THE MONEY MARKET FUND
1998 Annual Report
[PHOTO] Coins
December 31, 1998
Investment Adviser - R. Meeder & Associates
<PAGE>
THE MONEY MARKET FUND
[PHOTO] Philip A. Voelker, Portfolio Manager
1998 was another chart-topping year for The Money Market Fund, as we
extended our streak as the #1 general purpose money market fund for total
cumulative return since inception in March 1985, according to Lipper.** The
Flex-funds Money Market Fund also continues to rank among the top 10% of all
general purpose money market funds for total return for any 12-month period
since inception.
While money market funds may not get the attention they used to receive
nearly twenty years ago, they remain an integral part of many investors'
portfolios -- sometimes as a conservative investment and sometimes as a
temporary parking place for cash. Back in the early 80's, money market funds
sported double-digit yields and chatty investors talked them up in most
cocktail-party conversations. Nowadays, double-digit yields are available in
hours not years, and most investors chat on the Internet about the latest
high-tech IPO, not money market funds.
The problem is the returns on these trendy investments can work both ways
- -- for you or against you. Your money market fund, however, is generally more
stable over the long run. It always helps, of course, to have a strong
management team behind the Fund, working to maximize yields no matter what
occurs in other financial markets.
1998 was a challenging year for many money managers. The first six months
of the year were relatively quiet, and the Fund maintained an average maturity
of approximately 60 days. The second half of the year, however, was marked first
by widening quality spreads, then by rapidly falling rates as the Federal
Reserve cut short-term interest rates three times in two months. The Fed's
decision to lower rates was made primarily in an attempt to provide liquidity to
a debt-laden domestic economy and to help the economy fight off the infections
of the global economic flu, which had spread to Russia and Brazil during 1998.
During the last six months of the year, the Fund's average maturity had been
extended to 70 days, and quite often over 85 days. Our decision to extend the
average maturity of the Fund just before the Fed lowered interest rates helped
us continue to provide exceptional money market returns for investors.
- --------------------------------------------------------------------------------
1998 FUND HIGHLIGHTS
* The Flex-funds Money Market Fund RANKED #1 out of 87 general purpose money
market funds for total cumulative return since inception in March 1985.*
* The Flex-funds Money Market Fund ranks AMONG THE TOP 10% of general purpose
money market funds for total return for any 12-month period since
inception.*
- --------------------------------------------------------------------------------
Double-digit money market fund yields are long gone, and inflation has
gradually been wrung out of our economy. In 15 of the last 19 years, short-term
interest rates have ended the year unchanged or lower -- a remarkable record
that has benefited the U.S. economy greatly. The global trend toward
disinflation has ultimately led to deflation and disaster in many high-growth,
highly-leveraged economies of the developing world. Once these areas of weakness
stabilize, and assuming that domestic demand continues at a robust pace,
inflationary fears could rise once again in the U.S. We do not think this would
happen until much later in 1999, at the earliest.
For the short-term, we are planning to maintain a relatively long average
maturity in the portfolio, while monitoring developments in the financial
markets for signs of continued economic changes.
* Rankings based on total return as reported by Lipper, Inc. The Fund's average
annual total returns for 1, 5, and 10 year periods as of 12/31/98 rank among
general purpose money market funds as follows: 1 year - 22 out of 309; 5 year -
9 out of 201; 10 year - 5 out of 125.
** Out of 87 general purpose money market funds.
The Money Market Fund 1998 Annual Report Page 3
<PAGE>
Performance Update
- ----------------------------------------------------------
Period & Average Annual Total Returns as of 12/31/98
1 year .................................5.31%
3 years ................................5.32%
5 years ................................5.18%
10 years ...............................5.61%
Since Inception (3/27/85)...............6.05%
Current & Effective Yields
- ----------------------------------------------------------
as of 12/31/98
7-day Simple Yield ........................4.96%
7-day Compound Yield ......................5.07%
Quarterly Performance
- ----------------------------------------------------------
Quarterly Total Returns for 1998
First Quarter ..........................1.32%
Second Quarter .........................1.31%
Third Quarter ..........................1.31%
Fourth Quarter .........................1.27%
PORTFOLIO HOLDINGS as of 12/31/98
- -----------------------------------------------------------------------
[CHART] The following information was presented as a pie chart:
Corporate Obligations 76%
Variable Rate Notes 22%
Repurchase Agreements 2%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. All performance figures
represent total returns and average annual total returns for the periods ended
12/31/98. Investment performance represents total return and assumes
reinvestment of all dividend and capital gain distributions. The investment
return and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost. The
Investment Adviser waived a portion of its management fees and/or reimbursed
expenses in order to reduce the operating expenses during each of the periods
shown above. An investment in The Money Market Fund is not insured or 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.
