<PAGE> 1
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THE FLEX-PARTNERS FUNDS
SEMIANNUAL REPORT
JUNE 30, 1995
THE TAA FUND
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* *
* THE BTB FUND BEGAN ACCEPTING SHAREHOLDER INVESTMENTS ON JULY 11, *
* 1995. *
* *
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<PAGE> 2
THE FLEX-PARTNERS SEMIANNUAL REPORT
================================================================================
THE FLEX-PARTNERS 1995 SEMIANNUAL REPORT
Table of Contents
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SHAREHOLDER COMMUNICATION
------------------------------
2 PRESIDENT'S LETTER
4 THE MUTUAL FUND PORTFOLIO
FINANCIAL INFORMATION
------------------------------
THE TAA FUND
5 Statement of Assets and Liabilities
5 Statement of Operations
6 Statement of Changes in Net Assets
6 Financial Highlights
7 Notes to Financial Statements
THE MUTUAL FUND PORTFOLIO
8 Statement of Assets and Liabilities
8 Statement of Operations
9 Statement of Changes in Net Assets
9 Financial Highlights
10 Notes to Financial Statements
ON THE COVER: The BTB Fund began accepting
shareholder investments effective July 11, 1995 and
therefore is not included in this 1995 Semiannual
Report. Potential shareholders in The BTB Fund may
choose to invest in Class A or Class C shares.
[LOGO]
IF YOU HAVE ANY QUESTIONS ABOUT THE INFORMATION CONTAINED IN THIS
REPORT, CALL THE FLEX-PARTNERS FUNDS
AT 800-494-3539 (FLEX)
DEAR FELLOW SHAREHOLDERS:
Welcome to The Flex-Partners TAA Fund.
This Semiannual Report provides financial information for The TAA Fund
through June 30, 1995 - roughly the first thirty days of the Fund's life.
We appreciate the trust placed in us, as represented by your investment in
the TAA Fund, and we believe you will be pleased with the investment results we
intend to provide to you in the months and years ahead. R. Meeder & Associates,
the investment adviser to The Flex- Partners Funds, has been in the business of
managing money for over 20 years. We have managed mutual funds since 1982.
FUND PERFORMANCE
Over the first 30 days of The TAA Fund's life, it provided a total return of
4.08%. As I write this letter, the Fund is up a little over 10%. While it is
certainly difficult to judge an investment by its performance over such a short
span of days, we are proud of the Fund's early results.
WHAT LIES AHEAD?
As you may be aware, The TAA Fund takes its name from tactical asset
allocation, a strategy for managing market risk by maintaining the flexibility
to invest all or a portion of the Fund's assets in
CONTINUED ON PAGE 3
2
ROBERT S.
MEEDER, SR.
PRESIDENT
<PAGE> 3
THE FLEX-PARTNERS SEMIANNUAL REPORT
low risk money market instruments or bonds when the risk present in the stock
market outweighs the possible rewards.
Our investment strategy, which we label Defensive Investing, dictates that we
continuously monitor our investment discipline to identify a market top in a
bull market and a market bottom in a bear market. At some point, a bull or bear
market cycle ends and either risk or opportunity follows. The current bull
market cycle (intermediate term) is over seven months old. Most market analysts
view the period from 1982 to the present as one of the longest bull markets in
history. There have been three major bull markets this century: the 1920s, the
1950s-60s and now.
For the first seven months of this year, the market's strength has provided
rewards for investors, and we are pleased the gains have continued since June
30th. But I'm uncomfortable with the stock market's nearly straight-up rise ...
particularly since the 20-month declining interest rate trend may be coming to
an end.
My concern is also fueled by the amount of money that is pouring into equity
mutual funds. More than $1 trillion is now invested in equity funds. That's
twice the amount that was invested in equity funds in February of 1993.
Granted, the market is 35% - 40% higher today (depending on what market index
you measure), but net additions to mutual funds may amount to 60 - 65% of that
increase, or more than $300 billion. That's about $10 billion a month.
