THE FLEX-PARTNERS
ANNUAL REPORT 1997
[LOGO]
December 31, 1997
Investment Adviser - R. Meeder & Associates
<PAGE>
MUTUAL FUND PORTFOLIO
Portfolio of Investments as of December 31, 1997
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 9.0%
AEROSPACE/DEFENSE - 0.5%
Boeing Co. 7,000 $342,563
United Technologies Corp. 7,000 509,687
=======
852,250
-------
ALUMINUM - 0.3%
Aluminum Company of America 7,000 492,625
AUTO AND TRUCK - 0.3%
General Motors Corp. 7,000 424,375
BANKING - 0.5%
J.P. Morgan & Co. 7,000 790,125
BEVERAGE -- SOFT DRINK -0.3%
Coca-Cola Co. 7,000 466,375
CHEMICAL -- DIVERSIFIED - 0.5%
E.I. du Pont de Nemours & Co. 7,000 420,438
Union Carbide Corp. 7,000 300,562
=======
721,000
-------
COMPUTERS & PERIPHERALS - 0.5%
IBM 7,000 731,937
Raytheon Co. - Class A 446 22,013
======
753,950
-------
CONSUMER NON-DURABLE -0.4%
Proctor & Gamble Co. 7,000 558,687
DIVERSIFIED - 0.5%
Allied-Signal, Inc. 7,000 272,562
Minnesota Mining & Manufacturing Co. 7,000 574,438
=======
847,000
-------
DRUG - 0.5%
Merck & Co., Inc. 7,000 743,750
ELECTRICAL EQUIPMENT - 0.3%
General Electric Corp. 7,000 513,625
FINANCIAL SERVICES - 0.4%
American Express Co. 7,000 624,750
HEALTH - 0.3%
Johnson & Johnson 7,000 461,125
INSURANCE - MULTILINE - 0.2%
Travelers Group, Inc. 7,000 377,125
MACHINERY -- CONSTRUCTION & MINING - 0.2%
Caterpillar, Inc. 7,000 339,937
MULTIMEDIA - 0.5%
Walt Disney Co. 7,000 693,438
OFFICE AUTOMATION & EQUIPMENT - 0.3%
Hewlett Packard 7,000 437,500
OIL/GAS -- INTERNATIONAL - 0.6%
Chevron Corp. 7,000 539,000
Exxon Corp. 7,000 428,312
=======
967,312
-------
PAPER & FOREST PRODUCTS - 0.2%
International Paper 7,000 301,875
PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.3%
Eastman Kodak Co. 7,000 425,688
RESTAURANT - 0.2%
McDonald's Corp. 7,000 334,250
RETAIL STORE - 0.4%
Sears, Roebuck & Co. 7,000 316,750
WalMart Stores, Inc. 7,000 276,062
=======
592,812
-------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 0.3%
AT&T 7,000 428,750
TIRE & RUBBER - 0.3%
Goodyear Tire & Rubber 7,000 445,375
TOBACCO - 0.2%
Philip Morris Companies, Inc. 7,000 317,188
================================================================================
TOTAL COMMON STOCKS
(Cost $13,792,981 ) 13,910,887
- --------------------------------------------------------------------------------
MUTUAL FUNDS - 70.1%
Aim Constellation Fund 94 $2,467
Aim Weingarten Equity Fund 116 2,307
Federated S&P 500 Maxcap Fund 256,148 5,181,865
Federated Stock Trust Fund 201,166 7,058,906
Fidelity Growth & Income Fund 133,547 5,088,141
Fidelity Mid Cap Fund 400,450 6,683,512
Mutual Shares Fund 321 6,840
Neuberger & Berman Focus Trust Fund 7,406 151,231
Neuberger & Berman Partners Fund 49,971 1,314,226
Oppenheimer Quest Growth Fund 76,805 1,018,433
PBHG Growth Fund 624 15,849
Safeco Growth Fund 451,746 10,141,688
SteinRoe Young Investor Fund 43,783 1,019,702
Strong American Utility Fund 135,593 2,009,492
T. Rowe Price New Era Fund 147 3,820
T. Rowe Price New Horizons Fund 155 3,608
Vontobel U.S. Value Fund 61,162 1,009,786
Wasatch Micro-Cap Fund 151,876 571,055
================================================================================
TOTAL MUTUAL FUNDS
(Cost $42,109,119 ) 41,282,928
- --------------------------------------------------------------------------------
MONEY MARKET MUTUAL FUNDS - 70.1%
Charles Schwab Money Market Fund 15,369,715 15,369,715
Fidelity Core Money Market Fund 51,302,044 51,302,044
================================================================================
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $66,671,759 ) 66,671,759
- --------------------------------------------------------------------------------
U.S.TREASURY BILLS - 1.0%
** 5.27%, due 01/08/98 30,100 30,069
* 5.10%, due 03/05/98 $1,500,000 1,486,267
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $1,516,681 ) 1,516,336
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.4%
Merrill Lynch, 6.80%, 1/2/98,
(Collateralized by $13,165,000
Florida Power Corp. Commercial
Paper, 0.00%, 1/30/98, market
value - $13,165,000) 12,968,000 12,968,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $12,968,000 ) 12,968,000
- --------------------------------------------------------------------------------
OPTIONS PURCHASED - 11.5%
CALL OPTIONS
S&P 500 Index futures contract expiring
January 16, 1998 at 960 4,000 8,800,000
PUT OPTIONS
S&P 500 Index futures contract expiring
January 16, 1998 at 980 4,000 8,800,000
================================================================================
TOTAL OPTIONS PURCHASED
(Cost $27,378,320 ) 17,600,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $164,436,860) $153,949,910
- --------------------------------------------------------------------------------
FUTURES CONTRACTS
Long, Midcap 400 Futures, face amount
$3,612,350 expiring March 1998. 22 3,686,650
Long, S&P 500 Futures, face amount
$21,452,550 expiring March 1998. 88 $21,540,200
================================================================================
TOTAL FUTURES CONTRACTS $25,226,850
- --------------------------------------------------------------------------------
WRITTEN OPTIONS OUTSTANDING AS OF DECEMBER 31, 1997.
CALL OPTIONS
S&P 500 Index futures contracts expiring
January 16, 1998 at 980 (4,000) (4,604,000)
PUT OPTIONS
S&P 500 Index futures contracts expiring
January 16, 1998 at 960 (4,000) (5,000,000)
================================================================================
TOTAL OPTIONS WRITTEN
(Proceeds $19,383,673 ) ($9,604,000)
- --------------------------------------------------------------------------------
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
See accompanying notes to financial statements.
<PAGE>
UTILITIES STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1997
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.1%
DIVERSIFIED UTILITY - 1.2%
Citizens Utilities Co.--Class B # 13,808 $132,899
ELECTRIC/GAS UTILITY - 10.7%
AGL Resources, Inc. 16,100 329,044
MDU Resources Group, Inc. 6,000 189,750
NIPSCO Industries, Inc. 4,700 232,356
UtiliCorp United, Inc. 10,000 388,125
=========
1,139,275
---------
ELECTRIC UTILITY - 16.1%
Cinergy Corp. 7,800 298,838
IPALCO Enterprises, Inc. 5,900 247,431
KU Energy Corp. 3,200 125,600
LG&E Energy Corp. 8,600 212,850
New Century Energies, Inc. 5,600 268,450
PacifiCorp 9,800 267,662
TECO Energy, Inc. 10,400 292,500
=========
1,713,331
---------
ENERGY - 2.2%
CalEnergy Co., Inc. # 8,000 230,000
NATURAL GAS (DISTRIBUTOR) - 19.1%
Bay State Gas Co. 11,100 412,088
Consolidated Natural Gas Co. 3,800 229,900
KeySpan Energy Corp. 10,900 401,256
MCN Corp. 6,000 242,250
Pacific Enterprises 6,800 255,850
TransCanada Pipelines Ltd. 8,100 181,237
UGI Corp. 1,900 55,694
WICOR, Inc. 5,600 260,050
=========
2,038,325
---------
OIL/GAS (DOMESTIC) - 5.4%
El Paso Natural Gas Co. 4,220 280,630
Questar Corp. 5,100 227,588
Santa Fe Pacific Pipeline Partners, L.P. 1,600 73,200
=======
581,418
-------
TELECOMMUNICATION EQUIPMENT - 5.3%
Andrew Corp. # 10,000 240,000
QUALCOMM, Inc. # 6,520 329,260
=======
569,260
-------
TELECOMMUNICATION SERVICES - 33.3%
AirTouch Communications, Inc. # 5,400 224,437
Alltel Corp. 7,900 324,394
Bell Atlantic Corp. 2,300 209,300
Frontier Corp. 19,300 464,406
GTE Corp. 5,000 261,250
LCI International, Inc. # 15,000 461,250
MCI Communications Corp. 10,000 428,125
Sprint Corp. 4,300 252,088
Tele Denmark A/S - Sponsored ADR 4,900 150,981
Telecom New Zealand - ADR 5,000 193,750
Telefonica de Espana 3,460 315,076
U.S. West Communications Group 5,900 266,238
=========
3,551,295
---------
WATER UTILITY - 3.8%
American Water Works Co., Inc. 14,900 406,956
================================================================================
TOTAL COMMON STOCKS
(Cost $8,095,774 ) 10,362,759
- --------------------------------------------------------------------------------
U.S. TREASURY BILLS - 0.0%
* 5.27%, due 01/08/98 1,000 1,000
================================================================================
TOTAL U.S. TREASURY BILLS
(Cost $1,000 ) 1,000
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.9%
Merrill Lynch, 6.80%, 1/2/98, (Collateralized
by $309,000 Florida Power Corp. Commercial
Paper, 0.00%, 1/30/98, market value - $309,000) 304,000 304,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $304,000 ) 304,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $8,400,774 ) $10,667,759
- --------------------------------------------------------------------------------
* Pledged as collateral on Letter of Credit.
# Represents non-income producing securities.
See accompanying notes to financial statements.
