THE FLEX-PARTNERS THE FLEX-PARTNERS
1998 SEMI-ANNUAL REPORT P.O. Box 7177
Dublin, Ohio 43017
800-494-3539
INSIDE
------
Performance Table
[PHOTO] Hands Shaking page 2
Meet John Q. Investor
page 3
Letter to Shareholders
page 5
Core Equity Fund
page 7
Utility Growth Fund
page 8
Investment Adviser: R. Meeder & Associates
Tactical Asset Allocation Fund
page 9
Distributor: Adviser Dealer Services, Inc.
International Equity Fund
page 10
1998 Semi-Annual Financial
Statements
page 11
<PAGE>
PERFORMANCE TABLE
<TABLE>
<CAPTION>
PERIOD AND AVERAGE
ANNUAL TOTAL RETURNS THE TACTICAL ASSET INTERNATIONAL
BEFORE DEDUCTION OF SALES CHARGES CORE EQUITY FUND UTILITY GROWTH FUND ALLOCATION FUND EQUITY FUND
AS OF 6/30/98 CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A
- ------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Year to date 15.39% 15.09% 6.44% 6.34% 5.97% 5.88% 15.27%
1 year n/a n/a 29.80% 29.76% 8.78% 8.85% n/a
2 years n/a n/a 21.15% 21.05% n/a 11.01% n/a
Life of Fund 17.70%(1) 17.25%(1) 21.23%(2) 21.07%(2) 15.24%(3) 14.08%(3) 12.32%(4)
</TABLE>
<TABLE>
<CAPTION>
PERIOD AND AVERAGE
ANNUAL TOTAL RETURNS THE TACTICAL ASSET INTERNATIONAL
NET OF SALES CHARGES CORE EQUITY FUND UTILITY GROWTH FUND ALLOCATION FUND EQUITY FUND
AS OF 6/30/98 CLASS A(5)CLASS C(6) CLASS A(5) CLASS C(6) CLASS A(5) CLASS C(6) CLASS A(5)
- ------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Year to date 10.76% 13.59% 2.20% 4.84% 1.74% 4.38% 10.64%
1 year n/a n/a 24.59% 28.26% 4.46% 7.59% n/a
2 years n/a n/a 18.68% 21.05% n/a 11.01% n/a
Life of Fund 13.00%(1) 15.75%(1) 19.58%(2) 21.07%(2) 12.81%(3) 14.08%(3) 7.83%(4)
<FN>
1 Core Equity Fund Inception Date for Class A and C shares 8/1/97.
2 Utility Growth Fund Inception Date for Class A and C shares 7/11/95.
3 Tactical Asset Allocation Fund Inception Date for Class A shares 8/1/96. For
Class C shares, 6/1/95.
4 International Equity Fund Inception Date for Class A shares 9/2/97.
5 Reflects deduction of 4.00% maximum sales charges.
6 Reflects deduction of contingent sales charges, when applicable.
</FN>
</TABLE>
PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. All performance figures
represent total returns and average annual total returns for the periods ended
6/30/98. Investment performance represents total return and assumes reinvestment
of all dividend and capital gain distributions. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. The
Investment Adviser waived a portion of its management fees and/or reimbursed
expenses in order to reduce the operating expenses for each of the funds during
the periods shown above. For more information regarding any of the Flex-Partners
funds, call or write for a free prospectus. Please read the prospectus carefully
before investing. The Flex-Partners Funds are distributed by Adviser Dealer
Services Inc., which is affliated with The Flex-Partners.
The Flex-Partners 1998 Semi-Annual Report * page 2
<PAGE>
MEET JOHN Q. INVESTOR
Like many individual investors, he gets market information from the financial
press and the nightly news. On any given day, he could tell you how the Dow was
doing and where interest rates were headed. But it took a lesson in history
before John became a wise and knowledgeable investor. Here is his story.
"Four years ago," John says, "everyone was talking emerging markets. Twenty-,
thirty-, even forty-percent returns were being had, while the S&P 500 could
barely keep ahead of inflation.
"So at the beginning of 1995, I sold shares in my large-cap growth fund, and
bought shares in a hot emerging markets fund. By the end of 1997, my investment
had lost money, and I missed out on the gains made by the U.S. stock market
during that time.
"Now I know I should not have made my investment decision based on past
performance. Today, I am a better investor because of it."
John's story, although hypothetical, is not unusual. Almost 3 out of every 4
investors choose a fund based only on short-term performance* -- not the best
strategy to follow when planning your financial future.
Although analysts frequently cite historical figures to backup their theories
about market movements, there is no guarantee that a rising market will continue
to rise, year after record-breaking year. In fact, it is more likely a market
that posts gains over an extended period will not show similar results over the
next.
To demonstrate this point, consider the chart below. The numbers in the first
column represent the average annual total return of five diverse market indexes
for the years 1992 through 1994. Based on this information, in which market do
you think John Q. Investor would have invested his money? And in which market
would you have invested your money?
Turn to the next page to see how the market indexes performed over the next
three year period.
AVERAGE ANNUAL TOTAL RETURNS FOR 3-YEAR CYCLES
1992-1994 1995-1997 Index
- --------- --------- -----
18.3%
10.3%
7.9%
6.3%
4.6%
* FINANCIAL NEWS THIS WEEK, July 6, 1998. Published by Standard & Poor's
Published Image.
The Flex-Partners 1998 Semi-Annual Report * page 3
<PAGE>
MEET JOHN Q. INVESTOR Continued from page 3
AVERAGE ANNUAL TOTAL RETURNS FOR 3-YEAR CYCLES
1992-1994 1995-1997 Index
- --------- --------- -----
18.3% -7.6% MSCI Emerging Markets Index
10.3% 22.5% Real Estate Investment Trust Index
7.9% 6.3% MSCI Europe Asia Far East Index
6.3% 31.1% Standard & Poors 500 Index
4.6% 10.4% Lehman Bros. Aggregate Bond Index
Maybe you are surprised to learn that an index that has performed so well as of
late, like the S&P 500, was among the worst performing indexes only four years
earlier.
This demonstrates the point perfectly -- past performance does not guarantee
future results, and an investment strategy that chases past performance will not
always result in similar gains.
If you were chasing past performance at the end of 1994, you may have shifted
your investments to emerging markets, noting that the incredible 18.3% average
annual return of the MSCI Emerging Market Index beat the S&P 500's 6.3% average
annual return. If you had done so, you would have missed the bull run mounted by
large-cap issues in the U.S. stock market since that time, and your investment
in emerging markets may have actually lost money during the dismal performance
between 1995 and 1997.
Does this mean you should shift your investments now, out of U.S. stock funds
and into emerging market funds? Not exactly.
As a fund investor, your best strategy is to look beyond the annual returns,
into the fine print of the prospectus. Read beyond the performance charts, to
find out what is the fund's investment strategy, where are the market risks, and
who is the manager behind the fund.
Also, understand that many investment markets go through cycles of bullishness
and bearishness. If one market or fund posts stellar returns this year, don't
expect a command performance the next. If your goals are long-term, be prepared
to stick with your investment through the sluggish periods, in order to reap the
benefits of multi-year growth.
MOST IMPORTANTLY, KNOW YOUR OWN INVESTMENT OBJECTIVE AND TOLERANCE FOR RISK,
THEN FIND A FUND THAT IS CONSISTENT WITH YOUR OBJECTIVE AND STYLE.
By chasing the prevailing winds of performance, your investment strategy may
fall short of your financial expectations. Shifting your investments from fund
to fund may result in diminished returns, as hot markets quickly grow cold and
short-term gains may be dramatically reduced by increased taxes.
Philosopher George Santayana said more than a century ago, "Those who do not
remember the past are condemned to repeat it." He was speaking, of course, about
history. But just like John Q. Investor, everyone could use a history lesson
about the nature of change in the financial markets.
The Flex-Partners 1998 Semi-Annual Report * page 4
<PAGE>
LETTER TO SHAREHOLDERS
[PHOTO] Robert S. Meeder, Chairman
Dear Shareholders: July 21, 1998
The stock market has forged ahead to historically high values, and long term
interest rates have reached record lows. The second quarter of 1998 gave
investors a much needed pause after the first quarter's meteoric rise, when most
market averages recorded modest gains. But during the first twenty calendar days
of July, the percentage gain of the S&P 500, the Dow Jones Industrial Average,
and the Nasdaq exceeded the results of all ninety days of the second quarter.
(The Nasdaq alone added a 6.3% gain!)
Several years ago, I had a conversation with a respected market analyst which
bears some relevance today. We were discussing a recent market rally when he
said, "The rise in the market is significant, but how it got there may be more
important," ... meaning ... was it a broad based rally with good volume
statistics?
A current observation of "how it got there" was addressed in a recent article in
Barron's: "To illustrate," the author stated, "four equities -- Microsoft,
Intel, Cisco, and Dell -- represent 25% or $566 billion of the Nasdaq composite
index. That means the other 75% of the value of the composite is accounted for
by no less than 5,422 stocks."
A second Barron's article noted that three of these high tech market favorites
- -- Cisco, Dell, and Microsoft -- were responsible for 51% of the increase in the
Nasdaq's value for the last three years. The extent of their appreciation this
year is best illustrated by reviewing each equity's percentage gain and
price/earnings ratio estimated for this calendar year (as of 7/17/98):
EQUITY P/E RATIO % GAIN (YEAR TO DATE, AS OF 7/17/98)
- ------ --------- ------------------------------------
Dell Computer 58 171%
Microsoft 58 81%
Cisco Systems 51 71%
The point is, the advance in the market over the last six to twelve months has
become more selective as time has passed. This condition of narrow leadership
tends to develop high valuation in the few market favorites. Unless the rest of
the market can catch up, the eventual result is a vulnerable market. So far, the
catch-up has not occurred -- just the opposite is happening.
How high will this market go? Obviously, no one really knows. But at some point
in the future, most everyone will say in hindsight the market was tremendously
overvalued and a decline to more "normal levels" was inevitable.
In my previous letter to shareholders, I referred to an upcoming capability for
shareholders to access account balance information, including recent deposits,
redemptions, distributions, and share prices via The Flex-Partners Voice
Response Line. That has not happened yet, but we expect it will on or about
The Flex-Partners 1998 Semi-Annual Report * page 5
<PAGE>
October 1st. We are converting to a new record keeping software package, and we
elected to delay implementation of the Voice Response System until the new
record keeping system is installed. By the way, you will be pleased to know that
our new record keeping system is Year 2000 compliant.
Over the last few years, The Flex-Partners have contracted with well known
national and international investment managers, to expand our mutual fund
offerings. The Board is very pleased with the investment results provided by our
new partners, and we encourage you to investigate their strategies and
investment returns. The Utility Growth Fund, the Core Equity Fund, and our most
recent offering to our shareholders, the International Equity Fund, affords you
the opportunity to expand your investment horizon with experienced and
successful portfolio managers.
Please read the enclosed progress reports from our fund managers for in-depth
market and performance perspective. For more information on any fund in The
Flex-Partners family, call our shareholder services number at 1-800-325-3539,
and our friendly associates will make sure you receive the information you seek.
Cordially,
/s/ Robert S. Meeder
Robert S. Meeder
Chairman
The Flex-Partners 1998 Semi-Annual Report * page 6
<PAGE>
<PAGE>
The Flex-Partners Semi-annual Report * June 30th, 1998
CORE EQUITY FUND
[PHOTO] William L. Gurner, Portfolio Manager
For the first half of 1998, the Core Equity Fund outperformed the Morningstar
average growth fund with a six-month total return before the deduction of sales
charges of 15.39 for Class A shares and 15.09% for Class C shares. Each share
class bested the 13.66% Morningstar average total return for growth funds
through June 30, 1998.
MARKET PERSPECTIVE
The Core Equity Fund allocates its assets into 10 distinct industry sectors,
closely weighted to the respective sectors of the S&P 500. Investment managers
who are "sector specialists" are then utilized to manage the 10 distinct
sectors. Each sector specialist's goal is to outperform their S&P 500 sector
benchmark.
The following table illustrates each sector manager's performance versus their
respective S&P 500 sector performance for the first six months of 1998.
SECTOR The Highlands S&P SECTOR The Highlands S&P
Sector Manager Growth Fund 500 Sector Manager Growth Fund 500
- -------------- ----------- --- -------------- ----------- ---
CONSUMER DURABLES CONSUMER NON-DURABLES
Barrow-Hanley 32.02% 34.27% Barrow-Hanley 7.81% 13.41%
TECHNOLOGY MATERIALS & SERVICES
RCM 28.38% 26.31% Ashland 11.95% 10.79%
HEALTH CONSUMER GOODS
Alliance 24.82% 25.86% Hallmark 13.18% 15.83%
ENERGY FINANCE
Mitchell 2.85% 5.25% Delta Capital 15.99% 16.51%
TRANSPORTATION UTILITIES
Miller/Howard 2.65% 1.65% Miller/Howard 14.11% 12.00%
Through the first half of 1998, the stock market was performing to our
expectations. Large-cap stocks continued to advance during the second quarter
before corrections in several market sectors affected the market as a whole. By
the end of June, however, the market had achieved modest gains, thanks in part
to a slight recovery at the end of the quarter.
During the second quarter, we saw a bull market and a bear market at the same
time. Stocks with less earnings momentum were doing better than quality stocks
and equities with better earnings potential.
It looks as if the market may remain choppy through the second half of 1998. The
momentum shifts so quickly that a long-term investor should hold those quality
names that will do well in the long run.
PERIOD AND AVERAGE SECTOR WEIGHTINGS (6/30/98)
ANNUAL TOTAL RETURNS ---------------------------
before deduction of sales charges [GRAPH] The following was
as of 6/30/98 presented as a pie
CLASS A CLASS C chart:
Year to Date 15.39% 15.09%
Life of Fund(1) 17.70% 17.25% S&P 500 Futures 21.1%
Technology 14.1%
Finance 13.4%
PERIOD AND AVERAGE Consumer Nondurables 11.9%
ANNUAL TOTAL RETURNS Health 9.5%
net of sales charges Transportation 7.5%
as of 6/30/98 Energy 6.4%
CLASS A(2) CLASS C(3) Consumer Durables 6.4%
Year to Date 10.76% 13.59% Materials & Services 5.1%
Life of Fund(1) 13.00% 15.75% Capital Goods 3.9%
Utilities 0.8%
(1) Class A and C shares inception date 8/1/97.
