 1,700 47,175
Brooklyn UN Gas Company 3,900 114,075
Consolidated Natural Gas Company 2,900 131,587
MCN Corporation 6,200 144,150
Nicor Incorporated 1,800 49,500
Panhandle Eastern Corporation 5,500 153,313
Transcanada Pipelines Ltd. 3,200 44,000
UGI Corporation 2,000 41,500
Wicor Incorporated 3,800 122,550
- --------------------------------------------------------------------------------------------------------------------------
847,850
- --------------------------------------------------------------------------------------------------------------------------
OIL/GAS (DOMESTIC) - (7.3%)
Enron Corporation 3,000 114,375
Sante Fe Pacific Pipeline Partners 1,600 58,600
Williams Companies Incorporated 3,200 140,400
- --------------------------------------------------------------------------------------------------------------------------
313,375
- --------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION EQUIPMENT - (1.7%)
DSC Communications(1) 2,000 73,750
- --------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - (33.4%)
Alltel Corporation 5,100 150,450
American Telephone & Telegraph Corporation 1,500 97,125
Ameritech Corporation 2,500 147,500
Bell Atlantic Corporation 1,400 93,625
Century Telephone Enterprise 5,500 174,625
Cincinnati Bell Incorporated 2,000 69,500
Frontier Corporation 6,500 195,000
GTE Corporation 3,200 140,800
Nynex Corporation 300 16,200
Sprint Corporation 2,400 95,700
U.S. West Incorporated 6,000 214,500
United Media Group 2,000 38,000
- --------------------------------------------------------------------------------------------------------------------------
1,433,025
- --------------------------------------------------------------------------------------------------------------------------
Continued on next page
</TABLE>
17
<PAGE> 20
UTILITIES STOCK PORTFOLIO
Portfolio of Investments, continued
<TABLE>
<CAPTION>
SHARES OR VALUE
INDUSTRIES/CLASSIFICATIONS FACE AMOUNT (Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WATER UTILITY - (3.7%)
American Water Works Incorporated 4,100 159,387
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $3,503,676) 3,926,095
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.4%
(Collateralized by U.S. government obligations -
market value $360,995)
Everen Securities, dated 12/29/95, 5.90%, due 1/02/96 $360,000 360,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $360,000) 360,000
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost $3,863,676) $4,286,095
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)No dividend paid in 1995.
See accompanying notes to financial statements.
1995 FlexFunds Annual Report
18
<PAGE> 21
BOND PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
==========================================================================================================================
FACE VALUE
AMOUNT (Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S.TREASURY OBLIGATIONS - 85.7%
U.S. Treasury Note, 6.50%, due 8/15/2005 $7,700,000 8,214,938
U.S. Treasury Note, 6.50%, due 5/15/2005 5,000,000 5,327,344
*U.S. Treasury Bill, 5.17%, due 6/06/96 50,000 48,893
U.S. Treasury Bill, 6.66%, due 1/11/96 3,900 3,892
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S.TREASURY OBLIGATIONS
(Cost $12,924,502) 13,595,067
- --------------------------------------------------------------------------------------------------------------------------
*Pledged $50,000 face amount as collateral on futures and options contracts
REPURCHASE AGREEMENTS - 14.3%
(Collateralized by U.S. Government obligations -
market value $2,271,669)
Everen Securities, dated 12/29/95, 5.90%, due 1/02/96 2,262,000 2,262,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $2,262,000) 2,262,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS HELD LONG - 100%
(Cost $15,186,502) $15,857,067
- --------------------------------------------------------------------------------------------------------------------------
FUTURES CONTRACTS
CONTRACTS
Long, 10 Year Bond futures contracts
face amount $2,291,875 expiring in March, 1996. 20 $5,625
- --------------------------------------------------------------------------------------------------------------------------
NET RECEIVABLE FOR FUTURES CONTRACTS SETTLEMENTS $5,625
- --------------------------------------------------------------------------------------------------------------------------
WRITTEN OPTIONS OUTSTANDING AS OF DECEMBER 31, 1995:
CONTRACTS VALUE
(Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS
U.S. Treasury Note Contract Expiring
February, 1996 at 114 20 $19,063
- --------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN
(Proceeds $10,850) $19,063
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
19
<PAGE> 22
SHORT-TERM GLOBAL PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
==========================================================================================================================
FACE AMOUNT VALUE
(Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
U.S.TREASURY - 42.4%
U.S. Treasury Note, 5.875%, due 8/15/98 $1,300,000 $1,321,531
*U.S. Treasury Bill, 5.34%, due 2/15/96 50,000 49,651
U.S. Treasury Bill, 6.66%, due 1/11/96 1,200 1,198
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S.TREASURY BILLS
(Cost $1,355,357) 1,372,380
- --------------------------------------------------------------------------------------------------------------------------
*Pledged $10,000 face amount as collateral on futures
contracts
U.S. GOVERNMENT OBLIGATIONS - 15.5%
Federal National Mortgage Association Discount Note,
5.60%, due 1/04/96 500,000 499,767
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $499,767) 499,767
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 42.1%
(Collateralized by U.S. government obligations -
market value $1,386,192)
Everen Securities, dated 12/29/95, 5.90%, due 1/02/96 612,000 612,000
Smith Barney, dated 12/28/95, 5.90%, due 1/02/96 750,000 750,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $1,362,000) 1,362,000
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost $3,217,124) $3,234,147
- --------------------------------------------------------------------------------------------------------------------------
FUTURES CONTRACTS - 0.0%
CONTRACTS
Long, Canadian Dollar futures contracts
face amount $366,550 expiring in March, 1996. 5 $(1,150)
- --------------------------------------------------------------------------------------------------------------------------
NET PAYABLE FOR FUTURES CONTRACTS SETTLEMENTS $(1,150)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
20
<PAGE> 23
MONEY MARKET PORTFOLIO
Portfolio of Investments as of December 31, 1995
<TABLE>
<CAPTION>
==========================================================================================================================
FACE VALUE
AMOUNT (Notes 1 and 2)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER - 39.1%
American Honda Finance, 5.73%, due 2/23/96 $10,000,000 $9,915,642
American Honda Finance, 5.62%, due 4/02/96 3,000,000 2,956,913
BOT Financial, 6.20%, due 1/05/96 11,000,000 10,992,422
Dupont Corporation, 6.25%, due 1/03/96 275,000 274,905
Duff & Phelps, 5.47%, due 5/09/96 6,000,000 5,882,395
GTE Corporation, 5.83%, due 2/16/96 10,000,000 9,925,506
Idaho Power, 6.25%, due 1/11/96 140,000 139,757
Jefferson Smurfit, 5.70%, due 3/01/96 1,200,000 1,188,600