<PAGE>
GROWTH STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1997
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.7%
AEROSPACE/DEFENSE - 1.5%
Boeing Co. 819 $ 40,080
General Dynamics Corp. 730 63,099
Gulfstream Aerospace Corp. # 520 15,210
Lockheed Martin Corp. 980 96,530
Northrup Grumman Corp. 535 61,525
Raytheon Co. - Class B # 1,390 70,195
Textron, Inc. 1,060 66,250
Thiokol Corp. 450 36,563
United Technologies Corp. 740 53,881
=======
503,333
-------
AIR TRANSPORTATION - 0.4%
AMR Corp. # 445 57,183
Delta Air Lines, Inc. 175 20,825
Southwest Airlines 1,050 25,856
USAir Group # 410 25,625
=======
129,489
-------
ALUMINUM - 0.2%
Aluminum Company of America 860 60,523
AUTO & TRUCK - 1.8%
Chrysler Corp. 2,900 102,044
Ford Motor Co. 5,900 287,256
General Motors Corp. 3,100 187,938
Meritor Automotive, Inc. 279 5,876
Paccar, Inc. 218 11,445
TRW, Inc. 375 20,016
=======
614,575
-------
BANKING - 0.5%
J.P. Morgan & Co. 1,000 112,875
Washington Mutual Savings Bank 1,170 74,661
=======
187,536
-------
BEVERAGE--ALCOHOLIC - 0.8%
Canadaigua Wine Co. # 5,200 287,950
BEVERAGE--SOFT DRINK - 2.1%
Coca-Cola Co. 8,800 586,300
Pepsico, Inc. 3,000 109,313
=======
695,613
-------
BUILDING MATERIALS - 0.3%
Crane Co. 280 12,145
Masco Corp. 1,075 54,691
Willbros Group # 1,600 24,000
======
90,836
------
CAPITAL GOODS - 0.2%
Cooper Industries 345 16,905
Eaton Corp. 217 19,367
Ingersoll-Rand 478 19,359
======
55,631
------
CHEMICAL--DIVERSIFIED - 2.0%
Air Products & Chemicals, Inc. 535 44,004
Dow Chemical Co. 995 100,993
E.I. du Pont de Nemours & Co. 5,230 314,127
Monsanto Corp. 2,840 119,280
Praxair, Inc. 1,000 45,000
Rohm & Haas Co. 335 32,076
Union Carbide Corp. 460 19,751
=======
675,231
-------
CHEMICAL--SPECIALTY - 0.1%
Sigma Aldrich 440 17,490
W.R. Grace & Co. 410 32,979
======
50,469
------
COMMERCIAL SERVICES - 0.1%
Dun & Bradstreet 1,110 34,341
COMPUTERS & PERIPHERALS - 2.3%
Compaq Computer Corp. 1,905 107,513
Dell Computer Corp. # 1,600 134,400
EMC Corp./Mass # 5,150 141,303
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
IBM 3,395 354,990
Raytheon Co. - Class A 198 9,748
Sun Microsystems # 900 35,888
=======
783,842
-------
COMPUTER SOFTWARE & SERVICES - 4.8%
America Online, Inc. # 520 46,377
Cambridge Technologies Partners, Inc. # 970 40,376
Ceridian Co. # 2,850 130,566
Citrix Systems, Inc. # 380 28,880
Computer Associates International, Inc. 3,255 172,108
Computer Sciences Corp. # 980 81,830
First Data Corp. 2,220 64,935
Manugistics Group, Inc. # 690 30,791
Microsoft Corp. # 4,757 614,842
National Data Corp. 540 19,508
Network Associates, Inc. # 600 31,725
Orcale Corp. # 3,500 78,094
Peoplesoft, Inc. # 2,510 97,890
Sterling Commerce, Inc. # 1,600 61,500
Sungard Data Systems, Inc. # 3,190 98,890
Wind River Systems # 350 13,891
=========
1,612,203
---------
COMPUTER SYSTEMS - 0.1%
Visio Corp. # 690 26,479
CONSUMER DURABLES - 0.4%
Snap-On, Inc. 1,600 69,800
Sunbeam Corp. 1,600 67,400
=======
137,200
-------
CONSUMER NON-DURABLE - 3.8%
Chattem, Inc. # 8,700 128,325
Colgate Palmolive 2,000 147,000
EKCO Group # 11,400 88,350
Haggar Corp. 12,800 201,600
Procter & Gamble Co. 5,800 462,912
RJR Nabisco Holdings Corp. 1,600 60,000
Tupperware Corp. 7,200 200,700
=========
1,288,887
---------
CONTAINERS--PAPER & PLASTIC - 0.5%
First Brands Corp. 4,500 121,219
Sealed Air Corp. # 700 43,225
=======
164,444
-------
COPPER - 0.0%
Phelps Dodge Corp. 240 14,940
COSMETICS - 1.0%
Avon Products, Inc. 1,700 104,444
Estee Lauder Co. 4,600 235,472
=======
339,916
-------
DATA PROCESSING - 0.2%
I2 Technologies, Inc. # 1,040 54,860
DIVERSIFIED - 2.9%
Allied Signal, Inc. 2,080 80,990
Corning, Inc. 740 27,472
FMC Corp. # 859 57,821
Minnesota Mining & Manufacturing Co. 610 50,058
National Service Industries 430 21,312
Norfolk Southern Corp. 1,830 56,387
PPG Industries, Inc. 890 50,841
Ralston Purina 1,000 92,938
Raychem Corp. 540 23,254
Tenneco 615 24,292
Tyco International 1,140 51,371
Westinghouse Electric 9,500 279,656
Whitman Corp. 6,500 169,406
=======
985,798
-------
DRUG - 7.2%
Abbott Labs 3,432 225,011
Bristol Myers Squibb 4,443 420,419
Eli Lilly & Co. 4,916 342,276
Merck & Co., Inc. 5,425 576,406
Pfizer, Inc. 5,714 426,050
Pharmacia & Upjohn 2,213 81,051
Schering Plough Corp. 3,524 218,929
Warner Lambert Co. 1,221 151,404
=========
2,441,546
---------
DRUGSTORE - 0.2%
Longs Drug Stores 2,000 64,250
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
ELECTRIC--INTEGRATED - 0.9%
FPL Group, Inc. 840 49,718
Houston Industries, Inc. 1,600 42,700
Texas Utilities Co. 2,810 116,791
Unicom Corp. 3,270 100,552
=======
309,761
-------
ELECTRIC PRODUCTION - 0.1%
Sundstrand Corp. 820 41,307
ELECTRIC UTILITY - 0.7%
American Electric Power, Inc. 1,250 64,531
Duke Power Co. 1,640 90,815
Southern Co. 2,690 69,604
=======
224,950
-------
ELECTRICAL EQUIPMENT - 3.5%
General Electric Corp. 15,742 1,155,069
Thomas & Betts 350 16,581
=========
1,171,650
---------
ELECTRONIC COMPONENT SEMICONDUCTORS - 1.5%
Analog Devices # 1,000 27,688
Intel 4,370 306,992
KLA -Tencor Corp. # 430 16,609
Linear Tech Corp. 490 28,236
Maxim Integrated Products, Inc. # 1,600 55,200
Motorola, Inc. 930 53,068
Texas Instruments, Inc. 620 27,900
=======
515,693
-------
ELECTRONIC COMPONENTS - 0.3%
Emerson Electric 1,905 107,513
ELECTRONICS - 0.1%
Rockwell International Corp. 840 43,890
ENERGY - 0.1%
Western Atlas # 700 51,800
FINANCE - 9.4%
Banc One Corp. 3,000 162,938
Bank of Boston Corp. 800 75,150
Bankers Trust New York Co. 600 67,462
Barnett Banks, Inc. 1,200 86,250
Chase Manhattan Corp. 3,300 361,350
Citicorp 2,300 290,806
Corestates Financial 1,000 80,063
Equifax, Inc. 1,070 37,918
Federal Home Loan Mortgage Corp. 3,100 130,006
Federal National Mortgage Corp. 2,300 131,244
First Chicago NBD Corp. 1,700 141,950
First Union Corp. 3,800 194,750
Firstplus Financial Group # 4,600 176,525
Fleet Financial Group, Inc. 1,200 89,925
KeyCorp 1,400 99,137
Lehman Brothers Holdings, Inc. 1,300 66,300
Mellon Bank Corp. 1,000 60,625
Merrill Lynch & Co. 600 43,763
NationsBank Corp. 3,800 231,087
Norwest Corp. 6,200 239,475
PNC Bank Corp. 2,400 136,950
Ryder Systems, Inc. 370 12,118
SunTrust Banks, Inc. 900 64,237
Wells Fargo & Co. 600 203,663
=========
3,183,692
---------
FINANCIAL SERVICES - 2.2%
American Express Co. 1,500 133,875
Associates First Capital 1,900 135,137
Avery Dennison Corp. 720 32,220
BankAmerica Corp. 4,400 321,200
HF Ahmanson & Co. 800 53,550
Nationwide Financial Services - Class A 1,900 68,638
=======
744,620
-------
FOOD DIVERSIFIED - 2.4%
CPC International 1,800 193,950
General Mills 3,200 229,200
IBP, Inc. 11,000 230,606
International Home Foods # 1,900 53,200
Kellogg Co. 1,800 89,325
=======
796,281
-------
FOOD WHOLESALER - 0.3%
Nabisco 2,400 116,250
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
FOREST PRODUCTS - 0.3%
Georgia Pacific Corp. 430 26,122
Timber Group # 430 9,756
Weyerhauser Co. 1,010 49,553
Willamette Industries, Inc. 640 20,600
=======
106,031
-------
HEALTH - 1.9%
Allergan, Inc. 283 9,498
American Home Products 2,701 206,627
Humana, Inc. # 751 15,583
Johnson & Johnson 6,062 399,334
=======
631,042
-------
INSTRUMENTS--CONTROLS - 0.2%
Honeywell, Inc. 650 44,525
Johnson Controls, Inc. 237 11,317
Parker Hannifin Corp. 315 14,451
======
70,293
------
INSTRUMENTS--SCIENTIFIC - 0.0%
Perkin Elmer Corp. 50 3,553
INSURANCE--LIFE - 0.6%
American Heritage Life Investment Co. 1,000 36,000
AmerUs Life Holdings, Inc. 4,841 178,522
=======
214,522
-------
INSURANCE--MULTILINE - 3.3%
Allstate 1,800 163,575
American International Group 2,250 244,687
Conseco, Inc. 5,700 258,994
Leucadia National 1,600 55,200
PAULA Financial # 5,000 115,000
Travelers Group, Inc. 5,347 288,070
=========
1,125,526
---------
LASERS--SYSTEMS & COMPONENTS - 0.2%
Uniphase Corp. # 1,680 69,510
MACHINE TOOL - 0.2%
Cincinnati Milacron 2,471 64,100
MACHINERY - 0.4%
Deere & Co. 981 57,205
Dover Corp. 608 21,964
Lancer Corp. # 4,100 45,100
W.W. Grainger 146 14,189
=======
138,458
-------
MACHINERY--CONSTRUCTION & MINING - 0.6%
Case Corp. 211 12,752
Caterpillar, Inc. 1,581 76,777
Halliburton Co. 1,000 51,938
Harnischfeger Industries 1,990 70,272
=======
211,739
-------
MANUFACTURING - 0.8%
Black & Decker 2,400 93,750
Mueller Industries, Inc. # 750 44,250
Owens Illinois # 670 25,418
Samsonite Corp. # 3,100 102,516
=======
265,934
-------
MATERIALS & SERVICES - 0.8%
Champion International Corp. 425 19,258
Dana Corp. 370 17,575
Deluxe Corp. 300 10,350
Hercules, Inc. 570 28,536
Illinois Tool Works, Inc. 1,270 76,359
Service Corp. International 1,650 60,947
Sherwin-Williams Co. 920 25,530
Waste Management, Inc. 990 27,225
=======
265,780
-------
MEDICAL SERVICES - 1.0%
Amgen, Inc. # 1,159 62,731
Beverly Enterprise # 445 5,785
Columbia/HCA Healthcare Corp. 2,897 85,824
HBO & Co. 1,010 48,480
Healthsouth Rehab # 1,321 36,658
Manor Care, Inc. 264 9,240
Shared Medical Systems 420 27,720
Tenet Healthcare # 1,371 45,414
=======
321,852
-------
MEDICAL SUPPLIES - 1.1%
Alza Corp. # 389 12,375
BIOMET 471 12,069
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
Bausch & Lomb, Inc. 249 9,867
Baxter International, Inc. 1,237 62,391
Becton Dickinson 545 27,250
Boston Scientific Co. # 855 39,223
Cardinal Health, Inc. 150 11,269
CR Bard, Inc. 250 7,828
Guidant Corp. 662 41,209
Mallinckrodt, Inc. 331 12,578
Medtronic, Inc. 2,240 117,180
St. Jude Medical, Inc. # 347 10,584
U.S. Surgical 311 9,116
=======
372,939
-------
MEDICAL--HMO - 0.1%
United Healthcare Co. 836 41,539
METAL--DIVERSIFIED - 0.0%
Inco LTD 610 10,370
MINING - 0.1%
Tubos de Acero de Mexico SA # 2,100 45,412
MULTIMEDIA - 0.2%
Walt Disney Co. 800 79,250
