THE FLEX-PARTNERS FUNDS
1997 Semiannual Report
Tactical Asset Allocation Fund
Utility Growth Fund
[LOGO] Hands plotting points on a graph.
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CONTENTS
- -----------------------------------------
President's Letter 3
Financial Markets 4
PORTFOLIO MANAGER COMMENTARY
Tactical Asset Allocation Fund 7
Utility Growth Fund 8
FINANCIAL DATA
Portfolios 9
Fund Financials 12
Portfolio Financials 17
IMPORTANT PERFORMANCE INFORMATION: All performance figures shown in this report
represent total returns and average annual total returns for the periods ended
June 30, 1997. Total return calculations assume reinvestment of all dividend and
capital gain distributions. Investment performance represents past peformance
and does not necessarily indicate future performance. The investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original cost. The
Investment Adviser waived a portion of its management fees in the Utility Growth
Fund during each of the periods shown.
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July 30, 1997
Dear Fellow Shareholders:
In order to keep you informed about your Flex-Partners Funds investments,
we are pleased to provide you with this Semiannual Report. Our Report outlines
the most recent performance achieved by each one of The Flex-Partners Funds and
offers commentary from the members of your Investment Team. We encourage you to
read this report carefully.
AN EXCITING QUARTER
The second quarter saw the further development of two exciting new
investment opportunities for Flex-Partners Funds investors.
* Effective July 31, we launched the CORE EQUITY FUND, an equity fund
that seeks capital growth through investment in a diversified
portfolio of domestic common stocks selected primarily from the
Standard and Poor's 500 Index.
* In the culmination of an effort we have been reporting to you for some
time, we were recently informed by the Securities and Exchange
Commission that the INTERNATIONAL EQUITY FUND should be rendered
effective within the next few weeks.
The portfolio manager of the CORE EQUITY FUND is William L. Gurner of
Sector Capital Management, LLC in Memphis, Tennessee. Using a specialized
investment discipline, Mr. Gurner strives to add value through active management
of the stocks held by the Core Equity Fund. The discipline:
* Divides the S&P 500 Index into ten distinct industry sectors closely
weighted to the S&P 500 and allocates money to a manager for each sector
(except the Health sector, which is currently indexed); and,
* Challenges each sector manager to add value through active stock
selection and portfolio management.
The INTERNATIONAL EQUITY FUND represents a new working relationship for us.
The subadviser of the fund is Commercial Union Investment Management, Limited, a
wholly-owned subsidiary of Commercial Union, plc., an international insurance
and financial services organization that has managed international assets since
1861 and can trace its roots back to 1696. As of December 31, 1996, Commercial
Union Investment Management, Limited and its affiliates managed over $111
billion.
TO RECEIVE MORE INFORMATION ABOUT THE CORE EQUITY FUND OR THE INTERNATIONAL
EQUITY FUND, CALL YOUR FINANCIAL ADVISOR OR THE FLEX-PARTNERS INVESTOR RELATIONS
DEPARTMENT AT 800-494-3539.
For complete details regarding each of these funds, please read the
portfolio manager commentary that follows. We appreciate your continued
confidence and look forward to serving you in the future.
Cordially,
/s/ Robert S. Meeder, Sr.
Robert S. Meeder Sr.
President
[PHOTO] Robert S. Meeder, Sr., President
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The Financial Markets
SELL STOCK NOW? What's really going on in the current stock market environment
depends upon your perspective.
A recent Money magazine cover proclaimed "Don't just sit there, SELL STOCK
NOW."
To some, the headline is indeed a dire pronouncement from what is arguably
the nation's leading publication for individual investors. To others, the cover
is a sizzling enticement to buy, buy, buy.
Such paradoxes are commonplace on Wall Street. For investors already
convinced that the current bull market is taking its last wheezing steps, the
Money cover may be the penultimate sign that it is indeed time to head for the
exits. More optimistic investors may see the cover as the best thing that could
happen to the stock market. The logic being: if Money magazine and everyone else
thinks the market's going down hard, then the opposite must be true. Bear
markets invariably begin when investors are overconfident.
Ultimately, the decision to stick with the market or "sell stocks now"
rests with the individual investor, who must make a personal decision based on
an examination and interpretation of the facts at hand. Thus, we offer the
following analysis of the cases for and against the stock market. In order to
challenge your current thoughts about the market, if you're a bear, take a look
at the bullish scenario that begins below. Bulls may want to skip to the bearish
scenario that begins on the next page.
[PICTURE] Bull's head
Demographics, low interest rates, a strong economy, and the development of
a global marketplace each contributes to the case built by those who think that
this bull market has a long way to go. The stock market may be fundamentally
overpriced by historical standards, but that's because the market is benefiting
from an unprecedented rate of change and expansion in the global economy.
BOOMERS TO THE RESCUE!
The investors on whose shoulders rests the future of the stock market are
the very investors who have the most to gain from an ongoing stock market
ascent. Baby boomers, as a group fairly lackadaisical with regard to retirement
planning, have a huge stake in the success of stocks and stock mutual funds.
As the first wave of the baby boomers roars past fifty, the stock market
may be the prime beneficiary, because boomers have 401(k) plans and IRAs and
they are looking to build retirement nest eggs in a hurry. The influx of boomer
assets into stock mutual funds means a steady source of new money for the stock
market, especially since many 401(k) plans automatically invest assets each
month or quarter deducted from employee salaries. Additionally, since most
boomer investments are dedicated to retirement, they may be less likely to sell
out at the first sign of a market downturn.
INTEREST RATES AND THE ECONOMY
Interest rates are an important part of the stock market's ongoing success.
If you don't believe it, watch how the market gyrates at the first sign of an
interest rate hike by the Federal Reserve Board. So long as interest rates, and
inflation, remain in acceptable territory and the economy remains strong, the
stock market will likely prosper. So far in 1997, all of these elements favor
continued growth in stocks. Interest rates are low, consumer confidence is high,
and unemployment is at levels not seen since the early Seventies. Additionally,
after hiking rates a quarter of a point at its March meeting, The Federal
Reserve Board has since foregone further rate hikes and appears to be satisfied,
for the time being, that inflation is under control.