Can net positive cash flow continue at such a pace? If the flow of new assets
into stock funds declines, what impact will that have on the supply and demand
forces of the market? The buy-side bias which pushed stock prices higher over
the last two years could change. If that scenario develops, the market's
positive dynamics of the last year could reverse.
Another concern of mine relates to the attitude of many investors that "this
time it's different." Recently, I attended an investment meeting where the
thought was expressed that dividend yield is probably no longer important and
"total return" is the measure of stock selection. Total return has always been
one of the criteria of portfolio evaluation, but when double-digit total return
is assumed and common stock dividend yields are about 2 1/2% for the overall
market, stock appreciation assumptions become considerably higher than
historical norms. This condition may be more acceptable tively low, but when
rates rise, decisions about investment alternatives begin to adjust.
Trying to be more of a historian than a purveyor of gloom and doom, I
believe there are some comparisons today with the latter stages of the bull
market of the 1960s. At that time, dividend yields were historically low (but
higher than today), Price-to-Earnings ratios were relatively high (higher than
today), and the vogue for "total return" investing was popular with
institutions who invested in the "nifty fifty" (perhaps a comparison to
technology stocks today). The bubble finally burst. Economic activity declined,
the yield curve flattened, inflation increased, manufacturing labor cost
increased, mutual fund assets grew at a much faster rate than usual, and
speculation and overvalued measurements were at high levels. Between the late
sixties and 1974 the stock market lost over one half of its value.
No two periods ever exactly duplicate one another, and today's over-valuation
and mutual fund popularity have different dynamics than those that occurred
thirty years ago. But, I do feel caution, rather than euphoria, is currently
appropriate. Realistic expectations help make happy relationships. At The
Flex-Partners, we strive to when interest rates are reladevelop such a
relationship with our shareholders.
At this moment, the stock market looks like it will continue to rise and The
TAA Fund is positioned to take advantage of this strength. But rest assured
that when the "worm turns" your investment management team will do its best to
protect your investments.
Sincerely,
/s/ Robert S. Meeder, Sr.
Robert S. Meeder, Sr.
President
July 24, 1995
3
<PAGE> 4
<TABLE>
THE FLEX-PARTNERS SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS
The Mutual Fund Portfolio as of June 30, 1995
<CAPTION>
====================================================================================================================================
SHARES OR VALUE
FACE AMOUNT (NOTES 1 AND 3)
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS - 89.9%
Acorn International Fund 60 $942
Baron Asset Fund 42,662 1,100,256
Constellation Fund 81 1,714
Charles Schwab Money Market Fund 586,521 586,521
Crabbe Huson Special Fund 72,833 1,045,157
Fidelity Growth & Income Fund 122,942 2,972,732
Fidelity Contra Fund 81,587 2,982,825
Fidelity Equity Portfolio Growth Fund 293,020 10,419,797
Fidelity Over-The-Counter Fund 354,867 10,351,479
Founders Growth Fund 72,727 1,033,455
Mutual Shares Fund 102,979 9,277,336
Neuberger Berman Manhattan Fund 323,774 3,943,566
Neuberger Focus Fund 387,385 10,319,924
Neuberger Guardian Fund 455,732 10,112,695
Neuberger Partners Fund 240,768 5,333,004
PBHG Growth Fund 1,222 22,588
T. Rowe Price New Era Fund 114 2,571
T. Rowe Price New Horizons Fund 551,701 10,101,651
Twentieth Century Vista Fund 78,125 1,057,030
Weingarten Equity Fund 409,481 7,608,150
------------------------------------------------------------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(Cost $80,153,431) 88,273,393
====================================================================================================================================
U.S. TREASURY BILLS - 3.1%
*U.S. Treasury Bill, 5.58%, due 7/20/95 $3,000,000 $2,992,095
U.S. Treasury Bill, 6.66%, due,1/11/96 25,200 24,463
------------------------------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $3,016,400) 3,016,558
====================================================================================================================================
*Pledged $2,230,000 face amount as collateral on futures contracts
------------------------------------------------------------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.1%
(Collateralized by U.S. Government Obligations)
Paine Webber, dated 6/30/95, 6.20%, due 7/03/95 7,002,000 7,002,000
------------------------------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $7,002,000) 7,002,000