To obtain a prospectus containing more complete information about The Money
Market Fund, including other fees and expenses that apply to a continued
investment in the Fund, you may call (800)325-3539, or write P.O. Box 7177,
Dublin OH 43017. Please read the prospectus carefully before investing.
The Money Market Fund 1998 Annual Report Page 4
<PAGE>
Money Market Portfolio
Portfolio of Investments as of December 31, 1998
<TABLE>
<CAPTION>
COUPON/ FACE
YIELD MATURITY AMOUNT AMORTIZED COST
----- -------- ------ --------------
COMMERCIAL PAPER - 56.2%
<S> <C> <C> <C> <C>
AlliedSignal, Inc. 5.60% 01/29/99 30,000,000 $ 29,869,333
American Home Products Corp.*** 5.10% 02/19/99 5,000,000 4,965,292
American Home Products Corp.*** 5.00% 03/12/99 3,000,000 2,970,833
American Honda Finance Corp. 5.20% 01/29/99 22,000,000 21,911,022
Bankers Trust Corp. 5.04% 05/10/99 25,000,000 24,548,500
CSW Credit, Inc. 5.22% 03/12/99 32,650,000 32,318,603
Carolina Power & Light Co. 4.82% 08/20/99 20,000,000 19,381,433
Credit Suisse First Boston 5.20% 02/24/99 15,350,000 15,230,270
Duff & Phelps Utility and Corporate Bond Trust, Inc. 5.00% 04/20/99 1,000,000 984,861
Duff & Phelps Utility and Corporate Bond Trust, Inc. 5.00% 04/28/99 6,815,000 6,704,256
Duff & Phelps Utility and Corporate Bond Trust, Inc. 4.92% 05/13/99 5,000,000 4,909,800
Duff & Phelps Utility and Corporate Bond Trust, Inc. 4.95% 05/17/99 7,000,000 6,869,100
Eaton Corp.*** 5.38% 03/02/99 10,000,000 9,910,333
Eaton Corp.*** 4.87% 07/19/99 7,475,000 7,273,771
Edison International*** 5.51% 01/22/99 22,227,000 22,156,722
Ford Motor Credit Co. 5.46% 02/17/99 30,000,000 29,786,150
General Electric Capital Corp. 5.44% 03/09/99 20,000,000 19,797,511
Greenwich Asset Funding, Inc.*** 5.34% 01/14/99 30,000,000 29,942,150
J.P. Morgan & Co., Inc. 5.05% 02/19/99 18,311,000 18,185,137
LG&E Capital Corp. 4.92% 05/21/99 25,000,000 24,521,667
Monsanto Co. 5.10% 03/02/99 21,300,000 21,109,897
S.C. Johnson & Son, Inc. 5.20% 03/09/99 20,000,000 19,806,445
Signet Finance*** 5.51% 01/26/99 25,000,000 24,904,340
Toronto-Dominion Holdings USA, Inc. 5.46% 02/02/99 35,000,000 34,830,133
Xerox Credit Corp. 5.47% 02/03/99 7,000,000 6,964,901
Xerox Credit Corp. 5.40% 05/03/99 7,000,000 6,871,900
- ----------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost$446,724,360 ) 446,724,360
- ----------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 41.1%
ABT 95 Series A-3 5.54%* 01/15/99 20,000,000 20,000,000
Aquarium Holdings KY*** 5.60%* 01/07/99 12,000,000 12,000,000
Bank One Corp. 5.75% 05/17/99 500,000 500,060
Bank One Wisconsin 5.74% 05/11/99 1,000,000 1,000,082
Bear Stearns Corp. 5.24%* 01/05/99 20,000,000 20,000,000
Boeing Capital Corp. 5.87%* 02/27/99 5,000,000 5,011,669
Care Life Project*** 5.30%* 01/07/99 1,225,000 1,225,000
Caterpillar Financial Services Corp. 6.07% 02/09/99 2,135,000 2,135,556
Caterpillar, Inc. 6.80% 08/24/99 500,000 503,499
Chase Manhattan Bank 8.50% 02/15/99 8,300,000 8,326,515
Chase Manhattan Bank 10.00% 06/15/99 3,750,000 3,819,869
Chrysler Financial Corp. 6.37% 06/21/99 2,700,000 2,708,468
Clark Grave Vault Co.*** 5.60%* 01/07/99 2,700,000 2,700,000
Comerica 9.75% 05/01/99 5,000,000 5,061,659
Consolidated Edison*** 5.44%* 01/04/99 8,250,000 8,251,244
Coughlin Family Properties, Inc.*** 5.60%* 01/07/99 4,220,000 4,220,000
D.E.D.E. Realty*** 5.60%* 01/07/99 3,850,000 3,850,000
Danis Construction Co.*** 5.60%* 01/07/99 900,000 900,000
Doren, Inc.*** 5.30%* 01/07/99 500,000 500,000
Eaton Corp. 6.38% 04/01/99 1,742,000 1,745,032
Espanola/Nambe*** 5.30%* 01/07/99 2,115,000 2,115,000
First USA/Bank One 5.75% 01/15/99 1,000,000 999,996
