THE FLEX-FUNDS
THE MONEY MARKET FUND
1999 ANNUAL REPORT December 31, 1999
THE FLEX-FUNDS
P.O. BOx 7177, Dublin, OH 43017
(800)325-FLEX www.flexfunds.com
[email protected]
<PAGE>
The Flex-funds 1999 Annual Report
THE MONEY MARKET FUND
[PHOTO] Philip A. Voelker, Portfolio Manager
The Money Market Fund finished 1999 retaining its #1 ranking out of 83
general purpose money market funds for cumulative total return since inception
(March 1985) according to Lipper.* The Fund also continues to rank among the top
10% of all general purpose money market funds for total return for every
12-month period since inception.
1999 was a year of rising short-term interest rates, but like everything in
the financial world it was not simple and obvious as it developed. 90-day
commercial paper rates started the year at 4.75% and ended the year at 6.00%.
Most of the increase came during the summer and early fall as the Federal
Reserve increased rates, and corporate America pre-funded a large part of their
borrowing needs months before the normal year-end rush. During this period, we
shortened the average maturity of the portfolio to 27 days, in anticipation of
higher rates. As higher rates became available in late summer and early fall,
due to the early rush by companies to borrow, we invested in longer-maturing
paper to "tack down" those higher rates. During this period, our average
maturity once again reached over 80 days.
In the last several months, we let our average maturity settle to the
60-day range as we waited for the year-end to pass. Interest rates normally tick
up at the end of the year, but this year they were abnormally depressed because
many investors had extra cash on hand as a precaution against potential Y2K
calamities. Short-term interest rates on overnight investments had reached as
low as 3.25% on December 30.
The market's ability to forecast the need for interest rate adjustments,
and the Federal Reserve's de facto policy of "hinting" at the direction interest
rates may take in the future, have made today's interest rate environment less
volatile and less subject to surprise. We also believe these two factors have
helped to sustain the steady growth of the U.S. economy in recent years. We
continue to structure the portfolio with high quality, first-tier securities,
and strive to provide competitive yields for investors.
* The Money Market Fund ranked among general purpose money market funds for the
time periods as follows: 1 year - #27 out of 339; 5 years - #13 out of 220; 10
years - #5 out of 132. 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.
<PAGE>
1999 Performance
FUND RANKINGS among general purpose
money market funds for average annual
total returns as of 12/31/99 per Lipper:
One Year: #27 out of 339
Five Years: #13 out of 220
Ten Years: #5 out of 132
Period and Average Annual Total Returns
as of 12/31/99
The Money
Market Fund
One Year 4.96%
Three Years 5.22%
Five Years 5.36%
Ten Years 5.18%
1 Inception Date 3/27/85
Current & Effective Yields
as of 12/31/99
7-day Simple Yield....................................5.49%
7-day Compound Yield..................................5.63%
[GRAPH] The following information was presented as a pie chart:
PORTFOLIO HOLDINGS as of DECEMBER 31, 1999
1) Commercial Paper 56.30%
2) Variable Rate Notes 15.61%
3) Repurchase Agreements 15.28%
4) Corporate Notes 9.26%
5) U.S. Govt. Agency Notes 3.19%
<PAGE>
<TABLE>
