FLEX PARTNERS/, 485BPOS, 1999-04-30

FLEX PARTNERS/
485BPOS, 1999-04-30

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As filed with the Securities and Exchange Commission on April 30, 1999.

COMMISSION FILE NO. 33-48922
COMMISSION FILE NO. 811-6720

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 20

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 20

THE FLEX-PARTNERS (FORMERLY THE FLEX-FUNDS II)
(Exact Name of Registrant as Specified in Charter)

P.O. BOX 7177, 6000 MEMORIAL DRIVE, DUBLIN, OHIO 43017
(Address of Principal Executive Offices-Zip Code)

Registrant's Telephone Number, including Area Code: (614)766-7000

WESLEY F. HOAG, VICE PRESIDENT - R. MEEDER & ASSOCIATES, INC.
P.O. BOX 7177, 6000 MEMORIAL DRIVE, DUBLIN, OHIO 43017
(Name and Address of Agent for Service)

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
It is proposed that this filing will become effective
(check appropriate box).

-----
/ XXX / immediately upon filing pursuant to paragraph (b) of Rule 485
-----
/ / on (date) pursuant to paragraph (b) of Rule 485.
-----
/ / 60 days after filing pursuant to paragraph (a)(1).
-----
/ / on April 30, 1999 pursuant to paragraph (a)(1).
-----
/ / 75 days after filing pursuant to paragraph (a)(2).
-----
/ / on (date) pursuant to paragraph (a)(2) on Rule 485.
-----

If appropriate, check the following box:

-----
/ / This post-effective amendment designates a new effective date
----- for a previously filed post-effective amendment.

The Mutual Fund, Utilities Stock, Growth Stock and Money Market Portfolios have
also executed this Registration Statement.

<PAGE>

THE FLEX-PARTNERS CORE EQUITY,
UTILITY GROWTH, TACTICAL ASSET ALLOCATION
AND INTERNATIONAL EQUITY FUNDS
CROSS REFERENCE SHEET TO FORM N-1A

PART A.

ITEM NO. PROSPECTUS CAPTION

1(a) Front Cover Page
1(b) Back Cover Page

2(a) Investment Goal
2(b) Strategies
2(c)(1) Main Risk Factors
2(c)(2) Performance

3 Fees and Expenses of the Fund

4(a)(b) More Information About the Funds
How is the Trust Organized?
4(c) More About Risk
Risk and Investment Glossary

5 Results of a $10,000 Investment

6(a) Who Manages the Funds?
6(b) Not Applicable

7(a) Transaction Policies
7(b) How to Buy Shares
Other Shareholder Services
7(c) How To Make Withdrawals (Redemptions)
Exchange Privilege
Other Shareholder Services
7(d)(e) How Does Taxation Affect the Funds and Their Shareholders
7(f) Not Applicable

8(a) How To Buy Shares
8(b) Distribution Fees
8(c) More Information About the Funds - Each Fund's Investment in
a Portfolio

9 How to Read the Financial Highlights Table
Financial Highlights

<PAGE>

THE FLEX-PARTNERS

PROSPECTUS CORE EQUITY FUND
APRIL 30, 1999
UTILITY GROWTH FUND

TACTICAL ASSET ALLOCATION FUND

[LOGOS] INTERNATIONAL EQUITY FUND

The Flex-Partners' funds is a family of funds that includes four load
mutual funds covering a variety of investment opportunities.

This Prospectus gives you important information about the funds that you
should know before you invest. Please read this Prospectus carefully and keep it
handy for future reference.

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
1-800-494-FLEX or 614-766-7074
Internet: WWW.FLEXPARTNERS.COM

<PAGE>

CONTENTS

- ------------------------------------------------------------------ THE FUNDS

A fund by fund look at Core Equity Fund _____
investment goals, strategies, Utility Growth Fund _____
risks, performance and expenses Tactical Asset Allocation Fund _____
International Equity Fund _____

Information on who may want to Who May Want to Invest _____
invest and who may not want to
invest

Information about the results of Results of a $10,000 Investment _____
a hypothetical $10,000 investment
in the funds versus benchmark
indexes

More information about the funds More Information about the Funds _____
you should know before investing Who Manages the Funds? _____
Distribution Fees _____
How is the Trust Organized? _____
How Does Taxation Affect the
Funds and Their Shareholders? _____
How to Read the Financial
Highlights Table _____

- ------------------------------------------------------------ SHAREHOLDER MANUAL

Information about account How to Buy Shares _____
transactions and services How to Make Withdrawals
(Redemptions) _____
Transaction Policies _____
Other Shareholder Services _____

- --------------------------------------------------------------- MORE ABOUT RISK

Investment Practices, Securities
and Related Risks _____
Risk and Investment Glossary _____

- ---------------------------------------------------------- FOR MORE INFORMATION

Where to learn more about the funds Back Cover

<PAGE>

CORE EQUITY FUND
(FPCEX - A SHARES, FPCCX - C SHARES)

[ICON] INVESTMENT GOAL

The fund seeks growth of capital. To pursue this goal, the fund
invests 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. Current income
is not a primary objective.

[ICON] STRATEGIES

The fund invests all of its assets in the Growth Stock Portfolio, a
master fund having the same investment goal as the fund. See "Each
Fund's Investment in a Portfolio" under "More Information About the
Funds." Normally, at least 80% of the Portfolio's total assets will be
invested in domestic common stocks and at least 65% of the Portfolio's
total assets will be invested in growth stocks. At least 70% of the
Portfolio's assets invested in common stocks will be invested in S&P
500 stocks.

The Portfolio consists of investment portfolios representing each of
the industry sectors comprising the S&P 500: utilities,
transportation, capital goods, consumer durables, consumer
non-durables, energy, materials and services, finance, technology and
health. The Portfolio's assets will be allocated to each of these
industry sectors in approximately the same proportion as these
industry sectors are represented in the S&P 500 on a
market-capitalization weighted basis.

The assets of the Portfolio representing each of these industry
sectors are managed by one or more separate investment advisers.

The Portfolio may invest in "traditional" derivatives, such as
financial futures contracts and related options as a hedge against
changes, resulting from market conditions, in the value of securities
held or intended to be held by the Portfolio.

Form more information, see "How Does the Fund Pursue Its Investment
Goal?" under "More Information About the Funds."

[ICON] MAIN RISK FACTORS

The value of your investment will fluctuate in response to stock
market movements. To the extent that the fund invests in higher risk
securities, it encounters additional risks that could adversely affect
its performance. The use of several sector advisers or the replacement
of a sector adviser may increase the Portfolio's turnover, gains or
losses, and brokerage commissions. As with any mutual fund, loss of
money is a risk of investing in this fund. Please read "More About
Risk" carefully before investing.

<PAGE>

- --------------------------------------------------------------------------------

PERFORMANCE

The bar chart on the left below provides some indication of the risks of
investing in the Core Equity Fund by allowing a comparison to market
performance. The table on the right compares the fund's performance with a broad
measure of market performance and the returns of an index of funds with similar
investment objectives. How the fund has performed in the past is not necessarily
an indication of how the fund will perform in the future.

CLASS A ANNUAL TOTAL RETURNS(1)

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
1998 22.78%

1 Figures do not reflect sales charges. If they did, returns would be lower.

During the period shown in the bar chart, the highest return for a quarter was
19.94% (quarter ending December 31, 1998), and the lowest return for a quarter
was -11.29% (quarter ending September 30, 1998).

Average Annual Total Returns
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION (8/1/97)
- --------------------------------------------------------------------------------

Core Equity Fund - Class A 15.75% 12.44%
Core Equity Fund - Class C 21.35% 16.19%
S&P 500 Index* 28.58% 21.45%
Morningstar's Average Growth Fund 19.48% 14.20%

*The S&P 500 is a widely recognized unmanaged index of common stock prices. The
S&P 500 does not take into account the deduction of expenses associated with a
mutual fund, such as investment management and accounting fees. One cannot
invest directly in an index.

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

CLASS A CLASS C

Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%(1) None
Maximum Deferred Sales Charge (Load) (as a
percentage of offering price or redemption
proceeds, as applicable) None 1.50%(2)
Exchange fee None None

<PAGE>

Please see "Choosing a Share Class" for an explanation of how and when
these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)(3)

CLASS A CLASS C

Management Fees 1.00% 1.00%
Distribution and Service (12b-1) Fees 0.50% 1.00%(4)
Other Expenses(5) 1.63% 1.85%
----- -----
Total Annual Fund Operating Expenses 3.13% 3.85%
Expense Reimbursement(6) -1.38% -1.85%
----- -----
Net Expenses 1.75% 2.00%

1 The sales charge applied to purchases of Class A shares of the fund
declines as the amount invested increases. See "How to Buy Shares."

2 A deferred sales charge on Class C shares applies only if redemption
occurs within twenty-four months from purchase. See "How to Buy
Shares" and "How to Make Withdrawals (Redemptions)."

3 This table and the Example below reflect the expenses of the fund
and its proportionate share of expenses from its corresponding
Portfolio. See "Each Fund's Investment in a Portfolio" under "More
Information About the Funds."

4 Because of the distribution and service (12b-1) fees, over the long
term you may indirectly pay more than the equivalent of the maximum
permitted initial sales charge.

5 "Other Expenses" are based upon expenses actually incurred by the
fund for the year ended December 31, 1998.

6 The adviser has agreed to reduce its fees and/or absorb expenses to
limit the fund's total annual operating expenses for Class A shares
and Class C shares to 1.75% and 2.00%, respectively. The adviser may
terminate this agreement after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $743 $1,363 $2,007 $3,726

<PAGE>

Class C $353 $1,005 $1,826 $3,962

You would pay the following expenses if you did not redeem your
shares:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

Class A $743 $1,363 $2,007 $3,726

Class C $203 $1,005 $1,826 $3,962

Of course, your actual costs may be higher or lower.

<PAGE>

UTILITY GROWTH FUND
(FPBAX - A SHARES, FPBCX - C SHARES)

[ICON] INVESTMENT GOAL

The fund seeks an above average level of current income and growth of
income by investing primarily in equity securities of domestic and
foreign public utility companies; however, the fund will not invest in
electric utilities that generate power from nuclear reactors. The fund
also seeks capital appreciation, but only when consistent with its
primary investment objective.

[ICON] STRATEGIES

The fund invests all of its assets in The Utilities Stock Portfolio, a
master fund having the same investment goal as the fund. See "Each
Fund's Investment in a Portfolio" under "More Information About the
Funds." The Portfolio generally invests at least 65% of its total
assets in equity securities of domestic or foreign companies that
provide electricity, natural gas, water, telecommunications or
sanitary services to the public. The remaining 35% of the Portfolio's
total assets may be invested in debt securities of public utility
companies, or debt or equity securities of other issuers who stand to
benefit from developments in the utilities industry.

The subadviser utilizes fundamental analysis to identify those
securities that it believes provide an above average level of current
income and growth of income. Fundamental analysis involves assessing a
company and its business environment, management, balance sheet,
income statement, anticipated earnings and dividends, and other
related measures of value.

For more information, see "How Does the Fund Pursue Its Investment
Goals?" under "More Information About the Funds."

[ICON] MAIN RISK FACTORS

Utility stocks are subject to interest rate risk - i.e., price
fluctuations due to changing interest rates. Rising interest rates can
be expected to reduce the fund's net asset value. Because the fund
concentrates in the utility industry, its performance is largely
dependent on the utility industry's performance, which may differ from
that of the overall stock market. Governmental regulation of public
utility companies can limit their ability to expand their business or
to pass cost increases on to customers. Companies providing power or
energy-related services may also be affected by fuel shortages or cost
increases, environmental protection or energy conservation
regulations, as well as fluctuating demand for their services.
Investments in securities of foreign companies involve additional
risks relating to political and economic developments abroad,
including currency fluctuations. As with any mutual fund, loss of
money is a risk of investing in the fund. Please read "More About
Risk" carefully before investing.

<PAGE>

PERFORMANCE

The bar chart on the left below provides some indication of the risks of
investing in the Utility Growth Fund by showing changes in the fund's
performance from year to year during the past three calendar years. The table on
the right compares the fund's performance with a broad measure of market
performance and the returns of an index of funds with similar investment
objectives. How the fund has performed in the past is not necessarily an
indication of how the fund will perform in the future.

CLASS A ANNUAL TOTAL RETURNS(1)

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
1996 12.62%
1997 28.41%
1998 8.34%

1 Figures do not reflect sales charges. If they did, returns would be lower.

During the period shown in the bar chart, the highest return for a quarter was
13.52% (quarter ending December 31, 1998), and the lowest return for a quarter
was -10.33% (quarter ending September 30, 1998).

Average Annual Total Returns
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION (7/11/95)
- --------------------------------------------------------------------------------
Utility Growth Fund - Class A 2.11% 16.50%
Utility Growth Fund - Class C 6.58% 18.31%
The S&P 500 Composite Stock
Price Index* 28.58% 28.61%
Morningstar's Average
Utilities Fund 18.00% 19.52%

*The S&P 500 Composite Stock Price Index is a widely recognized unmanaged index
of common stock prices. The S&P 500 does not take into account the deduction of
expenses associated with a mutual fund, such as investment management and
accounting fees. One cannot invest directly in an index.

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

CLASS A CLASS C

<PAGE>

Please see "Choosing a Share Class" for an explanation of how and when
these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)(3)

CLASS A CLASS C

Management Fees 1.00% 1.00%
Distribution and Service (12b-1) Fees 0.50% 1.00%(4)
Other Expenses(5) 2.30% 2.31%
----- -----
Total Annual Fund Operating Expenses 3.80% 4.31%
Expense Reimbursement(6) -2.05% -2.06%
----- -----
Net Expenses 1.75% 2.25%

1 The sales charge applied to purchases of Class A shares of the fund
declines as the amount invested increases. See "How to Buy Shares."

2 A deferred sales charge on Class C shares applies only if redemption
occurs within twenty-four months from purchase. See "How to Buy
Shares" and "How to Make Withdrawals (Redemptions)."

4 Because of the distribution and service (12b-1) fees, over the long
term you may indirectly pay more than the equivalent of the maximum
permitted initial sales charge.

5 "Other Expenses" are based upon expenses actually incurred by the
fund for the year ended December 31, 1998.

6 The adviser has agreed to reduce its fees and/or absorb expenses to
limit the fund's total annual operating expenses for Class A shares
and Class C shares to 1.75% and 2.25%, respectively. The adviser may
terminate this agreement after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $743 $1,491 $2,258 $4,256
Class C $378 $1,120 $2,024 $4,340

<PAGE>

You would pay the following expenses if you did not redeem your
shares:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $743 $1,491 $2,258 $4,256
Class C $228 $1,120 $2,024 $4,340

Of course, your actual costs may be higher or lower.

<PAGE>

TACTICAL ASSET ALLOCATION FUND
(FPTAX - A SHARES, FPTCX - C SHARES)

[ICON] INVESTMENT GOAL

The fund seeks growth of capital. To pursue this goal, the fund
invests primarily in other growth mutual funds that are not affiliated
with the fund.

[ICON] STRATEGIES

The fund invests all of its assets in the Mutual Fund Portfolio, a
master fund having the same investment goal as the fund. See "Each
Fund's Investment in a Portfolio" under "More Information About the
Funds." The Portfolio pursues its investment goal through asset
allocation and mutual fund selection. Normally, at least 65% of the
value of the fund's total assets will be invested in mutual funds. The
mutual funds in which the fund invests are primarily growth funds
investing in common stocks. In the underlying mutual funds, current
income will usually be of secondary importance. The adviser
overweights mutual fund types that it believes represent above average
market potential with below average market risk. The adviser
continually evaluates market capitalization (for example, blue chip
versus small capitalization) and sector rotation (for example, high
tech versus industrial companies) when selecting mutual funds.

The Portfolio may invest up to 100% of its assets in money market
securities and investment grade bonds as a defensive tactic. When
invested defensively, the Portfolio could be unable to achieve its
investment objective. The Portfolio places a high degree of importance
on maintaining and protecting portfolio values from adverse market
conditions. The Portfolio strives to avoid losses during high risk
market environments and strives to provide attractive returns during
low risk markets. When the adviser's evaluation of the stock market
indicates that the risks of the stock market are greater than the
potential rewards, the Portfolio will reduce or eliminate its position
in growth mutual funds in order to attempt to preserve your capital.
The Portfolio may also invest in common stocks directly.

For more information, see "How Does the Fund Pursue Its Investment
Goal?" under "More Information About the Funds."

[ICON] MAIN RISK FACTORS

When the Portfolio is invested primarily in growth mutual funds, the
value of your investment will fluctuate in response to stock market
movements. Investing through the fund in an underlying portfolio of
mutual funds involves additional expenses and tax results which would
not arise if you invested directly in the mutual funds in which the
fund invests. The underlying mutual funds may invest in smaller or
newer companies which are more likely to grow as well as suffer more
significant losses than larger or more established companies.
Investments in such companies can be both more volatile and more
speculative. In addition, if the adviser does not accurately predict
changing market conditions and other economic factors, the Portfolio's
assets might be allocated in a manner that is disadvantageous. As with
any mutual fund, loss of money is a risk of investing in the fund.
Please read "More About Risk" carefully before investing.

<PAGE>

PERFORMANCE

The bar chart on the left below provides some indication of the risks of
investing in the Tactical Asset Allocation Fund by showing changes in the fund's
performance from year to year during the past three calendar years. The table on
the right compares the fund's performance with a broad measure of market
performance and the returns of an index of funds with similar investment
objectives. How the fund has performed in the past is not necessarily an
indication of how the fund will perform in the future.

CLASS C ANNUAL TOTAL RETURNS(1)

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
1996 5.07%
1997 17.71%
1998 28.13%

1 Figures do not reflect sales charges. If they did, returns would be lower.

During the period shown in the bar chart, the highest return for a quarter was
25.08% (quarter ending December 31, 1998), and the lowest return for a quarter
was -4.74% (quarter ending December 31, 1997).

Average Annual Total Returns - CLASS A
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION(1)
- --------------------------------------------------------------------------------
Tactical Asset Allocation Fund - Class A 20.95% 18.20%
S&P 500 Index(2) 28.58% 33.31%
Morningstar's Average Asset
Allocation Fund 11.40% 15.98%

Average Annual Total Returns - CLASS C
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION(1)
- --------------------------------------------------------------------------------
Tactical Asset Allocation Fund - Class C 26.63% 18.11%
S&P 500 Index(2) 28.58% 28.68%
Morningstar's Average Asset
Allocation Fund 11.40% 14.51%

1 Class A inception date: 8/1/96; Class C inception date: 6/1/95.

2 The S&P 500 is a widely recognized unmanaged index of common stock prices. The
S&P 500 does not take into account the deduction of expenses associated with a
mutual fund, such as investment management and accounting fees. One cannot
invest directly in an index.

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

<PAGE>

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

CLASS A CLASS C

Please see "Choosing a Share Class" for an explanation of how and when
these sales charges apply.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)(3)

CLASS A CLASS C

Management Fees 0.81% 0.81%
Distribution and Service (12b-1) Fees 0.50% 1.00%(4)
Other Expenses(5) 9.07% 0.67%
------ ------
Total Annual Fund Operating Expenses 10.38% 2.48%
Expense Reimbursement(6) -8.63% -0.33%
------ ------
Net Expenses 1.75% 2.15%

1 The sales charge applied to purchases of Class A shares of the fund
declines as the amount invested increases. See "How to Buy Shares."

2 A deferred sales charge on Class C shares applies only if redemption
occurs within twenty-four months from purchase. See "How to Buy
Shares" and "How to Make Withdrawals (Redemptions)."

4 Because of the distribution and service (12b-1) fees, over the long
term you may indirectly pay more than the equivalent of the maximum
permitted initial sales charge.

5 "Other Expenses" are based upon expenses actually incurred by the
Fund for the year ended December 31, 1998.

6 The adviser has agreed to reduce its fees and/or absorb expenses to
limit the fund's total annual operating expenses for Class A shares
and Class C shares to 1.75% and 2.15%, respectively. The adviser may
terminate this agreement after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

<PAGE>

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $743 $2,656 $4,368 $7,906
Class C $368 $ 741 $1,291 $2,791

You would pay the following expenses if you did not redeem your
shares:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Class A $743 $2,656 $4,368 $7,906
Class C $218 $ 741 $1,291 $2,791

Of course, your actual costs may be higher or lower.

<PAGE>

INTERNATIONAL EQUITY FUND

(FFIEX)

[ICON] INVESTMENT GOAL

The fund seeks long-term growth. To pursue this goal, the fund invests
primarily in equity securities of foreign issuers.

[ICON] STRATEGIES

Normally, at least 70% of the value of the fund's total assets will be
invested in equity securities of foreign issuers. Equity securities
include common and preferred stocks, convertible securities and
warrants or rights to subscribe to or purchase such securities, and
depositary receipts. The fund intends to diversify its assets broadly
among countries and will normally invest in at least three countries.
The fund may invest in both developed and developing countries,
although the fund does not intend to invest more than 30% of its
assets in developing countries.

The fund may invest up to 100% of its assets in any type of investment
grade securities, including debt securities of foreign issuers, and
obligations of the U.S. and foreign governments and their political
subdivisions.

The Portfolio may invest in "traditional" derivatives, such as
financial futures contracts, stock index futures contracts, foreign
currency contracts and related options as a hedge against changes,
resulting from market conditions, in the value of securities held or
intended to be held by the Portfolio.

[ICON] MAIN RISK FACTORS

As with any growth fund, the value of your investment will fluctuate
in response to stock market movements. Because it invests
internationally, the fund carries additional risks, which may make the
fund more volatile than a comparable domestic growth fund.

The political, economic and social structures of some countries in
which the fund invests may be less stable and more volatile than those
in the U.S. The risks of investing in these countries include the
possibility of the imposition of exchange controls, currency
devaluations, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization
of assets, punitive taxes, and certain custody and settlement risks.

These risks are heightened in developing countries, which may lack the
established legal, business and social frameworks necessary to support
securities markets. Foreign securities markets, including those in
developing countries, may have substantially lower trading volumes
than U.S. markets, resulting in less liquidity and more volatility
than in the U.S.

<PAGE>

PERFORMANCE

The bar chart on the left below provides some indication of the risks of
investing in the International Equity Fund by allowing a comparison to market
performance. The table on the right compares the fund's performance with a broad
measure of market performance and the returns of an index of funds with similar
investment objectives. How the fund has performed in the past is not necessarily
an indication of how the fund will perform in the future.

ANNUAL TOTAL RETURNS(1)

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
1998 19.78%

1 Figures do not reflect sales charges. If they did, returns would be lower.

During the period shown in the bar chart, the highest return for a quarter was
19.48% (quarter ending December 31, 1998), and the lowest return for a quarter
was -13.03% (quarter ending September 30, 1998).

Average Annual Total Returns
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION (9/2/97)
- --------------------------------------------------------------------------------

International Equity Fund 12.92% 7.46%
MSCI EAFE Index* 20.00% 12.35%
Morningstar's Average Foreign
Stock Fund 8.53% 4.25%

*The MSCI EAFE Index is a widely recognized unmanaged index of over 1,000 stock
prices from companies in Europe, Australasia and the Far East. The MSCI EAFE
Index does not take into account the deduction of expenses associated with a
mutual fund, such as investment management and accounting fees. One cannot
invest directly in an index.

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering price) 5.75%(1)
Maximum Deferred Sales Charge (Load) (as a
percentage of offering price or redemption
proceeds, as applicable) None
Exchange fee None

Please see "Choosing a Share Class" for an explanation of how and when
these sales charges apply.

<PAGE>

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

Management Fees 1.00%
Distribution and Service (12b-1) Fees 0.13%
Other Expenses(2) 1.04%
------
Total Annual Fund Operating Expenses 2.17%
Expense Reimbursement(3) -0.17%
------
Net Expenses 2.00%

1 The sales charge applied to purchases of shares of the fund declines
as the amount invested increases. See "How to Buy Shares."

2 "Other Expenses" are based upon expenses actually incurred by the
Fund for the year ended December 31, 1998.

3 The adviser has agreed to reduce its fees and/or absorb expenses to
limit the fund's total annual operating expenses to 2.00%. The adviser
may terminate this agreement after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$766 $1,200 $1,658 $2,922

Of course, your actual costs may be higher or lower.

<PAGE>

WHO MAY WANT TO INVEST

CORE EQUITY FUND

The fund may be appropriate if you:

o are seeking long-term growth potential

o are seeking a fund for the growth portion of an asset allocation
portfolio

o are more comfortable with a focus on established, well-known
companies

o are seeking to diversify your portfolio

o are willing to accept the higher short-term risk along with
potentially higher long-term returns

The fund may not be appropriate if you:

o are unwilling to accept an investment that will go up and down in
value

o are investing to meet short-term financial goals

UTILITY GROWTH FUND

The fund may be appropriate if you:

o are seeking a more conservative, income-oriented equity
investment

o are looking to supplement your core equity holdings

o are a socially responsible investor

The fund may not be appropriate if you:

o are seeking a short-term investment vehicle

o desire an investment that is diversified over several market
sectors

TACTICAL ASSET ALLOCATION FUND

The fund may be appropriate if you:

o are seeking long-term growth potential but are concerned about
moderating the risks associated with being invested in stocks at
all times

o are seeking to diversify your portfolio

o are investing with a long-term horizon

<PAGE>

The fund may not be appropriate if you:

o are investing to meet short-term financial goals

o are seeking to be invested in the stock market at all times

o are seeking to maximize returns from an aggressive growth
strategy that is invested in stocks at all times

INTERNATIONAL EQUITY FUND

The fund may be appropriate if you:

o are seeking to diversify a portfolio of domestic investments

o are seeking access to markets that can be less accessible to
individual investors

o are investing with a long-term horizon

o are willing to accept higher short-term risk along with
potentially higher long-term returns

The fund may not be appropriate if you:

o are unwilling to accept an investment that will go up and down in
value

o are investing to meet short-term financial goals

RESULTS OF A $10,000 INVESTMENT
THE CORE EQUITY FUND VS. BENCHMARK INDEXES

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

A SHARES A SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 15.75% 1 YEAR 22.78%
SINCE INCEPTION (8/1/97) 12.44% SINCE INCEPTION (8/1/97) 17.24%

C SHARES C SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 21.35% 1 YEAR 22.85%
SINCE INCEPTION (8/1/97) 16.19% SINCE INCEPTION (8/1/97) 17.18%

<PAGE>

[GRAPH] The following information was presented as a line graph:

Core Equity Fund Core Equity Fund Morningstar's
A Shares Including A Shares Excluding S&P 500 Average Growth
DATE Sales Charge Sales Charge Index Mutual Fund Index
- ---- ------------------ ---------------------- ------- -----------------
8/1/97 $ 9,425 $10,000 $10,000 $10,000
8/31/97 $ 9,010 $ 9,560 $ 9,440 $ 9,741
9/30/97 $ 9,448 $10,024 $ 9,957 $10,301
12/31/97 $ 9,614 $10,200 $10,243 $10,160
3/31/98 $10,835 $11,497 $11,670 $11,449
6/30/98 $11,093 $11,770 $12,056 $11,547
9/30/98 $ 9,841 $10,442 $10,859 $ 9,887
12/31/98 $11,804 $12,524 $13,170 $12,070

[GRAPH] The following information was presented as a line graph:

Core Equity Fund Core Equity Fund Morningstar's
C Shares Including C Shares Excluding S&P 500 Average Growth
DATE Sales Charge Sales Charge Index Mutual Fund Index
- ---- ------------------ ------------------ ------- -----------------
8/1/97 $ 9,850 $10,000 $10,000 $10,000
8/31/97 $ 9,410 $ 9,560 $ 9,440 $ 9,741
9/30/97 $ 9,874 $10,024 $ 9,957 $10,301
12/31/97 $10,038 $10,188 $10,243 $10,160
3/31/98 $11,325 $11,475 $11,670 $11,449
6/30/98 $11,575 $11,725 $12,056 $11,547
9/30/98 $10,279 $10,429 $10,859 $ 9,887
12/31/98 $12,366 $12,516 $13,170 $12,070

The chart compares the Core Equity Fund's Class A and Class C shares to
benchmark indexes. It is intended to give you a general idea of how the Fund
performed compared to these benchmarks over the period 8/1/97-12/31/98. It is
important to understand differences between your Fund and these indexes. An
index measures performance of a hypothetical portfolio.

A market index such as the S&P 500 Index is not managed, incurring no sales
charges, expenses, or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return. An index of funds such as the Morningstar's Average Growth Fund Index
includes a number of mutual funds grouped by investment objective. Each of those
funds interprets that objective differently, and each employs a different
management style and investment strategy.

For a description of indexes referred to on this page, please refer to
"Performance."

<PAGE>

PAST PERFORMANCE IS NO GUARANTEE OF COMPARABLE FUTURE RESULTS. MARKET VOLATILITY
CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE
TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.

1998 IN REVIEW

Two words can best describe the performance of the stock market during
1998: "volatile" and "narrow." While the first six months of the year were
relatively calm, with the market performing much to our expectations, the second
six months were anything but.

Investors received a cold shot of reality during the third quarter, as
equity markets plunged in response to financial crises in many emerging markets
and concerns about the effect of these crises on U.S. corporate earnings. By
early October, the Dow Jones Industrial Average had given back nearly all of its
year-to-date gains. However, the spectacular market comeback of the fourth
quarter helped the Dow and other large-cap market indexes finish the year in or
near record territory.

Through the whipsaw volatility and extreme narrowness that characterized
the performance of the stock market in 1998, the Core Equity Fund adhered to its
investment strategy by remaining nearly fully invested in equities throughout
the year. While such exposure may have left some investors feeling queasy at
times, especially during the market corrections of the third quarter, our
position ultimately helped us achieve strong returns in the fourth quarter and
for all of 1998.

In 1998, the Core Equity Fund Class A Shares provided shareholders with an
annual total return of 22.78% without a sales charge and an annual total return
of 15.75% after sales charge, and Class C Shares provided shareholders with an
annual total return of 22.85% without a sales charge and an annual total return
of 21.35% after sales charge. For the same period, the S&P 500 Index provided an
annual total return of 28.58% and the average growth fund monitored by
Morningstar provided an annual total return of 19.48%.

RESULTS OF A $10,000 INVESTMENT
THE TACTICAL ASSET ALLOCATION FUND VS. BENCHMARK INDEXES

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

A SHARES A SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 23.26% 1 YEAR 28.38%
SINCE INCEPTION (8/1/96) 19.10% SINCE INCEPTION (8/1/96) 21.13%

C SHARES C SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 26.63% 1 YEAR 28.13%
SINCE INCEPTION (6/1/95) 18.11% SINCE INCEPTION (6/1/95) 18.11%

<PAGE>

[GRAPH] The following information was presented as a line graph:

Tactical Asset Tactical Asset Morningstar's
Allocation Fund Allocation Fund Average Asset
A Shares Including A Shares Excluding S&P 500 Allocation
DATE Sales Charge Sales Charge Index Fund Index
- ---- ------------------ ------------------ ------- -------------
8/1/96 $ 9,425 $10,000 $10,000 $10,000
8/31/96 $ 9,380 $ 9,952 $10,211 $10,151
9/30/96 $ 9,644 $10,232 $10,785 $10,473
12/31/96 $ 9,944 $10,551 $11,684 $10,999
3/31/97 $10,103 $10,719 $11,998 $10,985
6/30/97 $11,362 $12,055 $14,091 $12,030
9/30/97 $12,318 $13,069 $15,146 $12,786
12/31/97 $11,664 $12,375 $15,580 $12,845
3/31/98 $12,138 $12,878 $17,752 $13,780
6/30/98 $12,360 $13,114 $17,595 $13,609
9/30/98 $11,957 $12,687 $16,517 $13,131
12/31/98 $14,973 $15,887 $20,032 $14,309

[GRAPH] The following information was presented as a line graph:

Tactical Asset Tactical Asset Morningstar's
Allocation Fund Allocation Fund Average Asset
C Shares Including C Shares Excluding S&P 500 Allocation
DATE Sales Charge Sales Charge Index Fund Index
- ---- ------------------ ------------------ ------- -------------
6/1/95 $ 9,850 $10,000 $10,000 $10,000
6/30/95 $10,258 $10,408 $10,232 $10,185
9/30/95 $11,346 $11,496 $11,044 $10,699
12/31/95 $11,307 $11,457 $11,709 $11,116
3/31/96 $11,566 $11,716 $12,337 $11,376
6/30/96 $12,024 $12,174 $12,890 $11,639
9/30/96 $11,532 $11,682 $13,289 $11,895
12/31/96 $11,963 $12,038 $14,395 $12,492
3/31/97 $12,150 $12,225 $14,782 $12,476
6/30/97 $13,783 $13,783 $17,361 $13,663
9/30/97 $14,875 $14,875 $18,661 $14,521
12/31/97 $14,170 $14,170 $19,196 $14,589
3/31/98 $14,725 $14,725 $21,872 $15,652
6/30/98 $15,003 $15,003 $22,594 $15,825
9/30/98 $14,516 $14,516 $20,351 $14,913
12/31/98 $18,156 $18,156 $24,682 $16,252

<PAGE>

The chart compares the Tactical Asset Allocation Fund's Class A and Class C
shares to benchmark indexes. It is intended to give you a general idea of how
the Fund performed compared to these benchmarks over the period 8/1/96-12/31/98
(for Class A Shares) and 6/1/95-12/31/98 (for Class C Shares). It is important
to understand differences between your Fund and these indexes. An index measures
performance of a hypothetical portfolio.

A market index such as the S&P 500 Index is not managed, incurring no sales
charges, expenses, or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return. An index of funds such as the Morningstar's Average Asset Allocation
Fund Index includes a number of mutual funds grouped by investment objective.
Each of those funds interprets that objective differently, and each employs a
different management style and investment strategy.

For a description of indexes referred to on this page, please refer to
"Performance."

1998 IN REVIEW

In 1998, Tactical Asset Allocation Fund Class A Shares provided
shareholders with an annual total return of 28.38% without a sales charge and an
annual total return of 23.26% after sales charge, and Class C Shares provided
shareholders with an annual total return of 28.13% without a sales charge and an
annual total return of 26.63% after sales charge. For the same period, the S&P
500 Index provided an annual total return of 28.58% and the Average Asset
Allocation Fund monitored by Morningstar, Inc. provided an annual total return
of 11.40%.

<PAGE>

Our evaluation of market conditions through the first half of the year
caused us to approach our equity mutual fund investments with caution, as we
periodically maintained defensive positions in cash equivalents. Moreover,
technical measurements also raised doubts about the health of the market during
1998.

The third quarter confirmed our assessment of overvalution, as the stock
market suffered its worst decline in many years. Timely decisions to adopt a
more defensive position as the market began to decline significantly helped the
Fund preserve year-to-date gains and avoid losses that affected most other
equity funds.

Our investment discipline prompted us to return to a fully invested
position by late October, once our evaluation of the risk/reward relationships
in the stock market turned positive again. Through most of the quarter, the
Fund's portfolio was split rather evenly between Nasdaq-oriented funds that
favor the technology sector and growth funds that are pegged to the S&P 500
Index.

