THE FLEX-FUNDS P.O. Box 7177, Dublin OH 43017 (800)325-FLEX www.flex-funds.com
2000 SEMI-ANNUAL REPORT [PHOTO] Newspaper
June 30, 2000
Semi-Annual Market Review page 1
The Muirfield Fund page 4
The Total Return Utilities Fund page 5
The Highlands Growth Fund page 6
The Dynamic Growth Fund page 7
The Aggressive Growth Fund page 8
The U.S. Government Bond Fund page 9
The Money Market Fund page 10
Financial Statements page 11
THE FLEX-FUNDS
P.O. Box 7177, Dublin OH 43017
TOLL FREE (800)325-FLEX
E-Mail: [email protected]
Internet: www.flex-funds.com
<PAGE>
PERFORMANCE CAPSULE Period and Average Annual Total Returns as of 6/30/00
<TABLE>
<CAPTION>
The Muirfield The Total Return The Highlands The Dynamic The Aggressive The U.S. Govt. The Money
Fund Utilities Fund Growth Fund** Growth Fund Growth Fund Bond Fund Market Fund
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<S> <C> <C> <C> <C> <C> <C> <C>
Year to Date -11.44% 5.07% -0.85% -14.20% -20.40% 2.52% 2.92%
One Year -7.76% 11.89% 4.74% -- -- 4.02% 5.57%
Three Years 11.38% 18.71% 18.22% -- -- 6.50% 5.33%
Five Years 13.11% 18.41% 18.25% -- -- 5.24% 5.35%
Ten Years 12.27% -- 13.95% -- -- 6.73% 5.07%
Life of Fund 12.43%1 18.02%2 11.11%3 -14.02%4 -20.40%5 6.85%6 5.98%7
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7-day Simple Yield* 6.24%
7-day Compound Yield* 6.42%
</TABLE>
1 Inception Date 8/10/88. 2 Inception Date 6/21/95. 3 Inception Date 3/20/85.
4 Inception Date 2/29/00. 5 Inception Date 2/29/00. 6 Inception Date 5/9/85.
7 Inception Date 3/27/85.
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
6/30/00. 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, The Dynamic Growth, The Aggressive Growth, and The Total Return
Utilities Funds during each of the periods shown above.
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 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.
<PAGE>
SEMI-ANNUAL MARKET REVIEW
Those of us who have taken a more tempered approach to the
technology-powered bull equity market over the last two-and-a-half years,
warning investors time and again of the perils of sky-high stock valuations and
narrow market leadership, were vindicated in the first six months of 2000. It
seems that investors finally paid attention to fundamentals such as dividends,
p/e ratios, corporate profits and real earnings -- statistics that as of late
seemed only to matter to Finance 101 students.
So far this year, we have witnessed tremendous rotation in the equity
market. Investors began the year with a tech-stock buying binge, accumulating
technology issues and selling off "old economy" stocks. Then, upon dumping these
very same technology and dot-com stocks, they doted on the classic equities of
the "old economy". The Nasdaq Composite Index* - seen by many investors as the
pulse of the "new economy" - surged in the 1st Quarter, returning 12% for the
quarter while the S&P 500* eked out a 2% gain and the Dow Jones Industrial
Average* declined more than 4%. However, the tide turned in March as the Nasdaq
fell nearly 10% on three separate trading days. This occurred even while many
technical indicators of broad market performance, such as advance/decline
statistics, showed signs of improvement.
The declines increased dramatically in April and May. Upon reaching its
lowest point for the year on May 23, the Nasdaq Composite Index declined 37%
from its March 10 high. The S&P 500 declined 10% from its high on March 23 to
its low point on April 14. However, during the short 4-day trading week
following Memorial Day, the Nasdaq jumped 19% -- its highest weekly increase on
record. The S&P 500 rose 7% during this week as well. The market was relatively
quiet for the remainder of June, with the major indices closing out a wild
six-month period in a narrow trading range.
The volatile and weak market naturally affected the performance of our
funds. The Muirfield Fund was overweighted in technology and telecommunications
while these sectors underpreformed in April and May. On top of this, our
investment discipline did not perform in a manner that we expect as the market
indices declined. The Fund
* The NASDAQ Composite Index is an unmanaged index of all the stocks traded on
the NASDAQ exchange. The S&P 500 Composite Stock Index is an unmanaged index
based on market capitalization. The Dow Jones Industrial Average is an unmanaged
index of 30 selected stocks. These indices incur no sales charges, expenses, or
fees. Past performance of an index does not guarantee future results. It is not
possible to invest directly in an index.
<PAGE>
declined -14.16% in the 2nd Quarter, and was down -11.44% for the year to date.
More detailed commentary about The Muirfield Fund can be found on page 4.
Our two newest Flex-funds - The Dynamic Growth Fund and The Aggressive
Growth Fund - were also affected by the declines in the technology and
telecommunications sectors. Both funds overweighted these high-growth sectors
when they were launched February 29. However we rotated out of the sectors in
June, after the Nasdaq Composite had retraced 50% of its decline. As of June
30th, The Dynamic Growth Fund declined -14.20% and The Aggressive Growth Fund
declined -20.40% from their inception date. More detailed commentary on both
funds can be found on pages 7 and 8.
The Highlands Growth Fund held about 30% of the Fund's portfolio in the
technology sector matching the sector's weighting in the S&P 500 Index. However,
the Fund's "sector neutral, style neutral" investment strategy kept the Fund on
par with its benchmark during the first half of 2000, declining -0.85% compared
to the -0.43% decline of the S&P 500 Index* over the same period. More detailed
commentary about The Highlands Growth Fund can be found on page 6.
During the 1st Quarter, the advance in telecommunications stocks aided the
performance of The Total Return Utilities Fund. Then, as investors moved to
relatively safe stocks during the tech slide, the overall utilities sector
enjoyed strong performance. The Total Return Utilities Fund had a 5.07% total
return for the year to date. More detailed information on The Total Return
Utilities Fund can be found on page 5.
In the fixed income market, bonds staged a rally that brought yields on
10-year Treasury notes down to 6.04% on June 30 from 6.45% on December 31, 1999.
Most of this rally occurred despite the fact that the Federal Reserve Board
increased the short-term Federal Funds target rate three times during this
period. The Fed's actions were prompted by inflationary pressures which were
fueled by tightening labor markets and rising energy prices.
While the bond rally seemed orderly on the surface, the fixed income market
was in fact
<PAGE>
quite volatile during the first six months of 2000. Beginning in January and
lasting through April, securities maturing seven years or longer rallied.
Quality spreads widened as corporate bonds were excluded from the upturn and the
Treasury yield curve inverted. As investors priced their expectations of the
Federal Open Market Committee's meetings in May and June, yields on 10-year
notes rose from 5.80% to 6.57%. In the end, however, the Treasury market rallied
again to close June 30 at a yield of 6.04%.
The U.S. Government Bond Fund became fully-invested in 10-year U.S.
Treasury notes in February in response to the strength in the fixed income
market. The Fund assumed a defensive position in April, as the bond market
weakened in advance of the Federal Reserve's May 16th meeting. The Fund rejoined
the market in June when yields settled down.
The Money Market Fund shortened its average maturity in anticipation of
rate hikes by the Fed. By June 30, the Fund's average maturity was extended to
68 days, as market indications hinted at an end to the Federal Reserve's
rate-tightening bias.
We believe the markets are at a critical defining point as we look ahead to
the second half of 2000. On the bright side, the Federal Reserve may achieve the
desired "soft landing" for the U.S. economy and the bulls can resume their
charge in the equity markets. On the dark side, inflationary pressures may
continue to swell, compelling the Federal Reserve to raise rates again. Even
worse, the economy may have already turned to the downside.
Over the last six months, volatility in the financial markets has created
more uncertainty and less clarity for investors. It is essential, therefore,
that investors utilize the experience and expertise of seasoned professional
investment managers to help them achieve their long-term financial goals.
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE MUIRFIELD FUND
The first half of the Year 2000 was a tale of two quarters for The
Muirfield Fund. The Fund returned 3.16% in the 1st Quarter, outperforming the
2.56% of the average asset allocation fund, according to Morningstar. However,
in the 2nd Quarter the Fund declined -14.16% compared to the average Asset
Allocation fund which declined -1.22%, according to Morningstar. Year-to-date,
the Fund declined -11.44%.
Looking at the 1st Quarter, our Strategic Fund Selection discipline
identified the opportunity for continued overwhelming strength in the
telecommunications and technology sectors. The risk/reward relationships in the
equity market improved as more stocks participated in the advance of the market.
Moreover, our interest rate models turned positive after being negative for a
whole year. These factors turned our investment discipline positive, and we
increased our equity exposure from 50% to 75% on March 17.
The 2nd Quarter was a different story. Not only did the equity market
suffer its worst decline in a number of years, but the Fund remained
overweighted in technology and telecommunications while these sectors
underpreformed during April and May. Also in the 2nd Quarter our investment
discipline did not perform in the manner that we expected. In mid-April, the
market indices declined below our stop-loss levels (considered the last line of
defense in our discipline) and we adopted a fully defensive position. By May,
the market stabilized and we increased equity exposure to 50%, investing
predominantly in funds that track the performance of the S&P 500 index.
From a historical standpoint The Fund's 2nd Quarter returns were
uncharacteristic and it is important for investors to keep a long-term
perspective with their equity investments. The Fund's weaker performance during
this period can be isolated to just two months: April and May. Our disciplines
have provided competitive results over the long-term, and we believe that they
will do so in the future.
For the second half of the year, we are looking for a clearer investment
picture to develop in the equity market before making a commitment to increase
our exposure. We remain confident that our discipline will resume its
long-standing track record of delivering investment results for investors.
[PHOTOS] Robert S. Meeder, Jr. and Philip A. Voelker, Portfolio Managers
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE MUIRFIELD AVG. ASSET
FUND ALLOCATION FUND(1)
Year to Date....................... -11.44% 1.32%
One Year........................... -7.76% 6.31%
Five Years......................... 11.38% 12.82%
Ten Years.......................... 13.11% 11.15%
Since Inception(2)................. 12.43% n/a
1 According to Morningstar Principia
2 Inception Date 8/10/88
PORTFOLIO HOLDINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) Cash Equivalents 59%
2) Federated S&P Maxcap Fund 30%
3) S&P 500 Futures 11%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE TOTAL RETURN UTILITIES FUND
The Total Return Utilities Fund outperformed the average utility fund for
the first half of the year, with a total return of 5.07%. In comparison, the
average utility fund returned 1.84%, according to Morningstar.
The Fund returned 11.89% for 12 months ended June 30. In comparison, the
average utility fund returned 8.98% for the same period, according to
Morningstar. For the five years ended June 30, the Fund's average annual total
return was 18.41%, compared with the 16.23% average annual total return of the
average utility fund, according to Morningstar.
The utilities market was generally weak in the first three months of the
year, and fund selection was the key to performance. Our gas distribution
holdings, which represented 17% of the portfolio as of June 30th, helped
substantially. Light merger and acquisition activity during the first quarter
constrained Fund performance. We held on to many of these as future acquisitions
candidates, and we anticipate renewed activity as the year progresses.
The Fund's returns were positive during most of the first part of this
year, led by more traditional growth-oriented utilities, takeover targets, and
stocks with a connection to the energy markets. However, declines in the
telecommunications sector in the 2nd Quarter hampered the Fund's performance. As
market declines spread through the broad equity market, investors sought refuge
in the usual "defensive" stocks - many of which are in the utilities market.
Then, in the final few days of June, many utility market declined as
institutional money managers rotated out of the sector to "dress-up" their
portfolios for quarter-end reporting. Many of our favorite stocks are now
attractively priced, giving us the opportunity to increase our positions at
reasonable valuation levels.
Our positive view of the investment environment for utilities remains
unchanged, although we are watching some areas of the market closely. The
electric and natural gas sectors have our interest since current capacity is
being strained by increased demand. We are also anticipating the possibile
revaluation of several "traditional" stocks in our portfolio, if investors
return from ethereal valuation levels to the real truths on investing. All in
all, the current utilities market is more interesting than it has been in many
years, and investors must be watchful for opportunities for growth.
[PHOTO] Lowell G. Miller, Portfolio Manager
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE TOTAL RETURN AVERAGE
UTILITIES FUND UTILITY FUND(1)
Year to Date....................... 5.07% 1.84%
One Year........................... 11.89% 8.98%
Two Years.......................... 18.71% 16.85%
Three Years........................ 18.41% 16.23%
Life of Fund(2).................... 18.02% n/a
1 According to Morningstar Principia
2 Inception Date 6/21/95
SECTOR WEIGHTINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) Telecomm. Services 28%
2) Oil/Gas Domestic 21%
2) Natural Gas (Distributor) 16%
4) Electric Utility 13%
5) Electric/Gas Utility 11%
6) Water Utility 7%
7) Computer Software 1%
8) Cash Equivalents 3%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE HIGHLANDS GROWTH FUND
For the six months ended June 30, 2000, The Highlands Growth Fund performed
in line with its benchmark, the S&P 500 Index. The Fund declined -0.85% during
this period, compared with the -0.43% decline for the S&P 500.
