As filed with the Securities and Exchange Commission on April 29, 1998.
File No. 811-6649
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 7
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
MONEY MARKET PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
P.O. Box 7177, 6000 Memorial Drive
Dublin, Ohio 43017
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 614-766-7000
Donald F. Meeder, P.O. Box 7177, 6000 Memorial Drive, Dublin, OH 43017
(Name and Address of Agent for Service)
Copy to:
James B. Craver
P. O. Box 811
Dover, MA 02030-0811
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EXPLANATORY NOTE
This Amendment to the Registration Statement of Money Market Portfolio has
been filed by the Registrant pursuant to Section 8(b) of the Investment Company
Act of 1940, as amended (the "1940 Act"). However, beneficial interests in the
Registrant are not being registered under the Securities Act of 1933, as amended
(the "1933 Act"), since such interests will be offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interests in the Registrant.
<PAGE>
FX0017
PART A
Responses to Items 1 through 3 have been omitted pursuant to paragraph 4 of
Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT.
Money Market Portfolio (the "Portfolio") is a diversified, open-end
management investment company which was organized as a trust under the laws of
the State of New York on November 1, 1991.
Beneficial interests in the Portfolio are offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
The Portfolio's investment adviser is R. Meeder & Associates, Inc. (the
"Adviser"). The investment objective of the Portfolio is current income and
stable asset values through investment in money market instruments. The
Portfolio will seek to maintain a constant net asset value of $1 per share,
although there is no assurance it will be able to do so. The Portfolio will seek
to achieve its objective by investing in a portfolio of high-quality money
market instruments which mature in 397 days or less. Further, the Portfolio will
seek to minimize changes in the value of its assets due to market factors by
maintaining a dollar-weighted average portfolio maturity of 90 days or less.
The Portfolio will value its securities by the amortized cost method, and
will normally include any accrued discount or premium in its daily dividend and
thereby keep constant the value of its assets and its net asset value per share.
This method does not take into account unrealized capital gains or losses.
Further, the Portfolio may change its average portfolio maturity or level
of quality to protect its net asset value when it is perceived that changes in
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the liquidity of major financial institutions may adversely affect the money
markets. Consequently, for temporary defensive purposes the Portfolio may
shorten the average maturity of its investments and/or invest only in the
highest quality debt instruments, including, for example, U.S. Government or
Agency obligations.
The portfolio will invest exclusively in money market instruments which are
deemed eligible securities pursuant to rules under the Investment Company Act of
1940, as amended (the "1940 Act"), applying to money market funds. No more than
5% of the Portfolio's total assets may be invested in securities issued by a
single issuer. At least 95% of the Portfolio's assets will be invested in
securities defined by the rules as "first-tier" securities. First-tier
securities must have two quality ratings which are in the highest rating
category, or one if rated by only one organization. Second-tier securities must
have ratings in the highest two rating categories and will be limited to a
maximum of five percent of assets with each position limited to $1,000,000 or 1%
of assets. The Portfolio also intends to comply with all other quality and
credit quality monitoring criteria applying to money market funds.
ITEM 5. MANAGEMENT OF THE PORTFOLIO.
The Portfolio's Board of Trustees provides broad supervision over the
affairs of the Portfolio. The address of the Adviser is P.O. Box 7177, 6000
Memorial Drive, Dublin, Ohio 43017. A majority of the Portfolio's Trustees are
not affiliated with the Adviser. Star Bank, N.A., Cincinnati ("Star Bank") is
the Portfolio's custodian and Mutual Funds Service Co. ("MFSCo") is the
Portfolio's transfer agent and dividend paying agent. The address of the
custodian is Star Bank Center, 425 Walnut Street, Cincinnati, Ohio 45202 and the
address of MFSCo is 6000 Memorial Drive, Dublin, Ohio 43017.
The Portfolio has not retained the services of a principal underwriter or
distributor, as interests in the Portfolio are offered solely in private
placement transactions.
The Adviser has been an adviser to individuals and retirement plans since
1974 and has served as investment adviser to registered investment companies
since 1982. The Adviser serves the Portfolio pursuant to an Investment Advisory
Agreement under the terms of which it has agreed to provide an investment
program within the limitations of the Portfolio's investment policies and
restrictions, and to furnish all executive, administrative, and clerical
services required for the transaction of Portfolio business, other than
accounting services and services which are provided by the Portfolio's
custodian, transfer agent, independent accountants and legal counsel.
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The Adviser was incorporated in Ohio in 1974 and maintains its principal
offices at 6000 Memorial Drive, Dublin, Ohio 43017. The Adviser is a
wholly-owned subsidiary of Muirfield Investors, Inc. ("MII"). MII is controlled
by Robert S. Meeder, Sr. through the ownership of voting common stock. MII
conducts business only through its subsidiaries which are the Adviser; MFSCo;
Adviser Dealer Services, Inc., a registered broker-dealer; Opportunities
Management Co., a venture capital investor; Meeder Advisory Services, Inc., a
registered investment adviser; and OMCO, Inc., a registered commodity trading
adviser and commodity pool operator.
The Adviser's officers and directors, their principal offices, are as
follows: Robert S. Meeder, Sr., Chairman and Sole Director; Robert S. Meeder,
Jr., President and Treasurer; Philip A. Voelker, Senior Vice President and Chief
Investment Officer; Donald F. Meeder, Vice President and Secretary; Sherrie L.
Acock, Vice President; Robert D. Baker, Vice President; and Wesley F. Hoag, Vice
President and General Counsel.
Philip A. Voelker is the portfolio manager primarily responsible for the
day-to-day management of the Portfolio. Mr. Voelker is a Trustee and Vice
President of the Portfolio, Vice President and Trustee of The Flex-funds and The
Flex-Partners and Senior Vice President and Chief Investment Officer of the
Adviser. Mr. Voelker has been associated with the Adviser since 1975 and has
managed the Portfolio since 1985.
The Adviser earns an annual fee, payable in monthly installments, at the
rate of 0.40% of the first $100 million and 0.25% in excess of $100 million of
the Portfolio's average net assets.
Accounting, transfer agency and dividend disbursing services are provided
to the Portfolio by MFSCo, a wholly-owned subsidiary of MII. MFSCo receives from
the Portfolio a minimum annual fee for accounting services of $30,000. Subject
to this minimum fee, the Portfolio's annual fee, payable monthly, is computed at
the rate of 0.15% of the first $10 million, 0.10% of the next $20 million, 0.02%
of the next $50 million and 0.01% in excess of $80 million of the Portfolio's
average net assets. For the year ended December 31, 1997 total payments from the
Portfolio to Mutual Funds Service Co. amounted to $88,713.
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TRANSFER AGENT AND CUSTODIAN
The Portfolio has entered into an Administration and Accounting Services
Agreement with MFSCo pursuant to which MFSCo acts as transfer agent for the
Portfolio, maintains an account for each investor in the Portfolio, performs
other transfer agency functions, and acts as dividend disbursing agent for the
Portfolio. Pursuant to a Custody Agreement, Star Bank acts as the custodian of
the Portfolio's assets. See Part B for more detailed information concerning
custodial arrangements.
EXPENSES
The expenses of the Portfolio include the compensation of its Trustees who
are not affiliated with the Adviser; governmental fees; interest charges; taxes;
fees and expenses of independent auditors, of legal counsel and of any transfer
agent, custodian, registrar or dividend disbursing agent of the Portfolio;
insurance premiums; expenses of calculating the net asset value of, and the net
income on, the Portfolio; all fees under its Administration and Accounting
Services and Subadministrative Services Agreements; the expenses connected with
the execution, recording and settlement of security transactions; fees and
expenses of the Portfolio's custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of preparing and mailing reports to investors and to
governmental officers and commissions; expenses of meetings of investors and
Trustees; and the advisory fees payable to the Adviser under the Investment
Advisory Agreement.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value. Investors in the
Portfolio (E.G., investment companies, insurance company separate accounts and
common and commingled trust funds) will each be liable for all obligations of
the Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations.
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The net income of the Portfolio is determined each day on which the New
York Stock Exchange is open for trading (and on such other days as are deemed
necessary in order to comply with Rule 22c-1 under the 1940 Act) ("Fund Business
Day"). This determination is made once during each such day. All the net income
of the Portfolio, as defined below, so determined is allocated PRO RATA among
the investors in the Portfolio at the time of such determination.