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PRODUCTIVITY AND THE GLOBAL MARKETPLACE
We are at a unique point in history, so why shouldn't the stock market
environment be unique as well? Companies are doing business around the globe
with heretofore unknown ease and efficiency. Markets are opening up in Asia, the
Far East, Eastern Europe, and the former Soviet Union. At the same time,
technological advances are prompting big gains in productivity.
In short, the world is a very different place than it was 15 years ago when
this bull market began. Those bears among us point to the fundamental
overvaluations present in the market and the unsustainable growth in the economy
as signs that the end is near. But it may be that we have entered a new era in
the stock market one in which many of the old rules no longer apply. Maybe it
really is different this time.
[PICTURE] Bear's head
"Even in the best of times, a wise man remembers the worst of times."
Does this wisdom come from a dusty old history book or an ancient
philosopher? Not really. We formulated this aphorism ourselves in response to
the flood of optimism currently engulfing the stock market and its constituents.
THE BEST OF TIMES OR THE WORST OF TIMES?
What we are getting at is that in today's stock market environment, it
might be helpful to remember that stocks have not always been the asset class of
choice. Just prior to the beginning of the current bull market, in 1982, with
interest rates and inflation at all-time highs, money market funds were offering
yields as high as 18 percent and stocks were the last thing on the minds of most
investors.
At the close of the second quarter of 1997, we find ourselves at the
opposite end of this spectrum. Everyone from the President to your paper boy
seems to be talking up stocks. The attainment of the elusive 10,000 mark on the
Dow Jones Industrial average, which to many investors may once have seemed as
intangible and unknown as the surface of Mars, now appears as accessible as
Pathfinder's pictures of the Martian surface, appearing on the evening news.
However, as we end the tenth consecutive positive quarter for the Standard
and Poor's 500 Index (an event that has occurred on only two other occasions
since 1928), it is logical to assume that we are closer to the end of this
15-year bull market than we are to its beginning.
A STRONG ECONOMY?
By most accounts, the economy is running along as smoothly today as it has
in the history of the country. Consumer confidence is high. Unemployment and
interest rates are low.
But the economy has been expanding steadily for seven years, a show of
strength much greater than the average period of economic expansion, which
normally lasts four or five years. Growth in the Gross Domestic Product (GDP)
during the first quarter ran at 5.8 percent, a level that many consider to be
unsustainable.
According to a recent commentary by Ned Davis Research, an independent
investment research firm, "When everyone agrees that the economy is wonderful,
the problem is that it breeds euphoria and complacency about stocks to the point
where people get `overbought,' and then when any random negative comes along,
investors usually sell, and sell big."
[GRAPHS] The performances of the NASDAQ Composite Index and the Standard
and Poor's 500 Index for the periods from 13/31/96 to 6/30/97 were presented in
the forms of graphs.
A REGRESSION TO THE MEAN
There is a truism in investing which contends that, despite all assertions
to the contrary, markets have a tendency toward normalcy. As the level of
returns available from the market grow increasingly abnormal, therefore, the
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market is more likely to undergo a "regression to the mean." For example, since
1928, the S&P 500 Index has undergone an average yearly advance of 10.61
percent. The bull market that began 15 years ago has appreciated at an annual
average of approximately 17.97 percent. The fact that the current price
appreciation of the stock market is over one and a half times that of its
historical "mean," or average, suggests that some action may eventually take
place that will bring the current level of appreciation closer to its historical
average.
Added to this atypical level of returns is a surprising lack of downside
risk. The current bull market has not experienced a decline of more that 10
percent since 1990. Such an extended period without a decline is more than twice
the historical average, which dictates that rising markets experience at least a
10 percent decline every two or three years.
As we have noted for some time, the market's fundamental valuations also
remain at historically high levels. The Dow Jones Industrial Average has
historically traded at about 16 times earnings, even during times of low
inflation. Since the Dow's price to earnings ratio is currently running above
20, a return to the mean in these terms could take the Dow to below 6200.
`GREENSPANNING' THE MARKET
The idea that the current bull market in stocks has less zip in its step
today than it did 15 years ago is not a new one. We are not trying to paint a
picture of doom and gloom. We are simply striving, like the eminent chair of The
Federal Reserve Board, to be a voice of prudence in a world where many seem to
have forgotten that stocks decline as well as advance.
WHETHER YOU ARE A BULL OR A BEAR . . .
Whether or not you think that the stock market is not going to keep going
up forever, there are actions you can take in response to your convictions.
Here's how:
IF YOU ARE A BULL . . . you know that not many investments offer the
returns of stocks over the long haul. Most investors can always have a portion
of their portfolios devoted to the stock market, even during market declines.
You may want to consider a larger investment in the Core Equity Fund and a
smaller, complementary investment in the Tactical Asset Allocation Fund. The
Core Equity Fund invests in stocks selected primarily from the S&P 500 Index.
The Tactical Asset Allocation Fund remains exposed to other growth mutual funds
as long as the potential rewards present in the marketplace outweigh the risks.
IF YOU ARE CAUTIOUSLY BULLISH . . . you may want to spread your investments
among mutual funds that invest in different asset classes in an effort to lessen
the risk from a decline in any individual fund asset class. To diversify your
portfolio, consider a core investment in an asset allocation fund like the
Tactical Asset Allocation Fund, with smaller complementary positions in an
international mutual fund like the new International Equity Fund (when it
becomes effective), the Core EquityFund, or a utility sector mutual fund, like
the Utility Growth Fund.
IF YOU ARE MINDFUL OF RISK . . . the successful implementation of a
strategy for asset allocation, dividing assets among stocks, bonds, and money
market instruments based on tactical decisions with regard to risk, may offer
you valuable benefits and peace of mind. Consider a larger position in The
Tactical Asset Allocation Fund, which implements asset allocation decisions on
behalf of its shareholders.
No matter your perspective with regard to the current market environment,
The Flex-Partners Funds has a mutual fund investment for you to consider. To
receive information about any of The Flex-Partners Funds, call your financial
advisor, or our Investor Relations Department at 800-494-3539.