Jefferson Smurfit, 5.70%, due 3/19/96 4,000,000 3,950,600
Laclede Gas, 6.25%, due 1/22/96 432,000 430,425
Marsh MacClellan, 5.58%, due 3/14/96 3,120,000 3,084,697
Mitsubishi Motor Credit Corporation, 6.25%, due 1/18/96 518,000 516,471
National Utilities, 5.58%, due 3/12/96 2,000,000 1,977,990
Nynex Corporation, 5.74%, due 2/06/96 3,000,000 2,982,780
Nynex Corporation, 5.77%, due 1/12/96 10,000,000 9,982,369
Pacific Bell, 6.25%, due 1/22/96 390,000 388,578
Public Services Electric & Gas, 5.93%, due 1/11/96 8,142,000 8,128,588
Public Services Electric & Gas, 5.90%, due 1/17/96 3,061,000 3,052,973
Tambrands, 5.50%, due 6/04/96 3,500,000 3,417,118
Torchmark, 5.75%, due 2/14/96 10,600,000 10,525,506
Whirlpool Corporation, 5.77%, due 1/31/96 10,700,000 10,648,551
- --------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost $100,362,786) 100,362,786
- --------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 47.9%
American Telephone & Telegraph Capital Corporation, 4.52%,
due 8/30/96 250,000 247,743
American Telephone & Telegraph Capital Corporation, 7.40%,
due 11/01/96 500,000 505,230
Associates Corporation, 7.50%, due 10/15/96 150,000 151,722
Associates Corporation, 4.75%, due 8/01/96 250,000 248,321
BP America, Incorporated, 10.00%, due 3/08/96 5,000,000 5,034,208
BP, Incorporated, 10.15%, due 3/15/96 190,000 191,649
Bank One, Dayton, 5.95%, due 10/02/96 5,000,000 5,000,000
* Bank One Capital Demand Note, 5.83%,
next redemption date 7/11/96, due 4/01/2113 3,510,000 3,510,000
Barnett Bank, 10.00%, due 1/08/96 3,500,000 3,502,308
Bat Industries, 8.60%, due 8/30/96 550,000 558,052
* Bear Stearns Floating Rate Note, 5.76%, due 3/01/96 10,000,000 10,000,000
* Best Sands Corporation Floating Rate Note,
5.95%, next redemption date 1/04/96, due 7/01/2002 850,000 850,000
* Care Life Project Floating Rate Note, 5.95%,
next redemption date 1/04/96, due 8/01/2111 1,375,000 1,375,000
Conrail, 5.20%, due 2/12/96 1,000,000 999,051
Continental Bankcorp, 9.875%, due 6/15/96 1,250,000 1,272,500
Dean Witter, 8.92%, due 3/15/96 1,000,000 1,005,634
Dow Capital Corporation, 8.25%, due 2/15/96 65,000 65,146
Dupont Corporation, 8.45%, due 10/15/96 860,000 897,347
Eastman Kodak, 10.00%, due 6/15/96 125,000 126,948
Eli Lilly Corporation, 6.58%, due 12/20/96 250,000 252,275
*Espanola/Nambe Variable Rate Demand Note, 5.95%,
next redemption date 1/04/96, due 6/01/2006 2,500,000 2,500,000
*Exxon Shipping Floating Rate Note, 5.78%,
next redemption date 1/04/96, due 10/01/2111 7,000,000 7,000,000
Ford Motor Credit Corporation, 8.00%, due 10/01/96 1,800,000 1,825,930
Ford Motor Credit Corporation, 9.07%, due 7/05/96 893,000 906,417
Continued on next page
</TABLE>
21
<PAGE> 24
MONEY MARKET PORTFOLIO
Portfolio of Investments, continued
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (Notes 1 and 2)
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Corporation, 4.85%, due 8/23/96 400,000 397,132
Ford Motor Credit Corporation, 8.25%, due 7/15/96 171,000 172,927
Ford Motor Credit Corporation, 9.10%, due 7/05/96 1,000,000 1,015,476
Ford Motor Credit Corporation, 8.25%, due 5/15/96 1,200,000 1,209,494
General Electric Capital Corporation,
4.615%, next redemption date 5/30/96 1,000,000 994,514
General Motors Acceptance Corporation, 9.00%, due 2/06/96 400,000 401,185
General Motors Acceptance Corporation, 8.00%, due 10/01/96 275,000 279,485
*General Motors Acceptance Corporation Floating Rate Note,
5.805%, next redemption date 4/13/96, due 4/13/98 10,000,000 10,000,000
*Hancor Incorporated Floating Rate Note, 5.95%,
next redemption date 1/04/95, due 12/01/2004 900,000 900,000
Hertz Corporation, 9.125%, due 8/01/96 2,850,000 2,902,407
Honeywell Corporation, 7.875%, due 5/14/96 1,445,000 1,453,511
Household Financial Corporation, 9.375%, due 2/15/96 2,000,000 2,007,835
IBM Corporation, 5.00%, due 2/26/96 250,000 249,698
IBM Credit Corporation, 5.06%, due 11/15/96 1,350,000 1,340,236
IBM Credit Corporation, 4.85%, due 11/05/96 3,000,000 2,973,731
International Bank, 8.75%, due 9/06/96 100,000 101,972
John Deere Corporation, 8.50%, due 4/10/96 200,000 201,383
Lockheed Corporation, 4.875%, due 2/15/96 85,000 84,848
Merrill Lynch & Company, Floating Rate Note, 5.925%,
due 11/18/96 10,000,000 10,000,000
Morgan Stanley Incorporated, 8.875%, due 4/01/96 400,000 402,793
Morgan Stanley Incorporated, 7.32%, due 1/15/97 500,000 507,941
Pacific Gas & Electric, 5.03%, due 3/22/96 800,000 798,800
Pepsico Incorporated, 7.875%, due 8/15/96 2,350,000 2,375,767
Philip Morris Companies, 8.875%, due 7/01/96 1,150,000 1,165,600
*Presrite Corporation Floating Rate Note, 5.95%,
next redemption date 1/04/96, due 1/01/2004 2,880,000 2,880,000
Regions Bank, Louisiana, 6.71%, due 4/11/96 5,000,000 5,011,262
Sears Roebuck & Company, 9.00%, due 9/15/96 1,000,000 1,020,902
Sears Roebuck & Company, 8.55%, due 8/01/96 2,000,000 2,028,466
Smith Barney Holding Company, 5.375%, due 6/01/96 5,380,000 5,365,423
Southwestern Bell, 7.90%, due 8/23/96 1,500,000 1,518,192
Southwestern Bell, 8.30%, due 6/01/96 100,000 101,028
Suntrust Banks, 8.375%, due 3/01/96 1,130,000 1,134,467
U.S. West Capital Funding Corporation, 8.00%, due 10/15/96 290,000 294,634
Unilever, 8.00%, due 5/28/96 450,000 453,838
Union Electric, 5.50% due 5/01/96 100,000 99,868
Virginia Electric & Power, 6.35%, due 5/30/96 3,000,000 3,005,191
Virginia Electric & Power, 8.35%, due 6/15/96 1,000,000 1,010,524
WMX Technologies, 4.875%, due 6/15/96 215,000 213,945
Waste Management Corporation, 7.875%, due 8/15/96 1,000,000 1,011,214
Waste Management Corporation, 4.875%, due 6/15/96 100,000 99,547
Weyerhaeuser Corporation, 8.41%, due 5/17/96 100,000 100,863
White Castle Corporation, Floating Rate Note, 5.95%,
next redemption date 1/04/96 7,000,000 7,000,000
World Book Finance Corporation, 8.125%, due 9/01/96 500,000 506,839
- --------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost $122,818,621) 122,818,621
- --------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS - 0.1%
U.S. Treasury Bill, 6.66%, due 1/11/96 66,000 67,874
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $67,874) 67,874
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 25
<TABLE>
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS - 4.6%
Federal Farm Credit Note, 5.91%, due 6/24/96 500,000 500,614
*Student Loan Marketing Association Floating Rate Note,
5.70%, due 11/10/98, next redemption date 1/02/96 5,000,000 5,000,000
*Student Loan Marketing Association Floating Rate Note,
5.75%, due 8/03/99, next redemption date 1/02/96 4,350,000 4,355,249
*Student Loan Marketing Association Floating Rate Note,
5.68%, due 11/24/97, next redemption date 1/02/96 2,000,000 1,999,610
- --------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $11,855,473) 11,855,473
- --------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.3%
(Collateralized by U.S. government obligations -
market value $21,644,319)
Everen Securities, dated 12/29/95, 5.90%,
due 1/02/96 20,556,000 20,556,000
Star Bank N.A., dated 12/29/95, 5.30%,
due 1/02/96 950,000 950,000
- --------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $21,506,000) 21,506,000
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost $256,610,754) $256,610,754
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Floating Rate as of 12/31/95.