For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) shall consist of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market discount) on
discount paper accrued ratably to the date of maturity and any net realized
gains or losses on the assets of the Portfolio.
Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and nonassessable, except as set forth below. The Portfolio is
not required to hold annual meetings of investors but the Portfolio will hold
special meetings of investors when in the judgment of the Trustees it is
necessary or desirable to submit matters for an investor vote. Investors have
the right to communicate with other investors to the extent provided in Section
16(c) of the 1940 Act in connection with requesting a meeting of investors for
the purpose of removing one or more Trustees, which removal requires a
two-thirds vote of the Portfolio's beneficial interests. Investors also have
under certain circumstances the right to remove one or more Trustees without a
meeting. Upon liquidation or dissolution of the Portfolio, investors would be
entitled to share PRO RATA in the net assets of the Portfolio available for
distribution to investors.
Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any income tax. However, each investor in the Portfolio
will be taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's taxable income, gain, loss,
deductions and credits in determining its income tax liability. The
determination of such share will be made in accordance with the Internal Revenue
Code of 1986, as amended, and regulations promulgated thereunder.
The Portfolio's assets, income and distributions are managed in such a way
that an investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended, assuming that the
investor invested all of its investable assets in the Portfolio.
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Investor inquiries may be directed to the Portfolio at 6000 Memorial Drive,
Dublin, Ohio 43017.
ITEM 7. PURCHASE OF SECURITIES.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
An investment in the Portfolio may be made without a sales load at the net
asset value next determined after an order is received in "good order" by the
Portfolio. The net asset value of the Portfolio is determined on each Fund
Business Day. Securities are valued at amortized cost, which the Trustees of the
Portfolio have determined in good faith constitutes fair value for the purposes
of complying with the 1940 Act. This valuation method will continue to be used
until such time as the Trustees of the Portfolio determine that it does not
constitute fair value for such purposes.
There is no minimum initial or subsequent investment in the Portfolio.
However, since the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the yield on its assets, investments
must be made in federal funds (I.E., monies credited to the account of the
Portfolio's custodian bank by a Federal Reserve Bank).
The Portfolio reserves the right to cease accepting investments at any time
or to reject any investment order.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Fund Business Day. As of 4:00 p.m., New York time, on each
such day, the value of each investor's beneficial interest in the Portfolio will
be determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
reductions, which are to be effected as of 4:00 p.m., New York time, on such
day, will then be effected. The investor's percentage of the aggregate
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beneficial interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of 4:00 p.m., New York time, on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio effected as of 4:00 p.m., New York time,
on such day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of 4:00 p.m., New York time, on such day, plus or minus, as
the case may be, the amount of net additions to or reductions in the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of 4:00 p.m., New York time, on the following Fund
Business Day.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in the Portfolio may reduce any portion or all of its
investment at any time at the net asset value next determined after a request in
"good order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the
business day the reduction is effected, but in any event within seven days.
Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any reduction
may be suspended or the payment of the proceeds therefrom postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on such Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
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FX0017
PART B
ITEM 10. COVER PAGE.
Not applicable.
ITEM 11. TABLE OF CONTENTS.
Page
General Information and History . . . . . . . . . . . . . B-1
Investment Objective and Policies . . . . . . . . . . . . B-1
Management of the Portfolio. . . . . . . . . . . . . . . . B-6
Control Persons and Principal Holders of Securities. . . . B-10
Investment Advisory and Other Services . . . . . . . . . . B-11
Brokerage Allocation and Other Practices . . . . . . . . . B-12
Capital Stock and Other Securities . . . . . . . . . . . . B-13
Purchase, Redemption and Pricing of Securities . . . . . . B-15
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . B-16
Underwriters . . . . . . . . . . . . . . . . . . . . . . . B-16
Calculation of Performance Data . . . . . . . . . . . . . B-17
Financial Statements . . . . . . . . . . . . . . . . . . . B-17
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVE AND POLICIES.
Part A contains additional information about the investment objective and
policies of the Money Market Portfolio (the "Portfolio"). This Part B should
only be read in conjunction with Part A.
The investment policies set forth below represent the Portfolio's policies
as of the date of this Registration Statement. The investment policies are not
fundamental and may be changed by the Trustees of the Portfolio without investor
approval.
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MONEY MARKET INSTRUMENTS
When investing in money market instruments, the Portfolio will limit its
purchases, denominated in U.S. dollars, to the following securities:
o U.S. Government Securities and Securities of its Agencies and
Instrumentalities-obligations issued or guaranteed as to principal or
interest by the United States or its agencies (such as the Export
Import Bank of the United States, Federal Housing Administration and
Government National Mortgage Association) or its instrumentalities
(such as the Federal Home Loan Bank, Federal Intermediate Credit Banks
and Federal Land Bank), including Treasury bills, notes and bonds.
o Bank Obligations and Instruments Secured Thereby-obligations
(including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of $1,000,000,000
or more, instruments secured by such obligations and obligations of
foreign branches of such banks, if the domestic parent bank is
unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may
also invest in obligations (including certificates of deposit and
bankers' acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more, if the domestic branch is subject to
the same regulation as United States banks. The Portfolio will not
invest at time of purchase more than 25% of its assets in obligations
of banks, nor will the Portfolio invest more than 10% of its assets in
time deposits.
o High Quality Commercial Paper-the Portfolio, which is subject to
specific quality criteria and diversification requirements, may invest
in commercial paper rated in either one of the two highest categories
by at least two nationally recognized rating services, or, if not
rated, guaranteed by a company having commercial paper rated in either
one of the two highest categories by at least two nationally
recognized rating services.
o Private Placement Commercial Paper-private placement commercial paper
("Rule 144A securities") consists of unregistered securities which are
traded in public markets to qualified institutional investors, such as
the Portfolio. The Portfolio's risk is that the universe of potential
buyers for the securities, should the Portfolio desire to liquidate a
position, is limited to qualified dealers and institutions, and
therefore such securities could have the effect of being illiquid. A
position in such Rule 144A securities would ordinarily be subject to a
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10% limitation. The Board of Trustees of the Portfolio has identified
the market for, and the categories of qualified buyers of, Rule 144A
securities and has determined that it is sufficient to consider such
securities to be liquid and not subject to the 10% illiquid asset
limitation. The Trustees have determined that the Portfolio may invest
up to 35% of its assets, at cost on the date of purchase, in private
placement commercial paper.
o Repurchase Agreements Pertaining to the Above-the Portfolio may invest
without limit in any of the above securities subject to repurchase
agreements with any Federal Reserve reporting dealer or member bank of
the Federal Reserve System. A repurchase agreement is an instrument
under which the purchaser (i.e., the Portfolio) acquires ownership of
a debt security and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the purchaser's holding period.
This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities could be
any of those described above, some of which might bear maturities
exceeding one year. The Portfolio's risk is that the seller may fail
to repurchase the security on the delivery date. If the seller
defaults, the underlying security constitutes collateral for the
seller's obligation to pay. It is a policy of the Portfolio to make
settlement on repurchase agreements only upon proper delivery of the
underlying collateral. Repurchase agreements usually are for short
periods, such as one week or less, but could be longer. The Portfolio
may enter into repurchase agreements with its custodian (Star Bank,
N.A., Cincinnati) when it is advantageous to do so. The Portfolio will
not invest more than 10% of its assets, at time of purchase, in
repurchase agreements which mature in excess of seven days.
RATINGS
1. A-1 and P-1 Commercial Paper Ratings:
Commercial paper rated A-1 by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1, A-2, or
A-3.
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The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
2. Description of Permitted Money Market Instruments:
Commercial Paper-refers to promissory notes issued by corporations in order
to finance their short term credit needs.
U.S. Government Obligations-are bills, certificates of indebtedness, notes
and bonds issued by the U.S. Treasury and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, authority or
instrumentality; as for example, Federal Home loan Mortgage and Federal Home
Loan Bank.