[GRAPHS] The performances of the Treasury Bill Index (yield) and the
30-year Treasury Bond Index (price) for the periods from 12/31/96 through
6/30/97 were presented in the forms of graphs.
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TACTICAL ASSET ALLOCATION FUND
[PHOTO] Robert S. Meeder, Jr.
The Tactical Asset Allocation Fund capitalized on an exceptionally strong
second quarter in the stock market and provided a total return for the period
(before the deduction of sales charges) that exceeded both the Asset Allocation
and Balanced fund averages, as reported by mutual fund rating service,
Morningstar, Inc. Period and average annual returns for the Fund's A and C
Shares are shown in the table at right.
Major holdings of the Tactical Asset Allocation Fund and their percentages
of the Portfolio on June 30, 1997 are shown in the table below.
THE TOP FIVE
mutual fund holdings of the Portfolio of the Tactical Asset Allocation Fund
1 Federated S&P 500 Maxcap Fund 15.7%
2 Neuberger & Berman Partners Fund 12.4%
3 Fidelity Growth & Income Fund 12.2%
4 Federated Stock Trust Fund 12.2%
5 Fidelity Blue Chip Fund 10.96%
MARKET PERSPECTIVE
As it did during the first quarter of the year, the Tactical Asset
Allocation Fund gained its exposure to the stock market during the second
quarter via investment in mutual funds with significant exposure to large cap
stocks and via exposure to the S&P 500 Index. In addition, based upon
improvements in the small-capitalization market, the Fund began to gain limited
exposure to funds with small- to mid-cap holdings. Our large-cap exposure and
our lack of significant exposure to bonds or money market instruments allowed us
to achieve the results that we did during the second quarter.
Our evaluation of the stock market environment was largely positive during
the second quarter. However, from mid-March to early May we adopted a partially
defensive position based on our concerns regarding the level of risk present in
the marketplace.
As soon as our investment discipline indicated that the level of risk in
the stock market had subsided to acceptable levels, we acted quickly to return
the Portfolio of the Tactical Asset Allocation Fund to a fully invested
position. Thus, the Fund performed well versus similar funds during the second
quarter and has participated nicely in the market's advance so far in 1997.
Thanks to our investment discipline, shareholders in the Tactical Asset
Allocation Fund were protected from a brief period of adversity in the
marketplace and have also enjoyed significant gains. We remain watchful for
signs of adversity in the stock market and are ready to act in defense of our
shareholders should the current market environment begin to show signs of a
growing level of risk.
PORTFOLIO EXPOSURE
THE MUTUAL FUND PORTFOLIO as of June 30, 1997
The following information was presented as a pie chart: 100% of the Mutual
Fund Portfolio was invested in other mutual funds and the S&P 500.
PERIOD AND AVERAGE ANNUAL TOTAL RETURNS
TACTICAL ASSET ALLOCATION FUND as of June 30, 1997
3 months 6 months 1 year Since
Inception
CLASS A INVESTMENT RESULTS
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Period and average annual returns 12.46% 14.25% n.a. 20.55%(1)
Period and average annual returns
(net of sales charges)(3) 7.98% 9.71% n.a. 15.74%(1)
Average Asset Allocation Fund* 9.41% 9.13% n.a. 19.96%
Average Balanced Fund* 10.14% 10.10% n.a. 22.23%
CLASS C INVESTMENT RESULTS
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Period and average annual returns 12.75% 14.50% 13.22% 16.66%(2)
Period and average annual returns
(net of sales charges)(4) 11.25% 13.00% 11.72% 16.66%(2)
Average Asset Allocation Fund* 9.41% 9.13% 16.86% 19.96%
Average Balanced Fund* 10.14% 10.10% 18.96% 22.23%
(1) Date of Inception 8/1/96. (2) Date of Inception 6/1/95. (3) Results reflect
the maximum 4.00% sales charge. (4) Results reflect the applicable contingent
deferred sales charge. *Per Morningstar Principia as of June 30, 1997.
Morningstar Principia Fund averages are based on gross total returns and do not
include adjustments for applicable sales charges and contingent deferred sales
charges.
Please see important related performance information on inside front cover.
<PAGE>
UTILITY GROWTH FUND
[PHOTO] Lowell G. Miller, Portfolio Manager
Last quarter we suggested the economy would have to slow this year - either
of its own accord or as a response to the stern Federal Reserve, whose cranky
visage seemed to loom above each new release of economic statistics. We noted
that our stocks, and utilities in general, continued to exhibit a pattern of
performance rather better than one would expect given the interest rate
environment, and that it was possible to envision an environment of supportive
tailwinds as the interest rate picture improved, rather than the headwinds that
utilities had fought for some time. In hindsight, we can see that an economic
pause indeed began to unfold just a few weeks after we uttered the suggestion.
MARKET PERSPECTIVE
There were several developments in our portfolio this quarter. LGE and KU
Energy, both Kentucky electrics, agreed to merge, with a premium paid to KU
shareholders. This merger makes eminent sense, taking two smaller deregulation
"winners" and making one larger "winner," and it has been initially applauded by
all local and regional regulators.
We also added Utilicorp and New Zealand Telecom, and increased our position
in Bay State Gas. Utilicorp is a fine representative of a "new era" utility - a
low cost producer with a forward-looking view of the industry. New Zealand
Telecom is also nicely higher since its purchase. This credit offers a 6-plus
percent local yield with anticipated growth of yield in the vicinity of 10
percent. There may be some currency risk, but we don't think it outweighs the
merits of NZT as a stock. Because the stock is not domestic we hold it on a
shorter leash than might otherwise be the case; still, if the story unfolds as
we think it will, this could be a very long-term holding. We increased Bay State
because it offers the best of all possible worlds, a company doing very well in
its local area with a clear vision regarding the path to prosperity in a
deregulated gas environment (the gas distributor as a "mall" offering services
to producers, marketers, and consumers), and pursuing that path in a fiscally
prudent manner.
