THE INSTITUTIONAL FUND
Annual Report 1997
December 31, 1997
Investment Adviser - R. Meeder & Associates
<PAGE>
THE INSTITUTIONAL FUND
The following information is presented as a pie chart:
PORTFOLIO EXPOSURE (12/31/97)
Commercial Paper 45.1%
Corporate Obligations 35.5%
Repurchase Agreements 12.7%
U.S. Government Obligations 4.1%
Certificates of Deposit 2.6%
PERIOD AND AVERAGE ANNUAL TOTAL RETURNS
as of 12/31/97
1 Year 5.53%
3 Years 5.66%
Life of Fund 5.54%
The Institutional Fund continued to provide a total return that exceeded
the total return available from the average institutional fund for 1997,
according to IBC Financial Data, Inc., an independent money market fund monitor.
For the 12 months ended December 31, 1997, The Institutional Fund provided
a total return of 5.53%, compared to the return from the average institutional
fund of 5.40%, according to IBC Financial Data, Inc.
As of December 31, 1997, The Institutional Fund's 7-day simple yield was
5.53% and the Fund's 7-day compound yield was 5.67%.
MARKET PERSPECTIVE
Following a quarter-point boost in the benchmark Federal Funds rate by the
Federal Reserve Board on March 25, short-term interest rates trended lower for
much of 1997. While this may not be good news for money market investors who
would enjoy seeing higher interest rates, it is good news for shareholders in
The Institutional Fund because the Fund was positioned for a stable to falling
interest rate environment.
We maintained an increasing and relatively long average maturity following
the Fed increase. In mid-November, we began to slightly reduce our maturity
structure in anticipation of temporary year-end pressures which afforded the
opportunity for sharply higher interest rates. The opportunity did present
itself, and we were able to benefit from it. The trend toward lower interest
rates continued after the year-end pressures were digested.
Late in the year, the U.S. stock market became increasingly volatile and
eventually experienced the largest single-day point-drop in stock market
history. As a result, the market for U. S. government bonds and Treasury bills
enjoyed increased demand as investors sought safe havens from the tumultuous
equity markets.
One aspect of these events that did not receive much attention was the
effect that these events had on other U.S. money markets. Even as T-bill yields
trended lower, the interest rates available on money market instruments backed
by Japanese banks rose dramatically. Late in the year, it was possible to
acquire yields on Japanese bank paper that were as much as 9/10 of one percent
above those available in U.S. instruments.
[PHOTO] Philip A. Voelker, Portfolio Manager
Unlike many of our competitors, The Institutional Fund has no exposure to
Japanese banks. In fact we have had little or no exposure to this market since
mid-1990. Today's market environment is the perfect example of why we have taken
this ultra- conservative approach. While we fully expect that the Japanese will
work through their problems with little disruption to the money markets, we take
comfort in the fact that we have no exposure should the situation grow
significantly worse.
The total return data included in this report assumes reinvestment of all
dividends and capital gains distributions. All performance data represents past
performance and does not necessarily indicate future performance results. The
Investment Adviser waived a portion of its management fee to reduce the
operating expenses of The Institutional Fund for the periods shown. The
Institutional Fund will seek to maintain a constant net asset value of $1.00 per
share, although there is no guarantee it will be able to do so. Investments in
The Institutional Fund are neither insured nor guaranteed by the U.S.
Government. For more complete information, please call or write for a free
Institutional Fund prospectus. Read the prospectus carefully before investing.
