As filed with the Securities and Exchange Commission on April 28, 2000.
File No. 811-6648
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 9
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
BOND 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 Bond 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.
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PART A
Responses to Items 1, 2, 3, 5 and 9 have been omitted pursuant to
paragraph 2 of Instruction B of the General Instructions to Form N-1A.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RELATED RISKS.
Bond 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 Meeder Asset Management, Inc. (the
"Adviser"), formerly known as R. Meeder & Associates, Inc. The Portfolio seeks
to maximize current income through investment in:
o securities which are issued, or guaranteed as to principal and
interest, by the U.S. government or any of its agencies or
instrumentalities and
o repurchase agreements involving these U.S. government securities
Normally, the Portfolio invests at least 65% of the value of its assets in
U.S. government debt securities. The Portfolio may invest in U.S. Treasuries;
agency securities such as Ginnie Maes, Sally Maes, Fanny Maes and Freddie Macs;
and repurchase agreements involving these securities.
The Portfolio may invest in U.S. government securities having any maturity.
Normally, the Portfolio will invest in 10-year U.S. government securities if the
adviser believes the risk/reward relationship of the bond market is positive.
The Portfolio will invest in short-term U.S. government securities or money
market securities when the Adviser believes the risk/reward relationship of the
bond market is negative. If the adviser believes that long-term interest rates
are significantly greater than inflation, the Portfolio may invest in U.S.
government securities with maturities as long as 30 years.
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To determine the maturities of U.S. government securities for purchase, the
Adviser monitors the following indicators:
o Momentum - the trend of U.S. government securities prices versus
various moving averages
o Real Rates - the 10-year treasury bond yield as compared to inflation
and
o Yield Spread - the 10-year treasury bond yield as compared to the
90-day T-bill yield.
The Portfolio may invest in "traditional" derivatives, such as financial
futures contracts and related options as a hedge against changes, resulting from
market conditions, in the value of securities held or intended to be held by the
Portfolio.
The U.S. government securities in which the Portfolio invests are either
issued or guaranteed by the U.S. government, its agencies, or instrumentalities.
These securities are limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities, such as: the Farm Credit System, including the
National Bank for Cooperatives, Farm Credit Banks, and Banks for
Cooperatives; Farmers Home Administration; Federal Home Loan Banks;
Federal Home Loan Mortgage Corporation; Federal National Mortgage
Association; Government National Mortgage Association; and Student
Loan Marketing Association; and
o repurchase agreements relating to any of the foregoing U.S. government
securities.
Some obligations issued or guaranteed by agencies or instrumentalities of
the U.S. government, such as Government National Mortgage Association
participation certificates, are backed by the full faith and credit of the U.S.
Treasury. No assurance can be given that the U.S. government will provide
financial support to other agencies or instrumentalities, since it is not
obligated to do so. These agencies and instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
Information concerning the selection of money market instruments and bonds
is set forth in Part B of this Registration Statement.
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HEDGING STRATEGIES
Derivatives are financial instruments whose performance is derived, at
least in part, from the performance of an underlying asset, security or index.
Financial futures contracts or related options used by a Portfolio to implement
its hedging strategies are considered derivatives. The value of derivatives can
be affected significantly by even small market movements, sometimes in
unpredictable ways. They do not necessarily increase risk, and may in fact
reduce risk.
The Portfolio may engage in hedging transactions in carrying out its
investment policies. A hedging program may be implemented for the following
reasons: (1) To protect the value of specific securities owned or intended to be
purchased while the Adviser is implementing a change in the Portfolio's
investment position; (2) To protect portfolio values during periods of
extraordinary risk without incurring transaction costs associated with buying or
selling actual securities; and (3) To utilize the "designated hedge" provisions
of Subchapter M of the Internal Revenue Code as a permitted means of avoiding
taxes that would otherwise have to be paid on gains from the sale of portfolio
securities.
A hedging program involves entering into an "option" or "futures"
transaction in lieu of the actual purchase or sale of securities. At present,
government securities such as Treasury bonds and notes are among debt securities
currently covered by futures contracts.
The Portfolio will not engage in transactions in financial futures
contracts or related options for speculation but only as a hedge against changes
in the market value of securities held or intended for purchase, and where the
transactions are economically appropriate to the reduction of risks inherent in
the ongoing management of the Portfolio.
For certain regulatory purposes, the Commodity Futures Trading Commission
("CFTC") limits the types of futures positions that can be taken in conjunction
with the management of a securities portfolio for management investment
companies, such as the Bond Portfolio. All futures transactions for the
Portfolio will consequently be subject to the restrictions on the use of futures
contracts established in CFTC rules, such as observation of the CFTC's
definition of "hedging". In addition, whenever the Portfolio establishes a long
futures position, it will set aside cash or cash equivalents equal to the
underlying commodity value of the long futures contracts held by the Portfolio.
Although all futures contracts involve leverage by virtue of the margin system
applicable to trading on futures exchanges, the Portfolio will not, on a net
basis, have leverage exposure on any long futures contracts that it establishes
because of the cash set aside requirement. All futures transactions can produce
a gain or a loss when they are closed, regardless of the purpose for which they
have been established. Unlike short futures contracts positions established to
protect against the risk of a decline in value of existing securities holdings,
the long futures positions established by the Portfolio to protect against
reinvestment risk are intended to protect the Portfolio against the risks of
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reinvesting portfolio assets that arise during periods when the assets are not
fully invested in securities.
The Portfolio may not purchase or sell futures or purchase related options
if immediately thereafter the sum of the amount of margin deposits on the
Portfolio's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Portfolio's total assets.
The Portfolio expects that any gain or loss on hedging transactions will be
substantially offset by any gain or loss on the securities underlying the
contracts or being considered for purchase.
MAIN RISK FACTORS
As with most bond funds, the value of your investment will fluctuate with
changes in interest rates. Typically, a rise in interest rates causes a decline
in the market value of debt securities (including U.S. government securities).
These and other risks of investing in the fund are set forth in "More About
Risk." Other factors may affect the market price and yield of the fund's
securities, including investor demand and domestic and worldwide economic
conditions. As with any mutual fund, loss of money is a risk of investing in the
fund.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE.
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. Firstar, N.A., Cincinnati ("Firstar") is the
Portfolio's custodian and Mutual Funds Service Co. is the Portfolio's transfer
agent and dividend paying agent. The address of the custodian is 425 Walnut
Street, Cincinnati, Ohio 45202 and the address of Mutual Funds Service Co. 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.
The Adviser was incorporated in Ohio in 1974 and maintains its principal
offices at 6000 Memorial Drive, Dublin, Ohio 43017. The Adviser is a
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wholly-owned subsidiary of Meeder Financial. Meeder Financial is controlled by
Robert S. Meeder, Sr. through the ownership of voting common stock. Meeder
Financial conducts business only through its subsidiaries which are the Adviser;
Mutual Funds Service Co.; Adviser Dealer Services, 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; Thomas E.
Line, Chief Operating Officer; Michael J. Sullivan, Vice President of Sales and
Marketing; and Wesley F. Hoag, Vice President and General Counsel.
Joseph A. Zarr is the portfolio manager primarily responsible for the
day-to-day management of the Bond Portfolio. Mr. Zarr was the portfolio manager
of the Short-Term Global Portfolio from May of 1992 until May of 1996. Mr. Zarr
is also a portfolio manager for the Adviser. He has been associated with the
Adviser since 1991. Mr. Zarr has been a licensed stockbroker since 1978.
The Adviser earns an annual fee, payable in monthly installments, at the
rate of 0.40% of the first $100 million and 0.20% in excess of $100 million of
the Portfolio's average net assets.
TRANSFER AGENT AND CUSTODIAN
The Portfolio has entered into an Administration and Accounting Services
Agreement with Mutual Funds Service Co., 6000 Memorial Drive, Dublin, Ohio
40317, a wholly-owned subsidiary of Meeder Financial, pursuant to which Mutual
Funds Service Co. provides accounting, transfer agency and dividend disbursing
services to the Portfolio. The minimum annual fee for all such services for the
Portfolio is $7,500. Subject to the 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, 1999, total payments from the Portfolio to Mutual Fund Service Co.
amounted to $30,056.
Pursuant to a Custody Agreement, Firstar 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;
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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 7. SHAREHOLDER INFORMATION.
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.
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
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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.
Investor inquiries may be directed to the Portfolio at 6000 Memorial Drive,
Dublin, Ohio 43017.
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. Securities owned by the Portfolio and listed or traded on any
national securities exchange are valued each Fund Business Day at 3:00 p.m. If
there has been no sale on that day, or if the security is not listed, it is
valued at its last bid quotation on the exchange or, in the case of unlisted
securities, as obtained from an established market maker. Futures contracts are
valued on the basis of the cost of closing out the liability; I.E., at the
settlement price of a closing contract or at the asked quotation for such a
contract if there has been no sale. Money market instruments having maturities
of 60 days or less are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
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available are to be valued by the Adviser in good faith at its own expense under
the direction of the Trustees.
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
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.
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 next
business day after 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.
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ITEM 8. DISTRIBUTION ARRANGEMENTS.
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.
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PART B
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
BOND PORTFOLIO
6000 Memorial Drive
Dublin, Ohio 43017
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 2000
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the Bond Portfolio dated April 30, 2000. A
copy of the Prospectus may be obtained at the above address, or by calling:
1-800-325-FLEX, or (614) 760-2159. Capitalized terms used and not otherwise
defined herein have the same meanings as defined in the Prospectus.
TABLE OF CONTENTS
Page
Portfolio History . . . . . . . . . . . . . . . . . . . B-1
Description of the Portfolio and Its Investments and
Risks.. . . . . . . . . . . . . . . . . . . . . . B-1
Management of the Portfolio . . . . . . . . . . . . . . B-5
Control Persons and Principal Holders of Securities . . B-9
Investment Advisory and Other Services . . . . . . . . B-9
Brokerage Allocation and Other Practices . . . . . . . B-11
Capital Stock and Other Securities . . . . . . . . . . B-11
Purchase, Redemption and Pricing of Securities . . . . B-13
Taxation of the Portfolio . . . . . . . . . . . . . . . B-14
Underwriters . . . . . . . . . . . . . . . . . . . . . B-14
Calculation of Performance Data . . . . . . . . . . . . B-14
Financial Statements . . . . . . . . . . . . . . . . . B-14
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ITEM 11. PORTFOLIO HISTORY.
