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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 10
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 10
THE FLEX-PARTNERS (FORMERLY THE FLEX-FUNDS II)
(Exact Name of Registrant as Specified in Charter)
P.O. BOX 7177, 6000 MEMORIAL DRIVE, DUBLIN, OHIO 43017
(Address of Principal Executive Offices-Zip Code)
Registrant's Telephone Number, including Area Code: (614)766-7000
COMMISSION FILE NO. 33-48922
COMMISSION FILE NO. 811-6720
DONALD F. MEEDER, SECRETARY - R. MEEDER & ASSOCIATES, INC.
P.O. BOX 7177, 6000 MEMORIAL DRIVE, DUBLIN, OHIO 43017
(Name and Address of Agent for Service)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective
(check appropriate box).
/X/ immediately upon filing pursuant to paragraph (b) of Rule 485
/ / on pursuant to paragraph (b) of Rule 485.
/ / 60 days after filing pursuant to paragraph (a)(1).
/ / on (date) pursuant to paragraph (a)(1).
/ / 75 days after filing pursuant to paragraph (a)(2).
/ / on (date) pursuant to paragraph (a)(2) on Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Indefinite number of shares registered under Rule 24f-2 by filing of a
Pre-Effective Amendment No. 1, effective July 6, 1992. The 24(f)-2 Notice for
the fiscal year ended December 31,1994 was filed with the Commission on February
22, 1995.
The Mutual Fund Portfolio and the Utilities Stock Portfolio have also executed
this Registration Statement.
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SUPPLEMENT TO PROSPECTUS
DATED MAY 18, 1995
THE TAA FUND
The accompanying Prospectus of The Flex-Partners (the "Trust")
describes two series of the Trust, including the TAA Fund. The TAA Fund has two
classes of shares, Class A Shares and Class C Shares. While the other series of
the Trust described in the Prospectus, the BTB Fund, may offer for sale and sell
Class A Shares and Class C Shares, and the TAA Fund may offer for sale and sell
Class C Shares, certain regulatory issues remain to be resolved with respect to
the TAA Fund before it is permitted to offer for sale or sell Class A Shares.
Class A Shares of the TAA Fund are to be sold at net asset value plus
the applicable initial sales charge (of up to a maximum of 4% of the public
offering price) as shown in the table on page 16 of the Prospectus. Class A
Shares of the TAA Fund also bear a Rule 12b-1 fee and an asset based service fee
as described on page 16 of the Prospectus.
The description in the Prospectus of the TAA Fund reflects a structure
in which the TAA Fund invests its assets in a corresponding investment company
(the "Mutual Fund Portfolio") having the same investment objective as the TAA
Fund. The Mutual Fund Portfolio in turn invests in the shares of other
investment companies or mutual funds. Regulatory issues referred to above
remain unresolved with regard to this type of multiple-tiered structure, as
practiced by the Mutual Fund Portfolio and The TAA Fund, in the context of
Class A Shares, which impose an initial sales charge of up to a maximum of 4%
of the public offering price.
Consequently, until and unless these regulatory issues are resolved,
Class A Shares of the TAA Fund are not permitted to be offered for sale or
sold. The Trust is unable to predict when or whether the regulatory issues
referred to above will be resolved. Questions or comments may be directed to
the Trust at the address or telephone numbers set forth on the cover page of
the Prospectus.
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THE FLEX-PARTNERS BTB FUND AND TAA FUND
CROSS REFERENCE SHEET TO FORM N-1A
Part A.
Not Applicable.
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THE FLEX-PARTNERS THE BTB FUND
CROSS REFERENCE SHEET TO FORM N-1A
Part B.
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Item No. Statement of Additional Information
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10 Cover Page
11 Table of Contents
12 Not applicable
13 Investment Policies and Limitations
14(a)(b) Trustees and Officers
14(c) Not applicable
15(a)(b) Not applicable
15(c) Trustees and Officers
16(a)(b) Investment Adviser and Manager
Investment Subadviser
16(c) Not applicable
16(d) Not applicable
16(e) Not applicable
16(f) The Distributor
16(g) Not applicable
16(h) Description of the Trust
16(i) Contracts with Companies Affiliated With Manager
17 Portfolio Transactions
18(a) Cover Page
Description of the Trust
18(b) Not applicable
19(a) Additional Purchase and Redemption Information
19(b) Valuation of Portfolio Securities
Additional Purchase and Redemption Information
20 Distributions and Taxes
21(a) The Distributor
21(b) Not applicable
21(c) Not applicable
22(a) Not applicable
22(b) Performance
23 Financial Statements
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THE BTB FUND
A FUND OF THE FLEX-PARTNERS TRUST
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 6, 1995
This Statement is not a prospectus but should be read in conjunction
with the Prospectus of The Flex-Partners (dated May 18, 1995). Please retain
this document for future reference. A copy of the Prospectus may be obtained
from The Flex-Partners, 6000 Memorial Drive, Dublin, Ohio 43017, or by calling
1-800-494-3539. Capitalized terms used and not otherwise defined herein have
the same meanings as defined in the Prospectus.
The Fund offers two classes of shares which may be purchased at the
next determined net asset value per share plus a sales charge which, at the
election of the investor, may be imposed (i) at the time of purchase (Class A
shares) or (ii) on a deferred basis (Class C shares). These alternatives
permit an investor to choose the method of purchasing shares that is most
beneficial given the amount of the purchase, the length of time the investor
expects to hold the shares and other circumstances.
Each share of Class A and Class C represents an identical legal
interest in the investment portfolio of the Fund and has the same rights,
except that the Class C shares bear the higher expenses of a distribution plan
for such class which will cause the Class C shares to have a higher expense
ratio and to pay lower dividends than the Class A shares. Each class will have
exclusive voting rights with respect to its distribution plan. Although the
legal rights of holders of Class A and Class C shares are identical, the
different expenses borne by each class will result in different net asset
values and dividends. The two classes also have different exchange privileges
and Class C shares have a conversion feature.
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TABLE OF CONTENTS PAGE
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Investment Policies and Limitations 2
Portfolio Transactions 15
Valuation of Portfolio Securities 17
Performance 18
Additional Purchase and Redemption Information 20
Distributions and Taxes 24
Investment Adviser and Manager 25
Investment Subadviser 27
The Distributor 27
Trustees and Officers 28
Flex-Partners Retirement Plans 31
Contracts With Companies Affiliated With Manager 32
Description of the Trust 32
Financial Statements 33
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INVESTMENT ADVISER INVESTMENT SUBADVISER
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R. Meeder & Associates, Inc. Miller/Howard Investments, Inc.
DISTRIBUTOR TRANSFER AGENT
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Roosevelt & Cross, Incorporated Mutual Funds Service Co.
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INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Portfolio's assets that may be invested in
any security or other asset, or sets forth a policy regarding quality
standards, such standard or percentage limitation will be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any subsequent change in values, net
assets, or other circumstances will not be considered when determining whether
the investment complies with the Fund's investment policies and limitations.
The Fund's fundamental investment limitations cannot be changed without
approval by a "majority of the outstanding voting securities" (as defined in
the Investment Company Act of 1940) of the Fund. However, except for the
fundamental investment limitations set forth below, the investment policies and
limitations described in this Statement of Additional Information are not
fundamental and may be changed by the Trustees without shareholder approval.
THE FOLLOWING ARE THE PORTFOLIO'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY; PROVIDED THAT NOTHING IN THE FOLLOWING INVESTMENT
RESTRICTIONS WILL PREVENT THE FUND FROM INVESTING ALL OR PART OF THE FUND'S
ASSETS IN AN OPEN-END MANAGEMENT INVESTMENT COMPANY WITH THE SAME INVESTMENT
OBJECTIVE AS THE FUND. THE FUND OR THE PORTFOLIO MAY NOT
(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than obligations issued or guaranteed by the
government of the United States, or any of its agencies or instrumentalities)
if, as a result thereof, (a) more than 5% of the Portfolio's total assets would
be invested in the securities of such issuer, or (b) the Fund would hold more
than 10% of the voting securities of such issuer;
(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(3) borrow money, except that the Portfolio may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays)
to the extent necessary to comply with the 33 1/3% limitation;
(4) underwrite securities issued by others (except to the extent that the
Portfolio may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);
(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities)
if, as a result, more than 25% of the Portfolio's total assets would be
invested in the securities of companies whose principal business activities are
in the same industry, except that the Portfolio may invest more than 25% of its
total assets in securities of public utility companies;
(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
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(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Portfolio from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities);
or
(8) lend any security or make any other loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this limitation
does not apply to purchases of debt securities or to repurchase agreements.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
(i) The Portfolio does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.
(ii) The Portfolio does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin payments
in connection with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.
(iii) The Portfolio may borrow money only (a) from a bank or from a
registered investment company for which the Manager serves as investment
adviser or (b) by engaging in reverse repurchase agreements with any party
(reverse repurchase agreements are treated as borrowings for purposes of
fundamental investment limitation (3)). The Portfolio will not purchase any
security while borrowings representing more than 5% of its total assets are
outstanding. The Portfolio will not borrow from other funds advised by the
Manager if total outstanding borrowings immediately after such borrowing would
exceed 15% of the Portfolio's total assets.
(iv) The Portfolio does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued, including repurchase agreements with remaining maturities in excess of
seven days or securities without readily available market quotes.
(v) The Portfolio does not currently intend to invest in securities of
real estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded on the NASDAQ
National Market System.
(vi) The Portfolio does not currently intend to lend assets other than
securities to other parties, except by (a) lending money (up to 5% of the
Portfolio's net assets) to a registered investment company for which the
Manager serves as investment adviser or (b) acquiring loans, loan
participations, or other forms of direct debt instruments and in connection
therewith, assuming any associated unfunded commitments of the sellers. (This
limitation does not apply to purchases or debt securities or to repurchase
agreements.)
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(vii) The Portfolio does not currently intend to purchase securities of
other investment companies.
This limitation does not apply to securities received as dividends, through
offers of exchange, or as a result of reorganization, consolidation, or merger.
(viii) The Portfolio does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5% of
its total assets would be invested in the securities of business enterprises
that, including predecessors, have a record of less than three years of
continuous operation.
(ix) The Portfolio does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 5% of the Portfolio's net assets.
Included in that amount, but not to exceed 2% of the Portfolio's net assets,
may be warrants that are not listed on the New York Stock Exchange or the
American Stock Exchange. Warrants acquired by the Portfolio in units or
attached to securities are not subject to these restrictions.
(x) The Portfolio does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.
(xi) The Portfolio does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers and
directors of the Manager or the Subadviser who individually own more than 1/2
of 1% of the securities of such issuer, together own more than 5% of such
issuer's securities.
(xii) The Portfolio does not currently intend to invest in electric
utilities whose generation of power is derived from nuclear reactors.
For the Portfolio's limitations on futures and options transactions,
see the section entitled "Limitations on Futures and Options Transactions"
beginning on page 11. For the Portfolio's limitations on short sales, see the
section entitled "Short Sales" on page 15.
MONEY MARKET INSTRUMENTS. When investing in money market instruments,
the Portfolio will limit its purchases, denominated in U.S. dollars, to the
following securities.
* 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.
* Bank Obligations and Instruments Secured Thereby -
obligations including certificates of deposit, time deposits
and bankers' acceptances) of domestic banks having total
assets of $1,000,000,000 or more, instruments secured by such
obligations and obligations of foreign branches of such banks,
if the domestic parent bank is unconditionally liable to make
payment on the instrument if the foreign branch fails to
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make payment for any reason. The Portfolio may also invest in
obligations (including certificates of deposit and bankers'
acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more, if the domestic branch is
subject to the same regulation as United States banks. The
Portfolio will not invest at time of purchase more than 25% of
its assets in obligations of banks, nor will the Portfolio
invest more than 10% of its assets in time deposits.
* High Quality Commercial Paper - The Portfolio may
invest in commercial paper rated no lower than "A-2" by
Standard & Poor's Corporation or "Prime-2" by Moody's
Investors Services, Inc., or, if not rated, issued by a
company having an outstanding debt issue rated at least A by
Standard & Poor's or Moody's.
* Private Placement Commercial Paper - Private
placement commercial paper consists of unregistered
securities which are traded in public markets to qualified
institutional investors, such as the Portfolio. The
Portfolio's risk is that the universe of potential buyers for
the securities, should the Portfolio desire to liquidate a
position, is limited to qualified dealers and institutions,
and therefore such securities could have the effect of being
illiquid.
* High Grade Corporate Obligations - obligations rated
at least A by Standard & Poor's or Moody's. See rating
information below.
* Repurchase Agreements -- See "Repurchase Agreements"
below.
The Subadviser exercises due care in the selection of money market
instruments. 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.
Ratings
1. Moody's Investors Services, Inc.'s Corporate Bond Rating:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
or protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
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A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length or time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
2. Standard and Poor's Corporation's Corporate Bond Rating:
AAA - Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they
move with interest rates, and hence provide the maximum safety on all counts.
AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.
A - Bonds rated A are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the adverse
effect of changes in economic and trade conditions. Interest and principal are
regarded as safe. They predominantly reflect money rates in their market
behavior but, to some extent, also economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
3. A-1 and P-1 Commercial Paper Ratings:
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P")
has the following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is A-1, A-2, or A-3.
The rating P-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Among the factors considered by
Moody's in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the
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management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
4. Description of Permitted Money Market Investments:
Commercial Paper - refers to promissory notes issued by corporations
in order to finance their short term credit needs.
U.S. Government Obligations - are bills, certificates of
indebtedness, notes and bonds issued by the U.S. Treasury and agencies,
authorities and instrumentalities of the U.S. Government established under the
authority of an act of Congress. Some obligations of U.S. Government
agencies, authorities and instrumentalities are supported by the full faith and
credit of the U.S. Treasury, as for example, the Government National Mortgage
Association; others by the right of the issuer to borrow from the Treasury, as
in the case of Federal Farm Credit Banks and Federal National Mortgage
Association; and others only by the credit of the agency, authority or
instrumentality; as for example, Federal Home Loan Mortgage and Federal Home
Loan Bank.
Repurchase Agreements - See "Repurchase Agreements" below.
Certificates of Deposit - are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified or
variable rate of return and are normally negotiable.
Banker's Acceptances - are short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
Corporate Obligations - include bonds and notes issued by corporations
in order to finance longer term credit needs.
ILLIQUID INVESTMENTS are investments that cannot be sold or disposed
of in the ordinary course of business at approximately the prices at which they
are valued. Under the supervision of the Board of Trustees, the Subadviser
determines the liquidity of the Portfolio's investments and, through reports
from the Subadviser, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Portfolio's investments, the Subadviser may
consider various factors, including (1) the frequency of trades and quotations,
(2) the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for
trades (including the ability to assign or offset the Portfolio's rights and
obligations relating to the investment). Investments currently considered by
the Portfolio to be illiquid include repurchase agreements not entitling the
holder to payment of principal and interest within seven days, over-the-counter
options, and non-government stripped fixed-rate mortgage-backed securities.
Also, the Subadviser may determine some restricted securities,
government-stripped fixed-rate mortgage-backed securities, loans and other
direct debt instruments, and swap agreements to be illiquid. However, with
respect to over-the- counter options the Portfolio writes, all or a portion of
the value of the underlying instrument may be illiquid depending on the assets
held to cover the option and the nature and terms of any agreement the
Portfolio may have to close out the option before expiration. In the absence of
market quotations, illiquid investments are priced at fair value as determined
in good faith by the Board of Trustees. If through a change in values, net
assets, or other
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circumstances, the Portfolio were in a position where more than 10% of its net
assets were invested in illiquid securities, it would seek to take appropriate
steps to protect liquidity.
RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the Securities
Act of 1933, or in a registered public offering. Where registration is
required, the Portfolio may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to
seek registration and the time the Portfolio may be permitted to sell a
security under an effective registration statement. If, during such a period,
adverse market conditions were to develop, the Portfolio might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio
purchases a security and simultaneously commits to resell that security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value (at least equal to the amount of the agreed upon
resale price and marked to market daily) of the underlying security. The
Portfolio may engage in repurchase agreements with respect to any security in
which it is authorized to invest.
While it does not presently appear possible to eliminate all risks
from these transactions (particularly the possibility of a decline in the
market value of the underlying securities, as well as delays and costs to the
Portfolio in connection with bankruptcy proceedings), it is the Portfolio's
current policy to limit repurchase agreement transactions to parties whose
creditworthiness has been reviewed and found satisfactory by the Subadviser.
REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
Portfolio sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase agreement is outstanding,
the Portfolio will maintain appropriate liquid assets in a segregated custodial
account to cover its obligation under the agreement. The Portfolio will enter
into reverse repurchase agreements only with parties whose creditworthiness has
been found satisfactory by the Subadviser. Such transactions may increase
fluctuations in the market value of the Portfolio's assets and may be viewed as
a form of leverage.
SECURITIES LENDING. The Portfolio may lend securities to parties such
as broker-dealers or institutional investors.
Securities lending allows the Portfolio to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since
there may be delays in the recovery of loaned securities, or even a loss of
rights in collateral supplied should the borrower fail financially, loans will
be made only to parties deemed by the Subadviser to be of good standing.
Furthermore, they will only be made if, in the Subadviser's judgment, the
consideration to be earned from such loans would justify the risk.
The Subadviser understands that it is the current view of the SEC
Staff that the Portfolio may engage in loan transactions only under the
following conditions: (1) the Portfolio must receive 100% collateral in the
form of cash or cash equivalents (e.g., U.S. Treasury bills or notes) from the
borrower;
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(2) the borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Portfolio must be able to terminate
the loan at any time; (4) the Portfolio must receive reasonable interest on the
loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to any
increase in market value; (5) the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (6) the Board of Trustees must be able to
vote proxies on the securities loaned, either by terminating the loan or by
entering into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any
security in which the Portfolio is authorized to invest. Investing this cash
subjects that investment, as well as the security loaned, to market forces
(i.e., capital appreciation or depreciation).
