THE FLEX-FUNDS P.O. Box 7177, Dublin OH 43017 (800)325-FLEX www.flex-funds.com
[PHOTO] Newspaper
1999 SEMI-ANNUAL REPORT
June 30, 1999
<PAGE>
PERFORMANCE CAPSULE Period and Average Annual Total Returns as of 6/30/99
<TABLE>
<CAPTION>
The Muirfield The Total Return The Highlands The U.S. Govt. The Money
Fund Utilities Fund Growth Fund** Bond Fund Market Fund
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year to Date 11.78% 12.69% 14.70% -1.09% 2.33%
One Year 35.86% 14.78% 22.33% 5.26% 4.99%
Three Years 19.44% 19.31% 23.63% 5.77% 5.23%
Five Years 18.46% -- 20.52% 7.14% 5.31%
Ten Years 14.39% -- 13.60% 7.14% 5.37%
Life of Fund 14.49%1 19.61%2 11.57%3 7.05%4 6.01%5
7-day Simple Yield* 4.64%
7-day Compound Yield* 4.74%
</TABLE>
To obtain a prospectus containing more complete information about The
Flex-funds, including other fees and expenses that apply to a continued
investment in the Funds, you may call The Flex-funds at (800)325-3539 or write
P.O. Box 7177, Dublin OH 43017. Please read the prospectus carefully before
investing.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. All performance figures
represents total returns and average annual total returns for the periods ended
6/30/99. Investment performance represents total return and assumes reinvestment
of all dividend and capital gain distributions. The investment value 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 of The Money Market, The U.S.
Government Bond, and The Total Return Utilities Funds during each of the periods
shown above. The Investment Adviser waived a portion of its management fees
during 1998 in order to reduce the operating expenses on The Highlands Growth
Fund.
An investment in The Money Market Fund is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency. Although
the Fund seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Fund. * Yield quotations more
closely reflect the current earnings of The Money Market Fund than do total
return quotations.
** The results achieved by The Highlands Growth Fund since 12/31/96 were
achieved with the Sector strategy as implemented by Sector Capital Management
LLC, the Fund's subadviser. The average annual rates of return for 3 years, 5
years, 10 years, and over the life of the Fund reflect a combination of the
Fund's previous tactical asset allocation discipline and the new Sector
discipline.
1 Inception Date 8/10/88. 2 Inception Date 6/21/95. 3 Inception Date 3/20/85.
4 Inception Date 5/9/85. 5 Inception Date 3/27/85.
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[PHOTO] Newspaper
TABLE OF CONTENTS
Semi-Annual Market Commentary . . . . . . . . . . . 4
The Muirfield Fund . . . . . . . . . . . . . . . . 6
The Total Return Utilities Fund . . . . . . . . . . 7
The Highlands Growth Fund . . . . . . . . . . . . . 8
The U.S. Government Bond Fund . . . . . . . . . . . 9
The Money Market Fund . . . . . . . . . . . . . . .10
Portfolio Holdings & Financial Statements . . . . .11
The Flex-funds 1999 Semi-Annual Report Page 3
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1999 SEMI-ANNUAL MARKET COMMENTARY
The first half of 1999 saw strong overall returns for The Flex-funds, as many
of our portfolios continued to outperform their peer groups and respective
benchmarks. Even more noteworthy, three of our no-load mutual funds The
Muirfield Fund, The U.S. Government Bond Fund, and The Money Market Fund -- were
ranked at or near the top of their categories for total returns as of June 30,
1999.
THE MUIRFIELD FUND ranked #1 out of 274 asset allocation funds for 12-month
total return as of June 30th, according to Morningstar. Strict adherence to the
Fund's "Defensive Investing" discipline, and well-researched fund selection
decisions, contributed greatly to this strong performance for the first six
months of 1999.
THE U.S. GOVERNMENT BOND FUND ranked #1 out of 392 general government bond
funds for 12-month total return as of June 30th, according to Morningstar. The
Fund has been in a fully-defensive position since February, when signs of a
negative trend in interest rates began to emerge. This stance helped The U.S.
Government Bond Fund survive the decline in bond prices in the second quarter
and return 0.94% for the three months ended June 30th, outperforming the -0.94%
return of the average general government bond fund according to Morningstar.
THE FLEX-FUNDS MONEY MARKET FUND remained #1 out of 85 general purpose money
market funds for cumulative total return since inception (March 1985) as of June
30, according to Lipper Inc. The Fund responded to changes in the fixed income
markets by shortening the average maturity of the portfolio from 64 days at the
end of March to 39 days at the end of June. The Money Market Fund also ranked
among the top 7% of all general purpose money market funds for average annual
total return for the 1-year, 5-year, and 10-year periods as of June 30th,
according to Lipper.
Our subadvised funds have also outperformed their respective peer group
averages for the first six months of 1999. Year to date, the 14.70% total return
of THE HIGHLANDS GROWTH FUND outperformed the 11.63% return of the Morningstar
average growth fund, and is ahead of the 12.38% total return of the S&P 500. And
THE TOTAL RETURN UTILITIES FUND enjoyed one of the best quarters in its history,
with an 11.99% total return for the three months ended June 30, 1999. The Fund's
12.69% year-to-date total return strongly outperformed the 7.17% total return of
the average utility fund, according to Morningstar.
THE MUIRFIELD FUND
- --------------------------------
# 1 ASSET ALLOCATION FUND
Based on average annual total
return as of 6/30/99 as follows:
1 year: 1 out of 274 funds
5 years: 26 out of 103 funds
10 years: 6 out of 37 funds
THE U.S. GOVERNMENT BOND FUND
- --------------------------------
# 1 GENERAL GOVERNMENT BOND FUND
Based on average annual total
return as of 6/30/99 as follows:
1 year: 1 out of 392 funds
5 years: 25 out of 241 funds
10 years: 30 out of 88 funds
THE MONEY MARKET FUND
- --------------------------------
# 1 Out of 85 general purpose money
market funds for cumulative total
return since inception (March 1985).
Rankings based on average annual total
return as of 6/30/99:
1 year: 21 out of 317 funds
5 years: 12 out of 213 funds
10 years: 5 out of 130 funds
The Flex-funds 1999 Semi-Annual Report Page 4
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Following last year's strong market performance, 1999 arrived with equal
amounts of apprehension and anticipation. Investors had their sights set on Dow
10,000 early in the year, but it took most of the first quarter for the Dow
Jones Industrial Average to close above that point for the first time. Internet
and high-tech stocks remained the darlings of the market during the first
quarter of the year. By the second quarter, however, these high-flying market
leaders were stalling as positive performance broadened to include value stocks
and long-neglected sectors such as energy, cyclical, and small-cap stocks.
Before breaking through the Dow 10,000-point barrier on March 29th, investors
had to weather a presidential impeachment hearing, a Brazilian currency crisis,
an increase in long bond yields, and skyrocketing stock valuations that gave
even the most bullish market analysts sensations of vertigo. Overseas, markets
continued to rotate as growth returned to Japan and the other emerging markets
which were devastated by last year's market corrections. The introduction of the
European single currency, the Euro, on January 1 came with great fanfare. Yet,
by mid-year the Euro was at its all-time low against the dollar, and questions
about the European Union's competitiveness versus the rest of the world remain
unanswered.
Also during the first half of the year, inflationary pressure clouded the
outlook for bonds, especially during the second quarter. In April, the Consumer
Price Index rose 0.7% - the highest one-month increase in eight years. In the
face of an overheating economy, long bond yields steadily increased. Speculation
mounted that the Federal Reserve Board would raise the Federal Funds target rate
in an effort to head-off inflation. Indeed, on June 30th the Fed tightened
monetary policy by raising rates from 4.75% to 5.00%.
Meanwhile, the calendar change heightened investor awareness of the imminent
arrival of Year 2000, and all the potential problems the next New Year's Day
could bring. Many companies were busily publicizing their Y2K corrective efforts
in an attempt to allay shareholder fears. The SEC and Wall Street's major
players demonstrated their Y2K conversion plans, successfully testing their
systems for Y2K compliance. Even with all these efforts, Y2K remains a question
mark for many investors and business executives, since no one really knows what
its effect will be until January 1, 2000 arrives. One thing we know for certain
about Y2K: it sets the stage for an interesting end to 1999.
We expect that the investment disciplines which have guided The Flex-funds to
outperform their peer groups during the first half of 1999 will continue to help
investors meet their long-term financial goals through the rest of the year and
into the next century.
[GRAPH] Showing the Daily Close of the Dow Jones Industrial Average from
January 1 through June 30, 1999.
[GRAPH] Showing the Daily Close of the S&P 500 Composite Stock Index from
January 1 through June 30, 1999.
[GRAPH] Showing the Average Daily U.S. Treasury Yield from January 1 through
June 30, 1999.
The Flex-funds 1999 Semi-Annual Report Page 5
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The Flex-funds 1999 Semi-Annual Report
THE MUIRFIELD FUND
The Muirfield Fund continued its strong performance from 1998 with a total
return of 11.78% for the first six months of 1999. This compares favorably to
the 4.11% total return of the average asset allocation fund for the same period,
according to Morningstar.
Two factors contributed greatly to the Fund's strong year-to-date
performance: 1) Strict adherence to our "Defensive Investing" discipline
throughout the changing market conditions in the first quarter, and 2)
Well-researched fund selections to invest in those styles or sectors of the
market where the potential for growth and good returns was strongest.
We began the year in a fully-invested position as the stock market continued
to chalk up impressive gains in January. As the interest rate environment turned
negative, and technical conditions in the stock market remained poor, our
tactical asset allocation discipline mandated a shift to a fully-defensive
position in February.
Conditions improved late in the first quarter and into the second. We
gradually increased our exposure to the stock market until we were fully
invested by mid-April. More significantly, we repositioned the Fund's holdings
in the second quarter to capitalize on the shifting trends away from growth and
technology, to value and cyclical stocks. This decision turned out to be very
rewarding, as value and cyclical stocks were among the best performing areas of
the market.
[PHOTOS] Robert S. Meeder, Jr. and Philip A. Voelker, Portfolio Managers
Looking forward to the second half of 1999, we see many challenges ahead for
the investment community, as growth expands in Japan and the emerging markets
which were devastated by last year's meltdown. It remains to be seen, however,
whether these economies can sustain low inflation simultaneously with robust
growth. Also, the next six months will bring more talk about Year 2000 and its
effects on the financial markets. The market commonly discounts events expected
to occur six months in the future, and if this is true it soon will begin to
discount the effects of the Y2K computer bug. While no one is sure what effect
these events will have as we approach year-end, we are confident that the Fund's
discipline will provide a sound investment strategy to help you meet your
long-term financial objectives during these difficult and uncertain times.
1999 SEMIANNUAL HIGHLIGHTS
--------------------------
FUND RANKINGS among asset allocation funds for average annual total returns
as of 6/30/99 per Morningstar:
One Year: #1 OUT OF 274
Five Years: #26 OUT OF 103
Ten Years: #6 OUT OF 37
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/99
Year to Date.......................11.78%
One Year...........................35.86%
Five Years.........................18.46%
Ten Years..........................14.39%
Life of Fund.1.....................14.49%
1 Inception Date 8/10/88
PORTFOLIO HOLDINGS as of 6/30/99:
[GRAPH] The following information was presented as a pie chart:
1) Fidelity Value 20.61%
2) Gabelli Value 11.85%
3) Federated S&P 500 9.15%
4) Federated Stock Trust 7.59%
5) Invesco Strat. Financial Svc. 5.77%
6) Invesco Strategic Energy 3.46%
7) S&P 500 Futures 41.57%
Please see page 2 for additional fund performance information.
The Flex-funds 1999 Semi-Annual Report Page 6
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The Flex-funds 1999 Semi-Annual Report
THE TOTAL RETURN UTILITIES FUND
The Total Return Utilities Fund surged in the first half of 1999 with a
year-to-date total return of 12.69%, outperforming the average utility fund
which returned 7.17% over the same period, according to Morningstar. A second
quarter return of 11.99% contributed greatly to the Fund's strong performance
during the first six months of 1999.