RESULTS OF A $10,000 INVESTMENT
THE UTILITY GROWTH FUND VS. BENCHMARK INDEXES

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

A SHARES A SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 4.03% 1 YEAR 8.34%
SINCE INCEPTION (7/11/95) 17.12% SINCE INCEPTION (7/11/95) 18.50%

C SHARES C SHARES
INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 6.58% 1 YEAR 8.08%
SINCE INCEPTION (7/11/95) 18.31% SINCE INCEPTION (7/11/95) 19.31%

<PAGE>

[GRAPH] The following information was presented as a line graph:

Utility Growth Fund Utility Growth Fund Morningstar's
A Shares Including A Shares Excluding Average Utility
DATE Sales Charge Sales Charge S&P 500 Fund Index
- ---- ------------------ ------------------ ------- ---------------
7/11/95 $ 9,425 $10,000 $10,000 $10,000
9/30/95 $ 9,915 $10,520 $10,794 $10,703
12/31/95 $11,849 $11,511 $11,443 $11,432
3/31/96 $10,743 $11,398 $12,058 $11,417
6/30/96 $11,378 $12,072 $12,598 $11,868
9/30/96 $11,343 $12,035 $12,988 $11,660
12/31/96 $12,218 $12,963 $14,069 $12,623
3/31/97 $11,932 $12,660 $14,447 $12,506
6/30/97 $12,865 $13,650 $16,967 $13,602
9/30/97 $13,933 $14,783 $18,238 $14,341
12/31/97 $15,689 $16,646 $18,761 $15,818
3/31/98 $17,245 $18,297 $21,376 $17,429
6/30/98 $17,699 $17,718 $22,082 $17,145
9/30/98 $14,974 $15,888 $19,890 $16,863
12/31/98 $16,998 $18,035 $24,122 $18,666

[GRAPH] The following information was presented as a line graph:

Utility Growth Fund Utility Growth Fund Morningstar's
C Shares Including C Shares Excluding Average Utility
DATE Sales Charge Sales Charge S&P 500 Fund Index
- ---- ------------------ ------------------ ------- ---------------
7/11/95 $ 9,850 $10,000 $10,000 $10,000
9/30/95 $10,363 $10,513 $10,794 $10,703
12/31/95 $11,357 $11,507 $11,443 $11,432
3/31/96 $11,241 $11,391 $12,058 $11,417
6/30/96 $11,894 $12,044 $12,598 $11,868
9/30/96 $11,869 $12,019 $12,988 $11,660
12/31/96 $12,790 $12,940 $14,069 $12,623
3/31/97 $12,552 $12,627 $14,447 $12,506
6/30/97 $13,526 $13,601 $16,967 $13,602
9/30/97 $14,741 $14,741 $18,238 $14,341
12/31/97 $16,596 $16,596 $18,761 $15,818
3/31/98 $18,234 $18,234 $21,376 $17,429
6/30/98 $17,649 $17,649 $22,082 $17,145
9/30/98 $15,813 $15,813 $19,890 $16,863
12/31/98 $17,936 $17,936 $24,122 $18,666

The chart compares the Utility Growth Fund's Class A and Class C shares to
benchmark indexes. It is intended to give you a general idea of how the Fund
performed compared to these benchmarks over the period 7/11/95-12/31/98. (Please
note that performance figures for the indexes are from 7/01/95-12/31/98.) It is
important to understand differences between your Fund and these indexes. An
index measures performance of a hypothetical portfolio.

<PAGE>

A market index such as the S&P 500 Composite Stock Price Index is not managed,
incurring no sales charges, expenses, or fees. If you could buy all the
securities that make up a market index, you would incur expenses that would
affect your investment's return. An index of funds such as the Morningstar's
Average Utility Fund Index includes a number of mutual funds grouped by
investment objective. Each of those funds interprets that objective differently,
and each employs a different management style and investment strategy.

For a description of indexes referred to on this page, please refer to
"Performance."

1998 IN REVIEW

In 1998, the Utility Growth Fund Class A Shares provided shareholders with
an annual total return of 8.34% without a sales charge and an annual total
return of 4.03% after sales charge, and Class C Shares provided shareholders
with an annual total return of 8.08% without a sales charge and an annual total
return of 6.58% after sales charge. For the same period, the S&P 500 Index
provided an annual total return of 28.58% and the Average Utility Fund Index
monitored by Morningstar, Inc. provided an annual total return of 18.00%.

The strong performance of the leading utility funds was mostly due to the
"flight to quality" of investors fleeing the turmoil of the world's equity
markets, as well as higher than normal gains by many electric utility companies
that generate nuclear power. The Fund's socially-conscious investment policy
prevents us from investing in these equities, for we consider the risks and
strict regulatory environment of the nuclear power industry to be a hindrance to
the long-term profitability of these companies.

RESULTS OF A $10,000 INVESTMENT
THE INTERNATIONAL EQUITY FUND VS. BENCHMARK INDEXES

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 14.97% 1 YEAR 19.78%
SINCE INCEPTION (9/2/97) 8.95% SINCE INCEPTION (9/2/97) 12.34%

<PAGE>

[GRAPH] The following information was presented as a line graph:

International Equity International Equity MSCI Morningstar's
Fund Including Fund Excluding EAFE Average Foreign
DATE Sales Charge Sales Charge Index Stock Fund Index
- ---- -------------------- -------------------- ----- ----------------

9/2/97 $ 9,425 $10,000 $10,000 $10,000
9/30/97 $ 9,923 $10,528 $10,560 $10,613
12/31/97 $ 9,184 $ 9,744 $ 9,733 $ 9,740
3/31/98 $10,368 $11,000 $11,165 $11,091
6/30/98 $10,586 $11,232 $11,284 $11,017
9/30/98 $ 9,206 $ 9,768 $10,320 $ 9,752
12/31/98 $11,000 $11,971 $11,680 $10,571

The chart compares the International Equity Fund's shares to benchmark indexes.
It is intended to give you a general idea of how the Fund performed compared to
these benchmarks over the period 9/2/97-12/31/98. (Please note that performance
figures for the indexes are from 9/30/97-12/31/98.) It is important to
understand differences between your Fund and these indexes. An index measures
performance of a hypothetical portfolio.

A market index such as the MSCI EAFE Index is not managed, incurring no sales
charges, expenses, or fees. If you could buy all the securities that make up a
market index, you would incur expenses that would affect your investment's
return. An index of funds such as the Morningstar's Average Foreign Stock Fund
Index includes a number of mutual funds grouped by investment objective. Each of
those funds interprets that objective differently, and each employs a different
management style and investment strategy.

For a description of indexes referred to on this page, please refer to
"Performance."

1998 IN REVIEW

In 1998, the International Equity Fund provided shareholders with an annual
total return of 19.78% without a sales charge and an annual total return of
14.97% after sales charge. For the same period, the MSCI EAFE Index provided an
annual total return of 20.00% and the Average Foreign Stock Fund monitored by
Morningstar, Inc. provided an annual total return of 8.53%.

For international equity markets, this past year was as volatile and
tumultuous as any seen in recent years. The contagious Asian financial crisis at
last reached the shores of Japan, as the world's second-largest economy fell
into recession in May. Efforts by the Japanese government to jump-start the
economy seemed promising but their long-term success remains uncertain. Our
exposure to Japanese and Pacific Rim markets was lower in 1998 in response to
the turmoil. As these markets recovered late in the year, we gradually increased
our holdings in this part of our portfolio.

<PAGE>

year-to-date gains and compound returns when the markets recovered during the
fourth quarter. Persistent instability in other emerging markets, specifically
Brazil, leaves us cautious in regard to the long-term prospects for growth in
these countries.

The story in Europe and the United Kingdom was different altogether.
Heightened merger activity in select sectors of the market, namely the
pharmaceutical and energy stocks, helped boost returns for the year. Growth in
the utility and telecommunications industries also aided the Fund during 1998.
Regional growth in peripheral European markets continued to be strong,
especially in those countries where positive job growth and falling interest
rates have raised domestic confidence. Our exposure to these markets contributed
significantly to the performance of the Fund during 1998.

<PAGE>

MORE INFORMATION ABOUT THE FUNDS

EACH FUND'S INVESTMENT IN A PORTFOLIO

Each fund, other than the International Equity Fund, seeks to achieve its
investment goal by investing all of its assets in a corresponding portfolio.
These funds and their corresponding portfolios are as follows:

FUND PORTFOLIO
---- ---------
Core Equity Fund -- Growth Stock Portfolio
Utility Growth Fund -- Utilities Stock Portfolio
Tactical Asset Allocation Fund -- Mutual Fund Portfolio

Each portfolio has the same investment goal as its corresponding fund. Each
of these funds' investment policies are also substantially similar to its
corresponding portfolio's, except the fund may pursue its policies by investing
in an open-end management investment company with the same investment goal and
substantially similar policies and restrictions as the fund. Each of these funds
buys shares of its corresponding portfolio at net asset value. An investment in
a fund is an indirect investment in its corresponding portfolio.

It is possible that a fund may have to withdraw its investment in its
corresponding portfolio and subsequently invest in another open-end management
investment company with the same investment goal and substantially similar
policies. This could happen if a portfolio changes its investment goal or if the
board of trustees, at any time, considers it in the fund's best interest.

Although the International Equity Fund currently does not invest its assets
in a separate corresponding portfolio, the fund's investment policies permit
such an investment. Shareholders will receive 30 days prior written notice with
respect to any such investment.

A fund's structure, where it invests all of its assets in its corresponding
portfolio, is sometimes called a "master/feeder" structure. You will find more
detailed information about this structure and the potential risks associated
with it in the Statement of Additional Information.

CORE EQUITY FUND

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

Under normal conditions, at least 80% of the Portfolio's total assets will
be invested in domestic common stocks and at least 65% of the Portfolio's
total assets will be invested in growth stocks.

The manager selects for the Portfolio common stocks from all domestic
publicly traded common stocks; however, at least 70% of the assets of the
Portfolio invested in common stocks will be invested in common stocks which
are included in the S & P 500.

The Portfolio consists of investment portfolios representing each of the
industry sectors (identified by the Portfolio's subadviser) comprising the
S & P 500. The assets of the Portfolio will be allocated to each of these
industry sectors in approximately the same proportion as these industry
sectors are represented in the S & P 500 on a market
capitalization-weighted basis. The subadviser continuously reviews the
representation of the industry sectors in the S & P 500 and continuously
groups domestic publicly traded common stocks into a specific industry
sector.

<PAGE>

The Portfolio subadviser compares the total market value of the common
stocks in each industry sector of the S & P 500 to the total market value
of all common stocks in the S & P 500 to determine each industry sector's
weighting in the S & P 500. If the weighting of any industry sector in the
Portfolio varies from the weighting on a market-capitalization basis of
that industry sector in the S & P 500 at the end of any month, the
Portfolio subadviser will reallocate the amount of assets in the Portfolio
allocated to that industry sector. The subadviser may reallocate more
frequently than monthly if it chooses to do so. These reallocations may
cause additional transaction costs to the extent that securities may be
sold as part of such reallocations.

The assets of the Portfolio representing each of these industry sectors are
managed on a discretionary basis by one or more separate investment
advisers, called sector advisers, selected by the Portfolio subadviser. The
Portfolio subadviser's selection of sector advisers is reviewed and
approved by the trustees of the Portfolio.

Assets of the Portfolio representing each of the industry sectors are
managed by one or more sector advisers. However, if an advisory agreement
between a sector adviser and the Portfolio is terminated leaving no sector
adviser to manage the assets of the Portfolio representing an industry
sector, the Portfolio's subadviser will, upon termination and until a new
sector adviser is selected, manage and "index" the assets of the Portfolio
representing the applicable industry sector. In this case, the subadviser
will "index" the assets of the Portfolio representing its industry sector
by selling any stocks representing the industry sector that are not
included in the S&P 500 and investing the assets comprising the industry
sector in S&P 500 stocks identified by the Portfolio's subadviser as
belonging to that industry sector in the same proportion as those stocks
are represented in the S&P 500 on a market capitalization-weighted basis.

Each sector adviser is limited to the list of companies identified by the
Portfolio's subadviser which represents the sector adviser's specific
industry sector. Each sector adviser then selects those common stocks
which, in its opinion, best represent the industry sector the sector
adviser has been assigned. In selecting securities for the Portfolio, the
sector advisers evaluate factors believed to be favorable to long term
growth of capital, including specific financial characteristics of the
issuer such as historical earnings growth, sales growth, profitability and
return on equity. The sector advisers also analyze the issuer's position
within its industry sector as well as the quality and experience of the
issuer's management.

Up to 20% of the Portfolio's assets may be invested in temporary defensive
investments such as money market instruments and investment grade bonds.
Money market instruments consist of commercial paper, certificates of
deposit, banker's acceptances and other bank obligations, obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, high grade corporate obligations and repurchase
agreements. Investment grade bonds are those rated A or better by S&P or
Moody's or deemed to be of equivalent quality in the judgment of the
subadviser. The Portfolio may purchase stock index futures contracts and
related options. Up to 5% of the total assets of the Portfolio may be
invested in American Depositary Receipts.

UTILITY GROWTH FUND

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

The Portfolio seeks to achieve its goal by investing, under normal
conditions, at least 65% of its total assets in a diversified portfolio of
common stocks, preferred stocks, warrants and rights, and securities
convertible into common or preferred stock of public utility companies.
Public utility companies include domestic or foreign companies that provide
electricity, natural gas, water, telecommunications or sanitary services to
the public. The Portfolio will not invest more than 5% of its total assets
in equity securities of issuers whose debt securities are rated below
investment grade, that is, rated below one of the four highest rating
categories by Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or deemed to be of equivalent quality in the
judgment of the subadviser. Debt securities rated below investment grade
are rated below Baa or BBB.

<PAGE>

The remaining 35% of the Portfolio's assets may be invested in debt
securities issued by public utility companies, and/or equity and debt
securities of issuers outside of the public utility industry which in the
opinion of the subadviser stand to benefit from developments in the public
utilities industry. The Portfolio will not invest more than 40% of its
total assets in the telephone industry. The Portfolio may invest up to 25%
of its total assets in securities of foreign issuers. The Portfolio will
not invest more than 10% of its net assets in securities that are deemed to
be illiquid.

Investments are selected on the basis of fundamental analysis to identify
those securities that, in the judgment of the subadviser, provide an above
average level of current income and growth of income, and secondarily,
capital appreciation, but only when consistent with its primary investment
goal.

Fundamental analysis involves assessing a company and its business
environment, management, balance sheet, income statement, anticipated
earnings and dividends and other related measures of value. The subadviser
monitors and evaluates the economic and political climate of the area in
which each company is located. The relative weightings among common stocks,
debt securities and preferred stocks will vary from time to time based upon
the subadviser's judgment of the extent to which investments in each
category will contribute to meeting the Portfolio's investment goal.

The subadviser emphasizes quality in selecting investments for the
Portfolio. In addition to looking for high credit ratings, the subadviser
ordinarily looks for several of the following characteristics: above
average earnings growth; above average growth of book value; an above
average balance sheet; high earnings to debt service coverage; low ratio of
dividends to earnings; high return on equity; low debt to equity ratio; an
above average rating with respect to government regulation; growing rate
base; lack of major construction programs and strong management.

The Portfolio may invest up to 35% of its total assets in debt securities
of issuers in the public utility industries. Debt securities in which the
Portfolio invests are limited to those rated A or better by S&P or Moody's
or deemed to be of equivalent quality in the judgment of the subadviser.

During periods when the subadviser deems it necessary for temporary
defensive purposes, the fund may invest without limit in high quality money
market instruments. These instruments consist of commercial paper,
certificates of deposit, banker's acceptances and other bank obligations,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, high grade corporate obligations and repurchase
agreements.

The Portfolio, under normal circumstances, will invest 25% or more of its
total assets in securities of public utility companies. This concentration
policy is fundamental and may not be changed without shareholder approval.

TACTICAL ASSET ALLOCATION FUND

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

The Portfolio will seek to achieve its investment goal through asset
allocation and mutual fund selection. Under normal circumstances, at least
65% of the value of the Portfolio's total assets will be invested in mutual
funds. The underlying mutual funds will consist of diversified mutual funds
which invest primarily in common stock or securities convertible into or
exchangeable for common stock (such as convertible preferred stock,
convertible debentures or warrants) and which seek long-term growth or
appreciation, with current income typically of secondary importance. The
Portfolio will not invest in other funds of the Flex-funds family of funds
or the Flex-Partners family of funds, the corresponding portfolios of which
are also managed by the adviser.

<PAGE>

The Portfolio will generally purchase "no-load" mutual funds, which are
sold and purchased without a sales charge. However, the Portfolio may
purchase "load" mutual funds only if the load, or sales commission, is
waived for purchases or sales made by the Portfolio.

The Portfolio may at times desire to gain exposure to the stock market
through the purchase of "index" funds (funds which purchase stocks
represented in popular stock market averages) with a portion of its assets.

The manager addresses asset allocation decisions by making shifts in the
mix of stocks, bonds and cash in the Portfolio. The Portfolio may at times
assume a defensive position by investing up to 100% of its assets in money
market securities and investment grade bonds.

INTERNATIONAL EQUITY FUND

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

Normally, at least 70% of the fund's total assets will be invested in
equity securities of foreign issuers. Equity securities include common and
preferred stocks, convertible securities and warrants or rights to
subscribe to or purchase such securities, American Depositary Receipts,
European Depositary Receipts, and Global Depositary Receipts. However, the
fund is not required to invest in such securities. Rather, the fund may
invest in any type of investment grade securities, including debt
securities of foreign issuers, and obligations of the U.S. and foreign
governments and their political subdivisions.

The fund intends to diversify its assets broadly among countries and
normally invests in at least three foreign countries. The fund may,
however, invest a substantial portion of its assets in one or more of such
countries. The fund may invest in both developed and developing countries,
though it currently does not intend to invest more than 30% of its assets
in developing countries.

Developed countries include, among others: Australia, Belgium, Canada,
Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway,
Spain, Sweden, Switzerland, United Kingdom, Australia, Hong Kong, Japan,
Malaysia, New Zealand, and Singapore.

Developing countries include, among others: Portugal, Poland, Czech
Republic, Hungary, Turkey, India, Pakistan, Israel, Sri Lanka, Russia,
China, Indonesia, Korea, Greece, Jordan, Philippines, Taiwan, Thailand, the
Republic of South Africa, Peru, Brazil, Colombia, Argentina, Chile,
Venezuela, and Mexico.

The fund may attempt to hedge against unfavorable changes in currency
exchange rates by:

o Engaging in forward currency contracts, which are agreements between
two parties to exchange currencies at a set price on a future date.

o Purchasing and writing put and call options on foreign currencies,
which are contracts involving the right or obligation to deliver or
receive assets or money depending on the future performance of a
currency.

o Trading currency futures contracts and options on such contracts.

<PAGE>

The fund may also lend its portfolio securities.

During periods when the subadviser deems it necessary for temporary
defensive purposes, the fund may invest up to 20% of its assets in high quality
money market instruments. These instruments consist of commercial paper,
certificates of deposit, banker's acceptances and other bank obligations,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, high grade corporate obligations and repurchase agreements.

WHAT ARE DERIVATIVES?

A derivative is a financial contract whose value is based on or derived
from a traditional security (such as a stock or a bond), an asset (such as a
commodity like gold), or a market index (such as the S&P 500 Index). Futures and
options are derivatives that have been trading on regulated exchanges for over
20 years. These "traditional" derivatives are standardized contracts that can
easily be bought and sold, and whose market values are determined and published
daily. It is these characteristics that differentiate futures and options from
the relatively new types of derivatives. If used for speculation or as leveraged
investments, derivatives can carry considerable risks.

Similar risks exist for warrants (securities that permit their owners to
purchase a specific number of shares of stock at a predetermined price), and
convertible securities (securities that may be exchanged for a different asset).
For this reason, the Portfolios will not use futures, options, warrants or
convertible securities for speculative purposes or as leveraged investments that
magnify the gains or losses of an investment.

The reasons for which a Portfolio will invest in futures and options are:

o To keep cash on hand to meet shareholder redemptions or other needs
while simulating full investment in stocks or bonds;

o To reduce the Portfolio's transaction costs or add value when these
instruments are favorably priced;

o To forego taxes that would otherwise have to be paid on gains from the
sale of the Portfolio's securities; and

o To attempt to protect the value of certain securities owned or
intended to be purchased by the Portfolio while the manager is making
a change in the Portfolio's investment position.

WHO MANAGES THE FUNDS?

THE BOARD. The board of trustees oversees the management of the funds and the
portfolios and elects their officers. The officers are responsible for the funds
and the portfolios' day-to-day operations. Information concerning the trustees
and officers of both the funds and the portfolios appears in the Statement of
Additional Information.

MANAGERS. The Portfolios' and the International Equity Fund's investment
advisers and subadvisers are as follows:

Portfolio, if any, and Investment Investment
CORRESPONDING FUND ADVISER SUBADVISER(S)
------------------ ------- -------------

Utilities Stock Portfolio R. Meeder & Miller/Howard
(Utility Growth Fund) Associates, Inc. Investments, Inc.

<PAGE>

Growth Stock Portfolio R. Meeder & Sector Capital
(Core Equity Fund) Associates, Inc. Management, L.L.C.
and the Sector
Advisers (see "Sector
Advisers - Growth
Stock Portfolio")

Mutual Fund Portfolio R. Meeder & None
(Tactical Asset Allocation Fund) Associates, Inc.

International Equity Fund R. Meeder & Commercial Union
Associates, Inc. Investment Management,
Limited

INVESTMENT ADVISER. R. Meeder & Associates, Inc. ("RMA") serves as investment
adviser to the portfolios and the International Equity Fund. RMA has been an
investment adviser to individuals, pension and profit sharing plans, trusts,
charitable organizations, corporations and other institutions since 1974. As of
December 31, 1998, RMA and its affiliates managed approximately $1.4 billion in
assets. RMA maintains its principal offices at 6000 Memorial Drive, Dublin, OH
43017.

INVESTMENT SUBADVISER - GROWTH STOCK PORTFOLIO

Sector Capital Management, L.L.C. ("Sector Capital"), the Growth Stock
Portfolio's subadviser, furnishes investment advisory services in connection
with the management of the Growth Stock Portfolio. Sector Capital has been a
registered investment adviser to individuals, pension and profit sharing plans,
trusts, charitable organizations, corporations and other institutions since
January 1995. As of December 31, 1998, Sector Capital managed approximately $550
million in assets. Sector Capital has it principal offices at 5350 Poplar
Avenue, Suite 490, Memphis, Tennessee 38119.

Sector Capital utilizes its "Sector Plus" investment strategy to manage the
assets of the Growth Stock Portfolio. Pursuant to this strategy, Sector Capital
divides the assets of the Growth Stock Portfolio among ten industry sectors of
the S&P 500, each of which is managed by a separate sector adviser. Sector
Capital is responsible for overseeing the sector advisers and recommending their
hiring, termination and replacement. RMA and Sector Capital are ultimately
responsible for the investment performance of the Growth Stock Portfolio because
of RMA's responsibility to oversee Sector Capital and Sector Capital's
responsibility to oversee the sector advisers and recommend their hiring,
termination and replacement.

Sector Capital and the Growth Stock Portfolio have entered into a
sub-subadvisory agreement with each Sector Adviser selected for the Portfolio.
Sector Capital is responsible for selecting, subject to the review and approval
of the Growth Stock Portfolio's Board of Trustees, the sector advisers that have
distinguished themselves by able performance in respective areas of expertise in
sector management, and to review their continued performance. In addition,
Sector Capital is responsible for categorizing publicly traded domestic common
stocks into a specific industry sector. Sector Capital may also invest the
Growth Stock Portfolio's financial futures contracts and related options.

During the sector adviser selection process, Sector Capital performs initial due
diligence on all prospective sector advisers. In evaluating prospective sector
advisers, Sector Capital considers, among other factors, each candidate's level
of expertise; relative performance and consistency of performance; level of
adherence to investment discipline or philosophy; personnel, facilities and
financial strength; and quality of service and client communications.

Sector Capital monitors sector adviser performance through quantitative and
qualitative analysis, as well as periodic in-person, telephonic and written
consultations with sector advisers. Sector Capital has responsibility for
communicating performance expectations and evaluations to sector advisers and

<PAGE>

ultimately recommending to the Board of Trustees of the Growth Stock Portfolio
whether sector advisers' contracts should be renewed, modified, or terminated.
Sector Capital provides reports to the Growth Stock Portfolio's Board of
Trustees regarding the results of its evaluation and monitoring functions.

The Securities and Exchange Commission has granted the Growth Stock Portfolio an
exemptive order that permits the Growth Stock Portfolio and Sector Capital to
enter into and materially amend sub-subadvisory agreements with sector advisers,
without such agreements being approved by the Growth Stock Portfolio's investors
or the Core Equity Fund's shareholders. The exemptive order does not apply,
however, to sub-subadvisory agreements with affiliated persons of the Growth
Stock Portfolio, the Manager or Sector Capital, other than by reason of such
affiliated person serving as an existing sector adviser to the Growth Stock
Portfolio, which still require shareholder approval. The exemptive order also
permits the Growth Stock Portfolio and the Core Equity Fund to disclose, on an
aggregate basis rather than individually, the fees paid to sector advisers that
are not such affiliated persons. In addition, the exemptive order includes the
condition that within 90 days of the hiring of any new sector advisers, the
Manager and Sector Capital will furnish shareholders of the fund with an
information statement about the new sector adviser and sub-subadvisory
agreement. Any changes to the advisory contract between the Growth Stock
Portfolio and the manager or the subadvisory agreement among the Growth Stock
Portfolio, Manager and Sector Capital will still require shareholder approval. A
majority of the shareholders of The Core Equity Fund approved the operation of
the Trust in accordance with the exemption.

SECTOR ADVISERS - GROWTH STOCK PORTFOLIO

Subject to the supervision and direction of Sector Capital and, ultimately, the
Board of Trustees of the Growth Stock Portfolio, each sector adviser's
responsibilities are limited to:

o managing its portion of the securities held by the Growth Stock
Portfolio in accordance with the Portfolio's stated investment goals
and strategies,

o making investment decisions for the Growth Stock Portfolio, and

o placing orders to purchase and sell securities on behalf of the Growth
Stock Portfolio.

The following sets forth certain information about each of the sector advisers:

MILLER/HOWARD INVESTMENTS, INC. serves as sector adviser to the utilities
and transportation sectors of the Growth Stock Portfolio. Miller/Howard is a
registered investment adviser that has been providing investment services to
broker-dealers, investment advisers, employee benefit plans, endowment
portfolios, foundations and other institutions and individuals since 1984. As of
December 31, 1998, Miller/Howard managed approximately $165 million in assets.
Lowell G. Miller, President and Secretary of Miller/Howard, is the portfolio
manager primarily responsible for the day-to-day management of those assets of
the Growth Stock Portfolio allocated to Miller/Howard. Mr. Miller has served as
President and portfolio manager of Miller/Howard since 1984. Miller/Howard is
also the subadviser to the Utilities Stock Portfolio, a corresponding portfolio
to The Flex-funds' Total Return Utilities Fund and The Flex-Partners' Utility
Growth Fund. Miller/Howard's principal executive offices are located at 141
Upper Byrdcliffe Road, Post Office Box 549, Woodstock, New York 12498.

<PAGE>

has been Chairman of the Board, President, and Chief Executive Officer of
Hallmark since 1994 and has been associated with Hallmark since 1986. Hallmark's
principal executive offices are located at One Greenbrook Corporate Center, 100
Passaic Avenue, Fairfield, New Jersey 07004.

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. serves as sector adviser to the
consumer durable and non-durable sectors of the Growth Stock Portfolio. Barrow
is a registered investment adviser that has been providing investment services
to banks; investment companies; pension and profit sharing plans; charitable
organizations and corporations since 1979. As of December 31, 1998, Barrow
managed approximately $36.3 billion in assets. Michael C. Mewhinney is the
portfolio manager primarily responsible for the day-to-day management of those
assets of the Growth Stock Portfolio allocated to Barrow. Mr. Mewhinney has
served as a portfolio manager and Principal for Barrow since 1979. Barrow's
principal executive offices are located at 3232 McKinney Avenue, 15th Floor,
Dallas, Texas 75204-2429.

THE MITCHELL GROUP, INC. serves as sector adviser to the energy sector of
the Growth Stock Portfolio. The Mitchell Group is a registered investment
adviser that has been providing investment services to individuals, banks,
investment companies, pension and profit sharing plans, charitable
organizations, corporations and other institutions since 1989. As of December
31, 1998, The Mitchell Group managed approximately $269 million in assets.
Rodney Mitchell, who has served as President, Chief Executive Officer, and Chief
Financial Officer of The Mitchell Group since 1989, is the portfolio manager
primarily responsible for the day-to-day management of those assets of the
Growth Stock Portfolio allocated to The Mitchell Group. The Mitchell Group's
principal executive offices are located at 1100 Louisiana, #4810, Houston, Texas
77002.

ASHLAND MANAGEMENT INCORPORATED serves as sector adviser to the materials
and services sector of the Growth Stock Portfolio. Ashland is a registered
investment adviser that has been providing investment services to individuals,
pension and profit sharing plans, charitable organizations, corporations and
other institutions since 1975. As of December 31, 1998, Ashland managed
approximately $1.5 billion in assets. Terence J. McLaughlin, Managing Director
of Ashland, and Deborah C. Ohl, a Portfolio Manager, are the portfolio managers
primarily responsible for the day-to-day management of those assets of the
Growth Stock Portfolio allocated to Ashland. Mr. McLaughlin has been a Portfolio
Manager for Ashland since 1984. Ms. Ohl has been employed by Ashland since
August 1992 and has served as a Portfolio Manager for Ashland since 1993.
Ashland's principal executive offices are located at 26 Broadway, New York, New
York 10004.

DELTA CAPITAL MANAGEMENT INC. serves as sector adviser to the finance
sector of the Portfolio. Delta Capital is a registered investment adviser that
has been providing investment services to individuals, endowments, corporations
and other institutions since 1992. As of December 31, 1998, Delta Capital
managed approximately $700 million in assets. Jonathan Kay is the portfolio
manager primarily responsible for the day-to-day management of those assets of
the Portfolio allocated to Delta Capital. Mr. Kay has been a portfolio manager
for Delta Capital since April 1998. From 1993 to March 1998, Mr. Kay was a
portfolio manager for Scudder Kemper Investments, Inc., a registered investment
adviser. Delta Capital's principal executive offices are located at 745 Fifth
Avenue, Suite 816, New York, New York 10151.

DRESDNER RCM GLOBAL INVESTORS LLC (formerly RCM Capital Management, L.L.C.)
serves as sector adviser to the technology sector of the Growth Stock Portfolio.
Dresdner RCM is a registered investment adviser that provides investment
services to institutional and individual clients and registered investment
companies. Dresdner RCM was established in April 1996 as the successor to the
business and operations of RCM Capital Management, a California Limited
Partnership that, with its predecessors, has been in operation since 1970. As of
December 31, 1998, Dresdner RCM managed approximately $34 billion in assets.
Walter C. Price and Huachen Chen, each Managing Directors of Dresdner RCM, are
the portfolio managers primarily responsible for the day-to-day management of
those assets of the Growth Stock Portfolio allocated to Dresdner RCM. Messrs.
Price and Chen have managed equity portfolios on behalf of Dresdner RCM since
1985. Dresdner RCM's principal executive offices are located at Four Embarcadero
Center, San Francisco, CA 94111.

<PAGE>

ALLIANCE CAPITAL MANAGEMENT L.P. serves as sector adviser to the health
sector of the Growth Stock Portfolio. Alliance, a registered investment adviser,
is an international investment manager supervising client accounts with assets
as of December 31, 1998 totaling approximately $286.7 billion. Alliance provides
investment services primarily to corporate employee benefit funds, public
employee retirement systems, investment companies, foundations, and endowment
funds. Raphael L. Edelman, Vice President of Alliance, is the portfolio manager
primarily responsible for the day-to-day management of those assets of the
Growth Stock Portfolio allocated to Alliance. Mr. Edelman, who has sixteen years
of investment experience, joined Alliance's research department in 1986 as an
analyst after working two years as a manager in Alliance's mutual fund division.
Alliance's principal executive offices are located at 1345 Avenue of the
Americas, New York, NY 10105.

INVESTMENT SUBADVISER - UTILITIES STOCK PORTFOLIO

Miller/Howard Investments, Inc. ("Miller/Howard"), the Utilities Stock
Portfolio's subadviser, makes investment decisions for the Utilities Stock
Portfolio. RMA continues to have responsibility for all investment advisory
services provided to the Utilities Stock Portfolio and supervises
Miller/Howard's performance of such services. Miller/Howard is a registered
investment adviser that has been providing investment services to
broker-dealers, investment advisers, employee benefit plans, endowment
portfolios, foundations and other institutions and individuals since 1984. As of
December 31, 1998, Miller/Howard managed approximately $165 million in assets.
Miller/Howard has its principal offices at 141 Upper Byrdcliffe Road, P. O. Box
549, Woodstock, New York 12498.

INVESTMENT SUBADVISER - INTERNATIONAL EQUITY FUND

Commercial Union Investment Management, Limited ("CUIM") is the investment
subadviser to the International Equity Fund. CUIM is a wholly-owned subsidiary
of CGU plc., an international insurance and financial services organization that
was formed by the recent merger of Commercial Union and General Accident. As of
September 30, 1998, CUIM and its affiliates managed $69.7 billion in assets.
CUIM is an investment adviser to mutual funds, public and corporate employee
benefit plans, charities, insurance companies, banks, investment trusts and
other institutions. CUIM is regulated in the United Kingdom by the Investment
Management Regulatory Organisation in the conduct of its Investment Business
under the provisions of the Financial Services Act of 1986. CUIM and its
affiliates have their principal offices at St. Helen's, 1 Undershaft, London,
England EC3P 3DQ and have investment offices in Amsterdam, Paris, Boston,
Toronto, Tokyo, Singapore, Cape Town and Melbourne.

RMA continues to have responsibility for all investment advisory services
provided to the fund and supervises CUIM's performance of such services.

PORTFOLIO MANAGERS

The individuals primarily responsible for the management of each of the
portfolios and the International Equity fund are listed below:

THE GROWTH STOCK PORTFOLIO. William L. Gurner, President of Sector Capital, is
primarily responsible for the day-to-day management of the Growth Stock
Portfolio through interaction with each of the sector advisers. Mr. Gurner is
also primarily responsible for managing the futures contracts and related
options of the portfolio on behalf of the subadviser. Mr. Gurner has managed the
portfolio since December 1996. Mr. Gurner has been President and portfolio
manager of Sector Capital since January 1995. From September 1987 through
December 1994, Mr. Gurner served as Manager of Pension Funds for Federal
Express. Philip A. Voelker, Senior Vice President and Chief Investment Officer
of RMA, is primarily responsible for managing the portfolio's liquidity reserve
and managing the futures contracts and related options of the Portfolio on
behalf of RMA. Mr. Voelker has managed assets on behalf of RMA since 1975.
Please see "Sector Advisers - Growth Stock Portfolio" for more information about
each of the portfolio's sector advisers.

<PAGE>

THE UTILITIES STOCK PORTFOLIO. The portfolio manager responsible for the
Utilities Stock Portfolio's investments is Lowell G. Miller, a director and the
President of Miller/Howard, the subadviser to the portfolio. Mr. Miller has
served as President and portfolio manager of Miller/Howard and its predecessor
since 1984 and has managed the portfolio since its inception in 1995.

THE MUTUAL FUND PORTFOLIO. The portfolio managers responsible for the Mutual
Fund Portfolio's investments are Robert S. Meeder, Jr. and Philip A. Voelker.
Mr. Meeder, President of RMA, joined RMA in 1983 and has been the portfolio
manager for the portfolio since 1988. Mr. Voelker, Senior Vice President and
Chief Investment Officer of RMA, has managed assets on behalf of RMA since 1975
and began co-managing the portfolio in April 1998.

INTERNATIONAL EQUITY FUND. Charles Brand, CUIM's Director of International
Equities and a member of its Strategy Committee, is responsible for managing the
overall strategic asset allocation of the fund. Mr. Brand has been a Director of
CUIM, with responsibility for international equity asset allocation across all
funds, since 1991.

Jane Coffey, Bradley Mitchell, Andrew Hitchings, Carrie Schloss and Mamoru Imai
exercise regional portfolio management responsibilities for the fund. Ms.
Coffey, Director and Head of European Equities for the subadviser, joined CUIM
in 1997 and is the portfolio manager responsible for the fund's Continental
European portfolio. Mr. Mitchell, Associate Director and Senior Fund Manager of
UK equities for the subadviser, joined CUIM in 1987 and is responsible for the
fund's United Kingdom portfolio. Mr. Hitchings, Managing Director of CUIM
Singapore, joined the subadviser in 1986 and is the portfolio manager
responsible for the fund's Asia-Pacific portfolio. Ms. Schloss, Director and
Head of Emerging Markets for the subadviser, joined CUIM in 1997 and is the
portfolio manager responsible for the fund's emerging markets portfolio. Mamoru
Imai, Representative Director of CUIM (Japan), joined the subadviser in 1989 and
is the portfolio manager for the fund's Japanese portfolio.

MANAGEMENT FEES. During the calendar year ended December 31, 1998, the
portfolios and the International Equity Fund paid management fees totaling the
following:

Management Fee as Percentage
FUND OF AVERAGE DAILY NET ASSETS

Growth Stock Portfolio 0.99%
Utilities Stock Portfolio 1.00%
Mutual Fund Portfolio 0.81%
International Equity Fund 0.83%

For more information about management fees, please see "Investment Adviser" and
"Investment Subadviser" in the Statement of Additional Information.

DISTRIBUTOR. Adviser Dealer Services, Inc. ("ADS"), 6000 Memorial Drive, Dublin,
Ohio 43017, an affiliate of RMA, serves as the distributor of the shares of the
funds.

YEAR 2000. The common past practice in computer programming of using just two
digits to identify a year has resulted in the Year 2000 challenge throughout the
information technology industry. If unchanged, many computer applications and
systems could misinterpret dates occurring after December 31, 1999, leading to
errors or failure. This failure could adversely affect the funds' operations,
including pricing, securities trading and the servicing of shareholder accounts.

