2/19/97
Dear Flex-funds Shareholders:
We are writing to call your attention to the enclosed proxy materials and to
ask for your support with regard to several proposals relating to the
management and operation of The Flex-funds.
A special meeting of The Flex-funds Shareholders is slated for April 18, 1997
at our offices in Dublin, Ohio. The enclosed proxy ballot represents your vote
on the proposals contained herein. We ask that you return your completed proxy
card to The Flex-funds in the enclosed envelope at your earliest convenience
in order to avoid additional Fund expense in soliciting your vote.
Flex-funds' proxies in the past have dealt with issues specific to one Fund.
The proposals within this proxy statement pertain to a wide range of
Flex-funds shareholders. Therefore, in the interest of saving money, we have
prepared a single proxy statement.There are issues contained within this proxy
statement that may not pertain to the Fund(s) you own.
The proxy statement contains detailed information about each of the proposals,
and we recommend that you read it carefully. However, we have also enclosed
some questions and answers that we hope will assist you in evaluating the
proposals.
The management and board of trustees of The Flex-funds requests that you
carefully consider each of these proposals before casting your vote. We
appreciate your continued confidence in The Flex-funds family and trust that
the proposed changes will enable us to better serve your investment
objectives. We look forward to working with you in the future. If you have
questions, please do not hesitate to call.
Cordially,
Robert S. Meeder, Sr.
President
<PAGE>
QUESTIONS AND ANSWERS
WHAT ARE THE PROPOSALS CONTAINED WITHIN THIS PROXY STATEMENT?
The purpose of the proxy statement is to ask for your vote on five issues
(Some of these issues may not apply to all Flex-funds shareholders):
Issues 1 & 3(A): To consolidate the Board of Trustees of The Flex-funds
and the Board of Trustees of each corresponding Portfolio
into one body in order to improve the efficiency of the
Boards' operations.
Issues 2 & 3(B): To ratify the selection of the accounting firm KPMG Peat
Marwick, LLP as the independent certified public accountants
of the Flex-Funds (the "Trust").
Issue #4: To approve a change in the investment policies followed
by The Money Market Fund and its corresponding Portfolio
such that the Portfolio will be allowed to purchase other
money market funds.
Issue #5: To approve a change in how the advisory fees of the
Total Return Utilities Fund's corresponding Portfolio
are divided between the adviser, R. Meeder & Associates, and
the sub-adviser, Miller/Howard Investments, Inc.
WHY ARE THE BOARDS RECOMMENDING A SINGLE BOARD OF TRUSTEES FOR THE FLEX-FUNDS
AND THEIR PORTFOLIOS?
The boards of trustees of The Flex-funds and their Portfolios have in the past
conducted concurrent yet separate meetings. By combining the boards, the
efficiency of operating the Funds will be enhanced due to the commonality of
interest among all board members as well as dispersing trustee fees to all
entities in the complex on a more equitable basis.
WHY DO THE BOARDS WANT TO CHANGE THE INVESTMENT POLICIES OF THE MONEY MARKET
FUND?
The goals strived for by the Money Market Fund include earning the highest
possible yield consistent with the quality, liquidity and diversification
requirements applicable to money market funds. At times, when the Fund seeks
highly-liquid overnight investments, higher yields could be available from
other money market funds rather than from repurchase agreements or other money
market instruments. In addition, during times of rapidly rising interest
rates, it may be desirable to maintain a large portion of the Money Market
<PAGE>
Portfolio in short-term investments so as to reinvest assets as higher interest
rates materialize. Again, money market funds could possibly offer higher yields
than repurchase agreements or other money market instruments for this purpose.
WHY ARE YOU BEING ASKED TO APPROVE THE SELECTION OF INDEPENDENT AUDITORS?
Each year, independent auditors audit the financial statements of the
Portfolios and The Flex-funds and prepare federal and state income tax
returns. The law requires that shareholders be asked to ratify the selection
of independent auditors for The Flex-funds and their corresponding Portfolios at
the same meetings at which board members are elected. Since we are conducting
a proxy vote at this time, we are also asking for your ratification of the
independent auditors.
WILL THE CHANGE IN COMPENSATION FOR THE SUB-ADVISER OF THE UTILITIES STOCK
PORTFOLIO (THE CORRESPONDING PORTFOLIO OF THE TOTAL RETURN UTILITIES FUND)
AFFECT THE ADVISORY FEE CURRENTLY PAID BY THE PORTFOLIO TO THE INVESTMENT
ADVISER?
If this proposal is approved, it will have no effect on the
investment advisory fee currently paid by The Utilities Stock Portfolio (The
Total Return Utilities Fund). This proposal only affects how the fees are
divided between the adviser and the sub-adviser and does not affect the level
of fees borne by the Portfolio (or indirectly by The Total Return
Utilities Fund)
PLEASE NOTE THAT YOUR BOARD OF TRUSTEES
HAS RECOMMENDED THAT YOU VOTE IN
SUPPORT OF EACH OF THESE
PROPOSALS.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|X| Preliminary proxy statement
|_| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE FLEX-FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box): N/A
<PAGE>
LOGO
THE FLEX-FUNDS
THE HIGHLANDER FUND
THE MUIRFIELD FUND
THE TOTAL RETURN UTILITIES FUND
THE U.S. GOVERNMENT BOND FUND
THE MONEY MARKET FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held April 18, 1997
A Special Meeting of Shareholders of the captioned Funds (each a
"Fund" and collectively the "Funds"), each a series of The Flex-funds (the
"Trust"), will be held on April 18, 1997 at the offices of the Trust, 6000
Memorial Drive, Dublin, Ohio 43017, at 9:00 A.M. for the purpose of
considering and acting on the following proposals by the Board of Trustees of
the Trust (the "Fund Trustees"):
FOR SHAREHOLDERS OF ALL FUNDS:
(1) To elect Fund Trustees.