====================================================================================================================================
CONTRACTS
FUTURES CONTRACTS - (0.1%)
Long, S&P 500 futures contracts
face amount $10,395,850 expiring in September, 1995. 38 (27,400)
------------------------------------------------------------------------------------------------------------------------------------
NET PAYABLE FOR FUTURES CONTRACTS SETTLEMENTS (27,400)
------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100%
(Cost $90,171,831) $98,264,551
====================================================================================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
4
<PAGE> 5
THE FLEX-PARTNERS SEMIANNUAL REPORT
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1995 (Unaudited)
----------------------------------------------------------------------
THE TAA FUND
<S> <C>
ASSETS:
----------------------------------------------------------------------
Investment in corresponding portfolio $2,827,342
----------------------------------------------------------------------
Subscriptions receivable 318,003
----------------------------------------------------------------------
Unamortized organizational costs 25,667
----------------------------------------------------------------------
Prepaid expenses and other assets 2,357
----------------------------------------------------------------------
Total Assets 3,173,369
======================================================================
LIABILITIES
----------------------------------------------------------------------
Accrued liabilities 29,296
----------------------------------------------------------------------
Total Liabilities 29,296
----------------------------------------------------------------------
NET ASSETS $3,144,073
======================================================================
CAPITAL STOCK OUTSTANDING 241,626
======================================================================
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICES PER SHARE $13.01
======================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
For the Period June 1, 1995 to June 30, 1995 (Unaudited)
----------------------------------------------------------------------
THE TAA FUND
<S> <C>
Net investment income from
corresponding portfolio:
Interest $1,025
----------------------------------------------------------------------
Dividends $901
----------------------------------------------------------------------
Expenses (1,376)
----------------------------------------------------------------------
Total Net Investment Income From
Corresponding Portfolio 550
----------------------------------------------------------------------
FUND EXPENSES:
----------------------------------------------------------------------
Legal fees 75
----------------------------------------------------------------------
Audit fees 500
----------------------------------------------------------------------
Printing 300
----------------------------------------------------------------------
Transfer agent fees 275
----------------------------------------------------------------------
Trustees fees and expenses 575
----------------------------------------------------------------------
Distribution plan 988
----------------------------------------------------------------------
Shareholder servicing fee 329
----------------------------------------------------------------------
Amortization of organizational costs 301
----------------------------------------------------------------------
Registration 200
----------------------------------------------------------------------
Postage 25
----------------------------------------------------------------------
Other expenses 62
----------------------------------------------------------------------
Total expenses 3,630
----------------------------------------------------------------------
Expenses waived (2,357)
----------------------------------------------------------------------
Total expenses - net 1,273
======================================================================
INVESTMENT LOSS - NET (723)
======================================================================
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS - NET:
======================================================================
Net realized gain on futures 6,149
----------------------------------------------------------------------
Net realized gain - other 4,815
----------------------------------------------------------------------
Unrealized appreciation of investments 49,399
----------------------------------------------------------------------
NET GAIN ON INVESTMENTS 60,363
----------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $59,640
======================================================================
<FN>
See Notes to Financial Statements.
*Date of Inception.