(2) Results reflect the maximum 4.00% sales charge.
(3) Results reflect applicable contingent deferred sales charge.
See page 2 for more fund performance information.
The Flex-Partners 1998 Semi-Annual Report * page 7
<PAGE>
The Flex-Partners Semi-Annual Report * June 30th, 1998
UTILITY GROWTH FUND
[PHOTO] Lowell G. Miller, Portfolio Manager
During the first half of 1998, the Utility Growth Fund lagged behind the average
utility fund, due to slight underperformance of some of our major holdings.
However, for the 12 months ended June 30, 1998, the total annual returns of both
Class A and C shares before the deduction of sales charges, 29.80% and 29.76%
respectively, remain ahead of the 25.38% Morningstar average total return for
utility sector funds.
Since the Fund's inception in 1995, it has provided a cumulative total return
before deduction of sales charges of 77.18% for Class A shares and 76.49% for
Class C shares, which equates to an average annual total return of 21.23% for
Class A shares and 21.07% for Class C shares.
MARKET PERSPECTIVE
After recording competitive results during the first quarter of 1998,
profit-taking and other circumstances caught up with the Utility Growth Fund
during the three months that ended June 30, 1998. In comparison, the Dow Jones
Utilities Average did well during the second quarter, largely because the index
is heavily weighted in favor of large-cap, nuclear-based electric utility
companies, just the sort of stock we do not own and never will.
Even though most of the Fund's portfolio is domestic, it was nicked by Asian
concerns and currency weaknesses. During the second quarter of 1998, for
instance, New Zealand Telecom (1.18% of the Fund's portfolio) lost 17.55%, while
Hong Kong Telecom (2.48% of portfolio) dropped 9.6%. Because some traders tend
to lump all non-Western companies in the same basket, Enersis, a Chilean company
(1.86% of portfolio) suffered, too, falling 22.57%.
On the positive side, Calenergy (1.73% of portfolio) has continued its recovery,
even though it has some limited exposure in the Far East. AirTouch (2.28% of
portfolio) has continued to move higher, up 16.25%, as has Enron (3.05% of
portfolio), up 16.0%, and the heavily weighted LGE (2.72% of portfolio) up
4.62%.
Looking forward, we see ample opportunity for our steady, moderate growth
utilities and excellent special opportunities due to mergers domestically and
oversold companies internationally.
PERIOD AND AVERAGE PORTFOLIO HOLDINGS (6/30/98)
ANNUAL TOTAL RETURNS ---------------------------
before deduction of sales charges [GRAPH] The following was
as of 6/30/98 presented as a pie
CLASS A CLASS C chart:
Year to Date 6.44% 6.34%
12 months 29.80% 29.76% Telecommunications 35.6%
Life of Fund(1) 21.23% 21.07% Natural Gas 18%
Telecommunications Equipment 16.6%
PERIOD AND AVERAGE Oil/Gas Domestic 12.2%
ANNUAL TOTAL RETURNS Electric Utility 9.7%
net of sales charges Water Utility 3.8%
as of 6/30/98 Energy 1.9%
CLASS A(2) CLASS C(3) Money Market Instruments 1.3%
Year to Date 2.20% 4.84% Diversified Utility 1.1%
12 months 24.59% 28.26%
Life of Fund(1) 19.58% 21.07%
(1) Class A and C shares inception date 7/11/95.
(2) Results reflect the maximum 4.00% sales charge.
(3) Results reflect applicable contingent deferred sales charge.
See page 2 for more fund performance information.
The Flex-Partners 1998 Semi-Annual Report * page 8
<PAGE>
The Flex-Partners Semi-Annual Report o June 30th, 1998
TACTICAL ASSET ALLOCATION FUND
[PHOTO] Robert S. Meeder, Jr., Portfolio Manager
Through the first half of 1998, the Tactical Asset Allocation Fund
underperformed the average asset allocation fund, despite good results during
the second quarter. For Class A and C shares, the 3-month total return before
deduction of sales charges, 1.83% and 1.89% respectively, exceeded Morningstar's
average total return of 1.08% for asset allocation funds.
We are pleased with the second quarter results, which are due to timely asset
allocation adjustments within the portfolio and good decisions on mutual fund
holdings made during the quarter.
MARKET PERSPECTIVE
The Fund began the second quarter with 65% of the portfolio invested in the
stock market, 30% in U.S. government bonds, and the remainder in money market
instruments. However, by early May, while the benchmark Dow Jones Industrial
Average hit record levels, the broader stock market and other internal
measurements of the stock market were not confirming the strength in the Dow
Jones Industrial Average.
For example, while the Dow Jones Industrial Average was posting new all-time
highs, the Nasdaq Composite (OTC), the Russell 2000, and our proprietary growth
mutual fund index were at lower highs. Additionally, fewer stocks were making
new highs, nearly all of our advance/decline statistics were in a negative
trend, and our various volume measurements were also negative.
Historically, when these conditions develop, it indicates the risk/reward
relationship may be changing, from a low risk to a high risk stock market
environment. Consequently, we concluded the most prudent posture was to adopt a
more defensive position, and we reduced our equity exposure to 50% in early May.
Furthermore, a flattening yield curve precipitated the elimination of our U.S.
Government bond holdings.
However, as the end of the quarter drew nearer, our investment discipline
improved to the point where it was no longer appropriate to maintain a partially
defensive position. By late June the Fund was invested nearly 100% in the stock
market.
As a reminder, all our traditional fundamental indicators (i.e.: P/E ratios,
dividend yield, earnings ratios, etc.) are so overvalued that it prevents us
from becoming complacent regarding the potential risk of the stock market.
PERIOD AND AVERAGE PORTFOLIO HOLDINGS (6/30/98)
ANNUAL TOTAL RETURNS ---------------------------
before deduction of sales charges [GRAPH] The following was
as of 6/30/98 presented as a pie
CLASS A CLASS C chart:
Year to Date 5.97% 5.88%
1 year 8.78% 8.85% Mutual Funds 61.3%
Life of Fund(1) 15.24% 14.08% S&P 500 Futures 22.2%
The Dow 30 Stocks 11.9%
PERIOD AND AVERAGE Cash & Cash Equivalents 3.5%
ANNUAL TOTAL RETURNS U.S. Government Bonds 1.1%
net of sales charges
as of 6/30/98
CLASS A(2) CLASS C(3)
Year to Date 1.74% 4.38%
1 year 4.46% 7.59%
Life of Fund(1) 12.81% 14.08%
(1) Class A shares inception date 8/1/96. C shares inception date 6/1/95.
(2) Results reflect the maximum 4.00% sales charge.
(3) Results reflect applicable contingent deferred sales charge.
See page 2 for more fund performance information.
The Flex-Partners 1998 Semi-Annual Report * page 9
<PAGE>
The Flex-Partners Semi-Annual Report * June 30th, 1998
THE INTERNATIONAL GROWTH FUND
For the first half of 1998, the International Equity Fund outperformed the
average foreign stock fund according to Morningstar, with a total return before
deduction of sales charges of 15.27%, compared with the Morningstar average of
13.19%. In response to the continuing Asian economic crisis, the Fund
selectively reduced its portfolio holdings in the Far East, while taking a more
defensive stance in the broader global market. In the West, the underlying
conditions remain positive, with low inflation helping to spur economic growth.
MARKET PERSPECTIVE
The positive economic environment in Western Europe and the introduction of the
eurodollar are creating a "virtuous circle" on the continent. Growth has spread
from peripheral markets to the larger core markets of France and Germany, and
has also spawned more mergers and acquisitions, mostly in the finance and
automotive industries. This has continued to improve economic efficiency, thus
helping to reduce inflation even further.
With the introduction of the eurodollar, or "euro," next January in most
European nations, interest rates are likely to rise higher than the current
French and German rates, although the increase will most likely be small. The
euro itself should be anti-inflationary, as more efficient manufacturing centers
draw increased production, and single market pricing becomes more common.
By contrast, the situation in Asia remains less positive. Japan technically fell
into recession in May. Unemployment and bankruptcies have risen markedly, and
non-performing loans continue to weigh down the financial system, which is
already in the midst of a credit crisis. American intervention has helped prop
up the yen, but real reform is still needed for long-term economic revival.
In other parts of Asia, disillusionment took hold in the second quarter after a
small bounce during the first three months of 1998. Corporate results are
disappointing, exports are stagnant due to a lack of financing, and weaker
currencies are fueling higher rates of inflation across the region. Should Japan
fail to bring about real economic reforms, the yen as well as other Asian
currencies could see further devaluation.
The International Equity Fund has not only changed its weightings in terms of
the Asian market, but it underweighted property, financial, technology and
resource equities and overweighted utilities, because of their steady income
streams. Positions also have been increased in European stocks likely to benefit
from the rise in consumer spending.
In exchange for greater potential rewards, foreign investments involve greater
risk than U.S. investments. These risks include political and economic
uncertainties of foreign countries, and currency fluctuations. These risks are
magnified in countries with emerging markets, since those countries may have
relatively unstable governments and less established economies.
PERIOD AND AVERAGE REGIONAL HOLDINGS (6/30/98)
ANNUAL TOTAL RETURNS ---------------------------
before deduction of sales charges [GRAPH] The following was
as of 6/30/98 presented as a pie
chart:
3 months 2.11%
6 months 15.27% Great Britain 22.4%
Life of Fund(1) 12.32% Japan 19.6%
France 11.3%
PERIOD AND AVERAGE Switzerland 7.9%
ANNUAL TOTAL RETURNS Germany 6.3%
net of sales charges(2) Spain 5.2%
as of 6/30/98 The Netherlands 5.1%
Italy 3.9%
3 months -1.95% Sweden 2.2%
6 months 10.64% Emerging Markets 3.9%
Life of Fund(1) 7.83% Cash Equivalents 3.7%
Rest of World 8.6%
(1) Date of inception 9/2/97.
(2) Results reflect the maximum 4.00% sales charge.
See page 2 for more fund performance information.