See accompanying notes to financial statements
23
<PAGE> 26
STATEMENTS OF ASSETS & LIABILITIES
December 31, 1995
<TABLE>
<CAPTION>
THE THE
TOTAL SHORT-TERM THE
THE THE RETURN THE GLOBAL MONEY
MUIRFIELD GROWTH UTILITIES BOND INCOME MARKET
FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------------
Investment in corresponding portfolio $110,642,016 $24,536,851 $2,880,695 $16,065,894 $3,262,193 $141,144,155
- ---------------------------------------------------------------------------------------------------------------------------------
Receivable for capital stock issued 1,573,138 119,903 1,576 394 208 --
- ---------------------------------------------------------------------------------------------------------------------------------
Unamortized organizational costs -- -- 22,175 -- 2,548 --
- ---------------------------------------------------------------------------------------------------------------------------------
Other assets 411 15,821 -- 2,610 7 7,786
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets 112,215,565 24,672,575 2,904,446 16,068,888 3,264,956 141,151,941
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------------------------------------------------------
Payable for capital stock redeemed 263,854 4,851 -- 4,105 55,504 --
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends payable 159,592 21,477 850 7,158 486 29,934
- ---------------------------------------------------------------------------------------------------------------------------------
Accrued transfer agent and administrative
fees 11,944 2,911 -- 1,201 430 8,592
- ---------------------------------------------------------------------------------------------------------------------------------
Other accrued liabilities 29,054 12,461 22,501 8,767 5,134 26,379
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 464,444 41,700 23,351 21,231 61,554 64,905
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------------
Capital 106,200,986 24,522,471 2,548,482 16,312,397 3,315,553 141,087,036
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net
investment income (loss) -- -- -- (14) (14) --
- ---------------------------------------------------------------------------------------------------------------------------------
Accumulated undistributed net realized
loss on investments (332,908) -- (679) (927,073) (129,158) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain on investments 5,883,143 108,404 333,292 662,347 17,021 --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets $111,751,221 $24,630,875 $2,881,095 $16,047,657 $3,203,402 $141,087,036
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Stock Outstanding 19,502,071 1,605,493 203,728 743,760 339,968 141,087,036
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering and
Redemption Price per Share $5.73 $15.34 $14.14 $21.58 $9.42 $1.00
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
24
<PAGE> 27
STATEMENTS OF OPERATIONS
for the year ended December 31, 1995
<TABLE>
<CAPTION>
THE THE
TOTAL SHORT-TERM THE
THE THE RETURN THE GLOBAL MONEY
MUIRFIELD GROWTH UTILITIES BOND INCOME MARKET
FUND FUND FUND* FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income
from corresponding portfolio:
- --------------------------------------------------------------------------------------------------------------------------------
Interest $1,861,721 $1,070,416 $7,224 $924,456 $236,403 $8,661,557
- --------------------------------------------------------------------------------------------------------------------------------
Dividends 303,932 127,829 47,321 -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Expenses (921,195) (297,385) (28,778) 82,622) (28,725) (292,189)
- --------------------------------------------------------------------------------------------------------------------------------
Total Net Investment Income From
Corresponding Portfolio 1,244,458 900,860 25,767 841,834 207,678 8,369,368
- --------------------------------------------------------------------------------------------------------------------------------
Fund Expenses:
- --------------------------------------------------------------------------------------------------------------------------------
Legal fees 1,501 1,095 1,082 1,095 1,364 1,278
Audit fees 5,454 3,285 846 3,011 1,808 5,215
Printing 19,205 8,057 2,949 4,715 568 41,305
Postage 12,255 4,934 303 2,913 787 27,370
Transfer agent fees 92,170 23,146 2,167 9,347 3,964 99,539
Administrative fee 27,001 6,626 361 4,016 1,079 37,068
Trustees fees and expenses 3,890 3,890 2,794 3,890 4,247 3,490
Registration and filing fees 8,098 8,130 9,025 5,747 4,050 21,880
Insurance 2,498 796 -- 411 205 5,876
Distribution plan 126,340 30,942 2,216 24,266 7,491 112,368
Amortization of organizational costs -- -- 2,633 -- 1,705 --
Other expenses 7,356 2,894 485 2,085 1,309 16,685
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses 305,768 93,795 24,861 61,496 28,577 372,074
Transfer Agent and Administrative fees
reimbursed -- -- (1,686) -- -- --
Expenses reimbursed by adviser -- -- (36,551) -- -- (98,327)
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses - net 305,768 93,795 (13,376) 61,496 28,577 273,747
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME - NET 938,690 807,065 39,143 780,338 179,101 8,095,621
- --------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS - NET:
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures 2,469,756 3,480,755 -- (47,454) (13,513) --
Net realized gain (loss) on investments 12,270,590 835,253 (679) 1,035,932 43,852 --
Change in unrealized appreciation of
investments 5,883,601 111,505 333,292 667,973 17,439 --
- --------------------------------------------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 20,623,947 4,427,513 332,613 1,656,451 47,778 --
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $21,562,637 $5,234,578 $371,756 $2,436,789 $226,879 $8,095,621
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period June 21, 1995 (commencement of operations) to December 31, 1995.
See accompanying notes to financial statements
25
<PAGE> 28
STATEMENTS OF
CHANGES IN NET ASSETS
For the years ended December 31, 1994
and December 31, 1995
<TABLE>
<CAPTION>
The Total Return
The Muirfield Fund The Growth Fund Utilities Fund
INCREASE (DECREASE) Year ended December 31, Year ended December 31, Year ended December 31,
IN NET ASSETS: 1995 1994 1995 1994 1995
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income - net $938,690 $2,097,085 $807,065 $469,324 $39,143
Net realized gain (loss) on
investments and futures contracts 14,740,346 302,942 4,316,008 705,535 (679)
Net change in unrealized
appreciation (depreciation)
of investments 5,883,601 (252,061) 111,505 (1,392,719) 333,292
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 21,562,637 2,147,966 5,234,578 (217,860) 371,756
- --------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS
AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Investment income - net (938,690) (2,097,066) (807,065) (469,410) (39,143)
Tax return of capital -- -- -- -- --
Net realized gain from investments
and futures contracts (15,073,253) (368,554) (659,136) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets
resulting from dividends
and distributions (16,011,943) (2,465,620) (1,466,201) (469,410) (39,143)
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Net proceeds from sales 26,530,545 $34,666,417 1,775,837 1,412,121 2,519,770
Reinvestment of dividends 15,844,992 2,445,383 1,436,634 462,346 33,121
Cost of redemptions (19,294,010)(26,738,157) (4,525,935) (5,182,334) (4,409)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share transactions 23,081,527 $10,373,643 (1,313,464) (3,307,867) 2,548,482
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE)
IN NET ASSETS 28,632,221 10,055,989 2,454,913 (3,995,137) 2,881,095
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - Beginning of year 83,119,000 73,063,011 22,175,962 26,171,099 --
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - End of year $111,751,221 $83,119,000 $24,630,875 $22,175,962 $2,881,095
- --------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 4,353,780 6,427,244 120,106 104,872 201,499
Reinvested 2,767,237 457,656 96,212 35,330 2,569
Redeemed (3,170,312) (4,956,807) (306,553) (389,689) (340)
- --------------------------------------------------------------------------------------------------------------------------------
Change in shares 3,950,705 1,928,093 (90,235) (249,487) 203,728
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
The Short-Term Global The Money Market
The Bond Fund Income Fund Fund
INCREASE (DECREASE) Year ended December 31, Year ended December 31, Year ended December 31,
IN NET ASSETS: 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Investment income - net $780,338 $470,988 $179,101 $243,984 $8,095,621 6,663,610
Net realized gain (loss) on
investments and futures contracts 988,478 (614,416) 30,339 (147,617) -- --
Net change in unrealized
appreciation (depreciation)
of investments 667,973 (5,626) 17,439 (5,068) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 2,436,789 (149,054) 226,879 91,299 8,095,621 6,663,610
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS
AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Investment income - net (780,352) (470,968) (173,972) (95,836) (8,095,621) (6,663,610)
Tax return of capital -- -- (5,143) (132,344) -- --
Net realized gain from investments
and futures contracts -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease in net assets
resulting from dividends
and distributions (780,352) (470,968) (179,115) (228,180) (8,095,621) (6,663,610)
- -----------------------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS:
Net proceeds from sales 2,883,665 2,137,786 1,153,932 1,014,828 365,251,080 449,948,057
Reinvestment of dividends 686,353 408,279 159,800 206,803 7,649,188 6,091,045
Cost of redemptions (2,161,626) (2,080,607) (2,091,734) (11,882,899) (396,651,391) (491,231,317)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from capital share transactions 1,408,392 465,458 (778,002) (10,661,268) (23,751,123) (35,192,215)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE)
IN NET ASSETS 3,064,829 (154,564) (730,238) (10,798,149) (23,751,123) (35,192,215)
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - Beginning of year 12,982,828 13,137,392 3,933,640 14,731,789 164,838,159 200,030,374
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS - End of year $16,047,657 $12,982,828 $3,203,402 $3,933,640 $141,087,036 $164,838,159
- -----------------------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS:
Issued 142,467 109,576 123,804 108,911 365,251,080 449,948,057
Reinvested 33,492 21,062 17,008 22,129 7,649,188 6,091,045
Redeemed (106,680) (107,118) (222,927) (1,273,867) (396,651,391) (491,231,317)
- ------------------------------------------------------------------------------------------------------------------------------------
Change in shares 69,279 23,520 (82,115) (1,142,827) (23,751,123) (35,192,215)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period June 21, 1995 (commencement of operations) to December 31, 1995.