</TABLE>
5
<PAGE> 6
THE FLEX-PARTNERS SEMIANNUAL REPORT
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the Period June 1, 1995 to June 30, 1995 (Unaudited)
----------------------------------------------------------------------
THE TAA FUND
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
----------------------------------------------------------------------
OPERATIONS:
----------------------------------------------------------------------
Investment loss - net ($723)
----------------------------------------------------------------------
Net realized gain on investments 10,964
----------------------------------------------------------------------
Net change in unrealized appreciation
of investments 49,399
Net increase in net assets
resulting from operations 59,640
Net increase in net assets
resulting from capital share transactions 3,084,433
----------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 3,144,073
----------------------------------------------------------------------
NET ASSETS - Beginning of period 0
----------------------------------------------------------------------
NET ASSETS - End of period $3,144,073
======================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA AND RATIOS FOR AN AVERAGE
SHARE OUTSTANDING DURING EACH PERIOD
======================================================================
THE TAA FUND
----------------------------------------------------------------------
<CAPTION>
For the Period
June 1, 1995*
to June 30,1995
(Unaudited)
<S> <C>
Net Asset Value, Beginning of Period $12.50
----------------------------------------------------------------------
Income from Investment Operations
----------------------------------------------------------------------
Net Investment income --
----------------------------------------------------------------------
Net Gains or Losses on Securities
(both realized and unrealized) 0.51
----------------------------------------------------------------------
Total From Investment Operations 0.51
----------------------------------------------------------------------
Less Distributions
----------------------------------------------------------------------
Dividends (from net investment income) --
----------------------------------------------------------------------
Distributions (from capital gains) --
----------------------------------------------------------------------
Returns of Capital --
----------------------------------------------------------------------
Total Distributions 0.00
----------------------------------------------------------------------
Net Asset Value, End of Period $13.01
======================================================================
Total Return 49.64%(1)
======================================================================
Ratios/Supplemental Data
----------------------------------------------------------------------
Net Assets, End of Period ($000) 3,144
----------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 1.95%(1)
----------------------------------------------------------------------
Ratio of Net Income to Average Net Assets -0.57%(1)
----------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
before waiver of fees 3.80%(1)
----------------------------------------------------------------------
Ratio of Net Income to Average Net Assets,
before waiver of fees -2.42%(1)
----------------------------------------------------------------------
<FN>
*Date of inception. 1 Annualized
See Notes to Financial Statements.
</TABLE>
6
<PAGE> 7
THE FLEX-PARTERS SEMIANNUAL REPORT
THE TAA FUND JUNE 30, 1995
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Flex-Partners Trust was organized in 1992 and is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The TAA Fund (the "Fund") commenced operations on June 1,
1995 when the Fund began investing all of its investable assets in a
corresponding open-end management investment company (the "Portfolio") having
the same investment objectives as the Fund. On June 30, 1995 The TAA Fund held
approximately 2.88% of the total assets of The Mutual Fund Portfolio.
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.
2. SIGNIFICANT ACCOUNTING POLICES
Valuation of Investments - Valuation of securities by the Portfolio is
discussed at Note 1 of the Notes to Financial Statements of the Mutual Fund
Portfolio, which are included elsewhere in this report (See page 10).
Income Taxes - It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and
to distribute all of its taxable income to its shareholders. Therefore, no
Federal income tax provision is required.
Distributions to Shareholders - Dividends to shareholders are recorded
on the ex-dividend date.
Organizational Costs - The cost related to the organization of the Fund
has been deferred and is being amortized on a straight-line basis over a
five-year period.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield
Investors, Inc. (MII), provides the Portfolio with investment management,
research, statistical and advisory services.
Mutual Funds Service Co., (MFS), a wholly-owned subsidiary of MII,
serves as stock transfer, dividend disbursing and shareholder servicing agent
for the Fund. Subject to a $4,000 annual minimum fee the Fund incurs an annual
fee equal to or the greater of $15 per shareholder account or 0.10% of the
Fund's average net assets, payable monthly. MFS also provides the Fund with
certain administrative services. The Fund incurs an annual fee, payable
monthly, of 0.03% of the Fund's average net assets.