The Flex-Partners 1998 Semi-Annual Report * page 10
<PAGE>
THE FLEX-PARTNERS
1998 Semi-Annual Report [PHOTO] Pocketwatch
Portfolio Holdings & Financial Statements
The Flex-Partners 1998 Semi-Annual Report 11
<PAGE>
GROWTH STOCK PORTFOLIO
Portfolio of Investments as of June 30, 1998 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
COMMON STOCKS - 78.6%
AEROSPACE/DEFENSE - 1.2%
Boeing Co. 3,590 $ 159,979
Cordant Technologies, Inc. 350 16,144
General Dynamics Corp. 1,000 46,500
General Motors Corp. - Class H 330 15,531
Gulfstream Aerospace Corp. # 150 6,975
Lockheed Martin Corp. 530 56,114
Northrup Grumman Corp. 200 20,625
Raytheon Co. - Class B # 1,070 63,264
Textron, Inc. 1,060 75,989
United Technologies Corp. 1,400 129,500
-------
590,621
AIR TRANSPORTATION - 0.3%
AMR Corp. # 750 62,437
Delta Air Lines, Inc. 315 40,714
Southwest Airlines 890 26,311
USAir Group # 340 26,945
-------
156,407
ALUMINUM - 0.1%
Aluminum Company of America 860 56,706
APPAREL - 0.5%
Fruit of the Loom, Inc. # 4,800 159,300
Polo Ralph Lauren Corp. # 2,100 58,800
-------
218,100
AUTO & TRUCK - 1.7%
Chrysler Corp. 2,200 124,025
Ford Motor Co. 6,500 383,500
General Motors Corp. 4,000 267,250
Paccar, Inc. 178 9,300
TRW, Inc. 770 42,061
-------
826,136
BANKING - 0.4%
J.P. Morgan & Co. 1,000 117,063
Washington Mutual Savings Bank 1,755 76,233
-------
193,296
BEVERAGE--ALCOHOLIC - 0.5%
Anheuser-Busch Cos., Inc. 2,400 113,250
Canadaigua Wine Co. # 2,600 127,887
-------
241,137
BEVERAGE--SOFT DRINK - 1.5%
Coca-Cola Co. 5,100 436,050
Pepsico, Inc. 6,500 267,719
-------
703,769
BUILDING MATERIALS - 0.3%
Crane Co. 280 13,597
Foster Wheeler Corp. 2,712 58,139
Masco Corp. 800 48,400
Willbros Group # 1,500 23,438
-------
143,574
CAPITAL GOODS - 0.1%
Cooper Industries 260 14,284
Eaton Corp. 166 12,906
Ingersoll-Rand 356 15,686
------
42,876
CHEMICAL--DIVERSIFIED - 1.4%
Air Products & Chemicals, Inc. 1,070 42,800
E.I. du Pont de Nemours & Co. 5,350 399,578
Monsanto Corp. 2,840 158,685
Praxair, Inc. 650 30,428
Rohm & Haas Co. 335 34,798
Union Carbide Corp. 460 24,552
-------
690,841
CHEMICAL--SPECIALTY - 0.0%
Sigma Aldrich 440 15,455
12 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
COMMERCIAL SERVICES - 0.2%
Cognizant Corp. 750 47,250
Dun & Bradstreet 1,260 45,360
------
92,610
COMPUTERS & PERIPHERALS - 2.3%
Allied Waste Industries, Inc. # 1,080 25,920
Compaq Computer Corp. 3,660 103,852
Dell Computer Corp. # 3,310 307,209
EMC Corp./Mass # 4,210 188,661
EVI Weatherford, Inc. # 760 28,120
IBM 3,420 392,659
Micron Technology, Inc. # 500 12,406
Sun Microsystems # 940 40,831
---------
1,099,658
COMPUTER SOFTWARE & SERVICES - 4.2%
America Online, Inc. # 610 64,126
Cambridge Technologies Partners, Inc. # 640 34,960
Ceridian Co. # 600 35,250
Citrix Systems, Inc. # 700 47,863
Computer Associates International, Inc. 2,555 141,962
Computer Sciences Corp. # 560 35,840
DST Systems, Inc. # 350 19,600
First Data Corp. 1,600 53,300
Manugistics Group, Inc. # 125 3,094
Microsoft Corp. # 11,174 1,210,982
National Data Corp. 900 39,375
Network Associates, Inc. # 1,140 54,577
Oracle Corp. # 3,430 84,249
Parametric Technology Co. # 600 16,275
Peoplesoft, Inc. # 1,500 70,500
Sapient Corp. # 300 15,825
Saville Systems plc - Sponsored ADR # 280 14,035
Sterling Commerce, Inc. # 1,050 50,925
Sungard Data Systems, Inc. # 770 29,549
Wind River Systems # 600 21,525
---------
2,043,812
COMPUTER SYSTEMS - 0.1%
Visio Corp. # 700 33,425
CONSUMER NON-DURABLE - 3.7%
Chattem, Inc. # 7,500 200,625
The Clorox Co. 1,900 181,688
Haggar Corp. 11,500 146,625
Procter & Gamble Co. 7,900 719,394
Rubbermaid, Inc. 11,400 376,200
Tupperware Corp. 6,500 182,812
---------
1,807,344
COPPER - 0.0%
Phelps Dodge Corp. 240 13,725
COSMETICS - 1.4%
Avon Products, Inc. 400 30,975
International Flavors & Fragrances, Inc. 3,900 169,406
Kimberly-Clark Corp. 2,300 105,513
Playtex Products, Inc. # 22,500 358,594
-------
664,488
DATA PROCESSING - 0.1%
Fiserv, Inc. # 650 27,605
I2 Technologies, Inc. # 360 12,645
------
40,250
DIVERSIFIED - 1.2%
Allied Signal, Inc. 2,200 97,625
Corning, Inc. 740 25,715
Minnesota Mining & Manufacturing Co. 900 73,969
National Service Industries 430 21,876
Norfolk Southern Corp. 1,550 46,209
PPG Industries, Inc. 970 52,259
Ralston Purina 600 70,088
Tenneco 559 21,277
Tyco International 2,470 155,610
-------
564,628
The Flex-Partners 1998 Semi-Annual Report 13
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
DRUG - 6.4%
Abbott Labs 5,530 226,730
Bristol Myers Squibb 5,170 594,227
Eli Lilly & Co. 3,270 216,637
Merck & Co., Inc. 5,660 757,025
Pfizer, Inc. 6,180 671,689
Schering Plough Corp. 4,390 402,234
Warner Lambert Co. 3,210 222,694
---------
3,091,236
DRUGSTORE - 0.1%
Longs Drug Stores 2,000 57,750
ELECTRIC--INTEGRATED - 0.6%
FPL Group, Inc. 780 49,140
Houston Industries, Inc. 1,510 46,527
Texas Utilities Co. 2,590 107,809
Unicom Corp. 3,050 106,941
-------
310,417
ELECTRIC PRODUCTION - 0.0%
Sundstrand Corp. 350 20,037
ELECTRIC UTILITY - 0.5%
American Electric Power, Inc. 1,130 51,274
Duke Power Co. 1,530 90,652
Southern Co. 2,890 80,017
-------
221,943
ELECTRICAL EQUIPMENT - 2.7%
General Electric Corp. 14,295 1,299,058
Thomas & Betts 330 16,253
---------
1,315,311
ELECTRONIC COMPONENT SEMICONDUCTORS - 1.6%
Intel 7,970 590,776
KLA -Tencor Corp. # 350 9,691
Linear Tech Corp. 200 12,063
Motorola, Inc. 240 12,615
Texas Instruments, Inc. 2,200 128,287
-------
753,432
ELECTRONIC COMPONENTS - 0.2%
Emerson Electric 1,729 104,388
ELECTRONIC MEASUREMENT - 0.0%
Teradyne, Inc. # 390 10,433
ELECTRONICS - 0.1%
Altera Corp. # 480 14,190
Rockwell International Corp. 700 33,600
------
47,790
ENERGY - 0.0%
Western Atlas # 200 16,975
FINANCE - 7.9%
Banc One Corp. 3,300 184,181
Bank of Boston Corp. 1,600 89,000
Bankers Trust New York Co. 600 69,638
Chase Manhattan Corp. 6,600 498,300
Citicorp 2,300 343,275
Equifax, Inc. 1,070 38,854
Federal Home Loan Mortgage Corp. 1,900 89,419
Federal National Mortgage Corp. 2,300 139,725
First Chicago NBD Corp. 1,700 150,662
First Union Corp. 6,068 353,461
Firstplus Financial Group # 7,100 255,600
Fleet Financial Group, Inc. 1,200 100,200
Green Tree Financial Corp. 1,700 72,781
Lehman Brothers Holdings, Inc. 1,300 100,831
Mellon Bank Corp. 3,000 209,063
Merrill Lynch & Co. 600 55,350
NationsBank Corp. 5,225 400,692
Norwest Corp. 6,200 232,500
PNC Bank Corp. 2,400 129,300
Ryder Systems, Inc. 310 9,784
SunTrust Banks, Inc. 900 73,181
Wells Fargo & Co. 600 221,400
---------
3,817,197
FINANCIAL SERVICES - 2.3%
American Express Co. 1,500 170,625
Associates First Capital 3,400 261,587
Avery Dennison Corp. 720 38,700
BankAmerica Corp. 4,400 380,600
14 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
Capital One Financial Corp. 1,700 211,119
HF Ahmanson & Co. 800 56,800
---------
1,119,431
FOREST PRODUCTS - 0.2%
Georgia Pacific Corp. 430 25,343
Weyerhauser Co. 1,120 51,730
Willamette Industries, Inc. 640 20,480
------
97,553
HEALTH - 1.4%
American Home Products 5,950 307,913
Humana, Inc. # 1,160 36,177
Johnson & Johnson 4,300 318,200
-------
662,290
HOTEL/GAMING - 0.3%
Hilton Hotels Corp. 5,100 145,988
INSTRUMENTS--CONTROLS - 0.2%
Honeywell, Inc. 630 52,644
Johnson Controls, Inc. 197 11,389
Parker Hannifin Corp. 246 9,379
------
73,412
INSTRUMENTS--SCIENTIFIC - 0.0%
Perkin Elmer Corp. 250 15,547
INSURANCE--LIFE - 0.8%
AmerUs Life Holdings, Inc. 7,841 253,852
Transamerica Corp. 1,100 126,637
-------
380,489
INSURANCE--MULTILINE - 2.2%
Allstate 1,800 164,813
American International Group 2,250 328,500
Conseco, Inc. 5,700 267,187
Travelers Group, Inc. 4,847 293,849
---------
1,054,349
LASERS--SYSTEMS & COMPONENTS - 0.0%
Uniphase Corp. # 330 20,718
MACHINERY - 0.4%
Deere & Co. 2,140 113,086
Dover Corp. 514 17,605
Lancer Corp. # 3,700 59,662
W.W. Grainger 234 11,656
-------
202,009
MACHINERY--CONSTRUCTION & MINING - 0.4%
Case Corp. 176 8,492
Caterpillar, Inc. 1,395 73,804
Halliburton Co. 1,300 57,769
NACCO Industries, Inc. 375 48,469
-------
188,534
MANUFACTURING - 0.2%
Mueller Industries, Inc. # 1,500 55,688
Owens Illinois # 670 29,982
------
85,670
MARKETING SERVICES - 0.1%
Omnicom Group, Inc. 975 48,628
MATERIALS & SERVICES - 0.6%
Champion International Corp. 425 20,905
Dana Corp. 370 19,703
Deluxe Corp. 490 17,517
Ecolab, Inc. 600 18,600
Hercules, Inc. 570 23,441
Illinois Tool Works, Inc. 1,490 99,364
Service Corp. International 1,350 57,881
Sherwin-Williams Co. 920 30,475
-------
287,886
MEDICAL PRODUCTS - 0.8%
Algos Pharmaceutical Corp. # 1,880 50,760
Centor, Inc. # 2,080 75,400
GelTex Pharmaceuticals, Inc. # 2,670 49,729
IDEC Pharmaceuticals Corp. # 1,160 27,332
MedImmune, Inc. # 1,990 124,126
Neurex Corp. # 990 30,071
PhyCor, Inc. # 1,480 24,513
-------
381,931
The Flex-Partners 1998 Semi-Annual Report 15
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
MEDICAL SERVICES - 0.4%
Columbia/HCA Healthcare Corp. 1,400 40,775
Genzyme Corp. # 1,370 35,021
HBO & Co. 2,370 83,543
Shared Medical Systems 420 30,844
-------
190,183
MEDICAL SUPPLIES - 0.6%
Boston Scientific Co. # 738 52,859
IDEXX Laboratories, Inc. # 1,280 31,840
Medtronic, Inc. 2,850 181,688
-------
266,387
MEDICAL--HMO - 0.2%
United Healthcare Co. 1,740 110,816
MINING - 0.2%
Barrick Gold Corp. 1,800 34,650
Newmont Mining Corp. 1,300 30,712
Tubos de Acero de Mexico SA # 1,900 24,344
------
89,706
MULTIMEDIA - 0.4%
Gannett Co., Inc. 2,900 206,081
NATURAL GAS DISTRIBUTOR - 0.1%
Williams Companies, Inc. 1,300 43,875
NETWORKING PRODUCTS - 1.0%
3Com Corp. # 470 14,423
Cisco Systems, Inc. # 5,175 476,423
-------
490,846
OFFICE AUTOMATION & EQUIPMENT - 1.0%
Hewlett Packard 3,980 238,303
Pitney Bowes, Inc. 1,760 84,700
Xerox Corp. 1,450 147,356
-------
470,359
OIL/GAS--DOMESTIC - 1.7%
Amoco Corp. 4,000 167,000
Apache Corp. 200 6,300
Atlantic Richfield 1,100 85,937
Baker Hughes 1,100 38,019
Burlington Resources 1,500 64,594
Devon Energy 700 24,456
Enron Corp. 400 21,625
Mobil Corp. 3,600 275,850
Murphy Oil Corp. 400 20,275
Noble Drilling Co. # 1,300 31,281
Sonat, Inc. 400 15,450
USX Marathon Group 1,800 61,763
-------
812,550
OIL/GAS--INTERNATIONAL - 2.1%
Chevron Corp. 2,800 234,500
Exxon Corp. 11,050 788,694
---------
1,023,194
OILFIELD SERVICES/EQUIPMENT - 0.4%
Dresser Industries 600 26,438
Enron Exchangeable Notes 1,000 20,000
Schlumberger LTD 2,200 150,287
Union Pacific Resources 800 14,050
-------
210,775
OIL & NATURAL GAS - 0.2%
Amerada Hess 500 27,156
Ocean Energy, Inc. # 1,560 30,518
Seagull Energy Corp. # 2,900 48,031
-------
105,705
PAPER & FOREST PRODUCTS - 0.3%
Bemis Co., Inc. 310 12,671
Bowater, Inc. 220 10,395
Fort James Corp. 910 40,609
International Paper 1,385 59,555
Mead Corp. 720 22,860
Union Camp Corp. 340 16,872
-------
162,962
16 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
PETROLEUM--INTEGRATED - 1.5%
Occidental Petroleum Corp. 400 10,800
Phillips Petroleum 1,400 67,463
Royal Dutch Petroleum 9,400 515,237
Texaco 1,900 113,406
Unocal Corp. 1,000 35,750
-------
742,656
PRINTING--COMMERCIAL - 0.3%
World Color Press, Inc. # 3,500 122,500
PROTECTION--SAFETY EQUIPMENT - 0.7%
Lo-Jack Corp. # 25,500 317,156
PUBLISHING - 0.4%
The Reader's Digest Association, Inc. 6,700 181,738
RAILROAD TRANSPORTATION - 0.2%
Burlington Northern Santa Fe 620 60,876
Union Pacific Corp. 1,020 44,880
-------
105,756
RENTAL--AUTO/EQUIPMENT - 0.4%
Budget Group Inc. # 3,400 108,588
The Hertz Corp. 2,200 90,475
-------
199,063
RESTAURANT - 0.6%
McDonald's Corp. 1,600 110,400
Wendy's International, Inc. 7,300 171,550
-------
281,950
RETAIL GROCERY - 0.3%
Albertsons, Inc. 2,500 129,531
RETAIL STORE - 3.3%
Kmart # 34,100 656,425
OfficeMax # 11,700 193,050
Sears, Roebuck & Co. 4,000 244,250
WalMart Stores, Inc. 8,000 486,000
---------
1,579,725
SERVICES - 0.2%
Automatic Data Processing, Inc. 1,210 88,179
Paychex, Inc. 787 32,021
-------
120,200
TELECOMMUNICATION EQUIPMENT - 1.8%
Advanced Fibre Communication, Inc. # 810 32,451
General Signal Corp. 1,641 59,076
Loral Space & Communications Ltd. # 4,240 119,780
Newbridge Networks Corp. # 4,000 96,125
Nokia Corp. - ADR - A 1,980 144,045
Northern Telecom LTD 2,370 134,497
P-Com, Inc. # 6,140 56,219
QUALCOMM, Inc. # 2,250 126,422
Telecomunicacoes Brasileiras SA - ADR 1,140 124,260
-------
892,875
TELECOMMUNICATION SERVICES - 6.6%
Airtouch Communications # 2,070 120,966
AT&T 8,230 470,139
Bell Atlantic Corp. 4,160 189,800
BellSouth Corp. 4,240 284,610
Cablevision Systems Corp. # 400 33,400
Frontier Corp. 2,740 86,310
GTE Corp. 4,050 225,281
Lucent Technologies, Inc. 6,000 499,125
MediaOne Group, Inc. # 2,390 105,011
MCI Communication 2,820 163,913
SBC Communications 12,300 494,306
Sprint Corp. 1,510 106,455
Telefonaktiebolaget LM Ericsson - ADR 470 13,454
Tellabs, Inc. # 940 67,328
U.S. West, Inc. 1,350 63,197
Worldcom, Inc. # 5,580 270,281
---------
3,193,576
TOBACCO - 2.0%
Gallaher Group, plc - ADR 2,800 61,250
Imperial Tobacco 4,400 63,580
Philip Morris Companies 14,400 567,000
UST, Inc. 10,900 294,300
-------
986,130
The Flex-Partners 1998 Semi-Annual Report 17
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----
TRANSPORTATION - 0.1%
FDX Corp. # 578 36,270
TRUCKING/TRANSPORTATION LEASING - 0.1%
CSX, Corp. 867 39,448
UTILITIES - 0.2%
PT Indosat - Sponsored ADR 6,700 74,538
WASTE DISPOSAL--NON-HAZARDOUS - 0.1%
USA Waste Services, Inc. # 1,398 69,025
================================================================================
TOTAL COMMON STOCKS
(Cost $29,466,026 ) 38,025,778
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 0.8%
U.S. Treasury Bills
* 4.99%, 09/03/98 400,000 396,469
** 5.02%, 01/07/99 6,000 5,839
================================================================================
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $402,293 ) 402,308
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 20.4%
Merrill Lynch, 6.30%, 07/01/98,
(Collateralized by $10,273,000
Daimler-Benz Yankee Commercial Paper,
09/25/98, market value - $10,273,000) 9,936,000 9,936,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $9,936,000 ) 9,936,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $39,804,319 ) $48,364,086
- --------------------------------------------------------------------------------
FUTURES CONTRACTS CONTRACTS VALUE
Long, S&P 500 Futures, face amount $6,378,575
expiring September 1998. 23 $6,572,250
================================================================================
TOTAL FUTURES CONTRACTS $6,572,250
- --------------------------------------------------------------------------------
ADR American Depositary Receipt
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
# Represents non-income producing securities.
See accompanying notes to financial statements.