See accompanying notes to financial statements.
26
<PAGE> 29
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for an average share
outstanding during each period based upon audited financial statements
<TABLE>
<CAPTION>
The Muirfield Fund Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.34 $5.36 $6.25 $6.43 $5.22
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment income 0.06 0.14 (0.01) 0.06 0.07
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(both realized and unrealized) 1.31 0.00 0.45 0.34 1.41
- --------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 1.37 0.14 0.44 0.40 1.48
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (0.06) (0.14) (0.02) (0.06) (0.27)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) (0.92) (0.02) (1.31) (0.52) --
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.98) (0.16) (1.33) (0.58) (0.27)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of period $5.73 $5.34 $5.36 $6.25 $6.43
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 25.82% 2.70% 8.11% 6.91% 29.83%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 111,751 83,119 73,063 55,280 43,276
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.26% 1.22% 1.26% 1.40% 1.50%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to
- --------------------------------------------------------------------------------------------------------------------------------
Average Net Assets 0.97% 2.55% (0.13%) 1.05% 1.25%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A N/A N/A 324.14% 107.05%
- --------------------------------------------------------------------------------------------------------------------------------
The Growth Fund Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $13.08 $13.45 $12.70 $12.05 $10.21
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment income 0.50 0.27 0.09 0.18 0.34
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(both realized and unrealized) 2.68 (0.37) 0.82 0.58 1.84
- --------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 3.18 (0.10) 0.91 0.76 2.18
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (0.50) (0.27) (0.16) (0.11) (0.34)
- --------------------------------------------------------------------------------------------------------------------------------
Distributions (from capital gains) (0.42) -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.92) (0.27) (0.16) (0.11) (0.34)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.34 $13.08 $13.45 $12.70 $12.05
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return 24.61% (0.69%) 7.21% 6.35% 21.46%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 24,631 22,176 26,171 25,534 32,654
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.64% 1.63% 1.51% 1.51% 1.42%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to
- --------------------------------------------------------------------------------------------------------------------------------
Average Net Assets 3.38% 1.95% 0.69% 1.31% 2.98%
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A N/A N/A 39.03% 265.32%
- --------------------------------------------------------------------------------------------------------------------------------
The Total Return Utilities Fund For The Period June 21, 1995 (2) to Dec. 31, 1995
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, beginning of Period $12.50
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment income 0.21
- --------------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities (both realized
and unrealized) 1.64
- --------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 1.85
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (0.21)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.21)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $14.14
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 15.00%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 2,881
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.25% (1)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 3.18% (1)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets, before waiver of fees 4.35% (1)
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets, before waiver of fees 0.08% (1)
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized
(2) Date of commencement of operations
See accompanying notes to financial statements
27
<PAGE> 30
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for an average share
outstanding during each period based upon audited financial statements
<TABLE>
<CAPTION>
The Bond Fund Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $19.25 $20.18 $19.46 $19.84 $18.37
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment income 1.11 0.72 0.86 0.99 1.23
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(both realized and unrealized) 2.33 (0.93) 0.71 (0.38) 1.47
- -----------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 3.44 (0.21) 1.57 0.61 2.70
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (1.11) (0.72) (0.85) (0.99) (1.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.11) (0.72) (0.85) (0.99) (1.23)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $21.58 $19.25 $20.18 $19.46 $19.84
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 18.32% (0.99%) 8.21% 3.26% 15.30%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 16,048 12,983 13,137 11,100 9,316
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.00% 1.00% 0.99% 1.00% 0.94%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 5.41% 3.71% 4.25% 5.13% 6.59%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
before waiver of fees * 1.14% 1.14% 1.09% 1.21% 1.23%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, before waiver of fees * 5.27% 3.57% 4.15% 4.92% 6.30%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A N/A N/A 100.53% 213.65%
- -----------------------------------------------------------------------------------------------------------------------------------
*Includes fees waived in corresponding portfolio
The Short-Term Global Income Fund
- -----------------------------------------------------------------------------------------------------------------------------------
For The Period
Year Ended December 31, May 27, 1992 (2)
1995 1994 1993 to Dec. 31, 1992
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.32 $9.41 $9.76 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net Investment income 0.41 0.29 0.43 0.30
- -----------------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(both realized and unrealized) 0.11 (0.09) (0.43) (0.24)
- -----------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.52 0.20 0.00 0.06
- -----------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (0.41) (0.12) -- (0.30)
- -----------------------------------------------------------------------------------------------------------------------------------
Returns of Capital (0.01) (0.17) (0.35) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.42) (0.29) (0.35) (0.30)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.42 $9.32 $9.41 $9.76
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 5.69% 2.14% 0.38% 0.52%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 3,203 3,934 14,732 34,805
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.45% 1.08% 0.82% 0.85% (1)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to
Average Net Assets 4.52% 3.17% 4.42% 4.85%(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
before waiver of fees * 1.85% 1.32% 0.82% 0.90%(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees * 4.12% 2.93% 4.42% 4.80%(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A N/A N/A N/A
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Annualized
(2) Date of commencement of operations
*Includes fees waived in corresponding portfolio
See accompanying notes to financial statements
</TABLE>
28
<PAGE> 31
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for an average share
outstanding during each period based upon audited financial statements
<TABLE>
<CAPTION>
The Money Market Fund Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment income 0.06 0.04 0.03 0.04 0.06
- --------------------------------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.06 0.04 0.03 0.04 0.06
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions
- --------------------------------------------------------------------------------------------------------------------------------
Dividends (from net investment income) (0.06) (0.04) (0.03) (0.04) (0.06)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.06) (0.04) (0.03) (0.04) (0.06)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------------------------------
Total Return 5.85% 4.10% 2.98% 3.70% 6.12%
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 141,087 164,838 200,030 245,259 316,951