NATURAL GAS DISTRIBUTOR - 0.1%
Williams Companies, Inc. 1,400 39,725
NETWORKING PRODUCTS - 1.0%
3Com Corp. # 1,060 37,034
Cisco Systems, Inc. # 5,205 290,179
=======
327,213
-------
OFFICE AUTOMATION & EQUIPMENT - 1.4%
Hewlett Packard 4,610 288,125
Pitney Bowes, Inc. 900 80,944
Xerox Corp. 1,300 95,956
=======
465,025
-------
OIL/GAS--DOMESTIC - 2.5%
Amoco Corp. 2,200 187,275
Apache Corp. 200 7,012
Atlantic Richfield 1,200 96,150
Baker Hughes 1,100 47,988
Burlington Resources 900 40,331
Chieftan International # 1,000 20,250
Devon Energy 700 26,819
Enron Corp. 400 16,625
Mitchell Energy & Development - Class B 1,500 43,687
Mobil Corp. 3,000 216,563
Murphy Oil Corp. 400 21,675
Noble Drilling Co. # 1,400 42,875
Sonat, Inc. 500 22,875
USX Marathon Group 1,900 64,125
=======
854,250
-------
OIL/GAS--INTERNATIONAL - 2.5%
Chevron Corp. 2,500 192,500
Exxon Corp. 10,600 648,588
=======
841,088
-------
OILFIELD SERVICES/EQUIPMENT - 1.1%
Dresser Industries 500 20,969
Enron Exchangeable Notes 1,000 20,625
Schlumberger LTD 2,200 177,100
Union Pacific Resources 800 19,400
Union Texas Petroleum Holdings 1,100 22,894
United Meridian Co. # 1,300 36,562
Veritas DGC, Inc. # 800 31,600
Weatherford Enterra # 800 35,000
=======
364,150
-------
OIL & NATURAL GAS - 0.1%
Amerada Hess 500 27,438
PAPER & FOREST PRODUCTS - 0.5%
Bemis Co., Inc. 310 13,659
Bowater, Inc. 220 9,776
Fort James Corp. 785 30,026
International Paper 1,485 64,041
Mead Corp. 720 20,160
Union Camp Corp. 450 24,159
=======
161,821
-------
PETROLEUM--INTEGRATED - 2.1%
Occidental Petroleum Corp. 400 11,725
Phillips Petroleum 1,500 72,937
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
Royal Dutch Petroleum 8,900 482,269
Texaco 2,000 108,750
Unocal Corp. 1,000 38,813
=======
714,494
-------
PHARMACEUTICAL - 0.0%
PharMerica, Inc. # 202 2,096
PROTECTION--SAFETY EQUIPMENT - 0.9%
Lo-Jack Corp. # 20,000 295,000
RAILROAD TRANSPORTATION - 0.4%
Burlington Northern Santa Fe 740 68,774
Union Pacific Corp. 1,210 75,549
=======
144,323
-------
RECREATION - 0.2%
Polaris Industries 2,000 61,125
RECYCLING - 0.1%
Philip Services Corp. # 2,070 29,756
RESTAURANT - 0.4%
McDonald's Corp. 3,000 143,250
RETAIL GROCERY - 0.4%
Albertsons, Inc. 2,500 118,437
RETAIL STORE - 2.7%
Dillard Department Stores 1,300 45,825
Kmart # 16,700 193,094
OfficeMax # 8,000 114,000
Sears, Roebuck & Co. 4,000 181,000
Toys "R" Us, Inc. # 1,500 47,156
WalMart Stores, Inc. 8,000 315,500
=======
896,575
-------
SERVICES - 0.4%
Automatic Data Processing, Inc. 1,540 94,518
Paychex, Inc. 525 26,578
=======
121,096
-------
STEEL--INTEGRATED - 0.0%
Nucor Corp. 320 15,460
TELECOMMUNICATION EQUIPMENT - 0.8%
Advanced Fibre Communication, Inc. # 410 11,941
General Signal Corp. 1,567 63,659
Newbridge Networks Corp. # 3,170 110,554
Nokia Corp. - Sponsored ADR - Class A 750 52,406
Northern Telecom LTD 295 26,255
=======
264,815
-------
TELECOMMUNICATION SERVICES - 9.1%
Airtouch Communications # 7,630 317,122
Ameritech Corp. 2,540 204,470
AT&T 7,520 460,600
BellSouth Corp. 4,260 239,891
British Telecom plc 3,860 310,006
Cia de Telecomunicaciones de Chile - Sponsore 1,870 55,866
DSC Communications # 620 14,880
Frontier Corp. 2,880 69,300
GTE Corp. 4,420 230,945
LCI International, Inc. # 3,500 107,625
Lucent Technologies, Inc. 3,645 291,144
MCI Communication 3,070 131,434
SBC Communications 4,100 300,325
Sprint Corp. 1,620 94,972
Telefonaktiebolaget LM Ericsson - ADR 400 14,925
Tellabs, Inc. # 950 50,231
U.S. West, Inc. 1,470 66,334
Worldcom, Inc. # 4,280 129,470
=========
3,089,540
---------
TOBACCO - 3.3%
Gallaher Group, plc - ADR 11,400 243,675
Imperial Tobacco 4,900 60,025
Philip Morris Companies 13,200 598,125
UST, Inc. 5,600 206,850
=========
1,108,675
---------
TOYS - 0.3%
Hasbro Bradley, Inc. 3,700 116,550
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
TRANSPORTATION - 0.2%
Alaska Air Group # 530 20,538
Caliber Systems, Inc. 190 9,251
Federal Express Corp. # 530 32,363
======
62,152
------
TRUCKING/TRANSPORTATION LEASING - 0.2%
CSX, Corp. 1,027 55,458
WASTE DISPOSAL--NON-HAZARDOUS - 0.3%
Browning Ferris Industries, Inc. 1,180 43,660
USA Waste Services, Inc. # 1,398 54,871
======
98,531
------
================================================================================
TOTAL COMMON STOCKS
(Cost $27,190,038 ) 33,063,192
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 0.9%
U.S. Treasury Bills
** 5.27%, 01/08/98 6,000 5,994
* 5.10%, 03/05/98 300,000 297,254
================================================================================
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $303,317 ) 303,248
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.4%
Merrill Lynch, 6.80%, 1/2/98, (Collateralized
by $470,000 Florida Power Corp. Commercial
Paper, 0.00%, 1/30/98, market value - $470,000) 463,000 463,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $463,000 ) 463,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $27,956,355 ) $33,829,440
- --------------------------------------------------------------------------------
================================================================================
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount $1,711,037
expiring March 1998. 7 $1,713,425
- --------------------------------------------------------------------------------
================================================================================
TOTAL FUTURES CONTRACTS $1,713,425
- --------------------------------------------------------------------------------
* Pledged $300,000 face amount as collateral on futures contracts.
** Pledged $6,000 face amount as collateral on Letter of Credit.
# Represents non-income producing securities.
See accompanying notes to financial statements.
<PAGE>
INTERNATIONAL EQUITY PORTFOLIO
Portfolio of Investments as of December 31, 1997
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS - 91.9%
AEROSPACE/DEFENSE - 0.3%
British Aerospace plc 1,246 $ 35,697
AGRICULTURE & FOOD - 0.1%
Kuala Lumpur Kepong Bhd 4,000 8,581
AIR TRANSPORT - 0.4%
British Airways plc 1,262 12,387
KLM Royal Dutch Airlines NV 850 31,447
Singapore Airlines Ltd. 1,000 6,529
======
50,363
------
APPAREL - 1.6%
Adidas AG 600 78,954
Alexon Group plc # 8,204 36,045
Ittierre Holding SpA # 25,000 74,802
Onward Kashiyama Co., Ltd. 1,000 11,614
=======
201,415
-------
AUTO & TRUCK - 2.3%
Daimler - Benz AG 910 63,872
Honda Motor Co., Ltd. 1,000 36,840
Perusahaan Otomobil Nasional Bhd 3,000 2,929
Toyota Motor Corp. 6,000 172,587
=======
276,228
-------
AUTOPARTS -- REPLACEMENT - 0.5%
Betrand Faure SA 540 38,410
Denso Corp. 1,000 18,074
======
56,484
------
BANKING - 14.8%
Abbey National plc 1,259 21,733
Asahi Bank Ltd. 4,000 16,305
Australia & New Zealand Banking Group Ltd. 6,200 40,964
Banca di Roma # 82,400 83,192
Bank of Scotland 6,020 54,583
Bank of Tokyo-Mitsubishi Ltd. 6,000 83,064
Banque Nationale de Paris 920 48,922
Barclays plc 2,206 58,626
Corporacion Bancaria de Espana SA 1,000 60,821
Credit Suisse Group 500 77,477
Dai-Ichi Kangyo Bank Ltd. 4,000 23,688
Dao Heng Bank Group Ltd. 2,500 6,243
Den Danske Bank 400 53,336
Den Norske Bank ASA 18,000 84,969
Deutsche Bank AG 1,840 129,967
Development Bank of Singapore Ltd. 1,000 8,546
Erste Bank Der Oesterreichischen Sparkassen AG 1,550 75,351
HSBC Holdings plc 1,200 29,581
HSBC Holdings plc 3,063 79,183
Halifax plc # 2,670 33,194
Hang Seng Bank Ltd. 2,000 19,295
ING Groep NV 1,450 61,084
Industrial Bank of Japan Ltd. 3,000 21,458
Malayan Banking Bhd 1,000 2,903
Mitsubishi Trust & Banking Corp. 3,000 30,226
National Australia Bank Ltd. 2,560 35,747
National Westminster Bank plc 1,525 25,333
Northern Rock plc # 500 4,904
Overseas-Chinese Banking Corp., Ltd. 1,000 5,816
Royal Bank of Scotland Group plc 1,261 16,144
Sanwa Bank Ltd. 2,000 20,304
Schroders plc 650 20,055
Schweizerischer Bankverein 275 85,602
Societe Generale 385 52,478
Standard Chartered plc 1,228 14,044
Sumitomo Bank Ltd. 5,000 57,298
Sumitomo Trust & Banking Corp. 6,000 31,287
Svenska Handelsbanken 3,710 128,353
Tokai Bank Ltd. 7,000 32,733
Union Bank of Switzerland 35 50,682
United Overseas Bank Ltd. 1,000 5,549
Woolwich plc 2,266 11,969
=========
1,803,009
---------
BEVERAGE -- ALCOHOLIC - 0.8%
Allied Domecq plc 1,746 15,802
Diageo plc 3,105 28,536
Pernod Ricard 900 52,961
======
97,299
------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
BROADCASTING -- CABLE TV - 0.7%
British Sky Broadcasting Group plc 4,057 30,309
Carlton Communications plc 1,415 10,897
Flextech plc # 2,390 20,726
Reuters Holdings plc 1,871 20,582
======
82,514
------
BROADCASTING & PUBLISHING - 0.1%
News Corporation Ltd. 2,000 11,038
BUILDING & CONSTRUCTION - 2.2%
Berkeley Group plc 1,994 20,426
Blue Circle Industries plc 904 5,292
Compagnie de Saint Gobain 280 39,795
Grupo Acciona Sa 250 40,777
New World Infrastructure Ltd. # 5,000 11,261
Obayashi Corp. 14,000 47,808
RMC Group plc 620 8,754
Suez Lyonnaise des Eaux 840 92,995
Taisie Corp. 4,000 6,584
=======
273,692
-------
BUILDING MATERIALS - 0.1%
Pioneer International Ltd. 2,200 6,006
Wolseley plc 1,216 9,665
======
15,671
------
CHEMICALS - 0.9%
Akzo Nobel NV 180 31,042
Bayer AG 1,140 42,607
Shin-Etsu Chemical Co., Ltd. 2,000 38,302
=======
111,951
-------
CHEMICALS -- DIVERSIFIED - 1.0%
BOC Group plc 3,100 51,344
Henkel KGaA 1,200 75,751
=======
127,095
-------
COMPUTERS & PERIPHERALS - 1.0%
Fujitsu Ltd. 5,000 53,837
NEC Corp. 6,000 64,143
=======
117,980
-------
CONSUMER DURABLES - 0.2%
Unilever plc 3,124 26,809
CONTAINERS -- PAPER & PLASTIC - 0.1%
Britton Group plc 6,915 15,760
COSMETICS - 0.6%
Kao Corp. 5,000 72,296
DATA PROCESSING - 0.5%
Industri-Matematik International Corp.