Looking forward, we see the same general forces that helped our portfolio
this quarter continuing to provide assistance for some time. While the recent
easing of the economy hardly has the hallmarks of "the end," it may take some
time before the weakening trend of the numbers is reversed. Meanwhile, inflation
is still nowhere to be seen. The trend in interest rates has been a clear
positive in recent weeks, and we don't see a good reason for this to change over
the summer. In addition, the issues of change that have concerned investors
regarding utilities continue to wane, but the sector still languishes at roughly
half the PE of the general market, a third of the book/market ratio, and more
than twice the yield. Investors have not fully recognized the values in
utilities at a time when few other sectors would be immune to profit-taking, yet
many essential service stocks, including many that we hold, offer growth
projections equal to or better than those of the S&P 500.
PORTFOLIO EXPOSURE
THE UTILITY STOCK PORTFOLIO as of June 30, 1997
The Following information was presented as a pie chart:
% of Portfolio
--------------
Diversified Utility 1.2%
Electric/Gas Utility 7.2%
Electric Utility 16.8%
Energy 3.5%
Natural Gas (Distributor) 20.4%
Oil/Gas (Domestic) 7.1%
Telecommunication Equipment 4.9%
Telecommunication Services 32.4%
Water Utility 3.6%
Money Market Instruments 2.9%
PERIOD AND AVERAGE ANNUAL TOTAL RETURNS
UTILITY GROWTH FUND as of June 30, 1997
3 months 6 months 1 year Since
Inception(1)
CLASS A INVESTMENT RESULTS
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Period and average annual returns 7.82% 5.30% 13.07% 17.09%
Period and average annual returns
(net of sales charges)(2) 3.52% 1.08% 8.53% 14.70%
Average Utility Fund* 8.51% 7.53% 13.92% 16.31%
CLASS C INVESTMENT RESULTS
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Period and average annual returns 7.72% 5.11% 12.93% 16.87%
Period and average annual returns
(net of sales charges)(3) 6.22% 3.61% 11.43% 16.54%
Average Utility Fund* 8.51% 7.53% 13.92% 16.31%
(1) Date of Inception 7/11/95. (2) Results reflect the maximum 4.00% sales
charge. (3) Results reflect the applicable contingent deferred sales charge.
*Per Morningstar Principia as of June 30, 1997. Morningstar Principia Fund
averages are based on gross total returns and do not include adjustments for
applicable sales charges and contingent deferred sales charges.
Please see important related performance information on inside front cover.
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MUTUAL FUND PORTFOLIO
Portfolio of Investments as of June 30, 1997 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
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MUTUAL FUNDS - 85.5%
Aim Constellation Fund 86 $2,361
Aim Weingarten Fund 99 2,105
Charles Schwab Money Market Fund 16,494,943 16,494,943
Federated S&P 500 Maxcap Fund 1,139,377 21,716,531
Federated Stock Trust Fund 445,617 16,875,513
Fidelity Blue Chip Fund 397,040 15,151,055
Fidelity Core Money Market Fund 787,000 787,000
Fidelity Growth & Income Fund 468,286 16,881,698
Fidelity Over-the-Counter Fund 189,404 6,593,166
Mutual Shares Fund 291 6,155
Neuberger & Berman Partners Fund 584,899 17,102,440
PBHG Growth Fund 624 15,462
Rydex OTC Fund 301,723 6,550,415
T. Rowe Price New Era Fund 132 3,788
T. Rowe Price New Horizons Fund 151 3,325
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TOTAL MUTUAL FUNDS
(Cost $108,346,288 ) 118,185,957
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U.S.TREASURY BILLS - 3.5%
* 5.17%, due 09/04/97 $4,400,000 4,359,021
* 5.23%, due 09/04/97 500,000 495,343
5.27%, due 01/08/98 30,100 29,272
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $4,883,465 ) 4,883,636
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REPURCHASE AGREEMENTS - 11.0%
** Paine Weber Inc., dated 06/30/97
6.10%, due 07/01/97 15,398,000 15,398,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $15,398,000 ) 15,398,000
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================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $128,627,753 ) $138,467,593
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================================================================================
FUTURES CONTRACTS
UNREALIZED
APPRECIATION
CONTRACTS (DEPRECIATION)
Long, S&P 500 Futures, face amount
$2,639,900 expiring September 1997. 85 $838,624
================================================================================
NET UNREALIZED APPRECIATION ON FUTURES CONTRACTS $838,624
- --------------------------------------------------------------------------------
* Pledged $4,660,000 face amount as collateral on futures contracts.
** Collateralized by U.S. government obligations--market value $15,488,061.
See accompanying notes to financial statements.
<PAGE>
UTILITIES STOCK PORTFOLIO
Portfolio of Investments as of June 30, 1997 (Unaudited)
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.1%
DIVERSIFIED UTILITY - 1.2%
Citizens Utilities Co.--Class B 13,535 $108,281
ELECTRIC/GAS UTILITY - 7.2%
MDU Resources Group Incorporated 6,000 144,000
Nipsco Industries Incorporated 4,700 194,169
Utilicorp United, Incorporated 10,000 291,250
==========
629,419
----------
ELECTRIC UTILITY - 16.8%
Cinergy Corporation 7,800 271,538
Ipalco Enterprises Incorporated 5,900 184,375
KU Energy Corporation 3,200 109,200
LG&E Energy Corporation 8,600 189,738
Pacificorp 9,800 215,600
Public Service Company of Colorado 5,600 232,400
Teco Energy Incorporated 10,400 265,850
==========
1,468,701
----------
ENERGY - 3.5%
CalEnergy 8,000 304,000
NATURAL GAS (DISTRIBUTOR) - 20.4%
Bay State Gas Company 8,100 215,663
Brooklyn UN Gas Company 10,900 312,012
Consolidated Natural Gas Company 3,800 204,488
MCN Corporation 6,000 183,750
Pacific Enterprises 6,800 228,650
Transcanada Pipelines Ltd. 8,100 163,012
UGI Corporation 1,900 42,038
Wicor Incorporated 5,600 218,050
Williams Companies Incorporated 4,800 210,000
==========
1,777,663
----------
OIL/GAS (DOMESTIC) - 7.1%
El Paso Natural Gas Company 4,220 232,100
Enron Corporation 3,000 122,437
Questar Corporation 5,100 205,913
Sante Fe Pacific Pipeline Partners 1,600 61,200
==========
621,650
----------
TELECOMMUNICATION EQUIPMENT - 4.9%
LCC International--A 10,000 157,500
Telecom New Zealand--ADR 5,000 203,750
Vanguard Cellular 4,600 62,675
==========
423,925
----------
TELECOMMUNICATION SERVICES - 32.4%
Airtouch Communications 5,400 $147,825
Alltel Corporation 7,900 264,156
AT&T 3,500 122,719
Bell Atlantic Corporation 2,300 174,512
Bellsouth Corporation 3,000 139,125
Century Telephone 8,400 282,975
Frontier Corporation 19,300 384,794
GTE Corporation 5,000 219,375
LCI International 15,000 328,125
MCI Communications 5,000 191,406
Sprint Corporation 4,300 226,288
Tele Denmark 4,900 128,012
U.S. West Incorporated 5,900 222,356
==========
2,831,668
----------
WATER UTILITY - 3.6%
American Water Works Incorporated 14,900 318,487
================================================================================
TOTAL COMMON STOCKS
(Cost $7,464,726) 8,483,794
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<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS - 0.0%
5.27%, due 01/08/98 1,000 972
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $972) 972
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.9%
**Paine Weber Inc., dated 06/30/97
6.10%, due 07/01/97 169,000 169,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $169,000) 169,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $7,634,698) $8,653,766
- --------------------------------------------------------------------------------