Sector rotation was fast and furious during the first half of 2000. The
market gave investors several reasons to sell in the 1st Quarter: two short-term
rate increases by the Federal Reserve Board; an inverted yield curve; and
strange behavior in the technology and "new economy" sectors. The Fund's "sector
neutral, style neutral" investment strategy seeks to avoid overweighting or
underweighting any sector or style. So, even when investors move out of one
sector in favor of another, it should have only a slight impact on returns. Fund
performance is therefore not overly dependent on any sector or style.
In addition to rotation, the stock market also experienced sharp volatility
in the first half of 2000. The major market indices rose or fell by 1% or more
on 55 trading days in the first six months. We have commented on the volatility
of the market for many quarters now, and it seems this condition is unlikely to
change anytime soon.
One key to the future growth of equities is interest rates. The Fed has now
raised short-term rates six times in the last 12 months. If we are nearing the
end of this cycle of rate increases, it appears likely that financial services
and other rate-sensitive sectors will get a boost from renewed investor
interest. It is far from certain, however, if the Fed is finished hiking
interest rates this year.
Currently, consensus is that the Federal Reserve will be able to achieve a
"soft landing" for the U.S. economy, although every economic report that comes
out seems only to add uncertainty to the outcome. It is certain that the equity
market will require a lessening in the interest rates in order to resume growth.
[PHOTO] William L. Gurner, Portfolio Manager
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE HIGHLANDS S&P 500
GROWTH FUND INDEX(1)
Year to Date....................... -0.85% -0.43%
One Year........................... 4.74% 7.25%
Five Years......................... 18.25% 23.79%
Ten Years.......................... 13.95% 17.79%
Since Inception(2)................. 11.11% NA
1 According to Morningstar Principia
2 Inception Date 3/20/85
SECTOR WEIGHTINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
Sector Manager % of Portfolio
------ ------- --------------
1) Technology RCM 28%
2) Finance Delta Capital 13%
3) Health Alliance 11%
4) Utility Miller Howard 9%
5) Cons. Non-Durables Barrow Hanley 8%
6) Energy Mitchell Group 6%
7) Capital Goods Hallmark 5%
8) Cons. Durables Barrow Hanley 5%
9) Materials & Services Ashland 4%
10) Transportation Miller Howard 1%
11) S&P 500 Futures 8%
12) Cash Equivalents 2%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE DYNAMIC GROWTH FUND
Since the launch of The Dynamic Growth Fund on February 29, the Fund has
declined -14.20%. The Dynamic Growth Fund began operations with an overweighted
position in funds that favor technology and telecommunications stocks. Many
investors have enjoyed success over the last several years investing primarily
in these market-leading sectors. However, following the peak of the Nasdaq
Composite Index in March, technology stocks dropped rapidly through April and
May.
Although we had somewhat reduced our technology exposure in the Fund in early
April, we maintained an overweighted position in technology and
telecommunications until June 2. Following the Nasdaq's 19% record weekly
advance, we reduced our exposure to technology to below-market weight. At this
time, the technology sector had retraced 50% of the decline from its March high.
Throughout June, The Dynamic Growth Fund had favored more defensive position
consisting of the S&P 500 index funds, value funds, energy and financial sector
funds. As we enter the second half of 2000, we remain bullish on the energy
sector as imbalances in supply and demand have enhanced profitability among
industry competitors. We will continue to watch this and other sectors to ensure
that they are appropriate for our growth portfolios, and we constantly seek to
invest in those sectors that we believe are poised to lead the market.
Our Strategic Fund Selection discipline makes us acutely aware of changing
trends in the market as fundamental shifts occur among sectors. We always pay
close attention to information conveyed from the market to help us understand
the trends that develop into opportunities for future investment potential.
THE FUNDS SELECTED BY THE PORTFOLIO MANAGER WILL OFTEN INVEST IN COMPANIES IN
DEVELOPING SECTORS OF THE EQUITY MARKET. THESE COMPANIES ARE MORE LIKELY TO
EXPERIENCE RAPID GROWTH AS WELL AS SIGNIFICANT LOSSES THAN LARGER OR MORE
ESTABLISHED COMPANIES OR INDUSTRIES. THE FUNDS SELECTED FOR INVESTMENT MAY ALSO
FOCUS ON THE TECHNOLOGY SECTOR, WHICH HISTORICALLY HAS INVOLVED GREATER RISK
THAN THE BROAD EQUITY MARKET IN EXCHANGE FOR THE OPPORTUNITY FOR GREATER
RETURNS.
[PHOTOS] Philip A. Voelker, Portfolio Manager
Robert M. Wagner, Portfolio Analyst
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE DYNAMIC AVERAGE
GROWTH FUND GROWTH FUND(1)
Since Inception(2)................. -14.20% 6.84%
1 According to Morningstar Principia
2 Inception Date 2/29/00
PORTFOLIO HOLDINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) Federated S&P Maxcap 21%
2) Federated Mid-Cap 19%
3) INVESCO Strategic Energy 15%
4) INVESCO Strat. Fin. Svcs. 14%
5) S&P 500 Futures 31%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE AGGRESSIVE GROWTH FUND
Since the launch of The Aggressive Growth Fund on February 29, the Fund has
declined -20.40% as of June 30, 2000. Like many aggressive portfolios at the
time, the Aggressive Growth Funds maintained an overweighted position in
technology and telecommunications. Many investors have enjoyed success over the
last several years investing primarily in these market-leading sectors. However,
from the peak of the Nasdaq market in March, technology stocks dropped rapidly
in April.
Although we had somewhat reduced our technology exposure, we maintained an
overweight position in technology and telecommunications until June 2. At this
time, the technology sector had retraced 50% of the decline from its March high.
We reduced our overweighting in technology following the Nasdaq's 19% record
weekly advance.
We replaced our positions in technology and telecomunications with value
and broad-based index funds, plus allocations in the energy and financial
sectors. Our Strategic Fund Selection discipline makes us acutely aware of
changing trends in the market as fundamental shifts occur among sectors. We
always pay close attention to information conveyed from the market to help us
understand the trends that develop into opportunities for future investment
potential.
THE FUNDS SELECTED BY THE PORTFOLIO MANAGER WILL OFTEN INVEST IN COMPANIES IN
DEVELOPING SECTORS OF THE EQUITY MARKET. THESE COMPANIES ARE MORE LIKELY TO
EXPERIENCE RAPID GROWTH AS WELL AS SIGNIFICANT LOSSES THAN LARGER OR MORE
ESTABLISHED COMPANIES OR INDUSTRIES. THE FUNDS SELECTED FOR INVESTMENT MAY ALSO
FOCUS ON THE TECHNOLOGY SECTOR, WHICH HISTORICALLY HAS INVOLVED GREATER RISK
THAN THE BROAD EQUITY MARKET IN EXCHANGE FOR THE OPPORTUNITY FOR GREATER
RETURNS.
[PHOTOS] Philip A. Voelker, Portfolio Manager
Robert M. Wagner, Portfolio Analyst
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE AGGRESSIVE AVG. AGGRESSIVE
GROWTH FUND GROWTH FUND(1)
Since Inception(2)................. -20.40% 6.84%
1 According to Morningstar Principia
2 Inception Date 2/29/00
PORTFOLIO HOLDINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) Federated Maxcap 500 32%
2) AIM Mid-Cap Equity 19%
3) INVESCO Strategic Energy 15%
4) Rydex Banking 12%
5) S&P 500 Futures 22%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE U.S. GOVERNMENT BOND FUND
The U.S. Government Bond Fund started strongly in 2000. The Fund returned
2.52% for the six months ended June 30th, 2000, despite being in a fully
defensive position for a part of the period.
Over longer periods, the Fund has outperformed its peer group. For one-year
total return as of June 30, the Fund returned 4.02%, while the average general
government bond fund returned 3.75%, according to Morningstar. The Fund had a
five year average annual total return as of June 30, of 5.24%, while the average
general government bond fund returned 5.05%, according to Morningstar. For
ten-year average annual total return as of June 30, the Fund returned 6.73%,
while the average general government bond fund returned 6.56%, according to
Morningstar.
The bond market, generally scorned by investors during most of 1999, found
support in February and staged a rally. The Fund increased exposure to adopt a
partially invested position in mid-February as yields for 10-year Treasuries
continued to decline. This event defied expectations as the Federal Reserve
raised short-term interest rates twice in the first quarter and the national
media gravely reported the imminent arrival of the inflation monster.
In mid-April yields on 10-year Treasuries reached a low of 5.77%. Then
yields increased to 6.54% in May. The increase turned the trend component of our
discipline negative, mandating that we adopt a fully defensive position.
On May 16, the Fed raised short-term rates by 0.50%, but the markets had
already factored in the possibility of the hike by shifting the entire yield
curve higher. At this time, our fund went to a fully invested position.
Thereafter, yields fell as expectations shifted to a less aggressive stance by
the Fed.
The next Fed meetings are scheduled for August and October. With the
presidential election to look forward to this fall, the interest rate market for
the next six months will be very interesting to watch.
[PHOTO] Joseph A. Zarr, Portfolio Manager
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE U.S. GOVERNMENT AVG. GENERAL
BOND FUND GOVT. BOND FUND(1)
Year to Date....................... 2.52% 3.42%
One Year............................ 4.02% 3.75%
Five Years.......................... 5.24% 5.05%
Ten Years........................... 6.73% 6.56%
Since Inception(2).................. 6.85% n/a
1 According to Morningstar Principia
2 Inception Date 5/9/85
PORTFOLIO HOLDINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) 10-Yr. U.S. Treasury Notes 96%
2) Cash Equivalents 4%
<PAGE>
The Flex-funds 2000 Semi-Annual Report
THE MONEY MARKET FUND
As of June 30, The Flex-funds Money Market Fund ranked in the top 10% of
all general purpose money market funds for period and average annual total
return for all periods monitored by Lipper, Inc. The Fund ranked in the top 6%
(#21 of 364) for 12-month total return, top 7% (#16 of 244) for 5-year average
annual total return, and top 5% (#6 of 137) for 10-year average annual total
return.*
The big news in the first half of 2000 was the 1.00% cumulative increase in
the Fed Funds rate by the Federal Reserve Board, spread out over 3 rate hikes.
Rapid economic growth led Alan Greenspan to a bias towards tightening short-term
interest rates. In anticipation, the Fund shortened its average maturity from 60
to 45 days and increased its exposure to floating rate instruments. Quality was
also a central issue during the quarter, as investors fled to the highest
quality issues on occasional fears of a sharp stock market decline.
The Fund's yields increased as a result of the Federal Reserve Board's
action to increase short-term interest rates and increased demand for funds from
businesses and consumers. On May 31, one-year LIBOR interest rates peaked at
7.50% then settled down to 7.11% by June 30. Since one-year LIBOR is very
sensitive to demands for borrowing, its decline prompted us to extend the
average maturity during June to as high as 72 days. At June 30th, the Fund's
average maturity was 68 days.
The Federal Reserve left short-term rates unchanged at their last meeting
in late June. The decision was undoubtedly based upon recent indications of a
slowing economy. The next meetings are scheduled for August and October while
the presidential campaigns are in full swing. If the Federal Reserve takes any
action in the next six months, it will most likely occur in August so the Fed.
No matter what the Fed does at its next meetings, it is apparent that we are
closer to the end than to the beginning of this cycle of rising interest rates.
* The Investment Advisor waived a portion of its management fees and/or
reimbursed expenses in order to reduce the operating expenses of the Fund for
each period shown above. Without such waivers, the Fund's rankings may have been
lower.
[PHOTO] Philip A. Voelker, Portfolio Manager
YEAR TO DATE PERFORMANCE
------------------------
PERIOD & AVERAGE ANNUAL TOTAL RETURNS
as of 6/30/00
THE MONEY AVERAGE MONEY
MARKET FUND MARKET FUND(1)
Year to Date........................ 2.92% 1.27%
One Year............................ 5.57% 4.72%
Five Years.......................... 5.35% 4.93%
Ten Years........................... 5.07% 4.73%
Since Inception(2).................. 5.98% n/a
1 According to Lipper Inc.
2 Inception Date 3/27/85
CURRENT & EFFECTIVE YIELDS
as of 6/30/00
7-day Simple Yield.................. 6.24%
7-day Compound Yield................ 6.42%
PORTFOLIO HOLDINGS as of June 30, 2000
[GRAPH] The following information was presented as a pie chart:
1) Commercial Paper 64%
2) Variable Rate Notes 17%
3) Repurchase Agreements 15%
4) Certificates of Deposit 4%
<PAGE>
The Flex-funds Semi-Annual Report * June 30, 2000
PORTFOLIO HOLDINGS & FINANCIAL STATEMENTS
<PAGE>
Mutual Fund Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
INDUSTRIES/CLASSIFICATIONS SHARES OR VALUE
FACE AMOUNT
<S> <C> <C>
REGISTERED INVESTMENT COMPANIES - 29.5%
Federated S&P 500 Maxcap Fund 1,467,737 $43,474,373
Mutual Shares Fund 418 7,960
TOTAL REGISTERED INVESTMENT COMPANIES
(Cost$42,201,077 ) 43,482,333
MONEY MARKET REGISTERED INVESTMENT COMPANIES - 64.8%
Charles Schwab Money Market Fund 950,767 950,767
Fidelity Cash Reserve Money Market Fund 94,873,362 94,873,362
TOTAL MONEY MARKET REGISTERED INVESTMENT COMPANIES
(Cost$95,824,129 ) 95,824,129
U.S. GOVERNMENT OBLIGATIONS - 1.7%
U.S. Treasury Bills
* 5.64%, due 01/04/01 30,100 29,168
** 5.79% due 08/31/00 2,464,516 2,477,244
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $2,506,472 ) 2,506,412
REPURCHASE AGREEMENT - 4.0%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $6,132,233 various commercial
papers, 5.47 - 6.60%, 07/03/00 - 09/25/00,
market value - $6,093,484) 5,974,000 5,974,000
TOTAL REPURCHASE AGREEMENT
(Cost $5,974,000 ) 5,974,000
TOTAL INVESTMENTS - 100.0%
(Cost $146,505,678) $147,786,874
CONTRACTS VALUE
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $16,632,875
expiring September 2000 45 $16,516,125
TOTAL FUTURES CONTRACTS $16,516,125
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 1,574 $35,709
Flex-funds Muirfield Fund 2,765 15,538
Flex-funds Total Return Utilities Fund 609 13,446
Meeder Advisor International Equity Fund 1,204 20,407
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $80,979 ) $85,100
<FN>
* Pledged as collateral on Letter of Credit.