Repurchase Agreements-a repurchase transaction occurs when an investor buys
a security and simultaneously agrees to resell it at a later date to the person
from whom it was bought, at a higher price. The price differential represents
interest for the period the security is held. Repurchase transactions will
normally be entered into with banks and securities brokers. The Portfolio could
suffer a loss if the bank or securities broker with which the Portfolio had a
repurchase agreement were to default.
Certificates of Deposit-are certificates issued against funds deposited in
a bank, are for a definite period of time, earn a specified or variable rate of
return and are normally negotiable.
Banker's Acceptances-are short-term credit instruments used to finance the
import, export, transfer or storage of goods. They are termed "accepted" when a
bank guarantees their payment at maturity.
Corporation Obligations-include bonds and notes issued by corporations in
order to finance longer term credit needs.
<PAGE>
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Portfolio as
fundamental policies. Under the 1940 Act, a "fundamental" policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Portfolio, which is defined in the 1940 Act with respect to the Portfolio as
the lesser of (a) 67 percent or more of the Portfolio's beneficial interests
represented at a meeting of investors if the holders of more than 50 percent of
the outstanding beneficial interests are present or represented by proxy, or (b)
more than 50 percent of the outstanding beneficial interests ("Majority Vote").
The percentage limitations contained in the restrictions listed below apply at
the time of the purchase of the securities.
The Portfolio may not: (a) Issue senior securities; (b) Borrow money except
as a temporary measure, and then only in an amount not to exceed 5% of the value
of its net assets (whichever is less) taken at the time the loan is made, or
pledge its assets taken at value to any extent greater than 15% of its gross
assets taken at cost; (c) Act as underwriter of securities of other issuers; (d)
Invest in real estate except for office purposes; (e) Purchase or sell
commodities or commodity contracts, except that it may purchase or sell
financial futures contracts involving U.S. Treasury securities, corporate
securities, or financial indexes; (f) Lend its funds or other assets to any
other person; however, the purchase of a portion of publicly distributed bonds,
debentures or other debt instruments, the purchase of certificates of deposit,
U.S. Treasury debt securities, and the making of repurchase agreements are
permitted, provided repurchase agreements with fixed maturities in excess of
seven days do not exceed 10% of its total assets; (g) Purchase more than 10% of
any class of securities, including voting securities of any issuer, except that
the purchase of U.S. Treasury debt instruments shall not be subject to this
limitation; (h) Invest more than 5% of its total assets (taken at value) in the
securities of any one issuer, other than obligations of the U.S. Treasury; (i)
Purchase securities on margin, or participate in any joint or joint and several
trading account; (j) Make any so-called "short" sales of securities, except
against an identical portfolio position (I.E., a "short sale against the box");
(k) Invest 25% or more of its total assets at time of purchase (taken at
value) in the securities of companies in any one industry; (l) Purchase the
securities of another investment company except where such purchase is part of a
plan of merger or consolidation; (m) Purchase or retain any securities of an
issuer, any of whose officers, directors or security holders is an officer or
director of the Portfolio, if such officer or director owns beneficially more
than 1/2 of 1% of the issuer's securities or together they own beneficially more
than 5% of such securities; (n) Invest in securities of companies which have a
<PAGE>
record of less than three years' continuous operation, if at the time of such
purchase, more than 5% of its assets (taken at value) would be so invested; (o)
Purchase participations or other direct interests in oil, gas or other mineral
exploration or development programs; (p) Invest in warrants; and (q) Invest more
than 10% of its assets in restricted securities and securities for which market
quotations are not readily available and repurchase agreements which mature in
excess of seven days; however, this shall not prohibit the purchase of money
market instruments or other securities which are not precluded by other
particular restrictions.
In order to comply with certain state investment restrictions, the
Portfolio's operating policy is not to: (a) Notwithstanding (b) above, pledge
assets having a value in excess of 10% of its gross assets; (b) Invest in oil,
gas or mineral leases or programs; and (c) Purchase real estate limited
partnerships.
ITEM 14. MANAGEMENT OF THE PORTFOLIO.
The Trustees and officers of the Portfolio and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate those Trustees who are "interested
persons" (as defined in the 1940 Act) of the Portfolio. Unless otherwise
indicated, the address of each Trustee and officer is P.O. Box 7177, 6000
Memorial Drive, Dublin, Ohio 43017.
TRUSTEES AND OFFICERS
NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION
- --------------------- ------------- --------------------
ROBERT S. MEEDER, SR.*+, 69 Trustee/President Chairman, R. Meeder &
Associates, Inc., an
investment adviser.
MILTON S. BARTHOLOMEW, 69 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
the Portfolio's Audit
Committee.
ROGER D. BLACKWELL, 57 Trustee Professor of Marketing
Blackwell Associates, Inc. and Consumer Behavior, The
3380 Tremont Road Ohio State University;
Columbus, OH 43221 President of Blackwell
Associates, Inc., a
strategic consulting firm.
<PAGE>
JOHN M. EMERY, 77 Trustee Retired; formerly Vice
2390 McCoy Road President and Treasurer of
Columbus, OH 43220 Columbus & Southern Ohio
Electric Co.; member of
the Portfolio's Audit
Committee.
RICHARD A. FARR, 79 Trustee President of R&R Supply
3250 W. Henderson Road Co. and Farrair Concepts,
Columbus, OH 43220 Inc., two companies
involved in engineering,
consulting and sales of
heating and air
conditioning equipment.
WILLIAM L. GURNER*, 51 Trustee President, Sector Capital
Sector Capital Management, Inc. Management, an investment
5350 Poplar Avenue, Suite 490 adviser (since January
Memphis, TN 38119 1995); Manager of Trust
Investments of Federal
Express Corporation (1987-
1994).
RUSSEL G. MEANS, 72 Trustee Retired; formerly Chairman
5711 Barry Trace of Employee Benefit
Dublin, OH 43017 Management Corporation,
consultants and
administrators of self-
funded health and
retirement plans.
ROBERT S. MEEDER, JR.*+, 37 Trustee and President of R. Meeder &
Vice President Associates, Inc.
LOWELL G. MILLER*, 49 Trustee President, Miller/Howard
Miller/Howard Investments, Inc. Investments, Inc., an
141 Upper Byrdcliffe Road investment adviser whose
P. O. Box 549 clients include the
Woodstock, NY 12498 Portfolio and the
Utilities Stock Portfolio.
<PAGE>
WALTER L. OGLE, 59 Trustee Executive Vice President
400 Interstate North Parkway, of Aon Consulting, an
Suite 1630 employee benefits
Atlanta, GA 30339 consulting group.
CHARLES A. DONABEDIAN, 55 Trustee President, Winston
Winston Financial, Inc. Financial, Inc., which
200 TechneCenter Drive, Suite 200 provides a variety of
Milford, OH 45150 marketing and consulting
services to investment
companies; CEO, Winston
Advisors, Inc., an
investment advisor.
JAMES W. DIDION, 67 Trustee Retired; formerly
8781 Dunsinane Drive Executive Vice President
Dublin, OH 43017 of Core Source, Inc., an
employee benefit and
Workers' Compensation
administration and
consulting firm (1991-
1997).
PHILIP A. VOELKER*+, 44 Trustee and Senior Vice President and
Vice President Chief Investment Officer
of R. Meeder & Associates,
Inc.
JAMES B. CRAVER*, 54 Assistant Practicing Attorney;
42 Miller Hill Road Secretary Special Counsel to Flex-
Box 811 Partners, Flex-funds and
Dover, MA 02030 their Portfolios; Senior
Vice President of
Signature Financial Group,
Inc. (January 1991 to
August 1995).
DONALD F. MEEDER*+, 59 Secretary/ Vice President of R.
Treasurer Meeder & Associates, Inc.,
and President of Mutual
Funds Service Company.
<PAGE>
WESLEY F. HOAG*+, 41 Vice President Vice President and General
Counsel of R. Meeder &
Associates, Inc. (since
July 1993); Attorney,
Porter, Wright, Morris &
Arthur, a law firm
(October 1984 to June
1993).
* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, The Flex-Partners and each Portfolio.
+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.
Robert S. Meeder, Sr. is Donald F. Meeder's uncle and Robert S. Meeder,
Jr's. father.