** Collateralized by U.S. government obligations--market value $169,988.
See accompanying notes to financial statements.
Utilities Stock Portfolio, continued The Flex-funds Semiannual Report
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1997 (Unaudited)
TACTICAL ASSET UTILITY GROWTH
ALLOCATION FUND FUND
- --------------------------------------------------------------------------------
Assets:
Investment in corresponding portfolio at value $15,060,942 $2,764,872
Receivable for capital stock issued 45,010 9,918
Receivable from investment adviser 3,806 18,022
Unamortized organization costs 24,469 17,067
Other assets 10,906 6,917
Total Assets 15,145,133 2,816,796
================================================================================
Liabilites:
Payable for capital stock redeemed 0 21,253
Dividends payable 2,057 53
Accrued transfer agent and administrative fees 1,694 807
Other accrued liabilities 43,477 13,281
Total Liabilities 47,228 35,394
================================================================================
Net Assets 15,097,905 2,781,402
================================================================================
Net Assets:
Capital 13,275,632 2,435,354
Accumulated undistributed (distributions in
excess of) net investment income 16,672 (160)
Accumulated undistributed net realized gain
from investments 797,646 49,588
Net unrealized appreciation of investments 1,007,955 296,620
Total Net Assets $15,097,905 $2,781,402
================================================================================
Net Assets:
Class A Shares 155,695 1,176,093
Class C Shares 14,942,210 1,605,309
15,097,905 2,781,402
================================================================================
Outstanding units of beneficial interest (shares):
Class A Shares 10,919 74,595
Class C Shares 970,373 103,106
981,292 177,701
================================================================================
Net asset value -- redemption price per share:
Class A Shares $14.26 $15.77
Class C Shares * $15.40 $15.57
Sales charge -- Class A Shares 4.00% 4.00%
Maximum offering price per share
(100%/(100% - sales charge) of net asset value
adjusted to nearest cent) -- Class A Shares $14.85 $16.43
- --------------------------------------------------------------------------------
* Redemption price varies based upon holding period.
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
TACTICAL ASSET UTILITY GROWTH
ALLOCATION FUND FUND
- --------------------------------------------------------------------------------
Net Investment Income from Corresponding Portfolio:
================================================================================
Interest $212,655 $3,522
Dividends 27,237 44,873
Expenses (63,805) (23,101)
Total net investment income from
corresponding portfolio 176,087 25,294
================================================================================
Fund Expenses:
================================================================================
Administrative fee 3,371 638
Transfer agent fees 9,018 4,182
Shareholder service -- Class A Shares 180 1,523
Shareholder service -- Class C Shares 17,982 1,932
Audit fees 3,712 988
Legal fees 1,084 1,611
Trustees fees and expenses 1,932 2,928
Printing 5,534 1,928
Amortization of organizational costs 4,154 2,902
12b-1 fees -- Class A Shares 180 1,523
12b-1 fees -- Class C Shares 53,945 5,797
Postage 1,094 585
Registration and filing fees 9,527 9,466
Insurance 337 192
Other expenses 2,170 1,495
Total Expenses 114,220 37,690
================================================================================
Expenses reimbursed by investment adviser (33,021) (31,505)
Net Expenses 81,199 6,185
================================================================================
NET INVESTMENT INCOME 94,888 19,109
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gain from futures contracts 804,752 0
Net realized gain (loss) from investments (7,106) 49,588
Net change in unrealized appreciation of
investments 1,035,419 69,597
NET GAIN FROM INVESTMENTS 1,833,065 119,185
================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $1,927,953 $138,294
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
<CAPTION>
TACTICAL ASSET ALLOCATION FUND
Six Months Ended June 30, 1997 1996
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
============================================================================================================================
OPERATIONS:
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net investment income $94,888 $1,117 $93,771 $102,837 $1,449 $101,288
Net realized gain from investments and futures contracts 797,646 7,907 789,739 350,025 5,070 344,955
Net change in unrealized appreciation of investments 1,013,700 10,189 1,003,511 175,349 566 174,783
Net increase in net assets resulting from operations 1,906,234 19,213 1,887,021 628,211 7,085 621,126
============================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (78,216) (977) (77,239) (101,477) (1,449) (100,028)
Net realized gain from investments and futures contracts --- --- --- (318,479) (5,070) (313,409)
Net decrease in net assets resulting from dividends
and distributions (78,216) (977) (77,239) (419,956) (6,519) (413,437)
============================================================================================================================
CAPITAL TRANSACTIONS:
Issued 429,839 101 429,738 3,210,419 129,635 3,080,784
Reinvested 76,159 977 75,182 401,724 6,534 395,190
Redeemed (1,337,280) (586) (1,336,694) (1,264,628) (5) (1,264,623)
Net increase (decrease) in net assets resulting from
capital share transactions (831,282) 492 (831,774) 2,347,515 136,164 2,211,351
TOTAL INCREASE (DECREASE) IN NET ASSETS 996,736 18,728 978,008 2,555,770 136,730 $13,942,720
============================================================================================================================
NET ASSETS - Beginning of period 14,079,450 136,730 13,942,720 11,523,680 - 11,523,680