<PAGE>
MONEY MARKET PORTFOLIO
Portfolio of Investments as of December 31, 1997
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 2.6%
BB&T Financial Corp. 5.70% 02/11/98 $15,000,000 $15,000,000
================================================================================
TOTAL CERTIFICATES OF DEPOSIT
(Cost $15,000,000 ) 15,000,000
- --------------------------------------------------------------------------------
COMMERCIAL PAPER - 45.1%
American Trading & Products** 5.75% 03/03/98 5,000,000 4,951,285
American Trading & Products** 5.75% 03/10/98 $9,000,000 $8,902,250
Bear Stearns Co., Inc.** 5.73% 03/25/98 25,000,000 24,669,729
Coopertime Tractor 5.57% 04/21/98 4,100,000 4,030,220
Duff & Phelps Utilities & Corp.** 5.70% 02/17/98 4,500,000 4,466,513
Duff & Phelps Utilities & Corp.** 5.55% 04/02/98 6,500,000 6,408,810
Duff & Phelps Utilities & Corp.** 5.58% 04/23/98 5,000,000 4,913,200
Duff & Phelps Utilities & Corp.** 5.56% 05/21/98 2,741,000 2,681,733
Duff & Phelps Utilities & Corp.** 5.65% 07/02/98 5,000,000 4,857,181
Engelhard Corp. 5.62% 06/09/98 7,435,000 7,250,451
Engelhard Corp. 5.70% 06/10/98 10,000,000 9,746,667
Ford Motor Credit Co. 5.47% 06/24/98 20,000,000 19,471,234
GE Capital Corp. 5.68% 02/19/98 15,000,000 14,884,033
GE Capital Corp. 5.56% 05/20/98 8,000,000 7,828,258
GTE Funding, Inc. 6.10% 01/20/98 24,822,000 24,742,087
LG&E Capital Corp. 5.60% 02/19/98 20,000,000 19,847,555
LG&E Capital Corp. 5.70% 04/01/98 5,700,000 5,618,775
LOCAP, Inc.** 5.70% 01/29/98 18,700,000 18,617,097
MCI Communications Corp.** 5.80% 04/15/98 14,500,000 14,257,044
Merrill Lynch & Co., Inc. 5.65% 05/27/98 10,000,000 9,770,861
Merrill Lynch & Co., Inc. 5.59% 06/02/98 15,000,000 14,645,967
Monsanto Co. 5.53% 04/27/98 10,000,000 9,821,811
Safeco Corp.** 5.57% 01/07/98 20,000,000 19,981,433
================================================================================
TOTAL COMMERCIAL PAPER
(Cost $262,364,194 ) 262,364,194
- --------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 35.5%
AT&T Corp. 5.63% 04/08/98 3,893,000 3,889,653
Albertsons, Inc. 5.65% 03/26/98 1,000,000 999,554
American General Finance Corp. 8.25% 01/15/98 400,000 400,317
American General Finance Corp. 7.25% 03/01/98 5,295,000 5,306,059
Associates Corp., N.A. 7.30% 03/15/98 200,000 200,476
Associates Corp., N.A. 5.25% 09/01/98 180,000 179,007
Barnett Banks, Inc. 6.25% 07/28/98 1,500,000 1,503,172
Care Life Project 6.05%* 01/02/98 1,275,000 1,275,000
Chrysler Financial Corp. 5.66% 01/16/98 1,875,000 1,874,850
Chrysler Financial Corp. 8.26% 01/26/98 10,000,000 10,014,254
Chubb Capital Corp. 6.00% 02/01/98 663,000 662,983
Clark Grave Vault Co. 6.00%* 01/02/98 3,000,000 3,000,000
Comerica Bank 6.75% 05/12/98 4,000,000 4,013,379
Coughlin Family Properties, Inc. 6.00%* 01/15/98 4,675,000 4,675,000
Danis Construction Co. 6.00%* 01/02/98 1,000,000 1,000,000
Dean Witter Discover & Co. 6.00% 03/01/98 2,000,000 2,000,098
Doren, Inc. 6.05%* 01/02/98 675,000 675,000
E.I. du Pont de Nemours & Co. 8.50% 06/25/98 3,095,000 3,129,566
Espanola/Nambe 6.05%* 01/02/98 2,315,000 2,315,000
First Chicago NBD Corp. 5.70% 01/07/98 5,000,000 4,999,808
First Chicago NBD Corp. 8.50% 06/01/98 180,000 181,767
First Fidelity Bancorp. 8.50% 04/01/98 2,000,000 2,012,401
First Union Corp. 6.75% 01/15/98 6,219,000 6,220,662
Ford Motor Credit Co. 6.25% 02/26/98 938,000 938,472
Ford Motor Credit Co. 9.13% 05/01/98 550,000 555,647
General Motors Acceptance Corp. 6.22%* 04/13/98 10,000,000 10,000,000
General Motors Acceptance Corp. 7.13% 05/11/98 11,100,000 11,149,261
GTE California, Inc. 6.25% 01/15/98 1,500,000 1,500,218
Gannett, Inc. 5.25% 03/01/98 2,525,000 2,521,635
GE Capital Corp. 8.63% 03/12/98 5,203,000 5,228,186
Georgia Power Co. 5.50% 04/01/98 1,000,000 999,112
Goldman Sachs Group, L.P. 6.10% 04/15/98 7,550,000 7,554,539
H.J. Heinz Co. 8.00% 01/05/98 5,130,000 5,130,626
Hancor, Inc. 6.05%* 01/02/98 700,000 700,000
Hertz Corp. 8.30% 02/02/98 200,000 200,393
Huntington Bancshares, Inc. 5.91% 06/23/98 5,000,000 5,001,908
Huntington Bancshares, Inc. 6.15% 10/15/98 2,000,000 2,003,222