American Depository Receipt # 2,000 57,250
DISTRIBUTION WHOLESALER - 0.8%
Headlam Group plc 6,261 36,420
Marubeni Corp. 6,000 10,568
Mitsui & Co. 8,000 47,500
======
94,488
------
DIVERSIFIED - 2.6%
BTR plc 5,318 16,321
Brambles Industries Ltd. 1,650 32,738
Broken Hill Proprietary Co., Ltd. 1,650 15,321
Citic Pacific Ltd. 4,000 15,900
Compagnie Generale des Eaux 425 59,344
Granada Group plc 2,256 34,785
Hutchison Whampoa Ltd. 4,000 25,090
Lagardere SCA 1,070 35,395
Rio Tinto Ltd. 1,190 13,882
Securicor plc 3,611 17,024
Societe Generale de Belgique 600 54,899
=======
320,699
-------
DRUG - 1.7%
Cortecs plc # 3,705 11,035
Roche Holding AG 20 198,903
=======
209,938
-------
ELECTRIC PRODUCTION -- MISCELLANEOUS - 2.6%
China Light & Power Co. 3,000 16,649
Chubu Electric Power Co., Inc. 3,600 55,099
Endesa SA 3,040 53,953
Hongkong Electric Holdings Ltd. 5,000 19,004
National Grid Group plc 2,274 10,861
Rohm Co., Ltd. 1,000 102,291
Scottish Power plc 4,733 41,785
Southern Electric plc 1,319 10,549
Tenaga Nasional Bhd 3,000 6,397
=======
316,588
-------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
ELECTRONIC COMPONENT -- MISCELLANEOUS - 2.2%
Matsushita Electric Industrial Co., Ltd. 5,000 73,450
Minebea Co., Ltd. 5,000 53,837
Siemens AG 820 48,571
Silvermines Group plc 9,120 6,828
Sony Corp. 1,000 89,216
=======
271,902
-------
ENGINEERING RESEARCH & DEVELOPMENT - 0.0%
United Engineers Bhd 1,000 832
FINANCE - 1.6%
Credit Saison Co., Ltd. 1,500 37,148
Lend Lease Corp., Ltd. 1,500 29,322
Lloyds TSB Group plc 6,259 80,954
Nomura Securities Co., Ltd. 4,000 53,530
=======
200,954
-------
FINANCIAL SERVICES - 0.3%
Legal & General Group plc 4,900 42,332
FOOD & BEVERAGE - 0.0%
Want Want Holdings American Depository Receipt # 2,000 2,760
FOOD -- DIVERSIFIED - 1.2%
Cadbury Schweppes plc 3,815 37,980
Nestle SA 70 105,060
=======
143,040
-------
FOOD WHOLESALER - 0.3%
FHTK Holdings Ltd. 13,000 2,932
Nissin Food Products 2,000 36,456
======
39,388
------
HOME APPLIANCE - 0.0%
Guangdong Kelon Elec Holdings 4,000 4,104
HOTEL/GAMING - 1.3%
Accor SA 385 71,614
Genting Bhd 4,600 11,523
Ladbroke Group plc 4,004 17,394
London Clubs International plc 4,322 23,079
Stanley Leisure plc 6,320 26,364
Sydney Harbour Casino Holdings Ltd. # 8,700 8,248
=======
158,222
-------
HOUSEHOLD PRODUCTS - 0.9%
Asahi Glass Co., Ltd. 6,000 28,611
Benckiser NV # 1,900 78,636
=======
107,247
-------
INSURANCE -- MULTILINE - 0.7%
Baloise Holding Ltd. # 26 48,185
Zurich Versicherungs-Gesellschaft 90 42,948
======
91,133
------
INSURANCE -- PROPERTY/CASUALTY - 1.6%
Allianz AG 415 107,558
Assurances Generales de France 1,560 82,696
=======
190,254
-------
INSURANCE - 1.6%
Assicurazioni Generali 1,600 39,321
Guardian Royal Exchange plc 6,784 36,281
Istituto Nazionale delle Assicurazioni 16,500 33,457
Norwich Union plc # 2,529 15,544
Skandia Forsakrings AB 710 33,512
Tokio Marine & Fire Insurance Co. 2,000 22,766
United Assurance Group plc 1,700 14,756
=======
195,637
-------
INVESTMENT COMPANIES - 1.0%
Amvescap plc 7,834 67,228
Corp. Financiera Reunida SA # 10,000 53,472
Mercury Asset Management Group plc 186 5,197
=======
125,897
-------
MACHINERY - 0.9%
Ebara Corp. 4,000 42,455
Mannesmann AG 130 65,723
=======
108,178
-------
MANUFACTURING - 2.8%
FKI plc 7,744 24,467
General Electric Co. plc 2,782 18,266
Mitsubishi Heavy Industries 10,000 41,839
RWE AG 2,400 128,810
Rexam plc 3,215 15,792
Shanghai Industrial Holdings Ltd. 1,000 3,717
Southcorp Ltd. 400 1,324
Unilever NV 1,040 64,128
VEBA AG 690 47,011
=======
345,354
-------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS - 4.6%
Glaxo Wellcome plc 5,408 127,969
Novartis AG 120 194,995
Shield Diagnostics Group plc # 1,733 20,461
Takeda Chemical Industries 2,000 57,222
Yamanouchi Pharmaceutical Co., Ltd. 3,000 64,605
Zeneca Group plc 2,566 90,361
=======
555,613
-------
METAL -- DIVERSIFIED - 0.2%
Union Miniere SA # 340 23,584
METAL FABRICATING - 0.1%
Simsmetal Ltd. 1,200 6,960
MINING - 0.3%
Rio Tinto plc 1,169 13,571
Sumitomo Metal Mining Co. 6,000 19,843
======
33,414
------
MUTUAL FUNDS - 7.6%
Baillie Gifford Japan Trust Fund # 11,000 78,740
Baring Emerging Europe Trust Fund # 65,000 102,375
Foreign & Colonial Emerging Markets Investment
Trust Fun 96,000 167,451
Genesis Emerging Markets Fund # 9,000 145,800
Schroder Japan Growth Fund # 139,000 118,940
Scudder Latin America Investment Trust Fund 70,000 114,037
Templeton Emerging Markets Investment Trust Fund 60,000 117,739
Templeton Latin America Investment Trust Fund 50,000 81,249
=======
926,331
-------
OFFICE AUTOMATION & EQUIPMENT - 0.4%
Canon, Inc. 2,000 46,762
OIL & NATURAL GAS - 6.4%
BG plc 4,053 18,274
British Petroleum Co., plc 6,047 79,655
Cairn Energy plc # 821 6,701
ENI SpA 6,850 38,861
Elf Aquitain SA 835 97,161
Envestra Ltd. 93,500 59,096
Hong Kong & China Gas Co., Ltd. 9,000 17,423
LASMO plc 5,263 23,427
Repsol SA 1,450 61,838
Royal Dutch Petroleum Co. 2,450 134,513
SOCO International plc # 4,008 24,007
Saipem SpA 5,800 30,509
Shell Transport & Trading Co. 14,626 106,259
Smedvig ASA 1,000 21,161
Tokyo Gas Co. 17,000 38,701
Woodside Petroleum Ltd. 2,700 19,036
=======
776,622
-------
OILFIELD SERVICES & EQUIPMENT - 0.6%
ISIS # 703 77,127
PAPER & FOREST PRODUCTS - 1.3%
Metsa Tissue Oyj # 12,000 115,694
Nippon Paper Industries Co. 5,000 19,689
UPM-Kymmene Oyj 1,400 28,024
=======
163,407
-------
PRINTING -- COMMERCIAL - 0.3%
Dai Nippon Printing Co., Ltd. 2,000 37,686
PROTECTION -- SAFETY EQUIPMENT - 0.5%
Secom Co., Ltd. 1,000 64,143
PUBLISHING - 1.9%
Elsevier NV 4,000 64,720
Independent Newspapers Ltd. 3,600 17,978
Johnston Press plc 4,338 14,634
Singapore Press Holdings Ltd. 1,000 12,523
Star Publications 2,000 2,281
United News & Media plc 1,209 13,668
Verenigde Nederlandse Uitgeversbedrijven
Verenigd Bezit 3,700 104,400
=======
230,204
-------
REAL ESTATE MANAGEMENT & INVESTMENT - 1.5%
Capital Shopping Centers plc 5,424 36,594
Cheung Kong Holdings Ltd. 3,000 19,650
China Resources Enterprise Ltd. 4,000 8,931
City Developments Ltd. 1,000 4,629
HKR International Ltd. 9,680 7,121
Henderson Land Development Co., Ltd. 1,000 4,711
Mitsubishi Estate Co., Ltd. 6,000 65,528
New World Development Co., Ltd. 2,000 6,918
Sun Hung Kai Properties Ltd. 3,000 20,908
Wing Tai Holdings Ltd. 3,000 3,508
=======
178,498
-------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
RECREATION - 0.3%
Berjaya Sports Toto Bhd 6,000 15,338
TABCORP Holdings Ltd. 1,400 6,568
Wembley plc 2,802 13,948
======
35,854
------
RETAIL - 1.6%
Dixons Group plc 1,685 16,678
EMI Group plc 1,264 10,904
Great Universal Stores plc 4,860 59,980
Harvey Nichols plc 1,733 5,490
Vendex International NV 1,800 99,359
=======
192,411
-------
RETAIL GROCERY - 0.8%
Ito-Yokado Co., Ltd. 1,000 51,146
Safeway plc 7,885 44,764
======
95,910
------
RETAIL STORE - 1.5%
Carpetright plc 765 5,728
Family Mart Co., Ltd. 2,000 71,988
Kingfisher plc 6,000 83,726
Marui Co. 1,000 15,613
=======
177,055
-------
SERVICES - 0.3%
BTG plc 3,520 39,388
STEEL -- INTEGRATED - 0.3%
Nippon Steel Corp. 19,000 28,203
Sumitomo Metal Industries 11,000 14,128
======
42,331
------
TELECOMMUNICATIONS - 3.2%
Cable & Wireless plc 3,591 31,584
Nippon Telegraph & Telephone Corp. 20 172,280
Portugal Telecom SA 1,450 67,356
Singapore Telecommunications Ltd. 10,000 18,636
Telecom Corporation of New Zealand Ltd. 5,300 25,698
Telecom Italia SpA 11,700 74,780
=======
390,334
-------
TELECOMMUNICATION EQUIPMENT - 2.5%
Alcatel Alsthom 740 94,102
France Telecom SA # 1,060 38,465
Telecom Italia Mobile SpA 11,400 52,648
Telefonica de Espana 2,900 82,767
Vodafone Group plc 5,286 38,577
=======
306,559
-------
TELECOMMUNICATION SERVICES - 0.8%
British Telecommunications plc 6,497 51,291
China Telecom Ltd. # 4,000 6,866
COLT Telecom Group plc # 658 6,675
Hong Kong Telecommunications Ltd. 3,200 6,587
Telekom Malaysia Bhd 4,000 11,818
Telestra Corp., Ltd. # 5,900 12,456
======
95,693
------
TIRE & RUBBER - 0.5%
Bridgestone Corp. 3,000 65,297
TOBACCO - 0.2%
BAT Industries plc 2,260 20,622
Rothmans of Pall Mall Bhd 400 3,109
======
23,731
------
TOILETRIES & COSMETICS - 0.4%
L'OREAL 115 45,019
TRANSPORTATION - 1.2%
East Japan Railway Co. 15 67,951
FirstGroup plc 1,701 6,270
Kowloon Motor Bus Holdings Ltd. 2,800 6,143
National Express Group plc 1,789 20,180
Peninsular and Oriental Steam Navigation Co. 1,020 11,657
Yamato Transport Co., Ltd. 3,000 40,378
=======
152,579
-------
WATER UTILITY - 0.3%
Severn Trent plc 2,097 33,748
================================================================================
TOTAL COMMON STOCKS
(Cost $11,340,205 ) 11,226,367
- --------------------------------------------------------------------------------
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 8.1%
State Street Bank, 4.50%, 1/2/98, (Collateralized
by $1,005,000 U.S. Treasury Notes, 5.63%,
11/30/99, market value - $1,007,513 984,000 984,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $984,000 ) 984,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $12,324,205 ) 12,210,367
- --------------------------------------------------------------------------------