** Pledged as collateral on Futures.
*** 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.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Utilities Stock Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
<S> <C> <C>
COMMON STOCKS - 96.1%
COMPUTER SOFTWARE & SERVICES - 1.3%
Covad Communications # 15,725 $253,566
ELECTRIC/GAS UTILITY - 10.9%
AGL Resources, Inc. 18,955 304,465
MDU Resources Group, Inc. 14,220 309,285
NiSource, Inc. 26,485 493,283
UtiliCorp United, Inc. 52,978 1,052,928
2,159,961
ELECTRIC UTILITY - 12.6%
Cinergy Corp. 710 18,016
Keyspan Corp. 41,585 1,278,738
Scottish Power PLC - ADR 7,468 249,711
TECO Energy, Inc. 47,215 953,153
2,499,618
NATURAL GAS (DISTRIBUTOR) - 15.6%
Columbia Energy Group 8,905 587,730
Eastern Enterprises 7,975 494,948
MCN Energy Group, Inc. 31,305 686,754
Nicor, Inc. 4,975 162,620
Williams Cos., Inc. 28,200 1,159,725
3,091,777
OIL/GAS (DOMESTIC) - 20.8%
El Paso Natural Gas Co. 15,310 779,853
Enron Corp. 7,710 511,751
Kinder Morgan Energy Partners, L.P. # 19,174 764,563
Kinder Morgan, Inc. 25,680 881,145
Peoples Energy Corp. 10,585 345,997
Questar Corp. 44,695 863,173
4,146,482
TELECOMMUNICATION SERVICES - 27.8%
Alltel Corp. 17,420 1,080,040
Bellsouth Corp. 9,935 422,238
CenturyTel, Inc. 17,035 494,015
Global Crossings Ltd. # 20,929 552,002
GTE Corp. 9,585 591,275
MCI Worldcom Inc. # 10,228 469,826
SBC Communications, Inc. 18,735 857,126
Telephone & DataSystems 5,485 559,470
U.S. West Communications Group 5,950 511,700
5,537,692
WATER UTILITY - 7.1%
American Water Works Co., Inc. 33,600 842,100
Azurix Corp. # 73,000 565,750
1,407,850
TOTAL COMMON STOCKS
(Cost $17,582,424 ) 19,096,946
<PAGE>
U.S. GOVERNMENT OBLIGATION - 0.0%
* U.S. Treasury Bill 5.64%, due 01/04/01 1,000 969
TOTAL U.S. GOVERNMENT OBLIGATION
(Cost $971 ) 969
REPURCHASE AGREEMENT - 3.9%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $786,289 various commercial
papers, 5.47 - 6.60%, 07/03/00 - 09/25/00,
market value - $781,321) 766,000 766,000
TOTAL REPURCHASE AGREEMENT
(Cost $766,000 ) 766,000
TOTAL INVESTMENTS - 100.0%
(Cost $18,349,395 ) $19,863,915
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 279 $6,328
Flex-funds Muirfield Fund 470 2,640
Flex-funds Total Return Utilities Fund 98 2,157
Meeder Advisor International Equity Fund 224 3,795
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $14,161 ) $14,920
<FN>
ADR: American Depositary Receipts
L.P.: Limited Partnership
# 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.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Growth Stock Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR VALUE
FACE AMOUNT
COMMON STOCKS - 90.1%
ADVERTISING - 0.1%
Young & Rubicam, Inc. 650 $37,091
AEROSPACE/DEFENSE - 0.7%
Boeing Co. 5,700 239,043
General Dynamics Corp. 600 31,312
Lockheed Martin Corp. 2,050 50,994
Northrup Grumman Corp. 200 13,225
Raytheon Co. - Class B 1,000 19,938
United Technologies Corp. 2,000 114,625
469,137
AIR TRANSPORTATION - 0.3%
AMR Corp. # 725 19,303
Delta Air Lines, Inc. 685 35,748
Frontier Airlines # 1,990 28,358
Southwest Airlines 3,962 76,021
USAir Group # 350 13,956
173,386
ALUMINUM - 0.2%
Aluminum Company of America 5,280 153,120
AUTO & TRUCK - 0.8%
Delphi Auto Systems 1,210 17,772
Ford Motor Co. 4,900 210,394
General Motors Corp. 2,600 150,800
Genuine Parts Co. 5,400 110,700
Paccar, Inc. 888 35,256
TRW, Inc. 620 26,893
Visteon Corp. # 641 7,937
559,752
BANKING - 1.0%
Washington Mutual Savings Bank 2,303 67,651
Wells Fargo Co. 15,900 628,050
695,701
BEVERAGE -- ALCOHOLIC - 0.6%
Adolf Coors Company Class B 2,800 170,450
Anheuser-Busch Cos., Inc. 2,900 217,500
387,950
BEVERAGE -- SOFT DRINK - 1.1%
Coca-Cola Co. 7,500 430,313
Pepsico, Inc. 6,500 286,406
716,719
BUILDING MATERIALS - 0.1%
Masco Corp. 1,530 27,731
Vulcan Materials Co. 590 25,186
52,917
<PAGE>
CAPITAL GOODS - 0.1%
Ingersoll-Rand 870 34,963
CHEMICAL -- DIVERSIFIED - 0.6%
Air Products & Chemicals, Inc. 1,180 36,432
Dow Chemical Co. 3,630 109,808
E.I. du Pont de Nemours & Co. 3,980 173,876
Praxair, Inc. 840 31,710
Rohm & Haas Co. 1,185 41,475
393,301
CHEMICAL -- SPECIALTY - 0.0%
Eastman Chemical Co. 500 23,937
COMMERCIAL SERVICES - 0.1%
Cendant Corp. # 6,500 91,000
COMPUTERS & PERIPHERALS - 5.5%
Apple Computer # 1,400 73,325
Compaq Computer Corp. 5,280 133,980
Convergys Corp. # 760 38,950
Dell Computer Corp. # 13,700 676,437
EMC Corp./Mass # 10,400 785,850
Gateway 2000, Inc. # 1,500 87,000
IBM Corp. 6,740 735,503
Micron Technology, Inc. # 3,030 274,215
QRS Corporation Delaware # 320 7,680
Seagate Technology, Inc. # 1,020 57,056
Sun Microsystems # 8,670 788,428
3,658,424
COMPUTER SOFTWARE & SERVICES - 6.0%
America Online, Inc. # 5,300 278,581
BMC Software, Inc. # 1,100 40,064
Ceridian Co. # 840 20,160
Check Point Software Technologies LTD # 600 127,463
Computer Associates International, Inc. 2,390 121,890
Computer Sciences Corp. # 950 71,131
Compuware Corp. # 820 8,508
Covad Communications Corp. # 4,545 73,288
Electronic Data System Corp. 1,760 73,590
Microsoft Corp. # 19,580 1,565,176
Oracle Corp. # 14,960 1,257,341
Sapient Corporation # 250 26,734
Seibel Systems, Inc. # 1,450 237,188
Unisys Corp. # 1,270 18,574
Veritas Software Co. # 1,730 195,490
4,115,178
CONSUMER NON-DURABLE - 1.6%
Colgate Palmolive 1,600 94,700
Fortune Brands, Inc. 7,800 181,350
Gillette Co. 3,400 115,812
Haggar Corp. 11,500 135,125
Procter & Gamble Co. 7,000 388,938
Sealed Air Corp. # 460 24,207
Tupperware Corp. 4,200 92,925
1,033,057
COSMETICS - 0.2%
Kimberly Clark 2,700 154,744
<PAGE>
DATA PROCESSING - 0.6%
Automatic Data Processing, Inc. 3,430 183,719
First Data Corp. 2,170 108,636
Fiserv, Inc. # 910 39,358
I2 Technologies, Inc. # 700 73,106
404,819
DIVERSIFIED - 1.2%
Honeywell International, Inc. 3,402 114,392
Minnesota Mining & Manufacturing Co. 1,100 92,950
Norfolk Southern Corp. 1,830 27,336
PPG Industries, Inc. 830 36,779
Tyco International 9,240 437,168
708,625
DRUG - 7.1%
Abbott Labs 6,620 290,039
Bristol Myers Squibb 7,760 443,290
Eli Lilly & Co. 4,570 452,430
Merck & Co., Inc. 11,640 883,912
Pfizer, Inc. 36,297 1,715,033
Pharmacia Corp. 7,180 368,424
Schering Plough Corp. 10,130 510,299
4,663,427
DRUGSTORE - 0.2%
Walgreen Co. 3,600 114,750
ELECTRICAL EQUIPMENT - 4.2%
General Electric Corp. 53,322 2,712,757
ELECTRONIC COMPONENT SEMICONDUCTORS - 6.0%
Advanced Micro Devices, Inc. # 2,130 164,809
Analog Devices # 1,550 118,672
Applied Materials, Inc. # 3,950 358,215
Intel 13,800 1,844,887
KLA -Tencor Corp. # 600 35,166
Linear Tech Corp. 850 54,294
LSI Logic Corp. # 900 49,387
Maxim Integrated Products, Inc. # 1,950 133,057
Motorola, Inc. 9,779 286,574
Solectron Corp. # 2,500 104,844
STMicroelectronics NV 3,120 199,485
Texas Instruments, Inc. 5,000 343,125
Xilinx Inc. # 2,910 240,257
3,932,772
ELECTRONIC COMPONENTS - 0.2%
Emerson Electric 2,624 158,752
ELECTRIC UTILITY - 0.7%
AES Corp. # 4,920 219,555
American Power # 960 39,240
Duke Power Co. 2,370 135,386
Teco Energy, Inc. 2,930 59,149
453,330
ELECTRONICS - 0.2%
Altera Corporation # 1,200 122,325
Rockwell International Corp. 840 26,512
148,837
<PAGE>
FINANCE - 6.1%
Bank One Corp. 4,326 116,261
BankAmerica Corp. 10,214 451,970
Chase Manhattan Corp. 5,850 273,853
First Union Corp. 4,968 125,752
FleetBoston Financial Corp. 4,808 167,678
Federal National Mortgage Association 6,600 346,500
Federal Home Loan Mortgage Corp. 9,300 376,069
Lehman Brothers Holdings, Inc. 1,500 141,938
Mellon Bank Corp. 4,800 175,800
Merrill Lynch & Co. 800 92,200
Metris Cos., Inc. 15,000 382,500
Morgan Stanley Dean Witter & Co. 5,200 439,400
PNC Bank Corp. 3,100 146,863
Providian Financial Corp. 7,150 643,500
Ryder Systems, Inc. 310 5,948
SLM Holding Corp. 4,000 148,500
4,034,732
FINANCIAL SERVICES - 3.3%
American Express Co. 3,600 187,200
Associates First Capital 10,400 233,350
Avery Dennison Corp. 920 61,640
Capital One Financial Corp. 20,600 921,850
Citigroup, Inc. 11,995 739,192
Concord EFS, Inc. # 690 17,854
H&R Block, Inc. 1,020 32,895
2,193,981
FOOD -- DIVERSIFIED - 1.2%
General Mills 4,800 184,200
Hershey Food Corp. 4,200 204,488
H.J. Heinz Co. 3,400 149,175
Safeway, Inc. # 3,300 147,056
Sara Lee Corp. 6,400 123,600
808,519
FOREST PRODUCTS - 0.1%
Georgia Pacific Corp. 1,130 29,874
Weyerhauser Co. 1,120 48,720
Willamette Industries, Inc. 640 17,600
96,194
GOLD/SILVER MINING - 0.1%
Barrick Gold Corp. 2,090 38,142
HEALTH - 1.6%
American Home Products 6,580 391,099
Johnson & Johnson 6,620 661,172
1,052,271
INSTRUMENTS -- SCIENTIFIC - 0.2%
PE Biosystems Group 1,630 105,644
<PAGE>
INSURANCE -- MULTILINE - 2.5%
Allstate 6,700 153,263
American International Group 10,543 1,243,415
Metlife, Inc. # 4,000 83,500
PMI Group 4,300 205,863
1,686,041
INTERNET CONTENT - 0.0%
Buy.com # 700 3,522
INTERNET SERVICE - 0.5%
Yahoo, Inc. # 2,600 322,238
INTERNET SOFTWARE - 0.4%
Ariba, Inc. # 550 53,900
BEA Systems, Inc. # 1,250 61,719
Broadvision, Inc. # 1,050 53,419
Vignette Corp. # 2,050 106,664
275,702
MACHINERY - 0.4%
Caterpillar, Inc. 1,282 43,508
Deere & Co. 717 26,619
Dover Corp. 1,960 79,993
Halliburton Co. 1,100 52,044
W. W. Grainger 1,778 55,229
257,393
MANUFACTURING - 0.0%
Millipore 480 36,150
MARKETING SERVICES - 0.2%
Omnicom Group, Inc. 1,205 107,170
MATERIALS & SERVICES - 0.3%
Ecolab, Inc. 800 31,150
Illinois Tool Works, Inc. 940 53,228
Pall Corp. 1,040 19,565
Sherwin-Williams Co. 4,270 92,606
196,549
MEDICAL HMO - 0.0%
Wellpoint Health Networks # 440 31,790
MEDICAL PRODUCTS - 1.2%
Amgen, Inc. # 3,710 260,396
Guidant Corp. # 2,620 129,526
Human Genome # 1,140 151,976
MedImmune, Inc. # 2,850 210,544
Millennium Pharmaceutical # 660 73,838
826,280
MEDICAL SERVICES - 0.3%
Columbia/HCA Healthcare Corp. 2,880 88,200