FOREIGN INVESTMENTS. Foreign investments can involve significant risks
in addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and interest
from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets, and
prices on some foreign markets can be highly volatile.
Many foreign countries lack uniform accounting and disclosure
standards comparable to those applicable to U.S. companies, and it may be more
difficult to obtain reliable information regarding an issuer's financial
condition and operations.
In addition, the costs of foreign investing, including withholding
taxes, brokerage commissions, and custodial costs, are generally higher than
for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to
less government supervision. Foreign security trading practices, including
those involving the release of assets in advance of payment, may involve
increased risks in the event of a failed trade or the insolvency of a
broker-dealer, and may involve substantial delays. It may also be difficult to
enforce legal rights in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse
to the interests of U.S. investors, including the possibility of expropriation
or nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility
of default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that the Subadviser will be able
to anticipate or counter these potential events.
The considerations noted above generally are intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that trade a small number of securities.
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The Portfolio may invest in foreign securities that impose
restrictions on transfer within the U.S. or to U.S. persons. Although
securities subject to transfer restrictions may be marketable abroad, they may
be less liquid than foreign securities of the same class that are not subject
to such restrictions.
American Depository Receipts and European Depository Receipts (ADRs
and EDRs) are certificates evidencing ownership of shares of a foreign-based
corporation held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and EDRs
are alternatives to the purchase of the underlying securities in their national
markets and currencies.
FOREIGN CURRENCY TRANSACTIONS. The Portfolio may hold foreign currency
deposits from time to time, and may convert dollars and foreign currencies in
the foreign exchange markets. Currency conversion involves dealer spreads and
other costs, although commissions usually are not charged. Currencies may be
exchanged on a spot (i.e., cash) basis, or by entering into forward contracts to
purchase or sell foreign currencies at a future date and price. Forward
contracts generally are traded in an interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.
The Portfolio may use currency forward contracts to manage currency
risks and to facilitate transactions in foreign securities. The following
discussion summarizes the principal currency management strategies involving
forward contracts that could be used by the Portfolio.
In connection with purchases and sales of securities denominated in
foreign currencies, the Portfolio may enter into currency forward contracts to
fix a definite price for the purchase or sale in advance of the trade's
settlement date. This technique is sometimes referred to as a "settlement
hedge" or "transaction hedge."
The Subadviser expects to enter into settlement hedges in the normal
course of managing the Portfolio's foreign investments. The Portfolio could
also enter into forward contracts to purchase or sell a foreign currency in
anticipation of future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected by the
Subadviser.
The Portfolio may also use forward contracts to hedge against a
decline in the value of existing investments denominated in foreign currency.
For example, if the Portfolio owned securities denominated in pounds sterling,
it could enter into a forward contract to sell pounds sterling in return for
U.S. dollars to hedge against possible declines in the pound's value. Such a
hedge, sometimes referred to as a "position hedge," would tend to offset both
positive and negative currency fluctuations, but would not offset changes in
security values caused by other factors. The Portfolio could also hedge the
position by selling another currency expected to perform similarly to the pound
sterling - for example, by entering into a forward contract to sell
Deutschemarks or European Currency Units in return for U.S. dollars. This type
of hedge, sometimes referred to as a "proxy hedge," could offer advantages in
terms of cost, yield, or efficiency, but generally would not hedge currency
exposure as effectively as a simple hedge into U.S. dollars. Proxy hedges may
result in losses if the currency used to hedge does not perform similarly to
the currency in which the hedged securities are denominated.
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Under certain conditions, SEC guidelines require mutual funds to set
aside cash and appropriate liquid assets in a segregated custodial account to
cover currency forward contracts. As required by SEC guidelines, the Portfolio
will segregate assets to cover currency forward contracts, if any, whose
purpose is essentially speculative. The Portfolio will not segregate assets to
cover forward contracts entered into for hedging purposes, including settlement
hedges, position hedges, and proxy hedges.
Successful use of forward currency contracts will depend on the
Subadviser's skill in analyzing and predicting currency values. Forward
contracts may substantially change the Portfolio's investment exposure to
changes in currency exchange rates, and could result in losses to the Portfolio
if currencies do not perform as the Subadviser anticipates. For example, if a
currency's value rose at a time when the Subadviser had hedged the Portfolio by
selling that currency in exchange for dollars, the Portfolio would be unable to
participate in the currency's appreciation. If the Subadviser hedges currency
exposure through proxy hedges, the Portfolio could realize currency losses from
the hedge and the security position at the same time if the two currencies do
not move in tandem. Similarly, if the Subadviser increases the Portfolio's
exposure to a foreign currency, and that currency's value declines, the
Portfolio will realize a loss. There is no assurance that the Subadviser's use
of forward currency contracts will be advantageous to the Portfolio or that it
will hedge at an appropriate time. The policies described in this section are
non-fundamental policies of the Portfolio.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Portfolio will
not: (a) sell futures contracts, purchase put options, or write call options if,
as a result, more than 50% of the Portfolio's total assets would be hedged with
futures and options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the Portfolio's total obligations upon
settlement or exercise of purchased futures contracts and written put options
would exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by the
Portfolio would exceed 5% of the Portfolio's total assets. These limitations do
not apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate features
similar to options. The above limitations on the Portfolio's investments in
futures contracts and options, and the Portfolio's policies regarding futures
contracts and options discussed elsewhere in this Statement of Additional
Information, may be changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Portfolio purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future
date. When the Portfolio sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the
purchase and sale will take place is fixed when the Portfolio enters into the
contract.
Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities prices, such as the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). Futures can be held until their delivery dates, or can be
closed out before then if a liquid secondary market is available.
The value of a futures contract tends to increase and decrease in
tandem with the value of its underlying instrument. Therefore, purchasing
futures contracts will tend to increase the Portfolio's exposure to positive
and negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Portfolio sells a
futures contract, by contrast, the value of its futures position will tend to
move in a direction contrary to the market. Selling futures
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contracts, therefore, will tend to offset both positive and negative market
price changes, much as if the underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and seller
are required to deposit "initial margin" with a futures broker, known as a
futures commission merchant (FCM), when the contract is entered into. Initial
margin deposits are typically equal to a percentage of the contract's value.
If the value of either party's position declines, that party will be
required to make additional "variation margin" payments to settle the change in
value on a daily basis. The party that has a gain may be entitled to receive
all or a portion of this amount. Initial and variation margin payments do not
constitute purchasing securities on margin for purposes of the Portfolio's
investment limitations. In the event of the bankruptcy of an FCM that holds
margin on behalf of the Portfolio, the Portfolio may be entitled to return of
margin owed to it only in proportion to the amount received by the FCM's other
customers, potentially resulting in losses to the Portfolio.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option the
Portfolio obtains the right (but not the obligation) to sell the option's
underlying instrument at a fixed strike price. In return for this right, the
Portfolio pays the current market price for the option (known as the option
premium). Options have various types of underlying instruments, including
specific securities, indices of securities prices, and futures contracts. The
Portfolio may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Portfolio
exercises the option, it completes the sale of the underlying instrument at the
strike price. The Portfolio may also terminate a put option position by closing
it out in the secondary market at its current price, if a liquid secondary
market exists.
The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price.
A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to
suffer a loss if security prices do not rise sufficiently to offset the cost of
the option.
WRITING PUT AND CALL OPTIONS. When the Portfolio writes a put option,
it takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Portfolio assumes the obligation to pay
the strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures contract
the Portfolio will be required to make margin payments to an FCM as described
above for futures contracts. The Portfolio may seek to terminate its position in
a put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not liquid for
a put option the
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Portfolio has written, however, the Portfolio must continue to be prepared to
pay the strike price while the option is outstanding, regardless of price
changes, and must continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to
profit, although its gain would be limited to the amount of the premium it
received. If security prices remain the same over time, it is likely that the
writer will also profit, because it should be able to close out the option at a
lower price. If security prices fall, the put writer would expect to suffer a
loss. This loss should be less than the loss from purchasing the underlying
instrument directly, however, because the premium received for writing the
option should mitigate the effects of the decline.
Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument, in return for the strike price, upon exercise
of the option. The characteristics of writing call options are similar to those
of writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is
greater, a call writer gives up some ability to participate in security price
increases.
COMBINED POSITIONS. The Portfolio may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Portfolio may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call
option at one strike price and buying a call option at a lower price, in order
to reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open and
close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Portfolio's current or
anticipated investments exactly. The Portfolio may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Portfolio's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the
Portfolio's investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes in
volatility of the underlying instrument, and the time remaining until
expiration of the contract, which may not affect security prices the same way.
Imperfect correlation may also result from differing levels of demand in the
options and futures markets and the securities markets, from structural
differences in how options and futures and securities are traded, or from
imposition of daily price fluctuation limits or trading halts.
The Fund may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility
between the contract and the securities, although this may not be successful in
all cases. If
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price changes in the Portfolio's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading volume
and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily price
fluctuation limits for options and futures contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible for the Portfolio to enter into new
positions or close out existing positions. If the secondary market for a
contract is not liquid because of price fluctuation limits or otherwise, it
could prevent prompt liquidation of unfavorable positions, and potentially could
require the Portfolio to continue to hold a position until delivery or
expiration regardless of changes in its value. As a result, the Portfolio's
access to other assets held to cover its options or futures positions could also
be impaired.
OTC OPTIONS. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter options (options not traded on
exchanges) generally are established through negotiation with the other party to
the option contract. While this type of arrangement allows the Portfolio greater
flexibility to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.
OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that they
are traded on exchanges (and have margin requirements) and are standardized as
to contract size and delivery date. Most currency futures contracts call for
payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract. The purchaser of a
currency call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying currency.
The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above. The
Portfolio may purchase and sell currency futures and may purchase and write
currency options to increase or decrease its exposure to different foreign
currencies. The Portfolio may also purchase and write currency options in
conjunction with each other or with currency futures or forward contracts.
Currency futures and options values can be expected to correlate with exchange
rates, but may not reflect other factors that affect the value of the Fund's
investments. A currency hedge, for example, should protect a Yen-denominated
security from a decline in the Yen, but will not protect the Portfolio against
a price decline resulting from deterioration in the issuer's creditworthiness.
Because the value of the Portfolio's foreign-denominated investments changes in
response to many factors other than exchange rates, it may not be possible to
match the amount of currency options and futures to the value of the
Portfolio's investments exactly over time.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Portfolio will
comply with guidelines established by the SEC with respect to coverage of
options and futures strategies by mutual funds, and if the guidelines so
require, will set aside appropriate liquid assets in a segregated custodial
account in the
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amount prescribed. Securities held in a segregated account cannot be sold while
the futures or option strategy is outstanding, unless they are replaced with
other suitable assets. As a result, there is a possibility that segregation of
a large percentage of the Portfolio's assets could impede portfolio management
or the Fund's ability to meet redemption requests or other current obligations.
SHORT SALES. The Portfolio may enter into short sales with respect to
stocks underlying its convertible security holdings. For example, if the
Subadviser anticipates a decline in the price of the stock underlying a
convertible security the Portfolio holds, it may sell the stock short. If the
stock price subsequently declines, the proceeds of the short sale could be
expected to offset all or a portion of the effect of the stock's decline on the
value of the convertible security. The Fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities underlying
its convertible security holdings under normal circumstances.
When the Portfolio enters into a short sale, it will be required to
set aside securities equivalent in kind and amount to those sold short (or
securities convertible or exchangeable into such securities) and will be
required to continue to hold them while the short sale is outstanding. The
Portfolio will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.
PORTFOLIO TURNOVER. The Portfolio has no fixed policy with respect to
portfolio turnover; however, as a result of the Portfolio's investment
policies, the Subadviser expects the annual portfolio turnover rate will be 50%
or less. The portfolio turnover rate is calculated by dividing the lesser of
sales or purchases of portfolio securities by the average monthly value of the
Portfolio's securities, excluding securities having a maturity at the date of
purchase of one year or less. High portfolio turnover may involve
correspondingly greater brokerage commissions and other transaction costs which
will be borne directly by the Portfolio.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of the Portfolio by the Subadviser pursuant to authority contained in
the investment advisory agreement and investment subadvisory agreement. The
Subadviser is also responsible for the placement of transaction orders for
accounts for which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, the Subadviser considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions, and arrangements for payment of Portfolio
expenses.
The Fund's brokerage transactions involving securities of companies
headquartered in countries other than the United States will be conducted
primarily on the markets and principal exchanges of such countries. Foreign
markets are generally not as developed as those located in the United States,
which may result in higher transaction costs, delayed settlement and less
liquidity for trades effected in foreign markets. Transactions on foreign
exchanges are usually subject to fixed commissions that generally are higher
than negotiated commissions on U.S. transactions. There is generally less
government supervision and regulation of exchanges and brokers in foreign
countries than in the United States.
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The Portfolio may execute portfolio transactions with broker-dealers
who provide research and execution services to the Portfolio or other accounts
over which the Subadviser or its affiliates exercise investment discretion.
Such services may include advice concerning the value of securities; the
advisability of investing in, purchasing or selling securities; the
availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). The selection of such
broker-dealers generally is made by the Subadviser (to the extent possible
consistent with execution considerations) in accordance with a ranking of
broker-dealers determined periodically by the Subadviser's investment staff
based upon the quality of research and execution services provided.
The receipt of research from broker-dealers that execute transactions
on behalf of the Portfolio may be useful to the Subadviser in rendering
investment management services to the Portfolio or its other clients, and
conversely, such research provided by broker-dealers who have executed
transaction orders on behalf of other Subadviser clients may be useful to the
Subadviser in carrying out its obligations to the Portfolio. The receipt of
such research is not expected to reduce the Subadviser's normal independent
research activities; however, it enables the Subadviser to avoid the additional
expenses that could be incurred if the Subadviser tried to develop comparable
information through its own efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, the Subadviser must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or the Subadviser's overall
responsibilities to the Portfolio and its other clients. In reaching this
determination, the Subadviser will not attempt to place a specific dollar value
on the brokerage and research services provided or to determine what portion of
the compensation should be related to those services.
The Subadviser is authorized to use research services provided by and
to place portfolio transactions with brokerage firms that have provided
assistance in the distribution of shares of the Fund or shares of other
Flex-Partners' funds or Flex-funds' funds to the extent permitted by law.
The Subadviser may allocate brokerage transactions to broker-dealers
who have entered into arrangements with the Subadviser under which the
broker-dealer allocates a portion of the commissions paid by the Portfolio
toward payment of the Portfolio's expenses, such as transfer agent fees of
Mutual Funds Service Co. or custodian fees. The transaction quality must,
however, be comparable to those of other qualified broker-dealers.
The Trustees of the Portfolio periodically review the Subadviser's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Portfolio and review the commissions
paid by the Portfolio over representative periods of time to determine if they
are reasonable in relation to the benefits to the Portfolio.
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From time to time, the Trustees of the Portfolio will review whether
the recapture for the benefit of the Portfolio of some portion of the brokerage
commissions or similar fees paid by the Portfolio on portfolio transactions is
legally permissible and advisable.
The Portfolio seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture arrangements
are in effect. The Trustees of the Portfolio intend to continue to review
whether recapture opportunities are available and are legally permissible and,
if so, to determine in the exercise of their business judgment, whether it
would be advisable for the Portfolio to seek such recapture.
Although the Trustees and officers of the Portfolio are substantially
the same as those of other portfolios managed by the Manager, investment
decisions for the Portfolio are made independently from those of other
portfolios managed by the Manager or accounts managed by affiliates of the
Manager. It sometimes happens that the same security is held in the portfolio
of more than one of these funds or accounts. Simultaneous transactions are
inevitable when several portfolios are managed by the same investment adviser,
particularly when the same security is suitable for the investment objective of
more than one portfolio.
When two or more portfolios are simultaneously engaged in the purchase
or sale of the same security, the prices and amounts are allocated in
accordance with a formula considered by the officers of the portfolios involved
to be equitable to each portfolio. In some cases this system could have a
detrimental effect on the price or value of the security as far as the
Portfolio is concerned. In other cases, however, the ability of the Portfolio
to participate in volume transactions will produce better executions and prices
for the Portfolio. It is the current opinion of the Trustees of the Portfolio
that the desirability of retaining the Manager as investment adviser to the
Portfolio outweighs any disadvantages that may be said to exist from exposure
to simultaneous transactions.
The Portfolio effects transactions in its portfolio securities on
securities exchanges on a non-exclusive basis through Roosevelt & Cross,
Incorporated (the "Distributor") in its capacity as a broker-dealer. Because
the Distributor is an "affiliated person" of the Portfolio (as such term is
defined under the Investment Company Act of 1940) by serving as the distributor
of the Fund, the Board of Trustees of the Portfolio has adopted procedures
pursuant to Rule 17e-1 under the Investment Company Act of 1940 governing the
payment of commissions by the Portfolio to the Distributor in its capacity as a
broker-dealer.
VALUATION OF PORTFOLIO SECURITIES
Portfolio securities are valued by various methods depending on the
primary market or exchange on which they trade. Equity securities for which the
primary market is the U.S. are valued at last sale price or, if no sale has
occurred, at the closing bid price. Equity securities for which the primary
market is outside the U.S. are valued using the official closing price or the
last sale price in the principal market where they are traded. If the last sale
price (on the local exchange) is unavailable, the last evaluated quote or last
bid price is normally used. Short-term securities are valued either at
amortized cost or at original cost plus accrued interest, both of which
approximate current value. Fixed-income securities are valued primarily by a
pricing service that uses direct exchange quotes and a vendor security
valuation matrix which incorporates both dealer-supplied valuations and
electronic data processing techniques.