Conventional market wisdom typically states that utility stocks trade
similarly to bonds. For several years now, however, we have maintained that the
opportunities available in today's utilities market have unlocked the historical
relationship between utility stocks and bonds. Consider that the price of
long-term government bonds declined about 7% on average during the three months
ended June 30, 1999, yet the Fund and the utilities sector as a whole enjoyed
one of its strongest quarters in a long time.
Weakness characterized the utilities market during the first quarter. A
declining credit market, continued sell-offs of large-cap electric utility
positions, and lack of interest in anything but the hottest stocks of the moment
contributed to the sector's weak performance during the first three months of
1999. Merger and acquisitions among various utility companies continued at a
rapid pace, and many of the Fund's holdings were engaged in talks or deals with
other companies, either as takeover principals or targets.
[PHOTO] Lowell G. Miller, Portfolio Manager
Positive performance broadened in the second quarter, as investors at last
demonstrated a willingness to invest in other sectors of the market besides
growth and high technology. The utilities sector benefited greatly from this
rotational trend, and we experienced double-digit gains from the more
traditional utilities in our portfolio, such as the gas distribution, pipeline,
electric utility, and telecommunications sectors. Ordinarily, we caution that
some consolidation is necessary after a good quarter, but at the moment we see
neither overbought technical conditions nor overpriced valuations for our
stocks. The outlook remains favorable for the second half of 1999, as we strive
for continued positive performance for the Fund.
1999 SEMI-ANNUAL HIGHLIGHTS
---------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/99
Year to Date.......................12.69%
One Year...........................14.78%
Two Years..........................22.27%
Three Years........................19.31%
Life of Fund1......................19.61%
1 Inception Date 6/21/95
SECTOR WEIGHTINGS as of 6/30/99:
[GRAPH] The following information was presented as a pie chart:
1) Telecomm. Services 26.91%
2) Natural Gas Distributor 18.56%
3) Oil/Gas Domestic 12.27%
4) Electric Utility 10.93%
5) Electric/Gas Utility 6.68%
6) Pipelines 6.58%
7) Water Utility 4.45%
8) Utility 3.42%
9) Telecomm. Equipment 3.06%
10) Natural Gas (Diversified) 1.84%
11) Cash Equivalents 5.30%
Please see page 2 for additional fund performance information.
The Flex-funds 1999 Semi-Annual Report Page 7
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The Flex-funds 1999 Semi-Annual Report
THE HIGHLANDS GROWTH FUND
The Highlands Growth Fund outperformed its peer group during the first six
months of 1999, with a year-to-date total return of 14.70%, compared with the
11.63% total return of the average growth fund for the same period, according to
Morningstar. So far this year, the Fund is also ahead of the S&P 500, which
returned 12.38% year-to-date as of June 30, 1999.
The big story in the stock market during the first half of 1999 was the
rotation among market sectors and styles: from technology to energy and cyclical
stocks, and from large-cap and growth stocks to small-cap and value stocks. In
the second quarter, investors became more willing to invest in other areas of
the market besides the high-flying technology and internet sectors. Overall
returns for the first half of 1999 were much more balanced than we have seen in
at least a year.
Volatility returned to the equity market in June, as investors grew
increasingly concerned with rising interest rates. Growth stocks are typically
priced relative to interest rates, and do not perform well when rates rise.
Thus, we were not surprised to see growth stocks affected more adversely than
traditional "rate sensitive" stocks during the changing interest rate
environment of the second quarter. The Federal Reserve remains worried about
inflation, despite its neutral stance following the 0.25% increase in the Fed
funds target rate on June 30th. It seems likely that the Fed will err on the
side of caution, and keep a tighter rein on inflation than it has since last
autumn.
[PHOTO] William L. Gurner, Portfolio Manager
We do not know which style or sector will dominate the equity market in the
latter half of the year. Thanks to the Fund's "sector neutral, style neutral"
investment strategy, the effects of market rotation among styles and sectors
should not constrain Fund performance. We believe the broadening trends in the
stock market may continue through the third and fourth quarters, and we will
continue to seek out the best stocks for investment.
1999 SEMI-ANNUAL HIGHLIGHTS
---------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/99
Year to Date.......................14.70%
One Year...........................22.33%
Five Years.........................20.52%
Ten Years..........................13.60%
Life of Fund1......................11.57%
1 Inception Date 3/20/85
SECTOR WEIGHTINGS as of 6/30/99:
[GRAPH] The following information was presented as a pie chart:
Sector Manager % Portfolio
- ------ ------- -----------
1) Technology RCM 19.57%
2) Finance Delta Capital 14.47%
3) Utilities Miller Howard 10.34%
4) Cons. Non-Durables Barrow Hanley 10.26%
5) Health Alliance 9.05%
6) Cons. Durables Barrow Hanley 8.09%
7) Energy Mitchell Group 6.10%
8) Materials & Services Ashland 5.09%
9) Capital Goods Hallmark 3.79%
10) Transportation Miller Howard 0.81%
11) S&P 500 Futures 12.43%
Please see page 2 for additional fund performance information.
The Flex-funds 1999 Semi-Annual Report Page 8
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The Flex-funds 1999 Semi-Annual Report
THE U.S. GOVERNMENT BOND FUND
The Flex-funds U.S. Government Bond Fund finished the second quarter of 1999
ranked #1 out of 392 general government bond funds for 12-month total return,
according to Morningstar.
The Fund was in a fully defensive position for most of the first half of
1999, after ending last year fully invested in 10-year Treasuries. Market
opinion at the time called for interest rates to remain flat as dictated by
global economic conditions. However, economic data released in January and
February revealed that the economy was growing faster than expected, and
investors feared an imminent rise in interest rates. Bond prices consequently
fell, triggering a sell signal in our investment discipline. On February 16th,
the Fund went to a fully defensive position and remained there through the rest
of the first quarter and all of the second.
The Federal Reserve Board decided to raise the Fed funds target rate by 0.25%
on June 30th. However, the bond market had moved ahead of the Fed, pushing rates
on the long bond higher in advance of the last Federal Open Market Committee
meeting of the quarter. During the first six months of 1999, long bond rates
increased by nearly one full percentage point, from 5.12% on December 31, 1998
to 6.10% on June 30, 1999.
[PHOTO] Joseph A. Zarr, Portfolio Manager
We believe another one-quarter to one-half point hike in short-term rates
by the Fed is possible in the second half of the year. We will be watching the
fixed income markets, maintaining our defensive position until the threat of
higher rates expires. Meanwhile, higher equity values have led to increased
carefree spending, and subsequently increased economic activity. Falling equity
values, however, may affect consumer spending adversely, possibly allowing for
interest rates to ease. We will therefore also watch the equity market in the
quarters to come, as it may provide key indications for the next major move in
interest rates.
1999 SEMI-ANNUAL HIGHLIGHTS
---------------------------
FUND RANKINGS among general government bond funds for average annual total
returns as of 6/30/99 per Morningstar:
One Year: #1 OUT OF 392
Five Years: #25 OUT OF 241
Ten Years: #30 OUT OF 88
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/99
Year to Date.......................-1.09%
One Year............................5.26%
Five Years..........................7.14%
Ten Years...........................7.14%
Life of Fund1.......................7.05%
1 Inception Date 5/9/85
PORTFOLIO HOLDINGS as of 6/30/99:
[GRAPH] The following information was presented as a pie chart:
1) Cash Equivalents 85%
2) U.S. Government Obligations 15%
(less than 13 mos. maturity)
Please see page 2 for additional fund performance information.
The Flex-funds 1999 Semi-Annual Report Page 9
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The Flex-funds 1999 Semi-Annual Report
THE MONEY MARKET FUND
The Money Market Fund continues to rank #1 out of 85 general purpose money
market funds for cumulative total return since inception (March 1985) according
to Lipper. The Fund also ranked among the top 7% of all general purpose money
markets funds for average annual total return over the 1-year, 5-year, and
10-year periods.
As of June 30, 1999, the Fund's 7-day simple yield was 4.64%, and the 7-day
compound yield was 4.74%.
Interest rates were on the rise throughout the first half of 1999, without
any action by the Federal Reserve until June 30th. On that day, the Fed raised
the Fed funds target rate for overnight interbank loans from 4.75% to 5.00%. It
was the Fed's first action since last autumn's triple-play 0.25% rate reduction.
The fact that interest rates across the board increased steadily over the
last six months without any intervention by the Federal Reserve demonstrates two
points: first, that the Federal Reserve has consistently "hinted" at possible
action in order to affect the interest rate market; and second, that the markets
have become quite adept at forecasting the need for interest rate adjustments.
Both factors make today's economic and interest rate environment less volatile
and less subject to surprise. They have also contributed to the continued steady
growth of the U.S. economy.
[PHOTO] Philip A. Voelker, Portfolio Manager
Because of this changing interest rate environment, we had decreased the
Fund's average maturity by almost half - from 70 days at the start of the year
to 39 days on June 30. This decision to shorten the average maturity of the Fund
should help us weather any changes in interest rates that may arise in the
latter half of 1999, and seek to provide investors with competitive rates of
return relative to other money market funds.
1999 SEMI-ANNUAL HIGHLIGHTS
---------------------------
FUND RANKINGS among general purpose money market funds for average annual
total returns as of 6/30/99 per Lipper:
One Year: #21 OUT OF 317
Five Years: #12 OUT OF 213
Ten Years: #5 OUT OF 130
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/99
Year to Date........................2.33%
One Year............................4.99%
Five Years..........................5.31%
Ten Years...........................5.37%
Life of Fund1.......................6.01%
1 Inception Date 3/27/85
CURRENT & EFFECTIVE YIELDS as of 6/30/99
7-day Simple Yield..................4.64%
7-day Compound Yield................4.74%
PORTFOLIO HOLDINGS as of 6/30/99:
[GRAPH] The following information was presented as a pie chart:
1) Commercial Paper 60.51%
2) Variable Rate Notes 16.02%
3) Repurchase Agreements 12.14%
4) Corporate Notes 11.33%
Please see page 2 for additional fund performance information.
