THE MONEY MARKET FUND
ANNUAL REPORT 1997
[LOGO]
December 31, 1997
Investment Adviser - R. Meeder
<PAGE>
MONEY MARKET PORTFOLIO
Portfolio of Investments as of December 31, 1997
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 2.6%
BB&T Financial Corp. 5.70% 02/11/98 $15,000,000 $15,000,000
================================================================================
TOTAL CERTIFICATES OF DEPOSIT
(Cost $15,000,000 ) 15,000,000
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 45.1%
American Trading & Products** 5.75% 03/03/98 5,000,000 4,951,285
American Trading & Products** 5.75% 03/10/98 $9,000,000 $8,902,250
Bear Stearns Co., Inc.** 5.73% 03/25/98 25,000,000 24,669,729
Coopertime Tractor 5.57% 04/21/98 4,100,000 4,030,220
Duff & Phelps Utilities & Corp.** 5.70% 02/17/98 4,500,000 4,466,513
Duff & Phelps Utilities & Corp.** 5.55% 04/02/98 6,500,000 6,408,810
Duff & Phelps Utilities & Corp.** 5.58% 04/23/98 5,000,000 4,913,200
Duff & Phelps Utilities & Corp.** 5.56% 05/21/98 2,741,000 2,681,733
Duff & Phelps Utilities & Corp.** 5.65% 07/02/98 5,000,000 4,857,181
Engelhard Corp. 5.62% 06/09/98 7,435,000 7,250,451
Engelhard Corp. 5.70% 06/10/98 10,000,000 9,746,667
Ford Motor Credit Co. 5.47% 06/24/98 20,000,000 19,471,234
GE Capital Corp. 5.68% 02/19/98 15,000,000 14,884,033
GE Capital Corp. 5.56% 05/20/98 8,000,000 7,828,258
GTE Funding, Inc. 6.10% 01/20/98 24,822,000 24,742,087
LG&E Capital Corp. 5.60% 02/19/98 20,000,000 19,847,555
LG&E Capital Corp. 5.70% 04/01/98 5,700,000 5,618,775
LOCAP, Inc.** 5.70% 01/29/98 18,700,000 18,617,097
MCI Communications Corp.** 5.80% 04/15/98 14,500,000 14,257,044
Merrill Lynch & Co., Inc. 5.65% 05/27/98 10,000,000 9,770,861
Merrill Lynch & Co., Inc. 5.59% 06/02/98 15,000,000 14,645,967
Monsanto Co. 5.53% 04/27/98 10,000,000 9,821,811
Safeco Corp.** 5.57% 01/07/98 20,000,000 19,981,433
================================================================================
TOTAL COMMERCIAL PAPER
(Cost $262,364,194 ) 262,364,194
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 35.5%
AT&T Corp. 5.63% 04/08/98 3,893,000 3,889,653
Albertsons, Inc. 5.65% 03/26/98 1,000,000 999,554
American General Finance Corp. 8.25% 01/15/98 400,000 400,317
American General Finance Corp. 7.25% 03/01/98 5,295,000 5,306,059
Associates Corp., N.A. 7.30% 03/15/98 200,000 200,476
Associates Corp., N.A. 5.25% 09/01/98 180,000 179,007
Barnett Banks, Inc. 6.25% 07/28/98 1,500,000 1,503,172
Care Life Project 6.05%* 01/02/98 1,275,000 1,275,000
Chrysler Financial Corp. 5.66% 01/16/98 1,875,000 1,874,850
Chrysler Financial Corp. 8.26% 01/26/98 10,000,000 10,014,254
Chubb Capital Corp. 6.00% 02/01/98 663,000 662,983
Clark Grave Vault Co. 6.00%* 01/02/98 3,000,000 3,000,000
Comerica Bank 6.75% 05/12/98 4,000,000 4,013,379
Coughlin Family Properties, Inc. 6.00%* 01/15/98 4,675,000 4,675,000
Danis Construction Co. 6.00%* 01/02/98 1,000,000 1,000,000
Dean Witter Discover & Co. 6.00% 03/01/98 2,000,000 2,000,098
Doren, Inc. 6.05%* 01/02/98 675,000 675,000
E.I. du Pont de Nemours & Co. 8.50% 06/25/98 3,095,000 3,129,566
Espanola/Nambe 6.05%* 01/02/98 2,315,000 2,315,000
First Chicago NBD Corp. 5.70% 01/07/98 5,000,000 4,999,808
First Chicago NBD Corp. 8.50% 06/01/98 180,000 181,767
First Fidelity Bancorp. 8.50% 04/01/98 2,000,000 2,012,401
First Union Corp. 6.75% 01/15/98 6,219,000 6,220,662
Ford Motor Credit Co. 6.25% 02/26/98 938,000 938,472
Ford Motor Credit Co. 9.13% 05/01/98 550,000 555,647
General Motors Acceptance Corp. 6.22%* 04/13/98 10,000,000 10,000,000
General Motors Acceptance Corp. 7.13% 05/11/98 11,100,000 11,149,261
GTE California, Inc. 6.25% 01/15/98 1,500,000 1,500,218
Gannett, Inc. 5.25% 03/01/98 2,525,000 2,521,635
GE Capital Corp. 8.63% 03/12/98 5,203,000 5,228,186