IBM Credit Corp. 5.90% 08/10/98 2,050,000 2,050,041
Lehman Brother Holdings Corp. 5.75% 02/15/98 1,250,000 1,249,434
Liberty Mutual Capital Corp. 5.96% 06/01/98 7,000,000 7,002,592
Merrill Lynch & Co., Inc. 6.52% 06/22/98 1,000,000 1,002,838
<PAGE>
AMORTIZED
YIELD MATURITY FACE AMOUNT COST
- --------------------------------------------------------------------------------
Midwest Power System, Inc. 6.25% 02/01/98 1,750,000 1,750,325
Morgan Stanley, Inc. 9.25% 03/01/98 1,750,000 1,758,938
Morgan Stanley, Inc. 9.40% 03/05/98 1,000,000 1,006,101
Mubea, Inc. 6.05%* 01/02/98 4,375,000 4,375,000
Mubea, Inc. 6.05%* 01/02/98 6,000,000 6,000,000
National Rural Utilities 8.50% 02/15/98 125,000 125,345
NationsBank Corp. 6.63% 01/15/98 615,000 615,143
Nordstrom, Inc. 8.88% 02/15/98 1,000,000 1,003,462
Nynex Credit Co. 6.72% 06/15/98 10,000,000 10,034,980
Osco Industries, Inc. 6.05%* 01/02/98 3,000,000 3,000,000
Pepsico, Inc. 6.13% 01/15/98 283,000 283,025
Potomac Electric Power Co. 4.38% 02/15/98 100,000 99,807
Presrite Corp. 6.05%* 01/02/98 2,210,000 2,210,000
Proctor & Gamble Co. 9.50% 02/11/98 4,450,000 4,465,491
R.I. Lampus Co. 6.05%* 01/02/98 2,440,000 2,440,000
RSD Technology 6.05%* 01/02/98 3,500,000 3,500,000
Salomon, Inc. 6.92% 04/14/98 3,550,000 3,559,833
Salomon, Inc. 7.25% 05/01/98 2,035,000 2,043,998
Seariver Maritime, Inc. 5.65%* 02/12/98 6,700,000 6,700,000
Southern California Edison Co. 5.88% 02/01/98 600,000 599,955
Surgery Financing Co. 6.05%* 01/12/98 6,585,000 6,585,000
Toyota Motor Corp. 5.63% 03/17/98 2,407,000 2,405,639
Toyota Motor Credit Corp. 5.13% 01/19/98 2,255,000 2,254,036
Toyota Motor Credit Corp. 5.88% 06/26/98 803,000 802,610
Travelers Group, Inc. 5.75% 04/15/98 1,500,000 1,499,727
Unilever Capital Corp. 8.88% 03/26/98 1,400,000 1,408,965
WalMart Stores, Inc. 7.00% 04/27/98 1,100,000 1,103,000
White Castle Project 6.05%* 01/02/98 9,500,000 9,500,000
Wisconsin Public Service Corp. 5.25% 07/01/98 320,000 319,019
================================================================================
TOTAL CORPORATE OBLIGATIONS
(Cost $206,765,529 ) 206,765,529
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 2.4%
Federal National Mortgage Assoc. 5.73% 04/13/98 500,000 499,519
Federal National Mortgage Assoc. 6.72% 04/27/98 140,000 140,398
Federal Home Loan Bank 6.00% 01/13/98 200,000 199,977
Federal Home Loan Bank 5.85% 10/15/98 2,785,000 2,785,000
Student Loan Marketing Assoc. 5.62%* 01/06/98 5,000,000 5,000,000
Student Loan Marketing Assoc. 5.68%* 01/06/98 4,350,000 4,352,319
Student Loan Marketing Assoc. 5.76% 01/14/98 1,000,000 999,913
Tennessee Valley Authority -
callable 1/20/98 @ 104 7.75% 12/15/22 250,000 260,125
================================================================================
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $14,237,251 ) 14,237,251
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 1.7%
***U.S. Treasury Bill 5.27% 01/08/98 63,100 63,036
U.S. Treasury Note 6.00% 09/30/98 10,000,000 10,019,615
================================================================================
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,082,651 ) 10,082,651
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 12.7%
Merrill Lynch, (Collateralized
by $65,582,000 various Discount
Commercial Papers, 1/7/98-1/30/98,
market value - $65,582,000) 6.80%* 01/02/98 64,413,000 64,413,000
Star Bank, (Collateralized by
$9,615,000 GNMA, 7.00%, 3/20/24,
market value - $9,835,784) 5.50%* 01/02/98 9,635,000 9,635,000
================================================================================
TOTAL REPURCHASE AGREEMENTS
(Cost $74,048,000 ) 74,048,000
- --------------------------------------------------------------------------------
================================================================================
TOTAL INVESTMENTS - 100.0%
(Cost $582,497,625 ) $582,497,625
- --------------------------------------------------------------------------------
* Variable rate security. Interest rate is as of December 31, 1997. Maturity
date reflects the next rate change date.