The following table shows the compensation paid by the Portfolio and all
other mutual funds advised by the Adviser, including The Flex-funds, The
Flex-Partners and the corresponding portfolios of The Flex-Partners and The
Flex-funds (collectively, the "Fund Complex") as a whole to the Trustees of the
Portfolio during the fiscal year ended December 31, 1997.
COMPENSATION TABLE
Pension or Total
Retirement Compensation
Benefits Estimated from
Aggregate Accrued Benefits Registrant
Compensation as Part of Annual and Fund
from the Portfolio or Upon Complex Paid
TRUSTEE PORTFOLIO FUND EXPENSE RETIREMENT TO TRUSTEE
- ------- --------- ------------ ---------- ----------
Robert S. Meeder, Sr. None None None None
Milton S. Bartholomew $1,245 None None $11,633
John M. Emery $1,245 None None $11,633
Richard A. Farr $1,062 None None $10,633
William F. Gurner None None None None
Russel G. Means $ 562 None None $7,883
Lowell G. Miller None None None None
Robert S. Meeder, Jr. None None None None
Walter L. Ogle $ 895 None None $9,883
Philip A. Voelker None None None None
Roger A. Blackwell $ 895 None None $9,883
Charles A. Donabedian $ 562 None None $5,541
James W. Didion None None None None
<PAGE>
Neither the Portfolio nor any other member of the Fund Complex pays any
pension or retirement benefits to any Trustee or officer or maintains any plan
for such purpose; however, the Portfolio and other members of the Fund Complex
have accrued the payment of certain Trustee fees which have not yet been paid to
the Trustees.
Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per meeting for each of the five Portfolios. In addition, each such Trustee
earns an annual fee, payable quarterly, based on the average net assets in each
Portfolio based on the following schedule: Money Market Portfolio, 0.0005% of
the amount of average net assets between $500 million and $1 billion; 0.0025% of
the amount of average net assets exceeding $1 billion. For the other four
Portfolios, including the Portfolio, each Trustee is paid a fee of 0.00375% of
the amount of each Portfolio's average net assets exceeding $15 million. Messrs.
Bartholomew, Emery and Donabedian comprise the Audit Committee for The
Flex-funds and the Flex-Partners Trusts, and each corresponding Portfolio of The
Flex-funds and the Flex-Partners Trusts. Each member of the Audit Committee is
paid $500 for each meeting of the Audit Committee attended. Trustees fees for
the Money Market Portfolio totaled $6,100 for the year ended December 31, 1997
($4,010 in 1996). Audit Committee fees for the Portfolio totaled $367 for the
year ended December 31, 1997 ($160 in 1996). All other officers and Trustees
serve without compensation from the Portfolio.
The Declaration of Trust provides that the Portfolio will indemnify its
Trustees and officers as described below under Item 18.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of April 15, 1997, the Flex-funds The Money Market Fund and the
Flex-Partners The Institutional Fund (the "Funds") have an investment in the
Portfolio equaling approximately 22% and 78%, respectively of the Portfolio's
interests. No Trustee or officer of the Portfolio or any other person, except
the Funds, own in the aggregate more than a 1% interest in the Portfolio as of
the date of this Registration Statement.
<PAGE>
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
ADVISER
R. Meeder & Associates, Inc. (the "Adviser") is the investment adviser for
the Portfolio. The Adviser serves the Portfolio pursuant to an Investment
Advisory Agreement which has been approved by a vote of a majority of the
Trustees, including a majority of those Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Portfolio and which will remain in
force so long as renewal thereof is specifically approved at least annually by a
majority of the Trustees or by a majority vote of the investors in the Portfolio
(with the vote of each being in proportion to the amount of its investment)
("Majority Portfolio Vote"), and in either case by vote of a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) at a
meeting called for the purpose of voting on such renewal.
The Investment Advisory Agreement will terminate automatically if assigned
and may be terminated without penalty at any time upon 60 days' prior written
notice by Majority Portfolio Vote, by the Trustees of the Portfolio, or by the
Adviser.
The Adviser earns an annual fee, payable in monthly installments at the
rate of 0.40% of the first $100 million and 0.25% in excess of $100 million of
the Portfolio's average net assets. For the period year ended December 31, 1997
the Portfolio paid fees to the Adviser totaling $774,778 ($548,106 in 1996;
$299,240 in 1995).
TRANSFER AGENT
The Portfolio has entered into an Administration and Accounting Services
Agreement with Mutual Funds Service Co. ("MFSCo"), which acts as transfer agent
for the Portfolio. MFSCo maintains an account for each investor in the
Portfolio, performs other transfer agency functions and acts as dividend
disbursing agent for the Portfolio.
CUSTODIAN
Pursuant to a Custody Agreement, Star Bank, N.A., Cincinnati, acts as the
custodian of the Portfolio's assets (the "Custodian"). The Custodian's
responsibilities include safeguarding and controlling the Portfolio's cash and
securities, handling the receipt and delivery of securities, determining income
and collecting interest on the Portfolio's investments and maintaining books of
original entry for Portfolio accounting and other required books and accounts.
<PAGE>
Securities held by the Portfolio may be deposited into the Federal
Reserve-Treasury Department Book Entry System or the Depository Trust Company
and may be held by a subcustodian bank if such arrangements are reviewed and
approved by the Trustees of the Portfolio. The Custodian does not determine the
investment policies of the Portfolio or decide which securities the Portfolio
will buy or sell. The Portfolio may, however, invest in securities of the
Custodian and may deal with the Custodian as principal in securities
transactions. For its services, the Custodian will receive such compensation as
may from time to time be agreed upon by it and the Portfolio.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio 43215, serves
as the Portfolio's independent auditors. The auditors audit financial statements
for the Portfolio and provide other assurance, tax, and related services.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Portfolio's purchases and sales of securities usually are principal
transactions. Securities are normally purchased directly from the issuer or from
an underwriter or market maker for the securities. There usually are no
brokerage commissions paid for such purchases. The Portfolio does not anticipate
paying brokerage commissions. Any transaction for which the Portfolio pays a
brokerage commission will be effected at the best price and execution available.
Purchases from underwriters of securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers include the spread between the bid and asked price.
Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
in the best interest of the investors in the Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.
Investment decisions for the Portfolio will be made independently from
those for any other account or investment company that is or may in the future
become managed by the Adviser or its affiliates. If, however, the Portfolio and
other investment companies or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
<PAGE>
account. When purchases or sales of the same security for the Portfolio and for
other investment companies managed by the Adviser occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantages available to large denomination purchases or sales.
The Manager is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance in the
distribution of shares of the Funds or shares of other Flex-funds funds or
Flex-Partners funds to the extent permitted by law.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate PRO
RATA in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share PRO RATA in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees of the Portfolio if they
choose to do so and in such event the other investors in the Portfolio would not
be able to elect any Trustee. The Portfolio is not required to hold annual
meetings of investors but the Portfolio will hold special meetings of investors
when in the judgment of the Portfolio's Trustees it is necessary or desirable to
submit matters for an investor vote. No material amendment may be made to the
Portfolio's Declaration of Trust without the affirmative majority vote of
investors (with the vote of each being in proportion to the amount of their
investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to the amount of their
investment), except that if the Trustees of the Portfolio recommend such sale of
assets, the approval by vote of a majority of the investors (with the vote of
each being in proportion to the amount of their investment) will be sufficient.
<PAGE>
The Portfolio may also be terminated (i) upon liquidation and distribution of
its assets, if approved by the vote of two-thirds of its investors (with the
vote of each being in proportion to the amount of their investment), or (ii) by
the Trustees of the Portfolio by written notice to its investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.
The Declaration of Trust further provides that obligations of the Portfolio
are not binding upon the Trustees individually but only upon the property of the
Portfolio and that the Trustees will not be liable for any action or failure to
act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust provides that
the trustees and officers will be indemnified by the Portfolio against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Portfolio, unless, as to
liability to the Portfolio or its investors, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the
Portfolio. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
<PAGE>
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
The Portfolio determines its net asset value as of 4:00 p.m., New York
time, each Fund Business Day by dividing the value of the Portfolio's net assets
by the value of the investment of the investors in the Portfolio at the time the
determination is made. (Net asset value will not be determined on Good Friday or
any holiday observed by the Federal Reserve system. These presently include New
Year's Day, Martin Luther King Day, President's Day, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day.)