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This twofold approach is believed to more accurately reflect fair
value because it takes into account appropriate factors such as institutional
trading in similar groups of securities, yield, quality, coupon rate, maturity,
type of issue, trading characteristics, and other market data, without
exclusive reliance upon quoted, exchange, or over-the-counter prices.
Securities and other assets for which there is no readily available
market are valued in good faith by the Board of Trustees. The procedures set
forth above need not be used to determine the value of the securities owned by
the Portfolio if, in the opinion of the Board of Trustees, some other method
(e.g., closing over-the-counter bid prices in the case of debt instruments
traded on an exchange) would more accurately reflect the fair market value of
such securities.
Generally, the valuation of foreign and domestic equity securities, as
well as corporate bonds, U.S. government securities, money market instruments,
and repurchase agreements, is substantially completed each day at the close of
the New York Stock Exchange (NYSE).
The values of any such securities held by the Portfolio are determined
as of such time for the purpose of computing the Portfolio's net asset value.
Foreign security prices are furnished by independent brokers or quotation
services which express the value of securities in their local currency. The
Manager gathers all exchange rates daily at the close of the NYSE using the
last quoted price on the local currency and then translates the value of
foreign securities from their local currency into U.S. dollars. Any changes in
the value of forward contracts due to exchange rate fluctuations and days to
maturity are included in the calculation of net asset value. If an
extraordinary event that is expected to materially affect the value of a
portfolio security occurs after the close of an exchange on which that security
is traded, then the security will be valued as determined in good faith by the
Board of Trustees.
PERFORMANCE
The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's share price and total returns
fluctuate in response to market conditions and other factors, and the value of
Fund shares when redeemed may be more or less than their original cost.
TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect
all aspects of the Fund's return, including the effect of reinvesting dividends
and capital gain distributions, and any change in the Fund's net asset value
over the period. Average annual total return is determined separately for
Class A and Class C shares. Average annual returns will be calculated by
determining the growth or decline in value of a hypothetical historical
investment in the Fund over a stated period, and then calculating the annually
compounded percentage rate that would have produced the same result if the rate
of growth or decline in value had been constant over the period. For example, a
cumulative return of 100% over ten years would produce an average annual return
of 7.18%, which is the steady annual rate of return that would equal 100%
growth on a compounded basis in ten years. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that the Fund's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as opposed to
the actual year-to-year performance of the Fund.
In addition to average annual returns, the Fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period. Average annual and
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cumulative total returns may be quoted as a percentage or as a dollar amount,
and may be calculated for a single investment, a series of investments, or
series of redemptions over any time period. Total returns may be broken down
into their components of income and capital (including capital gains and
changes in share price) in order to illustrate the relationship of these
factors and their contributions to total return. Total returns may be quoted on
a before-tax or after-tax basis. Total returns, yields, and other performance
information may be quoted numerically, or in a table, graph, or similar
illustration.
NET ASSET VALUE. Charts and graphs using the Fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted net asset value includes any distributions paid by the
Fund and reflects all elements of its return. Unless otherwise indicated, the
Fund's adjusted net asset values are not adjusted for sales charges, if any.
MOVING AVERAGES. The Fund may illustrate performance using moving
averages. A long-term moving average is the average of each week's adjusted
closing net asset value for a specified period. A short-term moving average is
the average of each day's adjusted closing net asset value for a specified
period. Moving Average Activity Indicators combine adjusted closing net asset
values from the last business day of each week with moving averages for a
specified period to produce indicators showing when a net asset value has
crossed, stayed above, or stayed below its moving average.
HISTORICAL FUND RESULTS. The Fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as mutual
fund rankings prepared by Lipper Analytical Services, Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the performance
of mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and total return is prepared without regard
to tax consequences. In addition to the mutual fund rankings, the Fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.
From time to time, the Fund's performance may also be compared to
other mutual funds tracked by financial or business publications and
periodicals. For example, the Fund may quote Morningstar, Inc. in its
advertising materials. Morningstar, Inc. is a mutual fund rating service that
rates mutual funds on the basis of risk-adjusted performance. Rankings that
compare the performance of Flex-Partners or Flex-funds funds to one another in
appropriate categories over specific periods of time may also be quoted in
advertising.
In advertising materials, the Trust may reference or discuss its
products and services, which may include: other Flex-Partners or Flex- funds
funds; retirement investing; the effects of periodic investment plans and
dollar cost averaging; saving for college; and charitable giving. In addition,
the Fund may quote financial or business publications and periodicals,
including model portfolios or allocations, as they relate to Fund management,
investment philosophy, and investment techniques. The Fund may also reprint,
and use as advertising and sales literature, articles from Reflexions, a
quarterly magazine provided free of charge to Flex-Partners and Flex-funds
shareholders.
VOLATILITY. The Fund may quote various measures of volatility and
benchmark correlation in advertising. In addition, the Fund may compare these
measures to those of other funds. Measures of volatility seek to compare the
Fund's historical share price fluctuations or total returns to those of a
19
<PAGE> 24
benchmark. Measures of benchmark correlation indicate how valid a comparative
benchmark may be. All measures of volatility and correlation are calculated
using averages of historical data.
MOMENTUM INDICATORS indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the Fund's
percentage change in price movements over that period.
The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during periods of low price levels.
The Fund may be available for purchase through retirement plans or
other programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually would have an after-tax value of
$1,949 after ten years, assuming tax was deducted from the return each year at
a 31% rate. An equivalent tax- deferred investment would have an after-tax
value of $2,100 after ten years, assuming tax was deducted at a 31% rate from
the tax-deferred earnings at the end of the ten-year period.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
The Fund is open for business and its net asset value per share (NAV)
is calculated each day the NYSE is open for trading. The NYSE has designated
the following holiday closings for 1995: Washington's Birthday (observed), Good
Friday, Memorial Day (observed), Independence Day (observed), Labor Day,
Thanksgiving Day, and Christmas Day (observed). Although the Subadviser expects
the same holiday schedule, with the addition of New Year's Day, to be observed
in the future, the NYSE may modify its holiday schedule at any time.
The Fund's net asset value is determined as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier if
trading on the NYSE is restricted or as permitted by the SEC. To the extent
that portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have
access to the Fund to purchase or redeem shares.
If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in securities
or other property, valued for this purpose as they are valued in computing the
Fund's NAV. Shareholders receiving securities or other property on redemption
may realize a gain or loss for tax purposes, and will incur any costs of sale,
as well as the associated inconveniences.
Shareholders of the Fund will be able to exchange their Class A shares
for Class A shares of any mutual fund that is a series of The Flex-Partners
(each a "Flex-Partners Fund"), and shares of The Flex-funds Money Market Fund.
No fee or sales load will be imposed upon the exchange. Shareholders of
20
<PAGE> 25
The Flex-funds Money Market Fund who acquired such shares upon exchange of
Class A shares of the Fund may use the exchange privilege only to acquire Class
A shares of a Flex-Partners Fund.
Shareholders of the Fund may exchange their Class C shares for Class C
shares of other Flex-Partners Funds. If Class C shares of the Fund are
exchanged for Class C shares of other Flex-Partners Funds, no contingent
deferred sales charge will be payable upon such exchange of Class C shares, but
a contingent deferred sales charge will be payable upon the redemption of Class
C shares acquired as a result of the exchange. The applicable sales charge
will be that imposed by the Fund in which shares were initially purchased and
the purchase date will be deemed to be the date of the initial purchase, rather
than the date of the exchange.
At any time after acquiring shares of other funds participating in the
Class C exchange privilege, the shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class C shares of the Fund
without subjecting such shares to any contingent deferred sales charge. Shares
of any fund participating in the Class C exchange privilege that were acquired
through reinvestment of dividends or distributions may be exchanged for Class C
shares of other funds without being subject to any contingent deferred sales
charge.
Additional details about the exchange privilege and prospectuses for
each of the Flex-Partners Funds and The Flex-funds Money Market Fund are
available from the Fund's Transfer Agent. The exchange privilege may be
modified, terminated or suspended on 60 days' notice, and any fund, including
the Fund, or the Distributor, has the right to reject any exchange application
relating to such fund's shares. The 60 day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge ordinarily
payable at the time of an exchange, or (ii) the Fund suspends the redemption of
the shares to be exchanged as permitted under the 1940 Act or the rules and
regulations thereunder, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance with
its investment objective and policies.
In the Prospectus, the Fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in the Subadviser's judgment, the Fund would be unable
to invest effectively in accordance with its investment objective and policies,
or would otherwise potentially be adversely affected.
COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor
or eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other series of the Trust, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "How to Buy Shares -
Cumulative Quantity Discount" in the Prospectus.
An eligible group of related Fund investors includes any combination
of the following:
(a) an individual;
(b) the individual's spouse, their children and their
parents;
(c) the individual's Individual Retirement Account (IRA);
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<PAGE> 26
(d) any company controlled by the individual (a person,
entity or group that holds 25% or more of the outstanding voting securities of
a corporation will be deemed to control the corporation, and a partnership will
be deemed to be controlled by each of its general partners);
(e) a trust created by the individual, the beneficiaries
of which are the individual, his or her spouse, parents or children;
(f) a Uniform Gifts to Minors Act/Uniform Transfers to
Minors Act account created by the individual or the individual's spouse; and
(g) one or more employee benefit plans of a company
controlled by an individual.
The Combined Purchase and Cumulative Purchase Privilege does not apply
to individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."
RIGHTS OF ACCUMULATION. Reduced sales charges are also available
through Rights of Accumulation, under which an investor or an eligible group of
related investors, as described above under "Combined Purchase and Cumulative
Purchase Privilege," may aggregate the value of their existing holdings of the
Class A shares of the Fund and Class A shares of other Flex-Partners Funds to
determine the reduced sales charge. The value of existing holdings for
purposes of determining the reduced sales charge is calculated using the
maximum offering price (net asset value plus maximum sales charge) as of the
previous business day. See "How Net Asset Value is Determined" in the
Prospectus. The Transfer Agent must be notified at the time of purchase that
the investor is entitled to a reduced sales charge. The reduced sales charges
will be granted subject to confirmation of the investor's holdings. Rights of
accumulation are not available to individual participants in the retirement and
group plans described below under "Flex-Partners Retirement Plans."
LETTERS OF INTENT. Reduced sales charges are also available to
investors (or an eligible group of related investors) who enter into a written
Letter of Intent providing for the purchase, within a thirteen-month period, of
Class A shares of the Fund and Class A shares of other Flex-Partners Funds.
All Class A shares of the Fund and Class A shares of other Flex-Partners Funds
which were previously purchased and are still owned are also included in
determining the applicable reduction. The Transfer Agent must be notified at
the time of purchase that the investor is entitled to a reduced sales charge.
The reduced sales charges will be granted subject to confirmation of the
investor's holdings. Letters of Intent are not available to individual
participants in retirement and group plans described below under "Flex-Partners
Retirement Plans."
A Letter of Intent permits a purchase to establish a total investment
goal to be achieved by any number of investments over a thirteen- month period.
Each investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. Shares totaling 5% of the dollar amount of the Letter of Intent
will be held by the Transfer Agent in escrow in the name of the purchaser. The
effective date of a Letter of Intent may be back-dated up to 90 days, in order
that any investments made during this 90-day period, valued at the purchaser's
cost, can be applied to the fulfillment of the Letter of Intent goal.
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<PAGE> 27
The Letter of Intent does not obligate the investor to purchase, nor
the Fund to sell, the indicated amount. In the event the Letter of Intent goal
is not achieved within the thirteen-month period, the purchaser is required to
pay the difference between the sales charge otherwise applicable to the
purchases made during this period and sales charges actually paid. Such
payment may be made directly to the Transfer Agent or, if not paid, the
Transfer Agent will liquidate sufficient escrowed shares to obtain such
difference. If the goal is exceeded in an amount which qualifies for a lower
sales charge, a price adjustment is made by refunding to the purchaser the
amount of excess sales charge, if any, paid during the thirteen-month period.
Investors electing to purchase Class A shares of the Fund pursuant to a Letter
of Intent should carefully read such Letter of Intent.
AUTOMATIC ACCOUNT BUILDER. An investor may arrange to have a fixed
amount of $100 or more automatically invested in shares of the Fund monthly by
authorizing his or her bank account to be debited to invest specified dollar
amounts in shares of the Fund. The investor's bank must be a member of the
Automatic Clearing House System. Stock certificates are not issued to Automatic
Account Builder participants.
Further information about these programs and an application form can
be obtained from the Fund's Transfer Agent.
SYSTEMATIC WITHDRAWAL PROGRAM. A systematic withdrawal plan is
available for shareholders having Class A and Class C shares of the Fund with a
minimum value of $10,000, based upon the offering price. The plan provides for
monthly, quarterly or annual checks in any amount, but not less than $100 (which
amount is not necessarily recommended). Except as otherwise provided in the
Prospectus, to the extent such withdrawals exceed the current net asset value of
reinvested dividends, they may be subject to the contingent deferred sales
charge. See "How to Buy Shares - Class C Shares" and "Other Shareholder
Services" in the Prospectus.
Dividends and/or distributions on shares held under this plan are
invested in additional full and fractional shares at net asset value. See
"Shareholder Investment Account - Automatic Reinvestment of Dividends and/or
Distributions" above. The Transfer Agent acts as agent for the shareholder in
redeeming sufficient full and fractional shares to provide the amount of the
periodic withdrawal payment. The plan may be terminated at any time.
Withdrawal payments should not be considered as dividends, yield or
income. If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares, and
any gain or loss realized must be recognized for federal income tax purposes.
In addition, withdrawals made concurrently with purchases of additional shares
are inadvisable because of the applicable sales charges to (i) the purchase of
Class A shares and (ii) the withdrawal of Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences
of the plan, particularly if used in connection with a retirement plan.
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<PAGE> 28
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you and
the U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, the Subadviser may reinvest your distributions at the
then-current NAV. All subsequent distributions will then be reinvested until you
provide the Subadviser with alternate instructions.
DIVIDENDS. A portion of the Fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the extent
that the Fund's income is derived from qualifying dividends. Because the Fund
may earn other types of income, such as interest income from securities loans,
non-qualifying dividends, and short-term capital gains, the percentage of
dividends from the Fund that qualifies for the deduction generally will be less
than 100%. The Fund will notify corporate shareholders annually of the
percentage of Fund dividends that qualifies for the dividends-received
deduction. A portion of the Fund's dividends derived from certain U.S.
government obligations may be exempt from state and local taxation. Gains
(losses) attributable to foreign currency fluctuations are generally taxable as
ordinary income and therefore will increase (decrease) dividend distributions.
The Fund will send each shareholder a notice in January describing the tax
status of dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the Fund
on the sale of securities by the Portfolio and distributed to shareholders of
the Fund are federally taxable as long-term capital gains regardless of the
length of time shareholders have held their shares. If a shareholder receives a
long-term capital gain distribution on shares of the Fund and such shares are
held six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from short-term
capital gains do not qualify for the dividends-received deduction.
FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the Fund does not
currently anticipate that securities of foreign issuers will constitute more
than 25% of the Portfolio's total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction on
their federal income tax returns with respect to foreign taxes withheld.
TAX STATUS OF THE FUND. The Fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be liable
for federal tax on income and capital gains distributed to shareholders. In
order to qualify as a regulated investment company and avoid being subject to
federal income or excise taxes at the Fund level, the Fund intends to distribute
substantially all of its net investment income (consisting of the income it
earns from its investment in the Portfolio, less expenses) and net realized
capital gains within each calendar year as well as on a fiscal year basis. The
Fund intends to comply with other tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held less than three months constitute less than 30% of the Fund's
gross income for each fiscal year. Gains from some forward currency contracts,
futures contracts, and options are included in this 30% calculation, which may
limit the Fund's investments in such instruments.
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<PAGE> 29
If the Portfolio purchases shares in certain foreign investment
entities, defined as passive foreign investment companies (PFICs) in the
Internal Revenue Code, it may be subject to U.S. federal income tax on a
portion of any excess distribution or gain from the disposition of such shares.
Interest charges may also be imposed on the Portfolio with respect to deferred
taxes arising from such distributions or gains.
The Fund is treated as a separate entity from the other funds of The
Flex-Partners Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In addition to
federal income taxes, shareholders may be subject to state and local taxes on
Fund distributions. Investors should consult their tax advisers to determine
whether the Fund is suitable to their particular tax situation.
INVESTMENT ADVISER AND MANAGER
R. Meeder & Associates, Inc. (the "Manager") is the investment adviser
and manager for, and has an Investment Advisory Contract with, the Portfolio.
Pursuant to the Investment Advisory Contract with the Portfolio, the
Manager, subject to the supervision of the Portfolio's Board of Trustees and in
conformity with the stated objective and policies of the Fund, manages both the
investment operations of the Fund and the composition of the Portfolio's
portfolio, including the purchase, retention, disposition and loan of
securities. In connection therewith, the Manager is obligated to keep certain
books and records of the Portfolio. The Manager also administers the Fund's
corporate affairs, and in connection therewith, furnishes the Fund with office
facilities, together with those ordinary clerical and bookkeeping services
which are not being furnished by Star Bank, N.A., the Portfolio's custodian and
Mutual Funds Service Co., the Fund's transfer and disbursing agent. The
management services of the Manager are not exclusive under the terms of the
Investment Advisory Agreement and the Manager is free to, and does, render
management services to others.