The Portfolio was organized as 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.
ITEM 12. DESCRIPTION OF THE PORTFOLIO AND ITS INVESTMENTS AND RISKS.
Part A contains additional information about the investment objective and
policies of the Bond 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. No such change would be made, however, without 30 days' written notice
to investors.
Meeder Asset Management, Inc., the investment adviser of the Portfolio (the
"Adviser"), places a high degree of importance on protecting portfolio values
from severe market declines. Consequently, the Portfolio's assets may at times
be invested for defensive purposes in money market instruments.
Because the Adviser intends to employ flexible defensive investment
strategies when market trends are not considered favorable, the Adviser may
occasionally change the entire Portfolio.
This defensive investment strategy can produce high portfolio turnover
ratios when calculated in accordance with SEC rules. The portfolio turnover rate
for the Portfolio was 352% for the year ended December 31, 1999 (225% in 1998;
376% in 1997).
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 Repurchase Agreements - The Portfolio may invest in repurchase
obligations relating to U.S. Government Securities. The Portfolio may
invest without limit in 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.,
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the Portfolio) acquires ownership of a debt security and the seller
agrees, at the time of the sale, to purchase 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 invest more than 10% of its assets, at time of
purchase, in repurchase agreements which mature in excess of seven
days.
When investing in money market instruments, the Portfolio will limit its
purchases, denominated in U.S. dollars, to 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, and any relating repurchase agreements
thereto.
The Adviser exercises due care in the selection of money market instruments
and bonds. However, there is a risk that the issuers of the securities may not
be able to meet their obligations to pay interest or principal when due. There
is also a risk that some of the Portfolio's securities might have to be
liquidated prior to maturity at a price less than original amortized cost or
value, face amount or maturity value to meet larger than expected redemptions.
Any of these risks, if encountered, could cause a reduction in net income or in
the net asset value of the Portfolio.
HEDGING STRATEGIES
The Adviser may conduct a hedging program on behalf of the Portfolio for
any of the reasons described in Part A. Such a program would involve entering
into options or futures transactions.
The objective of an option or futures transaction could be to protect a
profit or offset a loss in the Portfolio from future price erosion. Or, the
objective could be to acquire the right to purchase a fixed amount of securities
at a future date for a definite price. In either case, it would not be necessary
for the Portfolio to actually buy or sell the securities currently. Instead, the
option or futures contract would give the Portfolio the right at a future date
to sell, or in other instances buy, the particular securities under
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consideration or similar securities. The quantity of the securities covered by
the futures contract would be the same, or approximately the same, as the
quantity held in the Portfolio or the quantity under consideration for purchase.
In lieu of the sale of a security, an option transaction could involve the
purchase of a put option contract, which would give the Portfolio the right to
sell a security or futures contract on an index (see below) at a specified price
until the expiration date of the option. A Portfolio will only purchase a put
option contract when the quantity of the underlying security involved in the
option transaction is equal to that owned by the Portfolio. Limitations on the
use of put option contracts on an index are described below.
Also, in lieu of the sale of securities, a futures transaction could
involve the sale of a futures contract which would require a Portfolio either
(a) to deliver to the other party to the contract the securities specified and
receive payment at the price contracted for, prior to the expiration date of the
contract, or (b) to make or entitle it to receive payments representing
(respectively) the loss or gain on the security or securities involved in the
futures contract.
In lieu of the purchase of a security, an option transaction could involve
the purchase of a call option which would give the Portfolio the right to buy a
specified security or index aggregate at a specified price until the expiration
date of the option contract. Sufficient cash or money market instruments will be
segregated and maintained in reserve to complete the purchase.
In lieu of the purchase of securities, a futures transaction could involve
the purchase of a futures contract which would either (a) require the Portfolio
to receive and pay for the securities specified in the futures contract at the
price contracted for prior to the expiration date of the contract or (b) require
the Portfolio to make payment or receive payment representing respectively the
loss or gain on the security or securities involved in the contract.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Portfolio as
fundamental policies. Under the Investment Company Act of 1940 (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.
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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 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 net 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.
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ITEM 13. 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.
NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION
ROBERT S. MEEDER, SR.*+, 71 Trustee/President Chairman of Meeder Asset
Management, Inc., an
investment adviser;
Chairman and Director of
Mutual Funds Service Co.,
the Funds' transfer agent.
MILTON S. BARTHOLOMEW, 71 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit
Committee.
ROGER D. BLACKWELL, 59 Trustee Professor of Marketing
Blackwell Associates, Inc. and Consumer Behavior,
3380 Tremont Road The Ohio State University;
Columbus, OH 43221 President of Blackwell
Associates, Inc., a
strategic consulting firm.
ROBERT S. MEEDER, JR.*, 39 Trustee and President of Meeder Asset
Vice President Management, Inc.
WALTER L. OGLE, 61 Trustee Executive Vice President
400 Interstate North Parkway, of Aon Consulting, an
Suite 1630 employee benefits
Atlanta, GA 30339 consulting group.
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CHARLES A. DONABEDIAN, 57 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
management companies; CEO,
Winston Advisors, Inc., an
investment adviser.
JAMES W. DIDION, 69 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).
JACK W. NICKLAUS II, 39 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm
North Palm Beach, FL 33408 and division of Golden
Bear International, Inc.
PHILIP A. VOELKER*+, 46 Trustee and Vice Senior Vice President and
President Chief Investment Officer
of Meeder Asset
Management, Inc.
DONALD F. MEEDER*+, 61 Secretary Vice President of Meeder
Asset Management, Inc.;
Secretary of Mutual Funds
Service Co., the Funds'
transfer agent.
WESLEY F. HOAG*+, 43 Vice President Vice President and General
Counsel of Meeder Asset
Management, Inc. and
Mutual Funds Service Co.
(since July 1993);
Attorney, Porter, Wright,
Morris & Arthur, a law
firm (October 1984 to June
1993).
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THOMAS E. LINE*+, 32 Treasurer President, Mutual Funds
Service Co., the
Portfolio's transfer
agent, and Chief Operating
Officer, Meeder Asset
Management, Inc., the
Portfolio's investment
adviser (since June 1998);
Vice President and
Treasurer, BISYS Fund
Services (December 1996 to
June 1998); Senior Manager
- Financial Services,
KPMG, LLP (Sept. 1989 to
December 1996).
BRUCE E. MCKIBBEN*+, 30 Assistant Treasurer Manager/Fund Accounting
and Financial Reporting,
Mutual Funds Service Co.,
the Funds' transfer agent
(since April 1997);
Assistant Treasurer and
Manager/Fund Accounting,
The Ohio Company, a
broker-dealer (April 1991
to April 1997).
* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Meeder Advisor Funds 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.
Each Trustee and each officer of the Portfolio hold the same positions with
other Portfolios, each a corresponding Portfolio of The Flex-funds or Meeder
Advisor Funds, each a Massachusetts business trust consisting of several
separate series.
The following table shows the compensation paid by the Portfolio and all
other mutual funds advised by the Adviser, including The Flex-funds, Meeder
Advisor Funds, and the corresponding portfolios of The Flex-funds and Meeder
Advisor Funds (collectively, the "Fund Complex") as a whole to the Trustees of
the Portfolio and during the fiscal year ended December 31, 1999.
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COMPENSATION TABLE
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated from Registrant
Compensation Accrued as Part Annual and Fund
from the of Portfolio or Benefits Upon Complex Paid
TRUSTEE PORTFOLIO1 FUND EXPENSE RETIREMENT TO TRUSTEE1,2
- ------- ---------- ------------ ---------- -------------
Robert S. Meeder, Sr. None None None None
Milton S. Bartholomew $1,200 None None $16,734
Robert S. Meeder, Jr. None None None None
Walter L. Ogle $1,087 None None $16,234
Philip A. Voelker None None None None
Roger A. Blackwell $ 868 None None $15,234
Charles A. Donabedian $1,235 None None $17,734
James W. Didion $1,114 None None $16,234
Jack W. Nicklaus II $1,000 None None $15,984
1Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1999,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $1,200, Roger A. Blackwell - $868,
Charles A. Donabedian - $1,235, Jack W. Nicklaus II - $1,000, and Walter L. Ogle
- - $583.
2The Fund Complex consists of 19 investment companies.
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 six
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. Members
of the Audit and Strategic Planning Committees for each of The Flex-funds and
the Meeder Advisor Funds trusts, and the Portfolios are paid $500 for each
Committee meeting. Trustees fees for the Bond Portfolio totaled $6,504 for the
year ended December 31, 1999 ($7,527 in 1998). 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.
The Portfolio and the Adviser have each adopted a Code of Ethics that
permits personnel subject to the Code to invest in securities, including, under
certain circumstances and subject to certain restrictions, securities that may
be purchased or held by the Portfolio. However, each such Code restricts
9
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personal investing practices by directors and officers of the Adviser and its
affiliates, and employees of the Adviser with access to information about the
purchase or sale of Portfolio securities. The Code of Ethics for the Portfolio
also restricts personal investing practices of trustees of the Portfolio who
have knowledge about recent Portfolio trades. Among other provisions, the Code
of Ethics requires that such directors and officers and employees with access to
information about the purchase or sale of Portfolio securities obtain
preclearance before executing personal trades. Each Code of Ethics prohibits
acquisition of securities without preclearance in, among other events, an
initial public offering or a limited offering, as well as profits derived from
the purchase and sale of the same security within 60 calendar days. These
provisions are designed to put the interests of Portfolio shareholders before
the interest of people who manage the Portfolio.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
The Flex-funds The Bond Fund (the "Fund") has an investment in the
Portfolio equaling approximately 100% of the Portfolio's interests. No Trustee
or officer of the Portfolio or any other person, except the Fund, owns in the
aggregate more than a 1% interest in the Portfolio as of the date of this
Registration Statement.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
ADVISER
Meeder Asset Management, Inc. (the "Adviser"), formerly known as R. Meeder
& Associates, Inc., 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 0.20% in excess of $100 million of
the Portfolio's average net assets. For the year ended December 31, 1999 the
Portfolio paid fees to the Adviser totaling $25,388 ($30,260 in 1998; $43,103 in
1997).