# Represents non-income producing securities.
================================================================================
Portfolio Composition by Country of Domicile as of 12/31/97.
United Kingdom - 29.3% Sweden - 2.0%
Japan - 22.0% Finland - 1.3%
France - 8.3% Norway - 0.9%
Switzerland - 7.2% Austria - 0.7%
Germany - 7.0% Belgium - 0.7%
Netherlands - 6.0% Malaysia - 0.6%
Italy - 3.8% Portugal - 0.6%
Spain - 3.1% Singapore - 0.6%
Australia - 2.7% Denmark - 0.5%
Hong Kong - 2.3% New Zealand - 0.4%
FORWARD CURRENCY CONTRACTS
Contract Amount Contract Amount Appreciation Delivery
(Local Currency) (U.S. Dollars) (Depreciation) Date
Currency Purchased:
British Pound 30,187.380 $50,449 ($774) 1/2/98
================================================================================
Net receivable (payable) for forward currency contracts purchased ($774)
================================================================================
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND FUND FUND
Assets:
Investment in corresponding
portfolio, at value $328,462 $14,592,848 $2,541,061
Receivable for capital stock issued --- 12,673 9,602
Receivable from investment adviser 5,355 9,450 25,517
Unamortized organization costs 9,167 20,246 14,118
Other assets --- 5,911 6,533
Total Assets 342,984 14,641,128 2,596,831
================================================================================
Liabilites:
Payable for capital stock redeemed --- 857 1,221
Dividends payable --- 38,771 5,949
Accrued transfer agent and
administrative fees 717 2,156 767
Accrued 12b-1 and shareholder
service fees -- Class A 416 --- 1,675
Accrued 12b-1 and shareholder
service fees -- Class C 176 43,684 2,621
Organizational costs due to adviser 10,005 4,524 3,472
Other accrued liabilities 6,725 14,373 12,560
Total Liabilities 18,039 104,365 28,265
================================================================================
Net Assets 324,945 14,536,763 2,568,566
================================================================================
Components of Net Assets:
Capital 320,520 15,564,856 1,978,163
Accumulated undistributed net realized gains
(losses) from investment transactions (539) (335,671) ---
Net unrealized appreciation of investments
(depreciation) of investments 4,964 (692,422) 590,403
Total Net Assets $324,945 $14,536,763 $2,568,566
================================================================================
Net Assets:
Class A Shares $245,427 $36,080 $1,285,320
Class C Shares 79,518 14,500,683 1,283,246
324,945 14,536,763 2,568,566
================================================================================
Outstanding units of beneficial interest (shares):
(indefinite number of shares authorized,
$0.10 par value)
Class A Shares 19,370 3,259 73,999
Class C Shares 6,281 1,184,066 74,743
25,651 1,187,325 148,742
================================================================================
Net asset value -- redemption price per share:
Class A Shares $12.67 $11.07 $17.37
Class C Shares* $12.66 $12.25 $17.17
Sales charge -- Class A Shares 4.00% 4.00% 4.00%
Maximum offering price per share --
Class A Shares (100%/(100% - sales
charge) of net asset value adjusted
to nearest cent) $13.20 $11.53 $18.09
* Redemption price varies based upon holding period.
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND* FUND FUND
Net Investment Income from
Corresponding Portfolio:
================================================================================
Interest $868 $322,466 $10,733
Dividends 2,100 119,403 80,269
Expenses (1,996) (132,686) (42,829)
Total Net Investment Income from
Corresponding Portfolio 972 309,183 48,173
================================================================================
Fund Expenses:
================================================================================
Administrative fee 70 8,160 1,333
Transfer agent fees 3,366 20,472 8,118
Shareholder service -- Class A Shares 271 249 3,037
Shareholder service -- Class C Shares 79 37,029 3,632
Audit fees 1,539 4,944 1,418
Legal fees 1,099 3,043 3,353
Printing 1,613 11,145 6,135
Amortization of organizational costs 822 8,376 5,851
Postage 558 4,989 2,395
12b-1 fees -- Class A Shares 271 249 3,037
12b-1 fees -- Class C Shares 238 111,087 10,895
Registration and filing fees 2,776 18,397 16,846
Insurance --- 853 726
Other expenses 959 13,970 4,801
Total Expenses 13,661 242,963 71,577
================================================================================
Expenses reimbursed
by investment adviser (12,760) (62,471) (57,403)
Net Expenses 901 180,492 14,174
================================================================================
NET INVESTMENT INCOME 71 128,691 33,999
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gains (losses) from
futures contracts 1,237 800,960 ---
Net realized gains (losses) from
investment transactions 126 2,128,856 234,211
Net change in unrealized appreciation
(depreciation) of investments 4,964 (664,958) 363,380
NET GAIN (LOSS) FROM INVESTMENTS 6,327 2,264,858 597,591
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $6,398 $2,393,549 $631,590
================================================================================
* For the period from commencement of operations, August 1, 1997, through
December 31, 1997.
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
INTERNATIONAL
EQUITY
FUND
Assets:
Investments, at value (cost $11,340,205) $11,226,339
Repurchase agreements, at cost 984,000
Cash 13,772
Receivable for capital stock issued 99
Receivable for investments sold 984,390
Dividends, interest and tax reclaims receivable 10,817
Receivable from investment adviser 20,735
Unamortized organization costs 27,203
Total Assets 13,267,355
================================================================================
Liabilities:
================================================================================
Payable for capital stock redeemed 2,926
Payable for investments purchased 1,037,843
Foreign currency overdraft, at value (cost $2,483) 2,387
Payable for foreign currency contract 774
Accrued management fees 9,898
Accrued fund accounting fees 2,500
Accrued transfer agent and administrative fees 1,434
Organizational costs due to adviser 2,925
Other accrued liabilities 16,600
Total Liabilities 1,077,287
================================================================================
Net Assets $12,190,068
Components of Net Assets:
Capital $12,483,530
Accumulated undistributed (distributions
in excess of) net investment income (15,575)
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions (163,883)
Net unrealized appreciation (depreciation)
of investments and foreign currency (114,004)
Total Net Assets $12,190,068
================================================================================
Net Assets:
Class A Shares $12,190,068
Outstanding units of beneficial interest (shares):
Class A Shares 1,000,472
Net asset value -- redemption price per share:
Class A Shares $12.18
Sales charge -- Class A Shares 4.00%
Maximum offering price per share -- Class A Shares
(100%/(100% - sales charge) of net asset value
adjusted to nearest cent) $12.69
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1997
INTERNATIONAL
EQUITY
FUND*
Investment Income:
================================================================================
Interest $20,364
Dividends 43,417
Foreign taxes withheld (5,835)
Total Investment Income 57,946
Expenses:
================================================================================
Investment management fees 36,268
Administration fees 1,863
Fund accounting fees 17,863
Transfer agent fees 3,627
Audit fees 6,357
Legal fees 971
Custody fees 21,597
Trustees fees and expenses 2,462
Postage expense 140
Registration expense 2,959
Printing expense 1,644
Amortization of organizational costs 1,939
Other expenses 663
Total Expenses 98,353
================================================================================
Expenses reimbursed by investment adviser (24,832)
Net Expenses 73,521
================================================================================
NET INVESTMENT INCOME (LOSS) (15,575)
================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gains (losses) from investments
and foreign currency transactions (163,883)
Net change in unrealized appreciation
(depreciation) of investments (114,004)
NET GAIN (LOSS) FROM INVESTMENTS (277,887)
================================================================================
NET INCREASE (INCREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ($293,462)
================================================================================
* For the period from commencement of operations, September 2, 1997,
through December 31, 1997.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
CORE EQUITY FUND* TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
INCREASE (DECREASE) IN NET
ASSETS:
====================================================================================================================================
OPERATIONS:
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $71 $112 ($41) $128,691 $991 $127,700 $33,999 $16,465 $17,534
Net realized gains (losses)
from investment and futures
contract transactions 1,363 1,001 362 2,929,816 7,934 2,921,882 234,211 116,754 117,457
Net change in unrealized
appreciation (depreciation)
of investments 4,964 3,709 1,255 (664,958) 15,665 (680,623) 363,380 167,064 196,316
Net increase in net assets
resulting from operations 6,398 4,822 1,576 2,393,549 24,590 2,368,959 631,590 300,283 331,307
====================================================================================================================================
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS:
From net investment income (112) (112) --- (128,691) (991) (127,700) (33,999) (16,465) (17,534)
In excess of net investment
income --- --- --- --- --- --- --- --- ---
From net realized gains (1,363) (1,001) (362) (2,929,816) (7,934) (2,921,882) (234,211) (116,754) (117,457)
In excess of net realized
gains (539) (436) (103) (335,671) (926) (334,745) --- --- ---
Tax return of capital --- --- --- --- --- --- --- --- ---
Net decrease in net assets
resulting from dividends
and distributions (2,014) (1,549) (465) (3,394,178) (9,851) (3,384,327) (268,210) (133,219) (134,991)
====================================================================================================================================
CAPITAL TRANSACTIONS:
Issued 641,428 563,486 77,942 983,507 11,333 972,174 376,081 155,854 220,227
Reinvested 2,014 1,549 465 3,352,428 9,851 3,342,577 260,528 128,843 131,685
Redeemed (322,881) (322,881) --- (2,877,993) (136,573) (2,741,420) (1,323,208) (543,220) (779,988)
Net increase (decrease) in net
assets resulting from capital
share transactions 320,561 242,154 78,407 1,457,942 (115,389) 1,573,331 (686,599) (258,523) (428,076)
TOTAL INCREASE (DECREASE)
IN NET ASSETS 324,945 245,427 79,518 457,313 (100,650) 557,963 (323,219) (91,459) (231,760)
====================================================================================================================================
NET ASSETS - Beginning of
period --- --- --- 14,079,450 136,730 13,942,720 2,891,785 1,376,779 1,515,006
NET ASSETS - End of period $324,945 $245,427 $79,518 $14,536,763 $36,080 $14,500,683 $2,568,566 $1,285,320 $1,283,246
====================================================================================================================================
SHARE TRANSACTIONS:
Issued 50,902 44,658 6,244 64,263 786 63,477 24,093 9,531 14,562
Reinvested 159 122 37 271,118 864 270,254 15,263 7,494 7,769
Redeemed (25,410) (25,410) --- (190,148) (9,279) (180,869) (83,469) (34,239) (49,230)
Change in shares 25,651 19,370 6,281 145,233 (7,629) 152,862 (44,113) (17,214) (26,899)
====================================================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1997
INTERNATIONAL
EQUITY
FUND *
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income (loss) ($15,575)
Net realized gains (losses) from investments
and foreign currency transactions (163,883)
Net change in unrealized appreciation
(depreciation) of investments (114,004)
Net increase (decrease) in net assets
resulting from operations (293,462)
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ---
In excess of net investment income ---
From net realized gains ---
In excess of net realized gains ---
Tax return of capital ---
Net decrease in net assets resulting
from dividends and distributions ---
================================================================================
CAPITAL TRANSACTIONS:
Issued 12,536,720
Reinvested ---
Redeemed (53,190)
Net increase (decrease) in net assets
resulting from capital share transactions 12,483,530
TOTAL INCREASE (DECREASE) IN NET ASSETS 12,190,068
================================================================================
NET ASSETS - Beginning of period ---
NET ASSETS - End of period $12,190,068
================================================================================
SHARE TRANSACTIONS:
Issued 1,004,830
Reinvested ---
Redeemed (4,358)
Change in Shares 1,000,472
* For the period from commencement of operations, August 1, 1997 and September
2, 1997 for the Core Equity Fund and the Internationsl Equity Fund,
respectively, through December 31, 1997.