The Investment Advisory Contract for the Portfolio was separately
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 Investment Company
Act of 1940) of the Portfolio. The Investment Advisory Contract is to remain
in force so long as renewal thereof is specifically approved at least annually
by a majority of the Trustees or by vote of a majority of the interests in the
Portfolio, and in either case by vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) at a
meeting called for the purpose of voting on such renewal.
The Investment Advisory Contract provides that the Manager will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the matters to which the Investment Advisory
Contract relates except for a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days' prior written notice by Majority Vote of the
Portfolio, by the Trustees of the Portfolio, or by the Manager.
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<PAGE> 30
Costs, expenses and liabilities of the Trust attributable to a
particular fund are allocated to that fund. Costs, expenses and liabilities
which are not readily attributable to a particular fund are allocated among all
of the Trust's funds. Thus, each fund pays its proportionate share of: the
fees of the Trust's independent auditors, legal counsel, custodian, transfer
agent and accountants; insurance premiums; the fees and expenses of Trustees
who do not receive compensation from R. Meeder & Associates or Miller/Howard
Investments, Inc.; association dues; the cost of printing and mailing
confirmations, prospectuses, proxies, proxy statements, notices and reports to
existing shareholders; state registration fees; distribution expenses within
the percentage limitations of each Class of Shares' distribution and service
plan, including the cost of printing and mailing of prospectuses and other
materials incident to soliciting new accounts; and other miscellaneous
expenses.
The expenses of the Portfolio include the compensation of the Trustees
who are not affiliated with the Adviser or Subadviser; registration fees;
membership dues allocable to the Portfolio; fees and expenses of independent
accountants, of legal counsel and of any transfer agent or accountant of the
Portfolio; insurance premiums and other miscellaneous expenses.
Expenses of the Portfolio also include all fees under its Accounting
and Administrative Service Agreement; 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 offices and commissions; expenses of meetings of investors and
Trustees; the advisory fees payable to the Manager under the Investment
Advisory Contract and other miscellaneous expenses.
The Board of Trustees of the Trust believe that the aggregate per
share expenses of the Fund and the Portfolio will be less than or approximately
equal to the expenses which the Fund would incur if it retained the services of
an investment adviser and the assets of the Fund were invested directly in the
type of securities being held by the Portfolio.
The Manager earns an annual fee, payable in monthly installments as
follows. The fee for the Portfolio is based upon the average net assets of the
Portfolio and is at the rate of 1% of the first $50 million, 0.75% of the next
$50 million and 0.60% in excess of $100 million of average net assets.
The Manager presently intends to reimburse the Fund through an expense
reimbursement fee to the extent necessary to keep total expenses at 1.75% of
average daily net assets for Class A Shares and 2.00% of average daily net
assets for Class C shares. The Manager may change this policy at any time
without notice to shareholders.
R. Meeder & Associates, Inc. was incorporated in Ohio on February 1,
1974 and maintains its principal offices at 6000 Memorial Drive, Dublin, Ohio
43017. The Manager is a wholly-owned subsidiary of Muirfield Investors, Inc.
("MII"), which is controlled by Robert S. Meeder, Sr. through the ownership of
voting common stock. The Manager's officers and directors, and the principal
offices are as set forth as follows: Robert S. Meeder, Sr., Chairman and Sole
Director; Robert S. Meeder, Jr., President; G. Robert Kincheloe, Senior Vice
President; Philip A. Voelker, Senior Vice President; Donald F. Meeder, Vice
President and Secretary; Sherrie L. Acock, Vice President; Robert D. Baker,
Vice President; Richard W. Arndt, Vice President; Wesley F. Hoag, General
Counsel and Chief Operating
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<PAGE> 31
Officer; and Steven T. McCabe, Controller. Mr. Robert S. Meeder, Sr. is
President and a Trustee of the Trust and the Portfolio. Each of Mr. Robert
S. Meeder, Jr., Donald F. Meeder, Wesley F. Hoag and Steven T. McCabe is an
officer of the Trust and the Portfolio. Mr. Philip A. Voelker is a Trustee
and officer of the Portfolio and an officer of the Trust.
INVESTMENT SUBADVISER
Miller/Howard Investments, Inc., 141 Upper Byrdcliffe, Woodstock, New
York 12498, serves as the Portfolio's Subadviser. Lowell G. Miller controls
the Subadviser through the ownership of voting common stock. Lowell G. Miller
is a Trustee of the Trust. The Investment Subadvisory Agreement provides that
the Subadviser shall furnish investment advisory services in connection with
the management of the Portfolio. In connection therewith, the Subadviser is
obligated to keep certain books and records of the Portfolio. The Manager
continues to have responsibility for all investment advisory services pursuant
to the Investment Advisory Agreement and supervises the Subadviser's
performance of such services. Under the Investment Subadvisory Agreement, the
Manager, not the Portfolio, pays the Subadviser a fee, computed daily and
payable monthly, in an amount equal to 90% of the investment advisory fees
received by the Manager under its Investment Advisory Contract with the
Portfolio, provided that if a shareholder purchasing shares in the Fund is
solicited by the Manager, the Subadviser is compensated by the Manager in an
amount equal to 60% of such investment advisory fees received by the Manager.
The Investment Subadvisory Agreement provides that the Subadviser will
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution of
portfolio transactions for the Portfolio, except a loss resulting from
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Investment Subadvisory Agreement provides that it will terminate automatically
if assigned, and that it may be terminated by the Manager without penalty to
the Fund or the Portfolio by the Manager, the Trustees of the Portfolio or by
the vote of a majority of the outstanding voting securities of the Portfolio
upon not less than 30 days' written notice. The Investment Subadvisory
Agreement will continue in effect for a period of more than two years from the
date of execution only so long as such continuance is specifically approved at
least annually in conformity with the 1940 Act. The Investment Subadvisory
Agreement was approved by the Board of Trustees of the Portfolio, including all
of the Trustees who are not parties to the contract or "interested persons" of
any such party, and by the shareholders of the Fund.
THE DISTRIBUTOR
Roosevelt & Cross, Incorporated (the "Distributor"), 20 Exchange
Place, New York, NY 10005, acts as the distributor of the Class A shares and
the Class C shares of the Fund.
Pursuant to separate plans of distribution (the Class A Plan and the
Class C Plan, collectively, the Plans) adopted by the Fund under Rule 12b-1
under the 1940 Act and an underwriting agreement (the Underwriting Agreement),
the Distributor incurs the expenses of distributing the Fund's Class A shares
and Class C shares. See "Distribution Plans" in the Prospectus.
On August 4, 1994, the Board of Trustees, including a majority of the
Trustees who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Class A or Class C Plan or
in any agreement related to the Plan (the Rule 12b-1 Trustees), at a meeting
27
<PAGE> 32
called for the purpose of voting on the Class A Plan, adopted a plan of
distribution for the Class A shares of the Fund. On August 4, 1994, the Board
of Trustees, including the Rule 12b-1 Trustees, at a meeting called for the
purpose of voting on the Class C Plan, adopted a plan of distribution for the
Class C shares of the Fund. The Class A Plan was approved by Class A
shareholders of the Fund. The Class C Plan was approved by Class C
shareholders of the Fund.
The Distributor also receives the proceeds of contingent deferred
sales charges paid by investors upon certain redemptions of Class C shares.
See "How to Buy Shares" in the Prospectus. The amount of distribution expenses
reimbursable by Class C shares of the Fund is reduced by the amount of such
proceeds.
The Plans continue in effect from year to year, provided that each
such continuance is approved at least annually by a vote of the Board of
Trustees, including a majority vote of the Rule 12b-1 Trustees, cast in person
at a meeting called for the purpose of voting on such continuance. The Plans
may be terminated at any time, without penalty, by the vote of a majority of
the Trustees who are not interested persons or by the vote of the holders of a
majority of the outstanding shares of the Fund. Neither Plan may be amended to
increase materially the amounts to be spent for the services described therein
without approval by the shareholders of Class A and Class C, as applicable,
and all material amendments are required to be approved by the Board of
Trustees in the manner described above. The Fund will not be contractually
obligated to pay expenses incurred under either the Class A or Class C Plan if
it is terminated or not continued.
Pursuant to each Plan, the Board of Trustees will review at least
quarterly a written report of the distribution expenses incurred on behalf of
the Class A and Class C shares of the Fund by the Distributor. The report
includes an itemization of the distribution expenses and the purposes of such
expenditures. In addition, as long as the Plans remain in effect, the
selection and nomination of Trustees who are not interested persons of the Fund
shall be committed to the Trustees who are not interested persons of the Fund.
Pursuant to the Underwriting Agreement, the Fund has agreed to
indemnify the Distributor to the extent permitted by applicable law against
certain liabilities under the Securities Act and the Investment Company Act of
1940. The Distribution Agreement was approved by the Board of Trustees,
including a majority of the Rule 12b-1 Trustees, on May 1, 1995.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Trust are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Except as otherwise shown, all
persons named as Trustees also serve in similar capacities for other funds
advised by the Manager. Unless otherwise noted, the business address of each
Trustee and officer is 6000 Memorial Drive, Dublin, Ohio 43017, which is also
the address of the Manager. Those Trustees who are "interested persons" (as
defined in the Investment Company Act of 1940) by virtue of their affiliation
with either the Portfolio, the Trust, the Manager or the Subadviser are
indicated by an asterisk (*).
The Trust and the Portfolio are managed by its Trustees and officers.
Their names, positions and principal occupations during the past five years are
listed below:
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<TABLE>
<CAPTION>
Name & Address Position Held Principal Occupation
- -------------- ------------- --------------------
<S> <C> <C>
ROBERT S. MEEDER, SR.*+ Trustee/ Chairman, R. Meeder &
President (1)(2) & Associates, Inc. an
Investment Adviser
MILTON S. BARTHOLOMEW Trustee (2) Retired, formerly a practicing
1424 Clubview Boulevard, S. attorney in Columbus, Ohio
Worthington, OH 43235 Member of the Portfolio's Audit
Committee.
JOHN M. EMERY Trustee (1) Retired, formerly Vice President
2390 McCoy Road & Treasurer of Columbus &
Columbus, OH 43220 Southern Ohio Electric Co.
Member of the Trust's Audit
Committee.
RICHARD A. FARR Trustee (1) President of R&R Supply Co.
3250 W. Henderson Rd. and General Manager of RAFCo.,
Columbus, OH 43220 Inc., two companies involved in
engineering, consulting & sales of
heating & air conditioning
equipment.
RUSSELL G. MEANS Trustee (2) Chairman of Employee Benefit
4789 Rings Road Management Corporation,
Dublin, OH 43017 consultants and administrators of
self-funded health and retirement
plans.
ROBERT S. MEEDER, JR.*+ Vice President (1)(2) President of R. Meeder &
Associates, Inc.
WALTER L. OGLE Trustee (2) Executive Vice President of
One Corporate Drive Godwins, Booke & Dickenson,
Suite 600 Inc. employee benefit, compensation
Clearwater, Fl 43622 and human resource consultants.
PHILIP A. VOELKER*+ Trustee (2)/ Senior Vice President of R. Meeder
Vice President (1)(2) & Associates, Inc.
JAMES B CRAVER* Assistant Senior Vice President of Signature
6 St. James Avenue Secretary (1)(2) Financial Group, Inc. (since
Boston, MA 02116 January 1991); Partner, Baker &
Hostetler, a law firm (August 1984
to December 1990)
</TABLE>
29
<PAGE> 34
<TABLE>
<S> <C> <C>
STEVEN T. MCCABE*+ Assistant Controller, R. Meeder &
Treasurer (1)(2) Associates (since April 1991);
Assistant Treasurer, Cardinal
Group of Funds (October 1986 to
April 1990)
DONALD F. MEEDER*+ Secretary/ Vice President of R. Meeder &
Treasurer(1)(2) Associates, Inc., and President of
Mutual Funds Service Company
WESLEY F. HOAG*+ Vice President (1)(2) General Counsel and Chief
Operating Officer of R. Meeder &
Associates, Inc. (since July 1993);
Attorney, Porter, Wright, Morris &
Arthur, a law firm (October 1984 to
June 1993)
WILLIAM L. GURNER Trustee (1) President, Sector Capital
Sector Capital Management Management, an Investment Adviser
One Commerce Square, Suite 1900 (since January 1995); Manager of
Memphis, TN 38103 Trust Investments of Federal Express
Corporation (1987-1994)
LOWELL G. MILLER* Trustee (1) President, Miller/Howard
Miller/Howard Investments, Inc. Investments, Inc., an Investment
141 Upper Byrdcliffe Adviser
Woodstock, NY 12498
ROGER D. BLACKWELL Trustee (2) Professor of Marketing and
Blackwell Associates, Inc. Consumer Behavior, The Ohio State
3380 Tremont Road University, and President of
Columbus, OH 43221 Blackwell Associates, Inc., a
strategic consulting firm
NEIL P. RAMSEY Trustee (2) President, Ramsey Financial, a
Suite 215 private investment management
1230 Hurstbourne Parkway company
Louisville, KY 40222
</TABLE>
(1) Trustee and/or officer of The Flex-Partners
(2) Trustee and/or officer of the Portfolio
* "Interested Person" of the Trust (as defined in the Investment Company Act
of 1940) and Portfolio.
+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.
30
<PAGE> 35
Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.
Several Trustees and each officer of the Trust hold the same positions
with The Flex-funds, a Massachusetts business trust consisting of six separate
series. Each Trustee and officer of the Portfolio hold the same positions with
each corresponding Portfolio of The Flex-funds. The Manager serves as the
investment adviser to each Portfolio of The Flex-funds.
The Trust pays each Trustee who is not an "interested person" an
annual fee of $3,000, plus $750 for each meeting of the Board of Trustees
attended regardless of the number of Boards of Trustees on which each Trustee
serves. Mr. Emery comprises the Audit Committee for each of The Flex-funds and
The Flex-Partners Trusts. Mr. Emery is paid $400 for each meeting of the Audit
Committees attended regardless of the number of Audit Committees on which he
serves. All other officers and Trustees serve without compensation from the
Trust.
The Trustees and officers of the Fund and the Portfolio own, in the
aggregate, less than 1% of the Fund's total outstanding shares.
FLEX-PARTNERS RETIREMENT PLANS
The Trust offers retirement plans which are described in the
Prospectus. Minimum purchase requirements for retirement plan accounts are
subject to the same requirements as regular accounts, except for an IRA, which
has a $500 minimum purchase requirement. Information concerning contribution
limitations for IRA accounts are described below.
Individual Retirement Accounts (IRA):
Limitation on Deductible Contributions - Under prior law an individual
with earned income, not yet 70 1/2 years of age, was allowed a deductible IRA
contribution, limited to the lesser of earned income or $2,000. Effective for
years beginning after December 31, 1986, applicable law limits the
deductibility of IRA contributions where the taxpayer is a participant in an
employer-sponsored retirement plan and had adjusted gross income (AGI) in
excess of $40,000 (joint) and $25,000 (single). For every dollar that AGI
exceeds these limits, the maximum deduction is reduced by twenty cents. Thus,
a joint filer with AGI greater than $50,000 who is covered by an employer
sponsored plan will not be able to make a deductible IRA contribution. The
deductible limits for individuals not covered by an employer-sponsored plan
were not changed.
Nondeductible Contributions- Individuals who may not make a deductible
contribution due to the limits noted above, may continue to make nondeductible
contributions subject to the prior $2,000 limitation. The earnings on such
contributions will still accumulate on a tax deferred basis. Individuals will
be required to report such contributions on their tax returns.
Rollover Contributions-Individuals who receive certain lump-sum
distributions from employer-sponsored retirement plans may make roll- over
contributions to an IRA and by doing so defer taxes on the distribution and
shelter any investment earnings.
A Spousal IRA is also available.
31
<PAGE> 36
CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER
Mutual Funds Service Co. provides accounting, stock transfer, dividend
disbursing, and shareholder services to the Fund and the Portfolio. The
minimum annual fee for accounting services for the Portfolio is $7,500.
Subject to the applicable 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. Subject to a $4,000 annual
minimum fee, each class of shares of the Fund will incur an annual fee, payable
monthly, which will be the greater of $15 per shareholder account or 0.10% of
the Fund's average net assets, payable monthly, for stock transfer and dividend
disbursing services. Mutual Funds Service Co. also serves as Administrator to
the Fund pursuant to an Administration Services Agreement which was effective
February 1, 1995. Services provided to the Fund include coordinating and
monitoring any third party services to the Fund; providing the necessary
personnel to perform administrative functions for the Fund; assisting in the
preparation, filing and distribution of proxy materials, periodic reports to
Trustees and shareholders, registration statements and other necessary
documents. The Fund incurs an annual fee, payable monthly, of .03% of the
Fund's average net assets. These fees are reviewable annually by the
respective Trustees of the Trust and the Portfolio.
The general counsel for the Manager was primarily responsible for
preparing and filing with the Securities and Exchange Commission (i) a
post-effective amendment to the registration statement for the Trust to add the
Fund as an additional series of the Trust and (ii) the registration statement
for the Portfolio. Charges in the amounts of $12,000 and $5,000 for such legal
services rendered by the Manager on behalf of the Fund and the Portfolio,
respectively, will be paid and amortized by the Portfolio and the Fund as
organization expenses over a period not exceeding 60 months.
DESCRIPTION OF THE TRUST
TRUST ORGANIZATION. The assets of the Trust received for the issue
or sale of the shares of the Fund and all income, earnings, profits, and
proceeds thereof, subject only to the rights of creditors, are especially
allocated to the Fund and constitute the underlying assets of the Fund. The
underlying assets of the Fund are segregated on the books of account, and are
to be charged with the liabilities with respect to the Fund and with a share of
the general expenses of the Trust. Expenses with respect to the Trust are to
be allocated in proportion to the asset value of the respective funds except
where allocations of direct expense can otherwise be fairly made. The officers
of the Trust, subject to the general supervision of the Board of Trustees, have
the power to determine which expenses are allocable to a given fund, or which
are general or allocable to all of the funds. In the event of the dissolution
or liquidation of the Trust, shareholders of each fund are entitled to receive
as a class the underlying assets of such fund available for distribution.
SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of Trust
provides that the Trust shall not have any claim against shareholders except
for the payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees include a provision limiting the obligations created thereby to
the Trust and its assets.
32
<PAGE> 37
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder held personally liable for the obligations
of the Fund. The Declaration of Trust also provides that each Fund shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the Fund and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a Fund itself would be unable to meet its
obligations. The Manager believes that, in view of the above, the risk of
personal liability to shareholders is remote.
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees against
any liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of their office.
VOTING RIGHTS. The Fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each share you own. The
shares have no preemptive or conversion rights; the voting and dividend rights,
the right of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set forth under
the heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or the Fund may, as set forth in the
Declaration of Trust, call meetings of the Trust or the Fund for any purpose
related to the Trust or Fund, as the case may be, including, in the case of a
meeting of the entire Trust, the purpose of voting on removal of one or more
Trustees. The Trust or any Fund may be terminated upon the sale of its assets
to another open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a majority of
the Trust or the Fund, as determined by the current value of each shareholder's
investment in the Fund or Trust. If not so terminated, the Trust and the Fund
will continue indefinitely.
CUSTODIAN. Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202,
is custodian of the assets of the Portfolio. The custodian is responsible for
the safekeeping of the Portfolio's assets and the appointment of subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of the Portfolio or in deciding which securities are
purchased or sold by the Portfolio. The Portfolio may, however, invest in
obligations of the custodian and may purchase or sell securities from or to the
custodian.
AUDITOR. KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio
43215, serves as the trust's independent accountant. The auditor examines
financial statements for the Fund and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Financial Statements for the Fund and the Portfolio are presented on
the following pages.
33
<PAGE> 38
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
BTB FUND
Assets:
<S> <C>
Investment in corresponding portfolio $279,475
Receivable for capital stock issued 21,406
Unamortized organizational costs 27,294
Prepaid expenses and other assets 12,892
--------
Total Assets 341,067
--------
Liabilities:
Payable for capital stock redeemed
Accrued liabilities 39,206
--------
Total Liabilities 39,206
--------
Net Assets:
Capital 295,633
Accumulated net investment income (loss)
Accumulated net realized gain (loss) on investments 13
Net unrealized gain (loss) on investments 6,215
--------
Net Assets $301,861
========
Net Assets:
Class A Shares $280,166
Class C Shares 21,695
--------
Total $301,861
========
Outstanding units of beneficial interest (shares):
Class A Shares 21,382
Class C Shares 1,657
--------
Total 23,039
========
Net asset value - redemption price per share:
Class A Shares $ 13.10
Class C Shares 13.09
--------
Sales Charge (Class A) 4.00%
--------
Offering price (100%/(100%-Sales Charge) of net asset
value adjusted to nearest cent) per share - Class A $ 13.65
========
</TABLE>
<PAGE> 39
STATEMENT OF OPERATION
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
BTB FUND *
<S> <C>
Net investment income (loss) from corresponding
portfolio:
Interest $ 91
Dividends 781
Expenses (488)
-------
Total Net Investment Income (Loss) From
Corresponding Portfolio 384
-------
Fund Expenses:
Legal fees 590
Audit fees 540
Printing 1,428
Transfer agent fees 900
Administrative fee 1
Trustees fees and expenses 1,773
Distribution plan 65
Shareholder servicing fee 54
Amortization of organizational costs 385
Registration 6,789
Postage 138
Other expenses 732
-------
Total expenses 13,395
Expenses waived (13,490)
-------
Total expenses - net (95)
-------
INVESTMENT INCOME (LOSS) - NET 479
-------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS - NET:
Net realized gain (loss) on futures
Net realized gain (loss) - other 13
Unrealized appreciation (depreciation) of
investments 6,215
-------
NET GAIN (LOSS) ON INVESTMENTS 6,228
-------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,707
=======
</TABLE>
- ---------------
* For the period July 11, 1995 to September 30, 1995
<PAGE> 40
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
BTB FUND *
Total CLASS A CLASS C
-----------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss) - net $ 479 $ 447 $ 32
Net realized gain (loss) on investments 13 11 2
Net change in unrealized appreciation
(depreciation) of investments 6,215 5,583 632
-------- -------- -------
Net increase (decrease) in net assets
resulting from operations 6,707 6,041 666
-------- -------- -------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Investment income - net (479) (446) (33)
Tax return of capital 0
Net realized gain from investment
transactions 0
-------- -------- -------
Net decrease in net assets resulting
from dividends and distributions (479) (446) (33)
-------- -------- -------
CAPITAL TRANSACTIONS:
Net proceeds from sales 295,180 274,151 21,029
Reinvestment of dividends 446 33
Cost of redemptions (26) (26)
-------- -------- -------
Net increase (decrease) in net assets
resulting from capital share transactions 295,633 274,571 21,062
-------- -------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 301,861 280,166 21,695
NET ASSETS - Beginning of year 0 0 0
-------- -------- ------
NET ASSETS - End of period $301,861 $280,166 $ 21,695
======== ======== ========
SHARE TRANSACTIONS:
Issued 23,011 21,356 1,655
Reinvested 30 28 2
Redeemed (2) (2) 0
-------- -------- --------
Change in shares 23,039 21,382 1,657
======== ======== ========
</TABLE>
- ---------------
* For the period July 11, 1995 to September 30, 1995
<PAGE> 41
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
UTILITY STOCK
PORTFOLIO
<S> <C>
ASSETS:
Investment at market value* $2,657,451
Repurchase Agreements* 54,000
Cash 424
Interest receivable 502
Dividends receivable 7,395
Prepaid/Other assets
Organization cost 42,383
----------
Total Assets 2,762,155
----------
LIABILITIES:
Payable for futures contracts settlement
Payable to investment advisor 2,115
Other accrued liabilities 46,271
----------
Total Liabilities 48,386
----------
NET ASSETS:
Capital 2,606,514
Accumulated net investment income (loss) 13,046
Accumulated net realized gain (loss)
on investments 523
Net unrealized gain (loss) on investments 93,686
----------
Net Assets $2,713,769
==========
*Securities at cost 2,617,764
</TABLE>
<PAGE> 42
STATEMENT OF OPERATION
FOR THE PERIOD JUNE 21, 1995 TO SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
UTILITY STOCK
PORTFOLIO*
<S> <C>
INVESTMENT INCOME - NET:
Interest $ 4,907
Dividends 23,575
--------
Total Income 28,482
--------
Expenses:
Investment advisory fees 5,892
Legal fees 356
Audit fees 1,845
Custodian fees 963
Accounting fees 2,245
Trustees fees and expenses 1,436
Insurance
Amortization of organization cost 2,507
Other expenses 193
--------
Total Expenses 15,437
Investment advisory fees waived
--------
Total Expenses - net 15,437
--------
INVESTMENT INCOME (LOSS) - NET 13,045
--------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on futures contracts
Net realized gain (loss) - other 523
Net change in unrealized appreciation (depreciation)
of investments 93,687
--------
NET GAIN (LOSS) ON INVESTMENTS 94,210
--------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $107,255
========
</TABLE>
<PAGE> 43
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD JUNE 21, 1995 TO SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
UTILITY STOCK
PORTFOLIO*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss) - net $ 13,045
Net realized gain (loss) on investments 523
Net change in unrealized appreciation (depreciation)
of investments 93,687
----------
Net increase (decrease) in net assets resulting from
operations 107,255
----------
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 2,622,373
Withdrawals (15,859)
----------
Net increase( decrease) in net assets resulting from
transactions of investors' beneficial interests 2,606,514
----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,713,769
NET ASSETS - Beginning of year 0
----------
NET ASSETS - End of period $2,713,769
==========
</TABLE>
<PAGE> 44
THE FLEX-PARTNERS TAA FUND
CROSS REFERENCE SHEET TO FORM N-1A
Part B.
<TABLE>
<CAPTION>
Item No. Statement of Additional Information
- -------- -----------------------------------
<S> <C>
10 Cover Page
11 Table of Contents
12 Not applicable
13 Investment Policies and Related Matters
14(a)(b) Officers and Trustees
14(c) Not applicable
15(a)(b) Not applicable
15(c) Officers and Trustees
16(a)(b) Investment Adviser and Manager
16(c) Not applicable
16(d) Not applicable
16(e) Not applicable
16(f) The Distributor
16(g) Not applicable
16(h) Description of the Trust
16(i) Contracts with Companies Affiliated With the Manager
17 Purchase and Sale of Portfolio Securities
18(a) Cover Page
Description of the Trust
18(b) Not applicable
19(a) Additional Purchase and Redemption Information
19(b) Valuation of Portfolio Securities
Additional Purchase and Redemption Information
20 Distributions and Taxes
21(a) The Distributor
21(b) Not applicable
21(c) Not applicable
22(a) Not applicable
22(b) Calculation of Total Return
23 Financial Statements
</TABLE>
<PAGE> 45
TAA FUND
A Fund of The Flex-Partners Trust
Statement of Additional Information Dated December 6, 1995
This Statement of Additional Information is not a prospectus. It
should be read in conjunction with the Prospectus of The Flex-Partners dated
May 18, 1995. A copy of the Prospectus may be obtained from The Flex-Partners,
6000 Memorial Drive, Dublin, Ohio 43017, or by calling: 1-800-494-3539.
Capitalized terms used and not otherwise defined herein have the same meanings
as defined in the Prospectus.
The Fund offers two classes of shares which may be purchased at the
next determined net asset value per share plus a sales charge which, at the
election of the investor, may be imposed (i) at the time of purchase (Class A
shares) or (ii) on a deferred basis (Class C shares). These alternatives
permit an investor to choose the method of purchasing shares that is most
beneficial given the amount of the purchase, the length of time the investor
expects to hold the shares and other circumstances.
Each share of Class A and Class C represents an identical legal
interest in the investment portfolio of the Fund and has the same rights,
except that the Class C shares bear the higher expenses of a distribution plan
for such class which will cause the Class C shares to have a higher expense
ratio and to pay lower dividends than the Class A shares. Each class will have
exclusive voting rights with respect to its distribution plan. Although the
legal rights of holders of Class A and Class C shares are identical, the
different expenses borne by each class will result in different net asset
values and dividends. The two classes also have different exchange privileges
and Class C shares have a conversion feature.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Policies and Related Matters 2
General 2
The Mutual Fund Portfolio 2
Money Market Instruments and Bonds 3
Ratings 5
Hedging Strategies 7
Investment Restrictions 9
Portfolio Turnover 10
Purchase and Sale of Portfolio Securities 10
Valuation of Portfolio Securities 11
Calculation of Total Return 12
Additional Purchase and Redemption Information 12
Distribution and Taxes 15
Investment Adviser and Manager 16
Officers and Trustees 18
The Distributor 21
Flex-Partners Retirement Plans 22
Contracts with Companies Affiliated with the Manager 22
Description of the Trust 23
Financial Statements 24
</TABLE>
INVESTMENT ADVISER TRANSFER AGENT
- ------------------ --------------
R. Meeder & Associates, Inc. Mutual Funds Service Co.
DISTRIBUTOR
- -----------
Roosevelt & Cross, Incorporated
<PAGE> 46
INVESTMENT POLICIES AND RELATED MATTERS
GENERAL
As described in the Prospectus, the Trust seeks to achieve the
investment objective of the Fund by investing all of its investable assets in
the Mutual Fund Portfolio (the "Portfolio"), the Fund's corresponding portfolio
having the same investment objective, policies and restrictions as the Fund.
Since the investment characteristics of the Fund correspond directly to those
of its corresponding portfolio, the following is a discussion of the various
investments of and techniques employed by the Portfolio.
The investment policies set forth below in this section represent the
Portfolio's policies as of the date of this Statement of Additional
Information. The investment policies are not fundamental and they may be
changed by the Trustees of the Portfolio without shareholder approval. (No
such change would be made, however, without 30 days written notice to
shareholders.)
The Manager of the Portfolio 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 bonds and
money market instruments. (See "Money Market Instruments and Bonds" below.)
Because the Manager intends to employ flexible defensive investment
strategies when market trends are not considered favorable, the Manager may
occasionally change the entire portfolio of the Portfolio. High transaction
costs could result when compared with other funds.
The Portfolio intends to comply with the short-term trading
restrictions of Subchapter M of the Internal Revenue Code of 1986, as amended,
although these restrictions could inhibit a rapid change in the Portfolio's
investments. The Portfolio will strive for a positive investment return each
calendar year.
THE MUTUAL FUND PORTFOLIO
The Manager will select mutual funds for inclusion in the Portfolio on
the basis of the industry classifications represented in their portfolios,
their specific portfolio holdings, their performance records, their expense
ratios, and the compatibility of their investment policies and objectives with
those of the Portfolio.
The Manager utilizes an asset allocation system for deciding when to
invest in mutual funds or alternatively in temporary investments such as are
described below. The use of this system entails recurring changes from a fully
invested position to a fully defensive position and vice-versa. (See
"Additional Investment Policies" in the Trust's Prospectus.)
In purchasing shares of other mutual funds, the Portfolio will agree
to vote the shares in the same proportion as the vote of all other holders of
such shares.
<PAGE> 47
The Portfolio has adopted certain investment restrictions which cannot
be changed except with the vote of a majority of the Portfolio's outstanding
interests. These restrictions are applicable to the Portfolio and are
described elsewhere in this Statement of Additional Information. Investment
restrictions for the Portfolio differ from the restrictions applicable to the
portfolios in which other Flex-Partners' funds are invested, in that the
Portfolio is permitted to invest more than 5% of its assets in the securities
of any one issuer; is permitted to purchase the shares of other investment
companies (mutual funds); and may invest more than 25% of its assets in any one
industry.
The Portfolio may only purchase up to 3% of the total outstanding
securities of any underlying mutual fund. The holdings of any "affiliated
persons" of the Trust and the Portfolio, as defined in the Investment Company
Act, must be included in the computation of the 3% limitation. Accordingly,
when "affiliated persons" hold shares of an underlying mutual fund, the
Portfolio will be limited in its ability to fully invest in that mutual fund.
The Manager may then, in some instances, select alternative investments.
The Investment Company Act also provides that an underlying mutual
fund whose shares are purchased by the Portfolio may be allowed to delay
redemption of its shares in an amount which exceeds 1% of its total outstanding
securities during any period of less than 30 days. Shares held by the
Portfolio in excess of 1% of a mutual fund's outstanding securities therefore
may not be considered readily disposable securities.
Under certain circumstances, an underlying mutual fund may determine
to make payment of a redemption by the Portfolio wholly or partly by a
distribution in kind of securities from its portfolio, in lieu of cash, in
conformity with rules of the Securities and Exchange Commission. In such
cases, the Portfolio may hold securities distributed by an underlying mutual
fund until the Manager determines that it is appropriate to dispose of such
securities.
Portfolio investment decisions by an underlying mutual fund will be
made independent of investment decisions by other underlying mutual funds.
Therefore, an underlying mutual fund may be purchasing shares of a company
whose shares are simultaneously being sold by some other underlying mutual
fund. The result of this would be an indirect transaction expense
(principally commissions) for the Mutual Fund Portfolio, without its having
changed its investment position.
The Portfolio may invest in common stocks based upon the criteria
described in its investment objectives. Because the Portfolio will only
invest directly in common stocks to replicate the performance of popular stock
market indices the selection of stocks would be limited to those stocks found
in a particular index. Generally, investments in common stocks will not exceed
25% of the Portfolio's net assets.
For temporary defensive purposes, the Portfolio may invest in (or
enter into repurchase agreements with banks and broker-dealers with respect to)
corporate bonds, U.S. Government securities, commercial paper, certificates of
deposit or other money market instruments. The Portfolio may engage in
hedging transactions to the extent and for the purposes set forth in the
Trust's Prospectus.
MONEY MARKET INSTRUMENTS AND BONDS
When investing in money market instruments or bonds, the Portfolio
will limit its purchases, denominated in U.S. dollars, to the following
securities.
3
<PAGE> 48
* 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.
* Bank Obligations and Instruments Secured Thereby - obligations
(including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of
$1,000,000,000 or more, instruments secured by such
obligations and obligations of foreign branches of such banks,
if the domestic parent bank is unconditionally liable to make
payment on the instrument if the foreign branch fails to make
payment for any reason. The Portfolio may also invest in
obligations (including certificates of deposit and bankers'
acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more, if the domestic branch is
subject to the same regulation as United States banks. The
Portfolio will not invest at time of purchase more than 25% of
its assets in obligations of banks, nor will the Portfolio
invest more than 10% of its assets in time deposits.
* High Quality Commercial Paper - The Portfolio may invest in
commercial paper rated no lower than "A-2" by Standard &
Poor's Corporation or "Prime-2" by Moody's Investors Services,
Inc., or, if not rated, issued by a company having an
outstanding debt issue rated at least A by Standard & Poor's
or Moody's.
* Private Placement Commercial Paper - Private placement
commercial paper ("Rule 144A securities") consists of
unregistered securities which are traded in public markets to
qualified institutional investors, such as the Portfolio. The
Portfolio's risk is that the universe of potential buyers for
the securities, should the Portfolio desire to liquidate a
position, is limited to qualified dealers and institutions,
and therefore such securities could have the effect of being
illiquid.
* High Grade Corporate Obligations - obligations rated at least
A by Standard & Poor's or Moody's. See rating information
below.