Georgia Power Co. 5.50% 04/01/98 1,000,000 999,112
Goldman Sachs Group, L.P. 6.10% 04/15/98 7,550,000 7,554,539
H.J. Heinz Co. 8.00% 01/05/98 5,130,000 5,130,626
Hancor, Inc. 6.05%* 01/02/98 700,000 700,000
Hertz Corp. 8.30% 02/02/98 200,000 200,393
Huntington Bancshares, Inc. 5.91% 06/23/98 5,000,000 5,001,908
Huntington Bancshares, Inc. 6.15% 10/15/98 2,000,000 2,003,222
IBM Credit Corp. 5.90% 08/10/98 2,050,000 2,050,041
Lehman Brother Holdings Corp. 5.75% 02/15/98 1,250,000 1,249,434
Liberty Mutual Capital Corp. 5.96% 06/01/98 7,000,000 7,002,592
Merrill Lynch & Co., Inc. 6.52% 06/22/98 1,000,000 1,002,838
<PAGE>
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
Midwest Power System, Inc. 6.25% 02/01/98 1,750,000 1,750,325
Morgan Stanley, Inc. 9.25% 03/01/98 1,750,000 1,758,938
Morgan Stanley, Inc. 9.40% 03/05/98 1,000,000 1,006,101
Mubea, Inc. 6.05%* 01/02/98 4,375,000 4,375,000
Mubea, Inc. 6.05%* 01/02/98 6,000,000 6,000,000
National Rural Utilities 8.50% 02/15/98 125,000 125,345
NationsBank Corp. 6.63% 01/15/98 615,000 615,143
Nordstrom, Inc. 8.88% 02/15/98 1,000,000 1,003,462
Nynex Credit Co. 6.72% 06/15/98 10,000,000 10,034,980
Osco Industries, Inc. 6.05%* 01/02/98 3,000,000 3,000,000
Pepsico, Inc. 6.13% 01/15/98 283,000 283,025
Potomac Electric Power Co. 4.38% 02/15/98 100,000 99,807
Presrite Corp. 6.05%* 01/02/98 2,210,000 2,210,000
Proctor & Gamble Co. 9.50% 02/11/98 4,450,000 4,465,491
R.I. Lampus Co. 6.05%* 01/02/98 2,440,000 2,440,000
RSD Technology 6.05%* 01/02/98 3,500,000 3,500,000
Salomon, Inc. 6.92% 04/14/98 3,550,000 3,559,833
Salomon, Inc. 7.25% 05/01/98 2,035,000 2,043,998
Seariver Maritime, Inc. 5.65%* 02/12/98 6,700,000 6,700,000
Southern California Edison Co. 5.88% 02/01/98 600,000 599,955
Surgery Financing Co. 6.05%* 01/12/98 6,585,000 6,585,000
Toyota Motor Corp. 5.63% 03/17/98 2,407,000 2,405,639
Toyota Motor Credit Corp. 5.13% 01/19/98 2,255,000 2,254,036
Toyota Motor Credit Corp. 5.88% 06/26/98 803,000 802,610
Travelers Group, Inc. 5.75% 04/15/98 1,500,000 1,499,727
Unilever Capital Corp. 8.88% 03/26/98 1,400,000 1,408,965
WalMart Stores, Inc. 7.00% 04/27/98 1,100,000 1,103,000
White Castle Project 6.05%* 01/02/98 9,500,000 9,500,000
Wisconsin Public Service Corp. 5.25% 07/01/98 320,000 319,019
================================================================================
TOTAL CORPORATE OBLIGATIONS
(Cost $206,765,529 ) 206,765,529
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.4%
Federal National Mortgage Assoc. 5.73% 04/13/98 500,000 499,519
Federal National Mortgage Assoc. 6.72% 04/27/98 140,000 140,398
Federal Home Loan Bank 6.00% 01/13/98 200,000 199,977
Federal Home Loan Bank 5.85% 10/15/98 2,785,000 2,785,000
Student Loan Marketing Assoc. 5.62%* 01/06/98 5,000,000 5,000,000
Student Loan Marketing Assoc. 5.68%* 01/06/98 4,350,000 4,352,319
Student Loan Marketing Assoc. 5.76% 01/14/98 1,000,000 999,913
Tennessee Valley Authority -
callable 1/20/98 @ 104 7.75% 12/15/22 250,000 260,125
================================================================================
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $14,237,251 ) 14,237,251
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 1.7%
***U.S. Treasury Bill 5.27% 01/08/98 63,100 63,036
U.S. Treasury Note 6.00% 09/30/98 10,000,000 10,019,615
================================================================================
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,082,651 ) 10,082,651
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.7%
Merrill Lynch, (Collateralized
by $65,582,000 various Discount
Commercial Papers, 1/7/98-1/30/98,
market value - $65,582,000) 6.80%* 01/02/98 64,413,000 64,413,000
Star Bank, (Collateralized by
$9,615,000 GNMA, 7.00%, 3/20/24,