The Fund has adopted a distribution expense plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (the "Plan"). Pursuant to the Plan,
the Fund may use as much as 25/100 of 1% and 75/100 of 1% of net assets
annually to aid in the distribution of Class A shares and Class C shares,
respectively. Each Fund has adopted a service plan for using as much as 25/100
of 1% of net assets annually to aid in the distribution of each Class A shares
and Class C shares.
Certain officers and/or trustees of the Fund and the Portfolio are
officers and/or directors of MII, RMA and MFS.
4. CAPITAL SHARE TRANSACTIONS
At June 30, an indefinite number of shares of $0.10 par value stock were
authorized in the Fund and capital amounted to $3,084,433 in The TAA Fund.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
PERIOD FROM PERIOD FROM
THE TAA FUND: 6/1/95* TO 6/30/95 6/1/95* TO 6/30/95
==============================================================================================================
<S> <C> <C>
Shares sold 241,920 $3,088,243
Shares issued in reinvestment of dividends - -
Total 241,920 3,088,243
Shares redeemed (294) (3,810)
--------------------------------------------------------------------------------------------------------------
Net increase 241,626 $3,084,433
==============================================================================================================
<FN>
*Date of Inception
</TABLE>
DISTRIBUTIONS
The TAA Fund declares as dividends and distributes quarterly substantially all
of its net investment income. Net realized capital gains for the Fund, if any,
are distributed annually after deduction of prior years' loss carryforwards.
Dividends from net investment income and any distributions of realized capital
gains are distributed in cash or reinvested in additional shares of the Fund at
net asset value.
7
<PAGE> 8
THE FLEX-PARTNERS SEMIANNUAL REPORT
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(UNAUDITED)
----------------------------------------------------------------------
<CAPTION>
THE
MUTUAL
FUND
PORTFOLIO
----------------------------------------------------------------------
<S> <C>
ASSETS:
Investments at market value* $91,289,951
----------------------------------------------------------------------
Repurchase Agreements* 7,002,000
----------------------------------------------------------------------
Cash 1,154
----------------------------------------------------------------------
Receivable for futures contracts settlement -
----------------------------------------------------------------------
Interest receivable 11,500
----------------------------------------------------------------------
Dividends receivable 22,787
----------------------------------------------------------------------
Prepaid/Other assets 1,364
----------------------------------------------------------------------
Organization cost 13,090
----------------------------------------------------------------------
Total Assets 98,341,846
======================================================================
LIABILITIES:
Payable for securities purchased -
----------------------------------------------------------------------
Payable for futures contracts settlement 24,700
----------------------------------------------------------------------
Payable to investment advisor 73,718
----------------------------------------------------------------------
Other accrued liabilities 13,437
----------------------------------------------------------------------
Total Liabilities 111,855
----------------------------------------------------------------------
NET ASSETS $98,229,991
======================================================================
*Securities at cost 90,171,831
======================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
----------------------------------------------------------------------
<CAPTION>
THE
MUTUAL
FUND
PORTFOLIO
----------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME - NET:
Interest $1,316,516
----------------------------------------------------------------------
Dividends 61,067
----------------------------------------------------------------------
Total Income 1,377,583
----------------------------------------------------------------------
Expenses:
Investment advisory fees 395,186
----------------------------------------------------------------------
Legal fees 549
----------------------------------------------------------------------
Audit fees 5,765
----------------------------------------------------------------------
Custodian fees 6,067
----------------------------------------------------------------------
Accounting fees 23,482
----------------------------------------------------------------------
Trustees fees and expenses 2,397
----------------------------------------------------------------------
Insurance 1,331
----------------------------------------------------------------------
Amortization of organization cost 2,727
----------------------------------------------------------------------
Other expenses 249
----------------------------------------------------------------------
Total Expenses 437,753
----------------------------------------------------------------------
Investment advisory fees waived -
----------------------------------------------------------------------
Total Expenses - net 437,753
----------------------------------------------------------------------
INVESTMENT INCOME - NET 939,830
======================================================================
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on futures contracts 1,941,409
----------------------------------------------------------------------
Net realized gain - other 630,876
----------------------------------------------------------------------
Net change in unrealized appreciation
of investments 8,243,528
----------------------------------------------------------------------
NET GAIN ON INVESTMENTS 10,815,813
======================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $11,755,643
======================================================================
<FN>
See Notes to Financial Statements.