18 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
UTILITIES STOCK PORTFOLIO
Portfolio of Investments as of June 30, 1998 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
COMMON STOCKS - 98.9%
DIVERSIFIED UTILITY - 1.0%
Citizens Utilities Co.--Class B # 13,911 $133,889
ELECTRIC/GAS UTILITY - 8.5%
AGL Resources, Inc. 16,100 318,981
MDU Resources Group, Inc. 6,000 214,125
NIPSCO Industries, Inc. 9,400 263,200
UtiliCorp United, Inc. 10,000 376,875
---------
1,173,181
ELECTRIC UTILITY - 12.0%
Cinergy Corp. 7,800 273,000
Enersis S.A. - ADR 10,550 257,816
LG&E Energy Corp. 13,944 377,360
New Century Energies, Inc. 5,600 254,450
PacifiCorp 9,800 221,725
TECO Energy, Inc. 10,400 278,850
---------
1,663,201
ENERGY - 1.7%
CalEnergy Co., Inc. # 8,000 240,500
NATURAL GAS (DISTRIBUTOR) - 15.8%
Bay State Gas Co. 11,100 425,269
Consolidated Natural Gas Co. 8,200 482,775
KeySpan Energy Corp. 19,100 643,431
MCN Corp. 6,000 150,000
TransCanada Pipelines Ltd. 8,100 180,225
UGI Corp. 1,900 47,262
WICOR, Inc. 11,200 259,000
---------
2,187,962
OIL/GAS (DOMESTIC) - 10.7%
El Paso Natural Gas Co. 8,440 322,830
Enron Corp. 7,830 423,309
Kinder Morgan Energy Partners, L.P. 14,824 535,517
Questar Corp. 10,200 200,175
---------
1,481,831
TELECOMMUNICATION EQUIPMENT - 14.6%
Loral Space & Communications Ltd. # 14,890 420,643
P-Com, Inc. # 30,000 274,687
QUALCOMM, Inc. # 10,000 561,875
Telecomunicacoes Brasileiras S.A. - ADR 7,000 763,000
---------
2,020,205
TELECOMMUNICATION SERVICES - 31.3%
AirTouch Communications, Inc. # 5,400 315,563
Alltel Corp. 7,900 367,350
Bell Atlantic Corp. 4,600 209,875
Frontier Corp. 19,300 607,950
GTE Corp. 5,000 278,125
Hong Kong Telecommunications Ltd. - ADR 18,240 344,280
LCI International, Inc. # 15,000 542,812
PT Indosat - ADR 20,000 222,500
SBC Communications, Inc. 17,740 709,600
Sprint Corp. 4,300 303,150
Telecom New Zealand - ADR 5,000 163,750
U.S. West Communications Group 5,900 276,194
---------
4,341,149
WATER UTILITY - 3.3%
American Water Works Co., Inc. 14,900 461,900
================================================================================
TOTAL COMMON STOCKS
(Cost $11,130,406) 13,703,818
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS - 0.0%
* 5.02%, due 01/07/99 1,000 974
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $974) 974
- --------------------------------------------------------------------------------
The Flex-Partners 1998 Semi-Annual Report 19
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
REPURCHASE AGREEMENTS - 1.1%
Merrill Lynch, 6.30%, 07/01/98,
(Collateralized by $162,000
Daimler-Benz Yankee Commercial Paper,
09/25/98, market value - $162,000) 157,000 157,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $157,000 ) 157,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS
(Cost $11,288,380 ) $13,861,792
- --------------------------------------------------------------------------------
ADR American Depositary Receipt
* Pledged as collateral on Letter of Credit.
# Represents non-income producing securities.
See accompanying notes to financial statements.
20 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
MUTUAL FUND PORTFOLIO
Portfolio of Investments as of June 30, 1998 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
COMMON STOCKS - 12.0%
AEROSPACE/DEFENSE - 0.7%
Boeing Co. 7,000 $311,937
United Technologies Corp. 7,000 647,500
-------
959,437
ALUMINUM - 0.4%
Aluminum Company of America 7,000 461,562
AUTO AND TRUCK - 0.4%
General Motors Corp. 7,000 467,688
BANKING - 0.6%
J.P. Morgan & Co. 7,000 819,437
BEVERAGE -- SOFT DRINK - 0.5%
Coca-Cola Co. 7,000 598,500
CHEMICAL -- DIVERSIFIED - 0.7%
E.I. du Pont de Nemours & Co. 7,000 522,813
Union Carbide Corp. 7,000 373,625
-------
896,438
COMPUTERS & PERIPHERALS - 0.6%
IBM 7,000 796,687
Raytheon Co. - Class A 446 25,701
-------
822,388
CONSUMER NON-DURABLE - 0.5%
Proctor & Gamble Co. 7,000 637,438
DIVERSIFIED - 0.7%
Allied-Signal, Inc. 7,000 310,625
Minnesota Mining & Manufacturing Co. 7,000 575,312
-------
885,937
DRUG - 0.7%
Merck & Co., Inc. 7,000 936,250
ELECTRICAL EQUIPMENT - 0.5%
General Electric Corp. 7,000 636,125
FINANCIAL SERVICES - 0.6%
American Express Co. 7,000 796,250
HEALTH - 0.4%
Johnson & Johnson 7,000 518,000
INSURANCE -- MULTILINE - 0.3%
Travelers Group, Inc. 7,000 424,375
MACHINERY -- CONSTRUCTION & MINING - 0.3%
Caterpillar, Inc. 7,000 370,344
MULTIMEDIA - 0.6%
Walt Disney Co. 7,000 735,438
OFFICE AUTOMATION & EQUIPMENT - 0.3%
Hewlett Packard 7,000 419,125
OIL/GAS -- INTERNATIONAL - 0.8%
Chevron Corp. 7,000 586,250
Exxon Corp. 7,000 499,625
---------
1,085,875
PAPER & FOREST PRODUCTS - 0.2%
International Paper 7,000 301,000
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.4%
Eastman Kodak Co. 7,000 511,437
RESTAURANT - 0.4%
McDonald's Corp. 7,000 483,000
RETAIL STORE - 0.7%
Sears, Roebuck & Co. 7,000 427,438
WalMart Stores, Inc. 7,000 425,250
-------
852,688
The Flex-Partners 1998 Semi-Annual Report 21
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
TELECOMMUNICATION SERVICES - 0.3%
AT&T 7,000 399,875
TIRE & RUBBER - 0.3%
Goodyear Tire & Rubber 7,000 451,062
TOBACCO - 0.2%
Philip Morris Companies, Inc. 7,000 275,625
================================================================================
TOTAL COMMON STOCKS
(Cost$13,792,960 ) 15,745,294
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 61.8%
Aim Constellation Fund 94 $2,785
Aim Weingarten Equity Fund 116 2,732
Federated S&P 500 Maxcap Fund 72,452 1,711,315
Gabelli Growth 51,251 1,710,250
Gabelli Value 684,932 11,602,740
Janus Twenty Fund 311,382 13,106,086
Legg Mason Value Trust Fund 251,388 12,996,785
MFS Investor Growth - Class A 843,478 12,997,997
Mutual Shares Fund 321 7,299
PBHG Growth Fund 624 16,960
Rydex OTC Fund 419,604 12,755,958
Safeco Growth Fund 531,696 13,967,649
T. Rowe Price New Era Fund 147 3,928
T. Rowe Price New Horizons Fund 155 3,893
================================================================================
TOTAL MUTUAL FUNDS
(Cost $75,648,286 ) 80,886,377
- --------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS - 2.2%
Charles Schwab Money Market Fund 2,617,312 2,617,312
Fidelity Core Money Market Fund 307,835 307,835
================================================================================
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $2,925,147 ) 2,925,147
- --------------------------------------------------------------------------------
U.S.TREASURY BILLS - 1.2%
* 4.99%, due 09/03/98 $1,500,000 1,486,756
** 5.02%, due 01/07/99 30,100 29,294
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $1,515,996 ) 1,516,050
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 22.8%
Merrill Lynch, 6.30%, 07/01/98,
(Collateralized by $30,815,000 Daimler-Benz
Yankee Commercial Paper, 09/25/98,
market value - $30,815,000) 29,805,000 29,805,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost$29,805,000 ) 29,805,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $123,687,389) $130,877,868
- --------------------------------------------------------------------------------
FUTURES CONTRACTS CONTRACTS VALUE
Long, S&P 500 Futures, face amount
$29,184,125 expiring September 1998. 103 $29,432,250
================================================================================
TOTAL FUTURES CONTRACTS $29,432,250
- --------------------------------------------------------------------------------
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
See accompanying notes to financial statements.