MONEY MARKET PORTFOLIO
Portfolio of Investments as of December 31, 1999
<CAPTION>
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
--------------------- ----------- --------------
COMMERCIAL PAPER - 56.3%
<S> <C> <C> <C> <C>
Allied Signal, Inc. 5.69% 02/02/00 $50,000,000 $ 49,747,111
Archer Daniels Midland 5.62% 03/15/00 50,000,000 49,422,389
Bank of America 4.25% 01/03/00 20,000,000 19,995,278
CSW Credit, Inc. 5.70% 02/29/00 50,000,000 49,532,917
DPL, Inc.*** 5.95% 04/12/00 50,000,000 49,157,083
Duff & Phelps Utility & Corp.*** 5.97% 05/04/00 11,750,000 11,508,381
Duff & Phelps Utility & Corp.*** 5.80% 05/17/00 5,000,000 4,889,639
Eastman Kodak Co. 5.75% 01/26/00 50,000,000 49,800,347
Edison Asset Securities LLC*** 6.02% 02/16/00 30,000,000 29,769,233
Equilon Enterprises LLC 5.72% 02/23/00 10,000,000 9,915,789
Equilon Enterprises LLC 5.75% 02/16/00 20,000,000 19,853,055
Ford Motor Credit Co. 5.65% 01/12/00 50,000,000 49,913,680
FPL Group Capital, Inc.*** 5.70% 01/26/00 15,000,000 14,940,625
General Dynamics Corp.*** 5.92% 03/31/00 25,000,000 24,630,000
General Electric Capital Corp. 5.71% 06/14/00 30,000,000 29,214,875
General Motors Acceptance Corp. 5.71% 04/28/00 31,575,000 30,984,039
Johnson & Johnson 5.79% 07/05/00 25,000,000 24,252,125
J.P. Morgan & Co., Inc.*** 5.86% 04/14/00 29,841,000 29,335,825
Liberty Mutual Capital*** 5.80% 04/19/00 38,586,000 37,908,387
Mobil ESOP Trust*** 5.65% 02/29/00 25,000,000 24,768,507
Southern California Edison Co. 5.73% 02/11/00 10,000,000 9,934,742
TOTAL COMMERCIAL PAPER
(Cost$619,474,027 ) 619,474,027
CORPORATE OBLIGATIONS - 25.2%
Albertson's, Inc.*** 6.37% 06/01/00 1,500,000 1,502,370
American General Corp.*** 6.36% 06/30/00 2,000,000 2,003,987
American General Corp. 6.37% 06/15/00 275,000 275,392
Aquarium Holdings KY*** 6.50%* 01/06/00 15,108,000 15,108,000
Associates Corp., N.A. 7.44% 03/28/00 2,000,000 2,006,791
Associates Corp., N.A.*** 6.82% 05/22/00 1,500,000 1,504,306
Austin Printing Co., Inc.*** 6.80%* 01/06/00 2,515,000 2,515,000
Bank One Corp.*** 5.88% 06/21/00 40,000,000 40,000,000
Bath Technologies, Inc.*** 6.80%* 01/06/00 4,450,000 4,450,000
Bath Technologies, Inc.*** 6.83%* 01/06/00 1,480,000 1,480,000
Care Life Project*** 6.80% 01/06/00 3,600,000 3,600,000
Citigroup, Inc.*** 6.73% 05/15/00 3,400,000 3,409,584
Citigroup, Inc.*** 6.62% 06/01/00 500,000 500,648
Citigroup, Inc.*** 6.98% 05/15/00 250,000 250,885
Clark Grave Vault Co.*** 6.50%* 01/06/00 2,400,000 2,400,000
Coughlin Family Properties, Inc.*** 6.50%* 01/06/00 3,660,000 3,660,000
Damascus-Bishop Tire*** 6.80%* 01/06/00 3,500,000 3,500,000
Danis Construction Co.*** 6.50% 01/06/00 5,000,000 5,000,000
Doren, Inc.*** 6.80%* 01/06/00 300,000 300,000
E.I. du Pont de Nemours & Co. 9.07% 04/15/00 1,000,000 1,008,335
D.E.D.E. Realty*** 6.50%* 01/06/00 3,670,000 3,670,000
Espanola/Nambe*** 6.80%* 01/06/00 1,905,000 1,905,000
General Motors Acceptance Corp. 9.51% 05/15/00 10,000,000 10,123,135
General Motors Acceptance Corp.*** 6.88% 06/06/00 300,000 300,853
General Motors Acceptance Corp. 9.30% 04/01/00 370,000 372,814
General Motors Acceptance Corp.*** 6.63% 05/24/00 2,000,000 2,005,308
Goldman Sachs Group LP*** 5.29% 02/25/00 1,875,000 1,873,085
Gordon Flesch Co. Project*** 6.80%* 01/06/00 1,000,000 1,000,000
GTE Corp. 6.15%* 03/10/00 40,000,000 39,970,565
Hancor, Inc.*** 6.80%* 01/06/00 500,000 500,000
IBM Corp.*** 6.05% 08/07/00 3,000,000 2,996,121