(2) To ratify the selection of KPMG Peat Marwick, LLP ("Peat Marwick") as the
independent certified public accountants of the Trust.
FOR SHAREHOLDERS OF EACH FUND:
(3) With respect to each Fund's corresponding open-end management investment
company (each a "Portfolio") having substantially the same investment
objective, policies and restrictions as such Fund, to authorize the Trust to
vote at a meeting of holders of interests in such Portfolio to (A) elect
Trustees of the Portfolio and (B) ratify the selection of Peat Marwick as
the independent certified public accountants of the Portfolio.
FOR SHAREHOLDERS OF THE MONEY MARKET FUND:
(4) To eliminate an investment restriction of this Fund and its corresponding
Portfolio to permit them to invest in other money market funds.
<PAGE>
FOR SHAREHOLDERS OF THE TOTAL RETURN UTILITIES FUND:
(5) With respect to this Fund's corresponding Utilities Stock Portfolio, to
authorize the Trust to vote at a meeting of holders of interests in such
Portfolio to approve amending the Investment Subadvisory Agreement to
adopt a new compensation schedule for the Portfolio's Subadviser.
The transfer books will not be closed, but only those shareholders of
record at the close of business on February 21, 1997 will be entitled to vote
at the meeting.
Shareholders are cordially invited to attend the meeting in person.
If you plan to attend, please so indicate on the enclosed proxy card(s) and
return same promptly in the enclosed envelope. Whether you will be able to
attend or not, PLEASE VOTE, SIGN AND DATE THE PROXY CARD(S) AND RETURN SAME
PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Board of Trustees
Robert S. Meeder, Sr., President
Dublin, Ohio
March 1, 1997
PLEASE RETURN PROXY CARD(S) IMMEDIATELY
TO PREVENT ADDITIONAL SOLICITATION EXPENSE
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Trustees (the "Fund
Trustees") of The Flex-funds (the "Trust") to be used at a Special Meeting
(the "Meeting") of the shareholders of the five series funds of the Trust
(each a "Fund" and collectively the "Funds"). The Meeting will be held at the
offices of the Trust, 6000 Memorial Drive, Dublin, Ohio 43017 on April 18,
1997 at 9:00 A.M. for the purpose set forth in the accompanying notice of
meeting and relating, among other things, to meetings of holders of interests
in the five corresponding Portfolios (each a "Portfolio" and collectively the
"Portfolios") of the Funds. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked prior to its exercise by a signed
writing delivered at the Meeting or filed with the Secretary of the Trust at
the foregoing address, which is also the mailing address of the Trust, each
Fund and each Portfolio. Solicitation of proxies is being made by the mailing
of these proxy materials on or about March 1, 1997 to shareholders of
record at the close of business on February 21, 1997 (the "Record Date"). On
the Record Date, the numbers of shares of beneficial interest of each Fund
outstanding and entitled to vote at the Meeting were: Highlander
Fund--__________; Muirfield Fund--__________; Total Return Utilities
Fund--__________; U.S. Government Bond Fund--__________; and Money Market
Fund--__________. On the Record Date, all Trustees and officers of the Trust,
as a group, owned less than 1% of the outstanding shares of the Trust.
Shareholders of record at the close of business on the Record Date will be
entitled to one vote for each share held. If an accompanying proxy is executed
and returned in time for the Meeting, the shares covered thereby will be voted
in accordance with the proxy.
This is a joint proxy statement and is being used to reduce the
preparation, printing, handling and postage expenses that would result from
the use of a separate proxy statement for each Fund and, since many
shareholders own shares of more than one Fund, to avoid burdening shareholders
with multiple proxy statements. Proposals 1 and 2 described below relate to
all of the Funds and shareholders of all Funds will vote together on these
proposals. Proposal 3 relates to each of the Funds. Shareholders of each Fund
will vote separately on Proposal 3, and the Trust will cast its votes at the
upcoming meeting of each Portfolio with respect to the subject matter of
Proposal 3 in proportion to the votes for each Portfolio's corresponding Fund.
Proposal 4 will be voted on only by shareholders of the Money Market Fund and
Proposal 5 will be voted on only by shareholders of the Total Return Utilities
Fund. Separate proxy cards are enclosed for each Fund in which a shareholder
is a record owner of shares.
COMMON BOARD OF TRUSTEES
Proposals 1 and 3(A) would, if approved, implement the unanimous
recommendation of the Fund Trustees and the Trustees of each Portfolio (the
"Portfolio Boards" or the "Portfolio Trustees") that the Trust and the
Portfolios share the same persons as Trustees. When the Trust was organized,
there was a single board of trustees. In mid-1991, following the approval of
the shareholders of the Trust, the Trust converted to a master/feeder
structure in which, rather than directly investing each Fund's assets, such
assets were invested in one of the Portfolios with the objective of realizing
certain economies of scale, based on the premise that certain of the expenses
of managing an investment portfolio are relatively fixed and that a larger
<PAGE>
investment portfolio may therefore achieve a lower ratio of operating expenses
to net assets, as well as other potential benefits. No such economies of scale
or other benefits were anticipated following the conversion unless other
investors (i.e., "feeder" funds) joined a Fund and invested in the same
Portfolio. Since 1991, three of the five Portfolios have attracted additional
feeder funds and a fourth is in the process of accepting one. The Boards of
the Trust and the Portfolios believe that the conversion to the master/feeder
structure is producing the anticipated economies and other benefits, at least
for those Funds whose Portfolios have more than one feeder fund.