<PAGE>

RMA is dedicated to providing uninterrupted, high-quality performance from
our computer systems before, during and after 2000. We are now renovating and
testing our internal systems. RMA is diligently working with external partners,
suppliers, vendors and other service providers to ensure that the systems with
which we interact will remain operational at all times.

In addition to taking reasonable steps to secure our internal systems and
external relationships, RMA is further developing contingency plans intended to
ensure that unexpected systems failures will not adversely affect the funds'
operations. RMA intends to monitor these processes through the rollover of 1999
into 2000 and to quickly implement alternative solutions if necessary.

Despite RMA's efforts and contingency plans, however, noncompliant computer
systems would have an adverse material effect on the funds' business, operations
or financial condition. Additionally, the funds' performance could be hurt if a
computer system failure at a company or governmental unit affects the prices of
securities the funds own. Issuers in countries outside the U.S., particularly in
emerging markets, may not be required to make the same level of disclosure about
year 2000 readiness as required in the U.S. RMA, of course, cannot audit any
company and its major suppliers to verify their year 2000 readiness. RMA
understands that many foreign countries and companies are well behind their U.S.
counterparts in preparing for 2000.

PAST PERFORMANCE OF PRIVATE ACCOUNTS

PURPOSE OF PAST PERFORMANCE. William L. Gurner is the President and
portfolio manager of Sector Capital Management, L.L.C. ("Sector Capital"), the
subadviser to the Growth Stock Portfolio in which all of the assets of the Core
Equity Fund are invested. See "Investment Subadviser - Growth Stock Portfolio"
and "Portfolio Managers" under "Who Manages the Funds?" The performance
information below is provided to show the past performance of Mr. Gurner and
Sector Capital in managing substantially similar accounts to the Growth Stock
Portfolio and to measure the past performance against a market index, the S&P
500 Composite Stock Price Index.

WHAT PAST PERFORMANCE DOES NOT REPRESENT. THE PAST PERFORMANCE SHOWN BELOW
DOES NOT REPRESENT THE PERFORMANCE OF THE GROWTH STOCK PORTFOLIO OR THE CORE
EQUITY FUND. You should not consider the past performance shown below as an
indication of the future performance of the Growth Stock Portfolio or the Core
Equity Fund.

SIMILAR ACCOUNTS. Mr. Gurner served as Manager - Trust Investments for an
employee benefit plan of a large corporation from September 1987 through
December 1994. The employee benefit plan had investment goals, policies,
strategies and risks substantially similar to those of the Growth Stock
Portfolio and the Core Equity Fund, except during the period from September 1987
through February 1991, when the employee benefit plan was managed in a different
manner than the Growth Stock Portfolio and the Core Equity Fund.

Mr. Gurner left the large corporation in December, 1994 and founded Sector
Capital. Sector Capital subadvises the Growth Stock Portfolio and manages
private accounts that have investment goals, policies, strategies and risks
similar to those of the Growth Stock Portfolio and the Core Equity Fund. Mr.
Gurner and Sector Capital engaged substantially the same Sector Advisers
currently engaged by the Growth Stock Portfolio to manage the employee benefit
plan and such private accounts.

CALCULATION OF PAST PERFORMANCE. Mr. Gurner and Sector Capital's composite
performance data shown below were calculated in accordance with recommended
standards of the Association for Investment Management and Research ("AIMR"*),
retroactively applied to all time periods. All returns presented were calculated
on a total return basis and include all dividends and interest, accrued income
and realized and unrealized gains and losses. All returns reflect the deduction

<PAGE>

of investment advisory fees, brokerage commissions and execution costs paid by
the employee benefit plan and the private accounts without providing for federal
or state income taxes. Custodial fees, if any, were not used to reduce
performance returns. Sector Capital's composite includes all actual, fee paying,
discretionary, private accounts managed by Sector Capital that have investment
objectives, policies, strategies and risks substantially similar to those of the
Growth Stock Portfolio and the Core Equity Fund. Cash and equivalents are
included in performance returns. The yearly returns of Sector Capital's
composite combine the individual accounts' returns by asset-weighting each
individual account's asset value as of the beginning of each quarter. The yearly
returns are computed by linking the returns of each quarter within the calendar
year.

DIFFERENCES IN REGULATION. The employee benefit plan managed by Mr. Gurner
and the private accounts that are included in Sector Capital's composite are not
subject to the same types of expenses to which the Growth Stock Portfolio or the
Core Equity Fund are subject nor to the diversification requirements, specific
tax restrictions and investment limitations imposed on the Growth Stock
Portfolio and the Core Equity Fund by federal securities laws governing mutual
funds and tax laws. Consequently, the performance results for the employee
benefit plan managed by Mr. Gurner and Sector Capital's composite could have
been adversely affected if the employee benefit plan and the private accounts
included in the composite had been regulated as mutual funds under the federal
securities laws.

The investment results of Mr. Gurner and Sector Capital's composite
presented below are unaudited and not intended to predict or suggest the returns
that might be experienced by the Growth Stock Portfolio or that you might
experience by investing in the Core Equity Fund. You should also be aware that
the SEC uses a method different from that used below to calculate mutual fund
performance, which could result in different performance returns.

-----------------------
*AIMR is a non-profit membership and education organization that has
formulated a set of performance presentation standards for investment advisers.
These AIMR performance presentation standards are intended to promote full and
fair presentations by investment advisers of their performance results, and
ensure uniformity in reporting so that performance results of investment
advisers can be compared.

PAST PERFORMANCE OF PRIVATE ACCOUNTS

SECTOR CAPITAL
YEAR MR. GURNER MANAGEMENT, L.L.C. S&P 500(1)
- ---- ---------- ------------------ -------

1991(2) 18.79% N.A. 16.66%
1992 8.26% N.A. 7.69%
1993 14.78% N.A. 10.00%
1994 0.97% N.A. 1.30%
1995 N.A. 45.79% 37.53%
1996 N.A. 26.27% 23.08%
1997 N.A. 32.53% 33.35%
1998 N.A. 27.91% 28.58%

(1) The S&P 500 Index is an unmanaged index containing common stocks of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the U.S. stock market. The Index reflects the
reinvestment of income dividends and capital gain distributions, if any, but
does not reflect fees, brokerage commissions, or other expenses of investing.

(2) For the period from March 1, 1991 through December 31, 1991.

<PAGE>

DISTRIBUTION FEES

Rule 12b-1 of the Investment Company Act permits mutual funds that adopt a
written plan to pay out of fund assets certain expenses relating to the sale and
distribution of their shares. Each of the Core Equity, Utility Growth, and
Tactical Asset Allocation Funds has adopted two 12b-1 plans. Under these plans,
each fund class pays the distributor an annual fee as follows:

CLASS DISTRIBUTION FEE AS % OF NET ASSETS
A 0.25%
C 0.75%

Each of the Core Equity, Utility Growth, and Tactical Asset Allocation
Funds has adopted two service plans. Under these plans, each fund class pays the
distributor an annual fee as follows:

CLASS SERVICE FEE AS % OF NET ASSETS
A 0.25%
C 0.25%

The International Equity Fund has adopted distribution and service plans.
Under its plans, the International Equity Fund pays the distributor an annual
distribution (12b-1) fee of up to 0.25% of fund assets and an annual service fee
of up to 0.25% of fund assets.

Distribution fees are used primarily to offset initial and ongoing
commissions paid to brokerage firms for selling shares of the funds. The
distributor may use distribution fees that are not allocated to brokerage firms
to reduce its own sales and marketing expenses. Service fees are used primarily
to reimburse brokerage firms for providing personal services to fund
shareholders and maintaining shareholder accounts. Brokerage firms that have
sold Class A shares are eligible for reimbursement at the time of sale.
Brokerage firms that have sold Class C shares are eligible for reimbursement
beginning twelve months after the time of sale. The distributor may use service
fees that are not allocated to brokerage firms to reduce its own expenses for
providing personal services and maintaining shareholder accounts.

Because these fees are paid out of the funds' assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of charges.

HOW IS THE TRUST ORGANIZED?

Each fund is an open-end management investment company that is a series of
The Flex-Partners trust (the "Trust").

The Trust is supervised by a board of trustees, an independent body that
has ultimate responsibility for the funds' activities. The board retains various
companies to carry out the funds' operations, including the investment adviser,
custodian, transfer agent and others. The board has the right, and the
obligation, to terminate the funds' relationship with any of these companies and
to retain a different company if the board believes it is in the shareholders'
best interests. At a mutual fund's inception, the initial shareholder (typically
the adviser) appoints the fund's board. Thereafter, the board and the
shareholders determine the board's membership. The board of the Trust may
include individuals who are affiliated with the investment adviser.

The funds do not hold annual shareholder meetings, but may hold special
meetings for such purposes as electing or removing board members, changing
fundamental policies, approving a management contract or approving a 12b-1 plan
(12b-1 fees are explained in "Distribution Fees").

<PAGE>

PORTFOLIO TRADES

In placing portfolio trades, each portfolio's or the International Equity
Fund's advisers may use brokerage firms that market the Portfolio's
corresponding fund's shares or the International Equity Fund's shares, but only
when the advisers believe no other firm offers a better combination of quality
execution (i.e., timeliness and completeness) and favorable price. As long as
the advisers believe a brokerage firm can provide this combination, they may
consider research and related services when choosing a brokerage firm. Brokerage
firms may use a portion of the commissions paid by a portfolio or the
International Equity Fund to reduce its, or its corresponding fund's, expenses.

INVESTMENT GOALS

None of the portfolios' or the International Equity Fund's investment goals
are fundamental and may be changed without shareholder approval.

DIVERSIFICATION

All of the funds are diversified, which means each fund may not, with
respect to at least 75% of its assets, invest more than 5% in the securities of
one company.

HOW DOES TAXATION AFFECT THE FUNDS AND THEIR SHAREHOLDERS?

HOW DO THE PORTFOLIOS AND THE INTERNATIONAL EQUITY FUND EARN INCOME AND GAINS?

The portfolios and the International Equity Fund earn dividends and
interest (the Portfolios' and International Equity Fund's "income") on their
investments. When a portfolio or the International Equity Fund sells a security
for a price that is higher than it paid, it has a gain. When a portfolio or the
International Equity Fund sells a security for a price that is lower than it
paid, it has a loss. If a portfolio or the International Equity Fund has held
the security for more than one year, the gain or loss will be a long-term
capital gain or loss. If a portfolio or the International Equity Fund has held
the security for one year or less, the gain or loss will be a short-term capital
gain or loss. The portfolio's or the International Equity Fund's gains and
losses are netted together, and, if a portfolio or the International Equity Fund
has a net gain (a portfolio's or the International Equity Fund's "gains"), that
gain will generally be distributed to you.

TAXATION OF THE PORTFOLIOS' AND THE INTERNATIONAL EQUITY FUND'S INVESTMENTS

The portfolios and the International Equity Fund invest your money in the
securities that are described in the sections "Strategies" and "How Does the
Fund Pursue Its Investment Goal?" Special tax rules may apply in determining the
income and gains that a portfolio or the International Equity Fund earns on its
investments. These rules may, in turn, affect the amount of distributions that
the funds pay to you. These special tax rules are discussed in the SAI.

TAXATION OF A FUND. As a regulated investment company, a fund generally
pays no federal income tax on the income and gains that it distributes to you.

FOREIGN TAXES. Foreign governments may impose taxes on the income and gains
from a portfolio's or the International Equity Fund's investments in foreign
securities. These taxes will reduce the amount of the funds' distributions to
you.

TAXATION OF SHAREHOLDERS

WHAT IS A DISTRIBUTION?

<PAGE>

As a shareholder, you will receive your share of the funds' income and
gains on their corresponding portfolios', or the International Equity Fund's,
investments in stocks and other securities. The funds' income and short-term
capital gains are paid to you as ordinary dividends. The funds' long-term
capital gains are paid to you as capital gain distributions. If the fund pays
you an amount in excess of its income and gains, this excess will generally be
treated as a non-taxable distribution. These amounts, taken together, are what
we call the funds' distributions to you. The Utility Growth Fund pays dividends
from its net investment income on a monthly basis. The Core Equity Fund and The
Tactical Asset Allocation Fund pay dividends from their net investment income on
a quarterly basis. The International Equity Fund pays dividends from its net
investment income on at least an annual basis. All funds distribute capital
gains, if any, annually.

DISTRIBUTIONS. Distributions from a fund, whether you receive them in cash
or in additional shares, are generally subject to income tax. A fund will send
you a statement in January of the current year that reflects the amount of
ordinary dividends, capital gain distributions and non-taxable distributions you
received from the funds in the prior year. This statement will include
distributions declared in December and paid to you in January of the current
year, but which are taxable as if paid on December 31 of the prior year. The IRS
requires you to report these amounts on your income tax return for the prior
year.

DISTRIBUTIONS TO RETIREMENT PLANS. Fund distributions received by your
qualified retirement plan, such as a 401(k) plan or IRA, are generally
tax-deferred; this means that you are not required to report fund distributions
on your income tax return when paid to your plan, but, rather, when your plan
makes payments to you. Special rules apply to payouts from Roth and Education
IRAs.

DIVIDENDS-RECEIVED DEDUCTION. Corporate investors may be entitled to a
dividends-received deduction on a portion of the ordinary dividends they receive
from the funds.

BUYING A DIVIDEND. Purchasing fund shares in a taxable account shortly
before a distribution is known as "buying a dividend." In taxable accounts, you
must pay income taxes on the distribution whether you take the distribution in
cash or reinvest it. In addition, you will have to pay taxes on the distribution
whether the value of your investment decreased, increased or remained the same
after you bought the fund shares. The risk in buying a dividend is that the
portfolios may build up taxable gains throughout the period covered by a
distribution, as securities are sold at a profit. We distribute those gains to
you, after subtracting any losses, even if you did not own the shares when the
gains occurred.

DIVIDEND REINVESTMENTS. Most investors have their dividends reinvested in
additional shares of the same fund. If you choose this option, or if you do not
indicate any choice, your dividends will be reinvested on the dividend payable
date. Alternatively, you can choose to have a check for your dividends mailed to
you. However, if the check is not deliverable, your dividends will be
reinvested.

REDEMPTIONS AND EXCHANGES

WHAT IS A REDEMPTION?

A redemption is a sale by you to a fund of some or all of your shares in
the fund. The price per share you receive when you redeem fund shares may be
more or less than the price at which you purchased those shares. An exchange of
shares in a fund for shares of another Flex-Partners' fund is treated as a
redemption of fund shares and then a purchase of shares of the other
Flex-Partners' fund. When you redeem or exchange your shares, you will generally
have a gain or loss, depending upon whether the amount you receive for your
shares is more or less than your cost or other basis in the shares.

<PAGE>

If you redeem your shares or if you exchange your shares in a fund for
shares in another Flex-Partners' fund, you will generally have a gain or loss
that the IRS requires you to report on your income tax return. All or a portion
of any loss on the redemption or exchange of your shares will be disallowed by
the IRS if you purchase other shares in the fund within 30 days before or after
your redemption or exchange.

U.S. GOVERNMENT INTEREST. Many states grant tax-free status to dividends
paid from interest earned on direct obligations of the U.S. Government, subject
to certain restrictions. The funds will provide you with information at the end
of each calendar year on the amount of any such dividends that may qualify for
exemption from reporting on your individual income tax returns.

NON-U.S. INVESTORS. Ordinary dividends generally will be subject to U.S.
income tax withholding. Your home country may also tax ordinary dividends,
capital gain distributions and gains arising from redemptions or exchanges of
your fund shares. Fund shares held by the estate of a non-U.S. investor may be
subject to U.S. estate tax. You may wish to contact your tax advisor to
determine the U.S. and non-U.S. tax consequences of your investment in the
funds.

STATE TAXES. Ordinary dividends and capital gain distributions that you
receive from the funds, and gains arising from redemptions or exchanges of your
funds shares will generally by subject to state and local income tax. The
holding of funds shares may also be subject to state and local intangibles
taxes. You may wish to contact your tax advisor to determine the state and local
tax consequences of your investment in the funds.

HOW TO READ THE FINANCIAL HIGHLIGHTS TABLE

This explanation uses the Core Equity Fund - Class A as an example. The
fund began calendar year 1998 with a net asset value (price) of $12.67 per
share. During the year, the fund earned $0.00 per share from investment income
(interest and dividends less operating expenses) and $2.88 per share from
investments that had appreciated in value or that were sold for higher prices
than the fund paid for them.

Shareholders received $0.23 per share in the form of dividend and capital
gains distributions. A portion of each year's distributions may come from the
prior year's income or capital gains.

The earnings ($2.88 per share) minus the distributions ($0.23 per share)
resulted in a share price of $15.32 at the end of the year. This was an increase
of $2.65 per share (from $12.67 at the beginning of the year to $15.32 at the
end of the year). For a shareholder who reinvested the distributions in the
purchase of more shares, the total return from the fund was 22.78% for the year.

As of December 31, 1998, the Core Equity Fund Class A shares had
approximately $5,375,000 in net assets. For the year, the Core Equity Fund Class
A shares' expense ratio was 1.80% ($18 per $1,000 of net assets); and its net
investment income amounted to 0.09% of its average net assets. It sold and
replaced securities valued at 79.98% of its net assets.

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand the
funds' financial performance for the past 5 years (or, if shorter, the period of
the fund's operations). Certain information reflects financial results for a
single fund share. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in the funds (assuming
reinvestment of all dividends and distributions). This information has been
audited by KMPG LLP, independent auditors, whose report, along with the funds'
financial statements, are included in the annual report, which is available upon
request.

<PAGE>

1998 1997
CORE EQUITY FUND CLASS A CLASS C CLASS A CLASS C

NET ASSET VALUE, BEGINNING OF PERIOD $12.67 $12.66 $12.50 $12.50
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 0.00 (0.01) 0.01 (0.01)
- --------------------------------------------------------------------------------
Net Gains or Losses on Securities
(BOTH REALIZED AND UNREALIZED) 2.88 2.90 0.24 0.24
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.88 2.89 0.25 0.23
- --------------------------------------------------------------------------------

LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
DIVIDENDS (FROM NET INVESTMENT INCOME) -- -- (0.01) --
- --------------------------------------------------------------------------------
DISTRIBUTIONS (FROM CAPITAL GAINS) (0.23) (0.23) (0.05) (0.05)
- --------------------------------------------------------------------------------
DISTRIBUTIONS (IN EXCESS OF CAPITAL
GAINS) -- -- (0.02) (0.02)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.23) (0.23) (0.08) (0.07)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $15.32 $15.32 $12.67 $12.66
- --------------------------------------------------------------------------------
TOTAL RETURN 22.78% 22.85% 2.00%(1) 1.88%(1)
- --------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA

NET ASSETS, END OF PERIOD ($000) $5,375 $2,466 $245 $80
- --------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.80% 1.97% 2.00%(2) 2.25%(2)
- --------------------------------------------------------------------------------
RATIO OF NET INCOME (LOSS) TO AVERAGE
NET ASSETS 0.09% (0.11)% 0.10%(2) (0.13)%(2)
- --------------------------------------------------------------------------------
Ratio of Expenses to Average Net
Assets, Before Reimbursement
of Fees 3.13% 3.85% 9.50%(2) 16.58%(2)
- --------------------------------------------------------------------------------
Ratio of Net Income (Loss) to Average
Net Assets, Before Reimbursement
of Fees (1.24)% (1.99)% (7.40%)(2) (14.46%)(2)
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 79.98% 79.98% 130% 130%
- --------------------------------------------------------------------------------

* August 1, 1997 (date of commencement of operations) to December 31, 1997

(1) Not Annualized
(2) Annualized

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional information.

<TABLE>
<CAPTION>
1998 1997 1996 1995*
UTILITY GROWTH FUND CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C
------- ------- ------- ------- ------- ------- ------- -------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $17.37 $17.17 $15.09 $14.91 $14.26 $14.27 $12.50 $12.50
- -------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 0.23 0.16 0.22 0.19 0.29 0.26 0.12 0.10
- -------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(BOTH REALIZED AND UNREALIZED) 1.20 1.21 4.03 3.99 1.48 1.49 1.76 1.77
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.43 1.37 4.25 4.18 1.77 1.75 1.88 1.87
- ------------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------------------------------------------------
DIVIDENDS (FROM INVESTMENT INCOME) (0.21) (0.16) (0.22) (0.19) (0.29) (0.26) (0.12) (0.10)
- ----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (FROM CAPITAL GAINS) -- -- (1.75) (1.73) (0.65) (0.85) -- --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.21) (0.16) (1.97) (1.92) (0.94) (1.11) (0.12) (0.10)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $18.59 $18.38 $17.37 $17.17 $15.09 $14.91 $14.26 $14.27
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 8.34% 8.08% 28.41% 28.25% 12.61% 12.45% 15.11%(1) 15.07%(1)
- ------------------------------------------------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($000) $1,550 $1,299 $1,285 $1,283 $1,377 $1,515 $641 $782
- ------------------------------------------------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% 2.25% 2.00% 2.25% 1.75% 2.00% 1.75%(2) 2.00%(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
TO AVERAGE NET ASSETS 1.20% 0.93% 1.36% 1.21% 2.03% 1.85% 2.17%(2) 1.72%(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
BEFORE REIMBURSEMENT OF FEES 3.80% 4.31% 4.07% 4.56% 4.37% 4.65% 22.70%(2) 13.37%(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets, before
REIMBURSEMENT OF FEES (0.60)% (1.13)% (0.71%) (1.10)% (0.59%) (0.80%) (18.78%)(2) (9.55%)(2)
- ------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 51.36% 51.36% 41% 41% 51% 51% 5% 5%
- ------------------------------------------------------------------------------------------------------------------------

<FN>
* July 11, 1995 (date of commencement of operations) to December 31, 1995
(1) Not Annualized
(2) Annualized
</FN>
</TABLE>

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional information.

<PAGE>

<TABLE>
<CAPTION>
1998 1997 1996 1995
TACTICAL ASSET ALLOCATION FUND CLASS A CLASS C CLASS A CLASS C CLASS A* CLASS C CLASS C**
------- ------- ------- ------- -------- ------- ---------

<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.07 $12.25 $12.56 $13.52 $12.50 $13.26 $12.50
- ------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 0.05 0.05 0.40 0.14 0.14 0.10 (0.02)
- ------------------------------------------------------------------------------------------------------------------------
Net Gains or Losses on Securities
(BOTH REALIZED AND UNREALIZED) 3.07 3.38 1.78 2.26 0.55 0.57 1.84
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.12 3.43 2.18 2.40 0.69 0.67 1.82
- ------------------------------------------------------------------------------------------------------------------------

LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS (FROM INVESTMENT INCOME) (0.05) (0.05) (0.40) (0.14) (0.14) (0.10) --
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (FROM CAPITAL GAINS) (0.27) (0.30) (2.93) (3.17) (0.49) (0.31) (1.06)
- ------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS (IN EXCESS OF CAPITAL GAINS) -- -- (0.34) (0.36) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.32) (0.35) (3.67) (3.67) (0.63) (0.41) (1.06)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $13.87 $15.33 $11.07 $12.25 $12.56 $13.52 $13.26
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 28.38% 28.13% 17.29% 17.71% 5.51%(1) 5.07% 14.57%(1)
- ------------------------------------------------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD ($000) $59 $14,982 $36 $14,501 $137 $13,943 $11,524
- ------------------------------------------------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% 2.10% 2.00% 2.10% 1.73%(2) 2.00% 1.97%(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss)
TO AVERAGE NET ASSETS 0.45% 0.39% 0.99% 0.86% 2.60%(2) 0.75% (0.29%)(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
BEFORE REIMBURSEMENT OF FEES 10.38% 2.48% 6.16% 2.50% 5.23%(2) 2.40% 2.80%(2)
- ------------------------------------------------------------------------------------------------------------------------
Ratio of Net Investment Income (Loss) to
Average Net Assets, before
REIMBURSEMENT OF FEES (7.93)% 0.01% (3.17%) 0.46% (0.90%)(2) 0.35% (1.12%)(2)
- ------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 128.31% 128.31% 395% 395% 297% 297% 186%
- ------------------------------------------------------------------------------------------------------------------------

<FN>
* August 1, 1996 (date of commencement of operations) to December 31, 1996
** June 1, 1995 (date of commencement of operations) to December 31, 1995
(1) Not Annualized
(2) Annualized
</FN>
</TABLE>

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional information.

INTERNATIONAL EQUITY FUND 1998 1997*

NET ASSET VALUE, BEGINNING OF PERIOD $12.18 $12.50
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (0.02) (0.02)
- -------------------------------------------------------------------------------
Net Gains or Losses on Securities
(BOTH REALIZED AND UNREALIZED) 2.43 (0.30)
- -------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.41 (0.32)
- -------------------------------------------------------------------------------

LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------
DIVIDENDS (IN EXCESS OF NET INVESTMENT INCOME) (0.04) --
- -------------------------------------------------------------------------------
DISTRIBUTIONS (FROM CAPITAL GAINS) (0.08) --
- -------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.12) --
- -------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $14.47 $12.18
- -------------------------------------------------------------------------------
TOTAL RETURN 19.78% (2.56)%(1)
- -------------------------------------------------------------------------------

RATIOS/SUPPLEMENTAL DATA
NET ASSETS, END OF PERIOD ($000) $18,273 $12,190
- -------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE NET ASSETS 2.00% 2.00%(2)
- -------------------------------------------------------------------------------
RATIO OF NET INCOME (LOSS) TO AVERAGE NET ASSETS (0.18)% (0.43%)(2)
- -------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets,
BEFORE REIMBURSEMENT OF FEES 2.17% 2.68%(2)
- -------------------------------------------------------------------------------
Ratio of Net Income (Loss) to Average Net Assets,
BEFORE REIMBURSEMENT OF FEES (0.35)% (1.11%)(2)
- -------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE 86.13% 13.00%
- -------------------------------------------------------------------------------

* September 2, 1997 (date of commencement of operations) to December 31, 1997
(1) Not Annualized
(2) Annualized

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional information.

<PAGE>

SHAREHOLDER MANUAL

HOW TO BUY SHARES

MINIMUM INVESTMENT -- The minimum investment to open an account in each fund is
$2,500, except for an Individual Retirement Account (IRA), which has a $500
minimum. You may make subsequent investments in any account in amounts of at
least $100.

OPENING AN ACCOUNT -- You may open an account and make an investment by
purchasing shares through brokerage firms having sales agreements with the
Distributor. You may also purchase shares directly from The Flex-Partners by
submitting a check. In the case of a new account, fill out the New Account
Application accompanying this Prospectus. Be sure to specify the name of the
fund and class of shares in which you are investing. A check payable to each
fund you specify must accompany your New Account Application. You may make
payments by check or Federal Reserve Draft payable to the particular fund(s)
specified on the application (Core Equity Fund, Utility Growth Fund, Tactical
Asset Allocation Fund, and International Equity Fund). Please send your
completed application and payment to the following address: THE FLEX-PARTNERS,
C/O MUTUAL FUNDS SERVICE CO., P. O. BOX 7177, DUBLIN, OHIO 43017.

Should an order to purchase shares be canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred in the
transaction. All orders for the purchase of shares are subject to acceptance or
rejection by each fund or by the Distributor. Direct purchase orders received by
Mutual Funds Service Company (the "Transfer Agent"), the funds' transfer agent,
by 4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct purchase orders received by the Transfer Agent after 4:00 p.m. and orders
received by brokerage firms after 5:00 p.m. are confirmed at the public offering
price on the following business day.

Wire orders for shares of the funds received by dealers prior to 4:00 p.m.,
Eastern time, and received by the Transfer Agent before 5:00 p.m., Eastern time
on the same day, are confirmed at that day's public offering price. Orders
received by dealers after 4:00 p.m., Eastern time, are confirmed at the public
offering price on the following business day. It is the dealer's obligation to
place the order with the Transfer Agent before 5:00 p.m., Eastern time, and to
forward payment to Firstar Bank, N.A., the Custodian for the funds.

If the wire order is for a new account, or to open an account in a
different fund, you must telephone the fund prior to making your initial
investment. Call 1-800-494-FLEX, or (614) 766-7074. Be sure to specify the name
of the fund and class of shares in which you wish to invest. Advise the fund of
the amount you wish to invest and obtain an account number and instructions.
Money sent by a single wire can only be invested in one fund. Have your bank
wire federal funds to:

FIRSTAR BANK, N.A. CINTI/TRUST
ABA #: 042-00001-3
ATTENTION: THE FLEX-PARTNERS
(and Name of Fund - see below)
CREDIT ACCOUNT NUMBER (account
number for Fund as follows):

<PAGE>

CORE EQUITY FUND--
Account Number 486447980

UTILITY GROWTH FUND--
Account Number 483608964

TACTICAL ASSET ALLOCATION FUND--
Account Number 483608972

INTERNATIONAL EQUITY FUND--
Account Number 486484298

ACCOUNT NAME (your name)
YOUR FLEX-PARTNERS ACCOUNT NUMBER

No stock certificates will be issued. Instead, the Transfer Agent will
establish an account for each investor, and all shares purchased or received,
including those acquired through the reinvestment of dividends and
distributions, are registered on the books of each fund and credited to such
account.

Each fund will not permit redemptions until it receives the New Account
Application in good order.

SUBSEQUENT INVESTMENTS - You may make subsequent investments in an existing
account in a fund by mailing a check payable to the fund you specify. Please
include your account number and the class of shares in which you wish to invest
on the check and mail as follows:

THE FLEX-PARTNERS
C/O MUTUAL FUNDS SERVICE CO.
P. O. BOX 7177
DUBLIN, OHIO 43017

You may also make subsequent investments by bank wire as described above.
You must notify the fund prior to each wire purchase. Wires sent without
notifying the fund will result in a delay of the effective date of your
purchase.

CHOOSING A SHARE CLASS

You may purchase Class A shares or Class C shares of each of the Core
Equity, Utility Growth, and Tactical Asset Allocation Funds. Each class has its
own sales charge and expense structure, allowing you to choose the class that
best meets your situation. Your investment representative can help you decide.

<PAGE>

- ------------------------------------------ -------------------------------------
CLASS A CLASS C
- ------------------------------------------ -------------------------------------
o Initial Sales Charge of 5.75% or less o No initial sales charge

- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
o No deferred sales charge o Deferred sales charge of 1.5% or
less on shares you sell within 24
months

- ------------------------------------------ -------------------------------------
- ------------------------------------------ -------------------------------------
o Lower annual expenses than Class C o Higher annual expenses than Class
due to lower distribution fees A due to higher distribution fees

- ------------------------------------------ -------------------------------------

Due to Class C's higher annual expenses, a long-term shareholder who has
invested in Class C may pay more than the economic equivalent of Class A's
initial sales charge. Maximum sales charges and fees are set forth in the table
above, and quantity discounts for the Class A initial sales charge are set forth
below.

CLASS A SHARES. Class A shares are sold at net asset value plus the
applicable sales charge as shown in the table below. Class A shares also bear a
Rule 12b-1 fee of 0.25% per year (paid to the Distributor, Adviser Dealer
Services, Inc.) of their average net asset value. In addition, Class A shares
bear an asset based service fee of 0.25% per year. The sales charge on Class A
shares is allocated between your brokerage firm and Adviser Dealer Services,
Inc. as shown below:

THE SALES CHARGE WHICH EQUALS YOUR DEALER
WHEN YOU INVEST MAKES UP THIS % OF THIS % OF YOUR RECEIVES THIS % OF
THIS AMOUNT THE OFFERING PRICE INVESTMENT THE OFFERING PRICE
- --------------------------------------------------------------------------------
Up to $50,000 5.75% 6.10% 5.25%
$50,001 to $100,000 5.00% 5.26% 4.50%
$100,001 to $249,999 3.75% 3.90% 3.25%
$250,000 to $499,999 2.50% 2.56% 2.00%
$500,000 to $999,999 2.00% 2.04% 1.60%
$1,000,000 or more none none none

Shares of the International Equity Fund are sold with a sales charge at the
time of purchase, which varies with the amount invested. All sales charges and
fees for the International Equity Fund, as well as quantity discounts for its
initial sales charge, are identical to those set forth above for Class A shares.

The offering price of Class A shares and International Equity Fund shares
includes the applicable sales charge.

QUANTITY DISCOUNTS

CUMULATIVE QUANTITY DISCOUNT - lets you combine all of your Class A shares
in The Flex-Partners Funds and shares in the International Equity Fund for
purposes of calculating the sales charge. Therefore, the quantity discounts
shown in the table above will apply if the dollar amount of your purchase, plus
the net asset value of Class A shares (Core Equity, Utility Growth, or Tactical
Asset Allocation Funds) or International Equity Fund shares you already own, is
more than $50,000. The sales charge on the shares being purchased will then be
at the rate applicable to the aggregate value of such shares then owned, plus
the amount of the purchase.

<PAGE>

To receive the cumulative quantity discount, either you or your brokerage
firm must request the discount at the time of placing your purchase order. In
addition, you must give the Transfer Agent sufficient information to determine
and confirm that your purchase will qualify for the discount. The cumulative
quantity discount may be amended or terminated at any time as to all purchases
occurring thereafter.

LETTER OF INTENTION (LOI) - expresses your intent to buy a stated dollar
amount of shares over a 13-month period and lets you receive the same sales
charge as if all shares had been purchased at one time. The LOI applies only to
Class A shares of the Core Equity, Utility Growth, and Tactical Asset
Allocations Funds, and to shares of the International Equity Fund. To take
advantage of this discount, simply sign and complete the LOI on the New Account
Application, indicating the amount you wish to invest. The LOI may be back-dated
to include purchases made within 90 days prior to the signing of the LOI. The
LOI will not be a binding obligation on either the purchaser or the fund.

Purchases made under the LOI receive the sales charge applicable to the
aggregate amount you have indicated in the LOI, as if all shares were purchased
in a single transaction. During the period covered by the LOI, the Transfer
Agent will escrow shares representing 5% of your intended purchase. If you do
not purchase the amount stated in your LOI, your sales charge will be adjusted
to reflect the actual amount you invested during the period covered by your LOI,
and any additional sales charge will be recovered from your escrowed shares.

Your LOI can be amended: (a) during the 13-month period, if you file an
amended LOI with the same expiration date as the original, and (b) automatically
after the end of the period, if the total purchases credited to your LOI qualify
for an additional reduction in sales charge.

CLASS C SHARES. You may purchase Class C shares at net asset value without
an initial sales charge. There is a 1.50% contingent deferred sales charge
(CDSC) on any Class C shares you sell within 18 months of purchase. There is a
0.75% CDSC on any Class C shares you sell after 18 months of purchase and before
24 months of purchase. The CDSC for Class C shares is based on the current value
of the shares being sold or their net asset value when purchased, whichever is
less. There is no CDSC on shares you acquire by reinvesting your dividends.

To keep your CDSC as low as possible, each time you place a request to sell
shares, we will first sell any shares in your account that are not subject to a
CDSC. If there are not enough of these to meet your request, we will sell the
shares in the order they were purchased.

Class C shares bear an asset based service fee of 0.25% and a Rule 12b-1
fee of 0.75%, which is higher than the Rule 12b-1 fee for Class A shares. Class
C shares provide the benefit of putting all of your dollars to work from the
time the investment is made, but will have a higher annual expense ratio and pay
lower dividends than Class A shares due to the higher Rule 12b-1 fee.

All CDSC's imposed on redemptions are paid to the Distributor. The
Distributor intends to pay a commission of 1% of the purchase amount to
participating dealers at the time the investor purchases Class C shares.

<PAGE>

SALES CHARGE WAIVERS: Directors, trustees, officers and full-time employees
of the Portfolios, the Flex-Partners trust, the Manager, the Subadvisers or the
Distributor, including members of the immediate families of such individuals and
employee benefit plans established by such entities, may purchase shares of the
funds at net asset value.

You may purchase shares of the International Equity Fund at net asset value
if, on the date you purchase such shares, you are a shareholder of any mutual
fund (other than a Flex-Partners Fund) whose portfolios are advised by the
manager.