The Flex-funds 1999 Semi-Annual Report Page 10
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The Flex-funds 1999 Semi-Annual Report
PORTFOLIO HOLDINGS & FINANCIAL STATEMENTS
The Flex-funds 1999 Semi-Annual Report Page 11
<PAGE>
Mutual Fund Portfolio
Portfolio of Investments as of June 30, 1999 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
MUTUAL FUNDS - 58.9%
Federated S&P 500 Maxcap Fund 526,661 $ 14,888,714
Federated Stock Trust Fund 296,148 12,355,286
Fidelity Value Fund 589,623 33,531,840
Gabelli Growth Fund 984,930 19,284,926
Invesco Strategic Energy Fund 404,204 5,634,600
Invesco Strategic Stock Trust Fund 306,560 9,389,945
Mutual Shares Fund 358 8,027
TOTAL MUTUAL FUNDS
(Cost$89,107,883) 95,093,338
MONEY MARKET MUTUAL FUNDS - 7.6%
Charles Schwab Money Market Fund 908,830 908,830
Fidelity Cash Reserve Money Market Fund 11,425,411 11,425,411
Fidelity Core Money Market Fund 5,644 5,644
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost$12,339,885) 12,339,885
U.S.TREASURY BILLS - 2.8%
* 4.28%, due 07/22/99 4,025,000 4,014,730
* 4.70%, due 10/21/99 500,000 492,749
** 4.30%, due 01/06/00 30,100 29,347
TOTAL U.S. TREASURY BILLS
(Cost $4,536,840) 4,536,826
REPURCHASE AGREEMENT - 30.7%
Prudential Securities, 5.10%, 07/01/99,
(Collateralized by $30,334,000
FNMA Remic Series Pool #9903CA, 6.00%,
02/25/14, market value - $27,794,377) 24,500,000 24,500,000
State Street Bank & Trust Co., 4.90%,
07/01/99, (Collateralized by $25,587,605
FFCB, 5.13%, 04/02/01, market
value - $25,563,962) 25,062,000 25,062,000
TOTAL REPURCHASE AGREEMENT
(Cost $49,562,000) 49,562,000
TOTAL INVESTMENTS - 100.0%
(Cost $155,546,608) $161,532,049
The Flex-funds 1999 Semi-Annual Report Page 12
<PAGE>
CONTRACTS VALUE
FUTURES CONTRACT
Long, S&P 500 Futures, face amount
$64,898,988 expiring September 1999 197 $68,048,725
TOTAL FUTURES CONTRACT $68,048,725
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 837 19,893
Flex-funds Muirfield Fund 1,062 7,964
Flex-funds Total Return Utilities Fund 215 4,543
Flex Partners International Equity Fund 633 9,211
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $36,557 ) $41,611
FNMA Federal National Mortgage Association
Remic Real Estate Mortgage Investment Conduit
FFCB Federal Farm Credit Bureau
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
*** Assets of affiliates to the Mutual Fund Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds 1999 Semi-Annual Report Page 13
<PAGE>
Utilities Stock Portfolio
Portfolio of Investments as of June 30, 1999 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
COMMON STOCKS - 94.8%
ELECTRIC/GAS UTILITY - 6.7%
AGL Resources, Inc. 12,100 $ 223,094
MDU Resources Group, Inc. 5,000 114,063
NIPSCO Industries, Inc. 9,400 242,637
UtiliCorp United, Inc. 14,528 353,200
932,994
ELECTRIC UTILITY - 10.9%
Cinergy Corp. 8,200 262,400
LG&E Energy Corp. 13,944 292,824
New Century Energies, Inc. 5,600 217,350
PacifiCorp 12,830 235,751
TECO Energy, Inc. 22,760 517,790
1,526,115
NATURAL GAS (DISTRIBUTOR) - 25.9%
Consolidated Natural Gas Co. 9,700 589,275
Eastern Enterprises 6,475 257,381
KeySpan Energy Corp. 18,110 477,651
MCN Corp. 36,430 755,923
Peoples Energy Corp. 7,650 288,309
TransCanada Pipelines Ltd. 8,100 113,400
WICOR, Inc. 19,690 550,089
Williams Cos., Inc. 13,705 583,319
3,615,347
OIL/GAS (DOMESTIC) - 16.8%
El Paso Natural Gas Co. 5,670 199,513
Enron Corp. 4,055 331,496
K N Energy, Inc. 27,680 370,220
Kinder Morgan Energy Partners, L.P. 14,824 548,488
Questar Corp. 20,200 386,325
Sonat, Inc. 15,310 507,144
2,343,186
TELECOMMUNICATION EQUIPMENT - 3.0%
Loral Space & Communications Ltd. # 14,890 268,020
P-Com, Inc. # 30,000 157,031
425,051
TELECOMMUNICATION SERVICES - 26.9%
Alltel Corp. 7,900 564,850
BCE, Inc. 12,040 593,723
CenturyTel, Inc. 11,780 468,255
Frontier Corp. 7,260 425,618
GTE Corp. 7,350 554,925
SBC Communications, Inc. 6,930 401,940
Sprint Corp. 7,590 402,270
Sprint Corp. - PCS Group # 50 2,850
U.S. West Communications Group 5,900 346,625
3,761,056
The Flex-funds 1999 Semi-Annual Report Page 14
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
WATER UTILITY - 4.4%
American Water Works Co., Inc. 10,900 335,175
Azurix Corp. # 14,280 285,600
620,775
TOTAL COMMON STOCKS
(Cost $10,385,997 ) 13,224,524
U.S. TREASURY BILLS - 0.0%
* 5.02%, due 01/06/00 1,000 975
TOTAL U.S. TREASURY BILLS
(Cost $978 ) 975
REPURCHASE AGREEMENT - 5.2%
State Street Bank & Trust Co., 4.90%,
07/01/99, (Collateralized by $746,331
FFCB, 5.13%, 04/02/01, market value - $745,641) 731,000 731,000
TOTAL REPURCHASE AGREEMENT
(Cost $731,000 ) 731,000
TOTAL INVESTMENTS - 100.0%
(Cost $11,117,975 ) $13,956,499
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 147 3,496
Flex-funds Muirfield Fund 171 1,281
Flex-funds Total Return Utilities Fund 39 833
Flex Partners International Equity Fund 120 1,741
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $6,474 ) $7,351
FFCB Federal Farm Credit Bureau
# Represents non-income producing securities.
* Pledged as collateral on Letter of Credit.
** Assets of affiliates to the Utility Stock Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustees Deferred
Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds 1999 Semi-Annual Report Page 15
<PAGE>
Growth Stock Portfolio
Portfolio of Investments as of June 30, 1999 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
COMMON STOCKS - 89.0%
AEROSPACE/DEFENSE - 1.4%
Boeing Co. 4,850 $ 212,188
General Dynamics Corp. 1,360 93,245
Lockheed Martin Corp. 1,870 69,658
Northrup Grumman Corp. 200 13,225
Raytheon Co. - Class B 2,750 193,359
Textron, Inc. 740 61,744
United Technologies Corp. 2,960 212,565
855,984
AIR TRANSPORTATION - 0.3%
AMR Corp. # 910 62,335
Delta Air Lines, Inc. 770 44,323
Southwest Airlines 1,685 54,763
USAir Group # 470 21,062
182,483
ALUMINUM - 0.2%
Aluminum Company of America 2,460 154,673
AUTO & TRUCK - 1.3%
Delphi Auto Systems 3,494 64,867
Ford Motor Co. 6,500 367,250
General Motors Corp. 5,000 334,688
Navistar Int'l Corp # 334 16,679
Paccar Inc 522 27,862
TRW, Inc. 620 34,061
845,407
BANKING - 1.2%
Washington Mutual Savings Bank 2,303 81,757
Wells Fargo Co. 15,900 686,681
768,438
BEVERAGE--ALCOHOLIC - 0.3%
Anheuser-Busch Cos., Inc. 2,700 191,025
BEVERAGE--SOFT DRINK - 1.1%
Coca-Cola Co. 8,500 520,625
Pepsico, Inc. 4,300 165,550
686,175
BROADCASTING - 0.3%
Infinity Broadcasting Corp. # 5,200 153,725
BUILDING MATERIALS - 0.1%
Crane Co. 495 15,593
Masco Corp. 1,860 53,940
69,533
CAPITAL GOODS - 0.1%
Ingersoll-Rand 823 53,958
CHEMICAL--DIVERSIFIED - 1.0%
Air Products & Chemicals, Inc. 1,550 63,550
E.I. du Pont de Nemours & Co. 4,780 326,534
Monsanto Corp. 3,450 135,628
Praxair, Inc. 840 41,423
Rohm & Haas Co. 1,185 50,733
617,868
The Flex-funds 1999 Semi-Annual Report Page 16
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
CHEMICAL--SPECIALTY - 0.1%
Eastman Chemical Co. 500 25,875
MacDermid Inc. 800 37,200
Sigma Aldrich 610 21,007
84,082
COMMERCIAL SERVICES - 0.1%
Dun & Bradstreet 1,470 51,726
COMPONENTS - 0.1%
Sanmina Corp. # 850 64,494
COMPUTERS & PERIPHERALS - 3.6%
Compaq Computer Corp. 4,180 97,969
Dell Computer Corp. # 7,740 286,380
EMC Corp./Mass # 5,900 327,450
Gateway 2000, Inc. # 390 23,108
IBM 9,700 1,259,788
Micron Technology, Inc. # 470 19,064
Sun Microsystems # 3,540 243,818
2,257,577
COMPUTER SOFTWARE & SERVICES - 5.1%
America Online, Inc. # 3,000 330,188
BMC Software, Inc. # 3,110 167,746
Ceridian Co. # 840 27,458
Computer Sciences Corp. # 600 41,513
Electronic Data System Corp. 4,350 246,319
Exodus Communications Inc. # 650 77,959
Microsoft Corp. # 24,500 2,209,594
National Data Corp. 770 32,725
Novell, Inc. # 1,490 39,485
Oracle Corp. # 910 33,784
Unisys Corp. 1,270 49,133
3,255,904
CONSUMER NON-DURABLE - 1.8%
Corning Inc. 1,240 86,800
Fortune Brands, Inc. 6,000 250,500
Haggar Corp. 11,500 150,938
Procter & Gamble Co. 7,100 622,138
1,110,376
COSMETICS - 1.1%
Playtex Products, Inc. # 23,300 364,063
Revlon # 11,500 344,281
708,344
DATA PROCESSING - 0.5%
Automatic Data Processing, Inc. 3,300 144,169
Fiserv, Inc. # 1,380 43,211
First Data Corp. 2,820 138,004
325,384
The Flex-funds 1999 Semi-Annual Report Page 17
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
DIVERSIFIED - 1.5%
Allied Signal, Inc. 3,380 214,419
Minnesota Mining & Manufacturing Co. 1,920 167,040
Norfolk Southern Corp. 1,830 55,014
PPG Industries, Inc. 830 49,229
Tyco International 4,970 469,665
955,367
DRUG - 5.9%
Abbott Labs 6,890 307,466
Bristol Myers Squibb 11,840 831,020
Eli Lilly & Co. 4,970 356,287
Merck & Co., Inc. 10,560 774,840
Pfizer, Inc. 6,460 700,103
Schering Plough Corp. 9,830 505,016
Warner Lambert Co. 3,450 236,756
3,711,488
DRUGSTORE - 0.1%
Longs Drug Stores 2,000 69,125
ELECTRIC--INTEGRATED - 0.6%
CMS Energy Corp. 2,800 117,075
Edison International 1,800 48,488
FPL Group, Inc. 960 52,620
Korean Electric Power 3,100 63,550
Teco Energy Inc. 2,930 67,024
348,757
ELECTRIC UTILITY - 0.5%
AES Corp. # 2,460 142,988
Duke Power Co. 2,940 160,414
303,402
ELECTRICAL EQUIPMENT - 2.9%
General Electric Corp. 16,772 1,869,644
ELECTRONIC COMPONENT SEMICONDUCTORS - 2.8%
Applied Materials, Inc. # 1,880 138,885
Intel 12,800 761,600
KLA -Tencor Corp. # 350 22,706
Motorola, Inc. 4,410 420,328
STMicroelectronic NV # 1,440 99,900
Texas Instruments Inc. 1,810 258,830
Xilinx Inc. # 1,180 67,555
1,769,804
ELECTRONIC COMPONENTS - 0.3%
Emerson Electric 2,529 159,485
ELECTRONICS - 0.1%
Rockwell International Corp. 1,360 82,790
FINANCE - 6.0%
Banc One Corp. 8,926 533,329
Bank of Boston Corp. 3,300 169,331
Chase Manhattan Corp. 3,900 336,131
Equifax, Inc. 710 25,338
Federal Home Loan Mortgage Corp. 5,700 329,175
Federal National Mortgage Corp. 6,600 450,038
First Union Corp. 4,968 233,186
Fleet Financial Group, Inc. 3,100 136,981
The Flex-funds 1999 Semi-Annual Report Page 18
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