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TRANSFER AGENT
The Portfolio has entered into an Administration and Accounting Services
Agreement with Mutual Funds Service Co., which acts as transfer agent for the
Portfolio. Mutual Funds Service Co. maintains an account for each investor in
the Portfolio, performs other transfer agency functions and acts as dividend
disbursing agent for the Portfolio.
INDEPENDENT AUDITORS
KPMG 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.
CUSTODIAN
Pursuant to a Custody Agreement, Firstar, 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.
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.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
The Portfolio seeks to obtain the best available prices on, and firm
execution of, all purchases and sales of portfolio securities. In order to do
so, it may buy securities from or sell securities to broker-dealers acting as
principals and may use primary markets in the purchase or sale of
over-the-counter securities, unless best price and execution can be obtained in
some other way.
Satisfied that it is obtaining the best available price and favorable
execution, the Portfolio may, from time to time, place orders for the purchase
or sale of portfolio securities with broker-dealers who provide research,
statistical or other financial information or services ("research") to it or to
the Adviser, or to any other client for which the Adviser acts as investment
adviser. The Portfolio's portfolio transactions are reviewed periodically by its
Board of Trustees.
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The Adviser is the principal source of information and advice to the
Portfolio and is responsible for making and initiating the execution of
investment decisions for the Portfolio. However, it is recognized by the
Trustees that it is important for the Adviser, in performing its
responsibilities to the Portfolio, to continue to receive and evaluate the broad
spectrum of economic and financial information which many securities
broker-dealers have customarily furnished in connection with portfolio
transactions and that, in compensating broker-dealers for their services, it is
in the interest of the Portfolio to take into account the value of the
information received for use in advising the Portfolio. The extent, if any, to
which the obtaining of such information may reduce the expenses of the Adviser
in providing management services to the Portfolio is not determinable. In
addition, it is understood by the Trustees that other clients of the Adviser
might also benefit from the information obtained for the Portfolio, in the same
manner that the Portfolio might also benefit from information obtained by the
Adviser in performing services to others.
It is the opinion of the Trustees of the Portfolio and of the Adviser that
the receipt of research from broker-dealers will not materially reduce the
Adviser's own research activities or the overall cost of fulfilling its
contractual obligations to the Portfolio.
During the year ended December 31, 1999, the Bond Portfolio paid total
commissions of $0 on the purchase and sale of futures contracts.
ITEM 17. 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).
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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.
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.
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ITEM 18. 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 3:00 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, Veteran's Day, Thanksgiving Day and Christmas.)
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.
Securities owned by the Portfolio and listed or traded on any national
securities exchange are valued at 3:00 p.m. each day that the exchange is open
for business. If there is no sale on that day, or if the security is not listed,
it is valued at its last bid quotation on the exchange or, in the case of
unlisted securities, as obtained from an established market maker. Futures
contracts are valued on the basis of the cost of closing out the liability;
I.E., at the settlement price of a closing contract or at the asked quotation
for such a contract if there is no sale. Money market instruments having
maturities of 60 days or less are valued at amortized cost if not materially
different from market value. Portfolio securities for which market quotations
are not readily available are to be valued by the Adviser in good faith at its
own expense under the direction of the Trustees.
ITEM 19. TAXATION OF THE PORTFOLIO.
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.
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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 20. 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.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The financial statements and independent auditors' report required to be
included in this Statement of Additional Information are incorporated herein by
reference to the Portfolio's Annual Report to Shareholders for the fiscal year
ended December 31, 1999. The Portfolio will provide the Annual Report without
charge at written request or request by telephone.
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PART C
ITEM 23. EXHIBITS
*(a) Declaration of Trust of the Registrant.
*(b) By-Laws of the Registrant.
(c) Not applicable.
*(d) Form of Investment Advisory Agreement between the Registrant and
Meeder Asset Management, Inc.
*(e) Form of Exclusive Placement Agent Agreement between the Registrant and
Signature Broker-Dealer Services, Inc.
(f) Deferred Compensation Plan for independent Trustees is filed herewith.
**(g) Form of Custody Agreement between the Registrant and Firstar, N.A.,
Cincinnati.
**(h) (1) Form of Administration Agreement between the Registrant and
Mutual Funds Service Co. (MFSCo)
(2) Form of Accounting Services Agreement between the Registrant and
MFSCo.
(i) Consent of KPMG LLP, Independent Certified Public Accountants, filed
herewith.
(j) Not applicable.
(k) Not applicable.
**(l) Investment representation letters of initial investors.
(m) Not applicable.
(n) Not applicable.
(o) Not applicable.
(p) Codes of Ethics for the Portfolio, Meeder Financial and Meeder Asset
Management, Inc. are filed herewith.
- -------------------
*Filed April 30, 1992 and incorporated herein by reference.
**Filed June 8, 1992 and incorporated herein by reference.
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 25. 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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. 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
Meeder Asset Management, Inc. 6000 Memorial Drive
(investment adviser) Dublin, OH 43017
Mutual Funds Service Co. 6000 Memorial Drive
(transfer and accounting services Dublin, OH 43017
agent)
Firstar, N.A., Cincinnati 425 Walnut Street
(custodian) Cincinnati, OH 45202
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. 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 28th day of April, 2000.
BOND PORTFOLIO
By /s/ Wesley F. Hoag
------------------------
Wesley F. Hoag
Vice President
EXHIBIT 23(F)
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
SECTION 1. PURPOSE OF PLAN. The purpose of this Deferred Compensation Plan
(the "Plan") is to permit each Eligible Trustee (as that term is defined below)
of the Funds (as that term is defined below) to defer receipt of all or a
portion of the trustee fees payable by any of the Funds until the time set forth
herein.
SECTION 2. DEFINITIONS OF TERMS AND CONSTRUCTION
2.1 DEFINITIONS. The following terms as used in this Plan shall have the
following meanings:
(a) "Administrator" shall mean the Treasurer of the Funds.
(b) "Beneficiary" shall mean such person or persons designated
pursuant to Section 5.3 hereof to receive benefits after the
death of an Eligible Trustee.
(c) "Boards of Trustees" shall mean the respective Boards of Trustees
of the Funds.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
(e) "Compensation" shall mean the amount of trustees' fees (including
fees earned by an Eligible Trustee for serving as a member of any
committee of any of the Boards of Trustees) paid by each of the
Funds to an Eligible Trustee for a Deferral Year prior to
reduction for Deferrals made under this Plan.
(f) "Deferral" shall mean the amount or amounts of an Eligible
Trustee's Compensation deferred under the provisions of Section 4
of this Plan.
(g) "Deferral Account" shall mean the account maintained to reflect
an Eligible Trustee's Deferrals made pursuant to Section 4 hereof
and any other credits or debits thereto.
(h) "Deferral Election" shall mean the Eligible Trustee's annual
election to defer his Compensation under Plan Section 4.1(a).
(i) "Deferral Year" shall mean each calendar year (or the period
beginning on the effective date of the Plan and ending on
1
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December 31 of the calendar year in which the Plan becomes
effective) during which an Eligible Trustee makes, or is entitled
to make, Deferrals under Section 4 hereof.
(j) "Eligible Trustee" shall mean a member of the Board of Trustees
who is not an "interested person" of the Funds, as such term is
defined under Section 2(a)(19) of the Investment Company Act of
1940, as amended.
(k) "Funds" shall mean the following open-end registered investment
companies: the Money Market Portfolio, Bond Portfolio, Growth
Stock Portfolio, Utility Stock Portfolio and Mutual Fund
Portfolio; The Flex-funds' Money Market Fund, U.S. Government
Bond Fund, Highlands Growth Fund, Muirfield Fund, and Total
Return Utilities Fund; The Flex-Partners' International Equity
Fund; and such other open-end registered investment companies (i)
for which R. Meeder & Associates, Inc. (the "Adviser") may in the
future serve as investment adviser or (ii) which invest all of
their investable assets in an investment company so served by the
Adviser, and whose Board of Trustees shall adopt this Plan.
(l) "Hardship and Unforeseeable Emergency" shall mean a severe
financial hardship to an Eligible Trustee resulting from a sudden
and unexpected illness or accident of the Eligible Trustee or a
dependent (within the meaning of Section 152(a) of the Code), of
the Eligible Trustee, loss of the Eligible Trustee's property due
to casualty, or other similar extraordinary and unforeseeable
circumstances, arising from events beyond the Eligible Trustee's
control. Whether circumstances constitute a Hardship and
Unforeseeable Emergency depends on the facts of each case, as
determined by the Administrator, but in any case does not include
a hardship that may be relieved:
(i) through reimbursement or compensation by insurance of
otherwise;
(ii) by liquidation of the Eligible Trustee's assets to the
extent that liquidation itself would not cause such a
severe financial hardship; or
(iii) by ceasing to defer receipt of any compensation not
yet earned.
(m) "Separation from Service" shall mean the date on which an
Eligible Trustee ceases to be a member of any of the Boards of
Trustees.
(n) "Valuation Date" shall mean the last business day of each
calendar year and any other day upon which the Funds make a
valuation of the Deferral Account.
2
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2.2 PLURALS AND GENDER. Where appearing in this Plan the singular shall
include the plural and the masculine shall include the feminine, and vice versa,
unless the context clearly indicates a different meaning.
2.3 HEADINGS. The headings and subheadings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
SECTION 3. PERIOD DURING WHICH DEFERRALS ARE PERMITTED
3.1 COMMENCEMENT OF VOLUNTARY DEFERRALS. An Eligible Trustee may elect, on
a form provided by, and submitted to, the Administrator, to commence voluntary
Deferrals under Section 4.1(a) hereof for the period beginning on the date such
form is submitted to the Administrator.