NET ASSETS - End of period $15,076,186 $155,458 $14,920,728 $14,079,450 $136,730 $13,942,720
============================================================================================================================
SHARE TRANSACTIONS:
Issued 28,411 8 28,403 234,121 10,368 223,753
Reinvested 4,950 68 4,882 29,750 520 29,230
Redeemed (94,161) (45) (94,116) (91,027) - (91,027)
Change in shares (60,800) 31 (60,831) 172,844 10,888 161,956
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
<CAPTION>
UTILITY GROWTH FUND
Six Months Ended June 30, 1997 1996
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
- ----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
============================================================================================================================
OPERATIONS:
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net investment income $19,109 $9,154 $9,955 $55,104 $24,065 $31,039
Net realized gain from investments and futures contracts 49,588 23,214 26,374 139,002 57,262 81,740
Net change in unrealized appreciation of investments 69,597 29,170 40,427 137,909 73,100 64,809
Net increase in net assets resulting from operations 138,294 61,538 76,756 332,015 154,427 177,588
============================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (19,269) (9,219) (10,050) (55,104) (24,065) (31,039)
Net realized gain from investments and futures contracts --- --- --- (138,614) (57,068) (81,546)
Net decrease in net assets resulting from dividends
and distributions (19,269) (9,219) (10,050) (193,718) (81,133) (112,585)
============================================================================================================================
CAPITAL TRANSACTIONS:
Issued 278,250 73,023 205,227 2,936,429 982,609 1,953,820
Reinvested 18,162 8,235 9,927 184,771 73,097 111,674
Redeemed (525,820) (334,263) (191,557) (1,790,376) (392,983) (1,397,393)
Net increase (decrease) in net assets resulting from
capital share transactions (229,408) (253,005) 23,597 1,330,824 662,723 668,101
TOTAL INCREASE (DECREASE) IN NET ASSETS (110,383) (200,686) 90,303 1,469,121 736,017 733,104
============================================================================================================================
NET ASSETS - Beginning of period 2,891,785 1,376,779 1,515,006 1,422,664 640,762 781,902
NET ASSETS - End of period $2,781,402 $1,176,093 $1,605,309 $2,891,785 $1,376,779 $1,515,006
============================================================================================================================
SHARE TRANSACTIONS:
Issued 18,356 4,741 13,615 203,707 68,268 135,439
Reinvested 1,209 544 665 12,452 4,899 7,553
Redeemed (34,719) (21,903) (12,816) (123,009) (26,877) (96,132)
Change in shares (15,154) (16,618) 1,464 93,150 46,290 46,860
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
TACTICAL ASSET ALLOCATION FUND
<CAPTION>
Six Months Ended
June 30, 1997 June 1, 1995* to
(Unaudited) 1996 Dec. 31, 1995
CLASS A CLASS C CLASS A** CLASS C CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.56 $13.52 $12.50 $13.26 $12.50
Income from Investment Operations
Net investment income 0.10 0.10 0.14 0.10 (0.02)
Net gains or losses from securities 1.69 1.86 0.55 0.57 1.84
Total from investment operations 1.79 1.96 0.69 0.67 1.82
Less Distributions
Dividends from net investment income (0.09) (0.08) (0.14) (0.10) ---
Distributions (from capital gains) --- --- (0.49) (0.31) (1.06)
Total distributions (0.09) (0.08) (0.63) (0.41) (1.06)
Net Asset Value, End of Period $14.26 $15.40 $12.56 $13.52 $13.26
===================================================================================================================================
Total Return 14.25%(1) 14.50%(1) 5.51% 5.07% 14.57%
Ratios/Supplementary Data
Net assets, end of period ($000) $156 $14,942 $137 $13,943 $11,524
Ratio of expenses to average net assets 1.74%(2) 2.00%(2) 1.73%(2) 2.00% 1.97%(2)
Ratio of net investment income to average net assets 1.55%(2) 1.30%(2) 2.60%(2) 0.75% -0.29%(2)
Ratio of expenses to average net assets before
waiver of fees 4.91%(2) 2.42%(2) 5.23%(2) 2.40% 2.80%(2)
Ratio of net investment income to average net assets
before waiver of fees -1.62%(2) 0.88%(2) -0.90%(2) 0.35% -1.12%(2)
Portfolio turnover 106.89%(3) 106.89%(3) 297.41%(3) 297.41%(3) 186.13%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
UTILITY GROWTH FUND
<CAPTION>
Six Months Ended
June 30, 1997 July 11, 1995* to
(Unaudited) 1996 December 31, 1995
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.09 $14.91 $14.26 $14.27 $12.50 $12.50
Income from Investment Operations
Net investment income 0.11 0.10 0.29 0.26 0.12 0.10
Net gains or losses from securities 0.68 0.66 1.48 1.49 1.76 1.77
Total from investment operations 0.79 0.76 1.77 1.75 1.88 1.87
Less Distributions
Dividends from net investment income (0.11) (0.10) (0.29) (0.26) (0.12) (0.10)
Distributions (from capital gains) --- --- (0.65) (0.85) --- ---
Total distributions (0.11) (0.10) (0.94) (1.11) (0.12) (0.10)
Net Asset Value, End of Period $15.77 $15.57 $15.09 $14.91 $14.26 $14.27
===================================================================================================================================
Total Return 5.30%(1) 5.11%(1) 12.61% 12.45% 15.11% 15.07%
Ratios/Supplementary Data
Net assets, end of period ($000) $1,176 $1,605 $1,377 $1,515 $641 $782
Ratio of expenses to average net assets 2.00%(2) 2.21%(2) 1.75% 2.00% 1.75%(2) 2.00%(2)
Ratio of net investment income to average net assets 1.50%(2) 1.29%(2) 2.03% 1.85% 2.17%(2) 1.72%(2)
Ratio of expenses to average net assets before
waiver of fees 4.18%(2) 4.57%(2) 4.37% 4.65% 22.70%(2) 13.37%(2)
Ratio of net investment income to average net assets
before waiver of fees -0.68%(2) -1.07%(2) -0.59% -0.80% -18.78%(2) -9.55%(2)
Portfolio turnover 17.05%(3) 17.05%(3) 50.79%(3) 50.79%(3) 5.06%(3) 5.06%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Not annualized.