22 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
INTERNATIONAL EQUITY FUND
Portfolio of Investments as of June 30, 1998 (Unaudited)
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
COMMON STOCKS - 96.3%
AEROSPACE/DEFENSE - 0.5%
British Aerospace plc 11,124 $ 85,384
AGRICULTURE & FOOD - 0.0%
Kuala Lumpur Kepong Bhd 5,000 8,077
AIR TRANSPORT - 0.3%
British Airways plc 1,262 13,593
Japan Airlines Co. 9,000 25,032
Singapore Airlines Ltd. 1,000 4,676
43,301
APPAREL - 0.7%
Alexon Group plc # 3,181 12,235
Castellum AB 5,700 67,186
Espirit Holdings Ltd. 28,000 8,492
Onward Kashiyama Co., Ltd. 3,000 37,504
125,417
AUTO & TRUCK - 2.3%
Daimler - Benz AG 1,001 98,436
Honda Motor Co., Ltd. 3,000 106,784
Toyota Motor Corp. 7,000 181,071
386,291
AUTOPARTS -- REPLACEMENT - 0.3%
Denso Corp. 3,000 49,717
49,717
BANKING - 15.0%
Abbey National plc 1,259 22,436
Asahi Bank Ltd. 11,000 48,348
Australia & New Zealand Banking
Group Ltd. 5,600 38,633
Banco Comercial Portugues SA 2,850 80,924
Bank of Scotland 4,705 52,640
Bank of Tokyo-Mitsubishi Ltd. 8,000 84,678
Banque Cantonale de Geneve 320 101,160
Banque Nationale de Paris 2,300 187,926
Barclays plc 3,061 88,413
Compahnie Financiere de Paribas 800 85,610
Corporacion Bancaria de Espana SA 4,000 87,530
Credito Italiano 25,000 130,868
Credit Suisse Group 500 111,254
Dai-Ichi Kangyo Bank Ltd. 6,000 35,234
Dao Heng Bank Group Ltd. 5,000 7,098
Den Danske Bank 400 47,986
Development Bank of Singapore Ltd. 1,300 7,195
Erste Bank Der Oesterreichischen
Sparkassen AG # 1,550 93,984
HSBC Holdings plc 1,200 29,348
HSBC Holdings plc 4,596 116,645
Hang Seng Bank Ltd. 2,000 11,305
ING Groep NV 1,450 94,946
Industrial Bank of Japan Ltd. 7,000 43,881
Julius Baer Holding AG 24 75,079
KBC Bancassurance Holding 1,080 96,651
Macquarie Bank Ltd. 1,200 10,738
Malayan Banking Bhd 8,000 8,063
Mitsubishi Trust & Banking Corp. 6,000 50,971
National Australia Bank Ltd. 3,060 40,363
National Bank of Greece SA 816 104,561
National Westminster Bank plc 1,525 27,304
Overseas-Chinese Banking Corp., Ltd. 2,000 6,807
Royal Bank of Scotland Group plc 2,318 40,187
Sanwa Bank Ltd. 4,000 35,768
Schroders plc 975 25,038
Schweizerischer Bankverein 435 167,771
Sumitomo Bank Ltd. 6,000 58,364
Sumitomo Trust & Banking Corp. 3,000 13,402
Tokai Bank Ltd. 6,000 33,029
Union Bank of Switzerland 468 169,699
2,571,837
BEVERAGE -- ALCOHOLIC - 0.6%
Allied Domecq plc 1,746 16,315
Diageo plc 2,682 31,931
Pernod Ricard 900 62,372
110,618
The Flex-Partners 1998 Semi-Annual Report 23
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
BROADCASTING -- CABLE TV - 0.3%
British Sky Broadcasting Group plc 3,666 26,411
Carlton Communications plc 1,415 12,620
Reuters Holdings plc 1,621 18,555
57,586
BROADCASTING & PUBLISHING - 0.3%
News Corporation Ltd. 5,500 44,891
BUILDING & CONSTRUCTION - 2.0%
Berkeley Group plc 1,994 20,828
Grupo Acciona Sa 250 59,573
New World Infrastructure Ltd. # 7,000 8,040
Obayashi Corp. 15,000 63,552
RMC Group plc 620 10,770
Sekisui House Ltd. 3,000 23,237
Suez Lyonnaise des Eaux 840 138,240
Taisie Corp. 10,000 21,616
345,856
BUILDING MATERIALS - 0.2%
Pioneer International Ltd. 2,200 5,245
Wolseley plc 4,385 25,993
31,238
CHEMICALS - 1.0%
Bayer AG 1,140 58,989
Imperial Chemical Industries 2,480 39,975
Shin-Etsu Chemical Co., Ltd. 4,000 69,172
168,136
CHEMICALS -- DIVERSIFIED - 2.1%
BOC Group plc 668 9,118
Henkel KGaA 2,200 217,562
Montedison SpA 100,000 124,047
350,727
COMPUTERS & PERIPHERALS - 3.1%
Baan Co. NV 3,500 125,774
Cap Gemini 1,122 176,298
Fujitsu Ltd. 4,000 42,079
NEC Corp. 5,000 46,583
SAP AG 200 135,734
526,468
CONSUMER DURABLES - 0.2%
Unilever plc 3,124 33,544
COSMETICS - 0.5%
Kao Corp. 5,000 77,098
DATA PROCESSING - 0.1%
Industri-Matematik International
Corp. ADR # 2,000 22,000
DISTRIBUTION WHOLESALER - 0.5%
Marubeni Corp. 7,000 13,971
Mitsui & Co. 12,000 64,849
78,820
DIVERSIFIED - 1.4%
Brambles Industries Ltd. 1,650 32,381
Broken Hill Proprietary Co., Ltd. 1,650 13,948
Granada Group plc 2,256 41,559
Hutchison Whampoa Ltd. 8,000 42,228
Lagardere SCA 1,070 44,545
Rio Tinto Ltd. 1,190 14,149
Securicor plc 3,611 29,585
Tomkins plc 3,450 18,824
237,219
DRUG - 1.6%
Rhodia SA # 3,500 97,602
Sankyo Co., Ltd. 1,000 22,769
Smithkline Beecham plc 11,989 145,937
266,308
ELECTRIC PRODUCTION -- MISCELLANEOUS - 1.4%
CLP Holdings Ltd. 5,000 22,779
Chubu Electric Power Co., Inc. 5,000 74,576
Hitachi Ltd. 6,000 39,125
National Grid Group plc 3,008 20,289
24 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Scottish Power plc 4,733 41,778
Southern Electric plc 3,359 31,023
Tenaga Nasional Bhd 6,000 7,233
236,803
ELECTRONIC COMPONENT -- MISCELLANEOUS - 3.7%
Fanuc Ltd. 2,000 69,172
Fujikura Ltd. 5,000 22,265
Hirose Electric Co., Ltd. 600 29,268
Mabuchi Motor Co., Ltd. 1,200 76,089
Matsushita Electric Industrial Co., Ltd. 6,000 96,408
Minebea Co., Ltd. 7,000 69,655
Sony Corp. 1,000 86,104
STMicroelectronics # 2,300 163,009
Yokogawa Electric Corp. 4,000 21,328
633,298
ENGINEERING RESEARCH & DEVELOPMENT - 0.0%
Metallgesellschaft AG 7,550 1,518
United Engineers Bhd 8,000 3,260
4,778
FINANCE - 1.6%
Credit Saison Co., Ltd. 2,500 49,537
Lend Lease Corp., Ltd. 1,500 30,329
Lloyds TSB Group plc 11,410 159,355
Nomura Securities Co., Ltd. 3,000 34,910
274,131
FINANCIAL SERVICES - 0.8%
Legal & General Group plc 4,900 52,246
Unidanmark A/S 1,000 89,865
142,111
FOOD -- DIVERSIFIED - 3.0%
Cadbury Schweppes plc 3,815 59,074
Goodman Fielder Ltd. 11,100 16,154
Nestle SA 100 214,003
Royal Canin SA 3,300 188,852
Tesco plc 3,940 38,427
516,510
FOOD WHOLESALER - 0.4%
Nissin Food Products 4,000 71,622
HOTEL/GAMING - 1.1%
Accor SA 560 156,718
Genting Bhd 5,400 9,765
Ladbroke Group plc 4,004 22,098
188,581
HOUSEHOLD PRODUCTS - 1.1%
Asahi Glass Co., Ltd. 11,000 59,444
Benckiser NV # 1,900 116,847
Nippon Sheet Glass Co., Ltd. 6,000 9,468
185,759
HUMAN RESOURCES - 1.2%
Vedior 7,276 205,668
INDUSTRIAL SERVICES - 0.1%
Sumitomo Heavy Industries Ltd. 6,000 13,705
INSURANCE -- MULTILINE - 1.0%
ERGO Versicherungs Gruppe AG 950 170,526
INSURANCE -- PROPERTY/CASUALTY - 0.0%
Allianz AG 12 3,966
INSURANCE - 2.6%
Assicurazioni Generali 1,856 60,351
Fortis AG 500 127,654
Guardian Royal Exchange plc 6,461 38,299
Norwich Union plc # 7,930 57,758
Skandia Forsakrings AB 9,100 130,083
Tokio Marine & Fire Insurance Co. 3,000 30,825
444,970
INVESTMENT COMPANIES - 1.4%
Corp. Financiera Reunida SA # 15,000 226,827
Sime Darby Bhd 8,000 5,517
232,344
The Flex-Partners 1998 Semi-Annual Report 25
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
MACHINERY - 2.6%
Mannesmann AG 2,300 236,371
Okuma Corp. 11,000 50,092
Schneider SA 2,050 163,464
449,927
MANUFACTURING - 2.1%
FKI plc 24,090 70,144
General Electric Co. plc 8,052 69,395
Mitsubishi Heavy Industries 18,000 67,961
RWE AG 2,400 142,006
Southcorp Ltd. 4,056 11,780
361,286
MEDICAL PRODUCTS - 4.3%
Glaxo Wellcome plc 9,104 274,047
Novartis AG 100 166,403
Takeda Chemical Industries 3,000 79,764
Woolworths Ltd. 2,800 9,103
Yamanouchi Pharmaceutical Co., Ltd. 3,000 62,471
Zeneca Group plc 3,361 144,411
736,199
MINING - 0.2%
Rio Tinto plc 1,169 13,176
Sumitomo Metal Mining Co. 7,000 28,396
41,572
MUTUAL FUNDS - 3.6%
Baring Emerging Europe Trust Fund # 65,000 104,975
Foreign & Colonial Emerging Markets
Investment Trust Fund # 96,000 124,545
Genesis Emerging Markets Fund # 9,000 117,900
Scudder Latin America Investment
Trust Fund 70,000 101,327
Templeton Emerging Markets Investment
Trust Fund 60,000 99,366
Templeton Latin America Investment
Trust Fund 50,000 67,787
615,900
OIL & NATURAL GAS - 4.8%
Australia Gas & Light 2,100 13,135
BG plc 12,759 73,876
British Petroleum Co., plc 12,990 189,117
Cairn Energy plc # 821 3,740
Centrica plc # 9,770 16,547
Elf Aquitain SA 835 117,392
Envestra Ltd. 24,700 14,378
Hong Kong & China Gas Co., Ltd. 6,000 6,814
LASMO plc 5,263 21,121
Repsol SA 3,000 165,589
Royal Dutch Petroleum Co. 2,450 135,857
Tokyo Gas Co. 26,000 57,888
Woodside Petroleum Ltd. 2,700 13,477
828,931
PAPER & FOREST PRODUCTS - 1.1%
Nippon Paper Industries Co. 6,000 24,988
Stora Kopparbergs Bergslags Aktiebolag 10,250 161,946
186,934
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.4%
Fuji Photo Film 2,000 69,604
PRINTING -- COMMERCIAL - 0.2%
Dai Nippon Printing Co., Ltd. 2,000 31,920
PROTECTION -- SAFETY EQUIPMENT - 0.3%
Secom Co., Ltd. 1,000 57,715
PUBLISHING - 1.1%
Johnston Press plc 4,338 15,780
Singapore Press Holdings Ltd. 2,552 17,070
Star Publications 4,000 3,356
United News & Media plc 1,692 23,687
Verenigde Nederlandse
Uitgeversbedrijven Verenigd Bezit 3,700 134,416
194,309
REAL ESTATE MANAGEMENT & INVESTMENT - 1.7%
Capital Shopping Centers plc 5,424 36,519
Cheung Kong Holdings Ltd. 5,000 24,585
City Developments Ltd. 3,000 8,382
HKR International Ltd. 19,280 6,843
Mitsubishi Estate Co., Ltd. 8,000 70,325
New World Development Co., Ltd. 5,000 9,679
26 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Sponda Oyj # 17,000 119,295
Sun Hung Kai Properties Ltd. 4,000 16,984
292,612
RECREATION - 0.1%
TAB Ltd. # 2,790 4,112
TABCORP Holdings Ltd. 2,700 13,794
17,906
RETAIL - 0.9%
EMI Group plc 1,932 16,941
Great Universal Stores plc 5,442 71,782
Vendex NV 1,800 69,197
157,920
RETAIL GROCERY - 1.6%
Ito-Yokado Co., Ltd. 1,000 47,051
Safeway plc 2,123 13,957
Superdiplo SA # 9,500 206,023
267,031
RETAIL STORE - 3.1%
Family Mart Co., Ltd. 1,400 53,262
Jeronimo Martins 2,300 110,493
Kingfisher plc 6,000 97,213
Marks & Spencer 6,108 55,750
Marui Co. 3,000 44,745
The Swatch Group AG 200 154,536
Takashimaya Co. 3,000 22,611
538,610
RUBBER & PLASTICS - 1.0%
Compagnie Plastic - Omnium SA 1,100 162,653
SERVICES - 0.3%
BTG plc 3,520 49,044
SHIP BUILDING - 0.1%
Jurong Shipyard 2,000 9,648
STEEL -- INTEGRATED - 0.5%
Nippon Steel Corp. 30,000 52,743
Sumitomo Metal Industries 18,000 28,922
81,665
TELECOMMUNICATIONS - 4.4%
Cable & Wireless plc 3,591 43,712
Hellenic Telecommunication Organization SA 5,555 142,398
Nippon Telegraph & Telephone Corp. 25 207,155
Nokia Oyj 1,400 102,964
Portugal Telecom SA 1,450 76,849
Singapore Telecommunications Ltd. 80,000 11,365
Telecom Corporation of New Zealand Ltd. 6,800 28,027
Telecom Italia SpA 18,850 138,760
751,230
TELECOMMUNICATION EQUIPMENT - 4.9%
Alcatel Alsthom 1,240 252,471
Storebrand ASA # 13,250 117,417
Telecom Italia Mobile SpA 36,400 222,592
Telefonica de Espana 3,163 146,487
Vodafone Group plc 8,356 106,106
845,073
TELECOMMUNICATION SERVICES - 1.9%
Barry Callebaut AG # 450 97,013
British Telecommunications plc 13,819 170,057
China Telecom Ltd. # 6,000 10,415
Hong Kong Telecommunications Ltd. 14,400 27,040
Telekom Malaysia Bhd 6,000 10,127
Telestra Corp., Ltd. # 5,900 15,126
329,778
TIRE & RUBBER - 0.3%
Bridgestone Corp. 2,000 47,267
TOBACCO - 0.3%
BAT Industries plc 2,260 22,570
Japan Tobacco, Inc. 3 20,298
Rothmans of Pall Mall Bhd 1,400 9,705
52,573
The Flex-Partners 1998 Semi-Annual Report 27
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
TOILETRIES & COSMETICS - 0.4%
L'OREAL 115 63,967
TRANSPORTATION - 1.2%
East Japan Railway Co. 13 61,073
FirstGroup plc 1,701 11,637
National Express Group plc 1,789 28,911
Peninsular and Oriental Steam
Navigation Co. 2,200 31,735
Tokyu Corp. 7,000 21,234
Yamato Transport Co., Ltd. 4,000 44,818
199,408
WAREHOUSING & STORAGE - 0.2%
Mitsubishi Logistics Corp. 3,000 26,739
WATER UTILITY - 0.3%
Severn Trent plc 2,751 47,969
================================================================================
TOTAL COMMON STOCKS
(Cost $15,399,801 ) 16,460,695
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 3.7%
State Street Bank, 5.10%, 07/01/98, (Collateralized
by $450,000 U.S. Treasury Notes, 9.88%, 11/15/15, 644,000 644,000
market value - $661,430)
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $644,000 ) 644,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $16,043,801 ) 17,104,695
- --------------------------------------------------------------------------------
ADR American Depositary Receipt
# Represents non-income producing securities.
Portfolio Composition by Country of Domicile as of 06/30/98.