** Security is restricted as to resale to institutional investors, but has been
deemed liquid in accordance with guidelines approved by the Board of Trustees.
***Pledged as collateral on Letter of Credit.
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
Assets:
Investment in corresponding portfolio at value $417,749,464
Unamortized organization costs 4,739
Other assets 252,299
Total Assets 418,006,502
================================================================================
Liabilites:
Dividends payable 1,937,443
Accrued transfer agent and administrative fees 40,540
Other accrued liabilities 34,179
Total Liabilities 2,012,162
================================================================================
Net Assets 415,994,340
================================================================================
Net Assets:
Capital 415,994,340
Accumulated undistributed net
investment income (loss) ---
Accumulated undistributed net realized
gain (loss) on investments ---
Net Assets $415,994,340
================================================================================
Capital Stock Outstanding (indefinite shares
authorized, $0.100) 415,994,340
================================================================================
Net Asset Value, Offering and Redemption Price Per Share $1.00
================================================================================
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
Net Investment Income from Corresponding Portfolio:
================================================================================
Interest $21,348,707
Expenses (688,245)
Total Net Investment Income from Corresponding Portfolio 20,660,462
================================================================================
Fund Expenses:
================================================================================
Administrative fee 176,082
Transfer agent fees 229,976
Audit fees 5,364
Legal fees 2,635
Printing 3,201
Amortization of organizational costs 3,185
Distribution plan 112,925
Postage 799
Registration and filing fees 35,644
Insurance 1,895
Other expenses 14,602
Total Expenses 586,308
================================================================================
Expenses reimbursed by investment adviser (320,373)
Net Expenses 265,935
NET INVESTMENT INCOME 20,394,527
================================================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $20,394,527
================================================================================
See accompanying notes to financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997 and DECEMBER 31, 1996
1997 1996
INCREASE (DECREASE) IN NET ASSETS:
================================================================================
OPERATIONS:
================================================================================
Net investment income $20,394,527 $10,844,857
Net increase in net assets resulting from
operations 20,394,527 10,844,857
================================================================================
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (20,394,527) (10,844,857)
Net decrease in net assets resulting
from dividends and distributions (20,394,527) (10,844,857)
================================================================================
CAPITAL TRANSACTIONS:
Issued 3,337,084,529 1,024,281,687
Reinvested 3,043,438 4,122,320
Redeemed (3,156,276,005) (909,466,834)
Net increase in net assets resulting from
capital share transactions 183,851,962 118,937,173
TOTAL INCREASE IN NET ASSETS 183,851,962 118,937,173
================================================================================
NET ASSETS - Beginning of period 232,142,378 113,205,205
NET ASSETS - End of period $415,994,340 $232,142,378
================================================================================
SHARE TRANSACTIONS:
Issued 3,337,084,529 1,024,281,687
Reinvested 3,043,438 4,122,320
Redeemed (3,156,276,005) (909,466,834)
Change in shares 183,851,962 118,937,173
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
June 15, 1994*
Year Ended December 31, to
1997 1996 1995 Dec. 31, 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.000 $1.000 $1.000 $1.000
Income from Investment Operations
Net Investment Income 0.054 0.053 0.059 0.026
Total From Investment Operations 0.054 0.053 0.059 0.026
Less Distributions
Dividends (from net investment income) (0.054) (0.053) (0.059) (0.026)
Total Distributions (0.054) (0.053) (0.059) (0.026)
Net Asset Value, End of Period $1.000 $1.000 $1.000 $1.000
Total Return 5.53% 5.43% 6.01% 4.80%(1)
Ratios/Supplementary Data
======================================================================================================
Net Assets, End of Period ($000) $415,994 $232,142 $113,205 $59,494
Ratio of Expenses to Average Net Assets 0.25% 0.25% 0.25% 0.25%(1)
Ratio of Net Investment Income to
Average Net Assets 5.41% 5.30% 5.87% 4.51%(1)
Ratio of Expenses to Average Net Assets,
before waiver of fees(2) 0.47% 0.46% 0.55% 0.46%(1)
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees(2) 5.19% 5.09% 5.57% 4.25%(1)
<FN>
1 Annualized
2 Ratio includes fees waived in corresponding portfolio
* Date of commencement of operations.