When the conversion to a master/feeder structure was decided upon,
the structure was relatively new and untested. Because of certain unsettled
legal and/or regulatory issues, the Trust was advised that it would be prudent
to have at least a majority of the persons serving on the Board of a Portfolio
be different from a majority of the persons who served on the Trust Board.
This was done. Accordingly, the Trust presently has a board of five Trustees,
only one of whom also serves as a Portfolio Trustee. Each Portfolio also has a
board of five Trustees and the same five individuals serve on all five
Portfolio boards. Thus a total of ten persons comprise all the Trustees of the
Trust and the Portfolios.
To date all of the additional feeder funds of the Portfolios are
series of Flex-Partners, a Massachusetts business trust similar to the Trust.
The Trust and Flex-Partners share four common Trustees and two additional
persons who are not Trustees of the Trust or the Portfolios serve as
Flex-Partners trustees. Thus a total of eleven persons comprise all the
Trustees of the Trust and the Portfolios and the trustees of Flex-Partners. In
effect, the Trust, Flex-Partners and the Portfolios are a single mutual fund
complex organized in a master/feeder structure (the "Complex") for mutual
advantage.
Because of the commonality of interests of the entities in the
Complex, meetings of each entity's board of trustees are held at the same time
and place as the meetings of the other entities' boards of trustees. The
minutes of these meetings are also combined documents so that only one set of
minutes serves for all entities.
As the Trustees have become more familiar with the master/feeder
structure and as the structure itself has become not only more accepted by the
mutual fund industry and those governmental entities responsible for its
regulation, but also more popular in terms of the number of mutual fund
complexes choosing to adopt the structure, the number of unsettled issues
referred to above has substantially diminished to the point that there is
general acceptance of the structure. In addition, many of the fund complexes
adopting the structure are doing so with common boards of trustees or
directors at the master fund and the feeder fund levels. Accordingly, the
Trustees of the Complex believe unanimously that each trust in the Complex
should have the same persons serving as trustees (the "Common Board"). The
shareholders of the funds comprising the Flex-Partners trust are also being
asked to approve the Common Board proposal. The details are more fully
described below in Proposals 1 and 3(A).
<PAGE>
PROPOSAL 1: ELECTION OF FUND TRUSTEES
Proxies returned to the Trust will, unless authority to vote for the
election of one or more nominees is specifically withheld, be used to vote FOR
the election of the eleven nominees indicated below as Fund Trustees. Each
Fund Trustee so elected will hold office for a term of unlimited duration
until his successor is elected and qualified, as provided in the Trust's
Declaration of Trust. Please note that Messrs. Meeder, Sr., Emery, Farr,
Blackwell and Meeder, Jr., currently serve as Fund Trustees and that all
nominees have consented to serve if elected at the Meeting. Pursuant to the
Trust's Declaration of Trust, the Fund Trustees have the power to establish
and alter the number and the terms of office of Fund Trustees (subject to
certain removal procedures, including shareholder vote), to appoint successor
Fund Trustees and to fill vacancies, including vacancies existing by reason of
an increase in the number of Fund Trustees, provided that always at least a
requisite majority of Fund Trustees has been elected by the shareholders.
Generally, there will not be meetings of shareholders for the purpose of
electing Fund Trustees.
The following table sets forth certain information about the Fund
Trustee nominees:
<TABLE>
<CAPTION>
TRUSTEE BUSINESS EXPERIENCE
NAME AGE SINCE DURING PAST FIVE YEARS
<S> <C> <C> <C>
Robert S. Meeder, Sr.* 67 1982 Chairman of R. Meeder & Associates
(an investment advisory firm whose
clients include the Portfolios);
President of the Trust; President
and a Trustee of the Portfolios
and Flex-Partners
Milton S. Bartholomew 67 ** Retired; formerly a practicing
attorney in Columbus, Ohio; mem-
ber of each Portfolio's Audit
Committee
Roger D. Blackwell 56 1994 Professor of Marketing and Con-
sumer Behavior, The Ohio State
University; President of Blackwell
Associates, Inc., a strategic
consulting firm; Flex-Partners
Trustee
<PAGE>
<CAPTION>
TRUSTEE BUSINESS EXPERIENCE
NAME AGE SINCE DURING PAST FIVE YEARS
<S> <C> <C> <C>
John M. Emery 76 1982 Retired, formerly Vice President &
Treasurer of Columbus & Southern
Ohio Electric Co.; Flex-Partners
Trustee; member of the Audit
Committees of the Trust and
Flex-Partners
Richard A. Farr 78 1982 President of R&R Supply Co. and
Farrair Concepts, Inc.,
two companies involved in engineer-
ing, consulting and sales of heating
and air conditioning equipment;
Flex-Partners Trustee
William L. Gurner* 50 ** President, Sector Capital Manage-
ment, an investment adviser (since
January 1995); Manager of Trust
Investments, Federal Express
Corporation (1987-1994); Flex-
Partners Trustee
Russel G. Means 70 ** Chairman of Employee Benefit
Management Corporation,
consultants and administrators
of self- funded health and
retirement plans; Portfolio
Trustee
Robert S. Meeder, Jr.* 35 1991 President of R. Meeder & Associates;
Vice President of Flex-Partners and
each Portfolio
Lowell G. Miller* 48 ** President, Miller/Howard Invest-
ments, Inc., an investment adviser
whose clients include the Utilities
Stock Portfolio and the Growth Stock
Portfolio; Flex-Partners Trustee;
and Vice President of the Flex-Partners
Walter L. Ogle 59 ** Executive Vice President of AON
Consulting, an employee benefits