Class A shares (Core Equity, Utility Growth, Tactical Asset Allocation
Funds) or shares of the International Equity Fund may be sold at net asset value
without an initial sales charge to:

o clients of the Manager, the Subadvisers, registered investment
advisers, broker-dealers and financial planners, who are purchasing on
behalf of their clients or on behalf of clients in wrap accounts, by
making arrangements to do so with the Trust and the Transfer Agent

o participants in certain retirement and deferred compensation plans,
including qualified or non-qualified plans under the Internal Revenue
Code and certain affinity group and group savings plans, provided that
such plans have at least 100 eligible employees or members and

o broker-dealers who have a sales agreement with the Distributor and by
their registered personnel and employees, including members of the
immediate families of such registered personnel and employees (i.e.,
spouse and minor children only)

The funds may waive, where applicable, the CDSC on redemption:

o following the death of a shareholder,

o if a shareholder becomes unable to engage in any substantial gainful
activity by reason of a medically determinable physical or mental
impairment which can be expected to result in death or be of
long-continued and indefinite duration,

o when a total or partial redemption is made in connection with a
distribution from IRAs or other qualified retirement plans after
attaining age 59-1/2.

See "Other Shareholder Services - Systematic Withdrawal Program" and the
Statement of Additional Information.

Class A shares of the funds and shares of the International Equity Fund may
be purchased at net asset value, and the funds may waive the CDSC on the
redemption of Class C shares owned by banks, bank trust departments, savings and
loan associations, federal and state credit unions, trust companies, investment
advisers and broker-dealers, either in their fiduciary capacities or for their
own accounts. These institutions may charge fees to clients for whose accounts
they purchase shares at net asset value or for which the CDSC has been waived.

<PAGE>

No sales charge will be charged on accounts that are opened for you by your
brokerage firm where the amount invested represents redemption proceeds from
funds distributed other than by the funds' distributor, and where you have paid
a sales charge in connection with the purchase of such other fund's shares;
provided that (i) shares of a fund are purchased within 60 days after redemption
of such other fund's shares; and (ii) sufficient documentation of such
redemption as the Transfer Agent may require shall be provided at the time fund
shares are purchased. Also, if you have redeemed shares of a Flex-Partners' fund
described in this Prospectus, you may reinvest the proceeds in any
Flex-Partners' fund described in this Prospectus at net asset value if such
proceeds are reinvested within 60 days after the date of redemption.

HOW TO MAKE WITHDRAWALS (REDEMPTIONS)

You may redeem shares and withdraw funds at net asset value per share less,
in the case of Class C shares, any applicable CDSC. There are no redemption
fees. (See "How Net Asset Value Is Determined.")

BY MAIL -- You may redeem shares by mailing a written signature guaranteed
request to The Flex-Partners, c/o Mutual Funds Service Co., P. O. Box 7177,
Dublin, OH 43017. Signature guaranteed means that you must have signed the
request and the signature(s) must be guaranteed by an eligible guarantor
institution (a bank, broker-dealer, credit union, securities exchange, clearing
agency or savings association). We may require further documentation if you are
requesting redemption of shares held of record in the name of corporations or
trustees, and other fiduciaries.

Amounts withdrawn are mailed without charge to the address printed on your
account statement.

BY BANK WIRE -- You may redeem by telephone by placing a wire redemption
through a securities dealer. Wire redemption requests received by dealers prior
to 4:00 p.m., Eastern time, and received by the Transfer Agent before 5:00 p.m.,
Eastern time on the same day, are confirmed at that day's net asset value per
share. Direct wire redemption requests must be received by 4:00 p.m. to be
confirmed at that day's net asset value.

WHEN REDEMPTIONS ARE EFFECTIVE -- Redemptions are made at the net asset
value per share (less, in the case of Class C shares, any applicable CDSC) next
determined after receipt of a redemption request in good order. (See "How Net
Asset Value Is Determined.")

WHEN PAYMENTS ARE MADE -- Shares are redeemed at their net asset value per
share next determined after receipt by the Transfer Agent of the redemption
request in the form described above, less, in the case of Class C shares, any
applicable CDSC. Payment is normally made within seven days after the redemption
request.

EXCHANGE PRIVILEGE

An exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes.

<PAGE>

Your exchange will be processed at the net asset value (less any CDSC that
applies) next determined after the Transfer Agent receives your exchange
request. You will receive a prospectus along with your confirmation if you
exchange into a fund not offered in this Prospectus. The exchange feature may be
modified or discontinued at any time, upon notice to you in accordance with
federal securities rules.

Your exchange may be processed only if the shares of the fund to be
purchased are eligible for sale in your state and if the amount of your purchase
meets the minimum requirements for that fund. The exchange privilege is only
available in states in which it may be legally offered.

EXCHANGES OF CLASS A SHARES: You may exchange your Class A shares (Core
Equity, Utility Growth, or Tactical Asset Allocation Funds) or shares of the
International Equity Fund for Class A shares of any other Flex-Partners Fund,
for shares of the International Equity Fund, and for shares of The Flex-funds
Money Market Fund, a single-class money market fund managed by the Manager.

EXCHANGES OF CLASS C SHARES: You may exchange Class C shares (Core Equity,
Utility Growth, or Tactical Asset Allocation Funds) at net asset value only for
Class C shares of any other Flex-Partners Fund and for shares of The Flex-funds
Money Market Fund, a single class money market fund managed by the Manager. You
may not exchange Class C shares of the funds for Class A shares of the funds.

Each fund may refuse exchange purchases by anyone, if in the manager or
subadviser's judgment, the fund would be unable to invest effectively in
accordance with its investment goals and strategies, or would otherwise be
affected in a negative way.

IF YOU HAVE ANY QUESTIONS ON EXCHANGE OR REDEMPTION PROCEDURES, CALL YOUR
BROKERAGE FIRM OR THE TRANSFER AGENT.

TRANSACTION POLICIES

VALUATION OF SHARES. Except in the International Equity Fund, the net asset
value per share (NAV) for each fund is determined each business day at the close
of regular trading on the New York Stock Exchange (typically 4:00 p.m. Eastern
Time) by dividing the fund's net assets by the number of its shares outstanding.
In the International Equity Fund, the net asset value per share will be
calculated each day at approximately 3:00 p.m. Eastern time.

The assets of the portfolios and the International Equity Fund are
generally valued on the basis of market quotations or, where market quotations
are not readily available, on the basis of fair value as determined by the
adviser under procedures adopted by the Board of Trustees.

EXECUTION OF REQUESTS. Each fund is open on those days when the New York
Stock Exchange is open, typically Monday through Friday. Buy and sell requests
are executed at the next NAV to be calculated after your request is received by
the transfer agent.

At times of peak activity, it may be difficult to place requests by phone.
During these times, consider sending your request in writing.

<PAGE>

In unusual circumstances, any fund may temporarily suspend the processing
of sell requests, or may postpone payment of proceeds for up to seven business
days, as allowed by federal securities laws.

TELEPHONE TRANSACTIONS. For your protection, telephone requests may be
recorded in order to verify their accuracy. In addition, the transfer agent will
take measures to verify the identity of the caller, such as asking for name,
account number, Social Security or other taxpayer ID number and other relevant
information. If appropriate measures are taken, the transfer agent is not
responsible for any losses that may occur to any account due to an unauthorized
telephone call. Proceeds from telephone transactions can only be mailed to the
address of record.

SALES IN ADVANCE OF PURCHASE PAYMENTS. When you place a request to sell
shares for which the purchase money has not yet been collected, the request will
be executed in a timely fashion, but the fund will not release the proceeds to
you until your purchase payment clears. This may take up to fifteen business
days after the purchase.

OTHER SHAREHOLDER SERVICES

AUTOMATIC ACCOUNT BUILDER: This program offers you a convenient way for you
to invest in a fund by automatically transferring money from your checking or
savings account each month to buy shares. Under the program, regular investments
in a fund of $100 or more will be deducted from your checking or savings account
and invested in shares of the fund or funds selected. Your bank must be a member
of the Automated Clearing House (ACH). To sign up, complete the Automatic
Account Builder section of your New Account Application. There is no additional
charge for this service.

SYSTEMATIC WITHDRAWAL PROGRAM: This program allows you to automatically
sell your shares and receive regular distributions of $100 or more from your
account. You must either own or purchase shares having a value of at least
$10,000 and advise the Trust in writing of the amount to be distributed and the
desired frequency, i.e., monthly, quarterly or annually. To sign up, complete
the appropriate section of your New Account Application. Your should realize
that if withdrawals exceed income dividends, the invested principal may be
depleted.

If you have purchased Class C shares, withdrawals under this program from
your account will be subject to any CDSC that applies, with the following
exceptions. No CDSC will be charged on withdrawals:

o that involve a distribution from an IRA or other qualified retirement
plan after attaining age 59-1/2; or

o in an amount that does not exceed 10% annually of the "initial account
value" -- i.e., the value of your account at the time you elect to
participate in this program, and thereafter, the value of your account
as of the first day of any calendar year.

You may make additional investments and may change or stop the program at any
time. There is no charge for this program.

<PAGE>

RETIREMENT PLANS: The Trust offers retirement plans, which include a
prototype Profit Sharing Plan, a Money Purchase Pension Plan, a Salary Savings
Plan--401(k), Tax-Sheltered Custodial Account - 403(b)(7), an Individual
Retirement Account (IRA), a Roth IRA, an Education IRA, a Simple IRA, and a
Simplified Employee Pension (SEP) Plan. Plan Adoption Agreements and other
information required to establish a Flex-Partners Retirement Plan are available
from The Flex-Partners, c/o R. Meeder & Associates, Inc., P.O. Box 7177, Dublin,
Ohio 43017; or call 1-800-494-3539.

Minimum purchase requirements for retirement plan accounts are subject to
the same requirements as regular accounts, except for an IRA, which has a
reduced minimum purchase requirement. (See "How to Buy Shares.")

SHAREHOLDER ACCOUNTS

Each fund maintains an account for each shareholder in full and fractional
shares. Each fund may reject any purchase order and may waive minimum purchase
requirements.

CONFIRMATION STATEMENT -- All purchases and sales, and dividend
reinvestments, are confirmed promptly after they become effective.

ACCOUNTS WITH LOW BALANCES. Any fund may redeem shares in your account for
their then current net asset value and pay the proceeds to you if at any time
your account has shares valued at less than $1,000 ($500 for an IRA) as a result
of redemptions you have made. Any fund may redeem the shares in your account if
you have opened your account for less than the minimum purchase amount and you
do not purchase additional shares to meet the minimum. Before any shares are
redeemed for these purposes, you will be notified in writing 30 days before any
such redemption to bring the value of shares in your account to $1,000 ($500 for
an IRA).

MORE ABOUT RISK

A fund's risk profile is largely defined by the fund's principal securities
and investment practices. You may find the most concise description of each
fund's risk profile in the fund-by-fund information.

The funds are permitted to use - within limits established by the trustees
- - certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent that a fund uses these
securities or practices, its overall performance may be affected, either
positively or negatively. On the following pages are brief descriptions of these
securities and investment practices, along with the risks associated with them.
The funds follow certain policies that may reduce these risks.

As with any mutual fund, there is no guarantee that a Flex-Partners' fund
will earn income or show a positive total return over any period of time - days,
months or years.

INVESTMENT PRACTICES, SECURITIES AND RELATED RISKS

The table on the next page shows each portfolio's or fund's investment
limitations as a percentage of the portfolio's or fund's assets, if a percentage
applies. In each case the principal types of risk are listed (see following
pages for

<PAGE>

definitions). Numbers in this table show allowable usage only; for actual usage,
consult the portfolios and funds' annual/semiannual reports.

NL -- No policy limitation on usage; portfolio or fund may be using
currently
P -- Permitted, but has not typically been used
NP -- Not permitted
<TABLE>
<CAPTION>
MUTUAL
GROWTH FUND UTILITIES
STOCK PORTFOLIO STOCK
PORTFOLIO (TACTICAL PORTFOLIO
(CORE ASSET (UTILITY INTERNATIONAL
EQUITY ALLOCATION GROWTH EQUITY
FUND) FUND) FUND) FUND

<S> <C> <C> <C> <C>
SMALL AND MID-SIZED COMPANY P NL P NL

SECURITIES. Market, liquidity
and information risks.

FOREIGN SECURITIES. Market, NP P 25% NL
currency, transaction, liquidity,
information and political risks.

SECTOR FOCUS. Market and NP P NL NP
liquidity risks.

CONVERTIBLE SECURITIES. Market, P P P P
interest rate, prepayment and
credit risks.

INVESTMENT GRADE BONDS. Interest P P P P
rate, prepayment, market and
credit risks.

COMPANIES WITH LIMITED OPERATING P P P P
HISTORIES. Market, liquidity and
information risks.

ILLIQUID AND RESTRICTED 10% 10% 10% 15%
SECURITIES. Market, liquidity
and transaction risks.

DEFENSIVE MEASURES. Opportunity 20% 100% 100% 20%
risk.

REPURCHASE AGREEMENTS. Credit 20% 100% 100% 20%
risk.

BORROWING; REVERSE REPURCHASE 33-1/3% 5% 33-1/3% 33-1/3%
AGREEMENTS. Leverage and credit
risks.

<PAGE>

HEDGING STRATEGIES; FINANCIAL 100% 100% 100% 25%
FUTURES AND OPTIONS; SECURITIES
AND INDEX OPTIONS. Hedging,
correlation, opportunity,
leverage, interest rate, market,
and liquidity risks.

CURRENCY CONTRACTS. Currency NP NP P NL
leverage, credit, correlation,
liquidity and opportunity risks.

SECURITIES LENDING. Credit risk. NP NP 33 1/3% 33-1/3%

SHORT-TERM TRADING. Market risk. NL NL NL NL

WHEN-ISSUED SECURITIES AND NP NP P P
FORWARD COMMITMENTS. Market,
opportunity and leverage risks.
</TABLE>

NOTES TO TABLE.

RISK AND INVESTMENT GLOSSARY

BORROWING AND REVERSE REPURCHASE AGREEMENTS refer to a loan of money from a
bank or other financial institution undertaken by a portfolio or fund.

COMMON STOCK is a share of ownership (equity) interest in a company.

COMPANIES WITH LIMITED OPERATING HISTORIES are securities issued by
companies that have been in continuous operation for less than three years.
Sometimes called "unseasoned" issuers.

CONVERTIBLE SECURITIES are debt or equity securities which may be converted
on specified terms into stock of the issuer.

CORRELATION RISK occurs when a portfolio or fund "hedges" - uses one
investment to offset the portfolio or fund's position in another. If the two
investments do not behave in relation to one another the way the portfolio or
fund managers expect them to, then unexpected results may occur.

CREDIT RISK means that the issuer of a security or the counterparty to an
investment contract may default or become unable to pay its obligations when
due.

<PAGE>

CURRENCY CONTRACTS involve the right or obligation to buy or sell a given
amount of foreign currency at a specified price and future date.

CURRENCY RISK happens when a portfolio or fund buys or sells a security
denominated in foreign currency. Foreign currencies "float" in value against the
U.S. dollar. Adverse changes in foreign currency value can cause investment
losses when a portfolio's or fund's investments are converted to U.S. dollars.

THE EURO: SINGLE EUROPEAN CURRENCY. On January 1, 1999, the European
Monetary Union introduced a new single currency, the euro, which replaced
the national currency for the eleven participating member countries. If a
portfolio or fund holds investments in countries with currencies replaced
by the euro, the investment process, including trading, foreign exchange,
payments, settlements, cash accounts, custody and accounting will be
affected. Because this change to a single currency is new and untested, the
establishment of the euro may result in market volatility. For the same
reason, it is not possible to predict the impact of the euro on the
business or financial condition of European issuers which a portfolio or
fund may hold, and their impact on the value of portfolio or fund shares
and performance.

DEFENSIVE MEASURES may be taken when a portfolio's adviser believes they
are warranted due to market conditions. When this happens, the portfolio may
increase its investment in government securities and other short-term securities
without regard to the portfolio's investment restrictions, policies or normal
investment emphasis. As a result, the portfolio could be unable to achieve its
investment objective.

DIVERSIFICATION means a diversified fund may not, with respect to at least
75% of its assets, invest more than 5% in the securities of one company. A
non-diversified fund may be more volatile than a diversified fund because it
invests more of its assets in a smaller number of companies and the gains or
losses on a single stock will therefore have a greater impact on the fund's
share price. All of the Flex-Partners' funds are diversified funds. However, the
Mutual Fund Portfolio (the corresponding portfolio of the Tactical Asset
Allocation Fund) may invest more than 5% of its assets in one mutual fund. If
this underlying mutual fund performs poorly, this could negatively affect The
Tactical Asset Allocation Fund's share price.

FOREIGN SECURITIES are issued by companies located outside of the United
States. A portfolio or fund considers a company to be located outside the United
States if the principal securities trading market for its equity securities is
located outside the U.S. or it is organized under the laws of, and has its
principal office in, a country other than the U.S. The risks of investing in
foreign countries include the possibility of the imposition of exchange
controls, currency devaluations, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization of assets,
punitive taxes, and certain custody and settlement risks.

<PAGE>

DEVELOPING COUNTRIES: Investments in developing or emerging markets
are subject to all of the risks of foreign investing generally, and
have additional heightened risks due to a lack of established legal,
business and social frameworks to support securities markets. Foreign
securities markets, including emerging markets, may have substantially
lower trading volumes than U.S. markets, resulting in less liquidity
and more volatility than experienced in the U.S.

FORWARD FOREIGN CURRENCY CONTRACTS are privately negotiated contracts
committing the holder to purchase or sell a specified quantity of a foreign
currency on a predetermined future date.

HEDGING RISK comes into play when a portfolio or fund uses a security whose
value is based on an underlying security or index to "offset" the portfolio or
fund's position in another security or currency. The objective of hedging is to
offset potential losses in one security with gains in the hedge. But a hedge can
eliminate or reduce gains as well as offset losses. (Also see "Correlation
Risk.")

ILLIQUID AND RESTRICTED SECURITIES are securities which, by rules of their
issue or by their nature, cannot be sold readily. These include illiquid Rule
144A securities.

INFORMATION RISK means that information about a security or issuer may not
be available, complete, accurate or comparable.

INTEREST RATE RISK is the risk that changes in interest rates will
adversely affect the value of an investor's securities. When interest rates
rise, the value of fixed-income securities will generally fall. Conversely, a
drop in interest rates will generally cause an increase in the value of
fixed-income securities. Longer-term securities are subject to greater interest
rate risk.

INVESTMENT GRADE BONDS are rated BBB (Standard & Poor's) or Baa (Moody's)
or above. Bonds rated below investment grade are subject to greater credit risk
than investment grade bonds.

LEVERAGE RISK occurs in some securities or techniques that tend to magnify
the effect of small changes in an index or a market. This can result in a loss
that exceeds the account that was invested in the contract. Also, if the Mutual
Fund Portfolio (the corresponding portfolio of the Tactical Asset Allocation
Fund) invests in mutual funds that use leverage, it will have the risks arising
from the use of leverage.

LIQUIDITY RISK occurs when investments cannot be sold readily. A portfolio
or fund may have to accept a less-than-desirable price to complete the sale of
an illiquid security or may not be able to sell it at all.

MARKET CAPITALIZATION is the total current market value of a company's
outstanding common stock.

MARKET RISK exists in all mutual funds and means the risk that the prices
of securities in a market, a sector, or an industry will fluctuate, and that
such movements might reduce an investment's value.

<PAGE>

OPPORTUNITY RISK means missing out on an investment opportunity because the
assets necessary to take advantage of it are committed to less advantageous
investments or strategies.

POLITICAL RISK comes into play with investments, particularly foreign
investments, which may be adversely affected by nationalization, taxation, war,
government instability or other economic or political actions or factors.

PREPAYMENT RISK is the risk that, as interest rates fall, borrowers are
more likely to refinance their debts. As a result, the principal on certain
fixed income securities may be paid earlier than expected, which could cause
investment losses and cause prepaid amounts to have to be reinvested at a
relatively lower interest rate.

REPURCHASE AGREEMENTS means the purchase of a security that must later be
sold back to the issuer at the same price plus interest.

SECTOR FOCUS occurs when a significant portion of a portfolio or fund's
assets is invested in a relatively small number of related industries. None of
The Flex-Partners' funds, except the Utility Growth Fund, will concentrate more
than 25% of their total assets in any one industry. However, if the Mutual Fund
Portfolio (the corresponding portfolio of the Tactical Asset Allocation Fund)
invests in mutual funds that concentrate investments in one or a small number of
related industries, they will have the risks arising from sector focus. Sector
focus may increase both market and liquidity risk.

SECURITIES LENDING means the lending of securities to financial
institutions, which provide cash or government securities as collateral.

SHORT-TERM TRADING means selling a security soon after purchase. A
portfolio or a fund engaging in short-term trading will have higher turnover and
transaction expenses. Short-term trading may also result in short-term capital
gains. Upon the distribution to you of any net short-term capital gains from a
fund, you will be taxed at ordinary tax rates. Because the adviser or subadviser
may take defensive measures with regard to 100% of the assets in the
corresponding portfolios of the Utility Growth Fund and the Tactical Asset
Allocation Fund, the risks and expenses of short-term trading may be higher in
these portfolios.

SMALL AND MID-SIZED COMPANY SECURITIES are securities issued by small or
mid-sized companies, as measured by their market capitalization. Historically,
smaller company securities have been more volatile in price than larger company
securities, especially over the short-term. Among the reasons for the greater
price volatility are the less certain growth prospects of smaller companies, the
lower degree of liquidity in the markets for such securities, and the greater
sensitivity of smaller companies to changing economic conditions. In general,
the smaller the company, the greater its risks.

<PAGE>

TRANSACTION RISK means that a portfolio or fund may be delayed or unable to
settle a transaction or that commissions and settlement expenses may be higher
than usual.

WHEN ISSUED SECURITIES AND FORWARD COMMITMENTS involve the purchase and
sale of securities for delivery at a future date, market value may change before
delivery.

<PAGE>

FOR MORE INFORMATION:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the funds. The SAI
has been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus (is legally a part of
this Prospectus).

ANNUAL AND SEMIANNUAL REPORTS

These reports include portfolio holdings, financial statements,
performance information, the auditor's report (in the case of the
annual report), and a discussion of the market conditions and
investment strategies that significantly affected the funds'
performance during their last fiscal year.

The SAI, the reports and other information about the funds may be
viewed on the Commission's Internet website at HTTP://WWW.SEC.GOV and
copies of this information may be obtained (upon payment of a copying
fee) by writing the public reference section of the Commission,
Washington, D.C. 20549-6009 (telephone 1-800-SEC-0330).

To request a free copy of the current annual/semi-annual report or
SAI, request other information about the funds, or make shareholder
inquiries, please write, call or E-mail us at:

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
Telephone: 1-800-494-3539 or 614-766-7074
WWW.FLEXPARTNERS.COM

SEC File No.: 811-6720

<PAGE>

THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND
CROSS REFERENCE SHEET TO FORM N-1A

PART A.

ITEM NO. PROSPECTUS CAPTION

1(a) Front Cover Page
1(b) Back Cover Page

2(a) Investment Goal
2(b) Strategies
2(c)(1) Main Risk Factors
2(c)(2) Performance

3 Fees and Expenses of the Fund

4(a)(b) More Information About the Funds
How is the Trust Organized?
4(c) More About Risk
Risk and Investment Glossary

5 Results of a $10,000 Investment

6(a) Who Manages the Funds?
6(b) Not Applicable

7(a) Transaction Policies
7(b) How to Buy Shares
Other Shareholder Services
7(c) How to Make Withdrawals (Redemptions)
Exchange Privilege
Other Shareholder Services
7(d)(e) How Does Taxation Affect the Funds and Their Shareholders
7(f) Not applicable

8(a) How To Buy Shares
8(b) Distribution Fees
8(c) Not applicable

9 How to Read the Financial Highlights Table
Financial Highlights

<PAGE>

THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND

PROSPECTUS - APRIL 30, 1999

[LOGOS]

The International Equity Fund is a part of the Flex-Partners' funds, a
family of funds that includes four load mutual funds covering a variety of
investment opportunities.

This Prospectus gives you important information about the fund that you
should know before you invest. Please read this Prospectus carefully and keep it
handy for future reference.

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
1-800-494-FLEX or 614-766-7074
Internet: WWW.FLEXPARTNERS.COM

<PAGE>

CONTENTS

- ---------------------------------------------------------------------- THE FUND

A look at investment goals, Investment Goal _____
strategies, risks, performance Strategies _____
and expenses Main Risk Factors _____
Performance _____
Fees and Expenses of the Fund _____

Information on who may want to Who May Want to Invest _____
invest and who may not want to invest

Information about the results of Results of a $10,000 Investment _____
a hypothetical $10,000 investment
in the fund versus benchmark
indexes

More information about the fund More Information about the Fund _____
you should know before investing Who Manages the Fund? _____
Distribution Fees _____
How is the Trust Organized? _____
How Does Taxation Affect the
Fund and Its Shareholders? _____
How to Read the Financial
Highlights Table _____

- ------------------------------------------------------------ SHAREHOLDER MANUAL

Information about account How to Buy Shares _____
transactions and services How to Make Withdrawals
(Redemptions) _____
Transaction Policies _____
Other Shareholder Services _____

- --------------------------------------------------------------- MORE ABOUT RISK

Risk and Investment Glossary _____

- ---------------------------------------------------------- FOR MORE INFORMATION

Where to learn more about the fund Back Cover

<PAGE>

INTERNATIONAL EQUITY FUND

[ICON] INVESTMENT GOAL

The fund seeks long-term growth. To pursue this goal, the fund invests
primarily in equity securities of foreign issuers.

[ICON] STRATEGIES

[ICON] MAIN RISK FACTORS

<PAGE>

PERFORMANCE

The bar chart on the left below provides an indication of the risks of
investing in the International Equity Fund by allowing a comparison to market
performance. The table on the right compares the fund's performance with a broad
measure of market performance and the returns of an index of funds with similar
investment objectives. How the fund has performed in the past is not necessarily
an indication of how the fund will perform in the future.

ANNUAL TOTAL RETURN(1)

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
1998 19.78%

1 Figure does not reflect sales charges. If they did, returns would be lower.

Average Annual Total Returns
(for the periods ending
DECEMBER 31, 1998) PAST ONE YEAR SINCE INCEPTION (9/2/97)
- --------------------------------------------------------------------------------

International Equity Fund 14.97% 8.95%
MSCI EAFE Index* 20.00% 12.35%
Morningstar's Average Foreign
Stock Fund 8.53% 4.25%

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<PAGE>

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)

Management Fees 1.00%
Distribution and Service (12b-1) Fees 0.13%
Other Expenses(2) 1.04%
-----
Total Annual Fund Operating Expenses 2.17%
Expense Reimbursement(3) -0.17%
-----
Net Expenses 2.00%

1 The sales charge declines as the amount invested increases. See "How
to Buy Shares."

2 "Other Expenses" are based upon expenses actually incurred by the
fund for the year ended December 31, 1998.

3 The adviser has agreed to reduce its fees and/or absorb expenses to
limit the fund's total annual operating expenses to 2.00%. The adviser
may terminate this agreement after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$595 $1,200 $1,658 $2,922

Of course, your actual costs may be higher or lower.

WHO MAY WANT TO INVEST

The fund may be appropriate if you:

o are seeking to diversify a portfolio of domestic investments

o are seeking access to markets that can be less accessible to
individual investors

o are investing with a long-term horizon

<PAGE>

o are willing to accept higher short-term risk along with
potentially higher long-term returns

The fund may not be appropriate if you:

o are unwilling to accept an investment that will go up and down in
value

o are investing to meet short-term financial goals

RESULTS OF A $10,000 INVESTMENT
THE INTERNATIONAL EQUITY FUND VS. BENCHMARK INDEXES

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

INCLUDING SALES CHARGE EXCLUDING SALES CHARGE
1 YEAR 14.97% 1 YEAR 19.78%
SINCE INCEPTION (9/2/97) 8.95% SINCE INCEPTION (9/2/97) 12.34%

[GRAPH] The following information was presented as a line graph:

<PAGE>

For a description of indexes referred to on this page, please refer to
"Performance."

1998 IN REVIEW

In 1998, the International Equity Fund provided shareholders with an annual
total return of 19.78% without a sales charge and an annual total return of
14.97% after sales charge. For the same period, the MSCI EAFE Index provided an
annual total return of 20% and the Average Foreign Stock Fund monitored by
Morningstar, Inc. provided an annual total return of 12.68%.

Emerging markets outside the Pacific Rim were also hit particularly hard
this year. When Russia devalued its currency this summer and defaulted on loans
from many Western banks, stock markets around the world plummeted. Our defensive
position in response to these events effectively helped the Fund preserve
year-to-date gains and compound returns when the markets recovered during the
fourth quarter. Persistent instability in other emerging markets, specifically
Brazil, leaves us cautious in regard to the long-term prospects for growth in
these countries.

MORE INFORMATION ABOUT THE FUND

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

<PAGE>

The fund may attempt to hedge against unfavorable changes in currency
exchange rates by:

o Engaging in forward currency contracts, which are agreements between
two parties to exchange currencies at a set price on a future date.

o Trading currency futures contracts and options on such contracts.

The fund may also lend its portfolio securities.

WHAT ARE DERIVATIVES?

Similar risks exist for warrants (securities that permit their owners to
purchase a specific number of shares of stock at a predetermined price), and
convertible securities (securities that may be exchanged for a different asset).
For this reason, the fund will not use futures, options, warrants or convertible
securities for speculative purposes or as leveraged investments that magnify the
gains or losses of an investment.

The reasons for which the fund will invest in futures and options are:

<PAGE>

o To keep cash on hand to meet shareholder redemptions or other needs
while simulating full investment in stocks or bonds;

o To reduce the fund's transaction costs or add value when these
instruments are favorably priced;

o To forego taxes that would otherwise have to be paid on gains from the
sale of the fund's securities; and

o To attempt to protect the value of certain securities owned or
intended to be purchased by the fund while the manager is making a
change in the fund's investment position.

WHO MANAGES THE FUND?

THE BOARD. The board of trustees oversees the management of the fund and elects
its officers. The officers are responsible for the fund's day-to-day operations.
Information concerning the trustees and officers of the fund appears in the
Statement of Additional Information.

INVESTMENT ADVISER. R. Meeder & Associates, Inc. ("RMA") serves as investment
adviser to the fund. RMA has been an investment adviser to individuals, pension
and profit sharing plans, trusts, charitable organizations, corporations and
other institutions since 1974. As of December 31, 1998, RMA and its affiliates
managed approximately $1.4 billion in assets. RMA maintains its principal
offices at 6000 Memorial Drive, Dublin, OH 43017.

INVESTMENT SUBADVISER. Commercial Union Investment Management, Limited ("CUIM")
is the investment subadviser to the International Equity Fund. CUIM is a
wholly-owned subsidiary of CGU plc., an international insurance and financial
services organization that was formed by the recent merger of Commercial Union
and General Accident. As of September 30, 1998, CUIM and its affiliates managed
$69.7 billion in assets. CUIM is an investment adviser to mutual funds, public
and corporate employee benefit plans, charities, insurance companies, banks,
investment trusts and other institutions. CUIM is regulated in the United
Kingdom by the Investment Management Regulatory Organisation in the conduct of
its Investment Business under the provisions of the Financial Services Act of
1986. CUIM and its affiliates have their principal offices at St. Helen's, 1
Undershaft, London, England EC3P 3DQ and have investment offices in Amsterdam,
Paris, Boston, Toronto, Tokyo, Singapore, Cape Town and Melbourne.

RMA continues to have responsibility for all investment advisory services
provided to the fund and supervises CUIM's performance of such services.

FUND MANAGER

The individuals primarily responsible for the management of the fund are listed
below:

Charles Brand, CUIM's Director of International Equities and a member of its
Strategy Committee, is responsible for managing the overall strategic asset
allocation of the fund. Mr. Brand has been a Director of CUIM, with
responsibility for international equity asset allocation across all funds, since
1991.

<PAGE>

fund's United Kingdom portfolio. Mr. Hitchings, Managing Director of CUIM
Singapore, joined the subadviser in 1986 and is the portfolio manager
responsible for the fund's Asia-Pacific portfolio. Ms. Schloss, Director and
Head of Emerging Markets for the subadviser, joined CUIM in 1997 and is the
portfolio manager responsible for the fund's emerging markets portfolio. Mamoru
Imai, Representative Director of CUIM (Japan), joined the subadviser in 1989 and
is the portfolio manager for the fund's Japanese portfolio.

MANAGEMENT FEES. During the calendar year ended December 31, 1998, the fund paid
management fees totaling 1.00% of the fund's average daily net assets.

DISTRIBUTOR. Adviser Dealer Services, Inc. ("ADS"), 6000 Memorial Drive, Dublin,
Ohio 43017, an affiliate of RMA, serves as the distributor of the shares of the
fund.

YEAR 2000. The common past practice in computer programming of using just two
digits to identify a year has resulted in the Year 2000 challenge throughout the
information technology industry. If unchanged, many computer applications and
systems could misinterpret dates occurring after December 31, 1999, leading to
errors or failure. This failure could adversely affect the fund's operations,
including pricing, securities trading and the servicing of shareholder accounts.

In addition to taking reasonable steps to secure our internal systems and
external relationships, RMA is further developing contingency plans intended to
ensure that unexpected systems failures will not adversely affect the fund's
operations. RMA intends to monitor these processes through the rollover of 1999
into 2000 and to quickly implement alternative solutions if necessary.

Despite RMA's efforts and contingency plans, however, noncompliant computer
systems would have an adverse material effect on the fund's business, operations
or financial condition. Additionally, the fund's performance could be hurt if a
computer system failure at a company or governmental unit affects the prices of
securities the fund owns. Issuers in countries outside the U.S., particularly in
emerging markets, may not be required to make the same level of disclosure about
year 2000 readiness as required in the U.S. RMA, of course, cannot audit any
company and its major suppliers to verify their year 2000 readiness. RMA
understands that many foreign countries and companies are well behind their U.S.
counterparts in preparing for 2000.

DISTRIBUTION FEES

Rule 12b-1 of the Investment Company Act permits mutual funds that adopt a
written plan to pay out of fund assets certain expenses relating to the sale and
distribution of their shares. The fund has adopted distribution and service
plans. Under its plans, the fund pays the distributor an annual distribution
(12b-1) fee of 0.25% of fund assets and an annual service fee of 0.25% of fund
assets.

Distribution fees are used primarily to offset initial and ongoing
commissions paid to brokerage firms for selling shares of the fund. The
distributor may use distribution fees that are not allocated to brokerage firms
to reduce its own sales and marketing expenses. Service fees are used primarily
to reimburse brokerage firms for providing personal services to fund
shareholders and maintaining shareholder accounts. The distributor may use
service fees that are not allocated to brokerage firms to reduce its own
expenses for providing personal services and maintaining shareholder accounts.

<PAGE>

Because these fees are paid out of the fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of charges.

HOW IS THE TRUST ORGANIZED?

The fund is an open-end management investment company that is a series of
The Flex-Partners trust (the "Trust").

The Trust is supervised by a board of trustees, an independent body that
has ultimate responsibility for the fund's activities. The board retains various
companies to carry out the fund's operations, including the investment adviser,
custodian, transfer agent and others. The board has the right, and the
obligation, to terminate the fund's relationship with any of these companies and
to retain a different company if the board believes it is in the shareholders'
best interests. At a mutual fund's inception, the initial shareholder (typically
the adviser) appoints the fund's board. Thereafter, the board and the
shareholders determine the board's membership. The board of the Trust may
include individuals who are affiliated with the investment adviser.

The fund does not hold annual shareholder meetings, but may hold special
meetings for such purposes as electing or removing board members, changing
fundamental policies, approving a management contract or approving a 12b-1 plan
(12b-1 fees are explained in "Distribution Fees").

PORTFOLIO TRADES

In placing portfolio trades, the fund's adviser may use brokerage firms
that market the fund's shares, but only when the advisers believe no other firm
offers a better combination of quality execution (i.e., timeliness and
completeness) and favorable price. As long as the advisers believe a brokerage
firm can provide this combination, they may consider research and related
services when choosing a brokerage firm. Brokerage firms may use a portion of
the commissions paid by the fund to reduce its expenses.

INVESTMENT GOALS

None of the fund's investment goals are fundamental and may be changed
without shareholder approval.

DIVERSIFICATION

The fund is diversified, which means the fund may not, with respect to at
least 75% of its assets, invest more than 5% in the securities of one company.

HOW DOES TAXATION AFFECT THE FUND AND ITS SHAREHOLDERS?

HOW DOES THE FUND EARN INCOME AND GAINS?

The fund earns dividends and interest (the "income") on its investments.
When the fund sells a security for a price that is higher than it paid, it has a
gain. When the fund sells a security for a price that is lower than it paid, it
has a loss. If the fund has held the security for more than one year, the gain
or loss will be a long-term capital gain or loss. If the fund has held the
security for one year or less, the gain or loss will be a short-term capital
gain or loss. The fund's gains and losses are netted together, and, if the fund
has a net gain (the fund's "gains"), that gain will generally be distributed to
you.