</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. The Institutional
Fund (the "Fund") invests all of its investable assets in a corresponding
open-end management investment company (the "Portfolio") having the same
investment objective as the Fund. The Fund, the Portfolio into which the Fund
invests and the percentage of the Portfolio owned by the Fund is as follows:
PERCENTAGE OF PORTFOLIO OWNED
FUND PORTFOLIO BY FUND AS OF DECEMBER 31, 1997
Institutional Fund Money Market Portfolio 71%
The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.
2. SIGNIFICANT ACCOUNTING POLICES
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
The Fund values its investment in the corresponding Portfolio at fair value.
Valuation of securities held by the Portfolio is further described at Note 2 of
the Portfolio's Notes to Financial Statements which are included elsewhere in
this report.
Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
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
The Fund declares dividends from net investment income on a daily basis and pays
such dividends on a monthly basis. The 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. Permanent book and tax
basis differences have been reclassified among the components of net assets.
Organizational Costs
The costs related to the organization of the Fund have been deferred and are
being amortized by the 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. The Fund records daily its proportionate
share of the corresponding portfolio's income and expenses.
3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides the Portfolio with investment management, research,
statistical and advisory services.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for the Fund.
Subject to a $4,000 annual minimum fee the Fund pays MFSCo an annual fee equal
to the greater of $20 per active shareholder account or 0.06% of the Fund's
average daily net assets.
MFSCo provides the Trust with certain administrative services. In compensation
for such services, the Fund pays MFSCo an annual fee equal to 0.05% of the
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 Fund for the amount by which annual
expenses of the Fund including expenses allocated from its respective Portfolio
(excluding interest, taxes, brokerage fees, and extraordinary expenses) exceed
0.25% of average daily net assets of the Fund. Such reimbursement is limited to
the total of fees charged the Fund by RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted a Distribution Plan (the
"Plan"). Under the terms of the Plan, the Fund may incur certain expenses
associated with the distribution of fund shares in amounts not to exceed 0.03%
of the average daily net assets of the Fund on an annual basis.