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 0.40% 0.37% 0.37% 0.35% 0.38%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to
- --------------------------------------------------------------------------------------------------------------------------------
Average Net Assets 5.70% 4.02% 2.94% 3.68% 5.96%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
before waiver of fees * 0.64% 0.57% 0.57% 0.56% 0.56%
- --------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees * 5.46% 3.82% 2.74% 3.47% 5.78%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Includes fees waived in corresponding portfolio
See accompanying notes to financial statements
29
<PAGE> 32
THE FLEX-FUNDS
Notes to Financial Statements, December 31, 1995
1. ORGANIZATION
The Flex-funds Trust was organized in 1982 and is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company which is presently comprised of six separate funds (each a "Fund" and
collectively the "Funds") offering six separate series. Effective May 1,1992,
The Money Market, Growth, and Bond Funds began investing all of their
investable assets in a corresponding open-end management investment company
(each a "Portfolio" and collectively the "Portfolios") having the same
investment objective as the Fund. The Short-Term Global Income Fund commenced
operations on May 27, 1992 when it began investing all of its investable assets
in a corresponding open-end management investment company having the same
investment objectives as the Fund. The Muirfield Fund began on January 3, 1993
investing all of its investable assets in a corresponding open-end management
investment company having the same investment objectives as the Fund. The Total
Return Utilities Fund commenced operations on June 21, 1995 when it began
investing all of its investable assets in a corresponding open-end management
investment company having the same investment objectives as the Fund. The Money
Market, Muirfield, Growth, Bond, Short-Term Global Income and Total Return
Utilities Funds, the Portfolios into which they invest and the percentage of
each portfolio owned by the respective Fund at December 31, 1995 is shown
below:
<TABLE>
<CAPTION>
Approximate
Percentage of the
Portfolio Held
by the Fund at
Fund Portfolio December 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Muirfield Fund Mutual Fund Portfolio 91%
- ---------------------------------------------------------------------------------------------------------------------------------
The Growth Fund Growth Stock Portfolio 100%
- ---------------------------------------------------------------------------------------------------------------------------------
The Total Return Utilities Fund Utilities Stock Portfolio 67%
- ---------------------------------------------------------------------------------------------------------------------------------
The Bond Fund Bond Portfolio 100%
- ---------------------------------------------------------------------------------------------------------------------------------
The Short-Term Global Income Fund Short-Term Global Portfolio 100%
- ---------------------------------------------------------------------------------------------------------------------------------
The Money Market Fund Money Market Portfolio 55%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The financial statements of the Portfolios, including the Portfolios of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of each respective Fund.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Valuation of Investments - Valuation of securities by the Portfolios is
discussed at Note 1 of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report (See page 37).
Income Taxes - It is the Funds' policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of their taxable income to their shareholders. Therefore, no
Federal income tax provision is required.
Distributions to Shareholders - Dividends to shareholders are recorded on the
ex-dividend date.
Organizational Costs - The costs related to the organization of each of the six
Funds have been deferred and are being amortized by each Fund on a
straight-line basis over a five-year period. Such costs for The Growth, Bond,
Muirfield and Money Market Funds have been fully amortized.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides each Portfolio with investment management, research,
statistical and advisory services. Miller/Howard Investments, Inc. (Subadviser)
serves as the Utilities Stock Portfolio's Subadviser under an Investment
Subadvisory Agreement between RMA and the Subadviser.
RMA has agreed to reimburse each Fund for the amount by which annual expenses
of the Fund and its respective Portfolio (excluding interest, taxes, brokerage
fees, and extraordinary expenses) exceed the most restrictive expense
limitation imposed by any State in which such Fund's shares are sold. Such
reimbursement is limited to the total fee charged by RMA. The investment
advisory fees reimbursed in 1995 were at the request of RMA and were not the
result of the aforementioned expense limitations.
Mutual Funds Service Co., (MFS), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services for all of the
Trust's separate Funds. Subject to a $4,000 annual minimum fee The Growth,
Muirfield, and Total Return Utilities Funds each incur an annual fee equal to
the greater of $15 per shareholder account, or .10% of each Fund's average net
assets, payable monthly. In The Bond and Short-Term Global Income Funds, the
annual fee is the greater of $15 per shareholder account, or .06% of each
Fund's average net assets, payable monthly. In The Money Market Fund, the
annual fee is the greater of $20 per shareholder account, or .06% of the Fund's
average net assets, payable monthly.
30
<PAGE> 33
MFS also provides the Trust with certain administrative services. Each Fund
incurs an annual fee, payable monthly, of .03% of each Fund's average net
assets.
The Funds have adopted distribution expense plans pursuant to Rule 1 2b-1
under the Investment Company Act of 1940 (the "Plans"). Pursuant to the Plans,
the Funds may annually incur certain expenses associated with the distribution
of fund shares in amounts not to exceed 2/10 of 1% of each Fund's average net
assets, with the exception of The Total Return Utilities Fund whose amount
cannot exceed 25/100 of 1% of average net assets.
Certain officers and/or trustees of the Funds and each Portfolio are officers
and/or directors of MII, RMA and MFS.
4. COMMITMENTS AND CONTINGENCIES
Fidelity Bond and Errors and Omissions insurance coverage for the Trust and its
officers and Trustees has been obtained through ICI Mutual Insurance Company
(ICI Mutual), an industry-sponsored mutual insurance company. As of December
31, 1995, the Trust has made payments of $29,620, in addition to the annual
premiums paid, for the capital reserves of ICI Mutual.
The Trust is also committed to provide $51,055 should ICI Mutual experience the
need for additional capital contributions.
Total assets of $105,000 invested in U.S. Treasury Bills are held in segregated
accounts which collateralizes a standby letter of credit in connection with the
Trust's participation in ICI Mutual.
5. CAPITAL SHARE TRANSACTIONS
At December 31, 1995, an indefinite number of shares of $0.10 par value stock
were authorized in each of the Funds, and paid-in capital amounted to
$141,087,036 in The Money Market Fund, $106,200,986 in The Muirfield Fund,
$24,522,471 in The Growth Fund, $16,312,397 in The Bond Fund, $3,315,553 in The
Short-Term Global Income Fund and $2,548,482 in The Total Return Utilities
Fund. (See Statements of Changes in Net Assets which are included elsewhere in
this report for capital stock transactions.)
6. DISTRIBUTIONS
The Money Market, Bond and Short-Term Global Income Funds declare dividends
daily and distribute monthly all of their net investment income. The Total
Return Utilities Fund declares as dividends and distributes monthly
substantially all of its net investment income. The Muirfield and Growth Funds
declare as dividends and distribute quarterly substantially all of their net
investment income. Net realized capital gains for all Funds, if any, are
distributed annually afier deduction of prior years' loss carryforwards.
Dividends from net investment income and any distributions of realized capital
gains are distributed in cash or reinvested in additional shares of the Funds
at net asset value.
At December 31, 1995, The Bond, Short-Term Global Income and Total Return
Utilities Funds had available for Federal income tax purposes unused capital
loss carryforwards. The amount in The Bond Fund is $930,127 which will expire
in the years 1996 through 2002. The amount in The Short-Term Global Income Fund
is $135,290 which will expire in the years 2000 through 2002. The amount in The
Total Return Utilities Fund is $679 which will expire in 2003.