consulting group; Portfolio Trustee
Philip A. Voelker* 42 ** Senior Vice President of R. Meeder
& Associates; Portfolio Trustee;
Vice President of the Trust,
Flex-Partners and each
Portfolio
<FN>
* Interested person
** Not currently a Trustee of the Trust
</FN>
</TABLE>
<PAGE>
Mr. Emery comprises the Audit Committee of each of the Trust
and Flex-Partners. Mr. Bartholomew comprises the Audit committee of each
Portfolio. Each Audit Committee, among other things, (1) serves as the
liaison between its trust's management and the trust's independent public
accountants as their duties relate to assuring the integrity of each trust's
<PAGE>
financial reporting and the safeguarding of its assets; (2) seeks to
assure the independence of the auditors, the integrity of management and the
adequacy of financial disclosure to investors; and (3) reviews the scope
of the audit, the financial results of the trust for the year and the
auditors' evaluation of the overall adequacy of internal controls, thereby
assisting the Trustees in fulfilling their fiduciary responsibilities as
to accounting policies and reporting practices. Messrs. Emery and
Bartholomew each receive $500 for each Audit Committee meeting attended
regardless of the number of Audit Committees on which they serve. Two
Audit Committee meetings were held in the last fiscal year. Messrs. Emery
and Bartholomew attended each meeting.
Each Trustee who is not an "interested person" is paid a meeting fee
of $250 per meeting for each of the five Portfolios. In addition each such
Trustee earns an annual fee, payable quarterly, based on the average net
assets in each Portfolio according to the following schedule: Money Market
Portfolio, 0.0005% of the amount of average net assets between $500 million
and $1 billion; 0.00025% of the amount of average net assets exceeding $1
billion. For the other four Portfolios, each Trustee is paid a fee of 0.00375%
of the amount of each Portfolio's average net assets exceeding $15 million.
During the year ended December 31, 1996, the Trustees of the Trust
and the Portfolios held four regular and two special meetings with each
Trustee attended at least 75% of the aggregate of the number of meetings of
the respective Board of Trustees and any committee on which he served, except
for Mr. Blackwell, who was unable to attend one regular and two special
meetings.
BOARD RECOMMENDATION AND REQUIRED VOTE.
THE FUND TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE TO ELECT
EACH NOMINEE AS A FUND TRUSTEE. The Fund Trustee nominees receiving the
affirmative vote of a majority of the shares cast for the election of Fund
Trustees at the meeting will be elected, provided a quorum is present. Shares
of all Funds vote together as a single class for the Fund Trustees.
PROPOSAL 2: RATIFICATION OF AUDITORS
A majority of the Fund Trustees who are not "interested persons" of
the Trust, as defined in the Investment Company Act of 1940 (the "1940 Act"),
have selected KPMG Peat Marwick, LLP ("Peat Marwick"), Two Nationwide Plaza,
Columbus, Ohio 43215, as independent certified public accountants to sign or
certify any financial statements which may be filed by the Trust with the
Securities and Exchange Commission in respect of all or any part of the
Trust's current fiscal year, such employment being expressly conditioned upon
the right of the Trust, by vote of a majority of the outstanding "voting
securities" of the Trust at any meeting called for the purpose, to terminate
such employment forthwith without any penalty. Such selection will be
submitted for ratification or rejection by the shareholders of the Trust at
the Meeting. Peat Marwick currently serves as the independent certified public
accountants of the Trust, as well as of Flex-Partners and each Portfolio. No
member of Peat Marwick has any direct or material indirect interest in the
Trust, Flex-Partners or any Portfolio.
<PAGE>
The Trust's independent certified public accountants provide
customary professional services in connection with the audit function for a
management investment company such as the Trust and its Funds, and their fees
for such services include fees for work leading to the expression of opinions
on the financial statements included in annual reports to the shareholders of
the Trust, opinions on the financial statements and other data included in the
Trust's annual report to the Securities and Exchange Commission, opinions on
financial statements included in amendments to the Trust's registration
statement, and preparation of the Trust's federal and state income tax
returns.
Representatives of Peat Marwick are not expected to be present at the
Meeting but will have been given the opportunity to make a statement if they
so desire and will be available should any matter arise requiring their
presence. If the Trust receives a written request from any shareholder at
least five days prior to the Meeting stating that the shareholder will be
present in person at the Meeting and desires to ask questions of the
accountants, the trust will arrange to have a representative of Peat Marwick
present at the Meeting who will respond to appropriate questions and have an
opportunity to make a statement.
Proxies not limited to the contrary will be voted in favor of
ratifying the selection of Peat Marwick as the independent certified public
accountants for the Trust.
BOARD RECOMMENDATION AND REQUIRED VOTE
THE FUND TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE TRUST VOTE TO
RATIFY THE SELECTION OF PEAT MARWICK AS THE INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS OF THE TRUST AT THE MEETING. Such ratification requires the
affirmative vote of a majority of the shares cast with respect to
Proposal 2 at the meeting, provided a quorum is present. Shares of all
Funds vote together as a single class for Proposal 2.