TAXATION OF THE FUND'S INVESTMENTS

<PAGE>

The fund invests your money in the securities that are described in the
sections "Strategies" and "How Does the Fund Pursue Its Investment Goal?"
Special tax rules may apply in determining the income and gains that the fund
earns on its investments. These rules may, in turn, affect the amount of
distributions that the fund pays to you. These special tax rules are discussed
in the SAI.

TAXATION OF A FUND. As a regulated investment company, the fund generally
pays no federal income tax on the income and gains that it distributes to you.

FOREIGN TAXES. Foreign governments may impose taxes on the income and gains
from the fund's investments in foreign securities. These taxes will reduce the
amount of the fund's distributions to you.

TAXATION OF SHAREHOLDERS

WHAT IS A DISTRIBUTION?

As a shareholder, you will receive your share of the fund's income and
gains on the fund's investments in stocks and other securities. The fund's
income and short-term capital gains are paid to you as ordinary dividends. The
fund's long-term capital gains are paid to you as capital gain distributions. If
the fund pays you an amount in excess of its income and gains, this excess will
generally be treated as a non-taxable distribution. These amounts, taken
together, are what we call the fund's distributions to you. The fund pays
dividends from its net investment income on at least an annual basis. The fund
distributes capital gains, if any, annually.

DISTRIBUTIONS. Distributions from the fund, whether you receive them in
cash or in additional shares, are generally subject to income tax. The fund will
send you a statement in January of the current year that reflects the amount of
ordinary dividends, capital gain distributions and non-taxable distributions you
received from the fund in the prior year. This statement will include
distributions declared in December and paid to you in January of the current
year, but which are taxable as if paid on December 31 of the prior year. The IRS
requires you to report these amounts on your income tax return for the prior
year.

DIVIDENDS-RECEIVED DEDUCTION. Corporate investors may be entitled to a
dividends-received deduction on a portion of the ordinary dividends they receive
from the funds.

<PAGE>

REDEMPTIONS AND EXCHANGES

WHAT IS A REDEMPTION?

A redemption is a sale by you to the fund of some or all of your shares in
the fund. The price per share you receive when you redeem fund shares may be
more or less than the price at which you purchased those shares. An exchange of
shares in the fund for shares of another Flex-Partners' fund is treated as a
redemption of fund shares and then a purchase of shares of the other
Flex-Partners' fund. When you redeem or exchange your shares, you will generally
have a gain or loss, depending upon whether the amount you receive for your
shares is more or less than your cost or other basis in the shares.

If you redeem your shares or if you exchange your shares in the fund for
shares in another Flex-Partners' fund, you will generally have a gain or loss
that the IRS requires you to report on your income tax return. All or a portion
of any loss on the redemption or exchange of your shares will be disallowed by
the IRS if you purchase other shares in the fund within 30 days before or after
your redemption or exchange.

U.S. GOVERNMENT INTEREST. Many states grant tax-free status to dividends
paid from interest earned on direct obligations of the U.S. Government, subject
to certain restrictions. The fund will provide you with information at the end
of each calendar year on the amount of any such dividends that may qualify for
exemption from reporting on your individual income tax returns.

STATE TAXES. Ordinary dividends and capital gain distributions that you
receive from the fund, and gains arising from redemptions or exchanges of your
fund shares will generally by subject to state and local income tax. The holding
of fund shares may also be subject to state and local intangibles taxes. You may
wish to contact your tax advisor to determine the state and local tax
consequences of your investment in the fund.

HOW TO READ THE FINANCIAL HIGHLIGHTS TABLE

The fund began calendar year 1998 with a net asset value (price) of $12.18
per share. During the year, the fund lost $0.02 per share from investment income
(interest and dividends less operating expenses) and earned $2.43 per share from
investments that had appreciated in value or that were sold for higher prices
than the fund paid for them.

Shareholders received $0.12 per share in the form of dividend and capital
gains distributions. A portion of each year's distributions may come from the
prior year's income or capital gains.

The earnings ($2.41 per share) minus the distributions ($0.12 per share)
resulted in a share price of $14.47 at the end of the year. This was an increase
of $2.29 per share (from $12.18 at the beginning of the year to $14.47 at the
end of the year). For a shareholder who reinvested the distributions in the
purchase of more shares, the total return from the fund was 19.78% for the year.

As of December 31, 1998, the fund had $18,273,000 in net assets. For the
year, its expense ratio was 2.00% ($20 per $1,000 of net assets); and its net
investment income amounted to (0.18)% of its average net assets. It sold and
replaced securities valued at 86.13% of its net assets.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
fund's financial performance for the past two years. Certain information
reflects financial results for a single fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KMPG LLP, independent
auditors, whose report, along with the fund's financial statements, is included
in the annual report, which is available upon request.

INTERNATIONAL EQUITY FUND 1998 1997*

* September 2, 1997 (date of commencement of operations) to December 31, 1997

(1) Not Annualized
(2) Annualized

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional information.

<PAGE>

SHAREHOLDER MANUAL

HOW TO BUY SHARES

MINIMUM INVESTMENT -- The minimum investment to open an account is $2,500,
except for an Individual Retirement Account (IRA), which has a $500 minimum. You
may make subsequent investments in any account in amounts of at least $100.

OPENING AN ACCOUNT -- You may open an account and make an investment by
purchasing shares through brokerage firms having sales agreements with the
Distributor. You may also purchase shares directly from the fund by submitting a
check. In the case of a new account, fill out the New Account Application
accompanying this Prospectus. A check payable to the International Equity Fund
must accompany your New Account Application. You may make payments by check or
Federal Reserve Draft payable to the fund. Please send your completed
application and payment to the following address: THE FLEX-PARTNERS, C/O MUTUAL
FUNDS SERVICE CO., P. O. BOX 7177, DUBLIN, OHIO 43017.

Should an order to purchase shares be canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred in the
transaction. All orders for the purchase of shares are subject to acceptance or
rejection by the fund or by the Distributor. Direct purchase orders received by
Mutual Funds Service Company (the "Transfer Agent"), the fund's transfer agent,
by 4:00 p.m., Eastern time, are confirmed at that day's public offering price.
Direct purchase orders received by the Transfer Agent after 4:00 p.m. and orders
received by brokerage firms after 5:00 p.m. are confirmed at the public offering
price on the following business day.

Wire orders for shares of the fund received by dealers prior to 4:00 p.m.,
Eastern time, and received by the Transfer Agent before 5:00 p.m., Eastern time
on the same day, are confirmed at that day's public offering price. Orders
received by dealers after 4:00 p.m., Eastern time, are confirmed at the public
offering price on the following business day. It is the dealer's obligation to
place the order with the Transfer Agent before 5:00 p.m., Eastern time, and to
forward payment to Firstar Bank, N.A., the Custodian for the fund.

If the wire order is for a new account, you must telephone the fund prior
to making your initial investment. Call 1-800-494-FLEX, or (614) 766-7074.
Advise the fund of the amount you wish to invest and obtain an account number
and instructions. Have your bank wire federal funds to:

FIRSTAR BANK, N.A. CINTI/TRUST
ABA #: 042-00001-3
ATTENTION: THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND
Account Number 486484298
ACCOUNT NAME (your name)
YOUR FLEX-PARTNERS ACCOUNT NUMBER

<PAGE>

The fund will not permit redemptions until it receives the New Account
Application in good order.

SUBSEQUENT INVESTMENTS - You may make subsequent investments in the fund by
mailing a check payable to the International Equity Fund. Please include your
account number and mail as follows:

THE FLEX-PARTNERS
C/O MUTUAL FUNDS SERVICE CO.
P. O. BOX 7177
DUBLIN, OHIO 43017

SALES CHARGES - Maximum sales charges and fees are set forth in the table
below, and quantity discounts for the fund's initial sales charge are set forth
below.

------------------------------------------------
o Initial Sales Charge of 5.75% or less
------------------------------------------------
o No deferred sales charge
------------------------------------------------

The fund's shares are sold at net asset value plus the applicable sales
charge as shown in the table below. The fund's shares also bear a Rule 12b-1 fee
of 0.25% per year (paid to the Distributor, Adviser Dealer Services, Inc.) of
their average net asset value. In addition, the fund's shares bear an asset
based service fee of 0.25% per year. The sales charge on the fund's shares is
allocated between your brokerage firm and Adviser Dealer Services, Inc. as shown
below:

The offering price of International Equity Fund shares includes the
applicable sales charge.

<PAGE>

QUANTITY DISCOUNTS

CUMULATIVE QUANTITY DISCOUNT - lets you combine all of your shares in the
fund for purposes of calculating the sales charge. Therefore, the quantity
discounts shown in the table above will apply if the dollar amount of your
purchase, plus the net asset value of fund shares you already own, is more than
$50,000. The sales charge on the shares being purchased will then be at the rate
applicable to the aggregate value of such shares then owned, plus the amount of
the purchase.

LETTER OF INTENTION (LOI) - expresses your intent to buy a stated dollar
amount of shares over a 13-month period and lets you receive the same sales
charge as if all shares had been purchased at one time. To take advantage of
this discount, simply sign and complete the LOI on the New Account Application,
indicating the amount you wish to invest. The LOI may be back-dated to include
purchases made within 90 days prior to the signing of the LOI. The LOI will not
be a binding obligation on either the purchaser or the fund.

SALES CHARGE WAIVERS: Directors, trustees, officers and full-time employees
of the Flex-Partners trust, the Manager, the Subadviser or the Distributor,
including members of the immediate families of such individuals and employee
benefit plans established by such entities, may purchase shares of the fund at
net asset value.

You may purchase shares of the fund at net asset value if, on the date you
purchase such shares, you are a shareholder of any mutual fund (other than a
Flex-Partners Fund) whose portfolios are advised by the manager.

Fund shares may be sold at net asset value without an initial sales charge
to:

o clients of the Manager, registered investment advisers, broker-dealers
and financial planners, who are purchasing on behalf of their clients
or on behalf of clients in wrap accounts, by making arrangements to do
so with the Trust and the Transfer Agent

<PAGE>

See "Other Shareholder Services - Systematic Withdrawal Program" and the
Statement of Additional Information.

No sales charge will be charged on accounts that are opened for you by your
brokerage firm where the amount invested represents redemption proceeds from
funds distributed other than by Adviser Dealer Services, Inc., and where you
have paid a sales charge in connection with the purchase of such other fund's
shares; provided that (i) shares of the fund are purchased within 60 days after
redemption of such other fund's shares; and (ii) sufficient documentation of
such redemption as the Transfer Agent may require shall be provided at the time
fund shares are purchased. Also, if you have redeemed shares of a Flex-Partners'
fund, you may reinvest the proceeds in any Flex-Partners' fund at net asset
value if such proceeds are reinvested within 60 days after the date of
redemption.

HOW TO MAKE WITHDRAWALS (REDEMPTIONS)

You may redeem shares and withdraw funds at net asset value. There are no
redemption fees. (See "How Net Asset Value Is Determined.")

Amounts withdrawn are mailed without charge to the address printed on your
account statement.

WHEN REDEMPTIONS ARE EFFECTIVE -- Redemptions are made at the net asset
value per share next determined after receipt of a redemption request in good
order. (See "How Net Asset Value Is Determined.")

<PAGE>

WHEN PAYMENTS ARE MADE -- Shares are redeemed at their net asset value per
share next determined after receipt by the Transfer Agent of the redemption
request in the form described above. Payment is normally made within seven days
after the redemption request.

EXCHANGE PRIVILEGE

An exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes.

Your exchange will be processed at the net asset value next determined
after the Transfer Agent receives your exchange request. You will receive a
prospectus along with your confirmation if you exchange into a fund not offered
in this Prospectus. The exchange feature may be modified or discontinued at any
time, upon notice to you in accordance with federal securities rules.

EXCHANGES OF SHARES: You may exchange your shares of the International
Equity Fund for Class A shares of any other Flex-Partners Fund, and for shares
of The Flex-funds Money Market Fund, a single-class money market fund managed by
the Manager.

The fund may refuse exchange purchases by anyone, if in the manager or
subadviser's judgment, the fund would be unable to invest effectively in
accordance with its investment goals and strategies, or would otherwise be
affected in a negative way.

IF YOU HAVE ANY QUESTIONS ON EXCHANGE OR REDEMPTION PROCEDURES, CALL YOUR
BROKERAGE FIRM OR THE TRANSFER AGENT.

TRANSACTION POLICIES

VALUATION OF SHARES. The net asset value per share (NAV) for the fund will
be calculated each day at approximately 3:00 p.m. Eastern time by dividing the
fund's net assets by the number of its shares outstanding.

The assets of the fund are generally valued on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the adviser under procedures adopted by the Board
of Trustees.

EXECUTION OF REQUESTS. The fund is open on those days when the New York
Stock Exchange is open, typically Monday through Friday. Buy and sell requests
are executed at the next NAV to be calculated after your request is received by
the transfer agent.

At times of peak activity, it may be difficult to place requests by phone.
During these times, consider sending your request in writing.

<PAGE>

In unusual circumstances, the fund may temporarily suspend the processing
of sell requests, or may postpone payment of proceeds for up to seven business
days, as allowed by federal securities laws.

OTHER SHAREHOLDER SERVICES

AUTOMATIC ACCOUNT BUILDER: This program offers you a convenient way for you
to invest in the fund by automatically transferring money from your checking or
savings account each month to buy shares. Under the program, regular investments
in the fund of $100 or more will be deducted from your checking or savings
account and invested in shares of the fund. Your bank must be a member of the
Automated Clearing House (ACH). To sign up, complete the Automatic Account
Builder section of your New Account Application. There is no additional charge
for this service.

SYSTEMATIC WITHDRAWAL PROGRAM: This program allows you to automatically
sell your shares and receive regular distributions of $100 or more from your
account. You must either own or purchase shares having a value of at least
$10,000 and advise the fund in writing of the amount to be distributed and the
desired frequency, i.e., monthly, quarterly or annually. To sign up, complete
the appropriate section of your New Account Application. Your should realize
that if withdrawals exceed income dividends, the invested principal may be
depleted.

You may make additional investments and may change or stop the program at
any time. There is no charge for this program.

RETIREMENT PLANS: The fund offers retirement plans, which include a
prototype Profit Sharing Plan, a Money Purchase Pension Plan, a Salary Savings
Plan--401(k), Tax-Sheltered Custodial Account - 403(b)(7), an Individual
Retirement Account (IRA), a Roth IRA, an Education IRA, a Simple IRA, and a
Simplified Employee Pension (SEP) Plan. Plan Adoption Agreements and other
information required to establish a Flex-Partners Retirement Plan are available
from The Flex-Partners, c/o R. Meeder & Associates, Inc., P.O. Box 7177, Dublin,
Ohio 43017; or call 1-800-494-3539.

<PAGE>

SHAREHOLDER ACCOUNTS

The fund maintains an account for each shareholder in full and fractional
shares. The fund may reject any purchase order and may waive minimum purchase
requirements.

CONFIRMATION STATEMENT -- All purchases and sales, and dividend
reinvestments, are confirmed promptly after they become effective.

ACCOUNTS WITH LOW BALANCES. The fund may redeem shares in your account for
its then current net asset value and pay the proceeds to you if at any time your
account has shares valued at less than $1,000 ($500 for an IRA) as a result of
redemptions you have made. The fund may redeem the shares in your account if you
have opened your account for less than the minimum purchase amount and you do
not purchase additional shares to meet the minimum. Before any shares are
redeemed for these purposes, you will be notified in writing 30 days before any
such redemption to bring the value of shares in your account to $1,000 ($500 for
an IRA).

MORE ABOUT RISK

The fund's risk profile is largely defined by the fund's principal
securities and investment practices. You may find the most concise description
of the fund's risk profile in the fund summary near the beginning of this
Prospectus.

The fund is permitted to use - within limits established by the trustees -
certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent that the fund uses these
securities or practices, its overall performance may be affected, either
positively or negatively. On the following pages are brief descriptions of these
securities and investment practices, along with the risks associated with them.
The fund follows certain policies that may reduce these risks.

As with any mutual fund, there is no guarantee that the fund will earn
income or show a positive total return over any period of time - days, months or
years.

RISK AND INVESTMENT GLOSSARY

BORROWING AND REVERSE REPURCHASE AGREEMENTS refer to a loan of money from a
bank or other financial institution undertaken by the fund. The fund may borrow
up to 33-1/3% of its assets. LEVERAGE AND CREDIT RISKS.

COMMON STOCK is a share of ownership (equity) interest in a company.

COMPANIES WITH LIMITED OPERATING HISTORIES are securities issued by
companies that have been in continuous operation for less than three years.
Sometimes called "unseasoned" issuers. MARKET, LIQUIDITY AND INFORMATION RISKS.

CONVERTIBLE SECURITIES are debt or equity securities which may be converted
on specified terms into stock of the issuer. MARKET, INTEREST RATE, PREPAYMENT
AND CREDIT RISKS.

<PAGE>

CORRELATION RISK occurs when the fund "hedges" - uses one investment to
offset the fund's position in another. If the two investments do not behave in
relation to one another the way the fund managers expect them to, then
unexpected results may occur.

CREDIT RISK means that the issuer of a security or the counterparty to an
investment contract may default or become unable to pay its obligations when
due.

CURRENCY CONTRACTS involve the right or obligation to buy or sell a given
amount of foreign currency at a specified price and future date. CURRENCY
LEVERAGE, CREDIT, CORRELATION, LIQUIDITY AND OPPORTUNITY RISKS.

CURRENCY RISK happens when the fund buys or sells a security denominated in
foreign currency. Foreign currencies "float" in value against the U.S. dollar.
Adverse changes in foreign currency value can cause investment losses when a
portfolio's or fund's investments are converted to U.S. dollars.

THE EURO: SINGLE EUROPEAN CURRENCY. On January 1, 1999, the European
Monetary Union introduced a new single currency, the euro, which replaced
the national currency for the eleven participating member countries. If the
fund holds investments in countries with currencies replaced by the euro,
the investment process, including trading, foreign exchange, payments,
settlements, cash accounts, custody and accounting will be affected.
Because this change to a single currency is new and untested, the
establishment of the euro may result in market volatility. For the same
reason, it is not possible to predict the impact of the euro on the
business or financial condition of European issuers which the fund may
hold, and their impact on the value of fund shares and performance.

DEFENSIVE MEASURES may be taken when the fund's adviser believes they are
warranted due to market conditions. When this happens, the fund may increase its
investment 20% in government securities and other short-term securities without
regard to the fund's investment restrictions, policies or normal investment
emphasis. As a result, the fund could be unable to achieve its investment
objective. OPPORTUNITY RISK.

FINANCIAL FUTURES are exchange-traded contracts on securities, securities
indexes or foreign currencies that obligate the holder to take or make future
delivery of a specified quantity of those underlying securities or currencies on
a predetermined future date. The fund may invest up to 25% of its assets in
financial futures. HEDGING, CORRELATION, OPPORTUNITY, LEVERAGE, INTEREST RATE,
MARKET, AND LIQUIDITY RISKS.

FOREIGN SECURITIES are issued by companies located outside of the United
States. The fund considers a company to be located outside the United States if
the principal securities trading market for its equity securities is located
outside the U.S. or it is organized under the laws of, and has its principal
office in, a country other than the U.S. The risks of investing in foreign
countries include the possibility of the imposition of exchange controls,

<PAGE>

currency devaluations, foreign ownership limitations, expropriation,
restrictions on removal of currency or other assets, nationalization of assets,
punitive taxes, and certain custody and settlement risks. MARKET, CURRENCY,
TRANSACTION, LIQUIDITY, INFORMATION AND POLITICAL RISKS.

DEVELOPING COUNTRIES: Investments in developing or emerging markets are
subject to all of the risks of foreign investing generally, and have
additional heightened risks due to a lack of established legal, business
and social frameworks to support securities markets. Foreign securities
markets, including emerging markets, may have substantially lower trading
volumes than U.S. markets, resulting in less liquidity and more volatility
than experienced in the U.S.

FORWARD FOREIGN CURRENCY CONTRACTS are privately negotiated contracts
committing the holder to purchase or sell a specified quantity of a foreign
currency on a predetermined future date. MARKET, OPPORTUNITY AND LEVERAGE RISKS.

HEDGING RISK comes into play when the fund uses a security whose value is
based on an underlying security or index to "offset" the fund's position in
another security or currency. The objective of hedging is to offset potential
losses in one security with gains in the hedge. But a hedge can eliminate or
reduce gains as well as offset losses. (Also see "Correlation Risk.")

ILLIQUID AND RESTRICTED SECURITIES are securities which, by rules of their
issue or by their nature, cannot be sold readily. These include illiquid Rule
144A securities. The fund may invest up to 15% of its assets in illiquid and
restricted securities. MARKET, LIQUIDITY AND TRANSACTION RISKS.

INFORMATION RISK means that information about a security or issuer may not
be available, complete, accurate or comparable.

INVESTMENT GRADE BONDS are rated BBB (Standard & Poor's) or Baa (Moody's)
or above. Bonds rated below investment grade are subject to greater credit risk
than investment grade bonds. INTEREST RATE, PREPAYMENT, MARKET AND CREDIT RISKS

LIQUIDITY RISK occurs when investments cannot be sold readily. The fund may
have to accept a less-than-desirable price to complete the sale of an illiquid
security or may not be able to sell it at all.

MARKET CAPITALIZATION is the total current market value of a company's
outstanding common stock.

<PAGE>

OPPORTUNITY RISK means missing out on an investment opportunity because the
assets necessary to take advantage of it are committed to less advantageous
investments or strategies.

OPTIONS are contracts giving the holder the right but not the obligation to
purchase or sell a security on or before a predetermined future date for a fixed
price. Options on securities indexes are similar, but settle in cash. The fund
may invest up to 25% of its assets in options. HEDGING, CORRELATION,
OPPORTUNITY, LEVERAGE, INTEREST RATE, MARKET, AND LIQUIDITY RISKS.

REPURCHASE AGREEMENTS means the purchase of a security that must later be
sold back to the issuer at the same price plus interest. The fund may invest up
to 20% of its assets in repurchase agreements. CREDIT RISK.

SHORT-TERM TRADING means selling a security soon after purchase. If the
fund engages in short-term trading, you will have higher turnover and
transaction expenses. Short-term trading may also result in short-term capital
gains. Upon the distribution to you of any net short-term capital gains from the
fund, you will be taxed at ordinary tax rates. MARKET RISK.

SECURITIES LENDING means the lending of securities to financial
institutions, which provide cash or government securities as collateral. The
fund may lend up to 33-1/3% of assets. CREDIT RISK.

TRANSACTION RISK means that the fund may be delayed or unable to settle a
transaction or that commissions and settlement expenses may be higher than
usual.

WHEN ISSUED SECURITIES AND FORWARD COMMITMENTS involve the purchase and
sale of securities for delivery at a future date, market value may change before
delivery. MARKET, OPPORTUNITY AND LEVERAGE RISKS.

<PAGE>

FOR MORE INFORMATION:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the fund. The SAI has
been filed with the Securities and Exchange Commission and is
incorporated by reference in this Prospectus (is legally a part of
this Prospectus).

ANNUAL AND SEMIANNUAL REPORTS

The SAI, the reports and other information about the fund may be
viewed on the Commission's Internet website at HTTP://WWW.SEC.GOV and
copies of this information may be obtained (upon payment of a copying
fee) by writing the public reference section of the Commission,
Washington, D.C. 20549-6009 (telephone 1-800-SEC-0330).

To request a free copy of the current annual/semi-annual report or
SAI, request other information about the fund, or make shareholder
inquiries, please write, call or E-mail us at:

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
Telephone: 1-800-494-3539 or 614-766-7074
WWW.FLEXPARTNERS.COM

SEC File No.: 811-6720

<PAGE>

THE FLEX-PARTNERS
CROSS REFERENCE SHEET TO FORM N-1A
FOR THE INSTITUTIONAL FUND

PART A.

ITEM NO. PROSPECTUS CAPTION

1(a) Front Cover Page
1(b) Back Cover Page

2(a) Investment Goal
2(b) Strategies
2(c)(1) Main Risk Factors
2(c)(2) Performance

3 Fees and Expenses of the Fund

4(a)(b) More Information About the Funds
How is the Trust Organized?
4(c) More About Risk
Risk Glossary

5 Not applicable

6(a) Who Manages the Funds?
6(b) Not applicable

7(a) Transaction Policies
7(b) How to Buy Shares
Other Shareholder Services
7(c) How to Make Withdrawals (Redemptions)
Exchange Privilege
7(d)(e) How Does Taxation Affect the Fund and Its Shareholders?
7(f) Not applicable

8(a) Not applicable
8(b) Distribution Fees
8(c) More Information About the Fund - The Fund's Investment in a
Portfolio

9 How to Read the Financial Highlights Table
Financial Highlights

<PAGE>

THE INSTITUTIONAL FUND
A MONEY MARKET FUND

PROSPECTUS - APRIL 30, 1999

[LOGOS]

The Institutional Fund is a part of The Flex-Partners family of mutual
funds.

This Prospectus gives you important information about The Institutional
Fund that you should know before you invest. Please read this Prospectus
carefully and keep it handy for future reference.

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this Prospectus. Any
representation to the contrary is a criminal offense.

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
1-800-325-FLEX or 614-760-2159
Internet: WWW.FLEXPARTNERS.COM

<PAGE>

CONTENTS

- -------------------------------------------------------- THE INSTITUTIONAL FUND

A look at investment goals, Investment Goal _____
strategies, risks, performance Strategies _____
and expenses Main Risk Factors _____
Performance _____
Fees and Expenses of the Fund _____

Information on who may want to invest Who May Want to Invest _____
and who may not want to invest

- ------------------------------------------------------------ SHAREHOLDER MANUAL

Information about account How to Buy Shares _____
transactions and services How to Make Withdrawals
(Redemptions) _____
Transaction Policies _____
Other Shareholder Services _____

- -------------------------------------------------------------- MORE ABOUT RISK

Investment Practices, Securities
and Related Risks _____
Risk and Investment Glossary _____

- ---------------------------------------------------------- FOR MORE INFORMATION

Where to learn more about the fund Back Cover

<PAGE>

THE INSTITUTIONAL FUND (FFIXX)

[ICON] INVESTMENT GOAL

The fund seeks to provide current income while maintaining a stable
share price of $1.00. To pursue this goal, the fund invests primarily
in high-quality, short-term money market instruments, such as
securities backed by the full faith and credit of the U.S. government,
securities issued by U.S. government agencies, or obligations issued
by corporations and financial institutions.

[ICON] STRATEGIES

The fund invests all of its assets in The Money Market Portfolio, a
master fund having the same investment goal as the fund. See "The
Fund's Investment in a Portfolio" under "More Information about the
Fund." The Portfolio, like all money funds, follows SEC guidelines on
the quality, maturity and diversification of its investments. These
guidelines are designed to help reduce a money fund's risks so that it
is more likely to keep its share price at $1.00.

o The Portfolio only buys securities that the adviser determines
present minimal credit risks and that are rated in one of the top
two short-term rating categories or that are comparable unrated
securities in the adviser's opinion.

o The Portfolio only buys securities with remaining maturities of
397 calendar days or less and maintains a dollar-weighted average
portfolio maturity of 90 days or less.

o Generally, the Portfolio may not invest more than 5% of its total
assets in the securities of a single issuer, other than in U.S.
government securities.

o Generally, the adviser will attempt to purchase securities with
longer maturities when it believes interest rates are falling and
will attempt to purchase securities with shorter maturities when
it believes interest rates are rising.

The Portfolio will limit its purchases to U.S. government securities
and securities of its agencies and instrumentalities, bank obligations
and instruments secured thereby, high quality commercial paper, high
grade corporate obligations, funding agreements and repurchase
agreements.

For more information, see "How Does the Fund Pursue Its Investment
Goal?" under "More Information About the Fund."

[ICON] MAIN RISK FACTORS

The fund is subject to income risk, which is the possibility that the
fund's dividends or income will decline because of falling interest
rates. The fund is subject, to a limited extent, to credit risk, which
is the possibility that the issuer of a security owned by the fund
will be unable to repay interest and principal in a timely manner.

An investment in the fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although
the fund seeks to preserve the value of your investment at $1.00 per

<PAGE>

share, it is possible to lose money by investing in the fund. Please
read "More About Risk" carefully before investing.

PERFORMANCE

The bar chart shown on the left below provides some indication of the risks
of investing in The Institutional Fund by showing changes in the fund's
performance from year to year during the past four years. The table on the right
compares the fund's performance with the returns of an index of funds with
similar investment objectives. How the fund has performed in the past is not
necessarily an indication of how the fund will perform in the future.

[GRAPH] The following information was presented in the form of a bar graph:

YEAR ANNUAL TOTAL RETURN
---- -------------------
1995 6.01%
1996 5.43%
1997 5.53%
1998 5.49%

During the period shown in the bar chart, the highest return for a quarter
was 1.52% (quarter ended June 30, 1995) and the lowest return for a quarter was
1.31% (quarter ended June 30, 1996).

The fund's seven-day yield ended on December 31, 1998 was 5.10% and the
seven-day compound yield ended December 31, 1998 was 5.22%. To request the
fund's current seven-day yield, please call 1-800-325-FLEX or 614-760-2159.

Average Annual Total Returns
(for the periods ending Since Inception
DECEMBER 31, 1998) PAST ONE YEAR (6/15/94)
- --------------------------------------------------------------------------------

The Institutional Fund 5.49% 5.53%
IBC Financial Data, Inc.'s
Average Institutional Fund 5.33% 5.35%

[ICON] FEES AND EXPENSES OF THE FUND

The following table describes the fees and expenses that you may pay
if you buy and hold shares of the fund.

There are no sales loads, fees or other charges

o to buy fund shares directly from the fund
o to reinvest dividends in additional shares
o to exchange into shares of funds in the Flex-funds family of
no-load funds
o or to redeem your shares.

<PAGE>

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND
ASSETS)(1)

Management Fees 0.27%
Distribution (12b-1) Fees 0.03%
Other Expenses2 0.15%
-----
Total Annual Fund Operating Expenses 0.45%
Fee Waiver and Expense Reimbursement3 -0.20%
-----
Net Expenses 0.25%

1 This table and the Example below reflect the expenses of the fund
and its proportionate share of expenses from its corresponding
Portfolio. See "The Fund's Investment in a Portfolio" under "More
Information About the Fund."

2 "Other Expenses" are based on expenses actually incurred by the fund
for the year ended December 31, 1998.

3 Reflects the adviser's agreement to reduce its fees and/or absorb
expenses to the extent necessary to keep total expenses at 0.26% of
average daily net assets. The adviser may terminate this agreement
after December 31, 1999.

EXAMPLE

The example in the table below is intended to help you compare the
cost of investing in the fund with the cost of investing in other
mutual funds.

Assuming you

o invest $10,000 in the fund
o redeem your shares at the end of the periods shown below
o earn a 5% return each year and
o incur the same fund operating expenses shown above,

your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$26 $124 $232 $547

Of course, your actual costs may be higher or lower.

[ICON] WHO MAY WANT TO INVEST

The fund may be appropriate if you are an institutional investor who:

o likes to earn income at current money market rates while
preserving the value of your investment

o is looking for a short-term component of an asset allocation
program

o characterizes your investment outlook as "very conservative"

<PAGE>

o wants to be able to move money into stock or bond investments
quickly and without penalty

The fund may not be appropriate if you:

o are investing for maximum return over a long-term horizon

MORE INFORMATION ABOUT THE FUND

THE FUND'S INVESTMENT IN A PORTFOLIO

The fund seeks to achieve its investment goal by investing all of its
assets in the Money Market Portfolio, its corresponding portfolio.

The portfolio has the same investment goal as the fund. The fund's
investment policies are also substantially similar to the portfolio's, except
the fund may pursue its policies by investing in an open-end management
investment company with the same investment goal and substantially similar
policies and restrictions as the fund. The fund buys shares of the portfolio at
net asset value. An investment in the fund is an indirect investment in the
portfolio.

It is possible that the fund may withdraw its investment in the portfolio
and subsequently invest in another open-end management investment company with
the same investment goal and substantially similar policies. This could happen
if the portfolio changes its investment goal or if the board of trustees, at any
time, considers it in the fund's best interest.

The fund's structure, where it invests all of its assets in its
corresponding portfolio, is sometimes called a "master/feeder" structure. You
will find more detailed information about this structure and the potential risks
associated with it in the Statement of Additional Information.

HOW DOES THE FUND PURSUE ITS INVESTMENT GOAL?

The manager seeks to achieve its goal by investing in high-quality money
market instruments which mature in 397 days or less. Also, the portfolio
will seek to minimize changes in the value of its assets due to market
factors by maintaining a dollar-weighted average portfolio maturity of 90
days or less.

The portfolio may change its average portfolio maturity or level of quality
to protect its net asset value when it is perceived that changes in the
liquidity of major financial institutions may adversely affect the money
markets. Consequently, for temporary defensive purposes, the portfolio may
shorten the average maturity of its investments and/or invest only in the
highest quality debt instruments, including, for example, U.S. government
or agency obligations.

MONEY MARKET INSURANCE

The Portfolio is insured by ICIM Re (the "Insurer"), a wholly-owned
subsidiary of ICI Mutual Insurance Company, against specific types of
losses on certain money market instruments ("eligible securities") held by
the Portfolio. The specific types of losses are losses from non-payment of
principal or interest, or a bankruptcy or insolvency of the issuer or
credit provider, if any. The insurance does not cover losses resulting from
changes in interest rates or other market developments. The Insurer charges
the Portfolio an annual premium for the insurance. The Portfolio may
recover no more than $100 million annually and the Portfolio may only
recover if the amount of the loss exceeds 0.10% of its eligible
instruments. The Fund and another money market fund sponsored by the
manager have invested all of their investable assets in the Portfolio. The
benefit of any recovery would be shared by the Fund and such other money
market fund on the basis of their respective beneficial interests in the
Portfolio. The Portfolio and the Fund may incur losses regardless of the
insurance.

<PAGE>

WHO MANAGES THE FUND?

THE BOARD. The board of trustees oversees the management of the fund and the
portfolio, and elects their officers. The officers are responsible for the fund
and the portfolio's day-to-day operations. Information concerning the trustees
and officers of the fund and the portfolio appears in the Statement of
Additional Information.

INVESTMENT ADVISER. R. Meeder & Associates, Inc. ("RMA") manages the portfolio's
assets and makes investment decisions for the portfolio. RMA has been an
investment adviser to individuals, pension and profit sharing plans, trusts,
charitable organizations, corporations and other institutions since 1974. In
addition, RMA has served as investment adviser to the portfolio since its
inception and, prior to that, to The Flex-funds Trust since its inception in
1982. As of December 31, 1998, RMA and its affiliates managed approximately $1.4
billion in assets. RMA has its principal offices at 6000 Memorial Drive, Dublin,
OH 43017.

PORTFOLIO MANAGER

The portfolio manager responsible for the portfolio's investments is Philip
A. Voelker, Senior Vice President and Chief Investment Officer of RMA. Mr.
Voelker joined RMA in 1975 and has managed the portfolio since 1985.

MANAGEMENT FEES. During the calendar year ended December 31, 1998, the portfolio
paid management fees totaling 0.15% of the portfolio's average daily net assets.

YEAR 2000. The common past practice in computer programming of using just two
digits to identify a year has resulted in the Year 2000 challenge throughout the
information technology industry. If unchanged, many computer applications and
systems could misinterpret dates occurring after December 31, 1999, leading to
errors or failure. This failure could adversely affect the fund's operations,
including pricing, securities trading and the servicing of shareholder accounts.

In addition to taking reasonable steps to secure our internal systems and
external relationships, RMA is further developing contingency plans intended to
ensure that unexpected systems failures will not adversely affect the fund's
operations. RMA intends to monitor these processes through the rollover of 1999
into 2000 and to quickly implement alternative solutions if necessary.

<PAGE>

DISTRIBUTION FEES

Rule 12b-1 of the Investment Company Act permits mutual funds that adopt a
written plan to pay out of fund assets certain expenses relating to the sale and
distribution of their shares. The fund has a 12b-1 plan. Under the plan the fund
pays an annual fee of 0.03% of fund assets for distribution services. Payments
under the plan are made for distribution in the form of commissions and fees,
advertising, sales literature, services of public relations consultants, direct
solicitation and expenses of printing prospectuses and reports used for sales
purposes. Persons who receive payments under the plan include securities
brokers, attorneys, accountants, investment advisers, investment performance
consultants, pension actuaries, banks, and service organizations.

HOW IS THE TRUST ORGANIZED?

The fund is a no-load, open-end management investment company that is a
member of The Flex-Partners trust (the "Trust").