United Kingdom - 23.2% Greece - 1.5%
Japan - 20.5% Finland - 1.4%
France - 12.5% Belgium - 1.4%
Switzerland - 7.6% Hong Kong - 1.4%
Germany - 6.5% Denmark - 0.8%
Netherlands - 5.4% Norway - 0.7%
Spain - 5.4% Austria - 0.6%
Italy - 4.1% Malaysia - 0.4%
Sweden - 2.3% Singapore - 0.4%
Australia - 2.1% New Zealand - 0.2%
Portugal - 1.6%
FORWARD CURRENCY CONTRACTS
Contract Amount Contract Amount Appreciation Delivery
(Local Currency) (U.S. Dollars) (Depreciation) Date
Currency Purchased:
Belgian Fran 3,484,409 $93,642 $476 July 1, 1998
British Pound 10,037 16,748 (14) July 1, 1998
Japanese Yen 781,760 5,633 (358) July 1, 1998
- --------------------------------------------------------------------------------
Net receivable (payable)
for forward currency contracts purchased 104
- --------------------------------------------------------------------------------
Currency Sold:
French Franc 743,936 (123,046) (284) July 1, 1998
- --------------------------------------------------------------------------------
Net receivable (payable)
for forward currency contracts sold (284)
- --------------------------------------------------------------------------------
Net receivable (payable)
for forward currency contracts ($180)
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
28 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND FUND FUND
Assets:
Investment in corresponding
portfolio, at value $1,666,215 $13,780,784 $2,802,265
Receivable for capital stock issued 21,220 --- 167,663
Receivable from investment adviser 2,842 5,247 17,763
Unamortized organization costs 8,175 11,569 11,361
Other assets 5,697 22,812 20,247
Total Assets 1,704,149 13,820,412 3,019,299
================================================================================
Liabilites:
Payable for capital stock redeemed 7,856 24,663 176,658
Dividends payable --- 31,865 102
Accrued transfer agent and
administrative fees 722 6,188 76
Accrued 12b-1 and shareholder
service fees -- Class A 776 --- 2,716
Accrued 12b-1 and shareholder
service fees -- Class C 1,699 41,243 2,829
Organizational costs due to adviser 2,108 --- ---
Other accrued liabilities 22,430 13,955 18,120
Total Liabilities 35,591 117,914 200,501
================================================================================
Net Assets 1,668,558 13,702,498 2,818,798
================================================================================
Components of Net Assets:
Capital 1,584,113 13,937,526 2,074,394
Accumulated undistributed (distributions
in excess of) net investment income 788 3,021 (2,603)
Accumulated undistributed net realized gains
(losses) from investment transactions 46,640 (412,474) 70,015
Net unrealized appreciation
(depreciation) of investments 37,017 174,434 676,992
Total Net Assets $1,668,558 $13,702,498 $2,818,798
================================================================================
Net Assets:
Class A Shares $483,800 $48,332 $1,402,188
Class C Shares 1,184,758 13,654,166 1,416,610
$1,668,558 $13,702,498 $2,818,798
================================================================================
Outstanding units of beneficial interest
(shares): (indefinite number of shares
authorized, $0.10 par value)
Class A Shares 33,095 4,136 76,319
Class C Shares 81,325 1,056,995 78,018
114,420 1,061,131 154,337
================================================================================
Net asset value -- redemption price per share:
Class A Shares $14.62 $11.68 $18.37
Class C Shares * $14.57 $12.92 $18.16
Sales charge -- Class A Shares 4.00% 4.00% 4.00%
Maximum offering price per share --
Class A Shares (100%/(100% - sales
charge) of net asset value adjusted to
nearest cent) $15.23 $12.17 $19.14
* Redemption price varies based upon holding period.
See accompanying notes to financial statements.
The Flex-Partners 1998 Semi-Annual Report 29
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND FUND FUND
Net Investment Income from
Corresponding Portfolio:
================================================================================
Interest $4,057 $167,745 $3,610
Dividends 4,060 37,894 38,223
Expenses (4,528) (64,310) (19,677)
Total Net Investment Income from
Corresponding Portfolio 3,589 141,329 22,156
================================================================================
Fund Expenses:
================================================================================
Administrative fee 184 3,452 640
Transfer agent fees 3,982 8,940 1,802
Shareholder service -- Class A Shares 451 57 1,570
Shareholder service -- Class C Shares 471 17,541 1,631
Audit fees 1,282 1,543 957
Legal fees 1,414 1,894 1,933
Printing 2,064 6,085 3,107
Amortization of organizational costs 1,008 4,153 2,757
Postage 879 3,937 991
12b-1 fees -- Class A Shares 451 57 1,651
12b-1 fees -- Class C Shares 1,413 52,624 4,968
Registration and filing fees 5,017 9,609 8,941
Insurance --- 669 650
Other expenses 1,273 6,450 3,676
Total Expenses 19,889 117,011 35,274
================================================================================
Expenses reimbursed
by investment adviser (17,088) (33,366) (26,448)
Net Expenses 2,801 83,645 8,826
================================================================================
NET INVESTMENT INCOME 788 57,684 13,330
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS ALLOCATED FROM
CORRESPONDING PORTFOLIOS:
================================================================================
Net realized gains (losses) from
futures contracts 12,676 (326,227) (3,316)
Net realized gains (losses) from
investment transactions 34,503 249,424 73,331
Net change in unrealized appreciation
(depreciation) of investments 32,053 866,856 86,589
NET GAIN FROM INVESTMENTS 79,232 790,053 156,604
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $80,020 $847,737 $169,934
See accompanying notes to financial statements.
30 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
INTERNATIONAL EQUITY FUND
Assets:
Investments, at value (cost $15,399,801) $16,460,695
Repurchase agreements, at cost 644,000
Cash 48,976
Foreign currency, at value (cost $4,303) 4,220
Receivable for capital stock issued 25,330
Receivable for investments sold 978,017
Dividends, interest and tax
reclaims receivable 64,050
Receivable from investment adviser 5,766
Unamortized organization costs 24,315
Other assets 16,005
Total Assets 18,271,374
================================================================================
Liabilites:
================================================================================
Payable for capital stock redeemed 23,121
Payable for investments purchased 972,285
Payable for foreign currency contract 180
Accrued management fees 13,887
Accrued fund accounting fees 12,579
Accrued transfer agent and
administrative fees 6,888
Other accrued liabilities 9,787
Total Liabilities 1,038,727
================================================================================
Net Assets $17,232,647
Components of Net Assets:
Capital $15,510,023
Accumulated undistributed (distributions in excess
of) net investment income 43,207
Accumulated undistributed net realized gains (losses)
from investment and foreign currency
transactions 615,225
Net unrealized appreciation (depreciation) of
investments and foreign currency 1,064,192
Total Net Assets $17,232,647
================================================================================
Net Assets:
Class A Shares $17,232,647
Outstanding units of beneficial interest (shares):
Class A Shares 1,227,801
Net asset value -- redemption price per share:
Class A Shares $14.04
Sales charge -- Class A Shares 4.00%
Maximum offering price per share -- Class A Shares
(100%/(100% - sales charge) of net asset value
adjusted to nearest cent) $14.63
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
INTERNATIONAL EQUITY FUND
Investment Income:
================================================================================
Interest $17,046
Dividends 191,542
Foreign taxes withheld (14,907)
Total Investment Income 193,681
Expenses:
================================================================================
Investment management fees 75,074
Administration fees 8,667
Distribution (12b-1) fees 3,588
Fund accounting fees 14,876
Transfer agent fees 7,508
Audit fees 2,158
Legal fees 1,448
Custody fees 29,652
Trustees fees and expenses 4,549
Postage expense 362
Registration expense 5,835
Printing expense 2,480
Amortization of organizational costs 2,889
Other expenses 992
Total Expenses 160,078
================================================================================
Expenses reimbursed by investment adviser (9,604)
Net Expenses 150,474
================================================================================
NET INVESTMENT INCOME 43,207
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gains from investments
and foreign currency transactions 778,005
Net change in unrealized appreciation
of investments 1,178,196
NET GAIN FROM INVESTMENTS 1,956,201
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,999,408
================================================================================
See accompanying notes to financial statements.
The Flex-Partners 1998 Semi-Annual Report 31
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
<CAPTION>
CORE EQUITY FUND TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
INCREASE (DECREASE) IN NET ASSETS:
====================================================================================================================================
OPERATIONS:
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $788 $443 $345 $57,684 $214 $57,470 $13,330 $7,211 $6,119
Net realized gains (losses) from
investment, futures contracts and
foreign currency transactions 47,179 23,138 24,041 (76,803) (140) (76,663) 70,015 33,747 36,268
Net change in unrealized
appreciation (depreciation) of
investments 32,053 21,880 10,173 866,856 2,702 864,154 86,589 37,712 48,877
Net increase (decrease) in net
assets resulting from operations 80,020 45,461 34,559 847,737 2,776 844,961 169,934 78,670 91,264
====================================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income --- --- --- (54,672) (207) (54,465) (13,330) (7,211) (6,119)
In excess of net investment income --- --- --- --- --- --- (2,603) (1,142) (1,461)
Net decrease in net assets
resulting from dividends and
distributions --- --- --- (54,672) (207) (54,465) (15,933) (8,353) (7,580)
====================================================================================================================================
CAPITAL TRANSACTIONS:
Issued 2,186,439 211,167 1,975,272 1,222,309 9,600 1,212,709 459,861 134,250 325,611
Reinvested --- --- --- 24,795 83 24,712 15,184 8,007 7,177
Redeemed (922,846) (18,255) (904,591) (2,874,434) --- (2,874,434) (378,814) (95,706) (283,108)
Net increase (decrease) in net
assets resulting from capital
share transactions 1,263,593 192,912 1,070,681 (1,627,330) 9,683 (1,637,013) 96,231 46,551 49,680
TOTAL INCREASE (DECREASE)
IN NET ASSETS 1,343,613 238,373 1,105,240 (834,265) 12,252 (846,517) 250,232 116,868 133,364
====================================================================================================================================
NET ASSETS - Beginning of period 324,945 245,427 79,518 14,536,763 36,080 14,500,683 2,568,566 1,285,320 1,283,246
NET ASSETS - End of period $1,668,558 $483,800 $1,184,758 $13,702,498 $48,332 $13,654,166 $2,818,798 $1,402,188 $1,416,610
====================================================================================================================================
SHARE TRANSACTIONS:
Issued 153,819 15,056 138,763 100,593 870 99,723 26,046 7,261 18,785
Reinvested --- --- --- 1,958 7 1,951 853 447 406
Redeemed (65,050) (1,331) (63,719) (228,745) --- (228,745) (21,304) (5,388) (15,916)
Change in shares 88,769 13,725 75,044 (126,194) 877 (127,071) 5,595 2,320 3,275
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
INTERNATIONAL EQUITY FUND
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income (loss) $43,207
Net realized gains (losses) from investment,
futures contracts, and foreign
currency transactions 778,005
Net change in unrealized appreciation
(depreciation) of investments 1,178,196
Net increase (decrease) in net assets
resulting from operations 1,999,408
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ---
In excess of net investment income ---
Net decrease in net assets resulting
from dividends and distributions ---
================================================================================
CAPITAL TRANSACTIONS:
Issued 3,622,612
Reinvested ---
Redeemed (579,441)
Net increase (decrease) in net assets resulting from
capital share transactions 3,043,171
TOTAL INCREASE (DECREASE) IN NET ASSETS 5,042,579
================================================================================
NET ASSETS - Beginning of period 12,190,068
NET ASSETS - End of period $17,232,647
================================================================================
SHARE TRANSACTIONS:
Issued 269,781
Reinvested ---
Redeemed (42,452)
Change in shares 227,329
See accompanying notes to financial statements.
32 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
CORE EQUITY FUND * TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
INCREASE (DECREASE) IN NET ASSETS:
====================================================================================================================================
OPERATIONS:
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income 71 $112 ($41) $128,691 $991 $127,700 $33,999 $16,465 $17,534
Net realized gains (losses) from
investment transactions, futures
contracts and foreign currency 1,363 1,001 362 2,929,816 7,934 2,921,882 234,211 116,754 117,457
Net change in unrealized
appreciation (depreciation) of
investments and foreign currency 4,964 3,709 1,255 (664,958) 15,665 (680,623) 363,380 167,064 196,316
Net increase (decrease) in net
assets resulting from operations 6,398 4,822 1,576 2,393,549 24,590 2,368,959 631,590 300,283 331,307
====================================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (112) (112) --- (128,691) (991) (127,700) (33,999) (16,465) (17,534)
From net realized gains (1,363) (1,001) (362) (2,929,816) (7,934) (2,921,882) (234,211) (116,754) (117,457)
In excess of net realized gains (539) (436) (103) (335,671) (926) (334,745) --- --- ---
Net decrease in net assets
resulting from dividends and
distributions (2,014) (1,549) (465) (3,394,178) (9,851) (3,384,327) (268,210) (133,219) (134,991)
====================================================================================================================================
CAPITAL TRANSACTIONS:
Issued 641,428 563,486 77,942 983,507 11,333 972,174 376,081 155,854 220,227
Reinvested 2,014 1,549 465 3,352,428 9,851 3,342,577 260,528 128,843 131,685
Redeemed (322,881) (322,881) --- (2,877,993) (136,573) (2,741,420) (1,323,208) (543,220) (779,988)
Net increase (decrease) in net
assets resulting from capital
share transactions 320,561 242,154 78,407 1,457,942 (115,389) 1,573,331 (686,599) (258,523) (428,076)
TOTAL INCREASE (DECREASE)
IN NET ASSETS 324,945 245,427 79,518 457,313 (100,650) 557,963 (323,219) (91,459) (231,760)
====================================================================================================================================
NET ASSETS - Beginning of period --- --- --- 14,079,450 136,730 13,942,720 2,891,785 1,376,779 1,515,006
NET ASSETS - End of period $324,945 $245,427 $79,518 $14,536,763 $36,080 $14,500,683 $2,568,566 $1,285,320 $1,283,246
====================================================================================================================================
SHARE TRANSACTIONS:
Issued 50,902 44,658 6,244 64,263 786 63,477 24,093 9,531 14,562
Reinvested 159 122 37 271,118 864 270,254 15,263 7,494 7,769
Redeemed (25,410) (25,410) --- (190,148) (9,279) (180,869) (83,469) (34,239) (49,230)
Change in shares 25,651 19,370 6,281 145,233 (7,629) 152,862 (44,113) (17,214) (26,899)
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
INTERNATIONAL EQUITY FUND*
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income ($15,575)
Net realized gains (losses) from investment transactions,
futures contracts and foreign currency (163,883)
Net change in unrealized appreciation (depreciation) of
investments and foreign currency (114,004)
Net increase (decrease) in net assets resulting from operations (293,462)
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income ---
From net realized gains ---
In excess of net realized gains ---
Net decrease in net assets resulting from dividends and distributions ---
================================================================================
CAPITAL TRANSACTIONS:
Issued 12,536,720
Reinvested ---
Redeemed (53,190)
Net increase (decrease) in net assets resulting from capital
share transactions 12,483,530
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,190,068
================================================================================
NET ASSETS - Beginning of period ---
NET ASSETS - End of period $12,190,068
================================================================================
SHARE TRANSACTIONS:
Issued 1,004,830
Reinvested ---
Redeemed (4,358)
Change in shares 1,000,472
* For the period from commencement of operations, August 1, 1997, and September
2, 1997 for the Core Equity Fund and International Equity Fund, respectively,
through December 31, 1997.