31
<PAGE> 34
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of The Flex-funds:
We have audited the accompanying statements of assets and liabilities of The
Flex-funds (comprising, respectively, The Muirfield, Growth, Total Return
Utilities, Bond, Short-Term Global Income and Money Market Funds), as of
December 31, 1995, and the related statements of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of The Flex-funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1995, by correspondence with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Flex-funds at December 31, 1995, the
results of their operations, the changes in their net assets and the financial
highlights for each of the periods indicated herein, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Columbus, Ohio
February 2, 1996
32
<PAGE> 35
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1995
MUTUAL GROWTH UTILITIES SHORT-TERM MONEY
FUND STOCK STOCK BOND GLOBAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets :
Investments at market value* $100,159,430 $21,035,012 $3,926,095 $13,595,067 $1,872,147 $235,104,754
- -----------------------------------------------------------------------------------------------------------------------------------
Repurchase Agreements* 20,800,000 9,344,000 360,000 2,262,000 1,362,000 21,506,000
- -----------------------------------------------------------------------------------------------------------------------------------
Cash -- -- 121 124 85 206
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable for futures contracts settlement 45,750 17,650 -- 5,625 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Interest receivable 61,492 5,577 177 232,124 29,641 2,245,756
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends receivable 1,139,291 21,609 11,374 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Prepaid/Other assets 454 109 -- 68 19 1,251
- -----------------------------------------------------------------------------------------------------------------------------------
Unamortized organization costs 10,377 7,538 40,146 7,537 7,181 7,538
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 122,216,794 30,431,495 4,337,913 16,102,545 3,271,073 258,865,505
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payable for securities purchased -- -- -- -- -- 2,680,949
- -----------------------------------------------------------------------------------------------------------------------------------
Payable to corresponding Fund -- -- -- -- -- 1,477,153
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for futures contracts settlement -- -- -- -- 1,150 --
- -----------------------------------------------------------------------------------------------------------------------------------
Written options at market value* -- 5,857,500 -- 19,063 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Payable to investment adviser 85,828 21,414 3,325 4,275 -- 33,706
- -----------------------------------------------------------------------------------------------------------------------------------
Accrued fund accounting fees 4,159 2,496 628 1,699 636 4,818
- -----------------------------------------------------------------------------------------------------------------------------------
Other accrued liabilities 17,678 13,055 43,090 11,486 7,042 20,505
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 107,665 5,894,465 47,043 36,523 8,828 4,217,131
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets:
Capital 116,428,784 24,428,626 3,868,451 15,403,670 3,245,222 254,648,374
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized gain on investments 5,680,345 108,404 422,419 662,352 17,023 --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets $122,109,129 $24,537,030 $4,290,870 $16,066,022 $3,262,245 $254,648,374
- -----------------------------------------------------------------------------------------------------------------------------------
*Securities at cost 115,279,085 24,413,108 3,863,676 15,175,652 3,217,124 256,610,754
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements
33
<PAGE> 36
<TABLE>
STATEMENTS OF OPERATIONS
For the year ended December 31, 1995
<CAPTION>
MUTUAL GROWTH UTILITIES SHORT-TERM MONEY
BOND STOCK STOCK BOND GLOBAL MARKET
PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME - NET:
Interest $1,911,196 $1,070,422 $8,057 $924,478 $236,424 $12,128,882
- ---------------------------------------------------------------------------------------------------------------------------
Dividends 329,219 127,830 54,996 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Income 2,240,415 1,198,252 63,053 924,478 236,424 12,128,882
- ---------------------------------------------------------------------------------------------------------------------------
Expenses:
- ---------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 874,473 238,640 14,297 57,855 15,829 648,665
Legal fees 1,853 1,679 1,100 1,679 1,609 1,555
Audit fees 13,482 10,234 3,028 9,125 5,544 15,695
Custodian fees 11,483 7,236 1,755 3,624 3,649 17,104
Accounting fees 47,427 28,335 4,065 18,951 7,457 58,111
Trustees fees and expenses 5,223 5,223 3,776 5,223 5,130 5,385
Insurance 2,241 661 -- 369 161 5,920
Amortization of organization cost 5,438 4,978 4,744 4,979 4,745 4,978
Other expenses 399 399 1,611 399 432 432
- ---------------------------------------------------------------------------------------------------------------------------
Total Expenses 962,019 297,385 34,376 102,204 44,556 757,845
Investment advisory fees waived -- -- -- (19,580) (15,829) (349,425)
Directed brokerage payments received -- -- (1,212) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Expenses - net 962,019 297,385 33,164 82,624 28,727 408,420
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME - NET 1,278,396 900,867 29,889 841,854 207,697 11,720,462
- ---------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on futures
contracts 2,494,274 3,480,775 -- (47,455) (13,514) --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 13,060,418 835,258 (1,067) 1,035,942 43,853 --
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation
of investments 5,680,803 111,506 422,419 667,977 17,441 --
- ---------------------------------------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 21,235,495 4,427,539 421,352 1,656,464 47,780 --
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $22,513,891 $5,328,406 $451,241 $2,498,318 $255,477 $11,720,462
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period June 21, 1995 (commencement of operations) to December 31,
1995
See accompanying notes to financial statements
34
<PAGE> 37
STATEMENTS OF
CHANGES IN NET ASSETS
For the years ended December 31, 1994
and December 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Mutual Fund Growth Stock Utilities Stock
Portfolio Portfolio Portfolio*
Year ended December 31, Year ended December 31, Year ended December 31,
1995 1994 1995 1994 1995
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
OPERATIONS:
Investment income- net $1,278,396 $2,272,777 $900,867 $565,496 $29,889
Net realized gain (loss)
on investments
and futures contracts 15,554,692 302,941 4,316,033 705,537 (1,067)
Net change in unrealized
appreciation (depreciation)
of investments 5,680,803 (252,062) 111,506 (1,392,790) 422,419
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from operations 22,513,891 2,323,656 5,328,406 (121,757) 451,241
- --------------------------------------------------------------------------------------------------------------
TRANSACTIONS
OF INVESTORS'
BENEFICIAL INTERESTS:
Contributions 34,671,819 26,769,231 1,680,821 1,440,673 3,908,655
Withdrawals (18,261,284)(27,513,563) (4,640,744) (5,322,563) (69,026)
- --------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting from
transactions of investors'
beneficial interests 16,410,535 (744,332) (2,959,923) (3,881,890) 3,839,629
- --------------------------------------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE)
IN NET ASSETS 38,924,426 1,579,324 2,368,483 (4,003,647) 4,290,870
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -
Beginning of period 83,184,703 81,605,379 22,168,547 26,172,194 --
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -
End of period $122,109,129 $83,184,703 $24,537,030 $22,168,547 $4,290,870
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Bond Short-Term Global Money Market
Portfolio Portfolio Portfolio
Year ended December 31, Year ended December 31, Year ended December 31,
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS:
OPERATIONS:
Investment income- net $841,854 $526,976 $207,697 $279,212 $11,720,462 $8,115,651
Net realized gain (loss)
on investments
and futures contracts 988,487 (614,421) 30,339 (147,601) -- --
Net change in unrealized
appreciation (depreciation)
of investments 667,977 (5,626) 17,441 (5,068) -- --
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from operations 2,498,318 (93,071) 255,477 126,543 11,720,462 8,115,651
- ------------------------------------------------------------------------------------------------------------------
TRANSACTIONS
OF INVESTORS'
BENEFICIAL INTERESTS:
Contributions 2,890,694 2,140,676 1,159,854 1,025,710 753,617,719 733,486,217
Withdrawals (2,330,962) (2,217,176) (2,087,949) (11,962,648) (735,213,083)(717,226,708)
- ------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting from
transactions of investors'
beneficial interests 559,732 (76,500) (928,095) (10,936,938) 18,404,636 16,259,509
- ------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE
(DECREASE)
IN NET ASSETS 3,058,050 (169,571) (672,618) (10,810,395) 30,125,098 24,375,160
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS -
Beginning of period 13,007,972 13,177,543 3,934,863 14,745,258 224,523,276 200,148,116
- ------------------------------------------------------------------------------------------------------------------
NET ASSETS -
End of period $16,066,022 $13,007,972 $3,262,245 $3,934,863 $254,648,374 $224,523,276
- ------------------------------------------------------------------------------------------------------------------
*For the period June 21, 1995 (commencement of operations) to December 31, 1995.