3.2 TERMINATION OF DEFERRALS. An Eligible Trustee shall not be eligible for
Deferrals after the earlier of the following dates:
(a) his Separation from Service; or
(b) The effective date of the termination of this Plan.
SECTION 4. DEFERRALS
4.1 VOLUNTARY DEFERRAL ELECTIONS.
(a) Prior to the effective date of this Plan or the day the Eligible
Trustee first becomes eligible under this Plan and, for
subsequent Deferral Years, prior to the first day of the Deferral
Year, an Eligible Trustee may elect to defer the receipt of all
or a portion of his Compensation. Such election shall be made on
the form described in Section 3.1 hereof and shall set forth the
amount of such deferral (in whole percentage amounts). Such
election shall continue in effect for all subsequent Deferral
Years unless it is canceled or modified as provided below.
(b) Deferrals described in Section 4.1(a) above shall be withheld,
based upon the percentage amount elected, from each payment of
Compensation which the Eligible Trustee would otherwise have been
entitled but for his election in Section 4.1(a).
(c) The Eligible Trustee may cancel or modify the amount of his
deferral elected under Section 4.1(a) on a prospective basis by
submitting to the Administrator a revised Deferral election form.
Such change will be effective as of the first day of the Deferral
Year following the date such revision is submitted to the
Administrator.
3
<PAGE>
(d) The Eligible Trustee's Deferral Account shall be a bookkeeping
entry only, and each Fund paying Compensation shall fund the
Deferral Account.
4.2 VALUATION OF DEFERRAL ACCOUNT
(a) Each Fund paying Compensation shall establish a bookkeeping
Deferral Account to which will be credited an amount equal to the
Eligible Trustee's Deferrals under this Plan. Deferrals shall be
allocated to the Deferral Account on the first business day
following the date such Deferrals are withheld from the Eligible
Trustee's Compensation. The Deferral Account shall be debited to
reflect any distributions from such Deferral Account. Such debits
shall be allocated to the Deferral Account as of the date such
distributions are made.
(b) As of each Valuation Date, income, gain and loss equivalents
(resulting from the Deferral Account being invested in the manner
set forth under Section 4.3 below) attributable to the period
following the next preceding Valuation Date shall be credited to
and/or deducted from the Eligible Trustee's Deferral Account.
4.3 RETURN ON DEFERRAL ACCOUNT BALANCE
(a) (i) For purposes of measuring the investment return on an
Eligible Trustee's Deferrals, a dollar amount equivalent to the
Eligible Trustee's Deferrals shall be invested and reinvested in
one or more of the Funds, effected at such Fund or Funds' current
net asset value on the date the Eligible Trustee's Deferrals are
credited to the Deferral Account. The Funds used as a basis for
determining the investment return shall be designated by the
Eligible Trustee on a form provided by the Administrator. The
Eligible Trustee's Deferrals shall be credited with a return
(positive or negative) equal to the rate of return on shares of
the Funds selected, assuming reinvestment of dividends and
distributions from the Funds.
(ii) The Eligible Trustee shall make a designation of one or more
of the Funds on a form provided by the Administrator which shall
remain effective until another valid direction has been made by
the Eligible Trustee as herein provided. The Eligible Trustee may
amend his designation of investment return as of the end of any
calendar quarter by giving written direction to the Administrator
at least 15 days prior to the end of such quarter. A timely
change to an Eligible Trustee's designation of investment return
shall become effective on the first day of the calendar quarter
following receipt by the Administrator.
4
<PAGE>
(iii) The investment alternatives made available to the Eligible
Trustee shall be the same as from time to time are communicated
to the Eligible Trustee by the Administrator.
(b) Except as provided below, the Eligible Trustee's Deferral Account
shall receive a return in accordance with his investment
designations, provided such designations conform to the
provisions of this Section. If
(i) the Eligible Trustee does not furnish the Administrator with
a written designation,
(ii) the written designation from the Eligible Trustee is
unclear, or
(iii) less than all of the Eligible Trustee's Deferral Account is
covered by such written designation,
then the entire amount of the Eligible Trustee's Deferral Account
shall be invested in The Money Market Fund until such time as the
Eligible Trustee shall provide the Administrator with
instructions.
The Fund shall provide a statement to the Eligible Trustee quarterly
showing such information as is appropriate, including the aggregate amount in
the Deferral Account, as of a reasonably current date.
SECTION 5. DISTRIBUTIONS FROM DEFERRAL ACCOUNT
5.1 ELIGIBLE TRUSTEE'S ELECTION. An Eligible Trustee shall elect at the
time of his Deferral Election to have the total amount in the Deferral Account,
if any, and the amount of Deferrals for the Deferral Year, plus applicable
investment return, deferred for any number of whole years, greater than two,
specified by the Eligible Trustee in such Deferral Election; provided, however,
that the distribution may in no event be deferred beyond the Eligible Trustee's
Separation from Service. He shall also elect the form of distribution:
(a) Lump sum; or
(b) Generally equal annual installments over a period of up to ten
(10) years.
5
<PAGE>
Such distributions shall commence within ninety (90) days subsequent to the
Valuation Date of the last year of the deferral period elected by the Eligible
Trustee above.
The time period for deferrals and/or the form of distribution may be
amended annually based on mutual agreement between the Eligible Trustee and the
Funds. Any such amendment shall become effective one year following the date the
amendment is submitted to the Administrator and the amendment shall apply to the
entire amount in the Deferral Account on the effective date. Any such agreement
shall be attached to the amendment.
5.2 ACCELERATION OF DISTRIBUTION. Notwithstanding the foregoing, in the
event of the liquidation, dissolution or winding up of a Fund or the
distribution of all or substantially all of a Fund's assets and property to its
shareholders, or in the event of a merger or reorganization of a Fund (unless
prior to such merger or reorganization, the Board of Trustees determines that
the Plan shall survive the merger or reorganization), all unpaid amounts in the
Deferral Accounts maintained by a Fund as of the effective date thereof shall be
paid in a lump sum to the Eligible Trustees on the effective date of such
liquidation, dissolution, winding up, distribution, merger, or reorganization.
For purposes of this Section 5.2, the Valuation Date will be the effective date
of the liquidation, dissolution, winding up, distribution, merger, or
reorganization.
5.3 DEATH PRIOR TO COMPLETE DISTRIBUTION OF DEFERRAL ACCOUNT. Upon the
death of the Eligible Trustee prior to the commencement of the distribution of
the amounts credited to his Deferral Account, the balance of such Account shall
be distributed to his Beneficiary in a lump sum as soon as practicable after the
Eligible Trustee's death. In the event of the death of the Eligible Trustee
after the commencement of such distribution, but prior to the complete
distribution of his Deferral Account, the balance of the amounts credited to his
Deferral Account shall be distributed to his Beneficiary over the remaining
period during which such amounts were distributable to the Eligible Trustee
under Section 5.1 hereof. Notwithstanding the above, the Board of Trustees, in
its sole discretion, may accelerate the distribution of the Deferral Account.
5.4 HARDSHIP AND UNFORESEEABLE EMERGENCY. An Eligible Trustee may request
at any time a withdrawal of part or all of the amount then credited to his
Deferral Account on account of Hardship and Unforeseeable Emergency by
submitting a written request to the Administrator accompanied by evidence that
his financial condition constitutes a Hardship and Unforeseeable Emergency. The
Administrator shall review the Eligible Trustee's request and determine the
extent, if any, to which such request is justified. Any such withdrawal shall be
limited to an amount reasonably necessary to meet the Hardship and Unforeseeable
Emergency, but not more than the amount of benefit to which the Eligible Trustee
would be entitled if his service as trustee were terminated. The Eligible
Trustee shall make any such request on a form provided by, and submitted to, the
Administrator.
6
<PAGE>
5.5 CHANGE IN CONTROL
(a) Notwithstanding anything herein to the contrary, in the event of
a "Change in Control" of a Fund's investment adviser, the Board
of Trustees may accelerate or extend the payment of all amounts
credited to the Deferral Accounts of the Eligible Trustees.
(b) The term "Change in Control" shall mean a change in "control" as
defined in section 2(a)(9) of the Investment Company Act of 1940.
5.6 DESIGNATION OF BENEFICIARY. For the purposes of Section 5.3 hereof, the
Eligible Trustee's Beneficiary shall be the person or persons so designated by
the Eligible Trustee in a written instrument submitted to the Administrator. The
Beneficiary may be changed at any time by the Eligible Trustee's submission of
such a written instrument to the Administrator. In the event the Eligible
Trustee fails to properly designate a Beneficiary or if his Beneficiary
predeceases him, then his beneficiary shall be his surviving spouse or, if none,
his estate.
SECTION 6. AMENDMENTS AND TERMINATION
6.1 AMENDMENTS. The Funds reserve the right to amend, in whole or in part,
and in any manner, any or all of the provisions of this Plan by action of their
Boards of Trustees, except that if any amendment adversely affects the accrued
rights of an Eligible Trustee, such amendment shall not be effective without the
consent of the Trustee.
6.2 TERMINATION. The Funds may terminate this Plan at any time. The
Eligible Trustees' Deferral Accounts shall become payable as of the Valuation
Date next following the effective date of the termination of this Plan.
SECTION 7. MISCELLANEOUS
7.1 RIGHTS OF CREDITORS
(a) This Plan is unfunded. Neither an Eligible Trustee nor any other
persons shall have any interest in any specific asset or assets
of the Funds by reason of any Deferral Account hereunder, nor any
rights to receive distribution of his Deferral Account except and
to the extent expressly provided hereunder. In order to cover
their obligations hereunder, the Funds will purchase investments.
These investments shall continue for all purposes to be a part of
the general assets and property of the Funds, subject to the
claims of its general creditors and no persons other than the
Funds shall by virtue of the provisions of this Plan have any
interest in such assets other than an interest as a general
creditor of the Funds.