* Repurchase Agreements Pertaining to the Above - The Portfolio
may invest without limit in any of the above securities
subject to repurchase agreements with any Federal Reserve
reporting dealer or member bank of the Federal Reserve System.
A repurchase agreement is an instrument under which the
purchaser (i.e., the Portfolio) acquires ownership of a debt
security and the seller agrees, at the time of the sale, to
repurchase the obligation at a mutually agreed upon time and
price, thereby determining the yield during the purchaser's
holding period. This results in a fixed rate of return
insulated from market fluctuations during such period. The
underlying securities could be any of those described above,
some of which might bear maturities exceeding one year. The
Portfolio's risk is that the seller may fail to repurchase the
security on the delivery date. If the seller defaults, the
underlying security constitutes collateral for the seller's
obligation to pay. It is a policy of the Portfolio to make
settlement on repurchase agreements only upon proper delivery
of the underlying collateral. Repurchase agreements usually
are for
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<PAGE> 49
short periods, such as one week or less, but could be longer.
The Portfolio may enter into repurchase agreements with its
custodian (Star Bank, N.A., Cincinnati) when it is
advantageous to do so. The Portfolio will not invest more
than 10% of its assets, at the time of purchase, in repurchase
agreements which mature in excess of seven days.
The Manager 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.
RATINGS
1. Moody's Investors Services, Inc.'s Corporate Bond Rating:
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
or protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
A - Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length or time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
2. Standard and Poor's Corporation's Corporate Bond Rating:
AAA - Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they
move with interest rates, and hence provide the maximum safety on all counts.
AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.
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<PAGE> 50
A - Bonds rated A are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from adverse effect
of changes in economic and trade conditions. Interest and principal are
regarded as safe. They predominantly reflect money rates in their market
behavior but, to some extent, also economic conditions.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
3. A-1 and P-1 Commercial Paper Ratings:
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P")
has the following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and
cash flow have an upward trend. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is A-1, A-2, or A-3.
The rating P-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Among the factors considered by
Moody's in assigning ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of speculative-type risks which may be inherent in
certain areas; (3) evaluation of the issuer's products in relation to
competition and customer acceptance; (4) liquidity; (5) amount and quality of
long-term debt; (6) trend of earnings over a period of ten years; (7) financial
strength of a parent company and the relationships which exist with the issuer;
and (8) recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to meet
such obligations.
4. Description of Permitted Money Market Investments:
Commercial Paper - refers to promissory notes issued by corporations
in order to finance their short term credit needs.
U.S. Government Obligations - are bills, certificates of
indebtedness, notes and bonds issued by the U.S. Treasury and agencies,
authorities and instrumentalities of the U.S. Government established under the
authority of an act of Congress. Some obligations of U.S. Government
agencies, authorities and instrumentalities are supported by the full faith and
credit of the U.S. Treasury, as for example, the Government National Mortgage
Association; others by the right of the issuer to borrow from the Treasury, as
in the case of Federal Farm Credit Banks and Federal National Mortgage
Association; and others only by the credit of the agency, authority or
instrumentality; as for example, Federal Home Loan Mortgage and Federal Home
Loan Bank.
Repurchase Agreements - A repurchase transaction occurs when an
investor buys a security and simultaneously agrees to resell it at a later date
to the person from whom it was bought, at a higher price. The price
differential represents interest for the period the security is held.
Repurchase transactions will
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<PAGE> 51
normally be entered into with banks and securities brokers. The Portfolio
could suffer a loss if the bank or securities broker with which the Portfolio
had a repurchase agreement were to default.
Certificates of Deposit - are certificates issued against funds
deposited in a bank, are for a definite period of time, earn a specified or
variable rate of return and are normally negotiable.
Banker's Acceptances - are short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are termed
"accepted" when a bank guarantees their payment at maturity.
Corporate Obligations - include bonds and notes issued by corporations
in order to finance longer term credit needs.
HEDGING STRATEGIES
The Manager may conduct a hedging program on behalf of the Portfolio
for any of the reasons described in the Prospectus. Such a program would
involve entering into options or futures contracts (hedge transactions).
The objective of an option or futures contract 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 a Portfolio to actually buy or sell the securities currently.
Instead, the hedge transaction would give the Portfolio the right at a future
date to sell, or in other instances buy, the particular securities under
consideration or similar securities. The value of shares of common stock or
the face amount of government bonds or notes covered by the hedge transaction
would be the same, or approximately the same, as the quantity held by 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 common stock, government bond or futures contract on an index (see
below), at a specified price until the expiration date of the option. The
Portfolio will only purchase a put option contract on a stock or bond when the
number of shares of the issuer's stock or the face amount of government bonds
involved in the option transaction are equal to those 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 the 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.
The securities involved in an option or futures contract may be stocks
or government bonds, or a group of stocks represented by a popular stock market
index, and they need not be exactly the same as those owned by the Portfolio.
The Manager will select the futures contract which involves a security, group
of securities, or index which it feels is closest to a mirror image of the
investments held by the Portfolio. However, the securities involved in the
contract need not be exactly the same as those owned by the Portfolio, and this
may entail additional risk, as described below.
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<PAGE> 52
To the extent that the Portfolio enters into futures contracts which
sell an index or group of securities short and which therefore could require
the Portfolio to pay the other party to the contract a sum of money measured by
any increase in a market index, the Portfolio will be exposing itself to an
indeterminate liability. On the other hand, the Portfolio should increase or
decrease in value to approximately the same extent as the market index or
group of securities, so any loss incurred on the contract should be
approximately offset by unrealized gains in the Portfolio's positions. Such an
outcome is not guaranteed, and it would be possible for the value of the index
and the Portfolio to move in opposite directions, in which case the Portfolio
would realize an unexpected gain or loss.
The Portfolio will only sell an index short when the Manager has
decided to reduce the Portfolio's risk for defensive purposes, and will close
out the open liability as soon as the Manager decides that a defensive posture
is no longer appropriate or the open liability represents an inappropriate risk
in the circumstances. In shorting an index, the Portfolio will segregate
assets to the full value of the contract and maintain and supplement such
segregation to the extent necessary until the short position is eliminated.
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 (common stock or government bonds) 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. The Portfolio will only
purchase call options when the shares of stock or face amount of bonds or value
of the index aggregate included in the option are equal to those planned to be
purchased by the Portfolio.
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. The securities may be government bonds, stocks, or a
group of stocks such as a popular stock market index, and need not be exactly
the same as those intended to be purchased by the Portfolio. The Manager will
select the contract (therefore the group of securities) which it believes is
most similar to those desired to be purchased by the Portfolio.
The Portfolio may sell any put or call option contracts it enters
into. Such a transaction would normally be used to eliminate or close out a
hedged position. The Portfolio may also buy or sell futures contracts to
eliminate or close out a hedged position.
Option contracts will be purchased through organized exchanges and
will be limited to those contracts which are cleared through the Options
Clearing Corporation. Organized exchanges which presently trade option
contracts are the Chicago Board Options Exchange, the American Stock Exchange,
the Philadelphia Stock Exchange, the Pacific Stock Exchange, and the New York
Stock Exchange.
Futures contracts will only be entered into through an organized
exchange. The exchanges which presently trade financial futures contracts are
the New York Futures Exchange, the Chicago Mercantile Exchange, the Chicago
Board of Trade, the Kansas City Board of Trade, and the International Monetary
Market (at the Chicago Mercantile Exchange).
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<PAGE> 53
Put and call options and financial futures contracts are valued on the
basis of the daily settlement price or last sale on the exchanges where they
trade. If an exchange is not open, or if there is no sale, the contract is
valued at its last bid quotation unless the Trustees determine that such is not
a fair value. In the case of a futures contract which entails a potential
liability for a gain in a market index, the liability is valued at the last
sale of an offsetting contract or if there was no sale, at the last asked
quotation unless the Trustees determine that such does not fully reflect the
liability.
In conducting a hedging program for the Portfolio, the Manager may
occasionally buy a call on an index or futures contract and simultaneously sell
a put on the same index or futures contract. Or, in other circumstances, it
may sell a call and simultaneously buy a put on the same index or futures
contract.
When conducting a hedging program on behalf of the Portfolio, the
Portfolio will establish and maintain with the Custodian segregated accounts
for the deposit and maintenance of margin requirements. Such deposits will be
in the form of cash or U.S. Government securities in amounts as shall be
required from time to time by the broker or the exchange on which the
transactions are effected for the Portfolio.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Trust with
respect to the Fund and by the Portfolio as fundamental policies. Under the
Investment Company Act of 1940 (the "Act"), a "fundamental" policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund or the Portfolio, respectively, to which it relates, which is defined
in the Act as the lesser of (a) 67 percent or more of the shares present at a
shareholder meeting if the holders of more than 50 percent of the outstanding
shares are present or represented by proxy, or (b) more than 50 percent of the
outstanding shares ("Majority Vote"). The percentage limitations contained in
the restrictions listed below apply at the time of the purchase of the
securities. Whenever the Fund is requested to vote on a change in the
investment restrictions of the Portfolio, the Trust will hold a meeting of the
Fund shareholders and will cast its votes as instructed by the shareholders.
Provided that nothing in the following investment restrictions shall
prevent the Trust from investing all or part of the Fund's assets in the
Portfolio, the Fund nor the Portfolio may: (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
7 days do not exceed 10% of its total assets; (g) Purchase any security if, as a
result, more than 10% of its net assets would be invested in securities that are
deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued, including repurchase agreements with remaining maturities in excess of
seven days or securities without readily available market quotes; (h) Purchase
any securities on margin, or participate in any joint or joint and several
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<PAGE> 54
trading account, provided, however, that it may open a margin account to the
extent necessary to engage in hedging transactions which are not precluded by
other particular restrictions; (i) Make any so-called "short" sales of
securities, except against an identical portfolio position (i.e., a "short sale
against the box"), but this restriction shall not preclude a futures contract
which sells short an index or group of securities; (j) Purchase or retain any
securities of an issuer, any of whose officers, directors or security holders
is an officer or director of the Trust or 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; (k) 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; (l) Purchase participations or
other direct interests in oil, gas or other mineral exploration or development
programs; and (m) Invest in warrants.
In order to comply with certain state investment restrictions, each
of the Trust's and 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.
PORTFOLIO TURNOVER
The portfolio turnover rate for the fiscal year ended December 31,
1994 in the Mutual Fund Portfolio was 168% (1993 - 280%). Resultant turnover
rates are primarily a function of the Manager's response to market conditions.
In the Manager's opinion, it was in the best interest of the Portfolio to
change its portfolio to a fully or partially defensive position at various
times during the year. This defensive investment strategy can produce high
portfolio turnover ratios when calculated in accordance with SEC rules.
However, viewed in terms of "round trips", the Portfolio completed three
quarters of a "round trip" in the stock market during the year.
The portfolio turnover rate for the Portfolio is not expected to
exceed 300% in the current year.
PURCHASE AND SALE OF PORTFOLIO SECURITIES
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
R. Meeder & Associates, Inc. ("RMA"), or to any other client for which RMA acts
as investment adviser. The reasonableness of brokerage commissions paid by the
Portfolio in relation to transaction and research services received is
evaluated by the staff of RMA on an ongoing basis. The general level of
brokerage charges and other aspects of the Portfolio's portfolio transactions
are reviewed periodically by its Board of Trustees.
RMA 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 RMA, in performing its responsibilities to the Portfolio,
to
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<PAGE> 55
continue to receive and evaluate the broad spectrum of economic and financial
information which many securities brokers have customarily furnished in
connection with brokerage transactions and that, in compensating brokers 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 RMA in providing management services to the Portfolio is not
determinable. In addition, it is understood by the Trustees that other clients
of RMA might also benefit from the information obtained for the Portfolio, in
the same manner that the Portfolio might also benefit from information obtained
by RMA in performing services to others.
RMA utilizes brokers who have demonstrated an ability to execute
orders on a favorable basis, or who are able to provide research or other
services. RMA does not knowingly authorize a higher rate of commission to one
broker than to any other. In order to assure itself that the Portfolio is
paying reasonable commissions, RMA will periodically attempt to determine the
rates being paid by other institutional investors of similar size.
Currently, RMA negotiates for commissions equal to no more than 20
basis points (1/5 of 1%) and is generally able to hold commissions at or below
that level. Debt securities are purchased on a net basis.
RMA and the Trust have previously purchased various research and other
services with brokerage commissions paid to or for the benefit of certain
entities.
It is the opinion of the Trust, the Portfolio and RMA that the receipt
of research from brokers will not materially reduce RMA's own research
activities or the overall cost of fulfilling its contracts with the Trust or
the Portfolio. Neither the Trust nor the Portfolio has any broker/dealer
affiliate.
The Portfolio paid no commissions in 1993 or 1994 and paid $28,928 in
commissions in 1992 on the purchase and sale of portfolio securities.
VALUATION OF PORTFOLIO SECURITIES
Securities owned by a Portfolio and listed or traded on any national
securities exchange are valued at each closing of the New York Stock Exchange
on the basis of the last sale on such exchange 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 (certificates
of deposit, commercial paper, etc.) in the Portfolios, 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 Manager in good faith at its own expense
under the direction of the Trustees.
Other assets, which include cash, prepaid and accrued items and
amounts receivable as income on investments and from the sale of portfolio
securities, are carried at book value, as are all liabilities. Liabilities
include accrued expenses, sums owed for securities purchased, and dividends
payable.
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<PAGE> 56
CALCULATION OF TOTAL RETURN
From time to time, the Fund may advertise its average annual total
returns for various periods of time. When applicable, depending on the Fund,
the periods of time shown will be for a one-year period; a five-year period (or
relevant portion thereof) and since inception. Period and average annualized
total return are calculated separately for Class A and Class C shares. The
calculation assumes the reinvestment of all dividends and distributions.
Examples of the total return calculation for the Fund will assume a
hypothetical investment of $1,000 at the beginning of each period.
It is computed by finding the average annual compounded rates of
return over the length of the base periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P (1+T)(n) = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the
end of the base period
THE TAA FUND:
<TABLE>
<CAPTION>
Total Return
-------------------------------------------------------------------------
1 Year 5 Years Since Inception
Period Ended Period Ended Period Ended
December 31, 1994 December 31, 1994 December 31, 1994
----------------- ----------------- ------------------
<S> <C> <C> <C>
Value of Account
At end of Period $ 0 $ 0 $ 0
Value of Account
At beginning of Period 1,000.00 1,000.00 1,000.00
-------- -------- ---------
Base Period Return $ 0 $ 0 $ 0
Average Total Return 0 0 0
</TABLE>
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shareholders of the Fund will be able to exchange their Class A shares
for Class A shares of any mutual fund that is a series of The Flex-Partners
(each a "Flex-Partners Fund"), and shares of The Flex-funds Money Market Fund.
No fee or sales load will be imposed upon the exchange. Shareholders of The
Flex-funds Money Market Fund who acquired such shares upon exchange of Class A
shares of the Fund may use the exchange privilege only to acquire Class A
shares of a Flex-Partners Fund.
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<PAGE> 57
Shareholders of the Fund may exchange their Class C shares for Class C
shares of other Flex-Partners Funds. If Class C shares of the Fund are
exchanged for Class C shares of other Flex-Partners Funds, no contingent
deferred sales charge will be payable upon such exchange of Class C shares, but
a contingent deferred sales charge will be payable upon the redemption of Class
C shares acquired as a result of the exchange. The applicable sales charge
will be that imposed by the Fund in which shares were initially purchased and
the purchase date will be deemed to be the date of the initial purchase, rather
than the date of the exchange.
At any time after acquiring shares of other funds participating in the
Class C exchange privilege, the shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class C shares of the Fund
without subjecting such shares to any contingent deferred sales charge. Shares
of any fund participating in the Class C exchange privilege that were acquired
through reinvestment of dividends or distributions may be exchanged for Class C
shares of other funds without being subject to any contingent deferred sales
charge.
Additional details about the exchange privilege and prospectuses for
each of the Flex-Partners Funds and The Flex-funds Money Market Fund are
available from the Fund's Transfer Agent. The exchange privilege may be
modified, terminated or suspended on 60 days' notice, and any fund, including
the Fund, or the Distributor, has the right to reject any exchange application
relating to such fund's shares. The 60 day notification requirement may be
waived if (i) the only effect of a modification would be to reduce or eliminate
an administrative fee, redemption fee, or deferred sales charge ordinarily
payable at the time of an exchange, or (ii) the Fund suspends the redemption of
the shares to be exchanged as permitted under the 1940 Act or the rules and
regulations thereunder, or the fund to be acquired suspends the sale of its
shares because it is unable to invest amounts effectively in accordance with
its investment objective and policies.
In the Prospectus, the Fund has notified shareholders that it reserves
the right at any time, without prior notice, to refuse exchange purchases by
any person or group if, in the Manager's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.
All redemptions in kind shall be of readily marketable securities.
COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor
or eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other series of the Trust, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "How to Buy Shares -
Cumulative Quantity Discount" in the Prospectus.
An eligible group of related Fund investors includes any combination
of the following:
(a) an individual;
(b) the individual's spouse, their children and their
parents;
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<PAGE> 58
(c) the individual's Individual Retirement Account (IRA);
(d) any company controlled by the individual (a person,
entity or group that holds 25% or more of the outstanding voting securities of
a corporation will be deemed to control the corporation, and a partnership will
be deemed to be controlled by each of its general partners);
(e) a trust created by the individual, the beneficiaries
of which are the individual, his or her spouse, parents or children;
(f) a Uniform Gifts to Minors Act/Uniform Transfers to
Minors Act account created by the individual or the individual's spouse; and
(g) one or more employee benefit plans of a company
controlled by an individual.