Health Management # 3,980 51,989
IMS Health, Inc. 1,080 17,888
Tenet Healthcare Corp. # 2,250 61,875
219,952
<PAGE>
MEDICAL SUPPLIES - 0.7%
Cardinal Health, Inc 1,200 88,725
Medtronic, Inc. 7,370 365,276
454,001
MULTIMEDIA - 1.8%
Comcast Corp. - Class A 3,900 157,950
Gannett, Inc. 2,200 132,000
Seagrams Co., Ltd. 2,000 118,000
Time Warner, Inc. 3,700 280,044
Viacom, Inc. - Class B # 4,953 337,423
Walt Disney Co. 3,700 145,225
1,170,642
NATURAL GAS DISTRIBUTOR - 0.4%
MCN Corp. 6,125 134,367
Williams Cos., Inc. 2,600 106,925
241,292
NETWORKING PRODUCTS - 3.6%
3COM Corp. # 1,100 63,319
Cisco Systems, Inc. # 33,810 2,149,048
Network Appliance # 1,930 155,244
2,367,611
OFFICE AUTOMATION & EQUIPMENT - 1.1%
Hewlett Packard 4,880 607,255
Pitney Bowes, Inc. 1,325 52,586
Xerox Corp. 2,180 43,328
703,169
OIL/GAS -- DOMESTIC - 0.7%
Baker Hughes 1,540 50,724
Burlington Resources 1,000 38,063
Enron Corp. 3,900 258,863
Noble Affiliates, Inc. 2,100 78,881
USX Marathon Group 1,800 46,013
472,544
OIL/GAS -- INTERNATIONAL - 2.7%
BP Amoco PLC Sponsored ADR 1,148 65,006
Chevron Corp. 3,200 272,200
Exxon Corp. 18,362 1,448,303
Transocean Sedco 619 32,846
1,818,355
OILFIELD SERVICES/EQUIPMENT - 0.9%
Coastal Corp. 1,900 115,663
Carbo Ceramics, Inc. # 2,600 91,325
Kerr-McGee Corp. 1,600 93,700
Schlumberger Ltd. 2,300 170,200
Union Pacific Resources Group, Inc. 5,600 124,250
595,138
OIL & NATURAL GAS - 0.3%
Apache Corp. 1,100 64,763
Amerada Hess 500 31,000
Ocean Energy, Inc. # 6,860 96,469
Sante Fe International Corp. 1,300 44,931
237,163
<PAGE>
PAPER & FOREST PRODUCTS - 0.1%
International Paper 2,486 74,413
Mead Corp. 840 21,263
95,676
PETROLEUM -- INTEGRATED - 1.6%
Conoco, Inc. - Class B 4,500 110,250
Occidental Petroleum Corp. 3,600 76,050
Phillips Petroleum 1,100 56,100
Royal Dutch Petroleum 10,400 640,250
Texaco 3,100 167,206
1,049,856
PUBLISHING - 0.1%
The Reader's Digest Association, Inc. 4,900 194,163
Tribune Co. 1,400 48,912
243,075
RAILROAD TRANSPORTATION - 0.2%
Burlington Northern Santa Fe 2,005 46,115
Kansas City Southern Industries, Inc. 540 47,689
Union Pacific Corp. 765 28,448
122,252
RESTAURANT - 0.7%
McDonalds Corp. 8,100 265,275
Wendy's International, Inc. 11,500 206,281
471,556
RETAIL GROCERY - 0.2%
Albertson's, Inc. 3,700 123,488
Kroger Co. # 4,100 89,944
213,432
RETAIL STORE - 2.4%
Action Performance # 23,400 163,800
Best Buy Co. # 1,700 107,313
Gap, Inc. 2,800 86,625
Home Depot, Inc. 6,500 321,344
Lowe's Companies 2,300 94,300
Target Stores 1,600 91,100
WalMart Stores, Inc. 12,800 721,600
1,586,082
SEMICONDUCTOR - 0.0%
National Semiconductor Corp. # 550 31,900
SERVICES - 0.1%
Paychex, Inc. 2,182 91,371
TELECOMMUNICATION EQUIPMENT - 3.9%
ADC Telecom, Inc. # 1,150 96,456
Comverse Technology, Inc. # 600 55,838
Corning, Inc. 1,240 333,018
JDS Uniphase Corp. # 1,670 200,296
Nokia Corp. - ADR - Class A 3,050 152,309
Nortel Networks 14,480 1,021,745
P-Com, Inc. # 8,760 49,823
QUALCOMM, Inc. # 3,700 221,769
Sprint Corp. PCS Group # 7,355 436,703
2,567,957
<PAGE>
TELECOMMUNICATION SERVICES - 8.7%
Alltel Corp. 1,825 113,150
AT&T Corp. 13,765 438,759
Bell Atlantic Corp. 8,785 446,388
BellSouth Corp. 10,980 466,650
Global Crossing LTD # 24,219 638,776
Global Telesystems, Inc. # 8,655 104,401
GTE Corp. 5,320 328,178
Lucent Technologies, Inc. 8,570 495,989
Nextel Communications # 4,660 284,551
SBC Communications 17,674 808,586
Sprint Corp. FON Group 5,275 279,905
Telefonaktiebolaget LM Ericsson ADR 4,000 79,750
Tellabs, Inc. # 1,590 108,915
Winstar Communications 3,755 127,201
Worldcom, Inc. # 17,622 809,511
U.S. West, Inc. 2,665 229,190
5,759,900
TOBACCO - 0.7%
Philip Morris Cos. 12,500 326,563
UST, Inc. 9,200 135,125
461,688
TOYS - 0.8%
JAKKS Pacific Co. # 8,900 131,275
Toys "R" Us, Inc. # 26,900 401,819
533,094
TRANSPORTATION - 0.1%
FDX Corp. # 1,000 39,125
TRAVEL SERVICES - 0.2%
Carnival Corp. 4,800 93,300
Sabre Holdings Corp. # 523 14,709
108,009
TRUCKING/TRANSPORTATION LEASING - 0.0%
CSX Corp. 1,017 21,611
WASTE DISPOSAL NON HAZARDOUS - 0.1%
Waste Management, Inc. 3,670 69,271
WATER UTILITY - 0.2%
Azurix Corp. # 16,095 124,736
TOTAL COMMON STOCKS
(Cost $46,283,624 ) 59,991,222
U.S. GOVERNMENT OBLIGATIONS - 0.9%
U.S. Treasury Bills
** 5.64% 01/04/01 6,000 5,814
* 5.79% 08/31/00 600,000 594,375
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $600,201 ) 600,189
<PAGE>
REPURCHASE AGREEMENT - 9.0%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $6,133,259 various
commercial papers, 5.47 - 6.60%, 07/03/00 -
09/25/00, market value - $6,094,504) 5,975,000 5,975,000
TOTAL REPURCHASE AGREEMENT
(Cost $5,975,000 ) 5,975,000
TOTAL INVESTMENTS - 100.0%
(Cost $52,858,825 ) $66,566,411
CONTRACTS VALUE
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $5,227,900 14 5,138,350
expiring September 2000
TOTAL FUTURES CONTRACTS $5,138,350
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 594 $13,504
Flex-funds Muirfield Fund 1,073 6,032
Flex-funds Total Return Utilities Fund 250 5,509
Meeder Advisor International Equity Fund 478 8,110
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $31,717 ) $33,155
ADR: American Depositary Receipt
# 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.
<PAGE>
Growth Mutual Fund Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
INDUSTRIES/CLASSIFICATIONS SHARES OR VALUE
FACE AMOUNT
<S> <C> <C>
REGISTERED INVESTMENT COMPANIES - 68.7%
Federated Mid Cap Fund 169,011 $3,158,810
Federated S&P 500 Maxcap Fund 121,211 3,590,269
Invesco Strategic Energy Fund 125,578 2,450,031
Invesco Strategic Financial Services Fund 87,383 2,330,500
TOTAL REGISTERED INVESTMENT COMPANIES
(Cost $11,351,345 ) 11,529,610
U.S. GOVERNMENT OBLIGATION - 1.8%
* U.S. Treasury Bill 5.79%, due 08/31/00 300,000 297,165
TOTAL U.S. GOVERNMENT OBLIGATION
(Cost $297,165 ) 297,165
REPURCHASE AGREEMENTS - 29.5%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $3,020,951 various
commercial papers, 5.47 - 6.60%, 07/03/00 -
09/25/00, market value - $3,001,862) 2,943,000 2,943,000
State Street Securities LLC, 6.40%, 07/03/00,
(Collateralized by $2,045,000 Federal National
Mortgage Association, 6.25%, 11/20/01,
market value - $2,042,444) 2,000,000 2,000,000
TOTAL REPURCHASE AGREEMENTS
(Cost $4,943,000 ) 4,943,000
TOTAL INVESTMENTS - 100.0%
(Cost$16,591,510 ) $16,769,775
CONTRACTS VALUE
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $5,234,500
expiring September 2000 14 $5,138,350
TOTAL FUTURES CONTRACTS $5,138,350
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 7 151
Flex-funds Muirfield Fund 19 105
Flex-funds Total Return Utilities Fund 4 98
Meeder Advisor International Equity Fund 6 107
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $449 ) $461
<FN>
* Pledged as collateral on Futures.
** Assets of affiliates to the Growth Mutual Fund 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.
<PAGE>
Aggressive Growth Mutual Fund Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
INDUSTRIES/CLASSIFICATIONS SHARES OR VALUE
FACE AMOUNT
<S> <C> <C>
REGISTERED INVESTMENT COMPANIES - 78.3%
Federated S&P 500 Maxcap Fund 166,074 $4,919,102
Invesco Strategic Energy Fund 114,213 2,228,305
AIM Mid Cap Equity Fund 109,721 2,881,279
Rydex Banking Sector Fund 284,289 1,859,252
TOTAL REGISTERED INVESTMENT COMPANIES
(Cost $11,868,493 ) 11,887,938
U.S. GOVERNMENT OBLIGATION - 6.0%
* U.S. Treasury Bill, 5.79% due 08/31/00 200,000 198,114
TOTAL U.S. GOVERNMENT OBLIGATION
(Cost $198,114 ) 198,114
REPURCHASE AGREEMENTS - 20.4%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $1,135,295 various
commercial papers, 5.47 - 6.60%, 07/03/00 -
09/25/00, market value - $1,128,121) 1,106,000 1,106,000
State Street Securities LLC, 6.40%, 07/03/00,
(Collateralized by $2,045,000 Federal National
Mortgage Association, 6.25%, 11/20/01,
market value - $2,042,444) 2,000,000 2,000,000
TOTAL REPURCHASE AGREEMENTS
(Cost $3,106,000 ) 3,106,000
TOTAL INVESTMENTS - 100.0%
(Cost $15,172,607 ) $15,192,052
CONTRACTS VALUE
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $3,360,125
expiring September 2000 9 $3,303,225
TOTAL FUTURES CONTRACTS $3,303,225
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 6 $146
Flex-funds Muirfield Fund 18 102
Flex-funds Total Return Utilities Fund 4 95
Meeder Advisor International Equity Fund 6 103
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $435 ) $446
<FN>
* Pledged as collateral on Futures.
** Assets of affiliates to the Aggressive Growth Mutual Fund 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.
<PAGE>
Bond Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR VALUE
FACE AMOUNT
U.S.GOVRNMENT OBLIGATIONS - 99.1%
U.S. Treasury Bills
5.79%, 08/31/00 50,000 $49,552
* 5.64%, 01/04/01 4,800 4,651
54,203
U.S. Treasury Note
6.50%, 02/15/10 9,700,000 10,033,438
FNMA
5.69%, 08/11/00 1,740,000 1,740,230
TOTAL U.S.GOVERNMENT OBLIGATIONS
(Cost $11,761,509 ) 11,827,871
REPURCHASE AGREEMENT - 0.9%
Smith Barney Securities LLC, 7.19%, 07/03/00,
(Collateralized by $104,702 various commercial
papers, 5.47 - 6.60%, 07/03/00 - 09/25/00,
market value - $104,040) 102,000 102,000
TOTAL REPURCHASE AGREEMENT
(Cost $102,000 ) 102,000
TOTAL INVESTMENTS - 100.0%
(Cost $11,863,509 ) 11,929,871
FUTURES CONTRACTS CONTRACTS VALUE
10-Year Bond Futures, face amount $1,663,349
expiring September 2000 17 $1,674,234
TOTAL FUTURES CONTRACTS $1,674,234
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 272 $6,172
Flex-funds Muirfield Fund 454 2,552
Flex-funds Total Return Utilities Fund 94 2,068
Meeder Advisor International Equity Fund 221 3,742
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $13,753 ) $14,534
* Pledged as collateral on Letter of Credit.