7
<PAGE>
(b) The rights of an Eligible Trustee and the Beneficiaries to the
amounts held in the Deferral Account are unsecured and such
amounts shall be subject to the claims of the creditors of the
Funds. With respect to the payment of amounts held under the
Deferral Account, the Eligible Trustee and his Beneficiaries have
the status of unsecured creditors of the Funds. This Plan is
executed on behalf of the Funds by an officer of the Funds as
such and not individually. Any obligation of the Funds hereunder
shall be an unsecured obligation of the Funds and not of any
other person.
7.2 AGENTS. The Funds may employ agents and provide for such clerical,
legal, actuarial, accounting, advisory or other services as it deems necessary
to perform its duties under this Plan. The Funds shall bear the cost of such
services and all other expenses it incurs in connection with the administration
of this Plan.
7.3 LIABILITY AND INDEMNIFICATION. Except for their own negligence, willful
misconduct or willful breach of the terms of this Plan, the Funds shall be
indemnified and held harmless by the Eligible Trustees against liability or
losses occurring by reason of any act or omission of the Funds or any other
person, relating to this Plan.
7.4 INCAPACITY. If the Funds shall receive evidence satisfactory to them
that an Eligible Trustee or any Beneficiary entitled to receive any benefit
under the Plan is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such benefit and to give a valid
release therefor, and that another person or an institution is then maintaining
or has custody of the Eligible Trustee or Beneficiary and that no guardian,
committee or other representative of the estate of the Eligible Trustee or
Beneficiary shall have been duly appointed, the Funds may make payment of such
benefit otherwise payable to the Eligible Trustee or Beneficiary to such other
person or institution, including a custodian under a Uniform Gifts to Minors
Act, or corresponding legislation (who shall be an adult, a guardian of the
minor or a trust company), and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
7.5 GOVERNING LAW. This Plan is made and entered into in the State of Ohio
and all matters concerning its validity, construction and administration shall
be governed by the laws of the State of Ohio.
7.6 NON-GUARANTEE OF TRUSTEESHIP. Nothing contained in this Plan shall be
construed as a contract or guarantee of the right of an Eligible Trustee to be,
or remain as, a trustee of any of the Funds or to receive any, or any particular
rate of, Compensation.
7.7 COUNSEL. The Funds may consult with legal counsel with respect to the
meaning or construction of this Plan, its obligations or duties hereunder or
with respect to any action or proceeding or any question of law, and it shall be
fully protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of legal counsel.
8
<PAGE>
7.8 INTERESTS NOT TRANSFERABLE. An Eligible Trustee's and Beneficiaries'
interests in the Deferral Account may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred, alienated, assigned nor become subject
to execution, garnishment or attachment and any attempt to do so by any person
shall be deemed null and void. The Funds shall not recognize the rights of any
party under this Plan except those of the Eligible Trustee or his Beneficiary.
7.9 ENTIRE AGREEMENT. This Plan contains the entire understanding between
the Funds and the Eligible Trustees with respect to the payment of non-qualified
deferred compensation by the Funds to the Eligible Trustees.
7.10 INTERPRETATION OF PLAN. Interpretations of, and determinations related
to, this Plan made by the Funds in good faith, including any determinations of
the amounts of the Deferral Account, shall be conclusive and binding upon all
parties; and the Funds shall not incur any liability to an Eligible Trustee for
any such interpretation or determination so made or for any other action taken
by it in connection with this Plan in good faith.
7.11 SUCCESSORS AND ASSIGNS. This Plan shall be binding upon, and shall
inure to the benefit of, the Funds and their successors and assigns and to the
Eligible Trustees and their heirs, executors, administrators and personal
representatives.
7.12 SEVERABILITY. In the event any one or more provisions of this Plan are
held to be invalid or unenforceable, such illegality or unenforceability shall
not affect the validity or enforceability of the other provisions hereof and
such other provisions shall remain in full force and effect unaffected by such
invalidity or unenforceability.
IN WITNESS WHEREOF, the Funds have caused this Plan to be executed by one
of their duly authorized officers, this ________ day of _____________________,
1997.
[FUNDS]
By:
- -------------------------------- ----------------------------------
Witness
Name:
----------------------------------
Title:
----------------------------------
9
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
DEFERRAL ELECTION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
hereby make the following elections:
I. DEFERRAL OF COMPENSATION
You may elect to defer up to 100 percent of your Compensation (as defined under
the Plan), in whole percentage amounts.
Starting August 6, 1998 and for each year thereafter (unless subsequently
amended by completion of a new election form), you may elect any percentage
portion of your Compensation to be credited to your Deferral Account under the
Plan. The Deferral Account shall be further credited with a return on the
Deferral Account balance as provided under the Plan.
- -------------------------------------------------------------------------------
I hereby elect that the following percentage of my Compensation
be deferred under the Plan.
----%
- -------------------------------------------------------------------------------
II. ELECTION OF DEFERRAL PERIOD
You are required under the Plan to elect the time period for which Deferrals
(plus applicable investment return) are to be deferred. Such election shall
specify either (a) a number of years for the deferral, to be not less than two
(2) years, or (b) that the deferral continue until your Separation from Service.
I hereby make the following elections regarding my Deferrals under the Plan:
- -------------------------------------------------------------------------------
|_| The Compensation I elect to defer under the Plan is to be deferred for ___
years beyond the end of the Deferral year.
|_| The Compensation I elect to defer under the Plan is to be deferred until my
Separation from Service.
- -------------------------------------------------------------------------------
10
<PAGE>
III. FORM OF DISTRIBUTION
You are required to elect the form of distribution, which may be either (a) a
lump sum or (b) generally equal annual installments over a period of up to ten
years.
- -------------------------------------------------------------------------------
My distributions from the Plan are to be in the form of:
|_| a lump sum; or
|_| generally equal annual installments over ___ years (not
to exceed 10 years)
- -------------------------------------------------------------------------------
The time period for deferrals under II above and/or the form of distribution
under III above may be amended annually based on mutual agreement between the
Eligible Trustee and the Funds. Any such amendment shall become effective one
year following the date the amendment is submitted to the Administrator and the
amendment shall apply to the entire amount in the Deferral Account on the
effective date. Any such agreement shall be attached to this Form.
I understand that the amounts held in the Deferral Account shall remain the
general assets of the Funds and that, with respect to the payment of such
amounts, I am merely a general creditor of the Funds. I may not sell, encumber,
pledge, assign or otherwise alienate the amounts held under the Deferral
Account.
I hereby agree that the terms of the Plan are incorporated herein and are made a
part hereof.
- ------------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- ------------------------------- ---------------------------------
Witness Date
Accepted by Administrator:
- ------------------------------- ---------------------------------
Administrator Date
11
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
RETURN DESIGNATION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan") I
hereby elect that the return on my Deferral Account under the Plan be computed
as if the Deferral Account was invested in the following Funds:
- --------------------------------------------------------------------------------
Percentage of Current Percentage of Future
Name of Fund Deferral Account to be Deferral Account Earnings
Attributed to Fund to be Attributed to Fund
- --------------------------------------------------------------------------------
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- --------------------------------------------------------------------------------
Please include an attachment to this form if you need space to select additional
portfolios.
I realize that the designation included on this Form shall be effective until I
have filed another valid Return Designation Form with the Administrator. If (a)
I make no written designation, (b) the written designation is unclear or (c)
less than 100% of my Deferral Account is covered by this election, then my
Deferral Account shall be credited with the returns of the Money Market Fund
until I provide the Administrator with appropriate instructions. This form must
be delivered to the Administrator on or before 15 days prior to the end of the
calendar quarter to be effective the following quarter.
- --------------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- --------------------------------- ---------------------------------
Witness Date
12
<PAGE>
Accepted by Administrator:
- --------------------------------- ---------------------------------
Administrator Date
13
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
BENEFICIARY DESIGNATION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
hereby make the following beneficiary designations:
I. PRIMARY BENEFICIARY
I hereby select the following as my primary Beneficiary(ies) to receive at my
death in the form of a lump sum (or as otherwise provided in Section 5.3 of the
Plan) the amounts held in my Deferral Account under the Plan. In the event I am
survived by more than one primary Beneficiary, such primary Beneficiaries shall
share equally in the distribution of my Deferral Account unless I indicate
otherwise on an attachment to this form:
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
Please include an attachment to this form if you wish to select additional
primary Beneficiaries.
14
<PAGE>
II. SECONDARY BENEFICIARY
In the event I am not survived by any primary Beneficiary, I hereby appoint the
following as secondary Beneficiary(ies) to receive death benefits in the form of
a lump sum (or as otherwise provided in Section 5.3 of the Plan) under the Plan.
In the event I am survived by more than one secondary Beneficiary, such
secondary Beneficiaries shall share equally in the distribution of my Deferral
Account unless I indicate otherwise on an attachment to this form:
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
Please include an attachment to this form if you wish to select additional
secondary Beneficiaries.
I understand that if I am not survived by any primary or secondary Beneficiary,
my Beneficiary shall be as set forth under the Plan.
- ------------------------------- ----------------------------------
Witness ELIGIBLE TRUSTEE
- ------------------------------- ----------------------------------
Witness Date
Accepted by Administrator:
- ------------------------------- ----------------------------------
Administrator Date
15
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
HARDSHIP WITHDRAWAL FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
may request at any time a Hardship and Unforeseeable Emergency withdrawal (an
"Emergency withdrawal") of part or all of the amount then credited to my
Deferral Account. The amount of the Emergency withdrawal shall be limited to the
amount necessary to meet the Emergency.
- -------------------------------------------------------------------------------
I request a hardship withdrawal of $____________________ for the
following reason:
|_| My own or a dependent's sudden and unexpected illness.
|_| The loss of my property due to casualty.
|_| Other (explain):
- -------------------------------------------------------------------------------
In addition, I certify that the Emergency may not be relieved through (a)
reimbursement or compensation by insurance or otherwise; (b) liquidation of my
assets to the extent that liquidation itself would not cause an Emergency, or
(c) ceasing to defer receipt of any compensation that I have not yet earned. In
addition, I realize that the Administrator may require additional information
from me before deciding whether to grant this request for an Emergency
withdrawal.