IBM Corp.*** 8.94% 03/27/00 250,000 251,655
IBM Corp. 6.37% 06/15/00 1,000,000 1,001,094
Isaac Tire, Inc.*** 6.50%* 01/06/00 980,000 980,000
Jackson Tube Service, Inc.*** 6.50% 01/06/00 4,800,000 4,800,000
J.W. Harris Co., Inc.*** 6.50%* 01/06/00 2,100,000 2,100,000
Luken-Woodlawn LLC*** 6.50% 01/06/00 3,700,000 3,700,000
Merrill Lynch & Co.*** 6.34% 07/24/00 250,000 250,379
MetLife Insurance Co.*** 6.28% 03/21/00 20,000,000 20,000,000
Miami Valley Steel*** 6.80%* 01/06/00 2,050,000 2,050,000
Morgan Stanley Dean Witter & Co.*** 5.88% 04/24/00 5,000,000 4,995,924
Morgan Stanley Dean Witter & Co.*** 6.10% 02/11/00 9,000,000 8,999,158
Mubea Inc.*** 6.80% 01/06/00 3,125,000 3,125,000
Mubea Inc.*** 6.80%* 01/06/00 8,800,000 8,800,000
Nations Bank Corp. 5.39% 04/15/00 4,000,000 3,992,447
Norwest Financial, Inc.*** 7.11% 04/01/00 500,000 501,148
Osco Industries, Inc.*** 6.80%* 01/06/00 2,400,000 2,400,000
<PAGE>
COUPON/YIELD MATURITY FACE AMOUNT AMORTIZED COST
--------------------- ----------- --------------
O.K.I. Supply Co.*** 6.50%* 01/06/00 2,090,000 2,090,000
Presrite Corp.*** 6.80%* 01/06/00 1,530,000 1,530,000
Pro Tire, Inc.*** 6.50%* 01/06/00 1,175,000 1,175,000
RSD Technology*** 6.80%* 01/06/00 5,590,000 5,590,000
R.I. Lampus Co.*** 6.80%* 01/06/00 1,945,000 1,945,000
SBC Communications, Inc. 4.65% 05/01/00 7,730,000 7,692,448
Seariver Maritime, Inc. 5.80%* 02/01/00 6,000,000 6,000,000
SGS Tool Company*** 6.80%* 01/06/00 1,560,000 1,560,000
Firstar Corp.*** 6.74%* 05/01/00 4,000,000 4,007,790
Surgery Financing Co.*** 6.80%* 01/06/00 3,360,000 3,360,000
Surgery Financing Co.*** 6.80%* 01/06/00 3,000,000 3,000,000
TCI Communications, Inc. 7.37% 02/15/00 2,000,000 2,001,962
Wachovia Bank, N.A.*** 4.90% 01/10/00 2,000,000 1,999,660
White Castle Project*** 6.80%* 01/06/00 8,500,000 8,500,000
TOTAL CORPORATE OBLIGATIONS
(Cost $277,590,844 ) 277,590,844
U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.2%
Federal Home Loan Bank 5.06% 06/09/00 25,000,000 25,000,000
Student Loan Martketing Assoc. 6.20% 03/09/00 10,000,000 9,999,801
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $34,999,801 ) 34,999,801
U.S. TREASURY OBLIGATIONS - 0.0%
** U.S. Treasury Bill 4.30% 01/06/00 63,100 63,063
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $63,063 ) 63,063
REPURCHASE AGREEMENTS - 15.3%
Banc of America Securities LLC, 4.60%,
01/03/00, (Collateralized by $59,916,222
various commercial papers, 5.50%,
03/14/00 - 03/24/00, market
value - $59,226,866) 4.60% 01/03/00 58,065,000 58,065,000
Salomon Smith Barney, Inc., 4.56%,
01/03/00, (Collateralized by $113,099,000
various commercial papers, 5.50% - 6.52%,
02/03/00 - 03/30/00, market value - $112,200,339) 4.56% 01/03/00 110,000,000 110,000,000
TOTAL REPURCHASE AGREEMENTS
(Cost $168,065,000 ) 168,065,000
TOTAL INVESTMENTS - 100.0%
(Cost$1,100,192,735) (a) $1,100,192,735
TRUSTEE DEFERRED COMPENSATION***** SHARES VALUE
Flex-funds Highlands Growth Fund 616 13,345
Flex-funds Muirfield Fund 1,141 7,252
Flex-funds Total Return Utilities Fund 287 5,818
Flex-Partners International Equity Fund 479 6,917
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $33,332 ) $33,332
<FN>
(a) Cost for federal income tax and financial reporting purposes are the
same.
ESOP: Employee Stock Option Plan
LLC: Limited Liability Company
* Variable rate security. Interest rate is as of December 31, 1999.
Maturity date reflects the next rate change date.