Lehman Brothers Holdings, Inc. 1,500 93,375
Mellon Bank Corp. 7,200 262,350
Merrill Lynch & Co. 800 63,850
Morgan Stanley Dean Witter & Co. 1,800 185,625
Metris Cos., Inc. 4,400 178,750
PNC Bank Corp. 3,100 179,219
Providian Financial Corp. 4,650 429,253
Ryder Systems, Inc. 360 9,720
SLM Holding Corp. 4,000 183,500
3,799,151
FINANCIAL SERVICES - 5.0%
American Express Co. 1,700 226,206
Associates First Capital 10,400 444,600
Avery Dennison Corp. 920 55,603
BankAmerica Corp. 10,214 752,006
Capital One Financial Corp. 18,600 1,032,300
Citigroup Inc. 11,995 573,511
H&R Block, Inc. 1,370 68,500
3,152,726
FOOD - DIVERSIFIED - 0.2%
General Mills 1,900 152,950
FOREST PRODUCTS - 0.2%
Georgia Pacific Corp. 860 40,753
Weyerhauser Co. 1,120 76,510
Willamette Industries, Inc. 640 30,160
147,423
GOLD/SILVER MINING - 0.1%
Barrick Gold Corp. 2,090 40,494
HEALTH - 1.4%
American Home Products 6,150 351,319
Johnson & Johnson 5,630 538,369
889,688
HOMEBUILDING - 0.0%
Centrex Corp. 230 8,639
INSTRUMENTS--CONTROLS - 0.2%
Honeywell, Inc. 620 71,843
Johnson Controls Inc. 926 64,126
135,969
INSTRUMENTS--SCIENTIFIC - 0.0%
PE Biosystems Group 190 21,791
INSURANCE--LIFE - 0.3%
Conseco Inc. 7,000 213,063
INTERNET SERVICE - 0.1%
Yahoo, Inc. # 365 62,953
INSURANCE--MULTILINE - 2.2%
Allstate 6,700 241,200
American International Group 8,435 984,786
PMI Group 2,200 138,325
1,364,311
The Flex-funds 1999 Semi-Annual Report Page 19
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
MACHINERY - 0.4%
Caterpillar, Inc. 1,492 89,893
Deere & Co. 1,197 46,833
Dover Corp. 825 31,763
Lancer Corp. # 3,700 30,988
NACCO Industries 912 67,374
266,851
MACHINERY--CONSTRUCTION & MINING - 0.2%
Case Corp. 523 25,235
Halliburton Co. 1,900 86,450
111,685
MANUFACTURING - 0.1%
Mueller Industries, Inc. # 1,150 38,525
Owens Illinois # 780 25,448
63,973
MARKETING SERVICES - 0.2%
Omnicom Group, Inc. 1,205 94,969
MATERIALS & SERVICES - 0.6%
Champion International Corp. 425 20,613
Dana Corp. 970 44,741
Deluxe Corp. 910 35,433
Ecolab, Inc. 1,970 85,572
Illinois Tool Works, Inc. 1,730 141,644
Sherwin-Williams Co. 1,070 29,626
357,629
MEDICAL PRODUCTS - 1.0%
Algos Pharmaceutical Corp. # 1,990 43,904
Amgen, Inc. # 2,090 127,229
Becton Dickinson 1,150 34,644
Biogen Inc.# 960 61,740
Centor, Inc. # 480 22,380
GelTex Pharmaceuticals, Inc. # 3,840 69,120
Genzyme Surgical Products # 273 1,207
Guidant Corp. 780 40,024
Human Genome # 1,330 52,535
IDEC Pharmaceuticals Corp. # 980 75,521
MedImmune, Inc. # 1,670 113,143
PE Celera Genomics # 95 1,544
642,991
MEDICAL HMO - 0.1%
Wellpoint Health Networks # 460 38,928
MEDICAL SERVICES - 0.5%
Columbia/HCA Healthcare Corp. 2,420 55,358
Genzyme Corp. # 1,530 74,205
Health Management 4,760 53,550
HBO & Co. 1,220 39,345
IMS Health, Inc. 1,080 34,560
Shared Medical Systems 310 20,363
Tenet Healthcare Corp. # 2,170 40,145
317,526
MEDICAL SUPPLIES - 0.5%
Boston Scientific Co. # 1,070 45,676
IDEXX Laboratories, Inc. # 900 20,981
Medtronic, Inc. 2,870 222,246
288,903
The Flex-funds 1999 Semi-Annual Report Page 20
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
MULTIMEDIA - 0.7%
CBS Corp. # 9,700 422,556
NATURAL GAS DISTRIBUTOR - 0.2%
MCN Corp. 4,770 100,468
Williams Companies, Inc. 1,300 55,413
155,881
NETWORKING PRODUCTS - 1.8%
Cisco Systems, Inc. # 17,842 1,150,809
OFFICE AUTOMATION & EQUIPMENT - 1.1%
Hewlett Packard 5,070 502,564
Pitney Bowes, Inc. 1,325 86,291
Xerox Corp. 2,180 129,301
718,156
OIL/GAS--DOMESTIC - 1.5%
Ashland Oil 800 32,050
Atlantic Richfield 1,100 92,331
Baker Hughes 1,640 54,735
Burlington Resources 1,000 43,250
Devon Energy 1,200 43,575
Enron Corp. 1,500 121,688
Mobil Corp. 4,800 474,900
Noble Drilling Co. # 1,300 25,269
USX Marathon Group 2,800 91,000
978,798
OIL/GAS--INTERNATIONAL - 1.9%
Chevron Corp. 3,800 362,425
Exxon Corp. 11,050 857,066
1,219,491
OILFIELD SERVICES/EQUIPMENT - 0.5%
Coastal Corp. 1,900 76,713
Kerr-McGee Corp. 1,000 50,250
Schlumberger LTD 2,700 171,956
298,919
OIL & NATURAL GAS - 0.2%
Apache Corp. 1,400 54,775
Amerada Hess 500 29,813
Ocean Energy, Inc. # 10,160 106,045
190,633
PAPER & FOREST PRODUCTS - 0.2%
Bemis Co., Inc. 360 14,310
International Paper 1,615 82,163
Mead Corp. 840 35,123
131,596
PETROLEUM--INTEGRATED - 1.7%
Occidental Petroleum Corp. 3,100 65,681
Phillips Petroleum 1,600 80,300
Royal Dutch Petroleum 11,400 684,713
Texaco 3,100 193,944
Unocal Corp. 1,000 39,938
1,064,576
The Flex-funds 1999 Semi-Annual Report Page 21
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
PIPELINES - 0.1%
K N Energy Inc. 800 10,700
K N Energy Inc. - PEPS 1,100 28,463
39,163
PROTECTION--SAFETY EQUIPMENT - 0.3%
Lo-Jack Corp. # 25,500 213,563
PUBLISHING - 0.9%
The Reader's Digest Association, Inc. 14,000 565,250
RAILROAD TRANSPORTATION - 0.2%
Burlington Northern Santa Fe 2,370 72,433
Union Pacific Corp. 1,240 72,385
144,818
RENTAL--AUTO/EQUIPMENT - 0.8%
Budget Group Inc. # 14,800 185,000
The Hertz Corp. 5,600 336,350
521,350
RESTAURANT - 1.4%
McDonalds Corp. 9,500 392,469
Wendy's International, Inc. 17,100 484,144
876,613
RETAIL GROCERY - 0.4%
Albertsons, Inc. 5,000 256,250
RETAIL STORE - 2.7%
Amazon.Com Inc. # 540 67,568
eBay Inc. # 320 48,320
Kmart # 40,000 655,000
PETsMART, Inc. # 30,000 307,500
Sears, Roebuck & Co. 6,000 270,000
WalMart Stores, Inc. 8,000 382,000
1,730,388
S&L / THRIFTS - SOUTHERN U.S. - 0.3%
Greater Atlantic Financial Corp. # 20,000 192,500
SERVICES - 0.1%
Paychex, Inc. 1,995 63,607
TELECOMMUNICATION EQUIPMENT - 1.8%
General Instrument Corp. # 620 26,505
Loral Space & Communications Ltd. # 10,110 181,348
Nokia Corp. - ADR - A # 1,890 172,935
Northern Telecom LTD 3,020 261,608
P-Com, Inc. # 8,760 45,853
QUALCOMM, Inc. # 2,720 390,320
Uniphase Corp. # 550 91,300
1,169,869
TELECOMMUNICATION SERVICES - 10.4%
AirTouch Communications # 2,730 293,902
Ameritech Corp. 5,440 397,800
Ascend Communications, Inc. # 7,460 786,098
AT&T 17,095 940,225
BCE, Inc. 3,420 167,580
The Flex-funds 1999 Semi-Annual Report Page 22
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
Bell Atlantic Corp. 8,590 549,223
BellSouth Corp. 12,475 562,934
Century Telephone 1,730 68,768
Frontier Corp. 1,770 103,545
GTE Corp. 5,320 403,323
MCI Worldcom, Inc. # 9,933 856,721
Nextel Communications # 2,500 125,469
SBC Communications 10,515 601,327
Sprint Corp. 4,690 248,570
Sprint Corp. - PCS Group # 2,285 131,673
Star Telecommunications Inc. # 4,230 33,047
Tellabs, Inc. # 2,400 162,150
U.S. West, Inc. 2,665 156,069
6,588,424
TOBACCO - 2.8%
Gallaher Group, plc - ADR 11,400 278,588
Imperial Tobacco 5,500 120,313
Philip Morris Cos. 26,100 1,039,076
UST, Inc. 12,000 363,000
1,800,977
TOYS - 2.8%
Hasbro Bradley Inc. 10,650 298,200
JAKKS Pacific Co. # 5,400 160,988
Toys R Us Inc. # 64,000 1,324,000
1,783,188
TRANSPORTATION - 0.1%
FDX Corp. # 1,476 78,782
TRUCKING/TRANSPORTATION LEASING - 0.1%
CSX, Corp. 1,097 49,776
WASTE DISPOSAL--NON-HAZARDOUS - 0.3%
Allied Waste Industries, Inc. # 1,260 24,964
Waste Management, Inc. 3,048 163,259
188,223
TOTAL COMMON STOCKS
(Cost 42,061,786 ) 56,464,786
TREASURY OBLIGATIONS - 0.8%
U.S. Treasury Bills
** 4.30% 01/06/00 6,000 5,850
* 4.50% 09/09/99 500,000 495,553
TOTAL U.S. TREASURY OBLIGATIONS
(Cost 501,490 ) 501,403
REPURCHASE AGREEMENTS - 10.2%
State Street Bank & Trust Co., 4.90%, 07/01/99,
(Collateralized by $6,587,313 FFCB, 5.13%,
04/02/01, market value - $6,581,226) 6,452,000 6,452,000
TOTAL REPURCHASE AGREEMENT
(Cost 6,452,000 ) 6,452,000
TOTAL INVESTMENTS - 100.0%
(Cost 49,015,276 ) $63,418,189
The Flex-funds 1999 Semi-Annual Report Page 23
<PAGE>
CONTRACTS VALUE
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $7,709,513 23 7,944,775
expiring September 1999
TOTAL FUTURES CONTRACTS $7,944,775
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 293 6,967
Flex-funds Muirfield Fund 366 2,746
Flex-funds Total Return Utilities Fund 88 1,871
Flex Partners International Equity Fund 235 3,417
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost 13,286 ) $15,001
ADR: American Depositary Receipt
FFCB: Federal Farm Credit Bureau
PEPS: Premium Equity Partnership Security Units
# Represents non-income producing securities.
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
*** Assets of affiliates to the Growth Stock Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds 1999 Semi-Annual Report Page 24
<PAGE>
Bond Portfolio
Portfolio of Investments as of June 30, 1999 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE VALUE
AMOUNT
U.S. GOVERNMENT OBLIGATIONS - 49.1%
Federal Farm Credit Bureau
4.88%, 09/01/99 4,000,000 $ 3,996,642
Federal National Mortgage Association
5.69%, 08/11/00 1,710,000 1,740,174
* U.S. Treasury Bill
4.30%, 01/06/00 4,800 4,680
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $5,745,584 ) 5,741,496
REPURCHASE AGREEMENTS - 50.9%
Prudential Securities, 5.10%, 06/30/99,
(Collateralized by $3,095,000 FNMA Remic
Series Pool #9903CA, 6.00%, 02/25/14,
market value - $2,835,880) 2,500,000 2,500,000
State Street Bank and Trust, 4.90%, 07/01/99,
(Collateralized by $3,002,679 FFCB, 5.13%,
04/02/01, market value - $2,999,905) 2,941,000 2,941,000
State Street Bank and Trust, 4.70%, 07/01/99,
(Collateralized by $802,755 SLMA 1998-1,
5.20%, 01/25/07, market value - $510,058) 500,000 500,000
TOTAL REPURCHASE AGREEMENT
(Cost $5,941,000 ) 5,941,000
TOTAL INVESTMENTS - 100.0%
(Cost $11,686,584 ) 11,682,496
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 151 3,580
Flex-funds Muirfield Fund 175 1,312
Flex-funds Total Return Utilities Fund 39 831
Flex Partners International Equity Fund 121 1,767
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $6,590 ) $7,490
FNMA: Federal National Mortgage Association
Remic: Real Estate Mortgage Investment Conduit
FFCB: Federal Farm Credit Bureau
SLMA: Student Loan Marketing Association
* Pledged as collateral on Letter of Credit.