See accompanying notes to financial statements.
The Flex-Partners 1998 Semi-Annual Report 33
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
<CAPTION>
TACTICAL ASSET INTERNATIONAL
CORE EQUITY FUND ALLOCATION FUND UTILITY GROWTH FUND EQUITY FUND
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.67 $12.66 $11.07 $12.25 $17.37 $17.17 $12.18
Income from Investment Operations:
Net investment income 0.01 --- 0.05 0.05 0.10 0.08 0.04
Net gains (losses) from investments 1.94 1.91 0.62 0.67 1.01 1.01 1.82
Total from investment operations 1.95 1.91 0.67 0.72 1.11 1.09 1.86
Less Dividends and Distributions:
From net investment income --- --- (0.05) (0.05) (0.10) (0.08) ---
In excess of net investment income --- --- --- --- (0.01) (0.02) ---
Total distributions --- --- (0.05) (0.05) (0.11) (0.10) ---
Net Asset Value, End of Period $14.62 $14.57 $11.69 $12.92 $18.37 $18.16 $14.04
====================================================================================================================================
Total Return 15.39%(1) 15.09%(1) 5.97%(1) 5.88%(1) 6.44%(1) 6.34%(1) 15.27%(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $484 $1,185 $48 $13,654 $1,402 $1,417 $17,233
Ratio of expenses to
average net assets 1.91%(2) 2.06%(2) 2.00%(2) 2.10%(2) 2.00%(2) 2.25%(2) 2.00%(2)
Ratio of net investment income to
average net assets 0.25%(2) 0.18%(2) 0.93%(2) 0.82%(2) 1.10%(2) 0.90%(2) 0.57%(2)
Ratio of expenses to average net assets
before waiver of fees 6.74%(2) 6.51%(2) 10.81%(2) 2.55%(2) 3.88%(2) 4.31%(2) 2.13%(2)
Ratio of net investment income to average
net assets before waiver of fees (4.58%)(2) (4.27%)(2) (7.88%)(2) 0.37%(2) (0.78%)(2) (1.16%)(2) 0.44%(2)
Portfolio turnover 42.63%(3) 42.63%(3) 114.68%(3) 114.68%(3) 19.86%(3) 19.86%(3) 44.46%
<FN>
(1) Not annualized.
(2) Annualized.
(3) Represents turnover rate of corresponding portfolio.
</FN>
</TABLE>
See accompanying notes to financial statements.
34 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 1997
TACTICAL ASSET
CORE EQUITY FUND * ALLOCATION FUND UTILITY GROWTH FUND INTERNATIONAL
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C EQUITY FUND
August 1, 1997* September 2, 1997*
to to
December 31, 1997 December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.50 $12.50 $12.56 $13.52 $15.09 $14.91 $12.50
Income from Investment Operations:
Net investment income 0.01 (0.01) 0.40 0.14 0.22 0.19 (0.02)
Net gains (losses) from investments 0.24 0.24 1.78 2.26 4.03 3.99 (0.30)
Total from investment operations 0.25 0.23 2.18 2.40 4.25 4.18 (0.32)
Less Dividends and Distributions:
From net investment income (0.01) --- (0.40) (0.14) (0.22) (0.19) ---
In excess of net investment income --- --- --- --- --- --- ---
From net realized gains (0.05) (0.05) (2.93) (3.17) (1.75) (1.73) ---
In excess of net realized gains (0.02) (0.02) (0.34) (0.36) --- --- ---
Tax return of capital --- --- --- --- --- --- ---
Total distributions (0.08) (0.07) (3.67) (3.67) (1.97) (1.92) ---
Net Asset Value, End of Period $12.67 $12.66 $11.07 $12.25 $17.37 $17.17 $12.18
====================================================================================================================================
Total Return 2.00%(1) 1.88%(1) 17.29% 17.71% 28.41% 28.25% (2.56%)(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $245 $80 $36 $14,501 $1,285 $1,283 $12,190
Ratio of expenses to
average net assets 2.00%(2) 2.25%(2) 2.00% 2.10% 2.00% 2.25% 2.00%(2
Ratio of net investment income to
average net assets 0.10%(2) (0.13%)(2) 0.99% 0.86% 1.36% 1.21% (0.43%)(2)
Ratio of expenses to average net
assets before waiver of fees 9.50%(2) 16.67%(2) 6.16% 2.50% 4.03% 4.51% 2.68%(2
Ratio of net investment income to average
net assets before waiver of fees (7.40%)(2) (14.55%)(2) (3.17%) 0.46% (0.67%) (1.05%) (1.11%)(2)
Portfolio turnover 129.79%(3) 129.79%(3) 395.42%(3) 395.42%(3) 41.22%(3) 41.22%(3) 12.71%
Average brokerage commission per share n/a n/a n/a n/a n/a n/a $0.0316
</TABLE>
FINANCIAL HIGHLIGHTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
June 1, 1995* July 11, 1995* to
1996 to Dec. 31, 1995 1996 December 31, 1995
CLASS A** CLASS C CLASS C CLASS A CLASS C CLASS A CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.50 $13.26 $12.50 $14.26 $14.27 $12.50 $12.50
Income from Investment Operations
Net investment income 0.14 0.10 (0.02) 0.29 0.26 0.12 0.10
Net gains or losses from securities 0.55 0.57 1.84 1.48 1.49 1.76 1.77
Total from investment operations 0.69 0.67 1.82 1.77 1.75 1.88 1.87
Less Distributions
Dividends from net investment income (0.14) (0.10) --- (0.29) (0.26) (0.12) (0.10)
Distributions (from capital gains) (0.49) (0.31) (1.06) (0.65) (0.85) --- ---
Total distributions (0.63) (0.41) (1.06) (0.94) (1.11) (0.12) (0.10)
Net Asset Value, End of Period $12.56 $13.52 $13.26 $15.09 $14.91 $14.26 $14.27
==================================================================================================================================
Total Return 5.51%(1) 5.07% 14.57%(1) 12.61% 12.45% 15.11%(1) 15.07%(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $137 $13,943 $11,524 $1,377 $1,515 $641 $782
Ratio of expenses to average net
assets 1.73%(2) 2.00% 1.97%(2) 1.75% 2.00% 1.75%(2) 2.00%(2)
Ratio of net investment income to
average net 2.60%(2) 0.75% (0.29%)(2) 2.03% 1.85% 2.17%(2) 1.72%(2)
Ratio of expenses to average net
assets before waiver of fees 5.23%(2) 2.40% 2.80%(2) 4.37% 4.65% 22.70%(2) 13.37%(2)
Ratio of net investment income to
average net before waiver of fees (0.90%)(2) 0.35% (1.12%)(2) (0.59%) (0.80%) (18.78%)(2) (9.55%)(2)
Portfolio turnover 297.41%(3) 297.41%(3) 186.13%(3) 50.79%(3) 50.79%(3) 5.06%(3) 5.06%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Date of commencement of operations.
**August 1, 1996 (date of commencement of operations) to December 31, 1996.
(1)Not annualized.
(2)Annualized.
(3)Represents turnover rate of corresponding portfolio.
(4)Represents the total dollar amount of commissions paid on investment
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners 1998 Semi-Annual Report 35
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
1. ORGANIZATION
The Flex-Partners Trust (the "Trust") was organized in 1992 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
series, and it is presently comprised of five separate funds as follows: Core
Equity Fund, Tactical Asset Allocation Fund (formerly TAA Fund), Utility Growth
Fund (formerly BTB Fund), International Equity Fund (each a "Fund" and
collectively the "Funds") and Institutional Fund. Each Fund, except
International Equity Fund, invests all of its 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.
Each Fund, each Portfolio into which the Fund invests and the percentage of each
Portfolio owned by the respective Fund is as follows:
PERCENTAGE OF PORTFOLIO
OWNED BY FUND AS OF
FUND PORTFOLIO JUNE 30, 1998
- ---- --------- -------------
Core Equity Fund Growth Stock Portfolio 3%
Tactical Asset Allocation Fund Mutual Fund Portfolio 11%
Utility Growth Fund Utilities Stock Portfolio 20%
The investment objective of the International Equity Fund is to seek long-term
growth from investing primarily in equity securities of foreign issuers.
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. The financial
statements of the Institutional Fund are are separately reported.
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
Each Fund, except International Equity Fund, values its investment in the
corresponding Portfolio at fair value. Valuation of securities held by each
Portfolio is further described at Note 2 of the Portfolios' Notes to Financial
Statements which are included on Page 43 of this report.
Securities owned by the International Equity Fund are valued at the last sales
price, or, lacking any sales, at the closing bid prices.
FOREIGN CURRENCY TRANSLATION
Accounting records of the Funds are maintained in U.S. dollars. The value of
securities, other assets and liabilities of the International Equity Fund
denominated in foreign currency are translated into U.S. dollars at the current
exchange rate. Purchases and sales of securities, income receipts and expense
payments are translated into U.S. dollars at the exchange rate on the dates of
such transactions. The Funds do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates from those resulting
from changes in market prices of securities held.
FORWARD CURRENCY CONTRACTS
The International Equity Fund may enter into forward foreign currency exchange
contracts ("forwards") for purposes of hedging against either specific
transactions or portfolio positions. Forwards are agreements between two parties
to exchange currencies at a set price on a future date. The market value of
forwards fluctuates with changes in currency exchange rates. The forward is
marked-to-market daily, and the change in market value is recorded by the Fund
as unrealized appreciation or depreciation. When the forward is offset by entry
into a closing transaction or extinguished by delivery of the currency, the Fund
records a realized gain or loss equal to the fluctuation in value during the
period the forward was open. Risks may arise upon entering forwards from the
potential inability of counterparties to meet the terms of the forwards or from
unanticipated fluctuations in the value of the foreign currency relative to the
U.S. dollar.
36 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
INCOME TAXES
It is each 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
Dividends to shareholders are recorded on the ex-dividend date. Core Equity Fund
and Tactical Asset Allocation Fund declare dividends from net investment income
on a quarterly basis. Utility Growth Fund declares dividends from net investment
income on a monthly basis. International Equity Fund declares dividends from net
investment income on an annual basis. Each 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. These differences are primarily due to
deferrals of certain losses, expiring capital loss carryforwards, differing
treatment of unrealized gains and losses of futures contracts held by the Fund's
corresponding Portfolio, and differing treatment of gains and losses realized in
transactions denominated in foreign currency. Permanent book and tax basis
differences have been reclassified among the components of net assets.
ORGANIZATIONAL COSTS
The costs related to the organization of each of the four Funds have been
deferred and are being amortized by each Fund on a straight-line basis over a
five-year period.
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. Expenses of each Fund, other than expenses
incurred pursuant to the Class A and Class C distribution and shareholder
services plans, are allocated to the separate classes based on their relative
net assets or other appropriate basis.
3. AGREEMENTS AND TRANSACTIONS 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. Under separate Investment Subadvisory
Agreements with RMA, Sector Capital Management, Inc., Miller/Howard Investments,
Inc., and Commercial Union Investment Management, LTD serve as subadvisor of the
Growth Stock Portfolio, the Utilities Stock Portfolio, and the International
Equity Fund, respectively. Sub-subadvisers, selected by Sector Capital
Management, Inc., subject to the review and approval of the Trustees of the
Growth Stock Portfolio, are responsible for the selection of individual
portfolio securities for the assets of the Portfolio assigned to them by Sector
Capital Management, Inc. For such services, the International Equity Fund pays
RMA monthly fees at the annual rate of 1.00% of the average daily net asset
value of the Fund.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for each
Fund. In compensation for such services, each Fund pays MFSCo an annual fee
equal to the greater of $15 per active shareholder account or 0.10% of the
Fund's average daily net assets. MFSCo is entitled to receive an annual minimum
fee of $4,000 for each Fund. MFSCo provides the Trust with certain
administrative services. In compensation for such services, each Fund pays MFSCo
an annual fee equal to 0.05% of each Fund's average daily net assets.
RMA has voluntarily agreed to reimburse the Funds for the amount by which annual
expenses of each Fund including expenses allocated from its respective Portfolio
(excluding interest, taxes, brokerage fees, and extraordinary expenses) exceed
certain limitations. Such reimbursement is limited to the total of fees charged
the Fund by RMA and MFSCo. The limitations currently in place are as follows:
ANNUAL EXPENSE LIMITATION AS A
FUND PERCENTAGE OF AVERAGE DAILY NET ASSETS
- ---- --------------------------------------
Core Equity Fund -- Class A 1.80%*
Core Equity Fund -- Class C 1.95%*
Tactical Asset Allocation Fund -- Class A 2.00%
Tactical Asset Allocation Fund -- Class C 2.10%
Utility Growth Fund -- Class A 2.00%
Utility Growth Fund -- Class C 2.25%
International Equity Fund -- Class A 2.00%
* Prior to March 31, 1998, the annual expense limitation had been 2.00% and
2.25% of average daily net assets of the Core Equity Fund Class A shares and
Class C shares, respectively.
The Flex-Partners 1998 Semi-Annual Report 37
<PAGE>
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, each Fund has adopted two Distribution Plans
(the "Plans") with Advisor Dealer Services (the "Distributor"). Under the
provisions of the Plans, each Fund pays the Distributor an annual fee, at a
maximum rate of 0.25% and 0.75% of average daily net assets of Class A shares
and Class C shares, respectively, to aid in the distribution of Fund shares.
Additionally, each Fund has adopted two Service Plans with the Distributor.
Under the provisions of the Service Plans, each Fund pays the Distributor an
annual fee, at a maximum rate of 0.25% of average daily net assets of Class A
shares and Class C shares, to reimburse securities dealers for personal services
or maintenance of shareholder accounts.