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
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 $102,837 $1,449 $101,388 $55,104 $24,065 $31,039
Net realized gains (losses) from investment
and futures contract transactions 350,025 5,070 344,955 139,002 57,262 81,740
Net change in unrealized appreciation
of investments 175,349 566 174,783 137,909 73,100 64,809
Net increase in net assets
resulting from operations 628,211 7,085 621,126 332,015 154,427 177,588
==========================================================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (101,477) (1,449) (100,028) (55,104) (24,065) (31,039)
From net realized gains (318,479) (5,070) (313,409) (138,614) (57,068) (81,546)
Net decrease in net assets resulting
from dividends and distributions (419,956) (6,519) (413,437) (193,718) (81,133) (112,585)
==========================================================================================================================
CAPITAL TRANSACTIONS:
Issued 3,210,419 129,635 3,080,784 2,936,429 982,609 1,953,820
Reinvested 401,724 6,534 395,190 184,771 73,097 111,674
Redeemed (1,264,628) (5) (1,264,623) (1,790,376) (392,983) (1,397,393)
Net increase (decrease) in net assets
resulting from capital share transactions 2,347,515 136,164 2,211,351 1,330,824 662,723 668,101
TOTAL INCREASE (DECREASE)
IN NET ASSETS 2,555,770 136,730 2,419,040 1,469,121 736,017 733,104
==========================================================================================================================
NET ASSETS - Beginning of period 11,523,680 --- 11,523,680 1,422,664 640,762 781,902
NET ASSETS - End of period $14,079,450 $136,730 $13,942,720 $2,891,785 $1,376,779 $1,515,006
==========================================================================================================================
SHARE TRANSACTIONS:
Issued 234,121 10,368 223,753 203,707 68,268 135,439
Reinvested 29,750 520 29,230 12,452 4,899 7,553
Redeemed (91,027) --- (91,027) (123,009) (26,877) (96,132)
Change in shares 172,844 10,888 161,956 93,150 46,290 46,860
==========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 1997
TACTICAL ASSET INTERNATIONAL
CORE EQUITY FUND * ALLOCATION FUND UTILITY GROWTH FUND EQUITY FUND
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A
August 1, 1997* September 2, 1997*
to to
December 31, 1997 December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.50 $12.50 $12.56 $13.52 $15.09 $14.91 $12.50
Income from Investment Operations:
Net investment income 0.01 (0.01) 0.40 0.14 0.22 0.19 (0.02)
Net gains (losses) from investments 0.24 0.24 1.78 2.26 4.03 3.99 (0.30)
Total from investment operations 0.25 0.23 2.18 2.40 4.25 4.18 (0.32)
Less Dividends and Distributions:
From net investment income (0.01) --- (0.40) (0.14) (0.22) (0.19) ---
In excess of net investment income --- --- --- --- --- --- ---
From net realized gains (0.05) (0.05) (2.93) (3.17) (1.75) (1.73) ---
In excess of net realized gains (0.02) (0.02) (0.34) (0.36) --- --- ---
Tax return of capital --- --- --- --- --- --- ---
Total distributions (0.08) (0.07) (3.67) (3.67) (1.97) (1.92) ---
Net Asset Value, End of Period $12.67 $12.66 $11.07 $12.25 $17.37 $17.17 $12.18
====================================================================================================================================
Total Return 2.00%(1) 1.88%(1) 17.29% 17.71% 28.41% 28.25% (2.56%)(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $245 $80 $36 $14,501 $1,285 $1,283 $12,190
Ratio of expenses to
average net assets 2.00%(2) 2.25%(2) 2.00% 2.10% 2.00% 2.25% 2.00%(2
Ratio of net investment income to
average net assets 0.10%(2) (0.13%)(2) 0.99% 0.86% 1.36% 1.21% (0.43%)(2)
Ratio of expenses to average net
assets before waiver of fees 9.50%(2) 16.67%(2) 6.16% 2.50% 4.03% 4.51% 2.68%(2
Ratio of net investment income to average
net assets before waiver of fees (7.40%)(2) (14.55%)(2) (3.17%) 0.46% (0.67%) (1.05%) (1.11%)(2)
Portfolio turnover 129.79%(3) 129.79%(3) 395.42%(3) 395.42%(3) 41.22%(3) 41.22%(3) 12.71%
</TABLE>
FINANCIAL HIGHLIGHTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
June 1, 1995* July 11, 1995* to
1996 to Dec. 31, 1995 1996 December 31, 1995
CLASS A** CLASS C CLASS C CLASS A CLASS C CLASS A CLASS C
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.50 $13.26 $12.50 $14.26 $14.27 $12.50 $12.50
Income from Investment Operations
Net investment income 0.14 0.10 (0.02) 0.29 0.26 0.12 0.10
Net gains or losses from securities 0.55 0.57 1.84 1.48 1.49 1.76 1.77
Total from investment operations 0.69 0.67 1.82 1.77 1.75 1.88 1.87
Less Distributions
Dividends from net investment income (0.14) (0.10) --- (0.29) (0.26) (0.12) (0.10)
Distributions (from capital gains) (0.49) (0.31) (1.06) (0.65) (0.85) --- ---
Total distributions (0.63) (0.41) (1.06) (0.94) (1.11) (0.12) (0.10)
Net Asset Value, End of Period $12.56 $13.52 $13.26 $15.09 $14.91 $14.26 $14.27
==================================================================================================================================
Total Return 5.51%(1) 5.07% 14.57%(1) 12.61% 12.45% 15.11%(1) 15.07%(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $137 $13,943 $11,524 $1,377 $1,515 $641 $782
Ratio of expenses to average net
assets 1.73%(2) 2.00% 1.97%(2) 1.75% 2.00% 1.75%(2) 2.00%(2)
Ratio of net investment income to
average net 2.60%(2) 0.75% (0.29%)(2) 2.03% 1.85% 2.17%(2) 1.72%(2)
Ratio of expenses to average net
assets before waiver of fees 5.23%(2) 2.40% 2.80%(2) 4.37% 4.65% 22.70%(2) 13.37%(2)
Ratio of net investment income to
average net before waiver of fees (0.90%)(2) 0.35% (1.12%)(2) (0.59%) (0.80%) (18.78%)(2) (9.55%)(2)
Portfolio turnover 297.41%(3) 297.41%(3) 186.13%(3) 50.79%(3) 50.79%(3) 5.06%(3) 5.06%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Date of commencement of operations.
**August 1, 1996 (date of commencement of operations) to December 31, 1996.
(1)Not annualized.
(2)Annualized.
(3)Represents turnover rate of corresponding portfolio.
(4)Represents the total dollar amount of commissions paid on investment
transactions divided by the total number of shares purchased and sold for
which commissions were charged.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. ORGANIZATION
The Flex-Partners Trust (the "Trust") was organized in 1992 and is registered
under the Investment Company Act of 1940, as amended (the "Act"), as a
diversified, open-end management investment company. The Trust offers five
series, and it is presently comprised of five separate funds as follows: Core
Equity Fund, Tactical Asset Allocation Fund (formerly TAA Fund), Utility Growth
Fund (formerly BTB Fund), International Equity Fund (each a "Fund" and
collectively the "Funds") and Institutional Fund. Core Equity Fund and
International Equity Fund commenced operations August 1, 1997 and September 2,
1997, respectively. Each Fund, except International Equity Fund, invests all of
its investable assets in a corresponding open-end management investment company
(each a "Portfolio" and collectively the "Portfolios") having the same
investment objective as the Fund. Each Fund, each Portfolio into which the Fund
invests and the percentage of each Portfolio owned by the respective Fund is as
follows:
PERCENTAGE OF PORTFOLIO
OWNED BY FUND AS OF
FUND PORTFOLIO DECEMBER 31, 1997
Core Equity Fund Growth Stock Portfolio 1%
Tactical Asset Allocation Fund Mutual Fund Portfolio 10%
Utility Growth Fund Utilities Stock Portfolio 24%
The investment objective of the International Equity Fund is to seek long-term
growth from investing primarily in equity securities of foreign issuers.
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. The
financial statements of the Institutional Fund are are separately reported.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Valuation of Investments
Each Fund, except International Equity Fund, values its investment in the
corresponding Portfolio at fair value. Valuation of securities held by each
Portfolio is further described at Note 2 of the Portfolios' Notes to Financial
Statements which are included elsewhere in this report.
Securities, including closed-end mutual funds, owned by the International Equity
Fund are valued at 3:00 p.m. eastern time based on the last sales price, or,
lacking any sales, at the closing bid prices.