<PAGE>
PROPOSAL 3: AUTHORIZATION TO VOTE AT MEETING OF PORTFOLIO INVESTORS
Shareholders of the Trust are being asked to vote on certain matters
with respect to the Portfolios because each Portfolio will call a meeting of
its investors (including a corresponding Fund) to vote on such matters. These
Portfolio meetings are planned to take place as promptly as practicable after
the holding of the Meeting to which this proxy statement relates and a similar
meeting of Flex-Partners shareholders. Specifically, each Portfolio will ask
its investors to vote to (A) elect Trustees of the Portfolio and (B) ratify
the selection of Peat Marwick as the independent certified public accountants
of the Portfolio.
PROPOSAL 3(A): AUTHORIZATION TO ELECT PORTFOLIO TRUSTEES
Proxies returned to the Trust will, unless authority to vote for the
election of one or more nominees is specifically withheld, be used for the
purpose of authorizing the Trust to vote FOR the election as Portfolio
Trustees of the same eleven persons who are nominees for election as Fund
<PAGE>
Trustees and who are listed and identified under Proposal 1 above. Each
Portfolio Trustee so elected will continue to hold office for a term of
unlimited duration until his successor is elected and qualified, as provided
in each Portfolio's Declaration of Trust. Please note that Messrs. Meeder,
Sr., Bartholomew, Means, Ogle and Voelker currently serve as Portfolio
Trustees and that all nominees have consented to serve if elected. Pursuant to
each Portfolio's Declaration of Trust, the Portfolio Trustees have the power
to establish and alter the number and the terms of office of Portfolio
Trustees (subject to certain removal procedures, including shareholder vote),
to appoint successor Portfolio Trustees and to fill vacancies, including
vacancies existing by reason of an increase in the number of Portfolio
Trustees, provided that always at least a requisite majority of Portfolio
Trustees has been elected by the investors in each Portfolio. Generally, there
will not be meetings of investors for the purpose of electing Portfolio
Trustees.
See Proposal 1 above for a discussion of the Audit Committee of each
Portfolio and the compensation received by Portfolio Trustees.
BOARD RECOMMENDATION AND REQUIRED VOTE
THE FUND TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND VOTE TO
AUTHORIZE THE TRUST TO ELECT EACH NOMINEE AS A PORTFOLIO TRUSTEE AT EACH
MEETING OF THE INVESTORS IN SUCH PORTFOLIO. The nominees for a Portfolio
Board receiving the affirmative vote of a majority of the beneficial
interests cast for the election of the Portfolio's Trustees will be elected,
provided a quorum is present. The Trust, on behalf of the Funds, will cast
its votes at a meeting of the holders of the beneficial interests in each
Fund's corresponding Portfolio on Proposal 3(A) in the same proportions as
the votes cast by each Fund's shareholders.
PROPOSAL 3(B): RATIFICATION OF AUDITORS
A majority of the Portfolio Trustees who are not "interested persons"
of any Portfolio, as defined in the 1940 Act, have selected Peat Marwick as
independent certified public accountants for each Portfolio. See Proposal 2
above for a discussion and description of the services provided by such
auditors, the purpose of submitting such selection to investors in the
Portfolio for their ratification, the independence of the auditors and related
matters.
Proxies not limited to the contrary will be voted in favor of
authorizing the Trust to ratify the selection of Peat Marwick as the
independent certified public accountants for each Portfolio.
BOARD RECOMMENDATION AND REQUIRED VOTE
THE FUND TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF EACH FUND VOTE TO
AUTHORIZE THE TRUST TO RATIFY THE SELECTION OF PEAT MARWICK AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF EACH PORTFOLIO AT ITS MEETING
OF INVESTORS IN SUCH PORTFOLIO. With respect to each Portfolio, such
<PAGE>
ratification requires the affirmative vote of a majority of the beneficial
interests of the Portfolio cast with respect to Proposal 3(B) at the
Portfolio's meeting, provided a quorum is present. The Trust, on behalf of
the Funds, will cast its votes at a meeting of the holders of the beneficial
interests in each Fund's corresponding Portfolio on Proposal 3(B) in the
same proportions as the votes cast by each Fund's shareholders.
PROPOSAL 4: TO PERMIT THE MONEY MARKET FUND AND MONEY MARKET PORTFOLIO TO
INVEST IN OTHER MONEY MARKET FUNDS
The Boards of Trustees of the Trust and the Money Market Portfolio
propose the elimination of a fundamental investment policy (the "Policy") that
prohibits the Trust's Money Market Fund ("MMF") and its corresponding
Portfolio, the Money Market Portfolio ("MMP") from purchasing "the securities
of another investment company except where such purchase is part of a plan of
merger or consolidation" (and except for the permitted investment by the MMF
in the MMP).
Section 12 of the 1940 Act generally prohibits an investment company
such as MMF or MMP from (i) owning more than 3% of the total outstanding
voting stock of any other investment company, (ii) investing more than 5% of
its total assets in the securities of any one other investment company, and
(iii) investing more than 10% of its total assets (in the aggregate) in the
securities of other investment companies. Elimination of the Policy would make
the investment restrictions applicable to MMF and MMP co-extensive with the
provisions of the 1940 Act.