- ----------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- ----------------------------- ---------------------------------
Witness Date
- -------------------------------------------------------------------------------
Administrator: Approved: _____ Denied: ____
- ----------------------------- ---------------------------------
Administrator Date
- -------------------------------------------------------------------------------
16
INDEPENDENT AUDITORS' CONSENT
The Board of Trustees of
Bond Portfolio:
We consent to the use of our report included herein dated February 11, 2000 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, 1999 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 LLP
Columbus, Ohio
April 27, 2000
AMENDED AND RESTATED CODE OF ETHICS
THE GROWTH STOCK PORTFOLIO
THE MUTUAL FUND PORTFOLIO
THE BOND PORTFOLIO
THE MONEY MARKET PORTFOLIO
THE UTILITIES STOCK PORTFOLIO
THE GROWTH MUTUAL FUND PORTFOLIO
THE AGGRESSIVE GROWTH MUTUAL FUND PORTFOLIO
THE FLEX-FUNDS
THE FLEX PARTNERS
The Growth Stock Portfolio, The Mutual Fund Portfolio, The Bond Portfolio,
The Money Market Portfolio, The Utilities Stock Portfolio, The Growth Mutual
Fund Portfolio, The Aggressive Growth Mutual Fund Portfolio, The Flex-funds, The
Flex-Partners (each a "Portfolio" and collectively the "Portfolios") have each
determined to adopt this Code of Ethics (the "Code") as of February 3, 1995, as
amended and restated on February 11, 2000, to specify and prohibit certain types
of personal securities transactions deemed to create a conflict of interest and
to establish reporting requirements and preventive procedures pursuant to the
provisions of Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the
"1940 Act").
I. DEFINITIONS
A. An "Access Person" means (i) any Trustee, Director, officer or
Advisory Person (as defined below) of the Portfolio or any investment
adviser thereof, or (ii) any director or officer of any principal
underwriter or placement agent of the Portfolio who, in the ordinary
course of his or her business, makes, participates in or obtains
information regarding the purchase or sale of securities for the
Portfolio for which the principal underwriter or placement agent so
acts or whose functions or duties as part of the ordinary course of
his or her business relate to the making of any recommendation to the
Portfolio regarding the purchase or sale of securities or (iii)
notwithstanding the provisions of clause (i) above, where the
investment adviser is primarily engaged in a business or businesses
other than advising registered investment companies or other advisory
clients, any trustee, director, officer or Advisory Person of the
investment adviser who, with respect to the Portfolio, makes any
recommendation or participates in the determination of which
recommendation shall be made, or whose principal function or duties
relate to the determination of which recommendation shall be made to
the Portfolio or who in connection with his or her duties, obtains any
information concerning securities recommendations being made by such
investment adviser to the Portfolio.
<PAGE>
B. An "Advisory Person" means any employee of the Portfolio or any
investment adviser thereof (or of any company in a control
relationship to the Portfolio or such investment adviser), who, in
connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or sale
of securities by the Portfolio or whose functions relate to any
recommendations with respect to such purchases or sales and any
natural person in a control relationship with the Portfolio or adviser
who obtains information regarding the purchase or sale of securities.
C. A "Portfolio Manager" means any person or persons with the direct
responsibility and authority to make investment decisions affecting
the Portfolio.
D. "Access Persons," "Advisory Persons" and "Portfolio Managers" shall
not include any individual who is required to and does file quarterly
reports with the Portfolio's investment adviser, any subadviser, the
administrator or the principal underwriter or placement agent
substantially in conformity with Rule 17j-1 of the 1940 Act or Rule
204-2 of the Investment Advisers Act of 1940.
E. "Beneficial Ownership" shall be interpreted subject to the provisions
of Rule 16a-1(a) (exclusive of Section (a)(1) of such Rule) of the
Securities Exchange Act of 1934.
F. "Control" shall have the same meaning as set forth in Section 2(a)9 of
the 1940 Act.
G. "Disinterested Trustee" means a Trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the 1940 Act. An
"interested person" includes any person who is a trustee, director,
officer, employee or owner of 5% or more of the outstanding stock of
any investment adviser. Affiliates of brokers or dealers are also
"interested persons", except as provided in Rule 2(a)(19)(1) under the
1940 Act.
H. The "Review Officer" is the person designated by the Portfolio's Board
of Trustees to monitor the overall compliance with this Code. In the
absence of any such designation the Review Officer shall be the
Treasurer or any Assistant Treasurer of the Portfolio.
I. The "Preclearance Officer" is the person designated by the Portfolio's
Board of Trustees to provide preclearance of any personal security
transaction as required by this Code of Ethics.
J. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
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K. "Security" shall have the meaning as set forth in Section 2(a)(36) of
the 1940 Act (in effect, all securities), except that it shall not
include direct obligations of the U.S. Government (or any other
"government security" as that term is defined in the 1940 Act),
bankers' acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments, including repurchase
agreements; shares of registered open-end investment companies; and
stock index futures.
L. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
II. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the personal
investment activities of all Access Persons.
Each Access Person shall adhere to the highest ethical standards and
shall:
A. at all times, place the interests of the Portfolio before his personal
interests;
B. conduct all personal securities transactions in a manner consistent
with this Code, so as to avoid any actual or potential conflicts of
interest, or an abuse of position of trust and responsibility; and
C. not take any inappropriate advantage of his position with or on behalf
of the Portfolio.
III. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. BLACKOUT PERIODS
1. No Access Person shall purchase or sell, directly or indirectly,
any security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership on a day
during which he knows or should have known the Portfolio has a
pending "buy" and "sell" order in that same security until that
order is executed or withdrawn.
2. No Advisory Person or Portfolio Manager shall purchase or sell,
directly or indirectly, any security in which he has, or by
reason of such transaction acquires, any direct or indirect
beneficial ownership within at least seven calendar days before
and after the Portfolio trades (or has traded) in that security.
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B. INITIAL PUBLIC OFFERINGS
With regard to acquiring any security in an "initial public offering"
(as defined in Rule 17j-1(a)(6) under the 1940 Act) for the personal
account of an Advisory Person, he or she shall
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether the investment opportunity should be reserved
for the Portfolio, and whether such opportunity is being offered
to such Advisory Person by virtue of his position with the
Portfolio) for any acquisition of securities in an initial public
offering; and
2. after authorization to acquire securities in an initial public
offering has been obtained, disclose such personal investment,
with respect to any subsequent consideration by the Portfolio (or
any other investment company for which he acts in a capacity as
an Advisory Person) for investment in that issuer.
C. LIMITED OFFERINGS
With regard to a "limited offering" (as defined in Rule 17j-1(a)(8)
under the 1940 Act), each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider among other
factors, whether the investment opportunity should be reserved
for the Portfolio, and whether such opportunity is being offered
to such Advisory Person by virtue of his position with the
Portfolio) for any acquisition of securities in a limited
offering; and
2. after authorization to acquire securities in a limited offering
has been obtained, disclose such personal investment with respect
to any subsequent consideration by the Portfolio (or any other
investment company for which he acts in a capacity as an Advisory
Person) for investment in that issuer.
If the Portfolio decides to purchase securities of an issuer the
shares of which have been previously obtained for personal
investment by an Advisory Person, that decision shall be subject
to an independent review by Advisory Persons with no personal
interest in the issuer.
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D. SHORT-TERM TRADING PROFITS
With regard to the purchase and sale, or sale and purchase, within 60
calendar days, of the same (or equivalent) securities of which an Advisory
Person has beneficial ownership, each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether such opportunity is being offered to such
Advisory Person by virtue of his position with the Portfolio) for
the closing transaction (whether a purchase or sale) which would
result in the short-term profit; and
2. after authorization to purchase or sell such securities has been
obtained, disclose such personal investment with respect to any
subsequent consideration by the Portfolio (or any other
investment company for which he acts in a capacity as an Advisory
Person) for investment in that issuer.
E. GIFTS
No Advisory Person shall receive any gift or other things of more than
DE MINIMIS value from any person or entity that does business with or
on behalf of the Portfolio.
F. SERVICE AS A DIRECTOR
1. No Advisory Person shall serve on a board of directors of a
publicly traded company without prior authorization from the
Board of Trustees of the Portfolio, based upon a determination
that such board service would be consistent with the interests of
the Portfolio and its investors..
2. If board service of an Advisory Person is authorized by the Board
of Trustees of the Portfolio, such Advisory Person shall be
isolated from the investment making decisions of the Portfolio
with respect to the company of which he is a director.
G. EXEMPTED TRANSACTIONS
The prohibition of Section III shall not apply to:
1. purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
2. purchases or sales that are non-volitional on the part of the
Access Person or the Portfolio, including mergers,
recapitalizations or similar transactions;
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3. purchases which are part of an automatic dividend reinvestment
plan;
4. purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired; and
5. purchases and sales that receive prior approval in writing by the
Preclearance Officer as (a) only remotely potentially harmful to
the Portfolio because they would be very unlikely to affect a
highly institutional market, (b) clearly not economically related
to the securities to be purchased or sold or held by the
Portfolio or client or (c) not representing any danger of the
abuses prescribed by Rule 17j-1, but only if in each case the
prospective purchaser has identified to the Review Officer all
factors of which he or she is aware which are potentially
relevant to a conflict of interest analysis, including the
existence of any substantial economic relationship between his or
her transaction and securities held or to be held by the
Portfolio.
IV. COMPLIANCE PROCEDURES
A. PRE-CLEARANCE
An Access Person (other than a Disinterested Trustee) may not,
directly or indirectly, acquire or dispose of beneficial ownership of
a security except as provided below unless:
1. such purchase or sale has been approved by the Preclearance
Officer or, in the case of persons employed by the Portfolio's
investment adviser, by a supervisory person designated by the
investment adviser.
2. the approved transaction is completed on the same day approval is
received; and
3. the Preclearance Officer has not rescinded such approval prior to
execution of the transaction.