** Assets of affiliates to the Bond Portfolio held for the benefit of the
Portfolio's Trustees in connection with the Trustee Deferred Compensation
Plan.
See accompanying notes to financial statements.
The Flex-funds 1999 Semi-Annual Report Page 25
<PAGE>
<TABLE>
<CAPTION>
Money Market Portfolio
Portfolio of Investments as of June 30, 1999 (Unaudited)
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 60.5%
American Honda Finance Corp. 4.83% 07/07/99 10,000,000 $ 9,991,951
American Honda Finance Corp. 5.05% 07/30/99 24,353,000 24,253,931
Bankers Trust Corp. 4.97% 11/09/99 25,000,000 24,547,868
Bell Atlantic Financial Services, Inc. 4.98% 07/01/99 4,800,000 4,800,000
Bell Atlantic Financial Services, Inc. 4.98% 07/06/99 10,700,000 10,692,599
Cargill Global Funding plc 4.96% 07/06/99 25,000,000 24,982,778
Credit Suisse First Boston 4.94% 09/14/99 25,000,000 24,742,708
Credit Suisse First Boston 4.83% 10/13/99 40,000,000 39,441,867
Catholic Health Partners 4.93% 07/07/99 37,228,000 37,197,411
Carolina Power & Light Co. 4.82% 08/20/99 20,000,000 19,866,111
Duff & Phelps Utility & Corp. 4.82% 08/02/99 12,500,000 12,446,444
Duff & Phelps Utility & Corp. 4.85% 08/25/99 10,000,000 9,925,903
E.I. DuPont De Nemours & Co. 4.85% 07/21/99 50,000,000 49,865,278
Eaton Corp.*** 4.87% 07/19/99 7,475,000 7,456,798
Eaton Corp.*** 4.73% 10/08/99 10,000,000 9,869,925
FPL Group Capital, Inc.*** 4.83% 08/10/99 27,400,000 27,252,954
FPL Group Capital, Inc.*** 4.94% 09/15/99 25,000,000 24,739,278
Ford Motor Credit Co. 5.02% 07/28/99 50,000,000 49,811,750
General Electric Capital Corp. 4.85% 07/02/99 3,658,000 3,657,507
General Electric Capital Corp. 4.84% 09/02/99 32,350,000 32,075,996
General Electric Capital Corp. 4.73% 10/06/99 20,000,000 19,745,106
Ipalco Enterprises 4.90% 07/12/99 20,000,000 19,970,056
LG&E Capital Corp. 4.97% 07/06/99 17,958,000 17,945,604
LG&E Capital Corp. 4.83% 07/22/99 17,173,000 17,124,615
MidAmerican Energy Co. 4.93% 07/16/99 16,300,000 16,266,517
Motorola Credit Corp. 4.82% 07/02/99 4,000,000 3,999,465
Monsanto Co. 4.74% 08/12/99 9,400,000 9,348,018
Monsanto Co. 4.82% 08/18/99 11,000,000 10,929,307
Monsanto Co. 4.82% 09/08/99 14,000,000 13,870,663
National Rural Utilities 4.84% 07/06/99 10,000,000 9,993,277
National Rural Utilities 4.85% 09/17/99 25,000,000 24,737,292
Toronto Dominion Holdings USA, Inc. 4.68% 07/19/99 40,000,000 39,906,400
Toyota Motor Corp. 4.85% 07/07/99 18,400,000 18,385,127
UBS AG 4.74% 07/22/99 25,000,000 24,930,875
Xerox Credit Corp. 4.82% 09/03/99 50,000,000 49,571,555
TOTAL COMMERCIAL PAPER
(Cost$744,342,934 ) 744,342,934
CORPORATE OBLIGATIONS - 25.0%
Aquarium Holdings KY*** 5.13%* 07/01/99 14,000,000 14,000,000
Associates Corp. N.A. 6.37% 08/15/99 2,000,000 2,003,007
Associates Corp. N.A. 6.75% 10/15/99 300,000 301,316
Baltimore Gas & Electric Co. 8.40% 10/05/99 2,000,000 2,018,597
Bath Technologies, Inc. 5.14% 07/01/99 4,500,000 4,500,000
Bear Stearns Co., Inc. 6.22% 07/19/99 5,000,000 5,002,438
Bear Stearns Co., Inc. 7.62% 09/15/99 4,000,000 4,020,408
Bear Stearns Co., Inc. 7.63% 09/15/99 1,765,000 1,774,067
Care Life Project*** 5.14% 07/01/99 3,700,000 3,700,000
Caterpillar Finance 6.84% 09/15/99 1,000,000 1,003,508
Caterpillar Finance 6.42% 07/15/99 3,000,000 3,001,642
Caterpillar, Inc. 6.80% 08/24/99 500,000 500,804
Chase Manhattan Bank 5.88% 08/04/99 3,700,000 3,702,655
Chrysler Financial 12.75% 11/01/99 1,000,000 1,024,342
Citigroup 9.75% 08/01/99 500,000 501,938
Citigroup 6.25% 10/25/99 2,000,000 2,007,555
Clark Grave Vault Co.*** 5.30%* 07/01/99 2,550,000 2,550,000
Consolidated Edison*** 5.19%* 07/01/99 8,250,000 8,250,000
Coughlin Family Properties, Inc.*** 5.13%* 07/01/99 3,970,000 3,970,000
D.E.D.E. Realty*** 5.13%* 07/01/99 3,760,000 3,760,000
Damascus-Bishop Tire 5.14%* 07/01/99 3,000,000 3,000,000
Danis Construction Co.*** 5.13% 07/01/99 6,000,000 6,000,000
Doren, Inc.*** 5.14%* 07/01/99 400,000 400,000
Espanola/Nambe*** 5.14%* 07/01/99 2,115,000 2,115,000
Fleet Mortgage Group, Inc. 6.50% 09/15/99 4,000,000 4,011,427
Ford Motor Credit Co. 6.38% 09/15/99 500,000 501,298
Flordia Power & Light Co. 5.50% 07/01/99 1,000,000 1,000,000
The Flex-funds 1999 Semi-Annual Report Page 26
<PAGE>
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
GTE Southwest Inc. 5.82%* 12/01/99 1,000,000 1,003,041
General American Life Insurance**** 5.28%* 09/21/99 20,000,000 20,000,000
Georgia Power Co. 6.12% 09/01/99 1,500,000 1,502,545
General Motors Acceptance Corp. 8.00% 10/01/99 3,000,000 3,021,232
General Motors Acceptance Corp. 8.40% 10/15/99 1,255,000 1,267,051
Goldman Sachs Group LP 6.88% 09/15/99 1,000,000 1,003,365
Hancor, Inc.*** 5.14%* 07/01/99 600,000 600,000
International Lease Finance Corp. 7.41% 09/01/99 1,300,000 1,305,206
Isaac Tire, Inc.*** 5.13%* 07/01/99 980,000 980,000
J.W. Harris Co., Inc. 5.13%* 07/01/99 2,100,000 2,100,000
Jackson Tube Service, Inc. 5.13% 07/01/99 4,500,000 4,500,000
John Deere 6.43% 08/09/99 10,000,000 10,007,972
Luken-Woodlawn LLC 5.13% 07/01/99 3,740,000 3,740,000
Melvin Stone Co. 5.13% 07/01/99 7,600,000 7,600,000
Miami Valley Steel 5.14% 07/01/99 2,050,000 2,050,000
Morgan Guaranty Trust Co. 5.75% 10/08/99 500,000 500,754
Mubea Inc.*** 5.14% 07/01/99 3,750,000 3,750,000
Mubea Inc.*** 5.14%* 07/01/99 5,400,000 5,400,000
Norwest Financial, Inc. 7.20% 08/25/99 1,100,000 1,103,420
Norwest Financial, Inc. 6.38%* 10/01/99 500,000 501,541
Norwest Financial, Inc. 6.05% 11/19/99 2,000,000 2,006,156
O.K.I. Supply Co.*** 5.13%* 07/01/99 2,090,000 2,090,000
Osco Industries, Inc.*** 5.14%* 07/01/99 2,700,000 2,700,000
Pepsico, Inc. 6.25% 09/01/99 5,000,000 5,009,300
Presrite Corp.*** 5.14% 07/01/99 1,700,000 1,700,000
Pro Tire, Inc.*** 5.13% 07/01/99 1,175,000 1,175,000
R.I. Lampus Co.*** 5.14% 07/01/99 2,110,000 2,110,000
RSD Technology*** 5.14% 07/01/99 5,770,000 5,770,000
SBC Communication Capital Corp. 6.40% 08/18/99 1,000,000 1,001,910
Salomon, Inc. 7.13%* 08/01/99 225,000 225,343
Seariver Maritime, Inc. 4.92%* 08/01/99 6,400,000 6,400,000
SunAmerica, Inc. 6.20% 10/31/99 45,700,000 45,882,425
Signature Brands 13.00%* 08/15/99 18,500,000 20,139,518
Surgery Financing Co.*** 5.14% 07/01/99 3,475,000 3,475,000
Surgery Financing Co.*** 5.14% 07/01/99 3,000,000 3,000,000
Transamerica Finance 8.75% 10/01/99 2,000,000 2,018,168
Transamerica Finance 8.08% 11/04/99 1,390,000 1,404,176
Triangle Funding 5.35% 10/15/99 7,500,000 7,500,000
Virginia Electric Power Co. 6.35% 07/02/99 7,070,000 7,070,264
Wisconsin Electric Power Co. 6.20% 08/01/99 1,000,000 1,001,392
White Castle Project*** 5.14% 07/01/99 8,750,000 8,750,000
World Trade Finance 5.07% 09/01/99 20,000,000 20,000,000
TOTAL CORPORATE OBLIGATIONS
(Cost$306,984,781 ) 306,984,781
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.4%
Federal Home Loan Bank 5.14% 07/07/99 25,000,000 25,000,000
Student Loan Marketing Assoc. 5.30% 07/07/99 4,350,000 4,350,130
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $29,350,130 ) 29,350,130
U.S. TREASURY OBLIGATIONS - 0.0%
** U.S. Treasury Bill 4.30% 01/06/00 63,100 61,676
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $61,676 ) 61,676
The Flex-funds 1999 Semi-Annual Report Page 27
<PAGE>
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
REPURCHASE AGREEMENTS - 12.1%
Banc of America Securities LLC (Collateralized by 5.60% 07/01/99 50,000,000 50,000,000
$51,379,000 various commercial papers,
5.50% - 5.54%, 07/19/99 - 09/20/99,
market value - $51,000,007)
Prudential Securities (Collateralized by $53,556,000 5.10% 07/01/99 48,000,000 48,000,000
various U.S. Government securities,
6.00% - 6.50%, 02/25/14 - 04/15/14,
market value - $50,383,685)
State Street Bank & Trust Co. (Collateralized by 4.90% 07/01/99 31,569,000 31,569,000
$32,201,291 FFCB, 5.13%, 04/02/01,
market value - $32,201,291)
State Street Bank & Trust Co. (Collateralized by 4.70% 07/01/99 19,721,000 19,721,000
$31,662,245 SLMA, 5.20%, 01/25/07,
market value - $20,117,704)
TOTAL REPURCHASE AGREEMENTS
(Cost $149,290,000 ) 149,290,000
TOTAL INVESTMENTS - 100.0%
(Cost$1,230,029,521)(a) $1,230,029,521
</TABLE>
<TABLE>
<CAPTION>
TRUSTEE DEFERRED COMPENSATION***** SHARES VALUE
<S> <C> <C>
Flex-funds Highlands Growth Fund 356 7,470
Flex-funds Muirfield Fund 541 3,465
Flex-funds Total Return Utilities Fund 156 3,015
Flex Partners International Equity Fund 278 3,757
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $14,513 ) $17,707
<FN>
(a) Cost for federal income tax and financial reporting purposes are the same.