Rule 2a-7 under the 1940 Act prohibits investment companies from
holding themselves out as money market funds unless they meet, among other
things, specific portfolio composition requirements, including the types of
securities they may purchase, their quality, their liquidity and their
diversification. Together, Section 12 of and Rule 2a-7 under the 1940 Act
limit MMF and MMP to investment in money market instruments meeting the
requirements of Rule 2a-7 and prohibit their purchase of shares of non-money
market funds.
The reasons for the proposed change are: Management's objectives for
MMF and MMP include earning the highest possible yield consistent with the
quality, liquidity and diversification requirements applicable to money market
funds as referred to above. Management believes that it would be in the best
interests of shareholders to permit assets at times to be invested in other
money market funds. The nature of a money market fund is such that a certain
portion of its assets must be maintained in very liquid form, typically
through entering into overnight repurchase agreements. At times, higher yields
may be available through the purchase of shares of other money market funds,
but this is currently prohibited by the investment policy proposed for
elimination. In addition, there are also times, e.g., during rapidly rising
interest rate environments, when management wishes to maintain a relatively
short average maturity structure for the investment portfolio of MMP. The
ability to invest in other money market funds would permit MMP to receive
higher yields (from money market funds with longer average maturity
structures) while retaining the daily liquidity necessary to obtain new higher
rates that may become available in individual money market securities.
<PAGE>
BOARD RECOMMENDATION AND REQUIRED VOTE
THE FUND TRUSTEES AND THE PORTFOLIO TRUSTEES RECOMMEND APPROVAL OF
THE PROPOSED ELIMINATION OF THE POLICY. Such approval requires the affirmative
vote of a "majority of the outstanding voting securities" of each of MMF and
MMP, which term as used in this proxy statement means the vote of the lesser
of (a) more than 50% of the outstanding voting securities of each fund, or (b)
67% of the voting securities of a fund present at the meeting if the holders
of more than 50% of the outstanding voting securities are present or
represented by proxy at the meeting.
PROPOSAL 5: TO APPROVE A NEW COMPENSATION SCHEDULE FOR THE SUBADVISER TO THE
UTILITIES STOCK PORTFOLIO
The Total Return Utilities Fund ("TRUF") and its corresponding
Portfolio, the Utilities Stock Portfolio ("USP") were organized in 1994 with
R. Meeder & Associates, Inc. (the "Adviser") serving as investment adviser and
Miller/Howard Investments, Inc. (the "Subadviser") serving as subadviser to
USP. The Subadviser serves pursuant to an Investment Subadvisory Agreement
dated August 4, 1994 (the "Subadvisory Agreement") under which the Adviser,
not USP, pays the Subadviser a fee in an amount equal to 90% of the investment
advisory fees received by the Adviser under its investment advisory contract
with USP, provided that if a shareholder purchasing shares in the Fund was
solicited by the Adviser, the Subadviser's compensation is in an amount equal
to 60% of the investment advisory fees received by the Adviser with respect to
such shareholder. The Adviser is responsible for all investment advisory and
related services in accordance with its investment advisory contract with USP
and for supervising the Subadviser's performance of subadvisory services. The
Subadvisory Agreement provides that the Subadviser will furnish investment
advisory services in connection with the management of USP. In connection
therewith, the Subadviser is obligated to keep certain books and records of
USP.
The Subadvisory Agreement also provides that the Subadviser will not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of portfolio
transactions for USP, except a loss resulting from misfeasance, bad faith,
gross negligence or reckless disregard of duty. The Subadvisory Agreement
provides that it will terminate automatically if assigned, and that it may be
terminated by the Adviser without penalty to the Fund or USP by the Adviser,
the Trustees of USP or by the vote of a majority of the outstanding voting
securities of USP upon not less than 30 days' written notice. The Subadvisory
Agreement will continue in effect for a period of more than two years from its
date of execution only so long as such continuance is specifically approved at
least annually in conformity with the 1940 Act.
The Trustees of USP, with the consent of the Fund Trustees, have
approved a proposal by the Adviser and the Subadviser that the subadvisory fee
arrangement be modified to consist of a more conventional fee schedule based
on the assets of USP rather than the fee paid by USP to the Adviser.
Accordingly, the Trustees recommend that Article III, Compensation, of the
Subadvisory Agreement dated August 4, 1994 (the "Subadvisory Agreement")
<PAGE>
between the Adviser and the Subadviser be amended in its entirety to read as
follows:
For the services to be rendered by the Subadviser hereunder, the
Adviser shall pay to the Subadviser a fee, based on the value of the average
daily net assets of the Portfolio determined in accordance with the
Portfolio's Declaration of Trust, payable in monthly installments, and
computed as follows:
AVERAGE DAILY NET ASSETS FEE
------------------------ -----
First $10 million 0.00%
Next $50 million 0.40%
Next $40 million 0.30%
Over $100 million 0.25%
It is important to note that the proposed change would have NO EFFECT
on the investment advisory fee paid to the Adviser by USP (and indirectly by
TRUF). The advisory fee paid by USP to the Adviser will remain unchanged. Only
the portion of such fee passed along by the Adviser to the Subadviser would
change as described above. During the fiscal year ended December 31, 1996, USP
paid the Adviser an advisory fee of $65,190, of which $51,518 was allocated by
the Adviser to the Subadviser. All of such fees paid to the Adviser and such
amount allocated to the Subadviser were used to reimburse Fund operating
expenses of USP's feeder funds, TRUF and the Flex-Partners BTB Fund. Had the
proposed fee schedule been in effect during such period, the fee to the Adviser
would have been the same and the fee to the Subadviser would have been zero.