B. REPORTING
1. Coverage:
a. Each Access Person, (other than Disinterested Trustees) shall
file with the Review Officer confidential quarterly reports
containing the information required in Sections IV.B.1.b. and
IV.B.2 of this Code with
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respect to ALL transactions during the preceding quarter in any
securities in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, PROVIDED that (i) no Access Person shall be required
to report transactions effected for any account over which such
Access Person has no direct or indirect influence or control
(except that such an Access Person must file a written
certification stating that he or she has no direct or indirect
influence or control over the account in question), (ii) an
Access Person who is an Access Person of the investment adviser
of the Portfolio shall file such Access Person's reports with the
investment adviser. To the extent such reports would duplicate
information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) of the Investment Advisers Act of 1940, no such
reports need be filed by such Access Person pursuant to this
Code, and (iii) an Access Person who is an Access Person of the
principal underwriter or placement agent of the Portfolio shall
file such Access Person's reports with the principal underwriter.
All such Access Persons shall file reports, even when no
transactions have been effected, representing that no
transactions subject to reporting requirements were effected.
b. If during such preceding quarter an Access Person establishes
any account in which any securities were held during such quarter
for the direct or indirect benefit of the Access Person, the
Access Person must also include the following information in such
quarterly report: (i) the name of the broker, dealer or bank with
whom the Access Person established the account and (ii) the date
the account was established.
2. Filings: Every report shall be made no later than 10 days after
the end of the calendar quarter in which the transaction to which
the report relates was effected, and, in addition to any
information specified in Section IV.B.1.b. above, shall contain
the following information:
a. the date of the transaction, the title and the number of
shares and the principal amount of each security involved;
b. the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. the price at which the transaction was effected;
d. the name of the broker, dealer or bank with or through whom
the transaction was effected; and
e. the date that the report is submitted.
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3. Any report may contain a statement that it shall not be construed
as an admission by the person making the report that he or she
has any direct or indirect beneficial ownership in the security
to which the report relates.
C. REVIEW
In reviewing transactions, the Review Officer shall take into account
the exemptions allowed under Section III.G. Before making a
determination that a violation has been committed by an Access Person,
the Review Officer shall give such person an opportunity to supply
additional information regarding the transaction in question.
D. DISCLOSURES OF PERSONAL HOLDINGS
1. Initial Holdings Report: Each Access Person shall report to the
Review Officer within 10 days after becoming an Access Person (i)
the title, number of shares and principal amount of each Security
in which such Access Person had any direct or indirect beneficial
ownership when he or she became an Access Person, (ii) the name
of any broker, dealer or bank with whom such Access Person
maintained an account in which securities were held for the
direct or indirect benefit of such Access Person as of the date
he or she became an Access Person, and (iii) the date the report
is submitted by such Access Person .
2. Annual Holdings Report: On or before January 30, 2001, and
annually thereafter, each Access Person (other than Disinterested
Trustees) shall report (i) the title, number of shares and
principal amount of each Security in which such Access Person had
any direct or indirect beneficial ownership, (ii) the name of any
broker, dealer, or bank with whom such Access Person maintains an
account in which any securities are held for the direct or
indirect benefit of such Access Person, and (iii) the date that
the report is submitted. All of the information in such report
must be current as of a date no more than 30 days before the
report is submitted.
E. CERTIFICATION OF COMPLIANCE
Each Access Person is required to certify annually that he or she has
read and understood the Portfolio's Code and recognizes that he or she
is subject to such Code. Further, each Access Person is required to
certify annually that he or she has complied with all the requirements
of the Code and that he or she has disclosed or reported all personal
securities transactions pursuant to the requirements of the Code.
V. REQUIREMENTS FOR DISINTERESTED TRUSTEES
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A. Every Disinterested Trustee shall file with the Review Officer a
quarterly report indicating that he or she had no reportable
transactions or a report containing the information required in
Section IV.B. of this Code with respect to transactions (other than
exempted transactions listed under Section III.G.) in any securities
in which such person has, or by reason of such transactions acquires,
any direct or indirect beneficial ownership, if such Trustee, at the
time of that transaction, knew or should have known, in the ordinary
course of pursuing his or her official duties as Trustee, that during
the 15-day period immediately preceding or after the transaction by
the Trustee:
1. such security was being purchased or sold by the Portfolio; or
2. such security was being considered for purchase or sale by the
Portfolio.
All Disinterested Trustees shall file reports, even when no
transactions have been effected, representing that no transactions
subject to reporting requirements were effected.
B. Notwithstanding the preceding section, any Disinterested Trustee may,
at his or her option, report the information described in section
IV.B.2 with respect to any one or more transactions and may include a
statement that the report shall not be construed as an admission that
the person knew or should have known of portfolio transactions by the
Portfolio in such securities.
VI. REVIEW BY THE BOARD OF TRUSTEES
At least annually, the Review Officer shall report to the Board of Trustees
regarding:
A. All existing procedures concerning Access Persons' personal trading
activities and any procedural changes made during the past year;
B. Any recommended changes to the Portfolios' Code or procedures; and
At least annually, the Review Officer shall furnish the Board of
Trustees a written report that (i) describes any issues arising under
this Code or such procedures, including, but not limited to,
information about any material violations of this Code or such
procedures and any sanctions imposed in response to such violations
and (ii) certifies that the Portfolios have adopted procedures
reasonably necessary to prevent Access Persons from violating this
Code.
VII. SANCTIONS
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A. SANCTIONS FOR VIOLATIONS BY ACCESS PERSONS (EXCEPT DISINTERESTED
TRUSTEES).
If the Review Officer determines that a violation of this Code has
occurred, he or she shall so advise the Board of Trustees and the
Board may impose such sanctions as it deems appropriate, including,
inter alia, disgorgement of profits, censure, suspension or
termination of the employment of the violator. All material violations
of the Code and any sanctions imposed as a result thereto shall be
reported in writing at least annually to the Board of Trustees.
B. SANCTIONS FOR VIOLATIONS BY DISINTERESTED TRUSTEES
If the Review Officer determines that any Disinterested Trustee has
violated this Code, he or she shall so advise the President of the
Portfolio and also a committee consisting of the Disinterested
Trustees (other than the person whose transaction is at issue) and
shall provide the committee with a report, including the record of
pertinent actual or contemplated portfolio transactions of the
Portfolio and any additional information supplied by the person whose
transaction is at issue. The committee, at its option, shall either
impose such sanctions as it deems appropriate or refer the matter to
the full Board of Trustees of the Portfolio, which shall impose such
sanctions as it deems appropriate.
VIII. MISCELLANEOUS
A. ACCESS PERSONS
The Review Officer of the Portfolio will identify all Access Persons
who are under a duty to make reports to the Portfolio and will inform
such persons of such duty. Any failure by the Review Officer to notify
any person of his or her duties under this Code shall not relieve such
person of his or her obligations hereunder.
B. RECORDS
The Portfolio shall maintain records in the manner and to the extent
set forth below, which records may be maintained on microfilm under
the conditions described in Rule 31a-2(f) under the 1940 Act, and
shall be available for examination by representatives of the
Securities and Exchange Commission ("SEC"):
1. a copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place;
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2. a record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
3. a copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the end
of the fiscal year in which it is made, the first two years in an
easily accessible place;
4. a list of all persons who are required, or within the past five
years have been required, to make reports pursuant to this Code
shall be maintained in an easily accessible place; and
5. a record of any decision, and the reasons supporting the
decision, to approve the acquisition by Advisory Persons of
securities under Sections III.B. and C., for at least five years
after the end of the fiscal year in which it is made, the first
two years in an easily accessible place.
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C. CONFIDENTIALITY
All reports of securities transactions and any other information filed
pursuant to this Code shall be treated as confidential, except to the
extent required by law.
D. INTERPRETATION OF PROVISIONS
The Board of Trustees of the Portfolio may from time to time adopt
such interpretations of this Code as it deems appropriate.
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AMENDED AND RESTATED
CODE OF ETHICS
MUIRFIELD INVESTORS, INC.
Muirfield Investors, Inc., a Delaware corporation ("MII"), hereby adopts
this Code of Ethics (the "Code") as of November 1, 1995, as amended and restated
on February 11, 2000, to specify and prohibit certain types of personal
securities transactions deemed to create a conflict of interest and to establish
reporting requirements and preventive procedures pursuant to the provisions of
Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the "1940 Act") and
Rule 204-2 of the Investment Advisers Act of 1940. The Board of Trustees of The
Flex-funds, The Flex-Partners and the Portfolios in which the series of The
Flex-funds and The Flex-Partners are invested (the "Portfolios") approved this
Amended and Restated Code of Ethics on February 11, 2000.
I. DEFINITIONS
A. An "Access Person" means any director or officer of MII or any of its
subsidiaries and any Advisory Person.
B. An "Advisory Person" means any employee of MII who, in connection with
his regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of securities by an account
or an Investment Company or whose functions relate to any
recommendations with respect to such purchases or sales and any
natural person in a control relationship with MII who obtains
information regarding the purchase or sale of securities.
C. "Beneficial Ownership" shall be interpreted subject to the provisions
of Rule 16a-1(a) (exclusive of Section (a)(1) of such Rule) of the
Securities Exchange Act of 1934.
D. "Control" shall have the same meaning as set forth in Section 2(a)(9)
of the 1940 Act.
E. The "Review Officer" is the person designated by MII's Board of
Directors to monitor the overall compliance with this Code. In the
absence of any such designation the Review Officer shall be the
Treasurer or any Assistant Treasurer of MII.
F. The "Preclearance Officer" is the person designated by MII's Board of
Directors to provide preclearance of any personal security transaction
as required by this Code of Ethics.
G. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
H. "Security" shall have the meaning as set forth in Section 2(a)(36) of
the 1940 Act (in effect, all securities), except that it shall not
include direct obligations of the U.S. Government (or any other
"government security" as that term is defined in the 1940 Act);
bankers' acceptances, bank certificates of deposit, commercial paper
and high
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quality short-term debt instruments, including repurchase agreements;
shares of registered open-end investment companies; and stock index
futures.
I. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
J. "Investment Company" (collectively, the "Investment Companies") means
a company registered as such under the 1940 Act and for which R.
Meeder & Associates, Inc. is the investment adviser.
II. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the personal
investment activities of all Access Persons.