FHLMC: Federal Home Loan Mortgage Corporation
Remic: Real Estate Mortgage Investment Conduit
FFCB: Federal Farm Credit Bureau
SLMA: Student Loan Marketing Association
* Variable rate security. Interest rate is as of June 30, 1999. Maturity date
reflects the next rate change date.
** Pledged as collateral on Letter of Credit.
*** Security is restricted as to resale to institutional investors, but has
been deemed liquid in accordance with guidelines approved by the Board of
Trustees.
**** Illiquid security. The sale or disposition of such security may not be
possible in the ordinary course of business within seven days at
approximately the value at which the Fund has valued the security.
***** Assets of affiliates to the Money Market Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-funds 1999 Semi-Annual Report Page 28
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S.
TOTAL RETURN HIGHLANDS GOVERNMENT MONEY
MUIRFIELD UTILITIES GROWTH BOND MARKET
FUND FUND FUND FUND FUND
Assets:
<S> <C> <C> <C> <C> <C>
Investment in corresponding portfolio
at value $143,627,253 $10,934,198 $52,274,576 $11,730,484 $183,305,649
Receivable for capital stock issued 2,633,087 301,463 168,957 9,995 ---
Unamortized organization costs --- 4,803 --- --- ---
Other assets 28,704 14,229 26,204 12,962 84,454
Total Assets 146,289,044 11,254,693 52,469,737 11,753,441 183,390,103
Liabilities:
Payable for capital stock redeemed 2,447,913 217,988 57,480 14,332 ---
Dividends payable 380,313 12,965 340 39,359 681,039
Accrued 12b-1 distribution fees 126,823 --- 37,140 6,397 33,994
Accrued transfer agent and
administrative fees 15,314 895 5,952 872 17,414
Other accrued liabilities 16,309 17,435 7,126 2,583 2,245
Total Liabilities 2,986,672 249,283 108,038 63,543 734,692
Net Assets 143,302,372 11,005,410 52,361,699 11,689,898 182,655,411
Net Assets:
Capital 100,892,042 7,695,619 34,851,941 11,692,691 182,655,411
Accumulated undistributed (distributions
in excess of) net investment income 76,366 6,821 (25,250) 303,678 ---
Accumulated undistributed net realized
gain (loss) from investments 35,469,530 1,229,037 4,254,011 (302,385) ---
Net unrealized appreciation (depreciation) 6,864,434 2,073,933 13,280,997 (4,086) ---
of investments
Net Assets $143,302,372 $11,005,410 $52,361,699 $11,689,898 $182,655,411
Capital Stock Outstanding 18,712,372 517,263 2,151,523 543,916 182,655,411
(indefinite number of shares authorized,
$0.10 par value)
Net Asset Value, Offering and
Redemption Price Per Share $7.66 $21.28 $24.34 $21.49 $1.00
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 29
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S.
TOTAL RETURN HIGHLANDS GOVERNMENT MONEY
MUIRFIELD UTILITIES GROWTH BOND MARKET
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
Net Investment Income from Corresponding
Portfolio:
Interest $1,318,522 $9,040 $94,614 $272,565 $4,987,874
Dividends 89,843 158,340 260,556 --- ---
Expenses net of waivers and/or
reimbursement (566,889) (64,861) (265,139) (34,474) (177,240)
Total Net Investment Income from
Corresponding Portfolio 841,476 102,519 90,031 238,091 4,810,634
Fund Expenses:
Administrative fee 33,121 2,544 11,573 2,842 49,299
Transfer agent fees 66,242 5,087 23,146 3,411 63,712
Audit fees 5,249 1,010 1,800 1,448 1,892
Legal fees 652 272 659 117 686
Printing 10,317 1,556 6,300 1,267 19,862
Amortization of organizational costs --- 2,491 --- --- ---
Distribution plan 80,937 12,718 28,321 11,368 78,879
Postage 1,086 1,672 3,600 905 9,785
Registration and filing fees 5,792 6,784 13,320 2 10,899
Insurance 480 72 171 42 579
Other expenses 4,921 329 5,433 122 1,957
Total Expenses 208,797 34,535 94,323 21,524 237,550
Expenses reimbursed by investment advisor --- (7,804) --- --- (17,311)
Net Expenses 208,797 26,731 94,323 21,524 220,239
NET INVESTMENT INCOME (LOSS) 632,679 75,788 (4,292) 216,567 4,590,395
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
Net realized (losses) from futures (610,727) --- 69,036 --- ---
contracts
Net realized gains (losses) from 29,337,869 1,587,978 3,134,608 (386,105) ---
investments
Net change in unrealized appreciation
(depreciation) of investments (14,538,065) (440,688) 3,125,488 51,772 ---
NET GAIN FROM INVESTMENTS 14,189,077 1,147,290 6,329,132 (334,333) ---
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $14,821,756 $1,223,078 $6,324,840 ($117,766) $4,590,395
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 30
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
U.S.
TOTAL RETURN HIGHLANDS GOVERNMENT MONEY
MUIRFIELD UTILITIES GROWTH BOND MARKET
FUND FUND FUND FUND FUND
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $632,679 $75,788 ($4,292) $216,567 $4,590,395
Net realized gain (loss) from
investments and futures contracts 28,727,142 1,587,978 3,203,644 (386,105) ---
Net change in unrealized appreciation
(depreciation) of investments (14,538,065) (440,688) 3,125,488 51,772 ---
Net increase (decrease) in net assets
resulting from operations 14,821,756 1,223,078 6,324,840 (117,766) 4,590,395
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (557,576) (68,952) --- (216,567) (4,590,395)
In excess of net investment income --- --- (21,089) --- ---
Net decrease in net assets resulting
from dividends and distributions (557,576) (68,952) (21,089) (216,567) (4,590,395)
CAPITAL TRANSACTIONS:
Issued 19,376,200 1,339,252 58,553,020 1,336,181 331,806,373
Reinvested 181,837 55,000 20,959 166,774 3,849,142
Redeemed (16,067,138) (1,997,618) (56,423,775) (772,731) (307,255,401)
Net increase (decrease) in net assets
resulting from capital share
transactions 3,490,899 (603,366) 2,150,204 730,224 28,400,114
TOTAL INCREASE IN NET ASSETS 17,755,079 550,760 8,453,955 395,891 28,400,114
NET ASSETS - Beginning of period 125,547,293 10,454,650 43,907,744 11,294,007 154,255,297
NET ASSETS - End of period $143,302,372 $11,005,410 $52,361,699 $11,689,898 $182,655,411
SHARE TRANSACTIONS:
Issued 2,663,003 65,794 2,599,909 61,788 331,806,373
Reinvested 25,012 2,766 935 7,716 3,849,142
Redeemed (2,220,088) (101,146) (2,517,583) (35,705) (307,255,401)
Change in shares 467,927 (32,586) 83,261 33,799 28,400,114
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
U.S.
TOTAL RETURN HIGHLANDS GOVERNMENT MONEY
MUIRFIELD UTILITIES GROWTH BOND MARKET
FUND FUND FUND FUND FUND
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $1,435,207 $134,250 $129,094 $576,536 $8,867,836
Net realized gain (loss) from
investments and futures contracts 7,320,005 (358,953) 4,292,178 1,102,589 ---
Net change in unrealized appreciation
(depreciation) of investments 21,404,554 838,039 4,287,738 (591,216) ---
Net increase in net assets
resulting from operations 30,159,766 613,336 8,709,010 1,087,909 8,867,836
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (1,433,944) (134,265) (128,963) (576,536) (8,867,836)
Net realized gain from investments
and futures contracts (1,907,816) --- (3,152,482) (37,210) ---
Net decrease in net assets resulting
from dividends and distributions (3,341,760) (134,265) (3,281,445) (613,746) (8,867,836)
CAPITAL TRANSACTIONS:
Issued 21,967,180 5,724,377 64,413,686 2,306,810 478,112,579
Reinvested 3,296,460 131,606 3,254,744 576,374 8,641,621
Redeemed (57,316,946) (4,285,392) (62,940,124) (9,036,259) (501,833,777)
Net increase (decrease) in net assets
resulting from capital share transactions (32,053,306) 1,570,591 4,728,306 (6,153,075) (15,079,577)
TOTAL INCREASE (DECREASE) IN NET ASSETS (5,235,300) 2,049,662 10,155,871 (5,678,912) (15,079,577)
NET ASSETS - Beginning of period 130,782,593 8,404,988 33,751,873 16,972,919 169,334,874
NET ASSETS - End of period $125,547,293 $10,454,650 $43,907,744 $11,294,007 $154,255,297
SHARE TRANSACTIONS:
Issued 3,737,873 309,337 3,158,058 106,049 478,112,579
Reinvested 521,019 7,373 153,489 26,662 8,641,621
Redeemed (9,925,681) (241,126) (3,062,778) (423,756) (501,833,777)
Change in shares (5,666,789) 75,584 248,769 (291,045) (15,079,577)
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 31
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
THE MUIRFIELD FUND
Six Months Years Ended December 31,
Ended 6/30/99 --------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.88 $5.47 $5.47 $5.73 $5.34 $5.36
Income from Investment Operations
Net Investment Income 0.03 0.08 0.11 0.10 0.06 0.14
Net Gains or Losses from Securities
(both realized and unrealized) 0.78 1.51 0.91 0.25 1.31 -
Total From Investment Operations 0.81 1.59 1.02 0.35 1.37 0.14
Less Distributions
Dividends (from net investment income) (0.03) (0.08) (0.11) (0.10) (0.06) (0.14)
Distributions (from capital gains) -- (0.10) (0.91) (0.51) (0.92) (0.02)
Total Distributions (0.03) (0.18) (1.02) (0.61) (0.98) (0.16)
Net Asset Value, End of Period $7.66 $6.88 $5.47 $5.47 $5.73 $5.34
Total Return 11.78%(1) 29.33% 18.59% 5.99% 25.82% 2.70%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $143,302 $125,547 $130,783 $121,335 $111,751 $83,119
Ratio of Expenses to Average Net Assets 1.17%(2) 1.24% 1.29% 1.19% 1.26% 1.22%
Ratio of Net Investment Income to
Average Net Assets 0.95%(2) 1.23% 1.69% 1.54% 0.97% 2.55%
Portfolio Turnover Rate(3) 150.75% 128.31% 395.42% 297.41% 186.13% 168.17%
<FN>
(1) Not Annualized
(2) Annualized
(3) Represents turnover rate of corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 32
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
THE TOTAL RETURN UTILITIES FUND
Six Months Years Ended December 31, Period
Ended 6/30/99 ----------------------------------- June 21, 1995*
(Unaudited) 1998 1997 1996 to Dec. 31, 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $19.01 $17.72 $14.98 $14.14 $12.50
Income from Investment Operations
Net Investment Income 0.15 0.25 0.25 0.37 0.21