** Pledged as collateral on Futures.
*** 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.
<PAGE>
Money Market Portfolio
Portfolio of Investments as of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 63.8%
Allegheny Energy, Inc. 6.69% 09/07/00 $50,000,000 $49,386,750
American Honda Finance 6.60% 09/13/00 7,000,000 6,907,600
AT&T Corp. 6.61% 11/15/00 50,000,000 48,760,625
Bank of America Corp. 6.70% 12/06/00 50,000,000 48,548,333
British Telecommunications PLC 6.00% 07/31/00 50,000,000 49,766,666
Catholic Healthcare Partners*** 6.75% 10/04/00 11,488,000 11,287,678
Credit Suisse First Boston, Inc.*** 6.03% 08/18/00 50,000,000 49,614,750
Daimler Chrysler AG Holdings 6.23% 10/18/00 75,000,000 73,611,229
Deutsche Bank Financial 6.61% 11/06/00 50,000,000 48,843,250
Duff & Phelps Utility & Corp.*** 6.72% 11/20/00 12,500,000 12,173,333
Duff & Phelps Utility & Corp.*** 6.68% 11/03/00 11,193,000 10,937,538
E.I. duPont De Nemours Co. 5.98% 08/28/00 20,000,000 19,813,955
E.I. duPont De Nemours Co. 6.02% 10/04/00 50,000,000 49,222,417
General Electric Capital Corp. 6.66% 03/06/01 50,000,000 47,724,500
Household Finance Corp. 6.63% 12/13/00 50,000,000 48,499,042
Johnson & Johnson*** 5.79% 07/05/00 25,000,000 24,991,958
Merrill Lynch & Co. 6.01% 07/26/00 60,000,000 59,769,617
Monsanto Co. 5.95% 07/06/00 30,000,000 29,985,125
Motorola, Inc. 6.65% 09/18/00 50,000,000 49,288,819
National Rural Utilities 6.05% 08/07/00 25,000,000 24,852,952
Standard Life Funding 6.17% 08/10/00 25,000,000 24,837,180
Toronto Dominion Holdings 6.64% 09/19/00 50,000,000 49,280,667
Xerox Credit Corp. 6.18% 07/12/00 25,000,000 24,961,375
TOTAL COMMERCIAL PAPER (Cost$863,065,360 ) 863,065,360
CORPORATE OBLIGATIONS - 17.4%
American General Corp. 9.63% 07/15/00 3,000,000 3,002,944
American Honda Finance Corp.*** 6.89%* 08/21/00 10,000,000 10,005,791
Aquarium Holdings KY*** 6.69%* 07/06/00 13,208,000 13,208,000
Austin Printing Co., Inc.*** 6.76%* 07/06/00 2,515,000 2,515,000
AT&T Corp.*** 6.73%* 08/07/00 10,000,000 10,001,249
Bank One Corp.*** 6.84%* 08/18/00 10,000,000 10,001,464
Bath Technologies, Inc.*** 6.79%* 07/06/00 1,460,000 1,460,000
Bath Technologies, Inc.*** 6.76%* 07/06/00 4,400,000 4,400,000
Beaver Creek Enterprise*** 6.76%* 07/06/00 2,150,000 2,150,000
Branch Banking and Trust 7.06%* 08/30/00 10,000,000 10,011,591
Care Life Project*** 6.76%* 07/06/00 3,600,000 3,600,000
Clark Grave Vault Co.*** 6.69%* 07/06/00 2,250,000 2,250,000
Coughlin Family Prop., Inc.*** 6.69%* 07/06/00 3,405,000 3,405,000
Damascus-Bishop Tire*** 6.76%* 07/06/00 9,500,000 9,500,000
Danis Construction Co.*** 6.69%* 07/06/00 5,000,000 5,000,000
D.E.D.E. Realty*** 6.69%* 07/06/00 3,575,000 3,575,000
Doren, Inc.*** 6.76%* 07/06/00 200,000 200,000
Espanola/Nambe*** 6.76%* 07/06/00 1,905,000 1,905,000
Ford Motor Credit Co. 6.30%* 10/02/00 900,000 900,000
Ford Motor Credit Co. 10.13% 11/15/00 1,000,000 1,010,324
GTE Corp. 6.83%* 09/11/00 40,000,000 39,986,264
General Motors Acceptance Corp. 5.63% 09/11/00 85,000 84,008
Gordon Flesch Co. Project*** 6.76%* 07/06/00 1,000,000 1,000,000
Hancor, Inc.*** 6.76%* 07/06/00 500,000 500,000
IBM Corp. 6.04% 08/07/00 3,000,000 2,999,380
Isaac Tire, Inc.*** 6.69%* 07/06/00 955,000 955,000
Jackson Tube Service, Inc.*** 6.69%* 07/06/00 4,800,000 4,800,000
J.W. Harris Co., Inc.*** 6.69%* 07/06/00 4,100,000 4,100,000
K.L. Morris, Inc.*** 6.69%* 07/06/00 2,165,000 2,165,000
Luken-Woodlawn LLC*** 6.69%* 07/06/00 3,655,000 3,655,000
Merrill Lynch & Co. 6.35% 07/24/00 250,000 250,039
MetLife Insurance Co.**** 6.34%* 07/03/00 20,000,000 20,000,000
Miami Valley Steel*** 6.76%* 07/06/00 2,050,000 2,050,000
Mubea, Inc.*** 6.76%* 07/06/00 11,925,000 11,925,000
Ohio Presbyterian Retirement Services*** 6.76%* 07/06/00 6,245,000 6,245,000
O.K.I. Supply Co.*** 6.69%* 07/06/00 2,000,000 2,000,000
Osco Industries, Inc.*** 6.76%* 07/06/00 2,400,000 2,400,000
Presrite Corp.*** 6.76%* 07/06/00 1,360,000 1,360,000
Pro Tire, Inc.*** 6.69%* 07/06/00 1,145,000 1,145,000
R.I. Lampus Co.*** 6.76%* 07/06/00 1,780,000 1,780,000
RSD Technology LLC*** 6.76%* 07/06/00 5,365,000 5,365,000
Seariver Maritime, Inc.*** 6.60%* 07/03/00 6,000,000 6,000,000
SGS Tool Company*** 6.76%* 07/06/00 1,440,000 1,440,000
Surgery Financing Co.*** 6.76%* 07/06/00 6,240,000 6,240,000
<PAGE>
White Castle Project*** 6.76%* 07/06/00 8,250,000 8,250,000
TOTAL CORPORATE OBLIGATIONS
(Cost $234,796,054 ) 234,796,054
U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.1%
Federal Home Loan Bank Note 5.30% 12/01/00 1,000,000 993,123
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $993,123 ) 993,123
U.S. TREASURY OBLIGATIONS - 0.0%
** U.S. Treasury Bill 5.64% 01/04/01 63,100 61,272
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $61,272 ) 61,272
CERTIFICATES OF DEPOSIT - 3.7%
Wilmington Trust Co. 6.92% 10/03/00 50,000,000 50,001,248
TOTAL CERTIFICATES OF DEPOSIT
(Cost $50,001,248 ) 50,001,248
REPURCHASE AGREEMENTS - 15.0%
State Street Securities LLC, 6.40%, 07/03/00, (Collateralized by 6.40% 07/03/00 30,037,000 30,037,000
$30,335,000 Federal Home Loan Bank Note, 5.875%, 08/15/01,
market value - $30,638,350)
Smith Barney Securities LLC, 7.19%, 07/03/00, (Collateralized by 7.185% 07/03/00 173,794,000 173,794,000
$178,397,271 various commercial papers, 6.58 - 6.63%,
07/03/00 - 09/25/00, market value - $177,270,008)
TOTAL REPURCHASE AGREEMENTS
(Cost $203,831,000 ) 203,831,000
TOTAL INVESTMENTS - 100.0%
(Cost $1,352,748,057)(a) $1,352,748,057
TRUSTEE DEFERRED COMPENSATION***** SHARES VALUE
Flex-funds Highlands Growth Fund 783 $16,985
Flex-funds Muirfield Fund 1,587 9,874
Flex-funds Total Return Utilities Fund 404 8,281
Meeder Advisor International Equity Fund 631 9,483
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $44,623 ) $44,623
<FN>
(a) Cost for federal income tax and financial reporting purposes are the
same.
* Variable rate security. Interest rate is as of June 30, 2000. 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
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.
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MUIRFIELD TOTAL RETURN HIGHLANDS DYNAMIC
FUND UTILITIES GROWTH GROWTH
FUND FUND FUND
Assets
<S> <C> <C> <C> <C>
Investments in corresponding portfolio, at value $130,778,957 $14,667,468 $51,455,958 $16,791,932
Receivable for capital stock issued 2,658,087 301,464 142,572 0
Receivable from investment advisor 0 0 0 4,349
Other assets 22,344 27,777 38,299 1,421
Total Assets 133,459,388 14,996,709 51,636,829 16,797,702
Liabilities
Payable for capital stock redeemed 2,447,913 217,988 51,043 0
Dividends payable 1,900,910 13,893 0 0
Accrued 12b-1 distribution fees 177,032 0 52,610 383
Accrued transfer agent and administrative fees 18,402 1,591 7,802 2,032
Other accrued liabilities 2,654 17,403 15,980 1,579
Total Liabilities 4,546,911 250,875 127,435 3,994
Net Assets 128,912,477 14,745,834 51,509,394 16,793,708
Net Assets
Capital 127,487,143 11,707,684 38,016,435 19,493,016
Accumulated undistributed (distributions in excess of) 1,696,830 (7,519) 1,329 714
net investment income
Accumulated undistributed net realized gain (loss) (2,768,699) 1,800,341 1,540,502 (2,913,639)
from investments
Net unrealized appreciation (depreciation) of investments 2,497,203 1,245,328 11,951,128 213,617
Total Net Assets $128,912,477 $14,745,834 $51,509,394 $16,793,708
Capital Stock Outstanding 23,468,026 694,624 2,321,848 1,957,923
(indefinite number of shares authorized, $0.10 par value)
Net Asset Value, Offering and Redemption Price Per Share $5.49 $21.23 $22.18 $8.58
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE U.S. GOVERNMENT MONEY
GROWTH BOND MARKET
FUND FUND FUND
Assets
<S> <C> <C> <C>
Investments in corresponding portfolio, at value $15,202,469 $12,204,361 $224,551,105
Receivable for capital stock issued 0 0 0
Receivable from investment advisor 4,543 0 27,191
Other assets 2,043 4,357 95,035
Total Assets 15,209,055 12,208,718 224,673,331
Liabilities
Payable for capital stock redeemed 0 0 0
Dividends payable 0 52,907 1,212,230
Accrued 12b-1 distribution fees 0 1,973 51,670
Accrued transfer agent and administrative fees 2,031 1,208 15,658
Other accrued liabilities 1,659 4,630 1,012
Total Liabilities 3,690 60,718 1,280,570
Net Assets 15,205,365 12,148,000 223,392,761
Net Assets
Capital 19,050,713 12,484,647 223,392,761
Accumulated undistributed (distributions in excess of) (16,279) 1,574 0
net investment income
Accumulated undistributed net realized gain (loss) (3,871,239) (406,444) 0
from investments
Net unrealized appreciation (depreciation) of investments 42,170 68,223 0
Total Net Assets $15,205,365 $12,148,000 $223,392,761
Capital Stock Outstanding 1,911,407 569,608 223,392,761
(indefinite number of shares authorized, $0.10 par value)
Net Asset Value, Offering and Redemption Price Per Share $7.96 $21.33 $1.00
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MUIRFIELD TOTAL RETURN HIGHLANDS DYNAMIC
FUND UTILITIES GROWTH GROWTH
FUND FUND FUND*
Net Investment Income from Corresponding Portfolio
<S> <C> <C> <C> <C>
Interest $2,648,151 $9,526 $121,739 $43,664
Dividends 169,076 202,642 249,407 16,496
Expenses net of waivers and/or reimbursements (615,080) (94,108) (288,848) (53,111)
Total Net Investment Income from Corresponding Portfolio 2,202,147 118,060 82,298 7,049
Fund Expenses
Administrative 36,006 3,551 12,861 2,642
Transfer agent 76,461 7,103 27,451 5,284
Audit 1,008 1,008 1,008 666
Legal 1,143 1,143 1,143 163
Printing 10,291 1,098 3,698 829
Amortization of organizational costs 0 2,272 0 0
Distribution plan 93,614 17,757 28,294 2,642
Postage 9,086 1,730 3,844 333
Registration and filing 19,133 6,023 3,579 1,658
Insurance 626 48 212 67
Other 2,234 1,132 789 584
Total Expenses 249,602 42,865 82,879 14,868
Expenses reimbursed by investment advisor 0 (9,126) 0 (8,533)
Net Expenses 249,602 33,739 82,879 6,335
Net Investment Income (Loss) 1,952,545 84,321 (581) 714
Net Realized and Unrealized Gain (Loss) from Investments
Net realized gains (losses) from futures contracts (5,733,844) 0 (200,927) 39,474
Net realized gains (losses) from investments 619,383 1,016,305 2,023,039 (2,953,113)
Net change in unrealized appreciation (13,904,949) (406,360) (2,304,598) 213,617
(depreciation) of investments
Net Gain (Loss) from Investments (19,019,410) 609,945 (482,486) (2,700,022)
Net Increase (Decrease) in Net Assets Resulting from Operation ($17,066,865) $694,266 ($483,067) ($2,699,308)
<FN>
* Operations commenced on February 29, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVE U.S. GOVERNMENT MONEY
GROWTH BOND MARKET
FUND* FUND FUND
Net Investment Income from Corresponding Portfolio
<S> <C> <C> <C>
Interest $28,376 $364,675 $7,492,711
Dividends 10,936 0 0
Expenses net of waivers and/or reimbursements (50,014) (27,094) (225,489)