Purchases and reductions will be effected at the time of determination of net
asset value next following the receipt of any purchase or reduction order.
The securities held by the Portfolio are valued at their amortized cost.
Amortized cost valuation involves valuing an instrument at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. If fluctuating interest rates cause the market value of the securities
held by the Portfolio to deviate more than 1/2 of 1% from their value determined
on the basis of amortized cost, the Portfolio's Board of Trustees will consider
whether any action should be initiated, as described in the following paragraph.
Although the amortized cost method provides certainty in valuation, it may
result in periods during which the stated value of an instrument is higher or
lower than the price an investment company would receive if the instrument were
sold.
Pursuant to the rules of the Securities and Exchange Commission, the
Portfolio's Board of Trustees has established procedures to stabilize the value
of the Portfolio's net assets within 1/2 of 1% of the value determined on the
basis of amortized cost. These procedures include a review of the extent of any
such deviation of net asset value, based on available market rates. Should that
deviation exceed 1/2 of 1%, the Portfolio's Board of Trustees will consider
whether any action should be initiated to eliminate or reduce material dilution
<PAGE>
or other unfair results to the investors in the Portfolio. Such action may
include reduction in kind, selling its securities prior to maturity and
utilizing a net asset value as determined by using available market quotations.
The Portfolio will maintain a dollar-weighted average maturity of 90 days or
less, will not purchase any instrument with a remaining maturity greater than
397 days or subject to a repurchase agreement having a duration of greater than
397 days, will limit its investments, including repurchase agreements, to those
U.S. dollar-denominated instruments that the Portfolio's Board of Trustees has
determined present minimal credit risks and will comply with certain reporting
and recordkeeping procedures. The Portfolio has also established procedures to
ensure that securities purchased by it meet the high quality criteria.
ITEM 20. TAX STATUS.
The Portfolio is organized as a trust under New York law. Under the method
of operation of the Portfolio, the Portfolio is not subject to any income tax.
However, each investor in the Portfolio is taxable on its share (as determined
in accordance with the governing instruments of the Portfolio) of the
Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share is made in accordance with the
Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder.
The Portfolio's taxable year-end is December 31. Although, as described
above, the Portfolio is not subject to federal income tax, it files appropriate
federal income tax returns.
The Portfolio's assets, income and distributions are managed in such a way
that an investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended, assuming that the
investor invested all of its investable assets in the Portfolio.
ITEM 21. UNDERWRITERS.
The Portfolio has not retained the services of a principal underwriter or
distributor, as interests in the Portfolio are offered solely in private
placement transactions. Investment companies, insurance company separate
accounts, common and commingled trust funds and similar organizations and
entities may continuously invest in the Portfolio.
<PAGE>
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The following financial statements are intended to provide information only
with respect to the Money Market Portfolio. Persons interested in obtaining
information about any of the other Portfolios should contact the Investment
Adviser to obtain a copy of such Portfolio's current Registration Statement.
<PAGE>
MONEY MARKET PORTFOLIO
Portfolio of Investments as of December 31, 1997
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 2.6%
BB&T Financial Corp. 5.70% 02/11/98 $15,000,000 $15,000,000
================================================================================
TOTAL CERTIFICATES OF DEPOSIT
(Cost $15,000,000 ) 15,000,000
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 45.1%
American Trading & Products** 5.75% 03/03/98 5,000,000 4,951,285
American Trading & Products** 5.75% 03/10/98 $9,000,000 $8,902,250
Bear Stearns Co., Inc.** 5.73% 03/25/98 25,000,000 24,669,729
Coopertime Tractor 5.57% 04/21/98 4,100,000 4,030,220
Duff & Phelps Utilities & Corp.** 5.70% 02/17/98 4,500,000 4,466,513
Duff & Phelps Utilities & Corp.** 5.55% 04/02/98 6,500,000 6,408,810
Duff & Phelps Utilities & Corp.** 5.58% 04/23/98 5,000,000 4,913,200
Duff & Phelps Utilities & Corp.** 5.56% 05/21/98 2,741,000 2,681,733
Duff & Phelps Utilities & Corp.** 5.65% 07/02/98 5,000,000 4,857,181
Engelhard Corp. 5.62% 06/09/98 7,435,000 7,250,451
Engelhard Corp. 5.70% 06/10/98 10,000,000 9,746,667
Ford Motor Credit Co. 5.47% 06/24/98 20,000,000 19,471,234
GE Capital Corp. 5.68% 02/19/98 15,000,000 14,884,033
GE Capital Corp. 5.56% 05/20/98 8,000,000 7,828,258
GTE Funding, Inc. 6.10% 01/20/98 24,822,000 24,742,087
LG&E Capital Corp. 5.60% 02/19/98 20,000,000 19,847,555
LG&E Capital Corp. 5.70% 04/01/98 5,700,000 5,618,775
LOCAP, Inc.** 5.70% 01/29/98 18,700,000 18,617,097
MCI Communications Corp.** 5.80% 04/15/98 14,500,000 14,257,044
Merrill Lynch & Co., Inc. 5.65% 05/27/98 10,000,000 9,770,861
Merrill Lynch & Co., Inc. 5.59% 06/02/98 15,000,000 14,645,967
Monsanto Co. 5.53% 04/27/98 10,000,000 9,821,811
Safeco Corp.** 5.57% 01/07/98 20,000,000 19,981,433
================================================================================
TOTAL COMMERCIAL PAPER
(Cost $262,364,194 ) 262,364,194
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 35.5%
AT&T Corp. 5.63% 04/08/98 3,893,000 3,889,653
Albertsons, Inc. 5.65% 03/26/98 1,000,000 999,554
American General Finance Corp. 8.25% 01/15/98 400,000 400,317
American General Finance Corp. 7.25% 03/01/98 5,295,000 5,306,059
Associates Corp., N.A. 7.30% 03/15/98 200,000 200,476
Associates Corp., N.A. 5.25% 09/01/98 180,000 179,007
Barnett Banks, Inc. 6.25% 07/28/98 1,500,000 1,503,172
Care Life Project 6.05%* 01/02/98 1,275,000 1,275,000
Chrysler Financial Corp. 5.66% 01/16/98 1,875,000 1,874,850
Chrysler Financial Corp. 8.26% 01/26/98 10,000,000 10,014,254
Chubb Capital Corp. 6.00% 02/01/98 663,000 662,983
Clark Grave Vault Co. 6.00%* 01/02/98 3,000,000 3,000,000
Comerica Bank 6.75% 05/12/98 4,000,000 4,013,379
Coughlin Family Properties, Inc. 6.00%* 01/15/98 4,675,000 4,675,000
Danis Construction Co. 6.00%* 01/02/98 1,000,000 1,000,000
Dean Witter Discover & Co. 6.00% 03/01/98 2,000,000 2,000,098
Doren, Inc. 6.05%* 01/02/98 675,000 675,000
E.I. du Pont de Nemours & Co. 8.50% 06/25/98 3,095,000 3,129,566
Espanola/Nambe 6.05%* 01/02/98 2,315,000 2,315,000
First Chicago NBD Corp. 5.70% 01/07/98 5,000,000 4,999,808
First Chicago NBD Corp. 8.50% 06/01/98 180,000 181,767
First Fidelity Bancorp. 8.50% 04/01/98 2,000,000 2,012,401
First Union Corp. 6.75% 01/15/98 6,219,000 6,220,662
Ford Motor Credit Co. 6.25% 02/26/98 938,000 938,472
Ford Motor Credit Co. 9.13% 05/01/98 550,000 555,647
General Motors Acceptance Corp. 6.22%* 04/13/98 10,000,000 10,000,000
General Motors Acceptance Corp. 7.13% 05/11/98 11,100,000 11,149,261
GTE California, Inc. 6.25% 01/15/98 1,500,000 1,500,218
Gannett, Inc. 5.25% 03/01/98 2,525,000 2,521,635
GE Capital Corp. 8.63% 03/12/98 5,203,000 5,228,186
Georgia Power Co. 5.50% 04/01/98 1,000,000 999,112
Goldman Sachs Group, L.P. 6.10% 04/15/98 7,550,000 7,554,539
H.J. Heinz Co. 8.00% 01/05/98 5,130,000 5,130,626
Hancor, Inc. 6.05%* 01/02/98 700,000 700,000
Hertz Corp. 8.30% 02/02/98 200,000 200,393
Huntington Bancshares, Inc. 5.91% 06/23/98 5,000,000 5,001,908
<PAGE>
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
Huntington Bancshares, Inc. 6.15% 10/15/98 2,000,000 2,003,222
IBM Credit Corp. 5.90% 08/10/98 2,050,000 2,050,041
Lehman Brother Holdings Corp. 5.75% 02/15/98 1,250,000 1,249,434
Liberty Mutual Capital Corp. 5.96% 06/01/98 7,000,000 7,002,592
Merrill Lynch & Co., Inc. 6.52% 06/22/98 1,000,000 1,002,838
Midwest Power System, Inc. 6.25% 02/01/98 1,750,000 1,750,325
Morgan Stanley, Inc. 9.25% 03/01/98 1,750,000 1,758,938
Morgan Stanley, Inc. 9.40% 03/05/98 1,000,000 1,006,101