Foreign Currency Translation
Accounting records of the Funds are maintained in U.S. dollars. The value of
securities, other assets and liabilities of the International Equity Fund
denominated in foreign currency are translated into U.S. dollars at the current
exchange rate. Purchases and sales of securities, income receipts and expense
payments are translated into U.S. dollars at the exchange rate on the dates of
such transactions. The Funds do not isolate that portion of the results of
operations resulting from changes in foreign exchange rates from those resulting
from changes in market prices of securities held.
Forward Currency Contracts
The International Equity Fund may enter into forward foreign currency exchange
contracts ("forwards") for purposes of hedging against either specific
transactions or portfolio positions. Forwards are agreements between two parties
to exchange currencies at a set price on a future date. The market value of
forwards fluctuates with changes in currency exchange rates. The forward is
marked-to-market daily, and the change in market value is recorded by the Fund
as unrealized appreciation or depreciation. When the forward is offset by entry
into a closing transaction or extinguished by delivery of the currency, the Fund
records a realized gain or loss equal to the fluctuation in value during the
period the forward was open. Risks may arise upon entering forwards from the
potential inability of counterparties to meet the terms of the forwards or from
unanticipated fluctuations in the value of the foreign currency relative to the
U.S. dollar.
<PAGE>
Income Taxes
It is each Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income and net capital gains
to its shareholders. Therefore, no Federal income tax provision is required.
Distributions to Shareholders
Dividends to shareholders are recorded on the ex-dividend date. Core Equity Fund
and Tactical Asset Allocation Fund declare dividends from net investment income
on a quarterly basis. Utility Growth Fund declares dividends from net investment
income on a monthly basis. International Equity Fund declares dividends from net
investment income on an annual basis. Each Fund distributes net capital gains,
if any, on an annual basis.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
deferrals of certain losses, expiring capital loss carryforwards, differing
treatment of unrealized gains and losses of futures contracts held by the Fund's
corresponding Portfolio, and differing treatment of gains and losses realized in
transactions denominated in foreign currency. Permanent book and tax basis
differences have been reclassified among the components of net assets.
Organizational Costs
The costs related to the organization of each of the four Funds have been
deferred and are being amortized by each Fund on a straight-line basis over a
five-year period.
Expenses
Expenses incurred by the Trust that do not specifically relate to an individual
Fund of the Trust are allocated to the Funds based on each Fund's relative net
assets or other appropriate basis. Expenses of each Fund, other than expenses
incurred pursuant to the Class A and Class C distribution and shareholder
services plans, are allocated to the separate classes based on their relative
net assets or other appropriate basis. The Funds record daily their
proportionate share of the corresponding Portfolio's income, expenses and
realized and unrealized gains and losses.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), under separate agreements provides each Portfolio with investment
management, research, statistical and advisory services. Under separate
Investment Subadvisory Agreements with RMA, Sector Capital Management, Inc.,
Miller/Howard Investments, Inc., and Commercial Union Investment Management, LTD
serve as subadvisor of the Growth Stock Portfolio, the Utilities Stock
Portfolio, and the International Equity Fund, respectively. Sub-subadvisers,
selected by Sector Capital Management, Inc., subject to the review and approval
of the Trustees of the Growth Stock Portfolio, are responsible for the selection
of individual portfolio securities for the assets of the Portfolio assigned to
them by Sector Capital Management, Inc.
For such services, the International Equity Fund pays RMA monthly fees at the
annual rate of 1.00% of the average daily net asset value of the Fund.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for each
Fund. Subject to a $4,000 annual minimum fee, each Fund pays MFSCo an annual fee
equal to the greater of $15 per active shareholder account or 0.10% of the
Fund's average daily net assets.
MFSCo provides the Trust with certain administrative services. In compensation
for such services, each Fund pays MFSCo an annual fee equal to 0.05% of each
Fund's average daily net assets. Prior to January 31, 1997, such fees were
payable at an annual rate of 0.03% of average daily net assets.
RMA has voluntarily agreed to reimburse the Funds for the amount by which annual
expenses of each Fund including expenses allocated from its respective Portfolio
(excluding interest, taxes, brokerage fees, and extraordinary expenses) exceed
certain limitations. Such reimbursement, which is subject to change, is limited
to the total of fees charged the Fund by RMA . The limitations currently in
place are as follows:
LIMITATION AS A PERCENTAGE
FUND OF AVERAGE DAILY NET ASSETS
Core Equity Fund -- Class A 2.00%
Core Equity Fund -- Class C 2.25%
Tacticall Asset Allocation -- Class A 2.00%
Tactical Asset Allocation - Class C 2.10%
Utility Growth Fund -- Class A 2.00%
Utility Growth Fund -- Class C 2.25%
International Equity Fund -- Class A 2.00%
<PAGE>
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, each Fund has adopted two Distribution Plans
(the "Plans"). Under the provisions of the Plans, each Fund pays Adviser Dealer
Services (the "Distributor") an annual fee, at a maximum rate of 0.25% and 0.75%
of average daily net assets of Class A shares and Class C shares, respectively,
to aid in the distribution of Fund shares. Additionally, each Fund has adopted
two Service Plans with the Distributor. Under the provisions of the Service
Plans, each Fund pays the Distributor an annual fee, at a maximum rate of 0.25%
of average daily net assets of Class A shares and Class C shares.
4. SECURITIES TRANSACTIONS
For the period from its commencement of operations, September 2, 1997, through
December 31, 1997, the cost of purchases and proceeds from sales or maturities
of long-term investments for the International Equity Fund were $12,796,008 and
$1,292,592, respectively. Aggregate cost basis of investments for federal income
tax purposes and for financial reporting purposes was substantially the same.
5. FEDERAL INCOME TAX INFORMATION
At December 31, 1997, International Equity Fund had unused capital loss
carryforwards available to offset future capital gains, if any, for Federal
income tax purposes. The following table sets forth the amount of such losses
and the years such losses expire.
AMOUNT OF CAPITAL
FUND LOSS CARRYFORWARD YEAR EXPIRES
International Equity Fund $28,153 2005
6. CAPITAL GAIN DISTRIBUTIONS (UNAUDITED)
Capital gain distributions from long-term capital gains for the Funds for the
year ended December 31, 1997 were as follows:
FUND 28% RATE GAIN 20% RATE GAIN
AMOUNT % OF TOTAL AMOUNT % OF TOTAL
Core Equity Fund $ -- 0.0% $1,232 100.0%
Utility Growth Fund 27,793 18.3% 124,022 81.7%
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Flex-Partners Trust
We have audited the accompanying statements of assets and liabilities of The
Flex-Partners Trust (including, respectively, the Core Equity Fund, Tactical
Asset Allocation Fund (formerly TAA Fund), Utility Growth Fund (formerly BTB
Fund) and International Equity Fund), including the portfolio of investments for
the International Equity Fund, as of December 31, 1997, and the related
statements of operations, statements of changes in net assets and the financial
highlights for each of the periods indicated herein. These financial statements
and the financial highlights are the responsibility of the Flex-Partners Trust
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. With respect to the International Equity Fund, our procedures
included verification of securities owned as of December 31, 1997, by
confirmation with the custodian and brokers and other appropriate audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the aforementioned funds comprising The Flex-Partners Trust at December 31,
1997, the results of their operations, the changes in their net assets and the
financial highlights for each of the periods indicated herein, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 12, 1998
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
Assets:
Investments at market value* $123,381,910 $33,366,440 $10,363,759
Repurchase agreements, at cost* 12,968,000 463,000 304,000
Cash 947 507 347
Options purchased (cost $27,378,320) 17,600,000 --- ---
Receivable for net variation margin
on futures contracts 12,800 --- ---
Interest receivable 264,050 88 57
Dividends receivable 24,817 52,213 15,135
Prepaid/Other assets 13,924 9,407 27
Unamortized organization costs --- --- 8,288
Total Assets 154,266,448 33,891,655 10,691,613
================================================================================
Liabilites:
Payable for securities purchased --- 433,199 ---
Payable for net variation margin
on futures contracts --- 350 ---
Options written (premiums received
$19,383,673) 9,604,000 --- ---
Payable to investment adviser 97,671 30,236 8,829
Accrued audit fees 6,663 6,760 6,793
Accrued custodian fees 3,826 3,520 588
Accrued trustee fees 14,032 3,883 2,374
Accrued fund accounting fees 3,931 2,719 849
Other accrued liabilities 3,632 17,025 2,462
Total Liabilities 9,733,755 497,692 21,895
================================================================================
Net Assets 144,532,693 33,393,963 10,669,718
================================================================================
Net Assets:
================================================================================
Capital 145,227,170 27,521,228 8,402,733
Net unrealized appreciation
(depreciation) of investments (694,477) 5,872,735 2,266,985
Net Assets $144,532,693 $33,393,963 $10,669,718
================================================================================
*Securities at cost 137,058,540 27,956,355 8,400,774
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
NET INVESTMENT INCOME
================================================================================
Interest $3,091,061 $205,328 $20,737
Dividends 1,145,496 485,616 279,789
Total Investment Income 4,236,557 690,944 300,526
================================================================================
Expenses:
================================================================================
Investment advisory fees 1,130,843 317,772 88,486
Audit fees 9,215 9,421 9,223
Custodian fees 15,690 35,996 4,425
Trustees fees and expenses 42,679 9,347 7,454
Legal fees 3,331 11,491 3,053
Amortization of organization cost 4,924 2,545 8,972
Accounting fees 50,886 34,029 13,098
Insurance 2,242 467 80
Other expenses 10,982 5,233 11,131
Total Expenses 1,270,792 426,301 145,922
================================================================================
Investment advisory fees waived --- --- ---
Directed brokerage payments received --- --- (3,934)
Total Net Expenses 1,270,792 426,301 141,988
================================================================================
NET INVESTMENT INCOME 2,965,765 264,643 158,538
================================================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
================================================================================
Net realized gain from futures contracts 7,384,735 851,686 ---
Net realized gain (loss) from
investments 15,349,402 4,450,516 769,055
Net change in unrealized appreciation
(depreciation) of investments (1,244,081) 2,709,218 1,487,258
NET GAIN (LOSS) ON INVESTMENTS 21,490,056 8,011,420 2,256,313
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $24,455,821 $8,276,063 $2,414,851
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income $2,965,765 $264,643 $158,538
Net realized gain (loss) from
investments and futures contracts 22,734,137 5,302,202 769,055
Net change in unrealized appreciation
(depreciation) of investments (1,244,081) 2,709,218 1,487,258
Net increase in net assets
resulting from operations 24,455,821 8,276,063 2,414,851
TRANSACTIONS OF INVESTORS' BENEFICIAL
INTERESTS:
================================================================================
Contributions 27,375,051 40,513,401 2,517,724
Withdrawals (42,837,747) (39,809,183) (2,227,211)
Net increase (decrease) in net assets
resulting from transactions of
investors' beneficial interests (15,462,696) 704,218 290,513
TOTAL INCREASE (DECREASE) IN NET ASSETS 8,993,125 8,980,281 2,705,364
================================================================================
NET ASSETS - Beginning of period 135,539,568 24,413,682 7,964,354
NET ASSETS - End of period $144,532,693 $33,393,963 $10,669,718
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income $2,510,343 $601,083 $146,376
Net realized gain (loss) from
investments and futures contracts 10,575,124 (1,313,610) 348,392
Net change in unrealized appreciation
(depreciation) of investments (5,130,740) 3,055,094 357,308
Net increase in net assets
resulting from operations 7,954,727 2,342,567 852,076
TRANSACTIONS OF INVESTORS' BENEFICIAL
INTERESTS:
================================================================================
Contributions 32,575,692 4,020,512 5,138,546
Withdrawals (27,099,980) (6,486,427) (2,317,138)
Net increase (decrease) in net assets
resulting from transactions of
investors' beneficial interests 5,475,712 (2,465,915) 2,821,408
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,430,439 (123,348) 3,673,484
================================================================================
NET ASSETS - Beginning of period 122,109,129 24,537,030 4,290,870
NET ASSETS - End of period $135,539,568 $24,413,682 $7,964,354
See accompanying notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
Ratios/Supplemental Data
<TABLE>
MUTUAL FUND PORTFOLIO
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $144,533 $135,540 $122,109 $83,185 $81,605
Ratio of Expenses to Average Net Assets* 0.89% 0.87% 0.95% 1.01% 1.03%
Ratio of Net Investment Income to
Average Net Assets 2.08% 1.86% 1.26% 2.76% 0.09%
Portfolio Turnover Rate 395.42% 297.41% 186.13% 168.17% 279.56%
Average Commission Rate paid(2) $0.0800 --- --- n/a n/a
</TABLE>
<TABLE>
GROWTH STOCK PORTFOLIO
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $33,394 $24,414 $24,537 $22,169 $26,172
Ratio of Expenses to Average Net Assets 1.34% 1.24% 1.25% 1.23% 1.23%
Ratio of Net Investment Income to
Average Net Assets 0.83% 2.33% 3.78% 2.35% 0.99%
Portfolio Turnover Rate 129.79% 81.66% 337.57% 102.76% 99.54%
Average Commission Rate paid(2) $0.0623 $0.0910 $0.0806 N/A N/A
</TABLE>
<TABLE>
UTILITIES STOCK PORTFOLIO
<CAPTION>
Period
Year Ended December 31, June 21, 1995* to
1997 1996 December 31, 1995
<S> <C> <C> <C>
Net Assets, End of Period ($000) $10,670 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.60% 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 1.79% 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.65% 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 1.74% 2.19% 2.01%(1)
Portfolio Turnover Rate 41.22% 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. Disclosure is not required for
periods ended before December 31, 1995.