** Pledged as collateral on Letter of Credit.
*** Security is restricted as to resale to institutional investors, but
has been deemed liquid in accordance with guidelines approved by the
Board of Trustees.
**** Illiquid security. The sale or disposition of such security 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.
Currently, only 1.8% of the Funds's total investments constitute an
illiquid 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 AND LIABILITIES
DECEMBER 31, 1999
MONEY MARKET FUND
Assets:
Investment in corresponding portfolio $231,998,650
at value
Receivable from investment adviser 10,717
Other assets 82,080
Total Assets 232,091,447
Liabilities:
Dividends payable 4,953
Accrued 12b-1 distribution fees 46,307
Accrued transfer agent and administrative fees 12,968
Other accrued liabilities 3,986
Total Liabilities 68,214
Net Assets 232,023,233
Net Assets:
Capital 232,023,233
Net Assets $232,023,233
Capital Stock Outstanding 232,023,233
(indefinite number of shares authorized,
$0.10 par value)
Net Asset Value, Offering and
Redemption Price Per Share $1.00
See accompanying notes to financial statements
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
MONEY MARKET FUND
Net Investment Income from Corresponding
Portfolio:
Interest $11,431,569
Expenses net of waivers and/or (395,142)
reimbursements
Total Net Investment Income from 11,036,427
Corresponding Portfolio
Fund Expenses:
Administrative fee 108,060
Transfer agent fees 128,480
Audit fees 3,547
Legal fees 1,422
Printing 38,262
Distribution plan 172,895
Postage 25,425
Registration and filing fees 39,235
Insurance 1,762
Other expenses 3,706
Total Expenses 522,794
Expenses reimbursed by investment adviser (40,270)
Net Expenses 482,524
NET INVESTMENT INCOME (LOSS) 10,553,903
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $10,553,903
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
Year Ended Year Ended
12/31/99 12/31/98
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $10,553,903 $8,867,836
Net increase in net assets
resulting from operations 10,553,903 8,867,836
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income (10,553,903) (8,867,836)
Net decrease in net assets resulting
from dividends and distributions (10,553,903) (8,867,836)
CAPITAL TRANSACTIONS:
Issued 621,768,406 478,112,579
Reinvested 10,405,355 8,641,621
Redeemed (554,405,825) (501,833,777)
Net increase in net assets resulting
from capital share transactions 77,767,936 (15,079,577)
TOTAL INCREASE IN NET ASSETS 77,767,936 (15,079,577)
NET ASSETS - Beginning of period 154,255,297 169,334,874
NET ASSETS - End of period $232,023,233 $154,255,297
SHARE TRANSACTIONS:
Issued 621,768,406 478,112,579
Reinvested 10,405,355 8,641,621
Redeemed (554,405,825) (501,833,777)
Change in shares 77,767,936 (15,079,577)
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
MONEY MARKET FUND
Years Ended December 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations
Net Investment Income 0.049 0.052 0.053 0.05 0.06
Total From Investment Operations 0.049 0.052 0.053 0.05 0.06
Less Distributions
Dividends (from net investment income) (0.049) (0.052) (0.053) (0.05) (0.06)
Total Distributions (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
Total Return 4.96% 5.31% 5.38% 5.27% 5.85%
Ratios/Supplemental Data
Net Assets, End of Period ($000) $232,023 $154,255 $169,335 $119,947 $141,087
Ratio of Expenses to Average Net Assets 0.41% 0.40% 0.40% 0.40% 0.40%
Ratio of Net Investment Income to
Average Net Assets 4.88% 5.19% 5.26% 5.15% 5.70%
Ratio of Expenses to Average Net Assets,
before waiver of fees(1) 0.54% 0.59% 0.59% 0.58% 0.64%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(1) 4.75% 5.00% 5.07% 4.97% 5.46%
<FN>
(1) Ratio includes fees waived in corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
THE MONEY MARKET FUND ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered under
the Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Trust offers five separate series,
and it is presently comprised of five separate funds including The Money Market
Fund (the "Fund"). The Fund invests all of its investable assets in a
corresponding open-end management investment company (the "Portfolio") having
the same investment objective as the Fund. The Fund, the Portfolio into which
the Fund invests and the percentage of each Portfolio owned by the Fund is as
follows:
PERCENTAGE OF PORTFOLIO
OWNED BY FUND AS OF
FUND PORTFOLIO DECEMBER 31, 1999
- ---- --------- -----------------
The Money Market Fund Money Market Portfolio 21%
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
The Fund values its investment in the corresponding Portfolio at fair value.