The Subadvisory Agreement was approved by the initial investors in USP on
March 1, 1995. The revised fee schedule is the only change proposed to be made
to the Subadvisory Agreement.
The Subadviser is a registered investment adviser which has been
providing investment services to broker-dealers, investment advisers, employee
benefit plans, endowment portfolios, foundations and other institutions and
individuals since 1984. As of December 31, 1996, the Subadviser held
discretionary investment authority over approximately $183 million of assets.
Lowell G. Miller and Helen Hamada who are, respectively, the Subadviser's
President, Secretary and a director and its Treasurer and a director, each own
more than 10% of the outstanding voting securities of the Subadviser. Mr.
Miller controls the Subadviser through his stock ownership. Miller/Howard is
also the sub-subadviser to a portion of the assets of the Growth Stock
Portfolio, another member of the Complex. Mr. Miller is the portfolio manager
primarily responsible for the day-to-day management of such assets and the
assets of USP. Mr. Miller has been associated with the Subadviser since 1984.
He is also a trustee and vice president of Flex-Partners and a nominee to
serve as a Fund Trustee and a Portfolio Trustee. The Subadviser's principal
executive offices are located at 141 Upper Byrdcliffe Road, Post Office Box
549, Woodstock, New York 12498.
BOARD RECOMMENDATION AND REQUIRED VOTE
THE FUND TRUSTEES AND THE PORTFOLIO TRUSTEES RECOMMEND APPROVAL OF
THE PROPOSED COMPENSATION SCHEDULE FOR THE SUBADVISER TO THE UTILITIES STOCK
PORTFOLIO. Such approval requires the affirmative vote of a "majority of the
<PAGE>
outstanding voting securities" as defined in the 1940 Act and described in
Proposal 4 of this proxy statement.
ADDITIONAL INFORMATION
PRINCIPAL UNDERWRITER
The Funds have no principal underwriter. As no-load funds they offer
their shares directly to the public without any sales charge.
BENEFICIAL OWNERS
[INFORMATION RE MORE THAN 5% SHAREHOLDERS AS OF RECORD DATE TO COME]
OTHER MATTERS
Neither the Trust nor any Fund holds annual shareholder meetings.
Shareholders of the Trust wishing to submit proposals for consideration in a
proxy statement for the next shareholders' meeting should send their written
proposals to the Trust at Post Office Box 7177, 6000 Memorial Drive, Dublin,
Ohio 43017, c/o Donald F. Meeder, Secretary/Treasurer.
The Trust's Annual Report has previously been delivered to
shareholders. A shareholder may obtain a copy of the Trust's most recent
annual and semi-annual reports upon written or oral request, without charge,
by contacting the Trust at the address shown in the preceding paragraph, or by
calling 800-325-3539.
The expense of the preparation, printing and mailing of the enclosed
proxy card(s), the notice of meeting and this proxy statement will be borne by
the Trust.
To obtain the necessary representation at the Meeting, supplementary
solicitations may be made by mail, telephone, or interview by officers or
employees of the Trust, the Adviser or the Trust's transfer agent, the cost of
which, it is anticipated, would be nominal. No business other than the matters
described above is expected to come before the Meeting, but should any matter
requiring a vote of shareholders arise, including any question as to an
adjournment or postponement of the Meeting, the persons named on the enclosed
proxy card(s) will vote thereon according to their best judgment in the
interests of the Trust and its Funds. In determining whether to adjourn the
Meeting, the following factors may be considered: the nature of the proposals
which are the subject of the Meeting, the percentage of votes actually cast,
the percentage of actual negative votes, the nature of any further
solicitation and the information to be provided to shareholders with respect
to the reasons for such solicitation.
SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD(S) AND RETURN SAME IN THE ENCLOSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES
IT IS IMPORTANT THAT PROXIES BE RETURNED
Dated: March 1, 1997
<PAGE>
FLEX PROXY CARDS
[MONEY MARKET FUND]
THE FLEX-FUNDS MONEY MARKET FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF THE FLEX-FUNDS (THE "TRUST") FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE MONEY MARKET FUND (THE "FUND") OF THE
TRUST.
The undersigned hereby appoints Robert S. Meeder, Sr., Donald F.
Meeder and Wesley F. Hoag, and each of them, proxies with full powers of
substitution, to vote as follows for the undersigned at the Special Meeting of
Shareholders of the Fund to be held at the offices of the Fund, 6000 Memorial
Drive, Dublin, Ohio 43017, on April 18, 1997 at 9:00 a.m., Notice of which
meeting and the accompanying Proxy Statement have been received by the
undersigned, or at any adjournment or postponement thereof, upon the following
Proposals relating to the Fund as described in said Notice and Proxy
Statement:
(1) TO ELECT ELEVEN FUND TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below)__ to vote for all nominees __
Robert S. Meeder, Sr., Milton S. Bartholomew, Roger D. Blackwell,
John M. Emery, Richard A. Farr, William L. Gurner, Russel G. Means,
Robert S. Meeder, Jr., Lowell G. Miller, Walter L. Ogle,
Philip A. Voelker
(INSTRUCTION: To withhold authority for any individual nominee, write
his name in the space provided below.)