market value - $9,835,784) 5.50%* 01/02/98 9,635,000 9,635,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $74,048,000 ) 74,048,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $582,497,625 ) $582,497,625
- --------------------------------------------------------------------------------
* Variable rate security. Interest rate is as of December 31, 1997. Maturity
date reflects the next rate change date.
** Security is restricted as to resale to institutional investors, but has been
deemed liquid in accordance with guidelines approved by the Board of Trustees.
***Pledged as collateral on Letter of Credit.
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
MONEY
MARKET
FUND
- ------------------------------------------------------------------------
Assets:
Investment in corresponding portfolio at value $169,269,183
Receivable for capital stock issued ---
Unamortized organization costs ---
Other assets 85,894
Total Assets 169,355,077
========================================================================
Liabilites:
Payable for capital stock redeemed ---
Dividends payable 6,915
Accrued 12b-1 distribution fees ---
Accrued transfer agent and administrative fees 7,365
Other accrued liabilities 5,923
Total Liabilities 20,203
========================================================================
Net Assets 169,334,874
========================================================================
Net Assets:
========================================================================
Capital 169,334,874
Accumulated undistributed net realized
gain (loss) from investments ---
Net unrealized appreciation of investments ---
Net Assets $169,334,874
========================================================================
Capital Stock Outstanding 169,334,874
(indefinite number of shares authorized,
$0.10 par value)
Net Asset Value, Offering and
Redemption Price Per Share $1.00
- ------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
MONEY
MARKET
FUND
- -------------------------------------------------------------------------
Net Investment Income from Corresponding Portfolio:
=========================================================================
Interest $7,911,734
Dividends ---
Expenses (257,032)
Total Net Investment Income from Corresponding Portfolio 7,654,702
=========================================================================
Fund Expenses:
=========================================================================
Administrative fee 64,760
Transfer agent fees 107,918
Audit fees 3,506
Legal fees 3,150
Printing 33,714
Amortization of organizational costs ---
Distribution plan 106,810
Postage 32,771
Registration and filing fees 12,289
Insurance 2,162
Other expenses 28,264
Total Expenses 395,344
=========================================================================
Expenses reimbursed by investment adviser (92,400)
Net Expenses 302,944
=========================================================================
NET INVESTMENT INCOME 7,351,758
=========================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
=========================================================================
Net realized gains (losses) from futures contracts ---
Net realized gains (losses) from investments ---
Net change in unrealized appreciation
of investments ---
NET GAIN (LOSS) FROM INVESTMENTS ---
=========================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $7,351,758
=========================================================================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 and DECEMBER 31, 1996
1997 1996
- ---------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
===========================================================================