The Combined Purchase and Cumulative Purchase Privilege does not apply
to individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."
RIGHTS OF ACCUMULATION. Reduced sales charges are also available
through Rights of Accumulation, under which an investor or an eligible group of
related investors, as described above under "Combined Purchase and Cumulative
Purchase Privilege," may aggregate the value of their existing holdings of the
Class A shares of the Fund and Class A shares of other Flex-Partners Funds to
determine the reduced sales charge. The value of existing holdings for
purposes of determining the reduced sales charge is calculated using the
maximum offering price (net asset value plus maximum sales charge) as of the
previous business day. See "How Net Asset Value is Determined" in the
Prospectus. The Transfer Agent must be notified at the time of purchase that
the investor is entitled to a reduced sales charge. The reduced sales charges
will be granted subject to confirmation of the investor's holdings. Rights of
accumulation are not available to individual participants in the retirement and
group plans described below under "Flex-Partners Retirement Plans."
LETTERS OF INTENT. Reduced sales charges are also available to
investors (or an eligible group of related investors) who enter into a written
Letter of Intent providing for the purchase, within a thirteen-month period, of
Class A shares of the Fund and Class A shares of other Flex-Partners Funds.
All Class A shares of the Fund and Class A shares of other Flex-Partners Funds
which were previously purchased and are still owned are also included in
determining the applicable reduction. The Transfer Agent must be notified at
the time of purchase that the investor is entitled to a reduced sales charge.
The reduced sales charges will be granted subject to confirmation of the
investor's holdings. Letters of Intent are not available to individual
participants in retirement and group plans described below under "Flex-Partners
Retirement Plans."
A Letter of Intent permits a purchase to establish a total investment
goal to be achieved by any number of investments over a thirteen-month period.
Each investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. Shares totaling 5% of the dollar amount of the Letter of Intent
will be held by the Transfer Agent in escrow in the name of the purchaser. The
effective date of a Letter of Intent may be back-dated up to 90 days, in order
that any investments made during this 90-day period, valued at the purchaser's
cost, can be applied to the fulfillment of the Letter of Intent goal.
14
<PAGE> 59
The Letter of Intent does not obligate the investor to purchase, nor
the Fund to sell, the indicated amount. In the event the Letter of Intent goal
is not achieved within the thirteen-month period, the purchaser is required to
pay the difference between the sales charge otherwise applicable to the
purchases made during this period and sales charges actually paid. Such
payment may be made directly to the Transfer Agent or, if not paid, the
Transfer Agent will liquidate sufficient escrowed shares to obtain such
difference. If the goal is exceeded in an amount which qualifies for a lower
sales charge, a price adjustment is made by refunding to the purchaser the
amount of excess sales charge, if any, paid during the thirteen-month period.
Investors electing to purchase Class A shares of the Fund pursuant to a Letter
of Intent should carefully read such Letter of Intent.
AUTOMATIC ACCOUNT BUILDER. An investor may arrange to have a fixed
amount of $100 or more automatically invested in shares of the Fund monthly by
authorizing his or her bank account to be debited to invest specified dollar
amounts in shares of the Fund. The investor's bank must be a member of the
Automatic Clearing House System. Stock certificates are not issued to Automatic
Account Builder participants.
Further information about these programs and an application form can
be obtained from the Distributor.
SYSTEMATIC WITHDRAWAL PROGRAM. A systematic withdrawal plan is
available for shareholders having Class A and Class C shares of the Fund with a
minimum value of $10,000, based upon the offering price. The plan provides for
monthly, quarterly or annual checks in any amount, but not less than $100 (which
amount is not necessarily recommended). Except as otherwise provided in the
Prospectus, to the extent such withdrawals exceed the current net asset value of
reinvested dividends, they may be subject to the contingent deferred sales
charge. See "How to Buy Shares - Class C Shares" and "Other Shareholder
Services" in the Prospectus.
Dividends and/or distributions on shares held under this plan are
invested in additional full and fractional shares at net asset value. The
Transfer Agent acts as agent for the shareholder in redeeming sufficient full
and fractional shares to provide the amount of the periodic withdrawal payment.
The plan may be terminated at any time.
Withdrawal payments should not be considered as dividends, yield or
income. If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.
Furthermore, each withdrawal constitutes a redemption of shares, and
any gain or loss realized must be recognized for federal income tax purposes.
In addition, withdrawals made concurrently with purchases of additional shares
are inadvisable because of the applicable sales charges to (i) the purchase of
Class A shares and (ii) the withdrawal of Class C shares. Each shareholder
should consult his or her own tax adviser with regard to the tax consequences
of the plan, particularly if used in connection with a retirement plan.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS. If you request to have distributions mailed to you
and the U.S. Postal Service cannot deliver your checks, or if your checks remain
uncashed for six months, the Manager may reinvest
15
<PAGE> 60
your distributions at the then-current NAV. All subsequent distributions will
then be reinvested until you provide the Manager with alternate instructions.
DIVIDENDS. A portion of the Fund's income may qualify for the
dividends-received deduction available to corporate shareholders to the extent
that the Fund's income is derived from qualifying dividends. Because the Fund
may earn other types of income, such as non-qualifying dividends and short-term
capital gains, the percentage of dividends from the Fund that qualifies for the
deduction generally will be less than 100%. The Fund will notify corporate
shareholders annually of the percentage of Fund dividends that qualifies for
the dividends-received deduction. A portion of the Fund's dividends derived
from certain U.S. government obligations may be exempt from state and local
taxation. The Fund will send each shareholder a notice in January describing
the tax status of dividends and capital gain distributions for the prior year.
CAPITAL GAIN DISTRIBUTIONS. Long-term capital gains earned by the Fund
on the sale of securities by the Portfolio and distributed to shareholders of
the Fund are federally taxable as long-term capital gains regardless of the
length of time shareholders have held their shares. If a shareholder receives a
long-term capital gain distribution on shares of the Fund and such shares are
held six months or less and are sold at a loss, the portion of the loss equal to
the amount of the long-term capital gain distribution will be considered a
long-term loss for tax purposes.
Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from short-term
capital gains do not qualify for the dividends-received deduction.
TAX STATUS OF THE FUND. The Fund intends to qualify each year as a
"regulated investment company" for tax purposes so that it will not be liable
for federal tax on income and capital gains distributed to shareholders. In
order to qualify as a regulated investment company and avoid being subject to
federal income or excise taxes at the Fund level, the Fund intends to distribute
substantially all of its net investment income (consisting of the income it
earns from its investment in the Portfolio, less expenses) and net realized
capital gains within each calendar year as well as on a fiscal year basis. The
Fund intends to comply with other tax rules applicable to regulated investment
companies, including a requirement that capital gains from the sale of
securities held less than three months constitute less than 30% of the Fund's
gross income for each fiscal year. Gains from futures contracts and options are
included in this 30% calculation, which may limit the Fund's investments in such
instruments.
The Fund is treated as a separate entity from the other funds of The
Flex-Partners Trust for tax purposes.
OTHER TAX INFORMATION. The information above is only a summary of some
of the tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In addition to
federal income taxes, shareholders may be subject to state and local taxes on
Fund distributions. Investors should consult their tax advisers to determine
whether the Fund is suitable to their particular tax situation.
INVESTMENT ADVISER AND MANAGER
R. Meeder & Associates, Inc. (the "Manager") is the investment adviser
and manager for, and has an Investment Advisory Contract with, the Portfolio.
16
<PAGE> 61
Pursuant to the Investment Advisory Contract with the Portfolio, the
Manager, subject to the supervision of the Portfolio's Board of Trustees and in
conformity with the stated objective and policies of the Fund, manages both the
investment operations of the Fund and the composition of the Portfolio's
portfolio, including the purchase, retention, disposition and loan of
securities. In connection therewith, the Manager is obligated to keep certain
books and records of the Portfolio. The Manager also administers the Fund's
corporate affairs, and in connection therewith, furnishes the Fund with office
facilities, together with those ordinary clerical and bookkeeping services
which are not being furnished by Star Bank, N.A., the Portfolio's custodian and
Mutual Funds Service Co., the Fund's transfer and disbursing agent. The
management services of the Manager are not exclusive under the terms of the
Investment Advisory Agreement and the Manager is free to, and does, render
management services to others.
The Investment Advisory Contract for the Portfolio was separately
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 Investment Company
Act of 1940) of the Portfolio. The Investment Advisory Contract is to remain
in force so long as renewal thereof is specifically approved at least annually
by a majority of the Trustees or by vote of a majority of the interests in the
Portfolio, and in either case by vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) at a
meeting called for the purpose of voting on such renewal.
The Investment Advisory Contract provides that the Manager will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the matters to which the Investment Advisory
Contract relates except for a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days' prior written notice by Majority Vote of the
Portfolio, by the Trustees of the Portfolio, or by the Manager.
Costs, expenses and liabilities of the Trust attributable to a
particular fund are allocated to that fund. Costs, expenses and liabilities
which are not readily attributable to a particular fund are allocated among all
of the Trust's funds. Thus, each fund pays its proportionate share of: the
fees of the Trust's independent auditors, legal counsel, custodian, transfer
agent and accountants; insurance premiums; the fees and expenses of Trustees
who do not receive compensation from R. Meeder & Associates; association dues;
the cost of printing and mailing confirmations, prospectuses, proxies, proxy
statements, notices and reports to existing shareholders; state registration
fees; distribution expenses within the percentage limitations of each Class of
Shares' distribution and service plan, including the cost of printing and
mailing of prospectuses and other materials incident to soliciting new
accounts; and other miscellaneous expenses.
The expenses of the Portfolio include the compensation of the Trustees
who are not affiliated with the Manager; registration fees; membership dues
allocable to the Portfolio; fees and expenses of independent accountants, of
legal counsel and of any transfer agent or accountant of the Portfolio;
insurance premiums and other miscellaneous expenses.
Expenses of the Portfolio also include all fees under its Accounting
and Administrative Service Agreement; 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 offices and commissions; expenses of meetings of
17
<PAGE> 62
investors and Trustees; the advisory fees payable to the Manager under the
Investment Advisory Contract and other miscellaneous expenses.
The Board of Trustees of the Trust believe that the aggregate per
share expenses of the Fund and the Portfolio will be less than or approximately
equal to the expenses which the Fund would incur if it retained the services of
an investment adviser and the assets of the Fund were invested directly in the
type of securities being held by the Portfolio.
The Manager earns an annual fee, payable in monthly installments as
follows. The fee for the Portfolio is based upon the average net assets of the
Portfolio and is at the rate of 1% of the first $50 million, 0.75% of the next
$50 million and 0.60% in excess of $100 million of average net assets.
The Manager presently intends to reimburse the Fund through an expense
reimbursement fee to the extent necessary to keep total expenses at 1.75% of
average daily net assets for Class A Shares and 2.00% of average daily net
assets for Class C shares. The Manager may change this policy at any time
without notice to shareholders.
R. Meeder & Associates, Inc. was incorporated in Ohio on February 1,
1974 and maintains its principal offices at 6000 Memorial Drive, Dublin, Ohio
43017. The Manager is a wholly-owned subsidiary of Muirfield Investors, Inc.
("MII"), which is controlled by Robert S. Meeder, Sr. through the ownership of
voting common stock. The Manager's officers and directors, and the principal
offices are as set forth as follows: Robert S. Meeder, Sr., Chairman and Sole
Director; Robert S. Meeder, Jr., President; G. Robert Kincheloe, Senior Vice
President; Philip A. Voelker, Senior Vice President; Donald F. Meeder, Vice
President and Secretary; Sherrie L. Acock, Vice President; Robert D. Baker,
Vice President; Richard W. Arndt, Vice President; Wesley F. Hoag, General
Counsel and Chief Operating Officer; and Steven T. McCabe, Controller. Mr.
Robert S. Meeder, Sr. is President and a Trustee of the Trust and the
Portfolio. Each of Mr. Robert S. Meeder, Jr., Donald F. Meeder, Wesley F.
Hoag and Steven T. McCabe is an officer of the Trust and the Portfolio. Mr.
Philip A. Voelker is a Trustee and officer of the Portfolio and an officer of
the Trust.
OFFICERS AND TRUSTEES
The Trustees and executive officers of the Trust are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Except as otherwise shown, all
persons named as Trustees also serve in similar capacities for other funds
advised by the Manager. Unless otherwise noted, the business address of each
Trustee and officer is 6000 Memorial Drive, Dublin, Ohio 43017, which is also
the address of the Manager. Those Trustees who are "interested persons" (as
defined in the Investment Company Act of 1940) by virtue of their affiliation
with either the Portfolio, the Trust or the Manager are indicated by an
asterisk (*).
The Trust and the Portfolio are managed by its Trustees and officers.
Their names, positions and principal occupations during the past five years are
listed below:
<TABLE>
<CAPTION>
Position Principal
Name & Address Held Occupation
- -------------- -------- ----------
<S> <C> <C>
ROBERT S. MEEDER, SR.*+ Trustee/ Chairman, R. Meeder &
President (1)(2) & Associates, Inc. an
Investment Adviser
</TABLE>
18
<PAGE> 63
<TABLE>
<S> <C> <C>
MILTON S. BARTHOLOMEW Trustee (2) Retired, formerly a practicing
1424 Clubview Boulevard, S. attorney in Columbus, Ohio
Worthington, OH 43235 Member of the Portfolio's Audit
Committee.
JOHN M. EMERY Trustee (1) Retired, formerly Vice President
2390 McCoy Road & Treasurer of Columbus &
Columbus, OH 43220 Southern Ohio Electric Co.
Member of the Trust's Audit
Committee.
RICHARD A. FARR Trustee (1) President of R&R Supply Co.
3250 W. Henderson Rd. and General Manager of RAFCo.,
Columbus, OH 43220 Inc., two companies involved in
engineering, consulting & sales of
heating & air conditioning
equipment.
RUSSELL G. MEANS Trustee (2) Chairman of Employee Benefit
4789 Rings Road Management Corporation,
Dublin, OH 43017 consultants and administrators of
self-funded health and retirement
plans.
ROBERT S. MEEDER, JR.*+ Vice President (1)(2) President of R. Meeder &
Associates, Inc.
WALTER L. OGLE Trustee (2) Executive Vice President of
One Corporate Drive Godwins, Booke & Dickenson,
Suite 600 Inc. employee benefit, compensation
Clearwater, Fl 43622 and human resource consultants.
PHILIP A. VOELKER*+ Trustee (2)/ Senior Vice President of R. Meeder
Vice President (1)(2) & Associates, Inc.
JAMES B CRAVER* Assistant Senior Vice President of Signature
6 St. James Avenue Secretary (1)(2) Financial Group, Inc. (since
Boston, MA 02116 January 1991); Partner, Baker &
Hostetler, a law firm (August 1984
to December 1990)
STEVEN T. MCCABE*+ Assistant Controller, R. Meeder &
Treasurer (1)(2) Associates (since April 1991);
Assistant Treasurer, Cardinal
Group of Funds (October 1986 to
April 1990)
</TABLE>
19
<PAGE> 64
<TABLE>
<S> <C> <C>
DONALD F. MEEDER*+ Secretary/ Vice President of R. Meeder &
Treasurer(1)(2) Associates, Inc., and President of
Mutual Funds Service Co.
WESLEY F. HOAG*+ Vice President (1)(2) General Counsel and Chief
Operating Officer of R. Meeder &
Associates, Inc. (since July 1993);
Attorney, Porter, Wright, Morris &
Arthur, a law firm (October 1984 to
June 1993)
WILLIAM L. GURNER Trustee (1) President, Sector Capital
Sector Capital Management Management, an Investment Advisor
One Commerce Square, Suite 1900 (since January 1995); Manager of
Trust Investments of Federal
Express Corporation (1987-1994)
Memphis, TN 38103
LOWELL G. MILLER* Trustee (1) President, Miller/Howard
Miller/Howard Investments, Inc. Investments, Inc., an Investment
141 Upper Byrdcliffe Adviser
Woodstock, NY 12498
ROGER D. BLACKWELL Trustee (1) Professor of Marketing and
Blackwell Associates, Inc. Consumer Behavior, The Ohio State
3380 Tremont Road University, and President of
Columbus, OH 43221 Blackwell Associates, Inc., a
strategic consulting firm
NEIL P. RAMSEY Trustee (2) President, Ramsey Financial, a
Suite 215 private investment management
1230 Hurstbourne Parkway company
Louisville, KY 40222
</TABLE>
(1) Trustee and/or officer of The Flex-Partners
(2) Trustee and/or officer of the Portfolio
*"Interested Person" of the Trust (as defined in the Investment Company Act of
1940) and Portfolio.
+P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.
Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.
Several Trustees and each officer of the Trust hold the same positions
with The Flex-funds, a Massachusetts business trust consisting of six separate
series. Each Trustee and officer of the Portfolio hold the same positions with
each corresponding Portfolio of The Flex-funds. The Manager serves as the
investment adviser to each portfolio of The Flex-funds.
20
<PAGE> 65
The Trust pays each Trustee who is not an "interested person" an
annual fee of $3,000, plus $750 for each meeting of the Board of Trustees
attended regardless of the number of Boards of Trustees on which each Trustee
serves. Mr. Emery comprises the Audit Committee for each of The Flex-funds and
The Flex-Partners Trusts. Mr. Emery is paid $400 for each meeting of the Audit
Committees attended regardless of the number of Audit Committees on which he
serves. All other officers and Trustees serve without compensation from the
Trust.
The Trustees and officers of the Fund and the Portfolio own, in the
aggregate, less than 1% of the Fund's total outstanding shares.
THE DISTRIBUTOR
Roosevelt & Cross, Incorporated (the "Distributor"), 20 Exchange
Place, New York, New York 10005, acts as the distributor of the Class A shares
and the Class C shares of the Fund.