See accompanying notes to financial statements
</TABLE>
35
<PAGE> 38
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Mutual Fund Portfolio
Year Ended Dec 31,
Ratios/Supplemental Data 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Assets, End of Period ($000) 122,109 83,185 81,605
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 0.95% 1.01% 1.03%
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 1.26% 2.76% 0.09%
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 186.13% 168.17% 279.56%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
Growth Stock Portfolio
For The Period
Year Ended Dec 31, May 1, 1992
Ratios/Supplemental Data 1995 1994 1993 to Dec 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 24,537 22,169 26,172 25,556
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 1.25% 1.23% 1.23% 1.22%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 3.78% 2.35% 0.99% 2.04%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 337.57% 102.76% 99.54% 129.44%
- ------------------------------------------------------------------------------------------------------------------------------
Average brokerage commission per share $0.0806 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
(1)Annualized
- ------------------------------------------------------------------------------------------------------------------------------
Utilities Stock Portfolio
For The Period
June 21, 1995*
Ratios/Supplemental Datato Dec 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 4,291
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 2.32%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 2.09%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets
before directed brokerage payments 2.40%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets
before directed brokerage payments 2.01%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 5.06%
- ------------------------------------------------------------------------------------------------------------------------------
Average brokerage commission per share $0.0600
- ------------------------------------------------------------------------------------------------------------------------------
(1)Annualized
*Date of commencement of operations
- ------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio
For The Period
Year Ended December 31, May 1, 1992
Ratios/Supplemental Data 1995 1994 1993 to Dec 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 16,066 13,008 13,178 11,126
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 0.57% 0.56% 0.60% 0.58%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 5.82% 4.15% 4.62% 5.40%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets, before waiver of fees 0.71% 0.70% 0.71% 0.80%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, before waiver of fees 5.68% 4.01% 4.51% 5.18%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 232.34% 707.57% 235.74% 132.53%
- ------------------------------------------------------------------------------------------------------------------------------
(1) Annualized
- ------------------------------------------------------------------------------------------------------------------------------
Short-Term Global Portfolio
For The Period
Year Ended December 31, May 27, 1992
Ratios/Supplemental Data 1995 1994 1993 to Dec 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 3,262 3,935 14,745 34,809
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 0.73% 0.62% 0.64% 0.66%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 5.24% 3.62% 4.58% 3.88%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets, before waiver of fees 1.13% 0.86% 0.64% 0.72%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets, before
waiver of fees 4.84% 3.38% 4.58% 3.82%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 369.36% 0.00% 780.99% 380.28%(1)
- ------------------------------------------------------------------------------------------------------------------------------
(1) Annualized
- ------------------------------------------------------------------------------------------------------------------------------
Money Market Portfolio
For the Period
Year Ended Dec 31, May 1, 1992
Ratios/Supplemental Data 1995 1994 1993 to Dec 31, 1992
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period ($000) 254,648 224,523 200,148 244,272
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets* 0.21% 0.19% 0.19% 0.18%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 5.87% 4.28% 3.09% 3.60%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets, before waiver of fees 0.38% 0.39% 0.40% 0.40%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets, before
waiver of fees 5.70% 4.08% 2.88% 3.38%(1)
- ------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate N/A N/A N/A N/A
- ------------------------------------------------------------------------------------------------------------------------------
(1)Annualized
</TABLE>
*Please refer to pages 27-29 for total expense ratios relating to
each corresponding Fund. See accompanying notes to financial
statements
36
<PAGE> 39
MUTUAL FUND PORTFOLIO
GROWTH STOCK PORTFOLIO
UTILITIES STOCK PORTFOLIO
BOND PORTFOLIO
SHORT-TERM GLOBAL PORTFOLIO
MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Each separate Portfolio (the "Portfolios") is registered under the Investment
Company Act of 1940, as amended, as a no-load, open-end management investment
company which was organized as a trust under the laws of the State of New York.
Each Declaration of Trust permits the Trustees, who are the same for all the
Portfolios, to issue beneficial interests in each Portfolio. The following is a
summary of significant accounting policies followed by the Portfolios.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments - Money market securities held in the Money Market Portfolio are
valued at amortized cost, which approximates market value in accordance with
Rule 2a-7 of the Investment Company Act of 1940. Money market securities held
in the five remaining Portfolios maturing more than sixty days after the
valuation date are valued at the last sales price as of the close of business
on the day of valuation, or, lacking any sales, at the most recent bid price or
yield equivalent as obtained from dealers that make markets in such securities.
When such securities are valued within sixty days or less to maturity, the
difference between the valuation existing on the sixty-first day before
maturity and maturity value is amortized on a straight-line basis to maturity.
Securities maturing within sixty days from their date of acquisition are valued
at amortized cost.
Securities which are traded on stock exchanges are valued at the last sales
price as of the close of business of the New York Stock Exchange on the day of
valuation, or, lacking any sales, at the closing bid prices. Securities traded
on the over-the-counter market are valued at the most recent bid price or yield
equivalent as obtained from one or more dealers that make markets in such
securities. Mutual funds are valued at the daily redemption value determined by
the underlying fund. Valuations in The Bond and Short-Term Global Portfolios
are determined as of 3:00 p.m. Eastern time.
Repurchase Agreements - It is the Portfolios' policy to take possession of the
collateral for repurchase agreements before payment is made to the seller.
Market value of the collateral must be at least 100% of the amount of the
repurchase agreement. During the period ended December 31, 1995 the Portfolios
wrote the following option contracts:
<TABLE>
<CAPTION>
Growth Stock Portfolio Bond Portfolio Mutual Fund Portfolio
No. of No. of No. of
Contracts Premiums Contracts Premiums Contracts Premiums
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at Beginning of Period 0 $0 0 $0 0 $0
- ---------------------------------------------------------------------------------------------------------------
Options Written 3,342 4,927,214 185 67,650 173 186,057
- ---------------------------------------------------------------------------------------------------------------
Options Terminated (42) (45,852) (165) (56,800) (173) (186,057)
- ---------------------------------------------------------------------------------------------------------------
Outstanding at End of Period 3,300 $4,881,362 20 $10,850 0 $0
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Short-Term Global Portfolio
No.of
Contracts Premiums
- -------------------------------------------------------------
<S> <C> <C>
Outstanding at Beginning of Period 0 $0
- -------------------------------------------------------------
Options Written 24 7,470
- -------------------------------------------------------------
Options Terminated (24) (7,470)
- -------------------------------------------------------------
Outstanding at End of Period 0 $0
- -------------------------------------------------------------
</TABLE>
Options & Futures - Each Portfolio except the Money Market Portfolio may engage
in transactions in financial futures contracts and options as a hedge against
the change in market value of the securities held in the portfolio, or which it
intends to purchase. The expectation is that any gain or loss on such
transactions will be substantially offset by any gain or loss on the securities
in the underlying portfolio or on those which are being considered for
purchase.
To the extent that the Portfolio enters into futures contracts on an index or
group of securities the Portfolio exposes itself to an indeterminate liability
and will be required to pay or receive a sum of money measured by the change in
the market value of the index. Upon entering into a futures contract the
Portfolio is required to deposit either cash or securities in an amount
("initial margin") equal to a certain percentage of the contract value.
Subsequent payments ("variation margin") equal to changes in the daily
settlement price or last sale on the exchanges where they trade are paid or
received each day and are recorded as a gain or loss on futures contracts.
In the case of the Short-Term Global Portfolio, futures and options contracts
entered into will typically be futures and options on futures of a foreign
currency. The Portfolio is presently engaging only in the buying and selling of
futures contracts on foreign currencies. The expectation is that the Portfolio
will be able to participate in interest rate differentials between the U.S.
dollar and foreign currencies by investing in futures on the foreign currencies
in lieu of investing in short-term foreign debt instruments. At the same time,
the Portfolio will take advantage of the favorable transaction cost associated
with the purchase of a futures contract in lieu of a cash instrument. To the
extent that the Portfolio enters into futures contracts on foreign currencies,
the Portfolio exposes itself to a liability, which at a maximum cannot exceed
the value given for the contracts, and will be required to pay or receive a sum
of money measured by the change in the market value of that currency's index.