First USA/Bank One 5.42% 01/15/99 5,000,000 5,000,313
Ford Motor Credit Co. 5.63% 01/15/99 1,100,000 1,099,938
General America Life Insurance**** 5.35%* 03/21/99 10,000,000 10,000,000
General Motors Acceptance Corp. 7.75% 01/15/99 100,000 100,068
General Motors Acceptance Corp. 6.55% 06/04/99 2,400,000 2,408,192
General Motors Acceptance Corp. 8.63% 06/15/99 5,420,000 5,489,411
Hancor, Inc.*** 5.30%* 01/07/99 600,000 600,000
Household Finance 7.13% 04/30/99 10,000,000 10,044,817
Isaac Tire, Inc.*** 5.60%* 01/07/99 1,000,000 1,000,000
J.C. Penney Co., Inc. 6.88% 06/15/99 1,000,000 1,004,847
John Deere 6.43% 08/09/99 10,000,000 10,044,974
Key Corp. 6.63% 06/01/99 20,000,000 20,103,102
Merrill Lynch 7.75% 03/01/99 1,650,000 1,655,294
The Money Market Fund 1998 Annual Report Page 5
<PAGE>
COUPON/ FACE
YIELD MATURITY AMOUNT AMORTIZED COST
----- -------- ------ --------------
Merrill Lynch 6.38% 03/30/99 500,000 501,270
Merrill Lynch 5.49%* 02/25/99 10,280,000 10,292,233
Morgan Stanley 5.63% 03/01/99 4,850,000 4,849,711
Mubea, Inc.*** 5.30%* 01/07/99 5,400,000 5,400,000
Mubea, Inc.*** 5.30%* 01/07/99 3,750,000 3,750,000
National City Bank 6.00% 03/23/99 14,200,000 14,211,842
NationsBank Corp. 5.39%* 03/17/99 3,000,000 3,003,134
NationsBank Corp. 8.50% 03/01/99 1,095,000 1,099,645
O.K.I. Supply Co.*** 5.60%* 01/07/99 2,150,000 2,150,000
Osco Industries, Inc.*** 5.30%* 01/07/99 2,700,000 2,700,000
Presrite Corp.*** 5.30%* 01/07/99 1,870,000 1,870,000
Pro Tire, Inc.*** 5.60%* 01/07/99 1,200,000 1,200,000
R.I. Lampus Co.*** 5.30%* 01/07/99 2,275,000 2,275,000
RSD Technology*** 5.30%* 01/07/99 4,305,000 4,305,000
Seariver Maritime, Inc. 5.20%* 01/04/99 6,400,000 6,400,000
Surgery Financing Co.*** 5.30%* 01/07/99 6,585,000 6,585,000
Signa Finance 5.71% 03/02/99 3,000,000 3,000,660
Signature Brands (called 8/15/99) 13.00% 08/15/02 18,500,000 20,767,190
SunAmerica, Inc. 9.00% 01/15/99 2,500,000 2,502,839
Transamerica Finance 6.80% 03/15/99 6,435,000 6,452,728
Travelers 5.50% 01/15/99 500,000 500,002
Triangle Funding 5.32%* 03/29/99 7,500,000 7,500,000
Westpac Banking Corp. 5.67% 01/07/99 10,000,000 9,999,787
White Castle Project*** 5.30%* 01/07/99 9,000,000 9,000,000
World Trade Finance 5.48%* 03/01/99 20,000,000 20,000,000
- ----------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost$326,440,646 ) 326,440,646
- ----------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.5%
Student Loan Marketing Assoc. 4.89% 08/03/99 4,350,000 4,350,856
- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,350,856 ) 4,350,856
- ----------------------------------------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 0.0%
** U.S. Treasury Bill 5.02% 01/07/99 63,100 63,048
- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $63,048 ) 63,048
- ----------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.2%
Prudential Securities, 5.10%, 01/04/99,
(Collateralized by $16,750,00001/04/99
FNMA Remic Series Pool #93020J, 7.00%, 03/25/23,
market value - $17,357,188) 5.10% 01/04/99 17,022,000 17,022,000
- ----------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $17,022,000 ) 17,022,000
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost$794,600,910 )(a) $794,600,910
- ----------------------------------------------------------------------------------------------------------------
TRUSTEE DEFERRED COMPENSATION***** SHARES VALUE
Flex-funds Highlands Growth Fund 260 5,573
Flex-funds Muirfield Fund 351 2,429
Flex-funds Total Return Utilities Fund 56 1,074
Flex Partners International Equity Fund 167 2,429
- ----------------------------------------------------------------------------------------------------------------