</TABLE>
8
<PAGE> 9
THE FLEX-PARTNERS SEMIANNUAL REPORT
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For The Six Months Ended June 30, 1995 (Unaudited) And
The Year Ended December 31, 1994
----------------------------------------------------------------------
<CAPTION>
THE
MUTUAL FUND
PORTFOLIO
Six months Year
ended ended
6/30/95 12/31/94
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
----------------------------------------------------------------------
OPERATIONS:,
Investment income - net $939,830 $2,272,777
Net realized gain on investments 2,572,285 302,941
Net change in unrealized appreciation
(depreciation) of investments 8,243,528 (252,062)
----------------------------------------------------------------------
Net increase in net assets resulting
from operations 11,755,643 2,323,656
----------------------------------------------------------------------
TRANSACTIONS OF INVESTORS'
BENEFICIAL INTERESTS:
Contributions 11,359,013 26,769,231
Withdrawals (8,069,368) (27,503,563)
----------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from transactions of
investors' beneficial interests 3,289,645 (744,332)
----------------------------------------------------------------------
TOTAL INCREASE
IN NET ASSETS 15,045,288 1,579,324
----------------------------------------------------------------------
NET ASSETS - Beginning of year 83,184,703 81,605,379
----------------------------------------------------------------------
NET ASSETS - End of period $98,229,991 $83,184,703
----------------------------------------------------------------------
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
Ratios/Supplemental Data
====================================================================================================================================
MUTUAL FUND PORTFOLIO
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1995
(UNAUDITED) 1994 1993
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Assets, End of Period (000) 98,230 83,185 81,605
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets 0.99%(1) 1.01% 1.03%
------------------------------------------------------------------------------------------------------------------------------------
Ratio of Net Income to Average Net Assets 2.12%(1) 2.76% 0.09%
------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 92.50% 168.17% 279.56%
------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1)Annualized
</TABLE>
9
<PAGE> 10
THE FLEX-PARTNERS SEMIANNUAL REPORT
THE MUTUAL FUND PORTFOLIO
JUNE 30, 1995
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Mutual Fund Portfolio (the "Portfolio") is registered under the Investment
Company Act of 1940, as amended, as a no-load, open-end management investment
company which was organized as a trust under the laws of the State of New York.
The Declaration of Trust permits the Trustees to issue beneficial interests in
the Portfolio. The following is a summary of significant accounting policies
followed by the Portfolio.
Investments - Money market securities held in The Mutual Fund Portfolio
maturing more than sixty days after the valuation date are valued at the last
sales price as of the close of business on the day of valuation, or, lacking
any sales, at the most recent bid price or yield equivalent as obtained from
dealers that make markets in such securities. When such securities are valued
within sixty days or less to maturity, the difference between the valuation
existing on the sixty-first day before maturity and maturity value is amortized
on a straight-line basis to maturity. Securities maturing within sixty days
from their date of acquisition are valued at amortized cost.
Securities which are traded on stock exchanges are valued at the last sales
price as of the close of business of the New York Stock Exchange on the day of
valuation, or, lacking any sales, at the closing bid prices. Securities traded
on the over-the-counter market are valued at the most recent bid price or yield
equivalent as obtained from one or more dealers that make markets in such
securities. Mutual funds are valued at the daily redemption value determined
by the underlying fund.
Repurchase Agreements - It is the Portfolio's policy to take possession of the
collateral for repurchase agreements before payment is made to the seller.
Market value of the collateral at the date of purchase must be at least 100% of
the amount of the repurchase agreement.