Each Access Person shall adhere to the highest ethical standards and
shall:
A. at all times, place the interests of the accounts and the Investment
Companies before his personal interests;
B. conduct all personal securities transactions in a manner consistent
with this Code, so as to avoid any actual or potential conflicts of
interest, or an abuse of position of trust and responsibility; and
C. not take any inappropriate advantage of his position with or on behalf
of the accounts or the Investment Companies.
III. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. BLACKOUT PERIODS
1. No Access Person shall purchase or sell, directly or indirectly,
any security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership on a day
during which he knows or should have known an account or an
Investment Company has a pending "buy" or "sell" order in that
same security until that order is executed or withdrawn.
2. No Advisory Person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
within at least seven calendar days before and after an
Investment Company trades (or has traded) in that security.
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B. INITIAL PUBLIC OFFERINGS
With regard to acquiring any security in an "initial public
offering" (as defined in Rule 17j-1(a)(6) under the 1940 Act) for the
personal account of an Advisory Person, he or she shall
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether the investment opportunity should be reserved
for an account or an Investment Company, and whether such
opportunity is being offered to such Advisory Person by virtue of
his relationship to an account or his position with an Investment
Company) for any acquisition of securities in an initial public
offering; and
2. after authorization to acquire securities in an initial public
offering has been obtained, disclose such personal investment,
with respect to any subsequent consideration by an account or an
Investment Company for investment in that issuer.
C. LIMITED OFFERINGS
With regard to a "limited offering" (as defined in Rule 17j-1(a)(8)
under the 1940 Act), each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider among other
factors, whether the investment opportunity should be reserved
for an account or an Investment Company, and whether such
opportunity is being offered to such Advisory Person by virtue of
his relationship to an account or his position with an Investment
Company) for any acquisition of securities in a limited offering;
and
2. after authorization to acquire securities in a limited offering
has been obtained, disclose such personal investment with respect
to any subsequent consideration by an account or an Investment
Company for investment in that issuer.
If an account or an Investment Company decides to purchase
securities of an issuer the shares of which have been previously
obtained for personal investment by an Advisory Person, that
decision shall be subject to an independent review by Advisory
Persons with no personal interest in the issuer.
D. SHORT-TERM TRADING PROFITS
With regard to the purchase and sale, or sale and purchase,
within 60 calendar days, of the same (or equivalent) securities of
which an Advisory Person has beneficial ownership, each Advisory
Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether such opportunity is being offered to such
Advisory Person by virtue of his relationship to an
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account or his position with an Investment Company) for the
closing transaction (whether a purchase or sale) which would
result in the short-term profit; and
2. after authorization to purchase or sell such securities has been
obtained, disclose such personal investment with respect to any
subsequent consideration by an account or an Investment Company
for investment in that issuer.
E. GIFTS
No Advisory Person shall receive any gift or other things of more than
DE MINIMIS value from any person or entity that does business with or
on behalf of an account or an Investment Company.
F. SERVICE AS A DIRECTOR
1. No Advisory Person shall serve on a board of directors of a
publicly traded company without prior authorization from the
Board of Directors of MII and the boards of trustees of the
Investment Companies, based upon a determination that such board
service would be consistent with the interests of the accounts,
the Investment Companies and their investors.
2. If board service of an Advisory Person is authorized by the Board
of Directors of MII and the boards of trustees of the Investment
Companies, such Advisory Person shall be isolated from the
investment making decisions of the accounts and the Investment
Companies with respect to the company of which he is a director.
G. EXEMPTED TRANSACTIONS
The prohibition of Section III shall not apply to:
1. purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
2. purchases or sales that are non-volitional on the part of the
Access Person, an account or an Investment Company, including
mergers, recapitalizations or similar transactions;
3. purchases which are part of an automatic dividend reinvestment
plan;
4. purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired; and
5. purchases and sales that receive prior approval in writing by the
Preclearance Officer as (a) only remotely potentially harmful to
an account or an Investment Company because they would be very
unlikely to affect a highly institutional market, (b) clearly not
economically related to the securities to be purchased or sold or
held by an account or an Investment Company or (c) not
representing any
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danger of the abuses prescribed by Rule 17j-1 of the Act or Rule
204-2 of the Investment Adviser's Act of 1940, but only if in
each case the prospective purchaser has identified to the Review
Officer all factors of which he or she is aware which are
potentially relevant to a conflict of interest analysis,
including the existence of any substantial economic relationship
between his or her transaction and securities held or to be held
by an account or an Investment Company.
IV. COMPLIANCE PROCEDURES
A. PRE-CLEARANCE
An Access Person may not, directly or indirectly, acquire or dispose
of beneficial ownership of a security except as provided below unless:
1. such purchase or sale has been approved by the Preclearance
Officer;
2. the approved transaction is completed on the same day approval is
received; and
3. the Preclearance Officer has not rescinded such approval prior to
execution of the transaction.
B. REPORTING
1. Coverage:
a. Each Access Person shall file with the Review Officer
confidential quarterly reports containing the information
required in Sections IV.B.1.b. and IV.B.2 of this Code with
respect to ALL transactions during the preceding quarter in any
securities in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, PROVIDED that no Access Person shall be required to
report transactions effected for any account over which such
Access Person has no direct or indirect influence or control
(except that such an Access Person must file a written
certification stating that he or she has no direct or indirect
influence or control over the account in question).
b. If during such preceding quarter an Access Person establishes
any account in which any securities were held during such quarter
for the direct or indirect benefit of the Access Person, the
Access Person must also include the following information in such
quarterly report: (i) the name of the broker, dealer or bank with
whom the Access Person established the account and (ii) the date
the account was established.
2. Filings: Every report shall be made no later than 10 days after
the end of the calendar quarter in which the transaction to which
the report relates was effected, and, in addition to any
information specified in Section IV.B.1.b. above, shall contain
the following information:
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a. the date of the transaction, the title and the number of
shares and the principal amount of each security involved;
b. the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. the price at which the transaction was effected;
d. the name of the broker, dealer or bank with or through whom
the transaction was effected; and
e. the date that the report is submitted.
3. Any report may contain a statement that it shall not be construed
as an admission by the person making the report that he or she
has any direct or indirect beneficial ownership in the security
to which the report relates.
C. REVIEW
In reviewing transactions, the Review Officer shall take into account
the exemptions allowed under Section III.G. Before making a
determination that a violation has been committed by an Access Person,
the Review Officer shall give such person an opportunity to supply
additional information regarding the transaction in question.
D. DISCLOSURES OF PERSONAL HOLDINGS
1. Initial Holdings Report: Each Access Person shall report to the
Review Officer within 10 days after becoming an Access Person (i)
the title, number of shares and principal amount of each Security
in which such Access Person had any direct or indirect beneficial
ownership when such Access Person became an Access Person, (ii)
the name of any broker, dealer or bank with whom such Access
Person maintained an account in which securities were held for
the direct or indirect benefit of such Access Person as of the
date he or she became an Access Person, and (iii) the date the
report is submitted by such Access Person .
2. Annual Holdings Report: On or before January 30, 2001, and
annually thereafter, each Access Person shall report (i) the
title, number of shares and principal amount of each Security in
which such Access Person had any direct or indirect beneficial
ownership, (ii) the name of any broker, dealer, or bank with whom
such Access Person maintains an account in which any securities
are held for the direct or indirect benefit of such Access
Person, and (iii) the date that the report is submitted. All of
the information in such report must be current as of a date no
more than 30 days before the report is submitted.
E. CERTIFICATION OF COMPLIANCE
Each Access Person is required to certify annually that he or she has
read and understood this Code and recognizes that he or she is subject
to this Code. Further,
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each Access Person is required to certify annually that he or she has
complied with all the requirements of this Code and that he or she has
disclosed or reported all personal securities transactions pursuant to
the requirements of this Code.
V. REVIEW BY THE BOARDS
At least annually, the Review Officer shall report to the Board of
Directors of MII and the Boards of Trustees of the Investment Companies
regarding:
A. All existing procedures concerning Access Persons' personal trading
activities and any procedural changes made during the past year;
B. Any recommended changes to this Code or procedures.
At least annually, the Review Officer shall furnish each of such Boards a
written report that (i) describes any issues arising under this Code or
such procedures, including, but not limited to, information about any
material violations of this Code or such procedures and any sanctions
imposed in response to such violations and (ii) certifies that MII has
adopted procedures reasonably necessary to prevent Access Persons from
violating this Code.
VI. SANCTIONS
If the Review Officer determines that a violation of this Code has
occurred, he or she shall so advise the Board of Directors of MII and the
Board may impose such sanctions as it deems appropriate, including, inter
alia, disgorgement of profits, censure, suspension or termination of the
employment of the violator. All material violations of this Code and any
sanctions imposed with respect thereto shall be reported in writing at
least annually to the Board of Directors of MII and, if applicable, the
board of trustees of the Investment Company with respect to whose
securities the violation occurred.
VII. MISCELLANEOUS
A. ACCESS PERSONS
The Review Officer will identify all Access Persons who are under a
duty to make reports to MII and will inform such persons of such duty.
Any failure by the Review Officer to notify any person of his or her
duties under this Code shall not relieve such person of his or her
obligations hereunder.
B. RECORDS
MII shall maintain records in the manner and to the extent set forth
below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f) under the 1940 Act, and shall be
available for examination by representatives of the Securities and
Exchange Commission ("SEC"):
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1. a copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place;
2. a record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
3. a copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the end
of the fiscal year in which it is made, the first two years in an
easily accessible place;
4. a list of all persons who are required, or within the past five
years have been required, to make reports pursuant to this Code
shall be maintained in an easily accessible place; and
5. a record of any decision, and the reasons supporting the
decision, to approve the acquisition by Advisory Persons of
securities under Sections III.B. and C., for at least five years
after the end of the fiscal year in which it is made, the first
two years in an easily accessible place.
C. CONFIDENTIALITY
All reports of securities transactions and any other information filed
pursuant to this Code shall be treated as confidential, except to the
extent required by law.
D. INTERPRETATION OF PROVISIONS
The Board of Directors of MII may from time to time adopt such
interpretations of this Code as it deems appropriate.
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