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $10,454 ) $11,505
- ----------------------------------------------------------------------------------------------------------------
<FN>
(a)Cost for federal income tax and financial reporting purposes are the same.
FNMA Federal National Mortgage Association
Remic Real Estate Mortgage Investment Conduit
* Variable rate security. Interest rate is as of December 31, 1998. 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 would not be
possible in the ordinary course of business within seven days 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 Money Market Fund 1998 Annual Report Page 6
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
MONEY
MARKET
FUND
Assets:
Investment in corresponding portfolio at value $154,100,549
Other assets 205,030
Total Assets 154,305,579
Liabilities:
Dividends payable 6,725
Accrued 12b-1 distribution fees 18,115
Accrued transfer agent and administrative fees 18,959
Other accrued liabilities 6,483
Total Liabilities 50,282
Net Assets 154,255,297
Net Assets:
Capital 154,255,297
Net Assets $154,255,297
Capital Stock Outstanding 154,255,297
(indefinite number of shares authorized,
$0.10 par value)
Net Asset Value, Offering and
Redemption Price Per Share $1.00
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
MONEY
MARKET
FUND
Net Investment Income from Corresponding Portfolio:
Interest $9,551,155
Expenses net of waivers and/or reimbursements (307,115)
Total Net Investment Income from Corresponding Portfolio 9,244,040
Fund Expenses:
Administrative fee 85,423
Transfer agent fees 124,669
Audit fees 3,513
Legal fees 2,054
Printing 40,888
Distribution plan 161,737
Postage 31,392
Registration and filing fees 32,060
Insurance 2,003
Other expenses 12,688
Total Expenses 496,427
Expenses reimbursed by investment adviser (120,223)
Net Expenses 376,204
NET INVESTMENT INCOME 8,867,836
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $8,867,836
See accompanying notes to financial statements
The Money Market Fund 1998 Annual Report Page 7
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
Dec. 31, 1998 Dec. 31, 1997
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $8,867,836 $7,351,758
Net increase in net assets
resulting from operations 8,867,836 7,351,758
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (8,867,836) (7,351,758)
Net decrease in net assets resulting
from dividends and distributions (8,867,836) (7,351,758)
CAPITAL TRANSACTIONS:
Issued 478,112,579 440,552,839
Reinvested 8,641,621 7,195,653
Redeemed (501,833,777) (398,631,115)
Net increase (decrease) in net assets resulting
from capital share transactions (15,079,577) 49,387,377
TOTAL INCREASE (DECREASE) IN NET ASSETS (15,079,577) 49,387,377
NET ASSETS - Beginning of period 169,334,874 119,947,497
NET ASSETS - End of period $154,255,297 $169,334,874
SHARE TRANSACTIONS:
Issued 478,112,579 440,552,839
Reinvested 8,641,621 7,195,653
Redeemed (501,833,777) (398,361,115)
Change in shares (15,079,577) 49,387,377
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
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
Income from Investment Operations
Net Investment Income 0.052 0.053 0.05 0.06 0.04
Total From Investment Operations 0.052 0.053 0.05 0.06 0.04
Less Distributions
Dividends (from net investment income) (0.052) (0.053) (0.05) (0.06) (0.04)
Total Distributions (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
Total Return 5.31% 5.38% 5.27% 5.85% 4.10%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $154,255 $169,335 $119,947 $141,087 $164,838