Pursuant to separate plans of distribution (the Class A Plan and the
Class C Plan, collectively, the Plans) adopted by the Fund under Rule 12b-1
under the 1940 Act and an underwriting agreement (the Underwriting Agreement),
the Distributor incurs the expenses of distributing the Fund's Class A shares
and Class C shares. See "Distribution Plans" in the Prospectus.
On August 4, 1994, the Board of Trustees, including a majority of the
Trustees who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Class A or Class C Plan or
in any agreement related to the Plan (the Rule 12b- 1 Trustees), at a meeting
called for the purpose of voting on the Class A Plan, adopted a plan of
distribution for the Class A shares of the Fund. On August 4, 1994, the Board
of Trustees, including the Rule 12b-1 Trustees, at a meeting called for the
purpose of voting on the Class C Plan, adopted a plan of distribution for the
Class C shares of the Fund. The Class A Plan was approved by Class A
shareholders of the Fund. The Class C Plan was approved by Class C
shareholders of the Fund.
The Distributor also receives the proceeds of contingent deferred
sales charges paid by investors upon certain redemptions of Class C shares.
See "How to Buy Shares" in the Prospectus. The amount of distribution expenses
reimbursable by Class C shares of the Fund is reduced by the amount of such
proceeds.
The Plans continue in effect from year to year, provided that each
such continuance is approved at least annually by a vote of the Board of
Trustees, including a majority vote of the Rule 12b-1 Trustees, cast in person
at a meeting called for the purpose of voting on such continuance. The Plans
may be terminated at any time, without penalty, by the vote of a majority of
the Trustees who are not interested persons or by the vote of the holders of a
majority of the outstanding shares of the Fund. Neither Plan may be amended to
increase materially the amounts to be spent for the services described therein
without approval by the shareholders of Class A and Class C, as applicable,
and all material amendments are required to be approved by the Board of
Trustees in the manner described above. The Fund will not be contractually
obligated to pay expenses incurred under either the Class A or Class C Plan if
it is terminated or not continued.
Pursuant to each Plan, the Board of Trustees will review at least
quarterly a written report of the distribution expenses incurred on behalf of
the Class A and Class C shares of the Fund by the Distributor. The report
includes an itemization of the distribution expenses and the purposes of such
21
<PAGE> 66
expenditures. In addition, as long as the Plans remain in effect, the
selection and nomination of Trustees who are not interested persons of the Fund
shall be committed to the Trustees who are not interested persons of the Fund.
Pursuant to the Underwriting Agreement, the Fund has agreed to
indemnify the Distributor to the extent permitted by applicable law against
certain liabilities under the Securities Act and the Investment Company Act of
1940. The Underwriting Agreement was approved by the Board of Trustees,
including a majority of the Rule 12b-1 Trustees, on May 1, 1995.
FLEX-PARTNERS RETIREMENT PLANS
The Trust offers retirement plans which are described in the
Prospectus. Minimum purchase requirements for retirement plan accounts are
subject to the same requirements as regular accounts, except for an IRA, which
has a $500 minimum purchase requirement. Information concerning contribution
limitations for IRA accounts are described below.
Individual Retirement Accounts (IRA):
Limitation on Deductible Contributions - Under prior law an individual
with earned income, not yet 70 1/2 years of age, was allowed a deductible IRA
contribution, limited to the lesser of earned income or $2,000. Effective for
years beginning after December 31, 1986, applicable law limits the
deductibility of IRA contributions where the taxpayer is a participant in an
employer-sponsored retirement plan and had adjusted gross income (AGI) in
excess of $40,000 (joint) and $25,000 (single). For every dollar that AGI
exceeds these limits, the maximum deduction is reduced by twenty cents. Thus,
a joint filer with AGI greater than $50,000 who is covered by an employer
sponsored plan will not be able to make a deductible IRA contribution. The
deductible limits for individuals not covered by an employer-sponsored plan
were not changed.
Nondeductible Contributions - Individuals who may not make a deductible
contribution due to the limits noted above, may continue to make nondeductible
contributions subject to the prior $2,000 limitation. The earnings on such
contributions will still accumulate on a tax deferred basis. Individuals will
be required to report such contributions on their tax returns.
Rollover Contributions - Individuals who receive certain lump-sum
distributions from employer-sponsored retirement plans may make roll- over
contributions to an IRA and by doing so defer taxes on the distribution and
shelter any investment earnings.
A Spousal IRA is also available.
CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER
Mutual Funds Service Co. provides accounting, stock transfer and
dividend disbursing services to the Fund and the Portfolio. The minimum annual
fee for accounting services for the Portfolio is $7,500. Subject to the
applicable 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. Subject to a $4,000 annual minimum fee,
each class of shares of the Fund will incur an annual fee, payable monthly,
which will be the greater of $15 per shareholder account or 0.10% of the Fund's
average net assets, for stock
22
<PAGE> 67
transfer and dividend disbursing services. These fees are reviewable annually
by the respective Trustees of the Trust and the Portfolio.
Mutual Funds Service Co. also serves as Administrator to the Fund
pursuant to an Administration Services Agreement which was effective February
1, 1995. Services provided to the Fund include coordinating and monitoring any
third party services to the Fund; providing the necessary personnel to perform
administrative functions for the Fund; assisting in the preparation, filing and
distribution of proxy materials, periodic reports to Trustees and shareholders,
registration statements and other necessary documents. The Fund incurs an
annual fee, payable monthly, of 0.03% of the Fund's average net assets.
The general counsel for the Manager was primarily responsible for
preparing and filing with the Securities and Exchange Commission a
post-effective amendment to the registration statement for the Trust to add the
Fund as an additional series of the Trust. A charge in the amount of $12,000
for such legal services rendered by the Manager on behalf of the Fund will be
paid and amortized by the Fund as an organization expense over a period not
exceeding 60 months.
DESCRIPTION OF THE TRUST
Trust Organization. The assets of the Trust received for the issue
or sale of the shares of the Fund and all income, earnings, profits, and
proceeds thereof, subject only to the rights of creditors, are especially
allocated to the Fund and constitute the underlying assets of the Fund. The
underlying assets of the Fund are segregated on the books of account, and are
to be charged with the liabilities with respect to the Fund and with a share of
the general expenses of the Trust. Expenses with respect to the Trust are to
be allocated in proportion to the asset value of the respective funds except
where allocations of direct expense can otherwise be fairly made. The officers
of the Trust, subject to the general supervision of the Board of Trustees, have
the power to determine which expenses are allocable to a given fund, or which
are general or allocable to all of the funds. In the event of the dissolution
or liquidation of the Trust, shareholders of each fund are entitled to receive
as a class the underlying assets of such fund available for distribution.
Shareholder and Trustee Liability. The Trust is an entity of the type
commonly known as a "Massachusetts business trust." Under Massachusetts law,
shareholders of such a trust may, under certain circumstances, be held
personally liable for the obligations of the trust. The Declaration of Trust
provides that the Trust shall not have any claim against shareholders except
for the payment of the purchase price of shares and requires that each
agreement, obligation, or instrument entered into or executed by the Trust or
the Trustees include a provision limiting the obligations created thereby to
the Trust and its assets.
The Declaration of Trust provides for indemnification out of each
fund's property of any shareholder held personally liable for the obligations
of the Fund. The Declaration of Trust also provides that each Fund shall, upon
request, assume the defense of any claim made against any shareholder for any
act or obligation of the Fund and satisfy any judgment thereon. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability
is limited to circumstances in which a Fund itself would be unable to meet its
obligations. The Manager believes that, in view of the above, the risk of
personal liability to shareholders is remote.
23
<PAGE> 68
The Declaration of Trust further provides that the Trustees, if they
have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees against
any liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of their office.
Voting Rights. The Fund's capital consists of shares of beneficial
interest. As a shareholder, you receive one vote for each share you own. The
shares have no preemptive or conversion rights; the voting and dividend rights,
the right of redemption, and the privilege of exchange are described in the
Prospectus. Shares are fully paid and nonassessable, except as set forth under
the heading "Shareholder and Trustee Liability" above. Shareholders
representing 10% or more of the Trust or the Fund may, as set forth in the
Declaration of Trust, call meetings of the Trust or the Fund for any purpose
related to the Trust or Fund, as the case may be, including, in the case of a
meeting of the entire Trust, the purpose of voting on removal of one or more
Trustees. The Trust or any Fund may be terminated upon the sale of its assets
to another open-end management investment company, or upon liquidation and
distribution of its assets, if approved by vote of the holders of a majority of
the Trust or the Fund, as determined by the current value of each shareholder's
investment in the Fund or Trust. If not so terminated, the Trust and the Fund
will continue indefinitely.
Custodian. Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202,
is custodian of the assets of the Portfolio. The custodian is responsible for
the safekeeping of the Portfolio's assets and the appointment of subcustodian
banks and clearing agencies. The custodian takes no part in determining the
investment policies of the Portfolio or in deciding which securities are
purchased or sold by the Portfolio. The Portfolio may, however, invest in
obligations of the custodian and may purchase or sell securities from or to the
custodian.
Auditor. KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio
43215, serves as the Trust's independent accountant. The auditor examines
financial statements for the Fund and provides other audit, tax, and related
services.
FINANCIAL STATEMENTS
Financial statements for the Fund are presented on the following
pages.
24
<PAGE> 69
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
TAA FUND
<S> <C>
Assets:
Investment in corresponding portfolio $ 9,793,746
Receivable for capital stock issued 178,046
Unamortized organizational costs 26,460
Prepaid expenses and other assets 7,557
------------
Total Assets 10,005,809
------------
Liabilities:
Payable for capital stock redeemed 2,500
Accrued liabilities 52,158
------------
Total Liabilities 54,658
------------
Net Assets:
Capital 9,336,023
Accumulated net investment income (loss) (23,812)
Accumulated net realized gain (loss) on investments 127,482
Net unrealized gain (loss) on investments 511,458
------------
Net Assets $ 9,951,151
============
Net Assets:
Class A Shares N/A
Class C Shares 9,951,151
------------
Total $ 9,951,151
============
Outstanding units of beneficial interest (shares):
Class A Shares N/A
Class C Shares 692,514
------------
Total 692,514
============
Net asset value - redemption price per share:
Class A Shares $ N/A
Class C Shares 14.37
============
Sales Charge (Class A) 4.00%
------------
Offering price (100%/(100%-Sales Charge) of net asset
value adjusted to nearest cent) per share - Class A $ N/A
============
</TABLE>
<PAGE> 70
STATEMENT OF OPERATION
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
TAA FUND *
<S> <C>
Net investment income (loss) from corresponding
portfolio:
Interest $ 10,407
Dividends 1,069
Expenses (16,594)
----------
Total Net Investment Income (Loss) From
Corresponding Portfolio (5,118)
----------
Fund Expenses:
Legal fees 483
Audit fees 2,551
Printing 2,160
Transfer agent fees 1,284
Administrative fee 409
Trustees fees and expenses 2,956
Distribution plan 13,131
Shareholder servicing fee 4,377
Amortization of organizational costs 1,633
Registration 4,456
Postage 210
Other expenses 559
----------
Total expenses 34,209
Expenses waived (15,515)
----------
Total expenses - net 18,694
----------
INVESTMENT INCOME (LOSS) - NET (23,812)
----------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS - NET:
Net realized gain (loss) on futures 48,998
Net realized gain (loss) - other 78,484
Unrealized appreciation (depreciation) of
investments 511,458
----------
NET GAIN (LOSS) ON INVESTMENTS 638,940
----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 615,128
==========
</TABLE>
- ---------------
* For the period June 1, 1995 to September 30, 1995
<PAGE> 71
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
TAA FUND *
Total CLASS A CLASS C
-----------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Investment income (loss) - net $ (23,812) $ 0 $ (23,812)
Net realized gain (loss) on investments 127,482 0 127,482
Net change in unrealized appreciation
(depreciation) of investments 511,458 0 511,458
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 615,128 0 615,128
----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Investment income - net 0
Tax return of capital 0
Net realized gain from investment
transactions 0
----------- ----------- -----------
Net decrease in net assets resulting
from dividends and distributions 0 0 0
----------- ----------- -----------
CAPITAL TRANSACTIONS:
Net proceeds from sales 9,439,853 9,439,853
Reinvestment of dividends
Cost of redemptions (103,830) (103,830)
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from capital share transactions 9,336,023 0 9,336,023
----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,951,151 0 9,951,151
NET ASSETS - Beginning of year 0 0 0
----------- ----------- -----------
NET ASSETS - End of period $ 9,951,151 $ 0 $ 9,951,151
=========== =========== ===========
SHARE TRANSACTIONS:
Issued 699,776 0 699,776
Reinvested 0 0 0
Redeemed (7,262) 0 (7,262)
----------- ----------- -----------
Change in shares 692,514 0 692,514
=========== =========== ===========
</TABLE>
- ---------------
* For the period June 1, 1995 to September 30, 1995
<PAGE> 72
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Financial Statements included in Part A
Financial Highlights
Financial Statements included in Part B
REGISTRANT - THE FLEX-PARTNERS' TAA FUND AND BTB
FUND
Unaudited Statements of Assets and Liabilities - September 30,
1995
Unaudited Statements of Operations - For the period ended
September 30, 1995
Unaudited Statements of Changes in Net Assets - For the period
ended September 30, 1995
PORTFOLIOS - UTILITIES STOCK PORTFOLIO
Unaudited Statement of Assets and Liabilities - September 30,
1995
Unaudited Statement of Operations - For the period ended
September 30, 1995
Unaudited Statement of Changes in Net Assets - For the period
ended September 30, 1995
Statements and schedules other than those listed above are omitted because they
are not required, or because the information required is included in the
financial statements or notes thereto.
(b) Exhibits:
Not Applicable.
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this Amendment to
its Registration Statement meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dublin, and the State of Ohio on the 6th day of
December, 1995.
THE FLEX-PARTNERS
BY: /s/ Wesley F. Hoag
-------------------------
Wesley F. Hoag
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
December 6, 1995 /s/ Wesley F. Hoag
---------------- ------------------------------
Date Signed Wesley F. Hoag, Vice President
Pursuant to Powers of Attorney
copies of which are being filed herewith
as Exhibits, for Robert S. Meeder, Sr., Richard A. Farr,
John M. Emery, Roger D. Blackwell,
Lowell Miller and William Gurner
Trustees of The Flex-Partners
December 6, 1995 /s/ Wesley F. Hoag
---------------- ------------------------------
Date Signed Wesley F. Hoag
Executed by Wesley F. Hoag
Pursuant to Powers of Attorney
<PAGE> 74
SIGNATURES
Mutual Fund Portfolio (the "Portfolio") has duly caused this
Post-Effective Amendment to the Registration on Form N-1A of The Flex-Partners
(File No. 33-48922) to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Dublin and State of Ohio on the 6th day of
December, 1995.
MUTUAL FUND PORTFOLIO
By: /s/ Wesley F. Hoag
------------------------
Wesley F. Hoag
This Post-Effective Amendment to the Registration Statement on Form
N-1A of The Flex-Partners (File No. 33-48922) has been signed below by the
following persons in the capacities with respect to the Portfolio indicated on
December 6, 1995.
Signature Title
--------- -----
/s/ Robert S. Meeder, Sr.* President and Trustee
- -----------------------------
Robert S. Meeder, Sr.
/s/ Milton S. Bartholomew* Trustee
- -----------------------------
Milton S. Bartholomew
/s/ Russel G. Means* Trustee
- -----------------------------
Russel G. Means
/s/ Donald F. Meeder
- ---------------------------- Secretary/Treasurer, Principal Financial
Donald F. Meeder Officer and Principal Accounting Officer
/s/ Walter L. Ogle* Trustee
- -----------------------------
Walter L. Ogle
/s/ Philip A. Voelker* Vice President and Trustee
- -----------------------------
Philip A. Voelker
/s/ Neil P. Ramsey* Trustee
- -----------------------------
Neil P. Ramsey
*By: /s/ Wesley F. Hoag
--------------------------
Wesley F. Hoag
Executed by Wesley F. Hoag on behalf
of those indicated pursuant to Powers of Attorney
<PAGE> 75
SIGNATURES
Utilities Stock Portfolio (the "Portfolio") has duly caused this
Post-Effective Amendment to the Registration Statement on Form N-1A of The
Flex-Partners to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dublin and State of Ohio on the 6th day of December,
1995.
UTILITIES STOCK PORTFOLIO
By: /s/ Wesley F. Hoag
----------------------
Wesley F. Hoag
This Registration Statement on Form N-1A of The Flex-Partners has been
signed below by the following persons in the capacities with respect to the
Portfolio indicated on December 6, 1995.
Signature Title
--------- -----
/s/ Robert S. Meeder, Sr.* President and Trustee
- -----------------------------
Robert S. Meeder, Sr.
/s/ Milton S. Bartholomew* Trustee
- -----------------------------
Milton S. Bartholomew
/s/ Russel G. Means* Trustee
- -----------------------------
Russel G. Means
/s/ Donald F. Meeder
- ----------------------------- Secretary/Treasurer, Principal Financial
Donald F. Meeder Officer and Principal Accounting Officer
/s/ Walter L. Ogle* Trustee
- -----------------------------
Walter L. Ogle
/s/ Philip A. Voelker* Vice President and Trustee
- -----------------------------
Philip A. Voelker
/s/ Neil P. Ramsey* Trustee
- -----------------------------
Neil P. Ramsey
*By: /s/ Wesley F. Hoag
-------------------------
Wesley F. Hoag
Executed by Wesley F. Hoag on behalf
of those indicated pursuant to Powers of Attorney