OPERATIONS:
===========================================================================
Net investment income $7,351,758 $8,138,831
Net realized gain (loss) from investments
and futures contracts --- ---
Net change in unrealized appreciation/
(depreciation) of investments --- ---
Net increase in net assets
resulting from operations 7,351,758 8,138,831
===========================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (7,351,758) (8,138,831)
Net realized gain from investments
and futures contracts --- ---
Net decrease in net assets resulting
from dividends and distributions (7,351,758) (8,138,831)
===========================================================================
CAPITAL TRANSACTIONS:
Issued 440,552,839 389,806,633
Reinvested 7,195,653 7,883,875
Redeemed (398,361,115) (418,830,047)
Net increase (decrease) in net assets
resulting from capital share transactions 49,387,377 (21,139,539)
TOTAL INCREASE (DECREASE) IN NET ASSETS 49,387,377 (21,139,539)
===========================================================================
NET ASSETS - Beginning of period 119,947,497 141,087,036
NET ASSETS - End of period $169,334,874 $119,947,497
===========================================================================
SHARE TRANSACTIONS:
Issued 440,552,839 389,806,633
Reinvested 7,195,653 7,883,875
Redeemed (398,361,115) (418,830,047)
Change in shares 49,387,377 (21,139,539)
- ---------------------------------------------------------------------------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
Years Ended December 31,
-----------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income 0.053 0.05 0.06 0.04 0.03 0.04
Total From Investment Operations 0.053 0.05 0.06 0.04 0.03 0.04
Less Distributions
Dividends (from net investment income) (0.053) (0.05) (0.06) (0.04) (0.03) (0.04)
Total Distributions (0.053) (0.05) (0.06) (0.04) (0.03) (0.04)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return 5.38% 5.27% 5.85% 4.10% 2.98% 3.70%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $169,335 $119,947 $141,087 $164,838 $200,030 $245,259
Ratio of Expenses to Average Net Assets 0.40% 0.40% 0.40% 0.37% 0.37% 0.35%
Ratio of Net Investment Income to
Average Net Assets 5.26% 5.15% 5.70% 4.02% 2.94% 3.68%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.59% 0.58% 0.64% 0.57% 0.57% 0.56%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(1) 5.07% 4.97% 5.46% 3.82% 2.74% 3.47%
<FN>
(1) Includes fees waived in corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. ORGANIZATION
The Money Market Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The Portfolio is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio.
The investment objective of the Money Market Portfolio is to seek current income
and stable net asset values through investment in a portfolio of money market
instruments. The financial statements of the Fund are included elsewhere in this
report.
2. SIGNIFICANT ACCOUNTING POLICIES
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 Portfolio are valued at amortized cost,
which approximates market value.
Repurchase Agreements
The Portfolio may engage in repurchase agreement transactions whereby the
Portfolio takes possession of an underlying debt instrument subject to an
obligation of the seller to repurchase the instrument from the Portfolio and an
obligation of the Portfolio to resell the instrument at an agreed upon price and
term. At all times, the Portfolio maintains the value of collateral, including
accrued interest, at least 100% of the amount of the repurchase agreement, plus
accrued interest. If the seller defaults or the fair value of the collateral
declines, realization of the collateral by the Portfolios may be delayed or
limited.