PORTFOLIO TRADES

As long as the advisers believe a brokerage firm can provide a combination
of quality execution (i.e., timeliness and completeness) and favorable price,
they may consider research and related services when choosing a brokerage firm.
Brokerage firms may use a portion of the commissions paid by the portfolio to
reduce its, or the fund's, expenses.

INVESTMENT GOALS

None of the fund's investment goals are fundamental and may be changed
without shareholder approval.

DIVERSIFICATION

The fund is diversified, which means the fund may not invest more than 5%
in the securities of one company.

HOW DOES TAXATION AFFECT THE FUNDS AND THEIR SHAREHOLDERS?

HOW DOES THE PORTFOLIO EARN INCOME AND GAINS?

The portfolio earns dividends and interest (the portfolio's "income") on
its investments. When the portfolio sells a security for a price that is higher
than it paid, it has a gain. When the portfolio sells a security for a price
that is lower than it paid, it has a loss. If the portfolio has held the
security for more than one year, the gain or loss will be a long-term capital
gain or loss. If the portfolio has held the security for one year or less, the
gain or loss will be a short-term capital gain or loss. The portfolio's gains
and losses are netted together, and, if the portfolio has a net gain (the
portfolio's "gain"), that gain will generally be distributed to you.

<PAGE>

TAXATION OF THE PORTFOLIO'S INVESTMENTS

The portfolio invests your money in the securities that are described in
the sections "Strategies" and "How Does the Fund Pursue Its Investment Goal?"
Special tax rules may apply in determining the income and gains that the
portfolio earns on its investments. These rules may, in turn, affect the amount
of distributions that the fund pays to you. These special tax rules are
discussed in the Statement of Additional Information.

TAXATION OF THE FUND. As a regulated investment company, the fund generally
pays no federal income tax on the income and gains that it distributes to you.

<PAGE>

TAXATION OF SHAREHOLDERS

WHAT IS A DISTRIBUTION?

As a shareholder, you will receive your share of the fund's income and
gains on the portfolio's investments in money market securities. The fund's
income and short-term capital gains are paid to you as ordinary dividends. The
fund's long-term capital gains are paid to you as capital gain distributions. If
the fund pays you an amount in excess of its income and gains, this excess will
generally be treated as a non-taxable distribution. These amounts, taken
together, are what we call the fund's distributions to you. The fund pays
dividends from its net investment income on a monthly basis. The fund
distributes capital gains, if any, annually.

DISTRIBUTIONS. Distributions from the fund, whether you receive them in
cash or in additional shares, are generally subject to income tax. The fund will
send you a statement in January of the current year that reflects the amount of
ordinary dividends, capital gain distributions and non-taxable distributions you
received from the fund in the prior year. This statement will include
distributions declared in December and paid to you in January of the current
year, but which are taxable as if paid on December 31 of the prior year. The
Internal Revenue Service requires you to report these amounts on your income tax
return for the prior year.

DIVIDENDS-RECEIVED DEDUCTION. Corporate investors may be entitled to a
dividends-received deduction on a portion of the ordinary dividends they receive
from the fund.

BUYING A DIVIDEND. Purchasing fund shares in a taxable account shortly
before a distribution is known as "buying a dividend." In taxable accounts, you
must pay income taxes on the distribution whether you take the distribution in
cash or reinvest it. In addition, you will have to pay taxes on the distribution
whether the value of your investment decreased, increased or remained the same
after you bought the fund shares. The risk in buying a dividend is that the
portfolio may build up taxable gains throughout the period covered by a
distribution, as securities are sold at a profit. We distribute those gains to
you, after subtracting any losses, even if you did not own the shares when the
gains occurred.

DIVIDEND REINVESTMENTS. Most investors have their dividends reinvested in
additional shares of the fund. If you choose this option, or if you do not
indicate any choice, your dividends will be reinvested on the dividend payable
date. Alternatively, you can choose to have a check for your dividends mailed to
you. However, if the check is not deliverable, your dividends will be
reinvested.

REDEMPTIONS AND EXCHANGES

WHAT IS A REDEMPTION?

A redemption is a sale by you to the fund of some or all of your shares in
the fund. The price per share you receive when you redeem fund shares may be
more or less than the price at which you purchased those shares. An exchange of
shares in the fund for shares of a Flex-funds' fund is treated as a redemption
of fund shares and then a purchase of shares of the Flex-funds' fund. When you
redeem or exchange your shares, you will generally have a gain or loss,
depending upon whether the amount you receive for your shares is more or less
than your cost or other basis in the shares, which the IRS requires you to
report on your income tax return.

<PAGE>

U.S. GOVERNMENT INTEREST. Many states grant tax-free status to dividends
paid from interest earned on direct obligations of the U.S. Government, subject
to certain restrictions. The fund will provide you with information at the end
of each calendar year on the amount of any such dividends that may qualify for
exemption from reporting on your individual income tax returns.

NON-U.S. INVESTORS. Ordinary dividends generally will be subject to U.S.
income tax withholding. Your home country may also tax ordinary dividends,
capital gain distributions and gains arising from redemptions or exchanges of
your fund shares. Fund shares held by the estate of a non-U.S. investor may be
subject to U.S. estate tax. You may wish to contact your tax adviser to
determine the U.S. and non-U.S. tax consequences of your investment in the fund.

STATE TAXES. Ordinary dividends and capital gain distributions that you
receive from the fund, and gains arising from redemptions or exchanges of your
fund shares will generally by subject to state and local income tax. The holding
of fund shares may also be subject to state and local intangibles taxes. You may
wish to contact your tax adviser to determine the state and local tax
consequences of your investment in the fund.

HOW TO READ THE FINANCIAL HIGHLIGHTS TABLE

The fund began calendar year 1998 with a net asset value (price) of $1.00
per share. During the year, the fund earned $0.054 per share from investment
income (interest and dividends less operating expenses) and $0.00 per share from
investments that had appreciated in value or that were sold for higher prices
than the fund paid for them.

Shareholders received $0.054 per share in the form of dividend and capital
gains distributions. A portion of each year's distributions may come from the
prior year's income or capital gains.

The earnings ($0.054 per share) minus the distributions ($0.054 per share)
resulted in a share price of $1.00 at the end of the year. This was an increase
of $0.00 per share (from $1.00 at the beginning of the year to $1.00 at the end
of the year). For a shareholder who reinvested the distributions in the purchase
of more shares, the total return from the fund was 5.49% for the year.

As of December 31, 1998, the fund had approximately $641,831,000 in net
assets. For the year, its expense ratio was 0.24% ($24 per $1,000 of net
assets); and its net investment income amounted to 5.34% of its average net
assets.

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
fund's financial performance for the past 5 years. Certain information reflects
financial results for a single fund share. The total returns in the table
represent the rate that an investor would have earned (or lost) on an investment
in the fund (assuming reinvestment of all dividends and distributions). This
information has been audited by KMPG LLP, independent auditors, whose report,
along with the fund's financial statements, is included in the annual report,
which is available upon request.

<PAGE>

THE INSTITUTIONAL FUND

1998 1997 1996 1995 1994*
---- ---- ---- ---- -----
Net Asset Value, Beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS

NET INVESTMENT INCOME 0.054 0.054 0.053 0.059 0.026
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.054 0.054 0.053 0.059 0.026
- --------------------------------------------------------------------------------
Less Dividends and Distributions

FROM NET INVESTMENT INCOME (0.054) (0.054) (0.053) (0.059) (0.026)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.054) (0.054) (0.053) (0.059) (0.026)
- --------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------
TOTAL RETURN 5.49% 5.53% 5.43% 6.01% 4.80%(1)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA

Net Assets, End of Period ($000) 641,831 415,994 232,142 113,205 59,494
Ratio of Expenses to Average
Net Assets 0.24% 0.25% 0.25% 0.25% 0.20%(1)
Ratio of Net Investment Income
to Average Net Assets 5.34% 5.41% 5.30% 5.87% 4.51%(1)
Ratio of Expenses to Average
Net Assets before waiver
of fees(2) 0.45% 0.47% 0.46% 0.55% 0.46%(1)
Ratio of Net Income to Average
Net Assets, before waiver
of fees(2) 5.13% 5.19% 5.09% 5.57% 4.25%(1)

(1) Annualized

(2) Includes proportionate share of fees waived in corresponding portfolio. See
"Fees and Expenses of the Fund" for explanation of adviser's waiver of fees.

* For the period June 15, 1994 through December 31, 1994.

Financial Statements and Notes pertaining thereto appear in the Statement of
Additional Information Dated April 30, 1999.

SHAREHOLDER MANUAL

HOW TO BUY SHARES

Shares of The Institutional Fund are offered continuously and sold without a
sales charge. Shares are sold at the net asset value per share next determined
after receipt of both a purchase order and payment in federal funds. Investments
made by check are entered and credited at the net asset value determined on the
next business day following receipt.

MINIMUM INVESTMENT. The minimum investment to open an account in the fund is $5
million.

OPENING AN ACCOUNT. You may open an account by mail or bank wire as follows:

BY MAIL: To purchase shares, fill out the New Account Application
accompanying this Prospectus. A check payable to The Institutional Fund
must accompany the New Account Application. The fund does not accept third
party checks. Payments may be made by check or Federal Reserve Draft
payable to the fund and should be mailed to the following address: THE
FLEX-PARTNERS, C/O R. MEEDER & ASSOCIATES, INC., P.O. BOX 7177, DUBLIN,
OHIO 43017.

BY BANK WIRE: If the wire order is for a new account, YOU MUST TELEPHONE
THE FUND PRIOR TO MAKING YOUR INITIAL INVESTMENT. Call 1-800-325-FLEX, or
(614) 760-2159. Advise the fund of the amount you wish to invest and obtain
an account number and instructions. Have your bank wire federal funds to:

FIRSTAR BANK, N.A. CINTI/TRUST
ABA #: 042-00001-3
ATTENTION: THE INSTITUTIONAL FUND
Credit Account Number 851-2204
Account Name (your name)
Your Institutional Fund account number

On new accounts, a completed application must be sent to The Flex-Partners c/o
R. Meeder & Associates, Inc., P.O. Box 7177, Dublin, OH 43017 on the same day
your wire is sent. The fund will not permit a redemption until it receives the
New Account Application in good order.

<PAGE>

SUBSEQUENT INVESTMENTS. Subsequent investments in an existing account in the
fund may be made by mailing a check payable to The Institutional Fund. PLEASE
INCLUDE YOUR ACCOUNT NUMBER ON THE CHECK AND MAIL AS FOLLOWS:

THE FLEX-PARTNERS
LOCATION NUMBER: 00215
CINCINNATI, OH 45264-0215

Subsequent investments may also be made by bank wire as described above. IT IS
NECESSARY TO NOTIFY THE FUND PRIOR TO EACH WIRE PURCHASE. Wires sent without
notifying the fund will result in a delay of the effective date of your
purchase.

WHEN PURCHASES ARE EFFECTIVE. New Account Applications and subsequent purchase
orders for The Institutional Fund which are received by or on behalf of the fund
prior to 3:00 p.m., Eastern time on a business day, begin earning dividends that
day, provided payment in federal funds (bank wire) is received by the bank that
day. New Account Applications and subsequent purchase orders which are received
after 3:00 p.m., or for which wire payment is not received, are accepted as a
purchase the following day. Investments made by check are credited to
shareholder accounts, and begin to earn dividends, on the next business day
following receipt.

If your check is dishonored, the purchase and any dividends paid thereon will be
reversed. If shares are purchased with federal funds, they may be redeemed at
any time thereafter, and you may secure your funds as explained below. (See "How
to Make Withdrawals (Redemptions).")

Financial Institutions: You may buy shares or sell shares of the fund through a
broker or financial institution, which may charge you a fee for this service. If
you are purchasing shares of the fund through a program of services offered or
administered by a brokerage firm or financial institution, you should read the
program materials in conjunction with this Prospectus.

Purchase orders for the fund which are received prior to 3:00 p.m., Eastern
time, begin earning dividends that day, provided Firstar Bank, N.A., the
Custodian for the fund, receives federal funds by 4:00 p.m., Eastern time, that
same day. If payment for the purchase of shares is not received in a timely
manner, the financial institution could be held liable for any loss incurred by
the fund.

HOW TO MAKE WITHDRAWALS (REDEMPTIONS)

Shares are redeemed and funds withdrawn at net asset value per share, and there
are no redemption fees. (See "How Net Asset Value Is Determined.")

BY MAIL: You may redeem shares by mailing a written signature guaranteed
request to The Flex-Partners, c/o R. Meeder & Associates, Inc., P.O. Box
7177, Dublin, OH 43017. Signature guaranteed means that the request must be
signed by you and your signature must be guaranteed by an eligible
guarantor institution (a bank, broker-dealer, credit union, securities
exchange and association, clearing agency and savings association). We do
not accept signatures guaranteed by a notary public. Additional
documentation may be required as to the authority of the person requesting
redemption of shares held of record in the name of corporations, executors,
administrators, trustees, guardians or other fiduciaries. We may waive
these requirements in certain instances.

<PAGE>

Amounts withdrawn are mailed without charge to the address printed on your
account statement.

BY TELEPHONE: You may redeem by telephone: 1-800-325-FLEX, or call (614)
760-2159. If you wish to use this procedure, you must select this feature
on the New Account Application. Amounts withdrawn from an account by
telephone are mailed without charge to the address printed on your account
statement.

As a special service, you may arrange to have amounts in excess of $10,000
wired in federal funds to a designated commercial bank account. To use this
procedure, please designate on the New Account Application a bank and bank
account number to receive the proceeds of wire withdrawals. There is no
charge for this service.

You may change the bank account designated to receive redemptions. This may
be done at any time upon written request to the fund. In this case, your
signature must be guaranteed. Additional documentation may be required from
corporations, executors, administrators, trustees, guardians, or other
fiduciaries.

WHEN REDEMPTIONS ARE EFFECTIVE. Redemptions are made at the net asset value
per share next determined after receipt of a redemption request in good
order. (See "How Net Asset Value Is Determined.")

WHEN PAYMENTS ARE MADE. Amounts withdrawn by telephone are normally mailed
or wired on the next Columbus, Ohio bank business day following the date of
the order for withdrawal. If a request for a wire redemption is received
prior to 3:00 p.m., Eastern time, on a bank business day, funds will be
wired on the same day. Amounts withdrawn by mail are normally sent by mail
within one business day after the request is received, and must be mailed
within seven days, with the following exception. If shares are purchased by
check, the funds' transfer agent will not pay a redemption until reasonably
satisfied the check used to purchase shares has been collected. The fund
will forward proceeds promptly once the check has cleared. (See "How to Buy
Shares.")

ACCOUNTS WITH LOW BALANCES. The fund may redeem shares in your account for
their then current net asset value and pay the proceeds to you if at any
time your account has shares valued at less than $5 million as a result of
redemptions you have made. The fund may redeem the shares in your account
if you have opened your account for less than the minimum purchase amount
and you do not purchase additional shares to meet the minimum. Before any
shares are redeemed for these purposes, you will be notified in writing 30
days before any such redemption to bring the value of shares in the account
to $5 million.

EXCHANGE PRIVILEGE

You may exchange shares of the fund for shares of any Flex-funds' fund that are
available for sale in your state at their respective net asset values. The
Flex-funds family of funds has a variety of investment objectives. Read The

<PAGE>

Flex-funds' prospectus for more information about the fund that meets your
investment goals. You may obtain a free prospectus from The Flex-funds, c/o R.
Meeder & Associates, Inc., P.O. Box 7177, Dublin, Ohio 43017, or by telephone:
1-800-325-FLEX; in Ohio call (614) 760-2159.

Exchanges are subject to applicable minimum initial and subsequent investment
requirements. It will be necessary to complete a separate New Account
Application if:

o you wish to register a new account in a different name or

o you wish to add telephone redemption to an account.

Exchange requests may be directed to the fund by telephone or written request.
If your request is in valid form, and is received prior to 3:00 p.m., Eastern
time, shares will be exchanged that day. Otherwise, they will be exchanged the
next business day.

BY MAIL: Exchange requests may also be made in writing and should be sent
to The Flex-Partners, c/o R. Meeder & Associates, Inc., P.O. Box 7177,
Dublin, Ohio 43017. The letter must be signed exactly as your name appears
on the fund's account records.

BY TELEPHONE: Exchange requests may be made by telephone: call
1-800-325-FLEX, or call (614) 760-2159. You may make exchanges by telephone
if you have telephone redemption privileges for your current account. The
registration of additional accounts must be identical.

Any exchange involves a redemption of all or a portion of the shares in one
fund and an investment of the redemption proceeds in shares of one of the
other funds. The exchange will be based on the respective net asset values
of the shares involved, ordinarily at the value next determined after the
request is received. An exchange may be delayed briefly if redemption
proceeds will not be available immediately for purchase of newly acquired
shares. The exchange privilege may be modified or terminated at any time.
In addition, the fund may reject any exchange request and limit your use of
the exchange privilege.

The exchange of shares of one fund for shares of another fund is treated
for federal income tax purposes as a sale of the shares given in exchange.
You may realize a taxable gain or loss on an exchange, and you should
consult your tax adviser for further information concerning the tax
consequences of an exchange.

TRANSACTION POLICIES

VALUATION OF SHARES. The net asset value per share (NAV) for the fund is
determined each business day that the Federal Reserve System is open. The
NAV is calculated on each such business day at 3:00 p.m. Eastern Time by
dividing the fund's net assets by the number of its shares outstanding. The
assets of the portfolio are valued on the basis of amortized cost.

BUY AND SELL PRICES. When you buy shares, you pay the NAV. When you sell
shares, you receive the NAV.

<PAGE>

EXECUTION OF REQUESTS. The fund is open on those days when the Federal
Reserve System is open, typically Monday through Friday. Buy and sell
requests are executed at the next NAV to be calculated after your request
is received by the transfer agent.

At times of peak activity, it may be difficult to place requests by phone.
During these times, consider sending your request in writing.

In unusual circumstances, the fund may temporarily suspend the processing
of sell requests, or may postpone payment of proceeds for up to seven
business days, as allowed by federal securities laws.

TELEPHONE TRANSACTIONS. For your protection, telephone requests may be
recorded in order to verify their accuracy. In addition, the transfer agent
will take measures to verify the identity of the caller, such as asking for
name, account number, Social Security or other taxpayer ID number and other
relevant information. If appropriate measures are taken, the transfer agent
is not responsible for any losses that may occur to any account due to an
unauthorized telephone call. Proceeds from telephone transactions can only
be mailed to the address of record.

SALES IN ADVANCE OF PURCHASE PAYMENTS. When you place a request to sell
shares for which the purchase money has not yet been collected, the request
will be executed in a timely fashion, but the fund will not release the
proceeds to you until your purchase payment clears. This may take up to
fifteen business days after the purchase.

OTHER SHAREHOLDER SERVICES

SUB-ACCOUNTING FOR INSTITUTIONAL INVESTORS:

The fund's optional sub-accounting system offers a separate shareholder
account for each participant and a master account record for the
institution. Share activity is thus recorded and statements prepared for
both individual sub-accounts and for the master account. For more complete
information concerning this program contact the fund.

DISTRIBUTOR:

Shares of the funds are sold in those states where its shares have been
registered for sale or a valid exemption exists. States where registration
or an exemption exists can be obtained by calling 1-800-325-FLEX or (614)
760-2159.

MORE ABOUT RISK

The fund's risk profile is largely defined by the fund's principal
securities and investment practices. You may find the most concise description
of the fund's risk profile in "Main Risk Factors."

<PAGE>

The fund is permitted to use - within limits established by the trustees -
certain other securities and investment practices that have higher risks and
opportunities associated with them. To the extent that the portfolio utilizes
these securities or practices, its overall performance may be affected, either
positively or negatively. On the following pages are brief descriptions of these
securities and investment practices, along with the risks associated with them.
The fund follows certain policies that may reduce these risks.

As with any mutual fund, there is no guarantee that the fund will earn
income or show a positive total return over any period of time - days, months or
years.

INVESTMENT PRACTICES AND RELATED RISKS

BORROWING. A loan of money from a bank or other financial institution
undertaken by the portfolio. The portfolio may borrow up to 5% of its assets.
LEVERAGE AND CREDIT RISKS.

DEFENSIVE MEASURES. Shortening the average maturity of the portfolio's
investments and/or investing only in the highest quality debt instruments. The
adviser may invest 100% of its assets defensively if it believes market
conditions warrant defensive measures. OPPORTUNITY RISK.

SHORT-TERM TRADING. Selling a security soon after purchase. If the
portfolio engages in short-term trading, it will have higher turnover and
transaction expenses. Short-term trading may also result in short-term capital
gains. Upon the distribution to you of any net short-term capital gains from the
fund, you will be taxed at ordinary tax rates. There is no limitation on the
portfolio's ability to engage in short-term trading. MARKET RISK.

SECURITIES AND RELATED RISKS

INVESTMENT GRADE BONDS. Bonds rated BBB (Standard & Poor's) or Baa
(Moody's) or above. INTEREST RATE, PREPAYMENT, MARKET AND CREDIT RISKS.

ILLIQUID AND RESTRICTED SECURITIES. Securities which, by rules of their
issue or by their nature, cannot be sold readily. These include illiquid Rule
144A securities. The portfolio is permitted to invest 10% of its assets in
illiquid and restricted securities. MARKET, LIQUIDITY AND TRANSACTION RISKS.

REPURCHASE AGREEMENTS. The purchase of a security that must later be sold
back to the issuer at the same price plus interest. The portfolio may invest up
to 100% of its assets in repurchase agreements. CREDIT RISK.

RISK GLOSSARY

CREDIT RISK means that the issuer of a security or the counterparty to an
investment contract may default or become unable to pay its obligations when
due.

<PAGE>

LIQUIDITY RISK occurs when investments cannot be sold readily. The
portfolio may have to accept a less-than-desirable price to complete the sale of
an illiquid security or may not be able to sell it at all.

OPPORTUNITY RISK means missing out on an investment opportunity because the
assets necessary to take advantage of it are committed to less advantageous
investments or strategies.

TRANSACTION RISK means that the fund may be delayed or unable to settle a
transaction or that commissions and settlement expenses may be higher than
usual.

<PAGE>

FOR MORE INFORMATION:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMIANNUAL REPORTS

To request a free copy of the current annual/semi-annual report or
SAI, request other information about the fund, or make shareholder
inquiries, please write, call or E-mail us at:

The Flex-Partners
6000 Memorial Drive
Dublin, OH 43017
Telephone: 1-800-325-3539 or 614-760-2159
WWW.FLEXPARTNERS.COM

Investment Company Act File No. 811-6720

<PAGE>

THE FLEX-PARTNERS CORE EQUITY FUND
CROSS REFERENCE SHEET TO FORM N-1A

PART B.

ITEM NO. STATEMENT OF ADDITIONAL INFORMATION

10(a) Front Cover Page
10(b) Table of Contents

11 Description of the Trust

12(a) Description of the Trust
12(b)(c)(d)(e) Investment Policies and Limitations

13(a) Description of the Trust
Trustees and Officers
13(b)(c)(d) Trustees and Officers
13(e) The Distributor

14(a)(b) Principal Holders of Outstanding Shares
14(c) Not applicable

15(a) Investment Adviser and Manager
Investment Subadviser
Investment Sub-subadvisers
15(b) The Distributor
15(c) Investment Adviser and Manager
Investment Subadviser
Investment Sub-subadvisers
15(d) Contracts with Companies Affiliated with Manager
15(e) Not applicable
15(f)(g) The Distributor
15(h) Contracts with Companies Affiliated with Manager
Additional Information

16(a)(b)(c)(d) Portfolio Transactions
16(e) Not applicable

17(a) Description of the Trust
17(b) Not applicable

18(a) Additional Purchase and Redemption Information
Flex-Partners Retirement Plans
18(b) Not applicable
18(c) Valuation of Portfolio Securities
18(d) Description of the Trust

19 Distributions and Taxes

20(a)(b) The Distributor
20(c) Not applicable

21(a) Not applicable
21(b) Performance

22 Financial Statements

<PAGE>

CORE EQUITY FUND
A FUND OF THE FLEX-PARTNERS TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999

This Statement is not a prospectus but should be read in conjunction with The
Flex-Partners' current Prospectus (dated April 30, 1999). Please retain this
document for future reference. To obtain an additional copy of the Prospectus,
please call Mutual Funds Service Co. at 1-800-494-3539. Capitalized terms used
and not otherwise defined herein have the same meanings as defined in the
Prospectus.

The Fund offers two classes of shares which may be purchased at the next
determined net asset value per share plus a sales charge which at the election
of the investor may be imposed (i) at the time of purchase (Class A shares) or
(ii) on a deferred basis (Class C shares). These alternatives permit an investor
to choose the method of purchasing shares that is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares and other circumstances.

Each Class A and Class C share represents an identical legal interest in the
investment portfolio of the Fund and has the same rights except that the Class C
shares bear the higher expenses of a distribution plan for such class which will
cause the Class C shares to have a higher expense ratio and to pay lower
dividends than the Class A shares. Each class will have exclusive voting rights
with respect to its distribution plan. Although the legal rights of holders of
Class A and Class C shares are identical the different expenses borne by each
class will result in different net asset values and dividends. The two classes
also have different exchange privileges.

TABLE OF CONTENTS PAGE

Decription of the Trust
Investment Policies and Limitations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
Investment Adviser and Manager
Investment Subadviser
Investment Sub-subadvisers
Trustees and Officers
The Distributor
Flex-Partners Retirement Plans
Contracts With Companies Affiliated With Manager
Additional Information
Principal Holders of Outstanding Shares
Financial Statements

INVESTMENT ADVISER INVESTMENT SUBADVISER
R. Meeder & Associates, Inc. Sector Capital Management, L.L.C.

DISTRIBUTOR TRANSFER AGENT
Adviser Dealer Services, Inc. Mutual Funds Service Co.

<PAGE>

DESCRIPTION OF THE TRUST

BACKGROUND. The Flex-Partners (the "Trust") was organized as a
Massachusetts business trust on June 22, 1992. All of the Trust's constituent
funds are diversified open-end management companies. The Trust's offices are at
6000 Memorial Drive, Dublin, OH 43017. The business and affairs of the Trust are
under the direction of its Board of Trustees.

The Trust has not retained an investment adviser for the Core Equity Fund
because the Trust seeks to achieve the investment objectives of the Fund by
investing the Fund's assets in its corresponding Portfolio. The Portfolio has
retained the services of R. Meeder & Associates, Inc. as investment adviser.

INVESTMENT STRUCTURE. Unlike other mutual funds which directly acquire and
manage their own portfolio of securities, the Core Equity Fund seeks to achieve
its investment objectives by investing all of its assets in the Growth Stock
Portfolio, a separate registered investment company with the same investment
objectives as the Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect. In addition to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other mutual funds or
investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to sell
their shares at the same public offering price as the Fund. Investors in the
Fund should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
by contacting the Trust by calling: 1-800-325-FLEX, or (614) 760-2159.

The Growth Stock Portfolio is organized as a trust under the laws of the
State of New York. The Portfolio's Declaration of Trust provides that the Fund
and other entities investing in the Portfolio (e.g., other investment companies,
insurance company separate accounts, and common and commingled trust funds) will
each be liable for all obligations of the Portfolio. However, the risk of the
Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund's investing in the Portfolio. In addition,
whenever the Trust is requested to vote on matters pertaining to the fundamental
policies of the Portfolio, the Trust will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by the Fund's shareholders.

<PAGE>

Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Trust to withdraw the Fund's interest in the
Portfolio. Any such withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution from the Portfolio). If
such securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund.

The Trust may withdraw the investment of a Fund from its corresponding
Portfolio at any time, if the Board of Trustees of the Trust determines that it
is in the best interests of the Fund to do so. Upon any such withdrawal, the
Board of Trustees would consider what action might be taken, including the
investment of all the assets of the Fund in another pooled investment entity
having the same investment objectives as that Fund or the retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies with respect to that Fund's corresponding Portfolio. The inability to
find an adequate investment pool or investment adviser could have a significant
impact on shareholders' investment in the Fund.

The assets of the Trust received for the issue or sale of the shares of the
Fund and all income, earnings, profits, and proceeds thereof, subject only to
the rights of creditors, are especially allocated to the Fund and constitute the
underlying assets of the Fund. The underlying assets of the Fund are segregated
on the books of account, and are to be charged with the liabilities with respect
to the Fund and with a share of the general expenses of the Trust. Expenses with
respect to the Trust are to be allocated in proportion to the asset value of the
respective funds except where allocations of direct expense can otherwise be
fairly made. The officers of the Trust, subject to the general supervision of
the Board of Trustees, have the power to determine which expenses are allocable
to a given fund, or which are general or allocable to all of the funds. In the
event of the dissolution or liquidation of the Trust, shareholders of each fund
are entitled to receive as a class the underlying assets of such fund available
for distribution.

As stated in "Investment Policies and Limitations," except as otherwise
expressly provided herein, the Fund's investment objectives and policies are not
fundamental and may be changed by Trustees without shareholder approval.

For descriptions of the investment objectives and policies of the
Portfolio, see "Investment Policies and Limitations." For descriptions of the
management and expenses of the Portfolios, see "Investment Adviser and Manager"
and "Trustees and Officers."

<PAGE>

SHARES OF BENEFICIAL INTEREST. The Trust's Declaration of Trust permits the
Trust to offer and sell an unlimited number of full and fractional shares of
beneficial interest in each of the Trust's existing funds and to create
additional funds. All shares have a par value of $.10 per share, are fully paid,
non-assessable and fully transferable when issued. All shares are issued as full
or fractional shares.

A fraction of a share has the same rights and privileges as a full share.
Each fund of the Trust will issue its own series of shares of beneficial
interest. The shares of each fund represent an interest only in that fund's
assets (and profits or losses) and in the event of liquidation, each share of a
particular fund would have the same rights to dividends and assets as every
other share of that fund.

Each full or fractional share has a proportionate vote. On some issues,
such as the election of Trustees, all shares of the Trust vote together as one
series. On an issue affecting a particular fund, only its shares vote as a
separate series. An example of such an issue would be a fundamental investment
restriction pertaining to only one fund. In voting on a Distribution Plan,
approval of the Plan by the shareholders of a particular fund would make the
Plan effective as to that fund, whether or not it had been approved by the
shareholders of the other funds.

Each class of shares represents identical interests in the applicable
Fund's investment portfolio. As such, they have the same rights, privileges and
preferences, except with respect to the: (a) designation of each class, (b)
effect of the respective sales charges, if any, for each class, (c) distribution
fees borne by each class, (d) expenses allocable exclusively to each class, (e)
voting rights on matters exclusively affecting a single class, (f) exchange
privilege of each class and (g) any conversion feature applicable to a class.

Shares are fully paid and nonassessable. Shares have no preemptive or
conversion rights. The Trust or any fund may be terminated upon the sale of its
assets to another open-end management investment company, if approved by vote of
the holders of a majority of the Trust or the fund, as determined by the current
value of each shareholder's investment in the fund or Trust, or upon liquidation
and distribution of its assets, if approved by a majority of the Trustees of the
Trust. If not so terminated, the Trust and the fund will continue indefinitely.

TRUSTEE LIABILITY. The Declaration of Trust provides that the Trustees, if
they have exercised reasonable care, will not be liable for any neglect or
wrongdoing, but nothing in the Declaration of Trust protects Trustees against
any liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of their office.

<PAGE>

that does not affect that fund but that does require a separate vote of any
other fund. There normally will be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Any Trustee may be removed from office upon the vote of shareholders
holding at least two-thirds of the Trust's outstanding shares at a meeting
called for that purpose. The Trustees are required to call such a meeting upon
the written request of shareholders holding at least 10% of the Trust's
outstanding shares. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees of a
fund by a specified number of shareholders) the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees.

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Portfolio's assets that may be invested in
any security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Portfolio's acquisition of such security or other asset.
Accordingly, any subsequent change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations.

The Fund's fundamental investment limitations cannot be changed without
approval by a "majority of the outstanding voting securities" (as defined in the
Investment Company Act of 1940) of the Fund. However, except for the fundamental
investment limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental and
may be changed by the Trustees without shareholder approval. THE FOLLOWING ARE
THE PORTFOLIO'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY;
PROVIDED THAT NOTHING IN THE FOLLOWING INVESTMENT RESTRICTIONS WILL PREVENT THE
FUND FROM INVESTING ALL OR PART OF THE FUND'S ASSETS IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH THE SAME INVESTMENT OBJECTIVE AS THE FUND. THE FUND OR
THE PORTFOLIO MAY NOT:

(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than obligations issued or guaranteed by the
government of the United States, or any of its agencies or instrumentalities)
if, as a result thereof, (a) more than 5% of the Portfolio's total assets would
be invested in the securities of such issuer, or (b) the Fund would hold more
than 10% of the voting securities of such issuer;

(2) issue senior securities, except as permitted under the Investment
Company Act of 1940;

<PAGE>

(3) borrow money, except that the Portfolio may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33-1/3% of its total assets including the amount borrowed less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with the 33-1/3% limitation;

(4) underwrite securities issued by others (except to the extent that the
Portfolio may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities);

(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Portfolio
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business); or

(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Portfolio from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend to engage in short sales, but
may engage in short sales "against the box" to the extent that the Portfolio
contemporaneously owns or has the right to obtain at no added cost securities
identical to those sold short, and provided that transactions in futures
contracts and options are not deemed to constitute selling securities short.

(ii) The Portfolio does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments in
connection with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.

(iii) The Portfolio may borrow money only from a bank. The Portfolio will
not purchase any security while borrowings representing more than 5% of its
total assets are outstanding.

<PAGE>

(iv) The Portfolio does not currently intend to purchase any security if,
as a result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued, including repurchase agreements with remaining maturities in excess of
seven days or securities without readily available market quotes.

(v) The Portfolio does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable, or to invest in
securities of real estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded on the NASDAQ
National Market System.

(vi) The Portfolio does not currently intend to purchase securities of
other investment companies. This limitation does not apply to securities
received as dividends, through offers of exchange, or as a result of
reorganization, consolidation, or merger.

(vii) The Portfolio does not currently intend to purchase the securities of
any issuer (other than securities issued or guaranteed by the U.S. Government or
political subdivisions thereof) if, as a result, more than 5% of its total
assets would be invested in the securities of business enterprises that,
including predecessors, have a record of less than three years of continuous
operation.

(viii) The Portfolio does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 5% of the Portfolio's net assets.
Included in that amount, but not to exceed 2% of the Portfolio's net assets, may
be warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the Portfolio in units or attached to
securities are not subject to these restrictions.

(ix) The Portfolio does not currently intend to invest in oil, gas, or
other mineral exploration or development programs or leases.

(x) The Portfolio does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers and
directors of the Manager, the Subadviser, or the Sector Advisers who
individually own more than 1/2 of 1% of the securities of such issuer, together
own more than 5% of such issuer's securities.

For the Portfolio's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions." For the
Portfolio's limitations on short sales, see the section entitled "Short Sales."

MONEY MARKET INSTRUMENTS When investing in money market instruments, the
Portfolio will limit its purchases, denominated in U.S. dollars, to the
following securities.

<PAGE>

U.S. Government Securities and Securities of its Agencies and
Instrumentalities - obligations issued or guaranteed as to principal or interest
by the United States or its agencies (such as the Export Import Bank of the
United States, Federal Housing Administration, and Government National Mortgage
Association) or its instrumentalities (such as the Federal Home Loan Bank,
Federal Intermediate Credit Banks and Federal Land Bank), including Treasury
bills, notes and bonds.

Bank Obligations and Instruments Secured Thereby - obligations (including
certificates of deposit, time deposits and bankers' acceptances) of domestic
banks having total assets of $1,000,000,000 or more, instruments secured by such
obligations and obligations of foreign branches of such banks, if the domestic
parent bank is unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may also
invest in obligations (including certificates of deposit and bankers'
acceptances) of domestic branches of foreign banks having assets of
$1,000,000,000 or more, if the domestic branch is subject to the same regulation
as United States banks. The Portfolio will not invest at time of purchase more
than 25% of its assets in obligations of banks, nor will the Portfolio invest
more than 10% of its assets in time deposits.

High Quality Commercial Paper - The Portfolio may invest in commercial
paper rated no lower than "A-2" by Standard & Poor's Corporation or "Prime-2" by
Moody's Investors Services, Inc., or, if not rated, issued by a company having
an outstanding debt issue rated at least A by Standard & Poor's or Moody's.

Private Placement Commercial Paper - Private placement commercial paper
consists of unregistered securities which are traded in public markets to
qualified institutional investors, such as the Portfolio. The Portfolio's risk
is that the universe of potential buyers for the securities, should the
Portfolio desire to liquidate a position, is limited to qualified dealers and
institutions, and therefore such securities could have the effect of being
illiquid.