Ratio of Expenses to Average Net Assets 0.40% 0.40% 0.40% 0.40% 0.37%
Ratio of Net Investment Income to
Average Net Assets 5.19% 5.26% 5.15% 5.70% 4.02%
Ratio of Expenses to Average Net Assets,
before waiver of fees(1) 0.59% 0.59% 0.58% 0.64% 0.57%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(1) 5.00% 5.07% 4.97% 5.46% 3.82%
<FN>
(1) Ratio includes fees waived in corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
The Money Market Fund 1998 Annual Report Page 8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Trust offers five separate series,
and it is presently comprised of five separate funds including The Money Market
Fund (the "Fund"). The Fund invests all of its investable assets in a
corresponding open-end management investment company (the "Portfolio") having
the same investment objective as the Fund. The Fund, the Portfolio into which
the Fund invests and the percentage of each Portfolio owned by the Fund is as
follows:
Percentage of Portfolio
Owned by Fund as of
Fund Portfolio December 31, 1998
- ---- --------- -----------------
The Money Market Fund Money Market Portfolio 19%
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Valuation of Investments
The Fund values its investment in the corresponding Portfolio at fair value.
Valuation of securities held by the Portfolio is further described at Note 2 of
the Portfolios' Notes to Financial Statements which are included elsewhere in
this report.
Income Taxes
It is Fund's policy to comply with the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute substantially all
of its investment company taxable income and net capital gains to its
shareholders. Therefore, no Federal income tax provision is required.
Distributions to Shareholders
The Fund declares dividends from net investment income on a daily basis and pays
such dividends on a monthly basis. The Fund distributes net capital gains, if
any, on an annual basis.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Permanent book and tax basis
differences have been reclassified among the components of net assets.
Investment Income & Expenses
The Fund records daily its proportionate share of the Portfolio's income,
expenses, and realized and unrealized gains and losses. In addition, the Fund
accrues its 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 the Portfolio with investment management, research,
statistical and advisory services.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for the Fund.
In compensation for such services, the Fund pays MFSCo an annual fee equal to
the greater of $20 per active shareholder account or 0.06% of the Fund's average
daily net assets. MFSCo is entitled to receive an annual minimum fee of $4,000
from the Fund.
The Money Market Fund 1998 Annual Report Page 9
<PAGE>
MFSCo provides the Trust with certain administrative services. In compensation
for such services, the Fund pays MFSCo an annual fee equal to 0.05% of the
Fund's average daily net assets.
RMA has voluntarily agreed to reimburse the Fund for the amount by which annual
expenses of the Fund including expenses allocated from its respective Portfolio
(excluding interest, taxes, brokerage fees, and extraordinary expenses) exceed
0.40% of average daily net assets of the Fund on an annual basis. Such
reimbursement is limited to the total of fees charged the Fund by RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted a Distribution Plan (the
"Plan"). Under the provisions of the Plan, the Fund may incur certain expenses
associated with the distribution of fund shares in amounts not to exceed 0.20%
of the average daily net assets of the Fund on an annual basis.