Income Taxes
It is the Portfolio's 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 the Portfolio have been deferred and
are being amortized by the Portfolio on a straight-line basis over a five-year
period. Such costs have been fully amortized.
Securities Transactions
The Portfolio records security transactions on the trade date. Interest income
(including amortization of premium and accretion of discount) is recognized as
earned.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services. For such services the Portfolio pays monthly
a fee at the following annual rates: 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the year ended December 31, 1997, RMA voluntarily waived a portion of its
investment advisory fees in the Portfolio.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for the Portfolio. In compensation for such services
the Portfolio pays MFSCo an annual fee equal to the greater of: (a.) 0.15% of
the first $10 million of average daily net assets, 0.10% of the next $20 million
of average daily net assets, 0.02% of the next $50 million of average daily net
assets, and 0.01% in excess of $80 million of average daily net assets, or (b.)
$30,000.
Certain officers and trustees of the Portfolio are also officers or directors of
MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
As of December 31, 1997, the aggregate cost basis of investments for Federal
income tax purposes was $582,497,625.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Flex-funds:
We have audited the accompanying statement of assets and liabilities of The
Flex-funds -- The Money Market Fund (Fund) as of December 31, 1997, and the
related statement 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 Fund's
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. 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
Flex-funds -- The Money Market Fund at December 31, 1997, the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 12, 1998
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
MONEY
MARKET
PORTFOLIO
Assets:
Investments at market value* $508,449,625
Repurchase agreements, at cost* 74,048,000
Cash 551
Options purchased (cost $27,378,320) ---
Receivable for net variation margin on
futures contracts ---
Interest receivable 5,477,161
Dividends receivable ---
Prepaid/Other assets 2,005
Unamortized organization costs ---
Total Assets 587,977,342
=============================================================
Liabilites:
Payable for securities purchased 261,255
Payable for net variation margin on futures
contracts ---
Options written (premiums received $19,383,673) ---
Payable to investment adviser 78,989
Accrued audit fees 10,852
Accrued custodian fees 5,729
Accrued trustee fees 2,369
Accrued fund accounting fees 8,656
Other accrued liabilities 2,753
Total Liabilities 958,695
=============================================================
Net Assets 587,018,647
=============================================================
Net Assets:
=============================================================
Capital 587,018,647
Net unrealized appreciation (depreciation) of
investments
Net Assets $587,018,647
=============================================================
*Securities at cost 582,497,625
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
MONEY
MARKET
PORTFOLIO
NET INVESTMENT INCOME
===========================================================
Interest $29,260,441
Dividends ---
Total Investment Income 29,260,441
===========================================================
Expenses:
===========================================================
Investment advisory fees 1,436,168
Audit fees 14,851
Custodian fees 36,718
Trustees fees and expenses 7,762
Legal fees 3,307
Amortization of organization cost 2,545
Accounting fees 89,048
Insurance 5,027
Other expenses 11,241
Total Expenses 1,606,667
===========================================================
Investment advisory fees waived (661,390)
Directed brokerage payments received ---
Total Net Expenses 945,277
===========================================================
NET INVESTMENT INCOME 28,315,164
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
===========================================================
Net realized gain from futures contracts ---
Net realized gain (loss) from investments ---
Net change in unrealized appreciation
(depreciation) of investments ---
NET GAIN (LOSS) ON INVESTMENTS ---
===========================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $28,315,164
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
1997 1996
INCREASE (DECREASE) IN NET ASSETS:
===============================================================================
OPERATIONS:
===============================================================================
Net investment income $28,315,164 $19,455,266
Net realized gain (loss) from investments
and futures contracts --- ---
Net change in unrealized appreciation
(depreciation) of investments --- ---
Net increase in net assets
resulting from operations 28,315,164 19,455,266
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