Options & Futures - The Portfolio may engage in transactions in financial
futures contracts and options as a hedge against the change in market value of
the securities held in the portfolio, or which it intends to purchase. The
expectation is that any gain or loss on such transactions will be substantially
offset by any gain or loss on the securities in the underlying portfolio or on
those which are being considered for purchase.
To the extent that the Portfolio enters into futures contracts on an index or
group of securities the Portfolio exposes itself to an indeterminate liability
and will be required to pay or receive a sum of money measured by the change in
the market value of the index. Upon entering into a futures contract the
Portfolio is required to deposit either cash or securities in an amount
("initial margin") equal to a certain percentage of the contract value.
Subsequent payments ("variation margin") equal to changes in the daily
settlement price or last sale on the exchanges were they trade are paid or
received each day and are recorded as a gain or loss on futures contracts.
Call and put option contracts involve the payment of a premium for the right to
purchase or sell an individual security or index aggregate at a specified price
until the expiration of the contract. Such transactions expose the Portfolio
to the loss of the premium paid if the Portfolio does not sell or exercise the
contract prior to the expiration date. In the case of a call option,
sufficient cash or money market instruments will be segregated to complete the
purchase. Options are valued on the basis of the daily settlement price or
last sale on the exchanges where they trade and the changes in value are
recorded as an unrealized gain or loss until sold, exercised or expired.
Income Taxes - It is the Portfolio's policy to comply with the requirements of
the Internal Revenue Code applicable to it. Therefore, no Federal income tax
provision is required.
Organizational Costs - The costs related to the organization of the Portfolio
have been deferred and are being amortized by the Portfolio on a straight-line
basis over a five-year period.
Other - The Portfolio follows industry practice and records security
transactions on the trade date. Gains and losses on security transactions are
determined on the specific identification basis. Dividend income is recognized
on the ex-dividend date, and interest income (including amortization of premium
and discount) is recognized as earned.
10
<PAGE> 11
THE FLEX-PARTNERS SEMIANNUAL REPORT
2. INVESTMENT ADVISORY, AND OTHER AGREEMENTS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services, and pays certain other expenses of the
Portfolio. For such services the Portfolio pays a monthly fee based upon the
average daily value of the Portfolio's net assets at the following annual rate:
1% of average net assets up to $50 million, 0.75% of average net assets
exceeding $50 million up to $100 million and 0.60% of average net assets
exceeding $100 million.
Mutual Funds Service Co., (MFS), a wholly-owned subsidiary of MII, serves as
accounting services agent for the Portfolio. The minimum annual fee for all
such 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.
Certain officers and/or trustees of the Portfolio are officers and/or directors
of MII, RMA and MFS.
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, excluding short-term investments and U.S.
Government and agency obligations for the six months ended June 30, 1995 are as
follows:
<TABLE>
<CAPTION>
PURCHASES SALES
<S> <C> <C>
--------------------------------------------------------------------------------------------------------------
Mutual Fund Portfolio $97,012,407 $17,900,654
--------------------------------------------------------------------------------------------------------------
</TABLE>
As of June 30, 1995, the aggregate cost of investments for financial reporting
purposes approximated the cost for Federal income tax purposes and net
unrealized appreciation (depreciation) for Federal income tax purposes was
comprised of the following:
<TABLE>
<CAPTION>
NET UNREALIZED
GROSS UNREALIZED GROSS UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
OF INVESTMENTS OF INVESTMENTS OF INVESTMENTS
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Mutual Fund Portfolio $8,165,286 $(45,166) $8,120,120
--------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
[LOGO]
THE FLEX-PARTNERS FUNDS
INVESTMENT ADVISER: R. MEEDER & ASSOCIATES 800-494-3539 (FLEX)
DISTRIBUTOR: ROOSEVELT & CROSS, INC. MEMBER NASD 800-262-8642
(C) 1995 ROOSEVELT & CROSS, INC.
8/31/95 FP/SAR895