4. SECURITIES TRANSACTIONS
For the six months ended June 30, 1998, the cost of purchases and proceeds from
sales or maturities of long-term investments for the International Equity Fund
were $9,523,102 and $6,410,736, respectively. The cost of investments for
federal income tax purposes and for financial reporting purposes are
substantially the same.
38 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1998 (Unaudited)
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
Assets:
Investments at market value* $101,072,868 $38,428,086 $13,704,792
Repurchase agreements, at cost* 29,805,000 9,936,000 157,000
Cash 131 465 891
Receivable for securities sold --- 114,241 ---
Interest receivable 113,876 1,739 27
Dividends receivable 23,887 37,217 13,719
Prepaid/Other assets --- 5,695 ---
Unamortized organization costs --- --- 3,839
Total Assets 131,015,762 48,523,443 13,880,268
================================================================================
Liabilites:
Payable for securities purchased --- 143,451 ---
Payable for net variation margin on
futures contracts 237,150 85,200 ---
Payable to investment adviser 86,239 38,260 11,363
Accrued audit fees 4,778 5,189 4,422
Accrued legal fees 1,992 --- 1,595
Accrued custodian fees 4,712 9,482 1,409
Accrued trustee fees 17,115 2,235 2,641
Accrued fund accounting fees 3,587 3,225 1,576
Other accrued liabilities 3,796 163 1,716
Total Liabilities 359,369 287,205 24,722
================================================================================
Net Assets $130,656,393 $48,236,238 $13,855,546
================================================================================
Net Assets:
================================================================================
Capital 123,465,914 39,676,471 11,282,134
Net unrealized appreciation from
investments 7,190,479 8,559,767 2,573,412
Net Assets $130,656,393 $48,236,238 $13,855,546
================================================================================
*Securities at cost $123,687,389 $39,804,319 $11,288,380
See accompanying notes to financial statements
The Flex-Partners 1998 Semi-Annual Report 39
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
NET INVESTMENT INCOME
================================================================================
Interest $1,546,506 $210,773 $18,085
Dividends 399,688 247,193 174,678
Total Investment Income 1,946,194 457,966 192,763
================================================================================
Expenses:
================================================================================
Investment advisory fees 539,179 209,559 61,999
Audit fees 4,907 5,368 4,567
Custodian fees 8,296 21,101 2,201
Trustees fees and expenses 23,500 4,707 3,518
Legal fees 1,715 5,032 1,305
Amortization of organization cost --- --- 4,449
Accounting fees 25,061 19,048 9,203
Insurance 1,014 151 43
Other expenses 5,106 3,730 4,876
Total Expenses 608,778 268,696 92,161
================================================================================
Investment advisory fees waived --- (3,114) ---
Total Net Expenses 608,778 265,582 92,161
NET INVESTMENT INCOME 1,337,416 192,384 100,602
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gain (loss) from
futures contracts (3,106,475) 826,086 ---
Net realized gain (loss) from
investments 2,367,480 2,399,251 329,415
Net change in unrealized appreciation
of investments 7,884,956 2,687,032 306,427
NET GAIN (LOSS) ON INVESTMENTS 7,145,961 5,912,369 635,842
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $8,483,377 $6,104,753 $736,444
See accompanying notes to financial statements
40 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
=================================================================================================
OPERATIONS:
=================================================================================================
Net investment income $1,337,416 $192,384 $100,602
Net realized gain (loss) from investments
and futures contracts (738,995) 3,225,337 329,415
Net change in unrealized appreciation
(depreciation) of investments 7,884,956 2,687,032 306,427
Net increase in net assets
resulting from operations 8,483,377 6,104,753 736,444
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
=================================================================================================
Contributions 8,192,893 38,536,220 4,640,821
Withdrawals (30,552,570) (29,798,698) (2,191,437)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests (22,359,677) 8,737,522 2,449,384
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,876,300) 14,842,275 3,185,828
=================================================================================================
NET ASSETS - Beginning of period 144,532,693 33,393,963 10,669,718
NET ASSETS - End of period $130,656,393 $48,236,238 $13,855,546
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
=================================================================================================
OPERATIONS:
=================================================================================================
Net investment income $2,965,765 $264,643 $158,538
Net realized gain (loss) from investments
and futures contracts 22,734,137 5,302,202 769,055
Net change in unrealized appreciation
(depreciation) of investments (1,244,081) 2,709,218 1,487,258
Net increase in net assets
resulting from operations 24,455,821 8,276,063 2,414,851
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
=================================================================================================
Contributions 27,375,051 40,513,401 2,517,724
Withdrawals (42,837,747) (39,809,183) (2,227,211)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests (15,462,696) 704,218 290,513
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,993,125 8,980,281 2,705,364
=================================================================================================
NET ASSETS - Beginning of period 135,539,568 24,413,682 7,964,354
NET ASSETS - End of period $144,532,693 $33,393,963 $10,669,718
</TABLE>
See accompanying notes to financial statements
The Flex-Partners 1998 Semi-Annual Report 41
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
GROWTH STOCK PORTFOLIO
<CAPTION>
Six Months Ended
June 30, 1998 Years Ended December 31,
(unaudited) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $48,236 $33,394 $24,414 $24,537 $22,169 $26,172
Ratio of Expenses to Average Net Assets 1.27(1) 1.34% 1.24% 1.25% 1.23% 1.23%
Ratio of Net Investment Income to
Average Net Assets 0.92(1) 0.83% 2.33% 3.78% 2.35% 0.99%
Ratio of Expenses to Average Net Assets
before waiver of fees 1.28(1) 1.34% 1.24% 1.25% 1.23% 1.23%
Ratio of Net Investment Income to Average
Net Assets before waiver of fees 0.91(1) 0.83% 2.33% 3.78% 2.35% 0.99%
Portfolio Turnover Rate 42.63% 129.79% 81.66% 337.57% 102.76% 99.54%
</TABLE>
<TABLE>
UTILITIES STOCK PORTFOLIO
<CAPTION>
Six Months Ended Period
June 30, 1998 Years Ended December 31, June 21, 1995* to
(unaudited) 1997 1996 December 31, 1995
<S> <C> <C> <C> <C>
Net Assets, End of Period ($000) $13,856 $10,670 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.49%(1) 1.60% 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 1.62%(1) 1.79% 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.49%(1) 1.65% 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 1.62%(1) 1.74% 2.19% 2.01%(1)
Portfolio Turnover Rate 19.86% 41.22% 50.79% 5.06%
</TABLE>
<TABLE>
MUTUAL FUND PORTFOLIO
<CAPTION>
Six Months Ended
June 30, 1998 Year Ended December 31,
(unaudited) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $130,656 $144,533 $135,540 $122,109 $83,185 $81,605
Ratio of Expenses to Average Net Assets* 0.91%(1) 0.89% 0.87% 0.95% 1.01% 1.03%
Ratio of Net Investment Income to
Average Net Assets 1.99%(1) 2.08% 1.86% 1.26% 2.76% 0.09%
Portfolio Turnover Rate 114.68% 395.42% 297.41% 186.13% 168.17% 279.56%
</TABLE>
(1) Annualized
* Date of commencement of operations
See accompanying notes to financial statements
42 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 (UNAUDITED)
1. ORGANIZATION
Each Fund of The Flex-Partners Trust (the "Trust") invests all of its 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. Each 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. Each Declaration of Trust permits the Trustees, who are the same for
each Portfolio, to issue beneficial interests in each Portfolio.
The investment objective of each Portfolio is as follows:
The Mutual Fund Portfolio seeks growth of capital through investment in the
shares of other mutual funds.
The Growth Stock Portfolio seeks capital growth by investing in a
diversified portfolio of domestic common stocks with greater than average
growth characteristics selected primarily from the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500").
The Utilities Stock Portfolio seeks a high level of current income and
growth of income by investing primarily in equity securities of domestic
and foreign public utility companies; however, it will not invest in
electric utilities whose generation of power is derived from nuclear
reactors. The Portfolio also seeks capital appreciation, but only when
consistent with its primary investment objective.
The financial statements of the Funds are included elsewhere in this report.
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.
INVESTMENTS
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
over-the-counter 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 as reported by the underlying
fund. The Portfolios obtain prices from independent pricing services which use
valuation techniques approved by the Board of Trustees.
Money market securities held in the 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 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.
REPURCHASE AGREEMENTS
Each 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.
The Flex-Partners 1998 Semi-Annual Report 43
<PAGE>
FUTURES & OPTIONS
Each Portfolio may engage in transactions in financial futures contracts and
options contracts in order to manage the risk of unanticipated changes in market
values of 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 an initial margin, which is either cash or
securities in an amount equal to a certain percentage of the contract value.
Subsequently, the variation margin, which is equal to changes in the daily
settlement price or last sale price on the exchanges where they trade, is
received or paid. The Portfolios record realized gains or losses for the daily
variation margin when they are recorded as a gains or losses from futures
contracts.
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 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 appreciation or depreciation until closed, exercised or expired.
The Portfolios may write covered call or put options for which premiums received
are recorded in as liabilities and are subsequently adjusted to current market
value of the options written. When written options are closed or exercised,
premiums received are offset against the proceeds paid, and the Portfolio
records realized gains or losses for the difference. When written options
expire, the liability is eliminated, and the Portfolio records realized gains
for the entire amount of premiums received.
During the six months ended June 30, 1998, the Portfolios had the following
activity in futures contracts and written option contracts:
LONG CONTRACTS
NUMBER OF CONTRACTS NOTIONAL AMOUNT
================================================================================
Mutual Fund Portfolio:
Outstanding, beginning of year 110 $25,064,900
Contracts opened 561 11,313,150
Contracts closed (568) (7,193,925)
Outstanding, end of year 103 29,184,125
================================= ======================== =====================
Growth Stock Portfolio:
Outstanding, beginning of year 7 $1,711,037
Contracts opened 194 50,243,175
Contracts closed (178) (45,575,637)
Outstanding, end of year 23 6,378,575
================================= ======================== =====================
44 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
COVERED PUT OPTIONS COVERED CALL OPTIONS
Number of Number of
contracts Premiums contracts Premiums
--------- -------- --------- --------
Mutual Fund Portfolio:
Outstanding, beginning of year 4,000 $7,391,887 4,000 $11,991,787
Options written --- --- --- ---
Options exercised 4,000 (7,391,887) (4,000) (11,991,787)
Outstanding, end of year --- --- --- ---
================================ ========= ============= ========== ============
INCOME TAXES
It is each 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 each Portfolio have been deferred and
are being amortized by the Portfolio on a straight-line basis over a five-year
period. Such costs for Mutual Fund Portfolio and Growth Stock Portfolio have
been fully amortized.
SECURITIES TRANSACTIONS
The Portfolios record security transactions on the trade date. Gains and losses
realized from the sale of securities are determined on the specific
identification basis. Dividend income is recognized on the ex-dividend date, and
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 each Portfolio with investment management, research,
statistical and advisory services. Under separate Investment Subadvisory
Agreements with RMA, Sector Capital Management, Inc. and Miller/Howard
Investments, Inc. serve as subadvisor of the Growth Stock Portfolio and the
Utilities Stock Portfolio, respectively. Sub-subadvisers, selected by Sector
Capital Management, Inc., subject to the review and approval of the Trustees of
the Growth Stock Portfolio, are responsible for the selection of individual
portfolio securities for the assets of the Portfolio assigned to them by Sector
Capital Management, Inc.
For such services the Portfolios pay monthly fees based upon the average daily
value of each Portfolio's net assets at the following annual rate: 1.00% of
average daily net assets up to $50 million, 0.75% of average daily net assets
exceeding $50 million up to $100 million and 0.60% of average daily net assets
exceeding $100 million..
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for each Portfolio. In compensation for such services,
each 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.
$7,500.
Certain officers and trustees of the Portfolios are also officers or directors
of MII, RMA and MFSCo.
The Flex-Partners 1998 Semi-Annual Report 45
<PAGE>
4. SECURITIES TRANSACTIONS
For the six months ended June 30, 1998, the cost of purchases and proceeds from
sales or maturities of long-term investments for the Portfolios were as follows:
PORTFOLIO PURCHASES SALES
- --------- --------- -----
Mutual Fund Portfolio $137,451,076 $176,802,677
Growth Stock Portfolio 14,951,737 15,075,303
Utilities Stock Portfolio 5,072,323 2,367,157
As of June 30, 1998, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax was as follows:
COST BASIS OF UNREALIZED UNREALIZED NET
PORTFOLIO INVESTMENTS APPRECIATION DEPRECIATION UNREALIZED
APPRECIATION
Mutual Fund Portfolio $123,687,389 $7,516,370 ($325,891) $7,190,479
Growth Stock Portfolio 39,804,319 9,374,265 (814,498) 8,559,767
Utilities Stock Portfolio 11,288,380 2,773,712 (200,300) 2,573,412
46 The Flex-Partners 1998 Semi-Annual Report
<PAGE>
MANAGER AND INVESTMENT ADVISER
R. Meeder & Associates
6000 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
SUBADVISER/THE UTILITIES STOCK PORTFOLIO
Miller/Howard Investments, Inc.
141 Upper Byrdcliffe Road, P.O. Box 549
Woodstock, New York 12498
SUBADVISER/THE GROWTH STOCK PORTFOLIO
Sector Capital Management L.L.C.
5350 Poplar Avenue, Suite 490
Memphis, Tennesse 38119
BOARD OF TRUSTEES
Milton S. Bartholomew
Dr. Roger D. Blackwell
James Didion
Charles Donabedian
John M. Emery
Richard A. Farr
William L. Gurner
Robert S. Meeder, Sr.
Robert S. Meeder, Jr.
Russel G. Means
Lowell G. Miller
Jack Nicklaus II
Walter L. Ogle
Philip A. Voelker
CUSTODIAN
Star Bank, N.A. Cincinnati
Cincinnati, Ohio 45201
TRANSFER AGENT DIVIDEND DISBURSING AGENT
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, Ohio 43017
AUDITORS
KPMG Peat Marwick LLP
Columbus, Ohio 43215
<PAGE>
THE FLEX-PARTNERS
P.O. Box 7177
Dublin, Ohio 43017