===============================================================================
Contributions 3,784,994,914 1,414,075,891
Withdrawals (3,579,221,656)(1,335,249,306)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests 205,773,258 78,826,585
TOTAL INCREASE (DECREASE) IN NET ASSETS 234,088,422 98,281,851
===============================================================================
NET ASSETS - Beginning of period 352,930,225 254,648,374
NET ASSETS - End of period $587,018,647 $352,930,225
<TABLE>
MONEY MARKET PORTFOLIO
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $587,019 $352,930 $256,126 $224,523 $200,148
Ratio of Expenses to Average Net Assets 0.18% 0.19% 0.21% 0.19% 0.19%
Ratio of Net Investment Income to
Average Net Assets 5.47% 5.34% 5.87% 4.28% 3.09%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.31% 0.33% 0.37% 0.39% 0.40%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 5.34% 5.20% 5.70% 4.08% 2.88%
</TABLE>
See accompanying notes to financial statements
<PAGE>
Notes to Financial Statements
December 31, 1997
1. ORGANIZATION
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Trust offers five separate series,
and it is presently comprised of five separate funds including The Money Market
Fund (the "Fund"). The Fund invests all of its investable assets in a
corresponding open-end management investment company (the "Portfolio") having
the same investment objective as the Fund. The Fund, the Portfolio into which
the Fund invests and the percentage of the Portfolio owned by the Fund is as
follows:
FUND PORTFOLIO PERCENTAGE OF PORTFOLIO OWNED
BY FUND AS OF DECEMBER 31, 1997
The Money Market Fund Money Market Portfolio 29%
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the 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
The Fund values its investment in the corresponding Portfolio at fair value.
Valuation of securities held by the Portfolio is further described at Note 2 of
the Portfolio's Notes to Financial Statements which are included elsewhere in
this report.
Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income and net capital gains
to its shareholders. Therefore, no Federal income tax provision is required.
Distributions to Shareholders
The Fund declares dividends from net investment income on a daily basis and pays
such dividends on a monthly basis. The Fund distributes net capital gains, if
any, on an annual basis. Distributions from net investment income and from net
capital gains are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Permanent book and tax
basis differences have been reclassified among the components of net assets.
Organizational Costs
The costs related to the organization of the Fund have been deferred and are
being amortized on a straight-line basis over a five-year period. Such costs
have been fully amortized.
Expenses
Expenses incurred by the Trust that do not specifically relate to an individual
Fund of the Trust are allocated to the Funds based on each Fund's relative net
assets or other appropriate basis. The Fund records daily its proportionate
share of the Portfolio's income and expenses.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for the Fund.
Subject to a $4,000 minimum, the Fund pays MFSCo an annual fee equal to the
greater of $20 per active shareholder account or 0.06% of the Fund's average
daily net assets.
MFSCo provides the Trust with certain administrative services. In compensation
for such services, the Fund pays MFSCo an annual fee equal to 0.05% of the
Fund's average daily net assets. Prior to January 31, 1997, such fees were
payable at an annual rate of 0.03% of average daily net assets.
RMA has voluntarily agreed to reimburse operating expenses of the Fund. For the
year ended December 31, 1997, such reimbursements including fees waived in the
corresponding portfolio were 0.19% of average daily net assets of the Fund. Such
reimbursement, which is subject to change, is limited to the total of fees
charged the Fund by RMA.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted a Distribution Plan (the
"Plan"). Under the provisions of the Plan, the Fund may incur certain expenses
associated with the distribution of fund shares in amounts not to exceed an
annual limitation. Such limitation, on an annual basis, is 0.20% of the average
daily net assets of the Fund.
Certain officers of the Fund and trustees of the Trust and the Portfolio are
also officers or directors of MII, RMA and MFSCo.
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Trustees
The Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio (Portfolio), including the schedule of portfolio
investments, as of December 31, 1997, and the related statement 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 Portfolio's 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, 1997, by confirmation with the custodian and brokers 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
Money Market Portfolio at December 31, 1997, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
indicated herein, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 12, 1998