Mubea, Inc. 6.05%* 01/02/98 4,375,000 4,375,000
Mubea, Inc. 6.05%* 01/02/98 6,000,000 6,000,000
National Rural Utilities 8.50% 02/15/98 125,000 125,345
NationsBank Corp. 6.63% 01/15/98 615,000 615,143
Nordstrom, Inc. 8.88% 02/15/98 1,000,000 1,003,462
Nynex Credit Co. 6.72% 06/15/98 10,000,000 10,034,980
Osco Industries, Inc. 6.05%* 01/02/98 3,000,000 3,000,000
Pepsico, Inc. 6.13% 01/15/98 283,000 283,025
Potomac Electric Power Co. 4.38% 02/15/98 100,000 99,807
Presrite Corp. 6.05%* 01/02/98 2,210,000 2,210,000
Proctor & Gamble Co. 9.50% 02/11/98 4,450,000 4,465,491
R.I. Lampus Co. 6.05%* 01/02/98 2,440,000 2,440,000
RSD Technology 6.05%* 01/02/98 3,500,000 3,500,000
Salomon, Inc. 6.92% 04/14/98 3,550,000 3,559,833
Salomon, Inc. 7.25% 05/01/98 2,035,000 2,043,998
Seariver Maritime, Inc. 5.65%* 02/12/98 6,700,000 6,700,000
Southern California Edison Co. 5.88% 02/01/98 600,000 599,955
Surgery Financing Co. 6.05%* 01/12/98 6,585,000 6,585,000
Toyota Motor Corp. 5.63% 03/17/98 2,407,000 2,405,639
Toyota Motor Credit Corp. 5.13% 01/19/98 2,255,000 2,254,036
Toyota Motor Credit Corp. 5.88% 06/26/98 803,000 802,610
Travelers Group, Inc. 5.75% 04/15/98 1,500,000 1,499,727
Unilever Capital Corp. 8.88% 03/26/98 1,400,000 1,408,965
WalMart Stores, Inc. 7.00% 04/27/98 1,100,000 1,103,000
White Castle Project 6.05%* 01/02/98 9,500,000 9,500,000
Wisconsin Public Service Corp. 5.25% 07/01/98 320,000 319,019
================================================================================
TOTAL CORPORATE OBLIGATIONS
(Cost $206,765,529 ) 206,765,529
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.4%
Federal National Mortgage Assoc. 5.73% 04/13/98 500,000 499,519
Federal National Mortgage Assoc. 6.72% 04/27/98 140,000 140,398
Federal Home Loan Bank 6.00% 01/13/98 200,000 199,977
Federal Home Loan Bank 5.85% 10/15/98 2,785,000 2,785,000
Student Loan Marketing Assoc. 5.62%* 01/06/98 5,000,000 5,000,000
Student Loan Marketing Assoc. 5.68%* 01/06/98 4,350,000 4,352,319
Student Loan Marketing Assoc. 5.76% 01/14/98 1,000,000 999,913
Tennessee Valley Authority -
callable 1/20/98 @ 104 7.75% 12/15/22 250,000 260,125
================================================================================
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $14,237,251 ) 14,237,251
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 1.7%
***U.S. Treasury Bill 5.27% 01/08/98 63,100 63,036
U.S. Treasury Note 6.00% 09/30/98 10,000,000 10,019,615
================================================================================
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,082,651 ) 10,082,651
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.7%
Merrill Lynch, (Collateralized
by $65,582,000 various Discount
Commercial Papers, 1/7/98-1/30/98,
market value - $65,582,000) 6.80%* 01/02/98 64,413,000 64,413,000
Star Bank, (Collateralized by
$9,615,000 GNMA, 7.00%, 3/20/24,
market value - $9,835,784) 5.50%* 01/02/98 9,635,000 9,635,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $74,048,000 ) 74,048,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $582,497,625 ) $582,497,625
- --------------------------------------------------------------------------------
* Variable rate security. Interest rate is as of December 31, 1997. Maturity
date reflects the next rate change date.
** Security is restricted as to resale to institutional investors, but has been
deemed liquid in accordance with guidelines approved by the Board of Trustees.
***Pledged as collateral on Letter of Credit.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
Assets:
<S> <C> <C> <C> <C> <C>
Investments at market value* $123,381,910 $33,366,440 $10,363,759 $15,816,474 $508,449,625
Repurchase agreements, at cost* 12,968,000 463,000 304,000 782,000 74,048,000
Cash 947 507 347 851 551
Options purchased (cost $27,378,320) 17,600,000 --- --- --- ---
Receivable for net variation margin on
futures contracts 12,800 --- --- --- ---
Interest receivable 264,050 88 57 325,551 5,477,161
Dividends receivable 24,817 52,213 15,135 --- ---
Prepaid/Other assets 13,924 9,407 27 166 2,005
Unamortized organization costs --- --- 8,288 --- ---
Total Assets 154,266,448 33,891,655 10,691,613 16,925,042 587,977,342
=====================================================================================================================
Liabilites:
Payable for securities purchased --- 433,199 --- --- 261,255
Payable for net variation margin on futures contracts --- 350 --- --- ---
Options written (premiums received $19,383,673) 9,604,000 --- --- --- ---
Payable to investment adviser 97,671 30,236 8,829 3,349 78,989
Accrued audit fees 6,663 6,760 6,793 6,157 10,852
Accrued custodian fees 3,826 3,520 588 1,459 5,729
Accrued trustee fees 14,032 3,883 2,374 2,235 2,369
Accrued fund accounting fees 3,931 2,719 849 1,618 8,656
Other accrued liabilities 3,632 17,025 2,462 1,550 2,753
Total Liabilities 9,733,755 497,692 21,895 16,368 958,695
=====================================================================================================================
Net Assets 144,532,693 33,393,963 10,669,718 16,908,674 587,018,647
=====================================================================================================================
Net Assets:
=====================================================================================================================
Capital 145,227,170 27,521,228 8,402,733 16,373,316 587,018,647
Net unrealized appreciation (depreciation) of
investments (694,477) 5,872,735 2,266,985 535,358
Net Assets $144,532,693 $33,393,963 $10,669,718 $16,908,674 $587,018,647
=====================================================================================================================
*Securities at cost 137,058,540 27,956,355 8,400,774 16,063,116 582,497,625
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
NET INVESTMENT INCOME
================================================================================================================
<S> <C> <C> <C> <C> <C>
Interest $3,091,061 $205,328 $20,737 $972,641 $29,260,441
Dividends 1,145,496 485,616 279,789 --- ---
Total Investment Income 4,236,557 690,944 300,526 972,641 29,260,441
================================================================================================================
Expenses:
================================================================================================================
Investment advisory fees 1,130,843 317,772 88,486 66,626 1,436,168
Audit fees 9,215 9,421 9,223 8,564 14,851
Custodian fees 15,690 35,996 4,425 6,803 36,718
Trustees fees and expenses 42,679 9,347 7,454 7,570 7,762
Legal fees 3,331 11,491 3,053 3,339 3,307
Amortization of organization cost 4,924 2,545 8,972 2,545 2,545
Accounting fees 50,886 34,029 13,098 21,517 89,048
Insurance 2,242 467 80 285 5,027
Other expenses 10,982 5,233 11,131 1,470 11,241
Total Expenses 1,270,792 426,301 145,922 118,719 1,606,667
================================================================================================================
Investment advisory fees waived --- --- --- (23,523) (661,390)
Directed brokerage payments received --- --- (3,934) --- ---
Total Net Expenses 1,270,792 426,301 141,988 95,196 945,277
================================================================================================================
NET INVESTMENT INCOME 2,965,765 264,643 158,538 877,445 28,315,164
================================================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================================================
Net realized gain from futures contracts 7,384,735 851,686 --- 178,131 ---
Net realized gain (loss) from investments 15,349,402 4,450,516 769,055 (434,282) ---
Net change in unrealized appreciation
(depreciation) of investments (1,244,081) 2,709,218 1,487,258 649,921 ---
NET GAIN (LOSS) ON INVESTMENTS 21,490,056 8,011,420 2,256,313 393,770 ---
================================================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $24,455,821 $8,276,063 $2,414,851 $1,271,215 $28,315,164
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
==========================================================================================================================
OPERATIONS:
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net investment income $2,965,765 $264,643 $158,538 $877,445 $28,315,164