Total Net Investment Income from Corresponding Portfolio (10,702) 337,581 7,267,222
Fund Expenses
Administrative 2,527 3,063 61,133
Transfer agent 5,054 3,676 76,023
Audit 682 1,008 889
Legal 167 1,143 1,277
Printing 849 867 23,239
Amortization of organizational costs 0 0 0
Distribution plan 2,527 9,802 97,813
Postage 341 1,345 21,094
Registration and filing 1,699 12,650 29,303
Insurance 68 52 981
Other 600 565 3,422
Total Expenses 14,514 34,171 315,174
Expenses reimbursed by investment advisor (8,937) 0 (40,798)
Net Expenses 5,577 34,171 274,376
Net Investment Income (Loss) (16,279) 303,410 6,992,846
Net Realized and Unrealized Gain (Loss) from Investments
Net realized gains (losses) from futures contracts 10,099 (6,425) 0
Net realized gains (losses) from investments (3,881,338) (73,864) 0
Net change in unrealized appreciation 42,170 75,957 0
(depreciation) of investments
Net Gain (Loss) from Investments (3,829,069) (4,332) 0
Net Increase (Decrease) in Net Assets Resulting from Operation ($3,845,348) $299,078 $6,992,846
<FN>
* Operations commenced on February 29, 2000.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MUIRFIELD FUND TOTAL RETURN UTILITIES FUND HIGHLANDS GROWTH FUND
Six months Six months Six months
ended Year ended Year ended Year
June 30, 2000 ended June 30, 2000 ended June 30, 2000 ended
(unaudited) Dec. 31, 1999 (unaudited) Dec. 31, 1999 (unaudited) Dec. 31, 1999
Increase (Decrease) in Net Assets
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $1,952,545 $1,845,031 $84,321 $167,473 ($581) ($17,089)
Net realized gain (loss) from
investments and futures contracts (5,114,461) 24,271,958 1,016,305 2,604,826 1,822,112 5,284,110
Net change in unrealized appreciation
(depreciation) of investments (13,904,949) (5,000,347) (406,360) (862,933) (2,304,598) 4,100,217
Net increase in net assets resulting from
operations (17,066,865) 21,116,642 694,266 1,909,366 (483,067) 9,367,238
Dividends and Distributions to Shareholders
from
Net investment income (2,610,888) (1,844,594) (91,825) (167,473) 0 0
Net realized gain from investments and
futures contracts 0 (26,315,111) 0 (1,461,849) 0 (6,597,219)
Net decrease in net assets resulting from
dividends and distributions (2,610,888) (28,159,705) (91,825) (1,629,322) 0 (6,597,219)
Capital Transactions
Issued 22,269,262 51,902,553 4,229,173 7,241,515 14,175,828 91,122,133
Reinvested 703,596 28,024,910 73,798 1,551,863 0 6,553,604
Redeemed (30,209,695) (42,604,626) (4,052,914) (5,634,736) (15,270,287) (91,266,580)
Net increase in net assets resulting from
capital transactions (7,236,837) 37,322,837 250,057 3,158,642 (1,094,459) 6,409,157
Total Increase (Decrease) in Net Assets (26,914,590) 30,279,774 852,498 3,438,686 (1,577,526) 9,179,176
Net Assets - Beginning of Period 155,827,067 125,547,293 13,893,336 10,454,650 53,086,920 43,907,744
Net Assets - End of Period $128,912,477 $155,827,067 $14,745,834 $13,893,336 $51,509,394 $53,086,920
Share Transactions
Issued 3,645,987 7,800,886 201,917 331,544 646,116 3,995,692
Reinvested 108,437 4,779,728 3,518 76,776 0 304,498
Redeemed (4,954,476) (6,156,981) (193,816) (275,164) (696,956) (3,995,764)
Change in shares (1,200,052) 6,423,633 11,619 133,156 (50,840) 304,426
<FN>
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DYNAMIC AGGRESSIVE
GROWTH GROWTH
FUND FUND U.S. GOVERNMENT BOND FUND MONEY MARKET FUND
Period from Period from Six months Six months
2/29/00* 2/29/00* ended Year ended Year
to 6/30/00 to 6/30/00 6/30/00 ended 6/30/00 ended
(unaudited) (unaudited) (unaudited) 12/31/99 (unaudited) 12/31/99
Increase (Decrease) in Net Assets
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $714 ($16,279) $303,410 $485,815 $6,992,846 $10,553,903
Net realized gain (loss) from
investments and futures contracts (2,913,639) (3,871,239) (80,289) (476,420) 0 0
Net change in unrealized appreciation
(depreciation) of investments 213,617 42,170 75,957 48,124 0 0
Net increase in net assets resulting from
operations (2,699,308) (3,845,348) 299,078 57,519 6,992,846 10,553,903
Dividends and Distributions to Shareholders
from
Net investment income 0 0 (303,410) (485,815) (6,992,846) (10,553,903)
Net realized gain from investments and
futures contracts 0 0 0 0 0 0
Net decrease in net assets resulting from
dividends and distributions 0 0 (303,410) (485,815) (6,992,846) (10,553,903)
Capital Transactions
Issued 20,410,280 20,461,376 698,213 2,790,040 279,095,604 621,768,406
Reinvested 0 0 235,099 458,067 5,679,605 10,405,355
Redeemed (917,264) (1,410,663) (1,203,143) (1,691,655) (293,405,681) (554,405,825)
Net increase in net assets resulting from
capital transactions 19,493,016 19,050,713 (269,831) 1,556,452 (8,630,472) 77,767,936
Total Increase (Decrease) in Net Assets 16,793,708 15,205,365 (274,163) 1,128,156 (8,630,472) 77,767,936
Net Assets - Beginning of Period 0 0 12,422,163 11,294,007 232,023,233 154,255,297
Net Assets - End of Period $16,793,708 $15,205,365 $12,148,000 $12,422,163 $223,392,761 $232,023,233
Share Transactions
Issued 2,050,971 2,087,901 32,643 129,747 279,095,604 621,768,406
Reinvested 0 0 10,985 21,351 5,679,605 10,405,355
Redeemed (93,048) (176,494) (56,345) (78,890) (293,405,681) (554,405,825)
Change in shares 1,957,923 1,911,407 (12,717) 72,208 (8,630,472) 77,767,936
<FN>
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE MUIRFIELD FUND
<TABLE>
<CAPTION>
Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $6.32 $6.88 $5.47 $5.47 $5.73 $5.34
Income from Investment Operations
Net investment income 0.09 0.09 0.08 0.11 0.10 0.06
Net gains (losses) on securities
(both realized and unrealized) (0.81) 0.89 1.51 0.91 0.25 1.31
Total from Investment Operations (0.72) 0.98 1.59 1.02 0.35 1.37
Less Dividends and Distributions
From net investment income (0.11) (0.09) (0.08) (0.11) (0.10) (0.06)
From net capital gains 0.00 (1.45) (0.10) (0.91) (0.51) (0.92)
Total Dividends and Distributions (0.11) (1.54) (0.18) (1.02) (0.61) (0.98)
Net Asset Value, End of Period $5.49 $6.32 $6.88 $5.47 $5.47 $5.73
Total Return -11.44%(3) 16.43% 29.33% 18.59% 5.99% 25.82%
Ratios/Supplemental Data
Net assets, end of period ($000) $128,912 $155,827 $125,547 $130,783 $121,335 $111,751
Ratio of expenses to average net assets 1.20%(2) 1.21% 1.24% 1.29% 1.19% 1.26%
Ratio of net investment income to average
net assets 2.71%(2) 1.33% 1.23% 1.69% 1.54% 0.97%
Portfolio turnover rate(1) 118.33%(3) 787.66% 128.31% 395.42% 297.41% 186.13%
<FN>
(1) Represents turnover rate of corresponding portfolio.
(2) Annualized.
(3) Not annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE TOTAL RETURN UTILITIES FUND
<TABLE>
<CAPTION>
Six months Year Year Year Year Period from
ended ended ended ended ended 6/21/95* to
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $20.34 $19.01 $17.72 $14.98 $14.14 $12.50
Income from Investment Operations
Net investment income 0.13 0.30 0.25 0.25 0.37 0.21
Net gains on securities
(both realized and unrealized) 0.90 3.45 1.29 3.99 1.48 1.64
Total from Investment Operations 1.03 3.75 1.54 4.24 1.85 1.85
Less Dividends and Distributions
From net investment income (0.14) (0.30) (0.25) (0.25) (0.37) (0.21)
From net capital gains 0.00 (2.12) 0.00 (1.25) (0.64) 0.00
Total Dividends and Distributions (0.14) (2.42) (0.25) (1.50) (1.01) (0.21)
Net Asset Value, End of Period $21.23 $20.34 $19.01 $17.72 $14.98 $14.14
Total Return 5.07%(4) 20.01% 8.77% 28.68% 13.33% 15.00%(4)
Ratios/Supplemental Data
Net assets, end of period ($000) $14,746 $13,893 $10,455 $8,405 $5,074 $2,881
Ratio of expenses to average net assets 1.80%(3) 1.80% 1.80% 1.80% 1.25% 1.25%(3)
Ratio of net investment income to
average net asset 1.19%(3) 1.48% 1.35% 1.57% 2.55% 3.18%(3)
Ratio of expenses to average net assets 1.93%(3) 1.99% 2.11% 2.51% 2.95% 4.35%(3)
before waiver of fees(2)
Ratio of net investment income to
average net asset 1.06%(3) 1.29% 1.04% 0.86% 0.85% 0.08%(3)
before waiver of fees(2)
Portfolio turnover rate(1) 24.56%(4) 69.20% 51.36% 41.22% 50.79% 5.06%(4)
<FN>
(1) Represents turnover rate of corresponding portfolio.
(2) Ratio includes directed brokerage payments in corresponding portfolio.
(3) Annualized.
(4) Not annualized.
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE HIGHLANDS GROWTH FUND
<TABLE>
<CAPTION>
Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $22.37 $21.23 $18.55 $16.41 $15.34 $13.08
Income from Investment Operations
Net investment income (loss) 0.00 (0.01) 0.06 0.06 0.31 0.50
Net gains (losses) on securities
(both realized and unrealized) (0.19) 4.37 4.32 4.73 1.07 2.68
Total from Investment Operations (0.19) 4.36 4.38 4.79 1.38 3.18
Less Dividends and Distributions
From net investment income 0.00 0.00 (0.06) (0.06) (0.31) (0.50)
From net capital gains 0.00 (3.22) (1.64) (2.59) 0.00 (0.42)
Total Dividends and Distributions 0.00 (3.22) (1.70) (2.65) (0.31) (0.92)
Net Asset Value, End of Period $22.18 $22.37 $21.23 $18.55 $16.41 $15.34
Total Return -0.85%(4) 21.16% 23.67% 29.28% 9.08% 24.61%
Ratios/Supplemental Data
Net assets, end of period ($000) $51,509 $53,087 $43,908 $33,752 $24,204 $24,631
Ratio of expenses to average net assets 1.45%(3) 1.56% 1.69% 1.87% 1.65% 1.64%
Ratio of net investment income (loss)
to average net assets 0.00%(3) -0.04% 0.31% 0.30% 1.92% 3.38%
Ratio of expenses to average net assets 1.45%(3) 1.57% 1.70% 1.87% 1.65% 1.64%
before waiver of fees(2)
Ratio of net investment income (loss) to average 0.00%(3) -0.05% 0.30% 0.30% 1.92% 3.38%
net assets before waiver of fees(2)
Portfolio turnover rate(1) 27.10%(4) 51.22% 79.98% 129.79% 81.66% 337.57%
<FN>
(1) Represents turnover rate of corresponding portfolio.
(2) Ratio includes fees waived and/or directed brokerage payments received in
corresponding portfolio.
(3) Annualized.
(4) Not annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE DYNAMIC GROWTH FUND
Period from
February 29, 2000*
to June 30, 2000
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from Investment Operations
Net investment income 0.00
Net gains (losses) on securities (both realized and unrealized) (1.42)
Total from Investment Operations (1.42)
Less Dividends and Distributions
From net investment income 0.00
From net capital gains 0.00
Total Dividends and Distributions 0.00
Net Asset Value, End of Period $8.58
Total Return -14.20%(3)
Ratios/Supplemental Data
Net assets, end of period ($000) $16,794
Ratio of expenses to average net assets 1.09%(2)
Ratio of net investment income to average net assets 0.01%(2)
Ratio of expenses to average net assets 1.25%(2)
before waiver of fees
Ratio of net investment income (loss) to average -0.15%(2)
net assets before waiver of fees
Portfolio turnover rate(1) 182.22%(3)
(1) Represents turnover rate of corresponding portfolio.