(2) Annualized.
(3) Represents turnover rate of corresponding portfolio.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
THE FLEX-PARTNERS TRUST
THE TACTICAL ASSET ALLOCATION FUND AND THE UTILITY GROWTH FUND
NOTES TO FINANCIAL STATEMENTS, JUNE 30, 1997
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 Tactical Asset Allocation Fund and The Utility Growth Fund (the
"Funds") commenced operations on June 1, 1995 and July 11, 1995, respectively,
when each Fund began investing all of its investable assets in a corresponding
open-end management investment company (each a "Portfolio" and collectively the
"Portfolios") having the same investment objectives as the Fund. On June 30,
1997 The Tactical Asset Allocation Fund held approximately 11% of the total
assets of the Mutual Fund Portfolio and The Utility Growth Fund held
approximately 32% of the total assets of the Utilities Stock Portfolio.
The financial statements of the Portfolios, including the Portfolios of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of each respective Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Valuation of Investments -- Valuation of securities by the Portfolios is
discussed at Note 1 of the Portfolios Notes to Financial Statements which are
included elsewhere in this report (See page ).
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 each 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 each Portfolio with investment management, research,
statistical and advisory services. Miller/Howard Investments, Inc. (Subadviser)
serves as the Utilities Stock Portfolio's Subadviser under an Investment
Subadvisory Agreement between RMA and the Subadviser.
Mutual Funds Service Co., (MFS), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder servicing agent for all of
the Trust's separate Funds. Subject to a $4,000 annual minimum fee each class of
shares of each Fund incurs an annual fee equal to the greater of $15 per
shareholder account or 0.10% of each Fund's average net assets, payable monthly.
MFS also provides the Trust with certain administrative services. Each Fund
incurs an annual fee, payable monthly, of 0.05% of the Fund's average net
assets.
The Funds have adopted distribution expense plans pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Plans"). Pursuant to the Plans, the
Funds 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, 1997, an indefinite number of shares of $0.10 par value stock were
authorized in each of the Funds and paid in capital amounted to $13,275,632 in
The Tactical Asset Allocation Fund and $2,435,354 in The Utility Growth Fund.
Capital stock transactions for each class of shares appear elsewhere in this
report.
5. DISTRIBUTIONS
The Utility Growth Fund declares as dividends and distributes monthly
substantially all of its net investment income. The Tactical Asset Allocation
Fund declares as dividends and distributes quarterly substantially all of its
net investment income. Net realized capital gains for all Funds, 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 each class
of shares of each Fund at net asset value.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1997 (Unaudited)
MUTUAL UTILITIES
FUND STOCK
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
Assets:
Investments at market value* $123,069,593 $8,484,766
Repurchase agreements* 15,398,000 169,000
Appreciation (Depreciation) on futures contract 838,624 ---
Cash 706 717
Receivable for securities sold --- ---
Receivable for futures contract settlement --- ---
Interest receivable 174,354 29
Dividends receivable --- 15,863
Prepaid/Other assets 10,231 933
Unamortized organization costs --- 12,811
Total Assets 139,491,508 8,684,119
================================================================================
Liabilites:
Payable for securities purchased --- ---
Call options written, at cost --- ---
Payable for futures contract settlement 1,121,200 ---
Payable to corresponding Fund --- ---
Payable to investment adviser 89,037 6,873
Accrued fund accounting fees 3,672 552
Other accrued liabilities 6,344 7,977
Total Liabilities 1,220,253 15,402
================================================================================
Net Assets 138,271,255 8,668,717
================================================================================
Net Assets:
================================================================================
Capital 127,592,791 7,649,649
Net unrealized gain from investments 10,678,464 1,019,068
Net Assets $138,271,255 $8,668,717
================================================================================
*Securities at cost 128,627,753 7,634,698
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
MUTUAL UTILITIES
FUND STOCK
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME
===============================================================================
Interest $1,995,344 $10,162
Dividends 251,918 132,807
Total Investment Income 2,247,262 142,969
===============================================================================
Expenses:
===============================================================================
Investment advisory fees 544,844 40,523
Audit fees 3,910 5,614
Custodian fees 3,742 1,399
Trustees fees and expenses 9,835 3,174
Legal fees 1,241 1,381
Amortization of organization cost 2,697 4,449
Accounting fees 24,777 5,920
Insurance 1,294 36
Other expenses 6,327 5,959
Total Expenses 598,667 68,455
===============================================================================
Investment advisory fees waived --- ---
Total Net Expenses 598,667 68,455
===============================================================================
NET INVESTMENT INCOME 1,648,595 74,514
===============================================================================
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENTS:
===============================================================================
Net realized gain from futures contracts 7,558,231 ---
Net realized gain (loss) from investments (70,450) 149,894
Net change in unrealized appreciation
of investments 10,128,860 239,341
NET GAIN (LOSS) ON INVESTMENTS 17,616,641 389,235
===============================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $19,265,236 $463,749
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited)
MUTUAL UTILITIES
FUND STOCK
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
Six months Six months
ended ended
6/30/97 6/30/97
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income $1,648,595 $74,514
Net realized gain (loss) from investments
and futures contracts 7,487,781 149,894
Net change in unrealized appreciation
of investments 10,128,860 239,341
Net increase in net assets
resulting from operations 19,265,236 463,749
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
================================================================================
Contributions 10,911,125 1,702,141
Withdrawals (27,444,674) (1,461,527)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests (16,533,549) 240,614
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,731,687 704,363
================================================================================