Call and put option contracts involve the payment of a premium for the right to
purchase or sell an individual security or index aggregate at a specified price
until the expiration of the contract. Such transactions expose the Portfolio to
the loss of the premium paid if the Portfolio does not sell or exercise the
contract prior to the expiration date. In the case of a call option, sufficient
cash or money market
37
<PAGE> 40
instruments will be segregated to complete the purchase. Options are
valued on the basis of the daily settlement price or last sale on the exchanges
where they trade and the changes in value are recorded as an unrealized gain or
loss until sold, exercised or expired. In the case of a written option,
premiums received by each portfolio upon writing the option are recorded in the
liability section of the Statement of Assets and Liabilities and are
subsequently adjusted to current market value. When the written option is
closed, exercised or expired, the portfolio realizes a gain or loss and the
liability is eliminated.
Income Taxes - It is the Portfolios' policy to comply with the requirements of
the Internal Revenue Code applicable to it. Therefore, no Federal income tax
provision is required.
Organizational Costs - The costs related to the organization of each of the six
Portfolios have been deferred and are being amortized by each Portfolio on a
straight-line basis over a five-year period.
Other - The Portfolios follow industry practice and record security
transactions on the trade date. Gains and losses on security transactions are
determined on the specific identification basis. Dividend income is recognized
on the ex-dividend date, and interest income (including amortization of premium
and discount) is recognized as earned.
2. INVESTMENT ADVISORY, AND OTHER AGREEMENTS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolios with investment management, research,
statistical and advisory services, and pays certain other expenses of the
Portfolios. Miller/Howard Investments, Inc. (Subadviser) serves as the
Utilities Stock Portfolio's Subadviser under an Investment Subadvisory
Agreement between RMA and the Subadviser. For such services the Portfolios pay
monthly a fee based upon the average daily value of each Portfolios' net assets
at the following annual rates: Mutual Fund, Growth Stock, and Utilities Stock
Portfolio, 1% of average net assets up to $50 million, 0.75% of average net
assets exceeding $50 million up to $100 million and 0.60% of average net assets
exceeding $100 million; Bond and Short-Term Global Income Portfolios, 0.40% of
average net assets up to $100 million and 0.20% of average net assets exceeding
$100 million; Money Market Portfolio, 0.40% of average net assets up to $100
million and 0.25% of average net assets exceeding $100 million. During the year
ended December 31, 1995, RMA voluntarily waived a portion of its investment
advisory fees in the Money Market and Bond Portfolios, and all of its
investment advisory fees in the Short-Term Global Income Portfolio.
Mutual Funds Service Co., (MFS), a wholly-owned subsidiary of MII, serves as
accounting services agent for all of the Portfolios. The minimum annual fee for
all such services for the Mutual Fund, Growth Stock, Bond, Short-Term Global,
and Utilities Stock Portfolios is $7,500. Subject to the applicable minimum
fee, each Portfolio's annual fee, payable monthly, is computed at the rate of
0.15% of the first $10 million, 0.10% of the next $20 million, 0.02% of the
next $50 million, and 0.01% in excess of $80 million of the respective
Portfolio's average net assets. In the Money Market Portfolio the minimum
annual fee for accounting services is $30,000. Subject to the applicable
minimum fee, the Money Market Portfolio's annual fee, payable monthly, is
computed at the rate of 0.15% of the first $10 million, 0.10% of the next $20
million, 0.02% of the next $50 million and 0.01% in excess of $80 million of
the Portfolio's average net assets. Certain officers and/or trustees of the
Funds and each Portfolio are officers and/or directors of MII, RMA and MFS.
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding short-term investments and
U.S. Government and agency obligations for the year ended December 31, 1995
were as follows:
<TABLE>
<CAPTION>
Purchases Sales
- -----------------------------------------------------------------------
<S> <C> <C>
- -----------------------------------------------------------------------
Mutual Fund Portfolio $153,526,438 $77,373,285
- -----------------------------------------------------------------------
Growth Stock Portfolio $ 20,462,275 $10,183,074
- -----------------------------------------------------------------------
Utilities Stock Portfolio $ 3,636,056 $ 131,312
- -----------------------------------------------------------------------
</TABLE>
As of December 31, 1995, the aggregate cost of investments and net unrealized
appreciation (depreciation) for Federal income tax purposes was comprised of
the following:
<TABLE>
<CAPTION>
Net Unrealized
Unrealized Unrealized Appreciation
Investment Appreciation Depreciation (Depreciation)
Cost of Investments of Investments of Investments
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Mutual Fund Portfolio $115,644,899 $6,814,624 $(1,500,093) $5,314,531
- ---------------------------------------------------------------------------------------------------------------------------
Growth Stock Portfolio $ 24,438,982 $4,474,745 $(4,392,215) $82,530
- ---------------------------------------------------------------------------------------------------------------------------
Utilities Stock Portfolio $ 3,863,676 $ 428,434 $(6,015) $ 422,419
- ---------------------------------------------------------------------------------------------------------------------------
Bond Portfolio $ 15,173,624 $ 664,380 $0 $ 664,380
- ---------------------------------------------------------------------------------------------------------------------------
Short-Term Global
Portfolio $ 3,217,124 $ 17,023 $0 $ 17,023
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE> 41
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of the Mutual Fund Portfolio, Growth
Stock Portfolio, Utilities Stock Portfolio, Bond Portfolio, Short-Term Global
Portfolio, and Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of the
Mutual Fund Portfolio, Growth Stock Portfolio, Utilities Stock Portfolio, Bond
Portfolio, Short-Term Global Portfolio, and Money Market Portfolio, including
the schedules of portfolio investments, as of December 31, 1995, and the
related statements of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and the financial highlights are the responsibility of the
Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1995, by correspondence with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Mutual Fund Portfolio, Growth Stock Portfolio, Utilities Stock Portfolio, Bond
Portfolio, Short-Term Global Portfolio, and Money Market Portfolio at December
31, 1995, the results of their operations, the changes in their net assets and
the financial highlights for each of the periods indicated herein, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Columbus, Ohio
February 2, 1996
39
<PAGE> 42
MANAGER AND INVESTMENT ADVISER
R. Meeder & Associates
6000 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
SUBADVISER/Utilities Stock Portfolio
Miller/Howard Investments, Inc.
141 Upper Byrdcliff Road
P.O. Box 549
Woodstock, New York 12498
BOARD OF TRUSTEES
Milton S. Bartholomew
Dr. Roger D. Blackwell
John M. Emery
Richard A. Farr
William L. Gurner
Robert S. Meeder, Sr.
Robert S. Meeder, Jr.
Russel G. Means
Lowell G. Miller
Walter L. Ogle
Neil P. Ramsey
Philip A. Voelker
CUSTODIAN
Star Bank, N.A., Cincinnati
Cincinnati, Ohio 45201
TRANSFER AGENT AND
DIVIDEND DISBURSING AGENT
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, Ohio 43017
AUDITORS
KPMG Peat Marwick LLP
Columbus, Ohio 43215
<PAGE> 43
HOW TO REACH US
ENVELOPE GRAPHIC
The Flex-funds
P.O. Box 7177
Dublin, Ohio 43017
TELEPHONE GRAPHIC
(614) 766-7000
800-325-3539
MINIMUM INVESTMENTS
BUILDING GRAPHIC
$500 for IRAs
$2,500 for regular accounts
Subsequent Investments $100
<PAGE> 44
THE FLEX-FUNDS _________________
P.0. BOX 7177 | BULK RATE |
DUBLIN, OH 43017 | U.S. POSTAGE |
| PAID |
| COLUMBUS, OH |
| PERMIT No. 1213 |
|_________________|