Net realized gain (loss) from investments
and futures contracts 22,734,137 5,302,202 769,055 (256,151) ---
Net change in unrealized appreciation
(depreciation) of investments (1,244,081) 2,709,218 1,487,258 649,921 ---
Net increase in net assets
resulting from operations 24,455,821 8,276,063 2,414,851 1,271,215 28,315,164
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
==========================================================================================================================
Contributions 27,375,051 40,513,401 2,517,724 4,973,499 3,784,994,914
Withdrawals (42,837,747) (39,809,183) (2,227,211) (7,127,634)(3,579,221,656)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests (15,462,696) 704,218 290,513 (2,154,135) 205,773,258
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,993,125 8,980,281 2,705,364 (882,920) 234,088,422
==========================================================================================================================
NET ASSETS - Beginning of period 135,539,568 24,413,682 7,964,354 17,791,594 352,930,225
NET ASSETS - End of period $144,532,693 $33,393,963 $10,669,718 $16,908,674 $587,018,647
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
MUTUAL GROWTH UTILITIES MONEY
FUND STOCK STOCK BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
==========================================================================================================================
OPERATIONS:
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net investment income $2,510,343 $601,083 $146,376 $876,027 $19,455,266
Net realized gain (loss) from investments
and futures contracts 10,575,124 (1,313,610) 348,392 34,126 ---
Net change in unrealized appreciation
(depreciation) of investments (5,130,740) 3,055,094 357,308 (776,915) ---
Net increase in net assets
resulting from operations 7,954,727 2,342,567 852,076 133,238 19,455,266
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
==========================================================================================================================
Contributions 32,575,692 4,020,512 5,138,546 4,220,008 1,414,075,891
Withdrawals (27,099,980) (6,486,427) (2,317,138) (2,627,674)(1,335,249,306)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests 5,475,712 (2,465,915) 2,821,408 1,592,334 78,826,585
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,430,439 (123,348) 3,673,484 1,725,572 98,281,851
==========================================================================================================================
NET ASSETS - Beginning of period 122,109,129 24,537,030 4,290,870 16,066,022 254,648,374
NET ASSETS - End of period $135,539,568 $24,413,682 $7,964,354 $17,791,594 $352,930,225
</TABLE>
See accompanying notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
MONEY MARKET PORTFOLIO
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $587,019 $352,930 $256,126 $224,523 $200,148
Ratio of Expenses to Average Net Assets 0.18% 0.19% 0.21% 0.19% 0.19%
Ratio of Net Investment Income to
Average Net Assets 5.47% 5.34% 5.87% 4.28% 3.09%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.31% 0.33% 0.37% 0.39% 0.40%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 5.34% 5.20% 5.70% 4.08% 2.88%
</TABLE>
See accompanying notes to financial statements
<PAGE>
MUTUAL FUND PORTFOLIO, GROWTH STOCK PORTFOLIO, UTILITIES STOCK PORTFOLIO, BOND
PORTFOLIO, MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION
Each Fund of The Flex-funds Trust (the "Trust") invests all of its investable
assets in a corresponding open-end management investment company (each a
"Portfolio" and collectively the "Portfolios") having the same investment
objective as the Fund. Each Portfolio is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a no-load, open-end management
investment company which was organized as a trust under the laws of the State of
New York. Each Declaration of Trust permits the Trustees, who are the same for
each Portfolio, to issue beneficial interests in each Portfolio.
The investment objective of each Portfolio is as follows:
The Mutual Fund Portfolio seeks growth of capital through investment in the
shares of other mutual funds.
The Growth Stock Portfolio seeks capital growth by investing in a diversified
portfolio of domestic common stocks with greater than average growth
characteristics selected primarily from the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500").
The Utilities Stock Portfolio seeks a high level of current income and growth of
income by investing primarily in equity securities of domestic and foreign
public utility companies; however, it will not invest in electric utilities
whose generation of power is derived from nuclear reactors. The Portfolio also
seeks capital appreciation, but only when consistent with its primary investment
objective.
The 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 POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Securities which are traded on stock exchanges are valued at the last sales
price as of the close of business of the New York Stock Exchange on the day of
valuation or, lacking any sales, at the closing bid prices. Securities traded
over-the-counter are valued at the most recent bid price or yield equivalent as
obtained from one or more dealers that make markets in such securities. Mutual
funds are valued at the daily redemption value as reported by the underlying
fund. The 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.
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.
<PAGE>
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 in as liabilities and are subsequently adjusted to current market
value of the options written. When written options are closed or exercised,
premiums received are offset against the proceeds paid, and the Portfolio
records realized gains or losses for the difference. When written options
expire, the liability is eliminated, and the Portfolio records realized gains
for the entire amount of premiums received.
During the year ended December 31, 1997 the Portfolios had the following
activity in futures contracts and written option contracts:
LONG FUTURES CONTRACTS NUMBER OF CONTRACTS NOTIONAL AMOUNT
================================================================================
Mutual Fund Portfolio:
Outstanding, beginning of year 260 $92,637,850
Contracts opened 1,173 383,416,903
Contracts closed (1,323) (450,989,853)
Outstanding, end of year 110 25,064,900
================================================================================
Growth Stock Portfolio:
Outstanding, beginning of year 21 $7,817,250
Contracts opened 139 47,173,843
Contracts closed (153) (53,280,056)
Outstanding, end of year 7 1,711,037
================================================================================
Bond Portfolio:
Outstanding, beginning of year --- ---
Contracts opened 306 $31,947,563
Contracts closed (306) (31,947,563)
Outstanding, end of year --- ---
<PAGE>
COVERED PUT OPTIONS COVERED CALL OPTIONS
Number of Number of
contracts Premiums contracts Premiums
================================================================================
Mutual Fund Portfolio:
Outstanding, beginning of year --- --- --- ---
Options written 4,000 $7,391,887 4,000 $11,991,787
Outstanding, end of year 4,000 7,391,887 4,000 11,991,787
================================================================================
Growth Stock Portfolio:
Outstanding, beginning of year --- --- --- ---
Options written --- --- 140 $34,315
Options expired --- --- (140) (34,315)
Outstanding, end of year --- --- --- ---
================================================================================
Bond Portfolio:
Outstanding, beginning of year --- --- --- ---
Options written --- --- 20 $15,495
Options exercised --- --- (20) (15,495)
Outstanding, end of year --- --- --- ---
================================================================================
Income Taxes
It is each Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no Federal income tax provision is
required.
Organizational Costs
The costs related to the organization of each Portfolio have been deferred and
are being amortized by the Portfolio on a straight-line basis over a five-year
period. Such costs for Mutual Fund Portfolio, Growth Stock Portfolio, Bond
Portfolio and Money Market Portfolio have been fully amortized.