(2) Annualized.
(3) Not annualized.
* Date of commencement of operations.
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE AGGRESSIVE GROWTH FUND
Period from
February 29, 2000*
to June 30, 2000
(Unaudited)
Net Asset Value, Beginning of Period $10.00
Income from Investment Operations
Net investment income (loss) (0.01)
Net gains (losses) on securities (both realized and unrealized) (2.03)
Total from Investment Operations (2.04)
Less Dividends and Distributions
From net investment income 0.00
From net capital gains 0.00
Total Dividends and Distributions 0.00
Net Asset Value, End of Period $7.96
Total Return -20.40%(3)
Ratios/Supplemental Data
Net assets, end of period ($000) $15,205
Ratio of expenses to average net assets 1.10%(2)
Ratio of net investment income (loss) to average net assets -0.32%(2)
Ratio of expenses to average net assets before waiver of fees 1.27%(2)
Ratio of net investment income (loss) to average -0.49%(2)
net assets before waiver of fees
Portfolio turnover rate(1) 161.19%(3)
(1) Represents turnover rate of corresponding portfolio.
(2) Annualized.
(3) Not annualized.
* Date of commencement of operations.
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE U.S. GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $21.33 $22.14 $21.19 $20.64 $21.58 $19.25
Income from Investment Operations
Net investment income 0.53 0.88 0.97 0.99 0.96 1.11
Net gains (losses) on securities
(both realized and unrealized) 0.00 (0.81) 1.02 0.55 (0.94) 2.33
Total from Investment Operations 0.53 0.07 1.99 1.54 0.02 3.44
Less Dividends and Distributions
From net investment income (0.53) (0.88) (0.97) (0.99) (0.96) (1.11)
From net capital gains 0.00 0.00 (0.07) 0.00 0.00 0.00
Total Dividends and Distributions (0.53) (0.88) (1.04) (0.99) (0.96) (1.11)
Net Asset Value, End of Period $21.33 $21.33 $22.14 $21.19 $20.64 $21.58
Total Return 2.52%(4) 0.35% 9.62% 7.70% 0.15% 18.32%
Ratios/Supplemental Data
Net assets, end of period ($000) $12,148 $12,422 $11,294 $16,973 $17,783 $16,048
Ratio of expenses to average net assets 1.00%(3) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net asset 4.95%(3) 4.10% 4.52% 4.85% 4.61% 5.41%
Ratio of expenses to average net assets 1.31%(3) 1.18% 1.16% 1.14% 1.06% 1.14%
before waiver of fees(2)
Ratio of net investment income to
average net 4.64%(3) 3.92% 4.36% 4.71% 4.55% 5.27%
assets before waiver of fees(2)
Portfolio turnover rate(1) 144.89%(4) 352.23% 225.11% 375.64% 778.59% 232.34%
<FN>
(1) Represents turnover rate of corresponding portfolio.
(2) Ratio includes fees waived in corresponding portfolio.
(3) Annualized.
(4) Not annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
THE MONEY MARKET FUND
<TABLE>
<CAPTION>
Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net investment income 0.030 0.049 0.052 0.053 0.05 0.06
Total from Investment Operations 0.030 0.049 0.052 0.053 0.05 0.06
Less Dividends and Distributions
From net investment income (0.030) (0.049) (0.052) (0.053) (0.05) (0.06)
Total Dividends and Distributions (0.030) (0.049) (0.052) (0.053) (0.05) (0.06)
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total Return 2.92%(3) 4.96% 5.31% 5.38% 5.27% 5.85%
Ratios/Supplemental Data
Net assets, end of period ($000) $223,393 $232,023 $154,255 $169,335 $119,947 $141,087
Ratio of expenses to average net assets 0.41%(2) 0.41% 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net assets 5.73%(2) 4.88% 5.19% 5.26% 5.15% 5.70%
Ratio of expenses to average net assets before 0.55%(2) 0.54% 0.59% 0.59% 0.58% 0.64%
reimbursement/waiver of fees(1)
Ratio of net investment income to average net assets 5.59%(2) 4.75% 5.00% 5.07% 4.97% 5.46%
before reimbursement/waiver of fees(1)
<FN>
(1) Ratio includes fees waived in corresponding portfolio.
(2) Annualized.
(3) Not annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FLEX-FUNDS SEMI-ANNUAL REPORT
Notes to Financial Statements
June 30, 2000
(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 seven 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 Dynamic Growth Fund, The Aggressive 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
FUND PORTFOLIO BY FUND AS OF JUNE 30, 2000
The Muirfield Fund Mutual Fund Portfolio 88%
The Total Return Utilities Fund Utilities Stock Portfolio 74%
The Highlands Growth Fund Growth Stock Portfolio 77%
The Dynamic Growth Fund Growth Mutual Fund Portfolio 100%
The Aggressive Growth Fund Aggressive Growth Mutual Fund Portfolio 100%
The U.S. Government Bond Fund Bond Portfolio 100%
The Money Market Fund Money Market Portfolio 17%
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, The Highlands Growth Fund, The Dynamic Growth Fund and The Aggressive
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.
<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. Accordingly, timing differences relating to shareholder
distributions are reflected in the components of net assets and permanent book
and tax differences relating to shareholder distributions have been reclassified
to capital.
ORGANIZATIONAL COSTS
The costs related to the organization of each of the Funds have been deferred
and are being amortized by each Fund on a straight-line basis over a five-year
period. As of June 30, 2000, organizational costs for all Funds 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
Meeder Asset Management ("MAM"), 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 MAM, Miller/Howard Investments, Inc. and Sector
Capital Management, Inc. serve as subadvisor of the Utilities 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,
The Highlands Growth Fund, The Dynamic Growth Fund and The Aggressive 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.
MAM has voluntarily agreed to reimburse The Total Return Utilities Fund, The
Dynamic Growth Fund, The Aggressive Growth 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%, 1.10%, 1.10% and 0.41% of average daily
net assets of Funds, respectively. Such reimbursement is limited to the total of
fees charged to each Fund by MAM 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 except for The Total Return Utilities
Fund, The Dynamic Growth Fund and The Aggressive Growth Fund, which is 0.25% of
average daily net assets.
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, MAM and MFSCo.
4. FEDERAL TAX INFORMATION (Unaudited)
At December 31, 1999, The U.S. Government Bond Fund had unused capital loss
carryforwards of $476,420 available to offset future gains, if any, for Federal
income tax purposes. The capital loss carryforward expires in 2007.
<PAGE>
STATEMENTS OF ASSETS & LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Growth
Mutual Utilities Growth Mutual
Fund Stock Stock Fund
Portfolio Portfolio Portfolio Portfolio
Assets
<S> <C> <C> <C> <C>
Investments, at market value* $141,812,874 $19,097,915 $60,591,411 $11,826,775
Repurchase agreements, at cost* 5,974,000 766,000 5,975,000 4,943,000
Trustee deferred compensation investments, at market value 85,100 14,920 33,155 461
Cash 606 2 199 229
Receivable for securities sold 0 0 84,470 0
Receivable for net variation margin on futures contracts 113,625 0 35,350 35,350
Receivable from corresponding Fund 0 0 0 0
Interest and dividend receivable 512,085 30,664 40,998 2,829
Prepaid expenses/other assets 0 1,734 738 34
Total Assets 148,498,290 19,911,235 66,761,321 16,808,678
Liabilities
Payable for securities purchased 0 0 99,913 0
Payable for Trustee Deferred Compensation Plan 85,100 14,920 33,155 461
Payable to investment advisor 102,820 17,652 54,558 11,019
Accrued fund accounting fees 4,708 2,240 3,841 1,906
Other accrued liabilities 13,321 7,304 21,136 3,346
Total Liabilities 205,949 42,116 212,603 16,732
Total Net Assets $148,292,341 $19,869,119 $66,548,718 $16,791,946
Net Assets
Capital 146,897,520 18,354,599 52,805,782 16,578,331
Net unrealized appreciation of investments 1,394,821 1,514,520 13,742,936 213,615
Total Net Assets $148,292,341 $19,869,119 $66,548,718 $16,791,946
<FN>
*Securities at cost $146,505,678 $18,349,395 $52,858,825 $16,591,510
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggressive
Growth Money
Mutual Fund Bond Market
Portfolio Portfolio Portfolio
Assets
<S> <C> <C> <C>
Investments, at market value* $12,086,052 $11,827,871 $1,148,917,057
Repurchase agreements, at cost* 3,106,000 102,000 203,831,000
Trustee deferred compensation investments, at market value 446 14,534 44,623
Cash 735 930 675
Receivable for securities sold 0 0 0
Receivable for net variation margin on futures contracts 22,725 1,859 0
Receivable from corresponding Fund 0 0 1,821,618
Interest and dividend receivable 1,729 279,864 2,394,824
Prepaid expenses/other assets 230 1,789 146,658
Total Assets 15,217,917 12,228,847 1,357,156,455
Liabilities
Payable for securities purchased 0 0 0
Payable for Trustee Deferred Compensation Plan 446 14,534 44,623
Payable to investment advisor 9,946 919 192,239
Accrued fund accounting fees 1,770 1,552 15,903
Other accrued liabilities 3,265 7,314 15,464
Total Liabilities 15,427 24,319 268,229
Total Net Assets $15,202,490 $12,204,528 $1,356,888,226
Net Assets
Capital 15,160,320 12,136,307 1,356,888,226
Net unrealized appreciation of investments 42,170 68,221 0
Total Net Assets $15,202,490 $12,204,528 $1,356,888,226
<FN>
*Securities at cost $15,172,607 $11,863,509 $1,352,748,057
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Growth
Mutual Utilities Growth Mutual
Fund Stock Stock Fund
Portfolio Portfolio Portfolio Portfolio*
Net Investment Income
<S> <C> <C> <C> <C>
Interest $3,036,569 $12,750 $154,316 $43,664
Dividends 193,257 269,733 316,324 16,496
Total Net Investment Income 3,229,826 282,483 470,640 60,160
Expenses
Investment advisor 632,371 93,678 306,327 40,528
Accounting 26,836 11,882 21,072 7,084
Trustee 26,340 5,078 11,402 2,716
Audit 6,554 7,058 7,562 682
Custodian 7,864 2,570 14,767 1,699
Legal 1,143 1,143 1,143 167
Insurance 353 15 55 68
Other 3,919 3,919 3,919 167
Total Expenses 705,380 125,343 366,247 53,111
Investment advisor fees waived 0 0 0 0
Total Net Expenses 705,380 125,343 366,247 53,111
Net Investment Income (Loss) 2,524,446 157,140 104,393 7,049
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from futures contracts (6,580,650) 0 (258,025) 39,473
Net realized gain (loss) from investment transactions and 717,088 1,351,765 2,574,069 (2,953,097)
distributions of realized gains by other investment companies
Net change in unrealized appreciation (depreciation) of investments (15,910,160) (556,820) (2,946,249) 213,615
Net Gain (Loss) on Investments (21,773,722) 794,945 (630,205) (2,700,009)
Net Increase (Decrease) in Net Assets Resulting from Operations ($19,249,276) $952,085 ($525,812) ($2,692,960)
<FN>
* Operations commenced on February 29, 2000.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Aggressive
Growth Money
Mutual Fund Bond Market
Portfolio* Portfolio Portfolio
Net Investment Income
<S> <C> <C> <C>
Interest $28,376 $364,683 $44,887,494
Dividends 10,936 0 0
Total Net Investment Income 39,312 364,683 44,887,494
Expenses
Investment advisor 37,795 24,488 1,912,928
Accounting 6,720 8,636 92,102
Trustee 2,716 3,991 16,890
Audit 682 6,050 6,489
Custodian 1,699 1,663 53,143
Legal 167 1,143 1,181
Insurance 68 101 69,622
Other 167 138 3,713
Total Expenses 50,014 46,210 2,156,068
Investment advisor fees waived 0 (19,116) (807,397)
Total Net Expenses 50,014 27,094 1,348,671
Net Investment Income (Loss) (10,702) 337,589 43,538,823
Realized and Unrealized Gain (Loss) from Investments
Net realized gain (loss) from futures contracts 10,099 (6,424) 0
Net realized gain (loss) from investment transactions and (3,881,316) (73,865) 0
distributions of realized gains by other investment companies
Net change in unrealized appreciation (depreciation) of investments 42,170 75,952 0
Net Gain (Loss) on Investments (3,829,047) (4,337) 0
Net Increase (Decrease) in Net Assets Resulting from Operations ($3,839,749) $333,252 $43,538,823
<FN>
* Operations commenced on February 29, 2000.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MUTUAL FUND PORTFOLIO UTILITIES STOCK PORTFOLIO GROWTH STOCK PORTFOLIO
Six months Six months Six months
ended Year ended Year ended Year
6/30/00 ended 6/30/00 ended 6/30/00 ended
(unaudited) 12/31/99 (unaudited) 12/31/99 (unaudited) 12/31/99
Increase (Decrease) in Net Assets
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $2,524,446 $2,644,273 $157,140 $289,856 $104,393 $229,647
Net realized gain (loss) from investments
and futures contracts (5,863,562) 27,496,748 1,351,765 3,637,703 2,316,044 5,340,308
Net change in unrealized appreciation
(depreciation) of investments (15,910,160) (5,909,917) (556,820) (1,322,044) (2,946,249) 6,025,737
Net increase in net assets resulting from operations (19,249,276) 24,231,104 952,085 2,605,515 (525,812) 11,595,692
Transactions of Investors' Beneficial Interests
Contributions 24,570,426 67,402,736 5,508,339 11,399,891 20,298,281 105,405,498
Withdrawals (35,569,903) (53,900,433) (4,642,398) (9,173,858) (18,441,223) (102,951,461)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests (10,999,477) 13,502,303 865,941 2,226,033 1,857,058 2,454,037
Total Increase (Decrease) in Net Assets (30,248,753) 37,733,407 1,818,026 4,831,548 1,331,246 14,049,729
Net Assets - Beginning of Period 178,541,094 140,807,687 18,051,093 13,219,545 65,217,472 51,167,743
Net Assets - End of Period $148,292,341 $178,541,094 $19,869,119 $18,051,093 $66,548,718 $65,217,472
<FN>
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
AND YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AGGRESSIVE
MUTUAL GROWTH
FUND MUTUAL FUND
PORTFOLIO PORTFOLIO BOND PORTFOLIO MONEY MARKET PORTFOLIO
Period from Period from Six months Six months
2/29/00* 2/29/00* ended Year ended Year
to 6/30/00 to 6/30/00 6/30/00 ended 6/30/00 ended
(unaudited) (unaudited) (unaudited) 12/31/99 (unaudited) 12/31/99
Increase (Decrease) in Net Assets
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $7,049 ($10,702) $337,589 $539,910 $43,538,823 $59,927,411
Net realized gain (loss) from investments
and futures contracts (2,913,624) (3,871,217) (80,289) (476,427) 0 0
Net change in unrealized appreciation
(depreciation) of investments 213,615 42,170 75,952 48,130 0 0
Net increase in net assets resulting from
operations (2,692,960) (3,839,749) 333,252 111,613 43,538,823 59,927,411
Transactions of Investors' Beneficial Interests
Contributions 20,410,281 20,461,376 698,508 2,870,096 3,324,388,039 6,273,721,231
Withdrawals (925,375) (1,419,137) (1,254,090) (1,550,472) (3,115,235,238) (6,027,721,363)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests 19,484,906 19,042,239 (555,582) 1,319,624 209,152,801 245,999,868
Total Increase (Decrease) in Net Assets 16,791,946 15,202,490 (222,330) 1,431,237 252,691,624 305,927,279
Net Assets - Beginning of Period 0 0 12,426,858 10,995,621 1,104,196,602 798,269,323
Net Assets - End of Period $16,791,946 $15,202,490 $12,204,528 $12,426,858 $1,356,888,226 $1,104,196,602
<FN>
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Ratios/ Supplementary Data
<TABLE>
<CAPTION>
MUTUAL FUND PORTFOLIO Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period ($000) $148,292 $178,541 $140,808 $144,533 $135,540 $122,109
Ratio of expenses to average net assets 0.85%(1) 0.86% 0.91% 0.89% 0.87% 0.95%
Ratio of net investment income to average net assets 3.06%(1) 1.69% 1.56% 2.08% 1.86% 1.26%
Portfolio turnover rate 118.33%(2) 787.66% 128.31% 395.42% 297.41% 186.13%
<FN>
(1) Annualized.