--------------------------------------------------------------
(2) TO RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS
OF THE TRUST
FOR __ AGAINST __ ABSTAIN __
(3) TO AUTHORIZE THE TRUST TO VOTE AT A MEETING OF HOLDERS OF INTERESTS IN
THE FUND'S PORTFOLIO TO:
(A) ELECT ELEVEN PORTFOLIO TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below) __ to vote for all nominees __
(INSTRUCTION: The nominees are the same persons named above in
Proposal (1). To withhold authority for any individual nominee, write
his name in the space provided below.)
---------------------------------------------------------------
(B) RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS
OF THE FUND'S PORTFOLIO
FOR ___ AGAINST __ ABSTAIN __
(4) TO PERMIT THE FUND AND ITS PORTFOLIO TO INVEST IN OTHER
MONEY MARKET FUNDS
FOR __ AGAINST __ ABSTAIN __
(5) NOT APPLICABLE TO THE FUND
<PAGE>
[TOTAL RETURN UTILITIES FUND]
THE FLEX-FUNDS TOTAL RETURN UTILITIES FUND
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF THE FLEX-FUNDS (THE "TRUST") FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE TOTAL RETURN UTILITIES FUND (THE
"FUND") OF THE TRUST.
The undersigned hereby appoints Robert S. Meeder, Sr., Donald F.
Meeder and Wesley F. Hoag, and each of them, proxies with full powers of
substitution, to vote as follows for the undersigned at the Special Meeting of
Shareholders of the Fund to be held at the offices of the Fund, 6000 Memorial
Drive, Dublin, Ohio 43017, on April 18, 1997 at 9:00 a.m., Notice of which
meeting and the accompanying Proxy Statement have been received by the
undersigned, or at any adjournment or postponement thereof, upon the following
Proposals relating to the Fund as described in said Notice and Proxy
Statement:
(1) TO ELECT ELEVEN FUND TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below)__ to vote for all nominees __
Robert S. Meeder, Sr., Milton S. Bartholomew, Roger D. Blackwell,
John M. Emery, Richard A. Farr, William L. Gurner, Russel G. Means,
Robert S. Meeder, Jr., Lowell G. Miller, Walter L. Ogle,
Philip A. Voelker
(INSTRUCTION: To withhold authority for any individual nominee, write
his name in the space provided below.)
--------------------------------------------------------------
(2) TO RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS
OF THE TRUST
FOR __ AGAINST __ ABSTAIN __
(3) TO AUTHORIZE THE TRUST TO VOTE AT A MEETING OF HOLDERS OF INTERESTS IN
THE FUND'S PORTFOLIO TO:
(A) ELECT ELEVEN PORTFOLIO TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below) __ to vote for all nominees __
(INSTRUCTION: The nominees are the same persons named above in
Proposal (1). To withhold authority for any individual nominee, write
his name in the space provided below.)
---------------------------------------------------------------
(B) RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS OF THE
FUND'S PORTFOLIO
FOR ___ AGAINST __ ABSTAIN __
(4) NOT APPLICABLE TO THE FUND
(5) TO APPROVE A NEW COMPENSATION SCHEDULE FOR THE SUBADVISER TO THE FUND'S
PORTFOLIO
FOR __ AGAINST __ ABSTAIN __
<PAGE>
[HIGHLANDER, MUIRFIELD AND BOND FUNDS]
PROXY SOLICITED BY THE BOARD OF TRUSTEES OF THE FLEX-FUNDS (THE "TRUST") FOR A
SPECIAL MEETING OF SHAREHOLDERS OF THE TRUST'S FUND NAMED ON THE REVERSE
HEREOF (THE "FUND").
The undersigned hereby appoints Robert S. Meeder, Sr., Donald F.
Meeder and Wesley F. Hoag, and each of them, proxies with full powers of
substitution, to vote as follows for the undersigned at the Special Meeting of
Shareholders of the Fund to be held at the offices of the Fund, 6000 Memorial
Drive, Dublin, Ohio 43017, on April 18, 1997 at 9:00 a.m., Notice of which
meeting and the accompanying Proxy Statement have been received by the
undersigned, or at any adjournment or postponement thereof, upon the following
Proposals relating to the Fund as described in said Notice and Proxy
Statement:
(1) TO ELECT ELEVEN FUND TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below)__ to vote for all nominees __
Robert S. Meeder, Sr., Milton S. Bartholomew, Roger D. Blackwell,
John M. Emery, Richard A. Farr, William L. Gurner, Russel G. Means,
Robert S. Meeder, Jr., Lowell G. Miller, Walter L. Ogle,
Philip A. Voelker
(INSTRUCTION: To withhold authority for any individual nominee write
his name in the space provided below.)
--------------------------------------------------------------
(2) TO RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS
OF THE TRUST
FOR __ AGAINST __ ABSTAIN __
(3) TO AUTHORIZE THE TRUST TO VOTE AT A MEETING OF HOLDERS OF
INTERESTS IN THE FUND'S PORTFOLIO TO:
(A) ELECT ELEVEN PORTFOLIO TRUSTEES
FOR all nominees WITHHOLD AUTHORITY
(except as marked to the contrary below) __ to vote for all nominees __
(INSTRUCTION: The nominees are the same persons named above in
Proposal (1). To withhold authority for any individual nominee write
his name in the space provided below.)
---------------------------------------------------------------
(B) RATIFY SELECTION OF PEAT MARWICK AS ACCOUNTANTS
OF THE FUND'S PORTFOLIO
FOR ___ AGAINST __ ABSTAIN __
(4) AND (5) NOT APPLICABLE TO THE FUND