Securities Transactions
The Portfolios record security transactions on the trade date. Gains and losses
realized from the sale of securities are determined on the specific
identification basis. Dividend income is recognized on the ex-dividend date, and
interest income (including amortization of premium and accretion of discount) is
recognized as earned.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides each Portfolio with investment management, research,
statistical and advisory services. Under separate Investment Subadvisory
Agreements with RMA, Sector Capital Management, Inc. and Miller/Howard
Investments, Inc. serve as subadvisor of the Growth Stock Portfolio and the
Utilities Stock Portfolio, respectively. Sub-subadvisers, selected by Sector
Capital Management, Inc., subject to the review and approval of the Trustees of
the Growth Stock Portfolio, are responsible for the selection of individual
portfolio securities for the assets of the Portfolio assigned to them by Sector
Capital Management, Inc.
For such services the Portfolios pay monthly a fee at the following annual
rates: Mutual Fund Portfolio, Growth Stock Portfolio, and Utilities Stock
Portfolio, 1.00% of average daily net assets up to $50 million, 0.75% of average
daily net assets exceeding $50 million up to $100 million and 0.60% of average
daily net assets exceeding $100 million; Bond Portfolio, 0.40% of average daily
net assets up to $100 million and 0.20% of average daily net assets exceeding
$100 million; Money Market Portfolio, 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the year ended December 31, 1997, RMA voluntarily waived a portion of its
investment advisory fees in the Bond and Money Market 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, RMA and MFSCo.
<PAGE>
4. SECURITIES TRANSACTIONS
For the year ended December 31, 1997, 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 $480,151,975 $442,533,548
Growth Stock Portfolio 44,982,486 35,676,667
Utilities Stock Portfolio 4,565,204 3,490,778
Bond Portfolio 41,876,549 35,680,823
As of December 31, 1997, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax purposes was as follows:
PORTFOLIO COST BASIS UNREALIZED UNREALIZED NET UNREALIZED
OF INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
(DEPRECIATION)
Mutual Fund Portfolio $137,376,306 $10,599,957 ($11,612,200) ($1,012,243)
Growth Stock Portfolio 28,054,467 6,346,447 (571,824) 5,774,623
Utilities Stock Portfolio 8,400,774 2,443,238 (176,253) 2,266,985
Bond Portfolio 16,063,116 535,396 (38) 535,358
Money Market Portfolio 582,497,625 --- --- ---
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of the
Mutual Fund Portfolio, Growth Stock Portfolio,
Utilities Stock Portfolio, Bond Portfolio and
Money Market Portfolio:
We have audited the accompanying statements of assets and liabilities of the
Mutual Fund Portfolio, Growth Stock Portfolio, Utilities Stock Portfolio, Bond
Portfolio and Money Market Portfolio (Portfolios), including the portfolios of
investments, as of December 31, 1997, and the related statements 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 Portfolios' 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, 1997, by confirmation with the custodian and brokers 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 that 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
Mutual Fund Portfolio, Growth Stock Portfolio, Utilities Stock Portfolio, Bond
Portfolio and Money Market Portfolio at December 31, 1997, the results of their
operations, the changes in their net assets and the financial highlights for
each of the periods indicated herein, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 12, 1998
<PAGE>
FX0017
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS
The following report and financial statement are included in Part B:
Portfolio of Investments - December 31, 1997; Statement of Assets and
Liabilities - December 31, 1997; Statement of Operations - for the
year ended December 31, 1997; Statement of Changes in Net Assets for
the periods ended December 31, 1997 and 1996; Financial Highlights for
the periods indicated therein; Notes to Financial Statements;
Independent Auditors' Report dated February 12, 1998.
(B) EXHIBITS
*1. Declaration of Trust of the Registrant.
*2. By-Laws of the Registrant.
*5. Form of Investment Advisory Agreement between the Registrant and
R. Meeder & Associates, Inc.
*6. Form of Exclusive Placement Agent Agreement between the
Registrant and Signature Broker-Dealer Services, Inc.
**8. Form of Custody Agreement between the Registrant and Star Bank,
N.A., Cincinnati.
**9. (a) Form of Administration Agreement between the Registrant and
Mutual Funds Service Co. (MFSCo)
(b) Form of Accounting Services Agreement between the Registrant
and MFSCo.
11. Consent of KPMG Peat Marwick LLP, Independent Certified Public
Accountants, is filed herewith.
**13. Investment representation letters of initial investors.
19. Powers of Attorney of Trustees of Registrant -- previously filed
and incorporated herein by reference; however, Powers of Attorney
of new Trustees of Registrant are filed herewith.
- -------------------
*Filed April 30, 1992 and incorporated herein by reference.
**Filed June 8, 1992 and incorporated herein by reference.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Beneficial Interests 3 (as of December 31, 1997)
ITEM 27. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as Exhibit 1 to Registrant's initial Registration Statement on
April 30, 1992.
The Trustees and officers of the Registrant are insured under an errors and
omissions liability insurance policy and under the fidelity bond required by
Rule 17g-1 under the Investment Company Act of 1940 (the "1940 Act").
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
- ---- -------
R. Meeder & Associates, Inc. 6000 Memorial Drive
(investment adviser) Dublin, OH 43017
Mutual Funds Service Co. 6000 Memorial Drive
(transfer and accounting services agent) Dublin, OH 43017
Star Bank, N.A., Cincinnati Star Bank Center
(custodian) 425 Walnut Street
Cincinnati, OH 45202
<PAGE>
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Dublin and State of Ohio on the 29th day of April, 1998.
MONEY MARKET PORTFOLIO
By /S/ DONALD F. MEEDER
--------------------------------
Donald F. Meeder
Secretary/Treasurer
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
Money Market Portfolio:
We consent to the use of our report included herein dated February 12, 1998 on
the financial statements of the Mutual Fund Portfolio, Growth Stock Portfolio,
Utilities Stock Portfolio, Bond Portfolio, and Money Market Portfolio as of
December 31, 1997 and for the periods indicated therein and to the reference to
our firm under the heading "Independent Auditors" in Part B of the Registration
Statement.
KPMG Peat Marwick LLP
Columbus, Ohio
April 29, 1998
POWERS OF ATTORNEY
THE PORTFOLIOS
The undersigned hereby constitutes and appoints Donald F. Meeder, Philip A.
Voelker and James B. Craver, and each of them, with full powers of substitution
as his true and lawful attorneys and agents to execute in his name and on his
behalf in any and all capacities the Registration Statements on Form N-1A, and
any and all amendments thereto, filed by the Money Market, Mutual Fund, Growth
Stock, Bond and Utilities Stock Portfolios (the "Portfolios"), The Flex-Partners
or The Flex-funds (each a "Trusts") with the Securities and Exchange Commission
under the Investment Company Act of 1940 and the Securities Act of 1933 and any
and all instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Portfolios or the Trusts to comply with
such Acts, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction and the undersigned hereby ratifies and confirms as his own act and
deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents have,
and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day
of August, 1997.
/s/ Charles A. Donabedian
---------------------------
Charles A. Donabedian
<PAGE>
THE PORTFOLIOS
The undersigned hereby constitutes and appoints Donald F. Meeder, Philip A.
Voelker and James B. Craver, and each of them, with full powers of substitution
as his true and lawful attorneys and agents to execute in his name and on his
behalf in any and all capacities the Registration Statements on Form N-1A, and
any and all amendments thereto, filed by the Money Market, Mutual Fund, Growth
Stock, Bond and Utilities Stock Portfolios (collectively, the "Portfolios"), The
Flex-Partners or The Flex-funds (collectively, the "Trusts") with the Securities
and Exchange Commission under the Investment Company Act of 1940 and the
Securities Act of 1933 and any and all instruments which such attorneys and
agents, or any of them, deem necessary or advisable to enable the Portfolios or
the Trusts to comply with such Acts, the rules, regulations and requirements of
the Securities and Exchange Commission, and the securities or Blue Sky laws of
any state or other jurisdiction and the undersigned hereby ratifies and confirms
as his own act and deed any and all that such attorneys and agents, or any of
them, shall do or cause to be done by virtue hereof. Any one of such attorneys
and agents have, and may exercise, all of the powers hereby conferred.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day
of March, 1998.
/s/ James W. Didion
-------------------------
James W. Didion
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