(2) Not annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
UTILITY STOCK PORTFOLIO Six months Year Year Year Year Period from
ended ended ended ended ended 6/21/95* to
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period ($000) $19,869 $18,051 $13,220 $10,670 $7,964 $4,291
Ratio of expenses to average net assets 1.34%(1) 1.35% 1.44% 1.60% 1.61% 2.32%(1)
Ratio of net investment income to average net assets 1.67%(1) 1.94% 1.73% 1.79% 2.24% 2.09%(1)
Ratio of expenses to average net assets 1.34%(1) 1.35% 1.46% 1.65% 1.66% 2.40%(1)
before directed brokerage payments
Ratio of net investment income to average net assets 1.67%(1) 1.94% 1.71% 1.74% 2.19% 2.01%(1)
before directed brokerage payments
Portfolio turnover rate 24.56%(2) 69.20% 51.36% 41.22% 50.79% 5.06%(2)
<FN>
(1) Annualized.
(2) Not annualized.
* Date of commencement of operations.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Ratios/ Supplementary Data
<TABLE>
<CAPTION>
GROWTH STOCK PORTFOLIO Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period ($000) $66,549 $65,217 $51,168 $33,394 $24,414 $24,537
Ratio of expenses to average net assets 1.13%(1) 1.15% 1.25% 1.34% 1.24% 1.25%
Ratio of net investment income to average net assets 0.32%(1) 0.39% 0.77% 0.83% 2.33% 3.78%
Ratio of expenses to average net assets before 1.13%(1) 1.16% 1.26% 1.34% 1.24% 1.25%
waiver of fees and/or directed brokerage payments
Ratio of net investment income to average net assets 0.32%(1) 0.38% 0.76% 0.83% 2.33% 3.78%
before waiver of fees and/or directed brokerage payments
Portfolio turnover rate 27.10%(2) 51.22% 79.98% 129.79% 81.66% 337.57%
<FN>
(1) Annualized.
(2) Not annualized.
</FN>
</TABLE>
GROWTH MUTUAL FUND PORTFOLIO Period from
February 29, 2000*
to
June 30, 2000
(Unaudited)
Net assets, end of period ($000) $16,792
Ratio of expenses to average net assets 0.98%(1)
Ratio of net investment income to average net assets 0.13%(1)
Portfolio turnover rate 182.22%(2)
(1) Annualized.
(2) Not annualized.
* Date of commencement of operations.
AGGRESSIVE GROWTH MUTUAL FUND PORTFOLIO Period from
February 29, 2000*
to
June 30, 2000
(Unaudited)
Net assets, end of period ($000) $15,202
Ratio of expenses to average net assets 0.99%(1)
Ratio of net investment income (loss) to average net assets -0.21%(1)
Portfolio turnover rate 161.19%(2)
(1) Annualized.
(2) Not annualized.
* Date of commencement of operations.
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Ratios/ Supplementary Data
<TABLE>
<CAPTION>
BOND PORTFOLIO Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period ($000) $12,205 $12,427 $10,996 $16,909 $17,792 $16,066
Ratio of expenses to average net assets 0.44%(1) 0.54% 0.57% 0.57% 0.61% 0.57%
Ratio of net investment income to average net assets 5.50%(1) 4.57% 4.97% 5.27% 4.99% 5.82%
Ratio of expenses to average net assets before waiver of fees 0.75%(1) 0.73% 0.73% 0.71% 0.68% 0.71%
Ratio of net investment income to average net assets 5.19%(1) 4.38% 4.81% 5.13% 4.92% 5.68%
before waiver of fees
Portfolio turnover rate 144.89%(2) 352.23% 225.11% 375.64% 778.59% 232.34%
<FN>
(1) Annualized.
(2) Not annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO Six months Year Year Year Year Year
ended ended ended ended ended ended
6/30/00 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net assets, end of period ($000) $1,356,888 $1,104,197 $798,269 $587,019 $352,930 $256,126
Ratio of expenses to average net assets 0.18%(1) 0.18% 0.18% 0.18% 0.19% 0.21%
Ratio of net investment income to average net assets 5.90%(1) 5.07% 5.39% 5.47% 5.34% 5.87%
Ratio of expenses to average net assets 0.29%(1) 0.30% 0.30% 0.31% 0.33% 0.37%
before waiver of fees
Ratio of net investment income to average net assets 5.79%(1) 4.95% 5.27% 5.34% 5.20% 5.70%
before waiver of fees
<FN>
(1) Annualized.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MUTUAL FUND PORTFOLIO, UTILITIES STOCK PORTFOLIO, GROWTH STOCK PORTFOLIO, GROWTH
MUTUAL FUND PORTFOLIO, AGGRESSIVE GROWTH MUTUAL FUND PORTFOLIO, BOND PORTFOLIO,
MONEY MARKET PORTFOLIO
Notes to Financial Statements
June 30, 2000
(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 an open-ended management investment
company which was organized as a trust under the laws of the State of New York.
Each Declaration of Trust permits the Trustees, who are the same for each
Portfolio, to issue beneficial interests in each Portfolio.
The investment objective of each Portfolio is as follows:
The Mutual Fund Portfolio seeks growth of capital through investment in the
shares of other mutual funds.
The 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 Growth Mutual Fund Portfolio and Aggressive Growth Mutual Fund
Portfolio seek capital growth or appreciation, without regard to current
income, by investing in mutual funds and closed end funds that invest
primarily in common stock or securities convertible into or exchangeable
for common stock (such as convertible preferred stock, convertible
debentures or warrants).
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
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.
<PAGE>
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 Meeder
Advisor 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 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 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.
<PAGE>
During the six months ended June 30, 2000, the Portfolios had the following
activity in futures contracts:
LONG CONTRACTS
NUMBER OF CONTRACTS NOTIONAL AMOUNT
Mutual Fund Portfolio:
Outstanding, beginning of year --- $---
Contracts opened 671 239,497,125
Contracts closed (626) (222,981,000)
Outstanding, end of period 45 $16,516,125
======================================== =================== ===================
Growth Stock Portfolio:
Outstanding, beginning of year 10 $3,610,500
Contracts opened 56 20,346,200
Contracts closed (52) (18,818,350)
Outstanding, end of period 14 $5,138,350
======================================== =================== ===================
Growth Mutual Fund Portfolio:
Outstanding, beginning of year --- $---
Contracts opened 30 9,780,475
Contracts closed (16) (4,642,125)
Outstanding, end of period 14 $5,138,350
======================================== =================== ===================
Aggressive Growth Mutual Fund Portfolio:
Outstanding, beginning of year --- $---
Contracts opened 19 6,061,700
Contracts closed (10) (2,758,475)
Outstanding, end of period 9 $3,303,225
======================================== =================== ===================
Bond Portfolio:
Outstanding, beginning of year --- $---
Contracts opened 35 3,406,344
Contracts closed (18) (1,732,115)
Outstanding, end of period 17 $1,674,229
======================================== =================== ===================
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 Portfolios 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
Meeder Asset Management ("MAM"), 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 MAM, 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. As subadviser to the Utilities Stock
Portfolio, Miller/Howard Investments, Inc. is paid 0.00% of the 1.00% of average
daily net assets up to $10 million, 0.40% of the 1.00% of average daily net
assets exceeding $10 million up to $50 million, 0.40% of the 0.75% of average
daily net assets net assets exceeding $50 million up to $60 million, 0.30% of
the 0.75% of average daily net assets exceeding $60 million up to $100 million
and 0.25% of the 0.60% of average daily net assets exceeding $100 million. As
subadviser to the Growth Stock Portfolio, Sector Capital Management, Inc. is
paid 0.30% of the 1.00% of average daily net assets up to $25
<PAGE>
million, 0.70% of the 1.00% of average daily net assets exceeding $25 million up
to $50 million, 0.40% of the 0.75% of average daily net assets exceeding $50
million up to $100 million and 0.35% of the 0.60% of average daily net assets
exceeding $100 million. Sector Capital Management, Inc. pays all sub-subadvisers
0.25% on all average net assets. Growth Mutual Fund Portfolio and Aggressive
Growth Mutual Fund Portfolio, 0.75% of average daily net assets up to $200
million and 0.60% of average daily net assets exceeding $200 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, 2000, MAM
voluntarily waived a portion of its investment advisory fees in the Money Market
and Bond Portfolios.
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, MAM and MFSCo.
4. SECURITIES TRANSACTIONS
For the six months ended June 30, 2000, 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 $114,612,362 $219,613,844
Utilities Stock Portfolio 4,669,173 4,460,736
Growth Stock Portfolio 16,143,218 16,417,060
Growth Mutual Fund Portfolio 34,008,853 24,190,963
Aggressive Growth Mutual Fund 35,148,957 21,327,712
Portfolio
Bond Portfolio 20,126,235 10,078,784
As of June 30, 2000, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax purposes was as follows:
<TABLE>
<CAPTION>
PORTFOLIO COST BASIS OF UNREALIZED UNREALIZED NET UNREALIZED
INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
(DEPRECIATION)
<S> <C> <C> <C> <C>
Mutual Fund Portfolio $147,290,745 $1,288,002 ($678,248) $609,754
Utilities Stock Portfolio 18,525,515 2,631,635 (1,293,235) 1,338,400
Growth Stock Portfolio 53,084,239 17,778,144 (4,260,622) 13,517,522
Growth Mutual Fund Portfolio 16,591,510 433,343 (219,728) 213,615
Aggressive Growth Mutual 15,172,607 331,745 (289,575) 42,170
Fund Portfolio
Bond Portfolio 11,863,509 68,221 --- 68,221
Money Market Portfolio 1,352,748,057 --- --- ---
</TABLE>
<PAGE>
MANAGER AND INVESTMENT ADVISOR
Meeder Asset Management, Inc.
6000 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
SUBADVISOR/THE UTILITIES STOCK PORTFOLIO
Miller/Howard Investments, Inc.
141 Upper Byrdcliffe Road, P.O. Box 549
Woodstock, New York 12498
SUBADVISOR/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
Firstar 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
<PAGE>
THE FLEX-FUNDS
P.O. Box 7177, Dublin, OH 43017