High Grade Corporate Obligations - obligations rated at least A by Standard
& Poor's or Moody's. See rating information below.

Repurchase Agreements - See "Repurchase Agreements" below.

The Manager exercises due care in the selection of money market
instruments. However, there is a risk that the issuers of the securities may not
be able to meet their obligations to pay interest or principal when due. There
is also a risk that some of the Portfolio's securities might have to be
liquidated prior to maturity at a price less than original amortized cost or
value, face amount or maturity value to meet larger than expected redemptions.
Any of these risks, if encountered, could cause a reduction in net income or in
the net asset value of the Portfolio.

<PAGE>

RATINGS

1. Moody's Investors Services, Inc.'s Corporate Bond Rating:

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length or time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

2. Standard and Poor's Corporation's Corporate Bond Rating:

AAA - Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they move
with interest rates, and hence provide the maximum safety on all counts.

AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.

A - Bonds rated A are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the adverse
effect of changes in economic and trade conditions. Interest and principal are
regarded as safe. They predominantly reflect money rates in their market
behavior but, to some extent, also economic conditions.

<PAGE>

BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.

3. Commercial Paper Ratings:

Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1, A-2, or
A-3.

The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.

4. Description of Permitted Money Market Investments:

Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short term credit needs.

U.S. Government Obligations - are bills, certificates of indebtedness notes
and bonds issued by the U.S. Treasury and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, as in the case of
Federal Farm Credit Banks and Federal National Mortgage Association; and others
only by the credit of the agency, authority or instrumentality; as for example,
Federal Home Loan Mortgage and Federal Home Loan Bank.

Repurchase Agreements - See "Repurchase Agreements" below.

<PAGE>

Certificates of Deposit - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified or variable rate
of return and are normally negotiable.

Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed "accepted"
when a bank guarantees their payment at maturity.

Corporate Obligations - include bonds and notes issued by corporations in
order to finance longer term credit needs.

ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they are
valued. Under the supervision of the Board of Trustees, the Manager, Subadviser
and/or Sector Advisers determine the liquidity of the Portfolio's investments
and, through reports from the Manager, Subadviser and/or Sector Advisers, the
Board monitors investments in illiquid instruments. In determining the liquidity
of the Portfolio's investments, the Manager, Subadviser and Sector Advisers may
consider various factors, including (1) the frequency of trades and quotations,
(2) the number of dealers and prospective purchasers in the marketplace, (3)
dealer undertakings to make a market, (4) the nature of the security (including
any demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Portfolio's rights and
obligations relating to the investment). Investments currently considered by the
Portfolio to be illiquid include repurchase agreements not entitling the holder
to payment of principal and interest within seven days, over-the-counter
options, and non-government stripped fixed-rate mortgage-backed securities.
Also, the Manager, Subadviser and/or Sector Advisers may determine some
restricted securities to be illiquid. However, with respect to over-the-counter
options the Portfolio writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the option and
the nature and terms of any agreement the Portfolio may have to close out the
option before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Board of
Trustees. If through a change in values, net assets, or other circumstances, the
Portfolio were in a position where more than 10% of its net assets were invested
in illiquid securities, it would seek to take appropriate steps to protect
liquidity.

RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the Securities
Act of 1933, or in a registered public offering. Where registration is required,
the Portfolio may be obligated to pay all or part of the registration expense
and a considerable period may elapse between the time it decides to seek
registration and the time the Portfolio may be permitted to sell a security
under an effective registration statement. If, during such a period, adverse
market conditions were to develop, the Portfolio might obtain a less favorable
price than prevailed when it decided to seek registration of the security.

<PAGE>

REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio purchases a
security and simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date within a number of days from the date
of purchase. The resale price reflects the purchase price plus an agreed upon
incremental amount which is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and marked to
market daily) of the underlying security. The Portfolio may engage in repurchase
agreements with respect to any security in which it is authorized to invest.

While it does not presently appear possible to eliminate all risks from
these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delays and costs to the Portfolio
in connection with bankruptcy proceedings), it is the Portfolio's current policy
to limit repurchase agreement transactions to parties whose creditworthiness has
been reviewed and found satisfactory by the Manager.

HEDGING STRATEGIES. The Portfolio may engage in hedging transactions in
carrying out its investment policies. The Manager may conduct a hedging program
on behalf of the Portfolio for the following reasons: (1) to keep cash on hand
to meet shareholder redemptions or other needs while simulating full investment
in stocks; (2) to reduce the fund's transaction costs or add value when these
instruments are favorably priced; (3) to forego taxes that would otherwise have
to be paid on gains from the sale of the fund's securities; and (4) to attempt
to protect the value of certain securities owned or intended to be purchased by
the fund's while the manager is making a change in the fund's investment
position.

A hedging program involves entering into an "option" or "futures"
transaction in lieu of the actual purchase or sale of securities. At present,
many groups of common stocks (stock market indices) may be made the subject of
futures contracts, while government securities such as Treasury Bonds and Notes
are among debt securities currently covered by futures contracts.

Financial futures contracts or related options used by the Portfolio to
implement its hedging strategies are considered derivatives. The value of
derivatives can be affected significantly by even small market movements,
sometimes in unpredictable ways.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Portfolio will not:
(a) write call options if, as a result, more than 25% of the Portfolio's total
assets would be hedged with options under normal conditions; or (b) purchase
futures contracts if, as a result, the Portfolio's total obligations upon
settlement or exercise of purchased futures contracts would exceed 25% of its
total assets. These limitations do not apply to options attached to or acquired
or traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options.

<PAGE>

For certain regulatory purposes, the Commodity Futures Trading Commission
("CFTC") limits the types of futures positions that can be taken in conjunction
with the management of a securities portfolio for mutual funds, such as The
Flex-Partners. All futures transactions for the Portfolio will consequently be
subject to the restrictions on the use of futures contracts established in CFTC
rules, such as observation of the CFTC's definition of "hedging." In addition,
whenever the Portfolio establishes a long futures position, it will set aside
cash or cash equivalents equal to the underlying commodity value of the long
futures contracts held by the Portfolio. Although all futures contracts involve
leverage by virtue of the margin system applicable to trading on futures
exchanges, the Portfolio will not, on a net basis, have leverage exposure on any
long futures contracts that it establishes because of the cash set aside
requirement. All futures transactions can produce a gain or a loss when they are
closed, regardless of the purpose for which they have been established. Unlike
short futures contracts positions established to protect against the risk of a
decline in value of existing securities holdings, the long futures positions
established by the Portfolio to protect against reinvestment risk are intended
to protect the Portfolio against the risks of reinvesting portfolio assets that
arise during periods when the assets are not fully invested in securities.

The Portfolio may not purchase or sell financial futures or purchase
related options if immediately thereafter the sum of the amount of margin
deposits on the Portfolio's existing futures positions and premiums paid for
related options would exceed 5% of the market value of the Portfolio's total
assets.

The above limitations on the Portfolio's investments in futures contracts
and options, and the Portfolio's policies regarding futures contracts and
options discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.

FUTURES CONTRACTS. When the Portfolio purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When the Portfolio sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when the Portfolio enters into the contract.

Some currently available futures contracts are based on indices of
securities-prices, such as the Standard & Poor's 500 Composite Stock Price Index
(S&P 500). Futures can be held until their delivery dates, or can be closed out
before then if a liquid secondary market is available.

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Portfolio's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Portfolio sells a futures
contract, by contrast, the value of its futures position will tend to move in a

<PAGE>

direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However, both the purchaser and seller are
required to deposit "initial margin" with a futures broker, known as a futures
commission merchant (FCM), when the contract is entered into. Initial margin
deposits are typically equal to a percentage of the contract's value.

If the value of either party's position declines, that party will be
required to make additional "variation margin" payments to settle the change in
value on a daily basis. The party that has a gain may be entitled to receive all
or a portion of this amount. Initial and variation margin payments do not
constitute purchasing securities on margin for purposes of the Portfolio's
investment limitations. In the event of the bankruptcy of an FCM that holds
margin on behalf of the Portfolio, the Portfolio may be entitled to return of
margin owed to it only in proportion to the amount received by the FCM's other
customers, potentially resulting in losses to the Portfolio.

WRITING CALL OPTIONS. Writing a call option obligates the Portfolio to sell
or deliver the option's underlying instrument, in return for the strike price,
upon exercise of the option. The characteristics of writing call options are
similar to those of writing put options, except that writing calls generally is
a profitable strategy if prices remain the same or fall. Through receipt of the
option premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange traded options and futures contracts, it is likely that the
standardized contracts available will not match the Portfolio's current or
anticipated investments exactly. The Portfolio may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Portfolio's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Portfolio's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts.

<PAGE>

The Portfolio may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility between
the contract and the securities, although this may not be successful in all
cases. If price changes in the Portfolio's options or futures positions are
poorly correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract at
any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. In addition, exchanges may establish daily price fluctuation
limits for options and futures contracts, and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the Portfolio to enter into new positions or
close out existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and potentially could require the
Portfolio to continue to hold a position until delivery or expiration regardless
of changes in its value. As a result, the Portfolio's access to other assets
held to cover its options or futures positions could also be impaired.

ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Portfolio will comply
with guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and if the guidelines so require, will set
aside appropriate liquid assets in a segregated custodial account in the amount
prescribed. Securities held in a segregated account cannot be sold while the
futures or option strategy is outstanding, unless they are replaced with other
suitable assets. As a result, there is a possibility that segregation of a large
percentage of the Portfolio's assets could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations.

SHORT SALES. The Portfolio may enter into short sales "against the box"
with respect to equity securities it holds. For example, if a Sector Adviser
anticipates a decline in the price of a stock the Portfolio holds, it may sell
the stock short "against the box." If the stock price subsequently declines, the
proceeds of the short sale could be expected to offset all or a portion of the
stock's decline. The Portfolio currently intends to hedge no more than 15% of
its total assets with short sales "against the box" on equity securities under
normal circumstances.

When the Portfolio enters into a short sale "against the box", it will be
required to own or have the right to obtain at no added cost securities
identical to those sold short "against the box" and will be required to continue

<PAGE>

to hold them while the short sale "against the box" is outstanding. The
Portfolio will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.

PORTFOLIO TURNOVER.

Decisions to buy and sell securities are made by the Sector Advisers for
the assets assigned to them, and by the Manager and Sector Capital for assets
not assigned to a Sector Adviser. Currently, each portfolio representing an
industry sector has one Sector Adviser. The Manager invests the Growth Stock
Portfolio's liquidity reserves and the Manager or Sector Capital may invest the
Growth Stock Portfolio's assets in financial futures contracts and related
options. Each Sector Adviser makes decisions to buy or sell securities
independently from other Sector Advisers. In addition, when a Sector Adviser's
services are terminated and another retained, the new Sector Adviser may
significantly restructure the Growth Stock Portfolio's assets assigned to it.
These practices may increase the Growth Stock Portfolio's portfolio turnover
rates, realization of gains or losses, and brokerage commissions. The portfolio
turnover rates for the Growth Stock Portfolio may vary greatly from year to year
as well as within a year and may be affected by sales of investments necessary
to meet cash requirements for redemptions of shares. A high rate of turnover
involves correspondingly greater expenses, increased brokerage commissions and
other transaction costs, which must be borne by the Growth Stock Portfolio and
its investors. In addition, high portfolio turnover may result in increased
short-term capital gains, which, when distributed to shareholders, are treated
as ordinary income.

The Portfolio's portfolio turnover rate for the fiscal year ended December
31, 1998 was 80% (130% in 1997).

Major changes in the portfolio have resulted in portfolio turnover rates of
as much as 338%, which is greater than that of most other investment companies,
including many which emphasize capital appreciation as a basic policy. The
policies of the Growth Stock Portfolio may be expected to result in
correspondingly heavier brokerage commissions and taxes, which ultimately must
be borne by the Trust's shareholders.

PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolio by the Manager, Subadviser or Sector Advisers pursuant
to authority contained in the investment advisory agreement, investment
subadvisory agreement and investment sub-subadvisory agreements. The Manager,
Subadviser and Sector Advisers are also responsible for the placement of
transaction orders for accounts for which they or their affiliates act as
investment adviser. In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, the Manager, Subadviser and Sector
Advisers consider various relevant factors, including, but not limited to, the

<PAGE>

size and type of the transaction; the nature and character of the markets for
the security to be purchased or sold; the execution efficiency, settlement
capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions, and arrangements for payment of Portfolio
expenses.

The Portfolio may execute portfolio transactions with broker-dealers who
provide research and execution services to the Portfolio or other accounts over
which the Manager, Subadviser or Sector Advisers or their affiliates exercise
investment discretion. Such services may include advice concerning the value of
securities; the advisability of investing in, purchasing or selling securities;
the availability of securities or the purchasers or sellers of securities;
furnishing analyses and reports concerning issuers industries, securities,
economic factors and trends, portfolio strategy, and performance of accounts;
and effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). The selection of such broker-dealers
generally is made by the Manager, Subadviser and Sector Advisers (to the extent
possible consistent with execution considerations) in accordance with a ranking
of broker-dealers determined periodically by the Manager, Subadviser and Sector
Advisers' investment staffs based upon the quality of research and execution
services provided.

The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolio may be useful to the Manager, Subadviser and Sector
Advisers in rendering investment management services to the Portfolio or their
other clients, and conversely, such research provided by broker-dealers who have
executed transaction orders on behalf of other Manager, Subadviser and Sector
Advisers' clients may be useful to the Manager, Subadviser and Sector Advisers
in carrying out their obligations to the Portfolio. The receipt of such research
is not expected to reduce the Manager, Subadviser and Sector Advisers' normal
independent research activities; however, it enables the Manager, Subadviser and
Sector Advisers to avoid the additional expenses that could be incurred if the
Manager, Subadviser and Sector Advisers tried to develop comparable information
through their own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, the Manager, Subadviser and/or Sector
Advisers must determine in good faith that such commissions are reasonable in
relation to the value of the brokerage and research services provided by such
executing broker-dealers viewed in terms of a particular transaction or the
Manager, Subadviser and/or Sector Advisers' overall responsibilities to the
Portfolio and their other clients. In reaching this determination, the Manager,
Subadviser and/or Sector Advisers will not attempt to place a specific dollar
value on the brokerage and research services provided or to determine what
portion of the compensation should be related to those services.

<PAGE>

The Manager, Subadviser and Sector Advisers are authorized to use research
services provided by and to place portfolio transactions with brokerage firms
that have provided assistance in the distribution of shares of the Fund or
shares of other Flex-funds funds or Flex-Partners funds to the extent permitted
by law.

The Manager, Subadviser and Sector Advisers may allocate brokerage
transactions to broker-dealers who have entered into arrangements with the
Manager, Subadviser and Sector Advisers under which the broker-dealer allocates
a portion of the commissions paid by the Portfolio toward payment of the
Portfolio or the Fund's expenses, such as transfer agent fees of Mutual Funds
Service Co. or custodian fees. The transaction quality must, however, be
comparable to those of other qualified broker-dealers.

The Trustees of the Portfolio periodically review the Manager, Subadviser
and Sector Advisers' performance of their responsibilities in connection with
the placement of portfolio transactions on behalf of the Portfolio and review
the commissions paid by the Portfolio over representative periods of time to
determine if they are reasonable in relation to the benefits to the Portfolio.

From time to time, the Trustees of the Portfolio will review whether the
recapture for the benefit of the Portfolio of some portion of the brokerage
commissions or similar fees paid by the Portfolio on portfolio transactions is
legally permissible and advisable.

The Portfolio seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture arrangements
are in effect. The Trustees of the Portfolio intend to continue to review
whether recapture opportunities are available and are legally permissible and,
if so, to determine in the exercise of their business judgment, whether it would
be advisable for the Portfolio to seek such recapture.

Although the Trustees and officers of the Portfolio are substantially the
same as those of other portfolios managed by the Manager, investment decisions
for the Portfolio are made independently from those of other portfolios managed
by the Manager or accounts managed by affiliates of the Manager. It sometimes
happens that the same security is held in the portfolio of more than one of
these funds or accounts. Simultaneous transactions are inevitable when several
portfolios are managed by the same investment adviser, particularly when the
same security is suitable for the investment objective of more than one
portfolio.

When two or more portfolios are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in accordance
with a policy considered by the Portfolio Trustees to be equitable to each
portfolio. In some cases this system could have a detrimental effect on the
price or value of the security as far as the Portfolio is concerned. In other
cases, however, the ability of the Portfolio to participate in volume
transactions will produce better executions and prices for the Portfolio. It is
the current opinion of the Trustees of the Portfolio that the desirability of
retaining the Manager as investment adviser to the Portfolio outweighs any

<PAGE>

disadvantages that may be said to exist from exposure to simultaneous
transactions. During the period from January 1, 1998 to December 31, 1998, the
Growth Stock Portfolio paid total commissions of $78,411 ($100,888 in 1997;
$5,137 in 1996) on the purchase and sale of securities, of which $8,025 in
commissions were paid on the purchase and sale of futures and options contracts.

VALUATION OF PORTFOLIO SECURITIES

This twofold approach is believed to more accurately reflect fair value
because it takes into account appropriate factors such as institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data without exclusive reliance
upon quoted, exchange, or over-the-counter prices.

Securities and other assets for which there is no readily available market
are valued in good faith by the Board of Trustees. The procedures set forth
above need not be used to determine the value of the securities owned by the
Portfolio if, in the opinion of the Board of Trustees, some other method (e.g.,
closing over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.

Generally, the valuation of equity securities, as well as corporate bonds,
U.S. government securities, money market instruments, and repurchase agreements,
is substantially completed each day at the close of the New York Stock Exchange
(NYSE).

The values of any such securities held by the Portfolio are determined as
of such time for the purpose of computing the Portfolio's net asset value. If an
extraordinary event that is expected to materially affect the value of a
portfolio security occurs after the close of an exchange on which that security
is traded, then the security will be valued as determined in good faith by the
Board of Trustees.

PERFORMANCE

The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not

<PAGE>

intended to indicate future returns. The Fund's share price and total returns
fluctuate in response to market conditions and other factors, and the value of
Fund shares when redeemed may be more or less than their original cost.

TOTAL RETURN CALCULATIONS. Total returns quoted in advertising reflect all
aspects of the Fund's return, including the effect of reinvesting dividends and
capital gain distributions, and any change in the Fund's net asset value over
the period. Average annual total return is determined separately for Class A and
Class C shares. Average annual returns will be calculated by determining the
growth or decline in value of a hypothetical historical investment in the Fund
over a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant over the period. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that the Fund's performance is not constant over time, but changes from year to
year, and that average annual returns represent averaged figures as opposed to
the actual year-to-year performance of the Fund.

Total return is computed by finding the average annual compounded rates of
return over the length of the base periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:

P (1+T)n = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the end of the base period

CORE EQUITY FUND (CLASS A SHARES):

Total Return
-------------------------------------------------
Since Inception
One Year (8/1/97)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998

Value of Account
At end of Period $ 1,157.43 $ 1,180.56

Value of Account
At beginning of Period 1,000.00 1,000.00
---------- --------

Base Period Return $ 157.43 $ 180.56

Average Total Return 15.75% 12.44%

<PAGE>

CORE EQUITY FUND (CLASS C SHARES):

Total Return
-------------------------------------------------
Since Inception
One Year (8/1/97)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998

Value of Account
At end of Period $ 1,213.37 $ 1,236.71

Value of Account
At beginning of Period 1,000.00 1,000.00
---------- --------

Base Period Return $ 213.37 $ 236.71

Average Total Return 21.35% 16.19%

The Total Return performance data in this hypothetical example represents past
performance and the investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
than their original cost.

In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments, or series of redemptions over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted on a before-tax or after-tax basis. Total
returns, yields, and other performance information may be quoted numerically, or
in a table, graph, or similar illustration.

NET ASSET VALUE. Charts and graphs using the Fund's net asset values,
adjusted net asset values, and benchmark indices may be used to exhibit
performance. An adjusted net asset value includes any distributions paid by the
Fund and reflects all elements of its return. Unless otherwise indicated, the
Fund's adjusted net asset values are not adjusted for sales charges, if any.

<PAGE>

MOVING AVERAGES. The Fund may illustrate performance using moving averages.
A long-term moving average is the average of each week's adjusted closing net
asset value for a specified period. A short-term moving average is the average
of each day's adjusted closing net asset value for a specified period. Moving
Average Activity Indicators combine adjusted closing net asset values from the
last business day of each week with moving averages for a specified period to
produce indicators showing when a net asset value has crossed, stayed above, or
stayed below its moving average.

HISTORICAL FUND RESULTS. The Fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as mutual
fund rankings prepared by Lipper Analytical Services, Inc. (Lipper), an
independent service located in Summit, New Jersey that monitors the performance
of mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and total return is prepared without regard
to tax consequences. In addition to the mutual fund rankings, the Fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.

From time to time, the Fund's performance may also be compared to other
mutual funds tracked by financial or business publications and periodicals. For
example, the Fund may quote Morningstar, Inc. in its advertising materials.
Morningstar, Inc. is a mutual fund rating service that rates mutual funds on the
basis of risk-adjusted performance. Rankings that compare the performance of
Flex-Partners or Flex-funds funds to one another in appropriate categories over
specific periods of time may also be quoted in advertising.

In advertising materials, the Trust may reference or discuss its products
and services, which may include: other Flex-Partners or Flex-funds funds;
retirement investing; the effects of periodic investment plans and dollar; cost
averaging; saving for college; and charitable giving. In addition, the Fund may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to Fund management, investment
philosophy, and investment techniques. The Fund may also reprint, and use as
advertising and sales literature, articles from Reflexions, a quarterly magazine
provided free of charge to Flex-Partners and Flex-funds shareholders.

VOLATILITY. The Fund may quote various measures of volatility and benchmark
correlation in advertising. In addition, the Fund may compare these measures to
those of other funds. Measures of volatility seek to compare the Fund's
historical share price fluctuations or total returns to those of a benchmark.
Measures of benchmark correlation indicate how valid a comparative benchmark may
be. All measures of volatility and correlation are calculated using averages of
historical data.

MOMENTUM INDICATORS indicate the Fund's price movements over specific
periods of time. Each point on the momentum indicator represents the Fund's
percentage change in price movements over that period.

<PAGE>

The Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program, an
investor invests a fixed dollar amount in a Fund at periodic intervals, thereby
purchasing fewer shares when prices are high and more shares when prices are
low. While such a strategy does not assure a profit or guard against loss in a
declining market, the investor's average cost per share can be lower than if
fixed numbers of shares are purchased at the same intervals. In evaluating such
a plan, investors should consider their ability to continue purchasing shares
during periods of low price levels.

The Fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually would have an after-tax value of $1,949
after ten years, assuming tax was deducted from the return each year at a 31%
rate. An equivalent tax deferred investment would have an after tax value of
$2,100 after ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund is open for business and its net asset value per share (NAV) is
calculated each day the NYSE is open for trading. The NYSE has designated the
following holiday closings: New Year's Day, Washington's Birthday (observed),
Good Friday, Memorial Day (observed), Independence Day (observed), Labor Day,
Thanksgiving Day, and Christmas Day (observed). The NYSE may modify its holiday
schedule at any time.

The Fund's net asset value is determined as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier if
trading on the NYSE is restricted or as permitted by the SEC. To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.

Shareholders of the Fund will be able to exchange their Class A shares for
Class A shares of any mutual fund that is a series of The Flex-Partners (each a
"Flex-Partners Fund"), and shares of The Flex-funds Money Market Fund. No fee or
sales load will be imposed upon the exchange. Shareholders of The Flex-funds
Money Market Fund who acquired such shares upon exchange of Class A shares of
the Fund may use the exchange privilege only to acquire Class A shares of a
Flex-Partners Fund.

<PAGE>

At any time after acquiring shares of other funds participating in the
Class C exchange privilege, the shareholder may again exchange those shares (and
any reinvested dividends and distributions) for Class C shares of the Fund
without subjecting such shares to any contingent deferred sales charge. Shares
of any fund participating in the Class C exchange privilege that were acquired
through reinvestment of dividends or distributions may be exchanged for Class C
shares of other funds without being subject to any contingent deferred sales
charge.

Additional details about the exchange privilege and prospectuses for each
of The Flex-Partners funds and The Flex-funds Money Market Fund are available
from the Fund's Transfer Agent. The exchange privilege may be modified,
terminated or suspended on 60 days' notice and any fund, including the Fund, or
the Distributor has the right to reject any exchange application relating to
such Fund's shares. The 60 day notification requirement may be waived if (i) the
only effect of a modification would be to reduce or eliminate an administrative
fee redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the Fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the Fund to be acquired suspends the sale of its shares because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.

In the Prospectus, the Fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by any
person or group if, in the Subadviser's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.

COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of another series of the Trust, the purchases
may be combined to take advantage of the reduced sales charges applicable to
larger purchases. See the table of breakpoints under "How to Buy Shares -
Cumulative Quantity Discount" in the Prospectus.

An eligible group of related Fund investors includes any combination of the
following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

<PAGE>

(d) any company controlled by the individual (a person, entity or
group that holds 25% or more of the outstanding voting securities
of a corporation will be deemed to control the corporation, and a
partnership will be deemed to be controlled by each of its
general partners);

(e) a trust created by the individual, the beneficiaries of which are
the individual, his or her spouse, parents or children;

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act
account created by the individual or the individual's spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

The Combined Purchase and Cumulative Purchase Privilege does not apply to
individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of the Class A
shares of the Fund and Class A shares of other Flex-Partners Funds to determine
the reduced sales charge. The value of existing holdings for purposes of
determining the reduced sales charge is calculated using the maximum offering
price (net asset value plus maximum sales charge) as of the previous business
day. See "How Net Asset Value is Determined" in the Prospectus. The Transfer
Agent must be notified at the time of purchase that the investor is entitled to
a reduced sales charge. The reduced sales charges will be granted subject to
confirmation of the investor's holdings. Rights of accumulation are not
available to individual participants in the retirement and group plans described
below under "Flex-Partners Retirement Plans."

LETTERS OF INTENTION. Reduced sales charges are also available to investors
(or an eligible group of related investors) who enter into a written Letter of
Intention providing for the purchase, within a thirteen-month period, of Class A
shares of the Fund and Class A shares of other Flex-Partners Funds. All Class A
shares of the Fund and Class A shares of other Flex-Partners Funds which were
previously purchased and are still owned are also included in determining the
applicable reduction. The Transfer Agent must be notified at the time of
purchase that the investor is entitled to a reduced sales charge. The reduced
sales charges will be granted subject to confirmation of the investor's
holdings. Letters of Intention are not available to individual participants in
retirement and group plans described below under "Flex-Partners Retirement
Plans."

<PAGE>

A Letter of Intention permits a purchase to establish a total investment
goal to be achieved by any number of investments over a thirteen-month period.
Each investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. Shares totaling 5% of the dollar amount of the Letter of Intention
will be held by the Transfer Agent in escrow in the name of the purchaser. The
effective date of a Letter of Intention may be back-dated up to 90 days, in
order that any investments made during this 90-day period, valued at the
purchaser's cost, can be applied to the fulfillment of the Letter of Intention
goal.

The Letter of Intention does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intention goal is
not achieved within the thirteen-month period, the purchaser is required to pay
the difference between the sales charge otherwise applicable to the purchases
made during this period and sales charges actually paid. Such payment may be
made directly to the Transfer Agent or, if not paid, the Transfer Agent will
liquidate sufficient escrowed shares to obtain such difference. If the goal is
exceeded in an amount which qualifies for a lower sales charge, a price
adjustment is made by refunding to the purchaser the amount of excess sales
charge, if any, paid during the thirteen-month period. Investors electing to
purchase Class A shares of the Fund pursuant to a Letter of Intention should
carefully read such Letter of Intention.

AUTOMATIC ACCOUNT BUILDER. An investor may arrange to have a fixed amount
of $100 or more automatically invested in shares of the Fund monthly by
authorizing his or her bank account to be debited to invest specified dollar
amounts in shares of the Fund. The investor's bank must be a member of the
Automatic Clearing House System.

Further information about these programs and an application form can be
obtained from the Fund's Transfer Agent.

SYSTEMATIC WITHDRAWAL PROGRAM. A systematic withdrawal plan is available
for shareholders having Class A and Class C shares of the Fund with a minimum
value of $10,000, based upon the offering price. The plan provides for monthly,
quarterly or annual checks in any amount, but not less than $100 (which amount
is not necessarily recommended). Except as otherwise provided in the Prospectus,
to the extent such withdrawals exceed the current net asset value of reinvested
dividends, they may be subject to the contingent deferred sales charge. See "How
to Buy Shares - Class C Shares" and "Other Shareholder Services" in the
Prospectus.

Dividends and/or distributions on shares held under this plan are invested
in additional full and fractional shares at net asset value. See "Shareholder
Investment Account - Automatic Reinvestment of Dividends and/or Distributions"
above. The Transfer Agent acts as agent for the shareholder in redeeming
sufficient full and fractional shares to provide the amount of the periodic
withdrawal payment. The plan may be terminated at any time.

<PAGE>

Withdrawal payments should not be considered as dividends, yield or income.
If periodic withdrawals continuously exceed reinvested dividends and
distributions, the shareholder's original investment will be correspondingly
reduced and ultimately exhausted.

Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the applicable sales charges to (i) the purchase of Class
A shares and (ii) the withdrawal of Class C shares. Each shareholder should
consult his or her own tax adviser with regard to the tax consequences of the
plan, particularly if used in connection with a retirement plan.

DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. The Core Equity Fund's dividends,
if any, are declared payable on a quarterly basis. In December, the Fund may
distribute an additional ordinary income dividend (consisting of net short-term
capital gains and undistributed income) in order to preserve its status as a
registered investment company (mutual fund) under the Internal Revenue Code. Net
long-term capital gains, if any, also are declared and distributed in December.

Dividends paid by the Core Equity Fund with respect to Class A shares and
Class C shares, to the extent any dividends are paid, will be calculated in the
same manner at the same time, on the same day and will be in the same amount
except that each class will bear its own distribution charges, resulting in
lower dividends for Class C shares. Distributions of net capital gains, if any,
will be paid in the same amount for Class A shares and Class C shares.

A portion of the Fund's dividends derived from certain U.S. government
obligations may be exempt from state and local taxation. The Fund will send each
shareholder a notice in January describing the tax status of dividends and
capital gain distributions for the prior year.

Long-term capital gains earned by the Fund on the sale of securities by the
Portfolio and distributed to shareholders of the Fund are federally taxable as
long-term capital gains regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund and such shares are held six months or less and are sold at a
loss, the portion of the loss equal to the amount of the long-term capital gain
distribution will be considered a long-term loss for tax purposes.

<PAGE>

Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Distributions from short-term
capital gains do not qualify for the dividends-received deduction.

If you request to have distributions mailed to you and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed for six
months, the Transfer Agent may reinvest your distributions at the then-current
NAV. All subsequent distributions will then be reinvested until you provide the
Transfer Agent with alternate instructions.

TAX STATUS OF THE FUND. The Trust files federal income tax returns for the
Fund. The Fund is treated as a separate entity from the other funds of The
Flex-Partners Trust for federal income tax purposes.

The Fund intends to qualify each year as a "regulated investment company"
for tax purposes so that it will not be liable for federal tax on income and
capital gains distributed to shareholders. In order to qualify as a regulated
investment company and avoid being subject to federal income or excise taxes at
the Fund level, the Fund intends to distribute substantially all of its net
investment income (consisting of the income it earns from its investment in the
Portfolio, less expenses) and net realized capital gains within each calendar
year as well as on a fiscal year basis. The Fund intends to comply with other
tax rules applicable to regulated investment companies.

The Core Equity Fund qualified as a "regulated investment company" for each
of the last two years.

OTHER TAX INFORMATION. The information above is only a summary of some of
the tax consequences generally affecting the Fund and its shareholders, and no
attempt has been made to discuss individual tax consequences. In addition to
federal income taxes, shareholders may be subject to state and local taxes on
Fund distributions. Investors should consult their tax advisers to determine
whether the Fund is suitable to their particular tax situation.

INVESTMENT ADVISER AND MANAGER

R. Meeder & Associates, Inc. (the "Manager") is the investment adviser and
manager for, and has an Investment Advisory Contract with, the Portfolio.

Pursuant to the Investment Advisory Contract, the Manager, subject to the
supervision of the Portfolio's Board of Trustees and in conformity with the
stated objective and policies of the Portfolio, has general oversight
responsibility for the investment operations of the Portfolio. In connection
therewith, the Manager is obligated to keep certain books and records of the
Portfolio. The Manager also administers the Fund's corporate affairs, and in
connection therewith, furnishes the Fund with office facilities, together with

<PAGE>

those ordinary clerical and bookkeeping services which are not being furnished
by Firstar Bank, N.A., the Portfolio's custodian and Mutual Funds Service Co.,
the Fund's transfer and disbursing agent. The management services of the Manager
are not exclusive under the terms of the Investment Advisory Contract and the
Manager is free to, and does, render management services to others.

The Manager invests the Portfolio's liquidity reserves and may invest the
Portfolio's assets in financial futures contracts and related options.

The Investment Advisory Contract for the Portfolio was separately approved
by a vote of a majority of the Trustees, including a majority of those Trustees
who are not "interested persons" (as defined in the Investment Company Act of
1940) of the Portfolio. The Investment Advisory Contract is to remain in force
so long as renewal thereof is specifically approved at least annually by a
majority of the Trustees or by vote of a majority of the interests in the
Portfolio, and in either case by vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) at a
meeting called for the purpose of voting on such renewal.

The Investment Advisory Contract provides that the Manager will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the matters to which the Investment Advisory
Contract relates except for a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days prior written notice by Majority Vote of the
Portfolio, by the Trustees of the Portfolio, or by the Manager.

Costs, expenses and liabilities of the Trust attributable to a particular
fund are allocated to that fund. Costs, expenses and liabilities which are not
readily attributable to a particular fund are allocated among all of the Trust's
funds. Thus, each fund pays its proportionate share of: the fees of the Trust's
independent auditors, legal counsel, custodian, transfer agent and accountants;
insurance premiums; the fees and expenses of Trustees who do not receive
compensation from R. Meeder & Associates, Sector Capital Management, L.L.C or
any of the Sector Advisers; association dues; the cost of printing and mailing
confirmations, prospectuses, proxies, proxy statements, notices and reports to
existing shareholders; state registration fees; distribution expenses within the
percentage limitations of each Class of Shares' distribution and service plan,
including the cost of printing and mailing of prospectuses and other materials
incident to soliciting new accounts; and other miscellaneous expenses.

The expenses of the Portfolio include the compensation of the Trustees who
are not affiliated with the Manager, Subadviser or Sector Advisers; registration
fees; membership dues allocable to the Portfolio; fees and expenses of
independent accountants, of legal counsel and of any transfer agent or
accountant of the Portfolio; insurance premiums and other miscellaneous
expenses.

<PAGE>

Expenses of the Portfolio also include all fees under its Accounting and
Administrative Service Agreement; the expenses connected with the execution,
recording and settlement of security transactions, fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to governmental offices and
commissions; expenses of meetings of investors and Trustees; the advisory fees
payable to the Manager under the Investment Advisory Contract and other
miscellaneous expenses.

The Board of Trustees of the Trust believe that the aggregate per share
expenses of the Fund and the Portfolio will be less than the expenses which the
Fund would incur if it retained the services of an investment adviser and the
assets of the Fund were invested directly in the type of securities being held
by the Portfolio.

The Manager earns an annual fee, payable in monthly installments, at the
rate of 1% of the first $50 million, 0.75% of the next $50 million, and 0.60% in
excess of $100 million, of the Portfolio's average net assets. The Manager will
receive 70% and the Subadviser 30% of the fee payable with respect to the net
assets of the Portfolio upon effectiveness of the subadvisory arrangement; then
the Manager will receive 30% and the Subadviser 70% of the fee attributable to
any additional net assets of the Portfolio up to an amount of net assets equal
to the net assets upon effectiveness of the subadvisory arrangement, then the
Manager and the Subadviser will share equally the fee attributable to any
additional net assets of the Portfolio up to $50 million of the net assets. With
respect to net assets of more than $50 million and less than $100 million, the
applicable fees of 0.75% will be shared such that the Manager would receive
0.35% and the Subadviser 0.40%. For net assets of $100 million and more, the
applicable 0.60% fee will be shared such that the Manager will receive 0.25% and
the Subadviser 0.35%.

For the year ending December 31, 1998, the Growth Stock Portfolio paid fees
to the Manager totaling $435,886 ($317,772 in 1997; $258,239 in 1996).