Valuation of securities held by the Portfolio is further described at Note 2 of
the Portfolios' Notes to Financial Statements which are included elsewhere in
this report.
INCOME TAXES
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income and net capital gains
to its shareholders. Therefore, no Federal income tax provision is required.
DISTRIBUTIONS TO SHAREHOLDERS
The Fund declares dividends from net investment income on a daily basis and pays
such dividends on a monthly basis. The Fund distributes net capital gains, if
any, on an annual basis.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. Permanent book and tax basis
differences have been reclassified among the components of net assets.
Investment Income & Expenses
The Fund records daily its proportionate share of the Portfolio's income,
expenses, and realized and unrealized gains and losses. In addition, the Fund
accrues its own expenses. Expenses incurred by the Trust that do not
specifically relate to an individual Fund of the Trust are allocated to the
Funds based on each Fund's relative net assets or other appropriate basis.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for the Fund.
In compensation for such services, the Fund pays MFSCo an annual fee equal to
the greater of $20 per active shareholder account or 0.06% of the Fund's average
daily net assets. MFSCo is entitled to receive an annual minimum fee of $4,000
from the Fund.
MFSCo provides the Trust with certain administrative services. In compensation
for such services, the Fund pays MFSCo an annual fee equal to 0.05% of the
Fund's average daily net assets.
<PAGE>
RMA has voluntarily agreed to reimburse the Fund for the amount by which annual
expenses of the Fund including expenses allocated from its respective Portfolio
(excluding interest, taxes, brokerage fees, and extraordinary expenses) exceed
0.41% of average daily net assets of the Fund on an annual basis. Prior to April
28, 1999, the Fund's annual expense limitation had been 0.40% of average daily
net assets. Such reimbursement is limited to the total of fees charged the Fund
by RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted a Distribution Plan (the
"Plan"). Under the provisions of the Plan, the Fund may incur certain expenses
associated with the distribution of fund shares in amounts not to exceed 0.20%
of the average daily net assets of the Fund on an annual basis.
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of
The Flex-funds:
We have audited the accompanying statements of assets and liabilities of The
Flex-funds - The Money Market Fund (Fund) as of December 31, 1999, and the
related statement of operations, statement of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Flex-funds - The Money Market Fund at December 31, 1999, the results of its
operations, the changes in its net assets and the financial highlights for each
of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG LLP
Columbus, Ohio
February 11, 2000
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
MONEY
MARKET
PORTFOLIO
Assets:
Investments, at market value* $932,127,735
Repurchase agreements, at cost* 168,065,000
Trustee deferred compensation investments, 33,332
at market value
Cash 5
contracts
Receivable from corresponding Fund 1,812,035
Interest and dividend receivable 4,430,043
Prepaid/Other assets 53,454
Total Assets 1,106,521,604
Liabilities:
Payable for securities purchased 2,106,643
Payable for Trustee Deferred Compensation Plan 33,332
Payable to investment adviser 147,543
Accrued audit fees 12,014
Accrued custodian fees 11,291
Accrued fund accounting fees 13,011
Other accrued liabilities 1,168
Total Liabilities 2,325,002
Net Assets 1,104,196,602
Net Assets:
Capital 1,104,196,602
Net Assets 1,104,196,602
*Securities at cost 1,100,192,735
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
MONEY
MARKET
PORTFOLIO
NET INVESTMENT INCOME
Interest $62,084,195
Total Investment Income 62,084,195
Expenses:
Investment advisory fees 3,103,028
Accounting fees 155,121
Trustees fees and expenses 29,340
Audit fees 12,036
Custodian fees 78,426
Other expenses 7,474
Legal fees 958
Insurance 101,408
Total Expenses 3,487,791
Investment advisory fees waived (1,331,007)
Total Net Expenses 2,156,784
NET INVESTMENT INCOME 59,927,411
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $59,927,411
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
MONEY MARKET PORTFOLIO
Year Ended Year Ended
12/31/99 12/31/99
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $59,927,411 $40,566,858
Net increase in net assets
resulting from operations 59,927,411 40,566,858
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 6,273,721,231 3,894,846,315
Withdrawals (6,027,721,363) (3,724,162,497)
Net increase in net assets resulting from
transactions of investors' beneficial interests 245,999,868 170,683,818
TOTAL INCREASE IN NET ASSETS 305,927,279 211,250,676
NET ASSETS - Beginning of period 798,269,323 587,018,647
NET ASSETS - End of period $1,104,196,602 $798,269,323
See accompanying notes to financial statements
FINANCIAL HIGHLIGHTS
<TABLE>
MONEY MARKET PORTFOLIO
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $1,104,197 $798,269 $587,019 $352,930 $256,126
Ratio of Expenses to Average Net Assets 0.18% 0.18% 0.18% 0.19% 0.21%
Ratio of Net Investment Income to
Average Net Assets 5.07% 5.39% 5.47% 5.34% 5.87%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.30% 0.30% 0.31% 0.33% 0.37%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 4.95% 5.27% 5.34% 5.20% 5.70%
</TABLE>
See accompanying notes to financial statements
<PAGE>
THW MONEY MARKET FUND ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION
The Money Market Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The Portfolio is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a no-load, open-end
management investment company which was organized as a trust under the laws of
the State of New York. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio.