Net Gains or Losses from Securities
(both realized and unrealized) 2.26 1.29 3.99 1.48 1.64
Total From Investment Operations 2.41 1.54 4.24 1.85 1.85
Less Distributions
Dividends (from net investment income) (0.14) (0.25) (0.25) (0.37) (0.21)
Distributions (from capital gains) -- -- (1.25) (0.64) --
Total Distributions (0.14) (0.25) (1.50) (1.01) (0.21)
Net Asset Value, End of Period $21.28 $19.01 $17.72 $14.98 $14.14
Total Return 12.69%(1) 8.77% 28.68% 13.33% 15.00%(1)
Ratios/Supplemental Data
Net Assets, End of Period ($000) $11,005 $10,455 $8,405 $5,074 $2,881
Ratio of Expenses to Average Net Assets 1.80%(2) 1.80% 1.80% 1.25% 1.25%(2)
Ratio of Net Investment Income to
Average Net Assets 1.49%(2) 1.35% 1.57% 2.55% 3.18%(2)
Ratio of Expenses to Average Net Assets,
before waiver of fees(3) 1.95%(2) 2.11% 2.51% 2.95% 4.35%(2)
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(3) 1.34%(2) 1.04% 0.86% 0.85% 0.08%(2)
Portfolio Turnover Rate(4) 22.61% 51.36% 41.22% 50.79% 5.06%
<FN>
(1) Not Annualized
(2) Annualized
(3) Annualized ration includes directed brokerage payments in corresponding
portfolio
(4) Represents turnover rate of corresponding portfolio
* Date of commencement of operations
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 33
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
THE HIGHLANDS GROWTH FUND
Six Months Years Ended December 31,
Ended 6/30/99 ----------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.23 $18.55 $16.41 $15.34 $13.08 $13.45
Income from Investment Operations
Net Investment Income 0.01 0.06 0.06 0.31 0.50 0.27
Net Gains or Losses from Securities
(both realized and unrealized) 3.11 4.32 4.73 1.07 2.68 (0.37)
Total From Investment Operations 3.12 4.38 4.79 1.38 3.18 (0.10)
Less Distributions
Dividends (from net investment income) (0.01) (0.06) (0.06) (0.31) (0.50) (0.27)
Distributions (from capital gains) -- (1.64) (2.59) -- (0.42) --
Total Distributions (0.01) (1.70) (2.65) (0.31) (0.92) (0.27)
Net Asset Value, End of Period $24.34 $21.23 $18.55 $16.41 $15.34 $13.08
Total Return 14.70%(1) 23.67% 29.28% 9.08% 24.61% -0.69%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $52,362 $43,908 $33,752 $24,204 $24,631 $22,176
Ratio of Expenses to Average Net Assets 1.54%(2) 1.69% 1.87% 1.65% 1.64% 1.63%
Ratio of Net Investment Income to
Average Net Assets (0.02%)(2) 0.31% 0.30% 1.92% 3.38% 1.95%
Ratio of Expenses to Average Net Assets
before waiver of fees(3) 1.56%(2) 1.70% 1.87% 1.65% 1.64% 1.63%
Ratio of Net Investment Income to Average
Net Assets before waiver of fees(3) (0.04%)(2) 0.30% 0.30% 1.92% 3.38% 1.95%
Portfolio Turnover Rate(4) 28.83% 79.98% 129.79% 81.66% 337.57% 102.76%
<FN>
(1) Not Annualized
(2) Annualized
(3) Ratio includes fees waived in corresponding portfolio
(4) Represents turnover rate of corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 34
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
THE U.S. GOVERNMENT BOND FUND
Six Months Years Ended December 31,
Ended 6/30/99 --------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.14 $21.19 $20.64 $21.58 $19.25 $20.18
Income from Investment Operations
Net Investment Income 0.41 0.97 0.99 0.96 1.11 0.72
Net Gains or Losses from Securities
(both realized and unrealized) (0.65) 1.02 0.55 (0.94) 2.33 (0.93)
Total From Investment Operations (0.24) 1.99 1.54 0.02 3.44 (0.21)
Less Distributions and Dividends
From net investment income (0.41) (0.97) (0.99) (0.96) (1.11) (0.72)
From net realized gains -- (0.07) -- -- -- --
Total Distributions (0.41) (1.04) (0.99) (0.96) (1.11) (0.72)
Net Asset Value, End of Period $21.49 $22.14 $21.19 $20.64 $21.58 $19.25
Total Return (1.09%)(1) 9.62% 7.70% 0.15% 18.32% -0.99%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $11,690 $11,294 $16,973 $17,783 $16,048 $12,983
Ratio of Expenses to Average Net Assets 0.99%(2) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income to
Average Net Assets 3.81%(2) 4.52% 4.85% 4.61% 5.41% 3.71%
Ratio of Expenses to Average Net Assets,
before waiver of fees(3) 1.06%(2) 1.16% 1.14% 1.06% 1.14% 1.14%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(3) 3.74%(2) 4.36% 4.71% 4.55% 5.27% 3.57%
Portfolio Turnover Rate(4) 158.48% 225.11% 375.64% 778.59% 232.34% 707.57%
<FN>
(1) Not Annualized
(2) Annualized
(3) Ratio includes fees waived in corresponding portfolio
(4) Represents turnover rate of corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 35
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
Years Ended December 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income 0.023 0.052 0.053 0.05 0.06 0.04
Total From Investment Operations 0.023 0.052 0.053 0.05 0.06 0.04
Less Distributions
Dividends (from net investment income) (0.023) (0.052) (0.053) (0.05) (0.06) (0.04)
Total Distributions (0.023) (0.052) (0.053) (0.05) (0.06) (0.04)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return 2.33%(1) 5.31% 5.38% 5.27% 5.85% 4.10%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $182,655 $154,255 $169,335 $119,947 $141,087 $164,838
Ratio of Expenses to Average Net Assets 0.40%(2) 0.40% 0.40% 0.40% 0.40% 0.37%
Ratio of Net Investment Income to
Average Net Assets 4.66%(2) 5.19% 5.26% 5.15% 5.70% 4.02%
Ratio of Expenses to Average Net Assets,
before waiver of fees(3) 0.53%(2) 0.59% 0.59% 0.58% 0.64% 0.57%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(3) 4.53%(2) 5.00% 5.07% 4.97% 5.46% 3.82%
<FN>
(1) Not Annualized
(2) Annualized
(3) Ratio includes fees waived in corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 36
<PAGE>
THE FLEX-FUNDS SEMI-ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Trust offers five separate series,
and it is presently comprised of five separate funds as follows: The Muirfield
Fund, The Total Return Utilities Fund, The Highlands Growth Fund (formerly The
Growth Fund), The U.S. Government Bond Fund and The Money Market Fund (each a
"Fund" and collectively the "Funds"). Each 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, 1999
---- --------- -------------
The Muirfield Fund Mutual Fund Portfolio 88%
The Total Return Utilities Fund Utilities Stock Portfolio 78%
The Highlands Growth Fund Growth Stock Portfolio 82%
The U.S. Government Bond Fund Bond Portfolio 100%
The Money Market Fund Money Market Portfolio 15%
The financial statements of the Portfolios, including the Portfolios of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of each respective Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
Each 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.
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. The Muirfield
Fund and The Highlands Growth Fund declare dividends from net investment income
on a quarterly basis. The Total Return Utilities Fund declares dividends from
net investment income on a monthly basis. The U.S. Government Bond Fund and The
Money Market Fund declare dividends from net investment income on a daily basis
and pay such dividends on a monthly basis. Each Fund distributes net capital
gains, if any, on an annual basis.
The Flex-funds 1999 Semi-Annual Report Page 37
<PAGE>
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, and differing
treatment of unrealized gains and losses of futures contracts held by the Fund's
corresponding Portfolio. 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 five Funds have been
deferred and are being amortized by each Fund on a straight-line basis over a
five-year period. Such costs for The Muirfield Fund, The Highlands Growth Fund,
The U.S. Government Bond Fund, and The Money Market Fund have been fully
amortized.
INVESTMENT INCOME & EXPENSES
The Funds record daily their proportionate share of the Portfolios' income,
expenses, and realized and unrealized gains and losses. In addition, the Funds
accrue their own 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.
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, Miller/Howard Investments, Inc. and Sector Capital
Management, Inc. serve as subadvisor of the Utilties Stock Portfolio and the
Growth 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.
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
calculated as follows. For The Muirfield Fund, The Total Return Utilities Fund
and The Highlands Growth Fund, such fee is equal to the greater of $15 per
active shareholder account or 0.10% of the Fund's average daily net assets. For
The U.S. Government Bond Fund, such fee is equal to the greater of $15 per
active shareholder account or 0.06% of the Fund's average daily net assets. For
The Money Market Fund, such fee is equal to the greater of $20 per active
shareholder account or 0.06% 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 Total Return Utilities Fund and The
Money Market Fund for the amount by which annual expenses of such Funds
including expenses allocated from the respective Portfolio (excluding interest,
taxes, brokerage fees, and extraordinary expenses) exceed 1.80% and 0.41% of
average daily net assets of The Total Return Utilities Fund and The Money Market
Fund, respectively. Prior to April 28, 1999, The Money Market Fund's annual
expense limitation had been 0.40% of average daily net assets. Such
reimbursement is limited to the total of fees charged the Fund by RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, each Fund has adopted a Distribution Plan
(the "Plan"). Under the provisions of each Plan, the Fund may incur certain
expenses associated with the distribution of fund shares in amounts not to
exceed an annual limitation. Such limitation, on an annual basis, is 0.20% of
the average daily net assets of each Fund, 0.25% of the average daily net assets
of The Total Return Utilities Fund.