* Date of commencement of operations
</FN>
</TABLE>
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. ORGANIZATION
Each Fund of The Flex-Partners Trust (the "Trust") invests all of its investable
assets in a corresponding open-end management investment company (each a
"Portfolio" and collectively the "Portfolios") having the same investment
objective as the Fund. Each Portfolio is registered under the Investment Company
Act of 1940, as amended (the "Act"), as a no-load, open-end management
investment company which was organized as a trust under the laws of the State of
New York. Each Declaration of Trust permits the Trustees, who are the same for
each Portfolio, to issue beneficial interests in each Portfolio.
The investment objective of each Portfolio is as follows:
The Growth Stock Portfolio seeks capital growth by investing in a diversified
portfolio of domestic common stocks with greater than average growth
characteristics selected primarily from the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500").
The Mutual Fund Portfolio seeks growth of capital through investment in the
shares of other mutual funds.
The Utilities Stock Portfolio seeks a high level of current income and growth of
income by investing primarily in equity securities of domestic and foreign
public utility companies; however, it will not invest in electric utilities
whose generation of power is derived from nuclear reactors. The Portfolio also
seeks capital appreciation, but only when consistent with its primary investment
objective.
The financial statements of the Funds are included elsewhere in this report.
2. SIGNIFICANT ACCOUNTING POLICES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Securities which are traded on stock exchanges are valued at the last sales
price as of the close of business of the New York Stock Exchange on the day of
valuation or, lacking any sales, at the closing bid prices. Securities traded
over-the-counter are valued at the most recent bid price or yield equivalent as
obtained from one or more dealers that make markets in such securities. Mutual
funds are valued at the daily redemption value as reported by the underlying
fund. The Portfolios obtain prices from independent pricing services which use
valuation techniques approved by the Board of Trustees.
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 to maturity, the
difference between the valuation existing on the sixty-first day before maturity
and maturity value is amortized on a straight-line basis to maturity. Securities
maturing within sixty days from their date of acquisition are valued at
amortized cost.
Repurchase Agreements
Each Portfolio may engage in repurchase agreement transactions whereby the
Portfolio takes possession of an underlying debt instrument subject to an
obligation of the seller to repurchase the instrument from the Portfolio and an
obligation of the Portfolio to resell the instrument at an agreed upon price and
term. At all times, the Portfolio maintains the value of collateral, including
accrued interest, at least 100% of the amount of the repurchase agreement, plus
accrued interest. If the seller defaults or the fair value of the collateral
declines, realization of the collateral by the Portfolios may be delayed or
limited.
Futures & Options
Each Portfolio may engage in transactions in financial futures contracts and
options contracts in order to manage the risk of unanticipated changes in market
values of securities held in the portfolio, or which it intends to purchase. The
expectation is that any gain or loss on such transactions will be substantially
offset by any gain or loss on the securities in the underlying portfolio or on
those which are being considered for purchase. To the extent that the Portfolio
enters into futures contracts on an index or group of securities the Portfolio
exposes itself to an indeterminate liability and will be required to pay or
receive a sum of money measured by the change in the market value of the index.
Upon entering into a futures contract the Portfolio is required to deposit an
initial margin, which is either cash or securities in an amount equal to a
certain percentage of the contract value. Subsequently, the variation margin,
which is equal to changes in the daily settlement price or last sale price on
the exchanges where they trade, is received or paid. The Portfolios record
realized gains or losses for the daily variation margin when they are recorded
as a gains or losses from futures contracts.
Call and put option contracts involve the payment of a premium for the right to
purchase or sell an individual security or index aggregate at a specified price
until the expiration of the contract. Such transactions expose the Portfolio to
the loss of the premium paid if the Portfolio does not sell or exercise the
contract prior to the expiration date. In the case of a call option, sufficient
cash or money market instruments will be segregated to complete the purchase.
<PAGE>
Options are valued on the basis of the daily settlement price or last sale on
the exchanges where they trade and the changes in value are recorded as an
unrealized appreciation or depreciation until closed, exercised or expired.
The Portfolios may write covered call or put options for which premiums received
are recorded as liabilities and are subsequently adjusted to current market
value of the options written. When written options are closed or exercised,
premiums received are offset against the proceeds paid, and the Portfolio
records realized gains or losses for the difference. When written options
expire, the liability is eliminated, and the Portfolio records realized gains
for the entire amount of premiums received.
During the year ended December 31, 1997 the Portfolios had the following
activity in futures contracts and written option contracts:
LONG FUTURES CONTRACTS
NUMBER NOTIONAL
OF CONTRACTS AMOUNT
================================================================================
Mutual Fund Portfolio:
Outstanding, beginning of year 260 $92,637,850
Contracts opened 1,173 383,416,903
Contracts closed (1,323) (450,989,853)
Outstanding, end of year 110 25,064,900
================================================================================
Growth Stock Portfolio:
Outstanding, beginning of year 21 $7,817,250
Contracts opened 139 47,173,843
Contracts closed (153) (53,280,056)
Outstanding, end of year 7 1,711,037
================================================================================
COVERED PUT OPTIONS COVERED CALL OPTIONS
NUMBER OF NUMBER OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
================================================================================
Mutual Fund Portfolio:
Outstanding, beginning of year --- --- --- ---
Options written 4,000 $7,391,887 4,000 $11,991,787
Outstanding, end of year 4,000 7,391,887 4,000 11,991,787
================================================================================
Growth Stock Portfolio:
Outstanding, beginning of year --- --- --- ---
Options written --- --- 140 $34,315
Options expired --- --- (140) (34,315)
Outstanding, end of year --- --- --- ---
================================================================================
Income Taxes
It is each Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no Federal income tax provision is
required.
Organizational Costs
The costs related to the organization of each Portfolio have been deferred and
are being amortized by the Portfolio on a straight-line basis over a five-year
period. Such costs for Growth Stock Portfolio and Mutual Fund Portfolio have
been fully amortized.
<PAGE>
Securities Transactions
The Portfolios record security transactions on the trade date. Gains and losses
realized from the sale of securities are determined on the specific
identification basis. Dividend income is recognized on the ex-dividend date, and
interest income (including amortization of premium and accretion of discount) is
recognized as earned.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), under separate agreements provides each Portfolio with investment
management, research, statistical and advisory services. Under separate
Investment Subadvisory Agreements with RMA, Sector Capital Management, Inc. and
Miller/Howard Investments, Inc. serve as subadviser of the Growth Stock
Portfolio and the Utilities Stock Portfolio, respectively. Sub-subadvisers,
selected by Sector Capital Management, Inc., subject to the review and approval
of the Trustees of the Growth Stock Portfolio, are responsible for the selection
of individual portfolio securities for the assets of the Portfolio assigned to
them by Sector Capital Management, Inc.
For such services the Portfolios pay monthly fees based upon the average daily
value of each Portfolio's net assets at the following annual rate: 1.00% of
average daily net assets up to $50 million, 0.75% of average daily net assets
exceeding $50 million up to $100 million and 0.60% of average daily net assets
exceeding $100 million.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for each Portfolio. In compensation for such services,
each Portfolio pays MFSCo an annual fee equal to the greater of: (a.) 0.15% of
the first $10 million of average daily net assets, 0.10% of the next $20 million
of average daily net assets, 0.02% of the next $50 million of average daily net
assets, and 0.01% in excess of $80 million of average daily net assets, or (b.)
$7,500.
Certain officers and trustees of the Portfolios are also officers or directors
of MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
For the year ended December 31, 1997, the cost of purchases and proceeds from
sales or maturities of long-term investments for the Portfolios were as follows:
PORTFOLIO PURCHASES SALES
Growth Stock Portfolio $44,982,486 $35,676,667
Mutual Fund Portfolio 480,151,975 442,533,548
Utilities Stock Portfolio 4,565,204 3,490,778
As of December 31, 1997, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax purposes was as follows:
NET UNREALIZED
COST BASIS UNREALIZED UNREALIZED APPRECIATION
PORTFOLIO OF INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION)
Growth Stock Portfolio $28,054,467 $6,346,447 ($571,824) $5,774,623
Mutual Fund Portfolio 137,376,306 10,599,957 (11,612,200) (1,012,243)
Utilities Stock Portfolio 8,400,774 2,443,238 (176,253) 2,266,985
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of the
Growth Stock Portfolio, Mutual Fund Portfolio and
Utilities Stock Portfolio:
We have audited the accompanying statements of assets and liabilities of the
Growth Stock Portfolio, Mutual Fund Portfolio and Utilities Stock Portfolio
(Portfolios), including the portfolios of investments, as of December 31, 1997,
and the related statements of operations, statements of changes in net assets
and the financial highlights for each of the periods indicated herein. These
financial statements and the financial highlights are the responsibility of the
Portfolios' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of securities owned as of
December 31, 1997, by confirmation with the custodian and brokers and other
appropriate audit procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Growth Stock Portfolio, Mutual Fund Portfolio and Utilities Stock Portfolio at
December 31, 1997, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated herein, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 12, 1998
<PAGE>
THE FLEX-PARTNERS
P.O. Box 7177
Dublin, Ohio 43017