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
The Money Market Fund 1998 Annual Report Page 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of The Flex-funds:
We have audited the accompanying statement of assets and liabilities of The
Flex-funds The Money Market Fund (the Fund) as of December 31, 1998, and the
related statement of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Flex-funds-Money Market Fund at December 31, 1998, and the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
February 19, 1999
The Money Market Fund 1998 Annual Report Page 11
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
MONEY
MARKET
PORTFOLIO
Assets:
Investments, at market value* $777,578,910
Repurchase agreements, at cost* 17,022,000
Trustee deferred compensation investments, at 11,505
market value
Cash 59,912
Interest receivable 4,790,576
Prepaid/Other assets 8,722
Total Assets 799,471,625
Liabilites:
Payable for Trustee Deferred Compensation Plan 11,505
Payable to corresponding Fund 1,055,191
Payable to investment adviser 107,200
Accrued audit fees 9,231
Accrued legal fees 660
Accrued custodian fees 6,635
Accrued fund accounting fees 10,510
Other accrued liabilities 1,370
Total Liabilities 1,202,302
Net Assets $798,269,323
Net Assets:
Capital 798,269,323
Net Assets $798,269,323
*Securities at cost $794,600,910
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
MONEY
MARKET
PORTFOLIO
NET INVESTMENT INCOME
Interest $41,916,923
Total Investment Income 41,916,923
Expenses:
Investment advisory fees 2,029,468
Audit fees 15,235
Custodian fees 49,680
Trustees fees and expenses 24,375
Legal fees 5,664
Accounting fees 112,179
Insurance 5,759
Other expenses 9,492
Total Expenses 2,251,852
Investment advisory fees waived (901,787)
Total Net Expenses 1,350,065
NET INVESTMENT INCOME 40,566,858
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $40,566,858
See accompanying notes to financial statements
The Money Market Fund 1998 Annual Report Page 12
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
Year ended Year ended
Dec. 31, 1998 Dec. 31, 1997
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $40,566,858 $28,315,164
Net increase in net assets
resulting from operations 40,566,858 28,315,164
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 3,894,846,315 3,784,994,914
Withdrawals (3,724,162,497) (3,579,221,656)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests 170,683,818 205,773,258
TOTAL INCREASE (DECREASE) IN NET ASSETS 211,250,676 234,088,422
NET ASSETS - Beginning of period 587,018,647 352,930,225
NET ASSETS - End of period $798,269,323 $587,018,647
<TABLE>
FINANCIAL HIGHLIGHTS
MONEY MARKET PORTFOLIO
<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $798,269 $587,019 $352,930 $256,126 $224,523
Ratio of Expenses to Average Net Assets 0.18% 0.18% 0.19% 0.21% 0.19%
Ratio of Net Investment Income to
Average Net Assets 5.39% 5.47% 5.34% 5.87% 4.28%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.30% 0.31% 0.33% 0.37% 0.39%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 5.27% 5.34% 5.20% 5.70% 4.08%
</TABLE>
See accompanying notes to financial statements
The Money Market Fund 1998 Annual Report Page 13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION
The Money Market Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The Portfolio is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio.
The investment objective of the Money Market Portfolio is to seek current income
and stable net asset values through investment in a portfolio of money market
instruments. The financial statements of the Fund are included elsewhere in this
report.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Money market securities held in the Money Market Portfolio are valued at
amortized cost, which approximates market value.
Repurchase Agreements
The Portfolio may engage in repurchase agreement transactions whereby the
Portfolio takes possession of an underlying debt instrument subject to an
obligation of the seller to repurchase the instrument from the Portfolio and an
obligation of the Portfolio to resell the instrument at an agreed upon price and
term. At all times, the Portfolio maintains the value of collateral, including
accrued interest, at least 100% of the amount of the repurchase agreement, plus
accrued interest. If the seller defaults or the fair value of the collateral
declines, realization of the collateral by the Portfolios may be delayed or
limited.
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.
Letter of Credit
The 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 Portfolio's fidelity bond coverage.
Income Taxes
The Portfolio will be treated as a partnership for Federal income tax purposes.
As such, each investor in the Portfolio will be subject to taxation on its share
of the Portfolio's ordinary income and capital gains. It is the Portfolio's
policy to comply with the requirements of the Internal Revenue Code applicable
to it. Therefore, no Federal income tax provision is required.
Securities Transactions
The Portfolio records security transactions on the trade date. Interest income
(including amortization of premium and accretion of discount) is recognized as
earned.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services. For such services the Portfolio pays monthly
a fee at the following annual rates: 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the year ended December 31, 1998, RMA voluntarily waived a portion of its
investment advisory fees in the Portfolio.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for the Portfolio. In compensation for such services,
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.
$30,000.
Certain officers and trustees of the Portfolios are also officers or directors
of MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
As of December 31, 1998, the aggregate cost basis of investments for Federal
income tax was $794,600,910.
The Money Market Fund 1998 Annual Report Page 14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
The Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio (Portfolio), including the portfolio of investments, as
of December 31, 1998, and the related statement of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1998, by confirmation with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Portfolio at December 31, 1998, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
indicated herein, in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 19, 1999
The Money Market Fund 1998 Annual Report Page 15
<PAGE>
THE MONEY MARKET FUND
P.O. Box 7177
Dublin, Ohio 43017