NET ASSETS - Beginning of period 135,539,568 7,964,354
NET ASSETS - End of period $138,271,255 $8,668,717
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
MUTUAL UTILITIES
FUND STOCK
PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------
year ended year ended
12/31/96 12/31/96
- -------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
===============================================================================
OPERATIONS:
===============================================================================
Net investment income $2,510,343 $146,376
Net realized gain (loss) from investments
and futures contracts 10,575,124 348,392
Net change in unrealized appreciation
(depreciation) of investments (5,130,740) 357,308
Net increase in net assets
resulting from operations 7,954,727 852,076
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
===============================================================================
Contributions 32,575,692 5,138,546
Withdrawals (27,099,980) (2,317,138)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests 5,475,712 2,821,408
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,430,439 3,673,484
===============================================================================
NET ASSETS - Beginning of period 122,109,129 4,290,870
NET ASSETS - End of period $135,539,568 $7,964,354
- -------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
Ratios/Supplementary Data
<TABLE>
MUTUAL FUND PORTFOLIO
<CAPTION>
Six months ended
June 30, 1997 Year Ended December 31,
(unaudited) 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $138,271 $135,540 $122,109 $83,185 $81,605
Ratio of Expenses to Average Net Assets* 0.88%(1) 0.87% 0.95% 1.01% 1.03%
Ratio of Net Investment Income to
Average Net Assets 2.42%(1) 1.86% 1.26% 2.76% 0.09%
Portfolio Turnover Rate 106.89% 297.41% 186.13% 168.17% 279.56%
<FN>
(1) Annualized
*Ratio of expenses both with and without affect of directed payments
</FN>
</TABLE>
<TABLE>
UTILITIES STOCK PORTFOLIO
<CAPTION>
Six months ended Period
June 30, 1997 Year Ended June 21, 1995* to
(unaudited) December 31, 1996 December 31, 1995
<S> <C> <C> <C>
Net Assets, End of Period ($000) $8,669 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.69%(1) 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 1.84%(1) 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.69%(1) 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 1.84%(1) 2.19% 2.01%(1)
Portfolio Turnover Rate 17.05% 50.79% 5.06%
Average brokerage commission per share(2) $0.0600 $0.0600 $0.0600
<FN>
(1) Annualized
(2) Represents the total dollar amount of commissions paid on portfolio
transactions divided by the total number of shares purchased and sold by the
Portfolio for which commissions were charged.
* Date of commencement of operations
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
MUTUAL FUND PORTFOLIO
UTILITIES STOCK PORTFOLIO
June 30, 1997
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Each separate Portfolio (the "Portfolios") 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.
Each Declaration of Trust permits the Trustees, who are the same for each
Portfolio, to issue beneficial interests in each Portfolio. The following is a
summary of significant accounting policies followed by the Portfolios.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments -- Money market securities held in the Portfolios maturing more than
sixty days after the valuation date are valued at the last sales price as of the
close of business on the day of valuation, or, lacking any sales, at the most
recent bid price or yield equivalent as obtained from dealers that make markets
in such securities. When such securities are valued within sixty days or less to
maturity, the difference between the valuation existing on the sixty-first day
before maturity and maturity value is amortized on a straight-line basis to
maturity. Securities maturing within sixty days from their date of acquisition
are valued at amortized cost.
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 must be at least 100% of the amount of the
repurchase agreement.
Options & Futures -- Each 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. In the case of a
written option, premiums received by each portfolio upon writing the option are
recorded in the liability section of the Statement of Assets and Liabilities and
are subsequently adjusted to current market value. When the written option is
closed, exercised or expired, the portfolio realizes a gain or loss and the
liability is eliminated.
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
provisions required.
Organizational Costs -- The costs related to the organization of each Portfolio
have been deferred and are being amortized by the Portfolio on a straight-line
basis over a five-year period.
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.
<PAGE>
2. INVESTMENT ADVISORY, AND OTHER AGREEMENTS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolios with investment management research,
statistical and advisory services, and pays certain other expenses of the
Portfolios. Miller/Howard Investments, Inc. (Subadviser) serves as the Utilities
Stock Portfolio's Subadviser under an Investment Subadvisory Agreement between
RMA and the Subadviser. For such services the Portfolios pay monthly fees based
upon the average daily value of each 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 each of the Portfolios. The minimum annual fee for
all such services for each Portfolio is $7,500. Subject to the applicable
minimum fee, each 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, 1997 are as
follows:
Purchases Sales
Mutual Fund Portfolio $131,585,398 $104,473,473
Utilities Stock Portfolio $ 2,397,008 $ 1,334,469
As of June 30, 1997, the aggregate cost of investments and net unrealized
appreciation (depreciation) for Federal income tax purposes was comprised of the
following:
<TABLE>
<CAPTION>
Net Unrealized
Unrealized Unrealized Appreciation
Investment Appreciation Depreciation (Depreciation)
Cost ($) of Investments($) of Investments($) of Investments($)
<S> <C> <C> <C> <C>
Mutual Fund Portfolio 128,627,753 10,678,464 0 10,678,464
Utilities Stock Portfolio 7,634,698 1,189,436 (170,368) 1,019,068
</TABLE>
<PAGE>
MANAGER AND INVESTMENT ADVISER
R. Meeder & Associates
6000 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
SUBADVISER/THE UTILITIES STOCK PORTFOLIO
Miller/Howard Investments, Inc.
141 Upper Byrdcliffe Road, P.O. Box 549
Woodstock, New York 12498
SUBADVISER/THE GROWTH STOCK PORTFOLIO
Sector Capital Management L.L.C.
5350 Poplar Avenue, Suite 490
Memphis, Tennessee 38119
BOARD OF TRUSTEES
Milton S. Bartholomew
Dr. Roger D. Blackwell
John M. Emery
Richard A. Farr
William L. Gurner
Robert S. Meeder. Sr.
Robert S. Meeder, Jr.
Russel G. Means
Lowell G. Miller
Walter L. Ogle
Philip A. Voelker
CUSTODIAN
Star Bank, N.A. Cincinnati
Cincinnati, Ohio 45201
TRANSFER AGENT DIVIDEND DISBURSING AGENT
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, Ohio 43017
AUDITORS
KPMG Peat Marwick L.L.P.
Columbus, Ohio 43215
<PAGE>
THE FLEX-PARTNERS FUNDS
P.O. Box 7177
Dublin, Ohio 43017