The investment objective of the Money Market Portfolio is to seek current income
and stable net asset values through investment in a portfolio of money market
instruments. The financial statements of the 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
Money market securities held in the Portfolio are valued at amortized cost,
which approximates market value.
REPURCHASE AGREEMENTS
The Portfolio may engage in repurchase agreement transactions whereby the
Portfolio takes possession of an underlying debt instrument subject to an
obligation of the seller to repurchase the instrument from the Portfolio and an
obligation of the Portfolio to resell the instrument at an agreed upon price and
term. At all times, the Portfolio maintains the value of collateral, including
accrued interest, at least 100% of the amount of the repurchase agreement, plus
accrued interest. If the seller defaults or the fair value of the collateral
declines, realization of the collateral by the Portfolio may be delayed or
limited.
DEFERRED TRUSTEE COMPENSATION
Under a Deferred Compensation Plan (the "Plan") non-interested Trustees may
elect to defer receipt of a portion of their annual compensation. Under the
Plan, deferred amounts are invested in the shares of the Flex-funds and
Flex-Partners Funds. Deferred amounts remain in the Portfolios until distributed
in accordance with the Plan.
LETTER OF CREDIT
The Portfolio has pledged as collateral a U.S. Government security, cash or
other high-grade debt security solely for the benefit of ICI Mutual Insurance
Co. for the Portfolio's fidelity bond coverage.
INCOME TAXES
The Portfolio will be treated as a partnership for Federal income tax purposes.
As such, each investor in the Portfolio will be subject to taxation on its share
of the Portfolio's ordinary income and capital gains. It is the Portfolio's
policy to comply with the requirements of the Internal Revenue Code applicable
to it. Therefore, no Federal income tax provision is required.
SECURITIES TRANSACTIONS
The Portfolio records security transactions on the trade date. Interest income
(including amortization of premium and accretion of discount) is recognized as
earned.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services. For such services the Portfolio pays monthly
a fee at the following annual rates: 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the year ended December 31, 1999, RMA voluntarily waived a portion of its
investment advisory fees in the Portfolio.
<PAGE>
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for the Portfolio. In compensation for such services
the Portfolio pays MFSCo an annual fee equal to the greater of:
a. 0.15% of the first $10 million of average daily net assets, 0.10% of the
next $20 million of average daily net assets, 0.02% of the next $50 million
of average daily net assets, and 0.01% in excess of $80 million of average
daily net assets,
or
b. $30,000.
Certain officers and trustees of the Portfolio are also officers or directors of
MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
As of December 31, 1999, the aggregate cost basis of investments for Federal
income tax purposes was $1,100,192,735.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees of
The Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio (Portfolio), including the portfolio of investments, as
of December 31, 1999, and the related statement of operations, statements of
changes in net assets and the financial highlights for each of the periods
indicated herein. These financial statements and the financial highlights are
the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1999, by confirmation with the custodian and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Market Portfolio at December 31, 1999, the results of its operations, the
changes in its net assets and the financial highlights for each of the periods
indicated herein, in conformity with generally accepted accounting principles.
KPMG LLP
Columbus, Ohio
February 11, 2000
<PAGE>
THE FLEX-FUNDS
P.O. Box 7177, Dublin, OH 43017
(800)325-FLEX www.flexfunds.com
[email protected]