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
The Flex-funds 1999 Semi-Annual Report Page 38
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
Assets:
Investments, at market value* $111,983,971 $13,225,500 $57,081,814 $5,741,501 $1,080,739,521
Repurchase agreements, at cost* 49,562,000 731,000 6,452,000 5,941,000 149,290,000
Trustee deferred compensation investments, at 41,611 7,351 15,001 7,489 20,901
market value
Cash 718 652 594 830 559
Receivable for securities sold --- --- 499,864 --- ---
Receivable for net variation margin on futures 1,231,250 --- --- --- ---
Receivable from corresponding Fund --- --- --- --- 1,853,723
Interest receivable 58,026 99 878 55,572 5,019,977
Dividends receivable --- 20,860 48,680 --- ---
Prepaid/Other assets 3,938 4,284 1,389 1,214 116,098
Total Assets 162,881,514 13,989,746 64,100,220 11,747,606 $1,237,040,779
Liabilities:
Payable for securities purchased --- --- 218,232 --- 1,600,000
Payable for Trustee Deferred Compensation Plan 41,611 7,351 15,001 7,489 20,901
Payable to investment adviser 99,408 11,307 47,546 3,114 169,391
Accrued audit fees 4,329 4,894 4,149 4,533 6,264
Accrued legal fees 253 252 2,506 5 214
Accrued custodian fees 1,286 --- 5,542 147 11,246
Accrued trustee fees 2,377 --- 4,005 --- ---
Accrued fund accounting fees 4,396 1,572 3,451 1,403 13,922
Other accrued liabilities 1,590 97 724 271 7,551
Total Liabilities 155,250 25,473 301,156 16,962 1,829,489
Net Assets $162,726,264 $13,964,273 $63,799,064 $11,730,644 $1,235,211,290
Net Assets:
Capital 155,495,651 11,125,748 49,280,526 11,734,727 1,235,211,290
Net unrealized appreciation (depreciation) of 7,230,613 2,838,525 14,518,538 (4,083) ---
investments
Net Assets $162,726,264 $13,964,273 $63,799,064 $11,730,644 $1,235,211,290
*Securities at cost $155,546,608 $11,117,975 $49,015,276 $11,686,584 $1,230,029,521
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 39
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME
Interest $1,476,611 $11,235 $115,007 $272,568 $29,626,485
Dividends 101,103 204,319 316,363 --- ---
Total Investment Income 1,577,714 215,554 431,370 272,568 29,626,485
Expenses:
Investment advisory fees 581,491 64,909 271,934 22,529 1,540,234
Audit fees 4,344 4,909 4,163 3,716 6,286
Custodian fees 4,525 734 13,357 1,067 41,994
Trustees fees and expenses 18,705 3,707 13,575 2,207 14,620
Legal fees 102 104 2,715 652 222
Accounting fees 25,766 8,970 19,979 8,112 76,982
Insurance 102 70 54 163 34,197
Other expenses 102 36 1,720 260 2,690
Total Expenses 635,137 83,439 327,497 38,706 1,717,225
Investment advisory fees waived --- --- --- (4,227) (660,724)
Directed brokerage payments received --- --- (6,058) --- ---
Total Net Expenses 635,137 83,439 321,439 34,479 1,056,501
NET INVESTMENT INCOME 942,577 132,115 109,931 238,089 28,569,984
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
Net realized gain (loss) from futures (912,237) --- 77,193 --- ---
contracts
Net realized gain (loss) from
investments 32,820,371 2,036,285 3,794,993 (386,111) ---
Net change in unrealized appreciation
(depreciation) of investments (15,984,285) (554,859) 3,855,090 51,778 ---
NET GAIN ON INVESTMENTS 15,923,849 1,481,426 7,727,276 (334,333) ---
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $16,866,426 $1,613,541 $7,837,207 ($96,244) $28,569,984
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 40
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $942,577 $132,115 $109,931 $238,089 $28,569,984
Net realized gain (loss) from investments
and futures contracts 31,908,134 2,036,285 3,872,186 (386,111) ---
Net change in unrealized appreciation
(depreciation) of investments (15,984,285) (554,859) 3,855,090 51,778 ---
Net increase (decrease) in net assets
resulting from operations 16,866,426 1,613,541 7,837,207 (96,244) 28,569,984
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 22,543,115 1,623,628 64,647,448 1,416,533 3,932,769,311
Withdrawals (17,490,964) (2,492,441) (59,853,334) (585,266)(3,524,397,328)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests 5,052,151 (868,813) 4,794,114 831,267 408,371,983
TOTAL INCREASE IN NET ASSETS 21,918,577 744,728 12,631,321 735,023 436,941,967
NET ASSETS - Beginning of period 140,807,687 13,219,545 51,167,743 10,995,621 798,269,323
NET ASSETS - End of period $162,726,264 $13,964,273 $63,799,064 $11,730,644 $1,235,211,290
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $2,040,969 $218,745 $335,278 $631,782 $40,566,858
Net realized gain (loss) from investments
and futures contracts 8,222,183 (364,390) 4,583,800 1,102,605 ---
Net change in unrealized appreciation
(depreciation) of investments 23,909,375 1,126,399 4,790,713 (591,219) ---
Net increase in net assets
resulting from operations 34,172,527 980,754 9,709,791 1,143,168 40,566,858
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 21,876,913 6,977,776 74,136,798 2,292,244 3,894,846,315
Withdrawals (59,774,446) (5,408,703) (66,072,809) (9,348,465)(3,742,162,497)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests (37,897,533) 1,569,073 8,063,989 (7,056,221) 170,683,818
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,725,006) 2,549,827 17,773,780 (5,913,053) 211,250,676
NET ASSETS - Beginning of period 144,532,693 10,669,718 33,393,963 16,908,674 587,018,647
NET ASSETS - End of period $140,807,687 $13,219,545 $51,167,743 $10,995,621 $798,269,323
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 41
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
MUTUAL FUND PORTFOLIO
<CAPTION>
Six Months Year Ended December 31,
Ended 6/30/99 ------------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $162,726 $140,808 $144,533 $135,540 $122,109 $83,185
Ratio of Expenses to Average Net Assets 0.86%(1) 0.91% 0.89% 0.87% 0.95% 1.01%
Ratio of Net Investment Income to
Average Net Assets 1.27%(1) 1.56% 2.08% 1.86% 1.26% 2.76%
Portfolio Turnover Rate 150.75% 128.31% 395.42% 297.41% 186.13% 168.17%
</TABLE>
<TABLE>
UTILITIES STOCK PORTFOLIO
<CAPTION>
Six Months Year Ended December 31, Period from
Ended 6/30/99 -------------------------------------- June 21, 1995* to
(Unaudited) 1998 1997 1996 December 31, 1995
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $13,964 $13,220 $10,670 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.29%(1) 1.44% 1.60% 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 2.03%(1) 1.73% 1.79% 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.29%(1) 1.46% 1.65% 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 2.03%(1) 1.71% 1.74% 2.19% 2.01%(1)
Portfolio Turnover Rate 22.61% 51.36% 41.22% 50.79% 5.06%
</TABLE>
<TABLE>
GROWTH STOCK PORTFOLIO
<CAPTION>
Six Months Year Ended December 31,
Ended 6/30/99 -------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $63,799 $51,168 $33,394 $24,414 $24,537 $22,169
Ratio of Expenses to Average Net Assets 1.15%(1) 1.25% 1.34% 1.24% 1.25% 1.23%
Ratio of Net Investment Income to
Average Net Assets 0.39%(1) 0.77% 0.83% 2.33% 3.78% 2.35%
Ratio of Expenses to Average Net Assets
before waiver of fees 1.17%(1) 1.26% 1.34% 1.24% 1.25% 1.23%
Ratio of Net Investment Income to Average
Net Assets before waiver of fees 0.37%(1) 0.76% 0.83% 2.33% 3.78% 2.35%
Portfolio Turnover Rate 28.83% 79.98% 129.79% 81.66% 337.57% 102.76%
<FN>
(1) Annualized
* Date of commencement of operations
</FN>
</TABLE>
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 42
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
BOND PORTFOLIO
<CAPTION>
Six Months Year Ended December 31,
Ended 6/30/99 ------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $11,731 $10,996 $15,274 $17,792 $16,066 $13,008
Ratio of Expenses to Average Net Assets 0.61%(1) 0.57% 0.57% 0.61% 0.57% 0.56%
Ratio of Net Investment Income to
Average Net Assets 4.23%(1) 4.97% 5.27% 4.99% 5.82% 4.15%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.69%(1) 0.73% 0.71% 0.68% 0.71% 0.70%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 4.15%(1) 4.81% 5.13% 4.92% 5.68% 4.01%
Portfolio Turnover Rate 158.48% 225.11% 375.64% 778.59% 232.34% 707.57%
</TABLE>
<TABLE>
MONEY MARKET PORTFOLIO
<CAPTION>
Six Months Year Ended December 31,
Ended 6/30/99 -----------------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $1,233,358 $798,269 $587,019 $352,930 $256,126 $224,523
Ratio of Expenses to Average Net Assets 0.18%(1) 0.18% 0.18% 0.19% 0.21% 0.19%
Ratio of Net Investment Income to
Average Net Assets 4.87%(1) 5.39% 5.47% 5.34% 5.87% 4.28%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.29%(1) 0.30% 0.31% 0.33% 0.37% 0.39%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 4.76%(1) 5.27% 5.34% 5.20% 5.70% 4.08%
</TABLE>
(1) Annualized
See accompanying notes to financial statements
The Flex-funds 1999 Semi-Annual Report Page 43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION
Each Fund of The Flex-funds 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. Each Fund, each
Portfolio into which the Fund invests and the percentage of each Portfolio owned
by the respective Fund is as follows:
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 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 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 Bond Portfolio seeks to maximize current income through investment in
securities, which are issued or guaranteed as to payment of principal and
interest, by the U.S. government or any of its agencies or
instrumentalities.
The Money Market Portfolio seeks current income and stable net asset values
through investment in a portfolio of money market instruments.
The financial statements of the Funds are included elsewhere in this report.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENTS
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 Bond Portfolio values the securities held at 3:00 pm eastern time. The
Portfolios obtain prices from independent pricing services which use valuation
techniques approved by the Board of Trustees.
Money market securities held in the Money Market Portfolio are valued at
amortized cost, which approximates market value. Money market securities held in
the four remaining Portfolios maturing more than sixty days after the valuation
date are valued at the last sales price as of the close of business on the day
The Flex-funds 1999 Semi-Annual Report Page 44
<PAGE>
of valuation, or, lacking any sales, at the most recent bid price or yield
equivalent as obtained from dealers that make markets in such securities. When
such securities are valued within sixty days or less to maturity, the difference
between the valuation existing on the sixty-first day before maturity and
maturity value is amortized on a straight-line basis to maturity. Securities
maturing within sixty days from their date of acquisition are valued at
amortized cost.
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.
DEFERRED TRUSTEE COMPENSATION
Under a Deferred Compensation Plan (the "Plan") non-interested Trustees may
elect to defer receipt of a portion of their annual compensation. Under the
Plan, deferred amounts are invested in the shares of the Flex-funds and
Flex-Partners Funds. Deferred amounts remain in the Portfolios until distributed
in accordance with the Plan.
FUTURES & OPTIONS
Each Portfolio, except the Money Market 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. Such transactions may be considered trading
activity under generally accepted accounting principles. 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.
The Flex-funds 1999 Semi-Annual Report Page 45
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During the six months ended June 30, 1999 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 20 $6,274,000
Contracts opened 646 65,225,963
Contracts closed (469) (6,600,975)
Outstanding, end of period 197 $64,898,988
=================================== =================== =================
GROWTH STOCK PORTFOLIO:
Outstanding, beginning of year 7 $2,055,875
Contracts opened 200 65,054,413
Contracts closed (184) (59,400,775)
Outstanding, end of period 23 $7,709,513
=================================== =================== =================
LETTER OF CREDIT
Each Portfolio has pledged as collateral a U.S. Government Security, cash or
other high-grade debt security solely for the benefit of ICI Mutual Insurance
Co. for the Portfolios' fidelity bond coverage.
INCOME TAXES
The Prtfolios will be treated as a partnership for Federal income tax purposes.
As such, each investor in the Portfolios will be subject to taxation on its
share of the Portfolios' ordinary income and capital gains. 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.
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, Miller/Howard Investments, Inc. and Sector Capital
Management, Inc. serve as subadvisor of the Utilities Stock Portfolio and Growth
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 a fee at the following annual
rates: Mutual Fund Portfolio, Utilities Stock Portfolio, and Growth Stock
Portfolio, 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; Bond Portfolio, 0.40% of average daily
net assets up to $100 million and 0.20% of average daily net assets exceeding
$100 million; Money Market Portfolio, 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the six months ended June 30, 1999, RMA voluntarily waived a portion of
its investment advisory fees in the Money Market and Bond Portfolios.
The Flex-funds 1999 Semi-Annual Report Page 46
<PAGE>
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 for each Portfolio, except $30,000 for the Money Market
Portfolio.
Certain officers and trustees of the Portfolios are also officers or directors
of MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
For the six months ended June 30, 1999, 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 $131,601,231 $186,718,387
Utilities Stock Portfolio 2,861,733 4,004,953
Growth Stock Portfolio 15,532,282 15,080,012
Bond Portfolio 5,380,229 14,181,019
As of June 30, 1999, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax was as follows:
Net unrealized
Cost basis of Unrealized Unrealized appreciation
Portfolio investments appreciation depreciation (depreciation)
- --------- ----------- ------------ ------------ --------------
Mutual Fund Portfolio $155,565,703 $7,840,668 ($629,150) $7,211,518
Utilities Stock Portfolio 11,117,975 3,107,876 (269,351) 2,838,525
Growth Stock Portfolio 49,040,708 15,396,584 (903,478) 14,493,106
Bond Portfolio 11,690,944 0 (8,443) (8,443)
Money Market Portfolio 1,230,029,521 --- --- ---
The Flex-funds 1999 Semi-Annual Report Page 47
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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
Robert S. Meeder, Sr.
Robert S. Meeder, Jr.
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 LLP
Columbus, Ohio 43215
The Flex-funds 1999 Semi-Annual Report Page 48