Certain officers of the Funds and trustees of the Trust and the Portfolios are
also officers or directors of MII, RMA and MFSCo.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Flex-Partners Trust
We have audited the accompanying statement of assets and liabilities of The
Flex-Partners Trust -- The Institutional Fund (Fund) as of December 31, 1997,
and the related statement 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
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit 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. 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 audit provides 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
Flex-Partners Trust -- The Institutional Fund at December 31, 1997, the results
of its operations, the changes in its 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
MONEY
MARKET
PORTFOLIO
Assets:
Investments at market value* $508,449,625
Repurchase agreements, at cost* 74,048,000
Cash 551
Options purchased (cost $27,378,320) ---
Receivable for net variation margin on
futures contracts ---
Interest receivable 5,477,161
Dividends receivable ---
Prepaid/Other assets 2,005
Unamortized organization costs ---
Total Assets 587,977,342
=============================================================
Liabilites:
Payable for securities purchased 261,255
Payable for net variation margin on futures
contracts ---
Options written (premiums received $19,383,673) ---
Payable to investment adviser 78,989
Accrued audit fees 10,852
Accrued custodian fees 5,729
Accrued trustee fees 2,369
Accrued fund accounting fees 8,656
Other accrued liabilities 2,753
Total Liabilities 958,695
=============================================================
Net Assets 587,018,647
=============================================================
Net Assets:
=============================================================
Capital 587,018,647
Net unrealized appreciation (depreciation) of
investments
Net Assets $587,018,647
=============================================================
*Securities at cost 582,497,625
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
MONEY
MARKET
PORTFOLIO
NET INVESTMENT INCOME
===========================================================
Interest $29,260,441
Dividends ---
Total Investment Income 29,260,441
===========================================================
Expenses:
===========================================================
Investment advisory fees 1,436,168
Audit fees 14,851
Custodian fees 36,718
Trustees fees and expenses 7,762
Legal fees 3,307
Amortization of organization cost 2,545
Accounting fees 89,048
Insurance 5,027
Other expenses 11,241
Total Expenses 1,606,667
===========================================================
Investment advisory fees waived (661,390)
Directed brokerage payments received ---
Total Net Expenses 945,277
===========================================================
NET INVESTMENT INCOME 28,315,164
===========================================================
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
===========================================================
Net realized gain from futures contracts ---
Net realized gain (loss) from investments ---
Net change in unrealized appreciation
(depreciation) of investments ---
NET GAIN (LOSS) ON INVESTMENTS ---
===========================================================
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $28,315,164
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
1997 1996
INCREASE (DECREASE) IN NET ASSETS:
===============================================================================
OPERATIONS:
===============================================================================
Net investment income $28,315,164 $19,455,266
Net realized gain (loss) from investments
and futures contracts --- ---
Net change in unrealized appreciation
(depreciation) of investments --- ---
Net increase in net assets
resulting from operations 28,315,164 19,455,266
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
===============================================================================
Contributions 3,784,994,914 1,414,075,891
Withdrawals (3,579,221,656)(1,335,249,306)
Net increase (decrease) in net assets resulting from
transactions of investors' beneficial interests 205,773,258 78,826,585
TOTAL INCREASE (DECREASE) IN NET ASSETS 234,088,422 98,281,851
===============================================================================
NET ASSETS - Beginning of period 352,930,225 254,648,374
NET ASSETS - End of period $587,018,647 $352,930,225
<TABLE>
MONEY MARKET PORTFOLIO
<CAPTION>
Year Ended December 31,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $587,019 $352,930 $256,126 $224,523 $200,148
Ratio of Expenses to Average Net Assets 0.18% 0.19% 0.21% 0.19% 0.19%
Ratio of Net Investment Income to
Average Net Assets 5.47% 5.34% 5.87% 4.28% 3.09%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.31% 0.33% 0.37% 0.39% 0.40%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 5.34% 5.20% 5.70% 4.08% 2.88%
</TABLE>
See accompanying notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. ORGANIZATION
The Institutional Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The 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. The Declaration of Trust permits the Trustees to issue
beneficial interests in the Portfolio.
The investment objective of the Money Market Portfolio is to seek current income
and stable net asset values through investment in a portfolio of money market
instruments. The financial statements of the Fund are included elsewhere in this
report.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Investments
Money market securities held in the Portfolio are valued at amortized cost,
which approximates market value.
Repurchase Agreements
The 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.
Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no Federal income tax provision is
required.
Organizational Costs
The costs related to the organization of the Portfolio have been deferred and
are being amortized by the Portfolio on a straight-line basis over a five-year
period. Such costs have been fully amortized.
Securities Transactions
The Portfolio records security transactions on the trade date. 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), provides the Portfolio with investment management, research,
statistical and advisory services. For such services the Portfolio pays monthly
a fee at the following annual rates: 0.40% of average daily net assets up to
$100 million and 0.25% of average daily net assets exceeding $100 million.
During the year ended December 31, 1997, RMA voluntarily waived a portion of its
investment advisory fees in the Portfolio.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
accounting services agent for the Portfolio. In compensation for such services
the 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.)
$30,000.
Certain officers and trustees of the Portfolio are also officers or directors of
MII, RMA and MFSCo.
4. SECURITIES TRANSACTIONS
As of December 31, 1997, the aggregate cost basis of investments for Federal
income tax purposes was $582,497,625.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
The Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio (Portfolio), including the portfolio of investments, as
of December 31, 1997, and the related statement 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 Portfolio's 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
Money Market Portfolio at December 31, 1997, the results of its operations, the
changes in its 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