The Manager has agreed to reduce its fees and/or absorb expenses to limit
the fund's total annual operating expenses to 1.75% of average daily net assets
for Class A Shares and 2.00% of average daily net assets for Class C shares. The
Manager may terminate this agreement after December 31, 1999.

For the year ended December 31, 1998, the Manager reimbursed expenses
totaling $33,064 in the Core Equity Fund.

<PAGE>

Opportunities Management Co., a venture capital investor; Meeder Advisory
Services, Inc., a registered investment adviser; OMCO, Inc., a registered
commodity trading adviser and commodity pool operator; and Adviser Dealer
Services, Inc., a broker-dealer.

The Manager's officers and directors are as set forth as follows: Robert S.
Meeder, Sr., Chairman and Sole Director; Philip A. Voelker, Senior Vice
President and Chief Investment Officer; Donald F. Meeder, Vice President and
Secretary; Sherrie L. Acock, Vice President; Robert S. Meeder, Jr., President;
Thomas E. Line, Chief Operating Officer; Michael J. Sullivan, Vice President of
Sales and Marketing, and Wesley F. Hoag, Vice President and General Counsel. Mr.
Robert S. Meeder, Sr. is President and a Trustee of the Trust and each
Portfolio. Mr. Robert S. Meeder, Jr. and Philip A. Voelker each are a Trustee
and officer of the Trust and each Portfolio. Each of Messrs. Donald F. Meeder
and Wesley F. Hoag is an officer of the Trust and each Portfolio. Mr. Robert S.
Meeder, Sr. is a director of the Distributor. Mr. Voelker is President and a
director of the Distributor. Messrs. Donald F. Meeder and Craver are officers of
the Distributor.

The Manager and Subadviser may use their resources to pay expenses
associated with the sale of the Fund's shares. This may include payments to
third parties such as banks or broker-dealers that provide shareholder support
services or engage in the sale of the Fund's shares. However, the Fund does not
pay the Manager any separate fees for this service.

INVESTMENT SUBADVISER

Sector Capital Management L.L.C. serves as the Portfolio's subadviser. The
Subadviser is a Georgia limited liability company. William L. Gurner and John K.
Donaldson control the Subadviser. Messrs. Gurner and Donaldson are Managers and
Members of the Subadviser. The Subadviser's officers are as set forth as
follows: William L. Gurner, President and Administrator; George S. Kirk,
Director, Sales and Marketing; and Kenneth L. Riffle, Director, Client
Relations. Mr. Gurner is a Trustee of the Trust; the Portfolio, The Flex-funds,
mutual funds whose corresponding portfolios are also advised by the Manager; and
such portfolios. The Investment Subadvisory Agreement provides that the
Subadviser shall furnish investment advisory services in connection with the
management of the Portfolio. The Portfolio and the Manager have entered into an
Investment Subadvisory Agreement with the Subadviser which, in turn, has entered
into a investment sub-subadvisory agreement with each of the Sector Advisers
selected for the Portfolio. Under the Investment Subadvisory Agreement, the
Subadviser is required to (i) supervise the general management and investment of
the assets and securities portfolio of the Portfolio; (ii) provide overall
investment programs and strategies for the Portfolio and (iii) select Sector
Advisers for the Portfolio, except as otherwise provided, and allocate the
Portfolio's assets among such Sector Advisers. The Subadviser is obligated to
keep certain books and records of the Portfolio. The Manager continues to have
responsibility for all investment advisory services pursuant to the Investment
Advisory Agreement and supervises the Subadviser's performance of such services.
Under the Investment Subadvisory Agreement, the Manager, not the Portfolio, pays
the Subadviser an investment advisory fee in an amount described above under
"Investment Adviser and Manager."

<PAGE>

The Subadviser may invest the Portfolio's assets in financial futures
contracts and related options.

The Investment Subadvisory Agreement provides that the Subadviser will not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of portfolio
transactions for the Portfolio, except a loss resulting from misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment
Subadvisory Agreement provides that it will terminate automatically if assigned,
and that it may be terminated without penalty to the Fund or the Portfolio by
the Manager, the Trustees of the Portfolio or by the vote of a majority of the
outstanding voting securities of the Portfolio upon not less than 30 days
written notice. The Investment Subadvisory Agreement will continue in effect for
a period of more than two years from the date of execution only so long as such
continuance is specifically approved at least annually in conformity with the
1940 Act. The Investment Subadvisory Agreement was approved by the Board of
Trustees of the Portfolio, including all of the Trustees who are not parties to
the contract or "interested persons" of any such party, and by the investors in
the Portfolio.

INVESTMENT SUB-SUBADVISERS

Except as otherwise described above under "Investment Adviser and Manager"
and "Investment Subadviser", the assets of the Portfolio are managed by asset
managers (each a "Sector Manager" and collectively, the "Sector Managers")
selected by the Subadviser, subject to the review and approval of the Trustees
of the Portfolio. The Subadviser recommends, to the Trustees of the Portfolio,
Sector Advisers for each industry sector based upon its continuing quantitative
and qualitative evaluation of the Sector Advisers' skills in managing assets
pursuant to specific investment styles and strategies. The Portfolio has
received an exemptive order from the SEC permitting the Subadviser, subject to
certain conditions, to enter into sub-subadvisory agreements with Sector
Advisers approved by the Trustees of the Portfolio but without the requirement
of investor approval. At a meeting held on December 20, 1996, the shareholders
of the Portfolio approved the operation of the Portfolio in this manner.
Pursuant to the terms of the exemptive order, the Subadviser is to be able,
subject to the approval of the Trustees of the Portfolio, but without investor
approval, to employ new Sector Advisers for the Portfolio. Although investor
approval will not be required for the termination of sub-subadvisory agreements,
investors of the Portfolio will continue to have the right to terminate such
agreements for the Portfolio at any time by a vote of a majority of outstanding
voting securities of the Portfolio.

Except as otherwise provided above under "Investment Adviser and Manager"
and "Investment Subadviser," the assets of the Portfolio are allocated by the
Subadviser among the Sector Advisers selected for the Portfolio. Each Sector

<PAGE>

Adviser has discretion, subject to oversight by the Trustees and the Subadviser,
to purchase and sell portfolio assets, consistent with the Portfolio's
investment objectives, policies and restrictions. For its services, the
Subadviser receives a management fee from the Manager. A part of the fee paid to
the Subadviser is used by the Subadviser to pay the advisory fees of the Sector
Advisers. Each Sector Adviser is paid a fee for its investment advisory services
that is computed daily and paid monthly based on the value of the average net
assets of the Portfolio assigned by the Subadvisor to the Sector Adviser at an
annual rate equal to .25%.

Investors should be aware that the Subadviser may be subject to a conflict
of interest when making decisions regarding the retention and compensation of
particular Sector Advisers. However, the Subadviser's decisions regarding the
selection of Sector Advisers and specific amount of the compensation to be paid
to Sector Advisers, are subject to review and approval by a majority of the
Board of Trustees of the Growth Stock Portfolio.

Although the Subadviser and the Sector Advisers' activities are subject to
general oversight by the Board of Trustees and the officers of the Growth Stock
Portfolio, neither the Board nor the officers evaluate the investment merits of
any Sector Adviser's individual security selections. The Board of Trustees will
review regularly the Growth Stock Portfolio's performance compared to the
applicable indices and also will review the Growth Stock Portfolio's compliance
with its investment objectives and policies.

The Investment Sub-subadvisory Agreements provide that the Sector Advisers
will not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the execution of
portfolio transactions for the Portfolio, except a loss resulting from
misfeasance, bad faith, gross negligence or reckless disregard of duty. The
Investment Sub-subadvisory Agreements provide that they will terminate
automatically if assigned, and that they may be terminated without penalty to
the Fund or the Portfolio by the Subadviser, the Trustees of the Portfolio or by
the vote of a majority of the outstanding voting securities of the Portfolio
upon not less than 15 days written notice. The Investment Sub-subadvisory
Agreements will continue in effect for a period of more than two years from the
date of execution only so long as such continuance is specifically approved at
least annually in conformity with the 1940 Act. The Investment Sub-subadvisory
Agreements were approved by the Board of Trustees of the Portfolio, including
all of the Trustees who are not parties to the contract or "interested persons"
of any such party, and by the investors in the Portfolio.

A Sector Adviser may also serve as a discretionary or non-discretionary
investment adviser to management or advisory accounts unrelated in any manner to
the Portfolio or its affiliates. The investment Sub-subadvisory agreements among
the Sector Advisers, the Portfolio and the Subadviser require fair and equitable
treatment to the Portfolio in the selection of the Portfolio investments and the
allocation of investment opportunities, but do not obligate the Sector Advisers
to give the Portfolio exclusive or preferential treatment.

<PAGE>

Although the Sector Advisers make investment decisions for the Portfolio
independent of those for their other clients, it is likely that similar
investment decisions will be made from time to time. When the Portfolio and
another client of a Sector Adviser are simultaneously engaged in the purchase or
sale of the same security, the transactions are, to the extent feasible and
practicable, averaged as to price and allocated as to amount between the
Portfolio and the other client(s). In specific cases, this system could have
detrimental effect on the price or volume of the security to be purchased or
sold, as far as the Portfolio is concerned. However, the Trustees of the
Portfolio believe, over time, that coordination and the ability to participate
in volume transactions should be to the benefit of the Portfolio.

Listed below are the Sector Advisers selected by the Subadviser to invest
certain of the Portfolio's assets:

MILLER/HOWARD INVESTMENTS, INC. serves as sector adviser to the utilities
and transportation sectors of the Growth Stock Portfolio. Miller/Howard is a
registered investment adviser that has been providing investment services to
broker-dealers, investment advisers, employee benefit plans, endowment
portfolios, foundations and other institutions and individuals since 1984. As of
December 31, 1998, Miller/Howard managed approximately $165 million in assets.
Lowell G. Miller, President and Secretary of Miller/Howard, controls
Miller\Howard through stock ownership. Mr. Miller is the portfolio manager
primarily responsible for the day-to-day management of those assets of the
Growth Stock Portfolio allocated to Miller/Howard. Mr. Miller has been
associated with Miller/Howard since 1984. Miller/Howard is also the subadviser
to the Utilities Stock Portfolio, a corresponding portfolio to The Flex-funds'
Total Return Utilities Fund and The Flex-Partners' Utility Growth Fund.
Miller/Howard's principal executive offices are located at 141 Upper Byrdcliffe
Road, Post Office Box 549, Woodstock, New York 12498.

HALLMARK CAPITAL MANAGEMENT, INC. serves as sector adviser to the capital
goods sector of the Growth Stock Portfolio. Hallmark is a registered investment
adviser that has been providing investment services to individuals; banks;
pension, profit sharing, and other retirement plans; trusts; endowments;
foundations; and other charitable organizations since 1986. As of December 31,
1998, Hallmark managed approximately $180 million in assets. Peter S. Hagerman,
Chairman of the Board, President, and Chief Executive Officer; Katherine A.
Swieralski, Senior Vice President, Treasurer, Chief Financial and Administrative
Officer; and Jeffrey P. Braff each owns more than 10% of the outstanding voting
securities of Hallmark, as would Thomas S. Moore, Senior Vice President and
Chief Investment Officer, if his options were exercised. Mr. Hagerman is the
portfolio manager primarily responsible for the day-to-day management of those
assets of the Growth Stock Portfolio allocated to Hallmark. Mr. Hagerman has
been associated with Hallmark since 1986. Hallmark's principal executive offices
are located at One Greenbrook Corporate Center, 100 Passaic Avenue, Fairfield,
New Jersey 07004.

<PAGE>

BARROW, HANLEY, MEWHINNEY & STRAUSS, INC. serves as sector adviser to the
consumer durable and non-durable sectors of the Growth Stock Portfolio. Barrow
is a registered investment adviser that has been providing investment services
to banks; investment companies; pension and profit sharing plans; charitable
organizations and corporations since 1979. As of December 31, 1998, Barrow
managed approximately $36.3 billion in assets. Barrow is a wholly owned
subsidiary of United Asset Management. Michael C. Mewhinney is the portfolio
manager primarily responsible for the day-to-day management of those assets of
the Growth Stock Portfolio allocated to Barrow. Mr. Mewhinney has been
associated with Barrow since 1979. Barrow's principal executive offices are
located at 3232 McKinney Avenue, 15th Floor, Dallas, Texas 75204-2429.

THE MITCHELL GROUP, INC. serves as sector adviser to the energy sector of
the Growth Stock Portfolio. The Mitchell Group is a registered investment
adviser that has been providing investment services to individuals; banks;
investment companies; pension and profit sharing plans; charitable
organizations, corporations and other institutions since 1989. As of December
31, 1998, The Mitchell Group managed approximately $269 million in assets.
Rodney Mitchell, President, Chief Executive Officer, and Chief Financial Officer
of The Mitchell Group, owns more than 10% of the outstanding voting securities
of The Mitchell Group. Mr. Mitchell is the portfolio manager primarily
responsible for the day-to-day management of those assets of the Growth Stock
Portfolio allocated to The Mitchell Group. Mr. Mitchell has been associated with
The Mitchell Group since 1989. The Mitchell Group's principal executive offices
are located at 1100 Louisiana, #4810, Houston, Texas 77002.

ASHLAND MANAGEMENT INCORPORATED serves as sector adviser to the materials
and services sector of the Growth Stock Portfolio. Ashland is a registered
investment adviser that has been providing investment services to individuals,
pension and profit sharing plans, charitable organizations, corporations and
other institutions since 1975. As of December 31, 1998, Ashland managed
approximately $1.5 billion in assets. Charles C. Hickox, Chairman of the Board
and Chief Executive Officer, and Parry v.S. Jones, President and Chief Operating
Officer, each owns more than 10% of the outstanding voting securities of
Ashland. Terence J. McLaughlin, Managing Director of Ashland, and Deborah C.
Ohl, a Portfolio Manager, are the portfolio managers primarily responsible for
the day-to-day management of those assets of the Growth Stock Portfolio
allocated to Ashland. Mr. McLaughlin has been associated with Ashland since
1984. Ms. Ohl has been employed by Ashland since August 1992 and has served as a
Portfolio Manager for Ashland since 1993. Ashland's principal executive offices
are located at 26 Broadway, New York, New York 10004.

<PAGE>

manager primarily responsible for the day-to-day management of those assets of
the Portfolio allocated to Delta Capital. Mr. Kay has been associated with Delta
Capital since April 1998. From 1993 to March 1998, Mr. Kay was a portfolio
manager for Scudder Kemper Investments, Inc., a registered investment adviser.
Delta Capital's principal executive offices are located at 745 Fifth Avenue,
Suite 816, New York, New York 10151.

ALLIANCE CAPITAL MANAGEMENT L.P. serves as sector adviser to the health
sector of the Growth Stock Portfolio. Alliance, a registered investment adviser,
is an international investment manager supervising client accounts with assets
as of December 31, 1998 totaling approximately $286.7 billion. Alliance provides
investment services primarily to corporate employee benefit funds, public
employee retirement systems, investment companies, foundations, and endowment
funds. The general partner of Alliance, Alliance Capital Management Corporation,
is an indirect subsidiary of, and is controlled by, AXA, a French insurance
holding company. Alliance Capital conducts no other business. Raphael L.
Edelman, Vice President of Alliance, is the portfolio manager primarily
responsible for the day-to-day management of those assets of the Growth Stock
Portfolio allocated to Alliance. Mr. Edelman, who has sixteen years of
investment experience, joined Alliance's research department in 1986 as an
analyst after working two years as a manager in Alliance's mutual fund division.
Alliance's principal executive offices are located at 1345 Avenue of the
Americas, New York, NY 10105.

TRUSTEES AND OFFICERS

<PAGE>

Trustee and officer is 6000 Memorial Drive, Dublin, Ohio 43017, which is also
the address of the Manager. Those Trustees who are "interested persons" (as
defined in the Investment Company Act of 1940) by virtue of their affiliation
with the Fund Complex, the Manager, the Subadviser or the Sector Advisers are
indicated by an asterisk (*).

NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION

ROBERT S. MEEDER, SR.*+, 70 Trustee/President Chairman of R. Meeder &
Associates, Inc., an
investment adviser; Chairman
and Director of Mutual Funds
Service Co., the Fund's
transfer agent; Director of
Adviser Dealer Services,
Inc., the Fund's distributor.

MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit Committee.

ROGER D. BLACKWELL, 58 Trustee Professor of Marketing and
Blackwell Associates, Inc. Consumer Behavior, The Ohio
3380 Tremont Road State University; President
Columbus, OH 43221 of Blackwell Associates,
Inc., a strategic consulting
firm.

ROBERT S. MEEDER, JR.*, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.

WALTER L. OGLE, 60 Trustee Executive Vice President of
400 Interstate North Parkway Aon Consulting, an employee
Suite 1630 benefits consulting group.
Atlanta, GA 30339

CHARLES A. DONABEDIAN, 56 Trustee President, Winston Financial,
Winston Financial, Inc. Inc., which provides a
200 TechneCenter Drive variety of marketingand
Suite 200 consulting services to
Milford, OH 45150 investment management
companies; CEO, Winston
Advisors, Inc., an investment
adviser.

<PAGE>

JAMES W. DIDION, 68 Trustee Retired; formerly Executive
8781 Dunsinane Drive Vice President of Core
Dublin, OH 43017 Source, Inc., an employee
benefit and Workers'
Compensation administration
and consulting firm
(1991-1997).

JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm and
North Palm Beach, FL 33408 division of Golden Bear
International, Inc.

PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer of
R. Meeder & Associates, Inc.;
President and a Director of
Adviser Dealer Services, Inc.

JAMES B. CRAVER*, 55 Assistant Secretary Assistant Secretary and
42 Miller Hill Road Assistant Treasurer of
Box 811 Adviser Dealer Services,
Dover, MA 02030 Inc.; Practicing Attorney;
Special Counsel to
Flex-Partners, Flex-funds
and their Portfolios; Senior
Vice President of Signature
Financial Group, Inc.
(January 1991 to August 1995).

DONALD F. MEEDER*+, 60 Secretary/Treasurer Vice President of R. Meeder &
Associates, Inc.; Secretary
of Mutual Funds Service Co.,
the Fund's transfer agent;
Secretary of Adviser Dealer
Services, Inc.

WESLEY F. HOAG*+, 42 Vice President Vice President and General
Counsel of R. Meeder &
Associates, Inc. and Mutual
Funds Service Co. (since July
1993); Attorney, Porter,
Wright, Morris & Arthur, a
law firm (October 1984 to
June 1993).

<PAGE>

RICHARD A. CLEMENS*+, 31 Assistant Treasurer Manager/Financial Reporting,
Mutual Funds Service Co.
(since March 1997), the
Funds' transfer agent;
Manager, Financial
Administration, BISYS Fund
Services (May 1995 to
February 1997); Supervising
Senior Accountant, Ernst &
Young LLP (October 1990 to
May 1995)

* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Flex-Partners and each Portfolio.

+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.

Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.

The following table shows the compensation paid by the Portfolio and the
Fund Complex as a whole to the Trustees of the Portfolio and the Fund Complex
during the fiscal year ended December 31, 1998.

COMPENSATION TABLE

Pension or Total
Retirement Compensation
Benefits from
Aggregate Accrued as Estimated Registrant and
Compensation Part of Annual Fund Complex
TRUSTEE from the Portfolio Benefits Upon Paid TO
PORTFOLIO(1) EXPENSE RETIREMENT TRUSTEE(1)(2)
----------- ------- ------------- -----------

Robert S. Meeder, Sr. None None None None

Milton S. Bartholomew $2,013 None None $13,525

Robert S. Meeder, Jr. None None None None

John M. Emery $1,481 None None $ 9,867

Richard A. Farr $1,457 None None $ 9,367

Russel G. Means $1,207 None None $ 7,867

Walter L. Ogle $2,059 None None $14,525

<PAGE>

Philip A. Voelker None None None None

Roger A. Blackwell $2,016 None None $13,525

Charles A. Donabedian $1,791 None None $12,525

James Didion None None None None

Jack W. Nicklaus II $1,050 None None $ 6,325

William L. Gurner None None None None

Lowell G. Miller None None None None

1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1998,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $1,071, Roger A. Blackwell - $2,016,
Charles A. Donabedian - $1,791, and Jack W. Nicklaus II - $1,050.

2 The Fund Complex consists of 15 investment companies.

Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per meeting for each of the five Portfolios. In addition, each such Trustee
earns an annual fee, payable quarterly, based on the average net assets in each
Portfolio based on the following schedule: Money Market Portfolio, 0.0005% of
the amount of average net assets between $500 million and $1 billion; 0.00025%
of the amount of average net assets exceeding $1 billion. For the other four
Portfolios, including the Portfolio, each Trustee is paid a fee of 0.00375% of
the amount of each Portfolio's average net assets exceeding $15 million. Members
of the Audit and Strategic Planning Committees for each of The Flex-Partners and
The Flex-funds Trusts, and the Portfolios are paid $500 for each Committee
meeting attended. Trustees fees for the Portfolio totaled $15,042 for the year
ended December 31, 1998 ($9,231 in 1997). All other officers and Trustees serve
without compensation from the Trust.

SALES CHARGE WAIVERS: Directors, Trustees, officers and full-time employees
of the Portfolios, the Flex-Partners trust, the Manager, the Subadvisers or the
Distributor, including members of the immediate families of such individuals and
employee benefit plans established by such entities, may purchase shares of the
funds at net asset value.

THE DISTRIBUTOR

Adviser Dealer Services, Inc. (the "Distributor"), 6000 Memorial Drive,
Dublin, Ohio 43017, acts as the distributor of the Class A shares and the Class
C shares of the Fund. The Distributor is an affiliate of the Manager and a
subsidiary of Muirfield Investors, Inc.

<PAGE>

Pursuant to separate plans of distribution (the Class A Plan and the Class
C Plan, collectively, the Plans) adopted by the Fund under Rule 12b-1 under the
1940 Act and an underwriting agreement (the Underwriting Agreement) the
Distributor incurs the expenses of distributing the Fund's Class A shares and
Class C shares. See "Distribution Plans" in the Prospectus.

CLASS A SHARES. Class A shares are sold at net asset value plus the
applicable sales charge as shown in the table below. Class A shares also bear a
Rule 12b-1 fee of 0.25% per year (paid to the Distributor, Adviser Dealer
Services, Inc.) of their average net asset value. In addition, Class A shares
bear an asset based service fee of 0.25% per year. The sales charge on Class A
shares is allocated between the investment dealer and Adviser Dealer Services,
Inc. as shown below:

AS A PERCENTAGE AS A PERCENTAGE
OF OFFERING OF NET ASSET
PRICE OF THE VALUE OF THE DEALER'S
SHARES SHARES SALES
AMOUNT INVESTED PURCHASED PURCHASED CONCESSION
- -------------------------------------------------------------------------------
Up to $50,000 5.75% 6.10% 5.25%
$50,001 to $100,000 5.00% 5.26% 4.50%
$100,001 to $249,999 3.75% 3.90% 3.25%
$250,000 to $499,999 2.50% 2.56% 2.00%
$500,000 to $999,999 2.00% 2.04% 1.60%
$1,000,000 or more none none none

CLASS C SHARES. Class C shares are sold at net asset value without an
initial sales charge. There is a 1.50% contingent deferred sales charge (CDSC)
on any Class C shares redeemed within 18 months of purchase. There is a 0.75%
CDSC on any Class C shares redeemed after 18 months of purchase and before 24
months of purchase. The CDSC for Class C shares is based on the current value of
the shares being sold or their net asset value when purchased, whichever is
less. There is no CDSC on shares acquired by reinvesting dividends.

The Board of Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Class A or Class C Plan or in any agreement
related to the Plans (the Rule 12b-1 Trustees), at a meeting called for the
purpose, have adopted a plan of distribution for each of the Class A shares and
the Class C shares of the Fund. The Class A Plan was approved by Class A
shareholders of the Fund. The Class C Plan was approved by Class C shareholders
of the Fund.

The Distributor also receives the proceeds of contingent deferred sales
charges paid by investors upon certain redemptions of Class C shares. See "How
to Buy Shares" in the Prospectus.

<PAGE>

The Plans continue in effect from year to year, provided that each such
continuance is approved at least annually by a vote of the Board of Trustees,
including a majority vote of the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on such continuance. Either Plan may be
terminated at any time, without penalty, by the vote of a majority of the
Trustees who are not interested persons or by the vote of the holders of a
majority of the relevant class of outstanding shares of the Fund. Neither Plan
may be amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of Class A and Class C,
as applicable, and all material amendments are required to be approved by the
Board of Trustees in the manner described above. The Fund will not be
contractually obligated to pay expenses incurred under either the Class A or
Class C Plan if it is terminated or not continued.

Pursuant to each Plan, the Board of Trustees will review at least quarterly
a written report of the distribution expenses incurred on behalf of the Class A
and Class C shares of the Fund by the Distributor. The report includes an
itemization of the distribution expenses and the purposes of such expenditures.
In addition, as long as the Plans remain in effect, the selection and nomination
of Trustees who are not interested persons of the Fund shall be committed to the
Trustees who are not interested persons of the Fund.

The table below states the amounts paid under the Fund distribution plan
for the year ended December 31, 1998.

DISTRIBUTION PLAN EXPENSES PAID BY THE FUND

TYPE OF EXPENSE AMOUNT PAID

Advertising $ 0
Printing and Mailing of Prospectuses $ 0
Compensation to Underwriters $ 8,112
Compensation to Broker-Dealers $ 1,979
Compensation to Sales Personnel $ 0
Interest, Carrying, or Other Financial Charges $ 0
---------
Total $10,091

The Distributor for the Fund, is an affiliated person of the Manager and
the Fund and received the following commissions and other compensation from the
Trust during the fiscal year ended December 31, 1998.

<PAGE>

Name of Net Underwriting Compensation of
Principal Discounts and on Redemptions Brokerage Other
UNDERWRITER COMMISSIONS AND REPURCHASES COMMISSIONS COMPENSATION
- ----------- ----------- --------------- ----------- ------------
Adviser Dealer
Services, Inc. $10,040 $5,715 $0 $0

FLEX-PARTNERS RETIREMENT PLANS

The Trust offers retirement plans which are described in the Prospectus.
Minimum purchase requirements for retirement plan accounts are subject to the
same requirements as regular accounts, except for an IRA, which has a $500
minimum purchase requirement. Information concerning contribution limitations
for IRA accounts and Roth IRA accounts are described below.

INDIVIDUAL RETIREMENT ACCOUNTS (IRA):

DEDUCTIBLE CONTRIBUTIONS

All contributions (other than certain rollover contributions) must be made
in cash and are subject to the following limitations:

REGULAR. Contributions to an IRA (except for rollovers or employer
contributions under a simplified employee pension) may not exceed the amount of
compensation includible in gross income for the tax year or $2,000, whichever is
less. If neither you nor your spouse is an active participant in an employer
plan, you may make a contribution up to this limit and take a deduction for the
entire amount contributed. If you or your spouse is an active participant and
your adjusted gross income (AGI) is below a certain level you may also make a
contribution and take a deduction for the entire amount contributed. However, if
you or your spouse is an active participant and your AGI is above the specified
level, the dollar limit of the deductible contribution you make to your IRA may
be reduced or eliminated.

Regular contributions are not allowed for the year in which you attain age
70-1/2 or for any year thereafter. You do not have to file an itemized federal
tax return to take an IRA deduction. Deductions are not allowed for any
contribution in excess of the deduction limit. Contributions for a year may be
made during such year or by the tax return filing date for such year (not
including extensions), if irrevocably designated for such year, in writing, when
such contribution is made.

If you and your spouse each receive compensation during the year and are
otherwise eligible, each of you may establish your own IRA. The contribution
limits apply separately to the compensation of each of you, without regard to
the community property laws of your state, if any.

<PAGE>

SPOUSAL. You may make spousal IRA contributions for a year, if: 1) your
spouse has "compensation" that is includible in gross income for such year; 2)
you have less compensation than your spouse for such year; 3) you do not reach
age 70-1/2 by the end of such year; and 4) you file a joint federal income tax
return for such year.

If you are the compensated (or higher compensated) spouse, your
contribution must be made in accordance with the regular contribution rules
above. If you are the noncompensated (or lower compensated) spouse, your
contribution may not exceed the lesser of $2,000 or 100% of the combined
compensation of you and your spouse, reduced by the amount of your spouse's IRA
contribution.

Contributions for your spouse must be made to a separate IRA established by
your spouse as the depositor or grantor of his or her own IRA and your spouse
becomes subject to all of the privileges, rules, and restrictions generally
applicable to IRAs. This includes conditions of eligibility for distribution;
penalties for premature distribution, excess accumulation (failure to take a
required distribution) and prohibited transaction; designation of beneficiaries
and distribution in the event of your spouse's death; income and estate tax
treatment of withdrawals and distributions.

ADJUSTED GROSS INCOME (AGI). If you are an active participant or are
considered an active participant, the amount of your AGI for the year (if you
and your spouse file a joint tax return, your combined AGI) will be used to
determine if you can make a deductible IRA contribution. The instructions for
your tax return will show you how to calculate your AGI for this purpose. If you
are at or below a certain AGI level, called the Threshold Level, you can make a
deductible contribution under the same rules as a person who is not an active
participant. This AGI level may change each year. The instructions for your tax
return will show you the AGI level in effect for that year.

For example, if you are single, or treated as being single, your AGI
Threshold Level is $30,000 for 1998. If you are married and file a joint tax
return, your AGI Threshold Level is $50,000 for 1998. If you are not an active
participant, but you file a joint tax return with your spouse who is an active
participant, your AGI Threshold Level is $150,000. If you are married, file a
separate tax return, and live with your spouse for any part of the year, your
AGI Threshold Level is $0.

If your AGI is less than $10,000* above your AGI Threshold Level, you will
still be able to make a deductible contribution, but it will be limited in
amount. The amount by which your AGI exceeds your AGI Threshold Level (AGI minus
AGI Threshold Level) is called your Excess AGI. The Maximum Allowable Deduction
is $2,000 per individual. You may determine your Deduction Limit by using the
following formula:

($10,000* - EXCESS AGI ) Maximum Allowable = Deduction
--------------------- X Deduction Limit
$10,000*

<PAGE>

Round the result up to the next higher multiple of $10 (the next higher
whole dollar amount that ends in zero). If the final result is below $200, but
above zero, your Deduction Limit is $200. Your Deduction Limit cannot exceed
100% of your compensation.

*For years after 2006, $20,000 if you are married, filing jointly.

NONDEDUCTIBLE CONTRIBUTIONS

Eligibility - Even if your deduction limit is less than $2,000, you may
still contribute using the rules in the "Deductible Contributions" section
above. The portion of your IRA contribution that is not deductible will be a
nondeductible contribution. You may choose to make a nondeductible IRA
contribution even if you could have deducted part or all of the contribution.
Generally, interest or other earnings on your IRA contribution, whether from
deductible or nondeductible contributions, will not be taxed until distributed
from your IRA.

Rollover Contributions - Individuals who receive certain lump-sum
distributions from employer-sponsored retirement plans may make rollover
contributions to an IRA and by doing so defer taxes on the distribution and
shelter any investment earnings.

ROTH INDIVIDUAL RETIREMENT ACCOUNTS (ROTH IRA):

CONTRIBUTIONS:

All contributions must be made in cash and are subject to the following
limitations:

REGULAR. Contributions to a Roth IRA (except for rollovers) cannot exceed
the amount of compensation includible in gross income for the tax year or
$2,000, whichever is less. If our adjusted gross income (AGI) is below a certain
level, you may contribute the maximum amount. However, if your AGI is above a
specified level, the dollar limit of the contribution you make to your Roth IRA
may be reduced or eliminated.

If you are single, and your adjusted gross income (AGI) is $95,000 or less
($150,000 or less if married and filing jointly, or $0 or less if married and
filing separately) you are eligible to contribute the full amount to a Roth IRA.

Contributions to a Roth IRA are aggregated with Traditional IRA
contributions for the purpose of the annual contribution limit. Therefore, you
may contribute up to the lesser of $2,000 or 100% of earned income per year to a
Traditional IRA and a Roth IRA combined.

SPOUSAL. You may make spousal Roth IRA contributions for a year, if: 1)
your spouse has "compensation" that is includible in gross income for such year;
2) you have less compensation than your spouse for such year; and 3) you file a
joint federal income tax return for such year.

<PAGE>

If you are the higher compensated spouse, your contribution must be made in
accordance with the regular contribution rules above. If you are the
noncompensated (or lower compensated) spouse, your contribution may not exceed
the lesser of $2,000 or 100% of the combined compensation of you and your
spouse, reduced by the amount of your spouse's Roth IRA contribution.

Contributions for your spouse must be made to a separate Roth IRA
established by your spouse as the depositor or grantor of his or her own Roth
IRA and your spouse becomes subject to all of the privileges, rules, and
restrictions generally applicable to Roth IRAs. This includes conditions of
eligibility for distribution; designation of beneficiaries and distribution in
the event of your spouse's death; tax treatment of withdrawals and
distributions. This form may be used to establish such Roth IRA.

NO MAXIMUM AGE LIMIT. There is no maximum age limit for making a Roth IRA
contribution. Attainment of age 70 1/2 does not prevent you from contributing to
a Roth IRA.

APRIL 15 FUNDING DEADLINE. Contributions to a Roth IRA for the previous tax
year must be made by the tax-filing deadline (not including extensions) for
filing your federal income tax return. If you are a calendar-year taxpayer, your
deadline is usually April 15. If April 15 falls on a Saturday, Sunday, or legal
holiday, the deadline is the following business day.

LOWER CONTRIBUTION LIMITS. To determine the maximum contribution to a Roth
IRA if your AGI is between $95,000 and $110,000 (between $150,000 and $160,000
if married, filing jointly or between $0 and $10,000 if married, filing
separately), the following steps must be taken:

(a) Subtract your AGI from $110,000 ($160,000 if married, filing jointly;
$10,000 if married, filing separately).

(b) Multiply the result in Step `a' by .1333 (.20 if married).

(d) The result in Step `c' is your allowable contribution limit. If it is
more than $0, but less that $200, your allowable contribution limit is
$200.

<PAGE>

deductible Traditional IRA contribution is not allowed as a deduction in
computing AGI, and any amount of a rollover-conversion from a Traditional IRA to
a Roth IRA is not taken into account. Whether an individual, or his spouse, is
an active participant in an employer retirement plan is irrelevant for
determining whether he may make a Roth contribution.

EXCESS ROTH CONTRIBUTIONS. Excess contributions to a Roth IRA are subject
to a 6% penalty tax unless removed (along with attributable earnings) by your
tax-filing deadline (plus extensions). An excess contribution could occur for
many reasons including, for example, if you contribute more than $2,000 or 100%
of earned income, or if you are not permitted to make a Roth contribution
because your AGI is too high.

CONVERSION OF TRADITIONAL CONTRIBUTIONS TO ROTH CONTRIBUTIONS. Generally,
if you make a contribution to a Traditional IRA, you may transfer the
contribution plus attributable earnings to a Roth IRA by your tax-filing
deadline (not including extensions). The transferred contribution amount is not
taxable if no deduction was allowed for the contribution. Such a contribution is
treated as a Roth IRA contribution.

ROLLING OVER/CONVERTING TRADITIONAL IRAS TO ROTH IRAS

You are allowed to roll over, transfer, or "convert" your Traditional IRAs
to Roth IRAs beginning in 1998. Regardless of whether a Traditional IRA is
rolled over/converted to a Roth IRA in 1998 or afterwards, the
rollover/conversion amount is subject to federal income taxation (but no 10%
penalty tax).

$100,000 AGI LIMIT FOR ROLLOVER. If you are a single taxpayer, or a married
individual who files jointly, you may roll over, transfer, or convert your
Traditional IRAs to Roth IRAs if your AGI is $100,000 or less. If you are a
single taxpayer (or a married individual who files jointly) with AGI of more
than $100,000 you may not roll over, transfer, or convert your Traditional IRAs
to Roth IRAs. Also, if you are a taxpayer who is married, but files separately,
you may not roll over, transfer, or convert your Traditional IRAs to Roth IRAs
regardless of AGI.

ROLLOVER/CONVERSION AFTER 1998. If you roll over a Traditional IRA
distribution received after 1998, to a Roth IRA the taxable portion of the
Traditional IRA distribution is included in your income for the year in which
the Traditional IRA distribution is received, but the amount is not subject to
the IRS 10% early distribution penalty. No special tax treatments apply.

CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER

<PAGE>

minimum annual fee for accounting services for the Portfolio is $7,500. Subject
to the applicable minimum fee, the Portfolio's annual fee, payable monthly, is
computed at the rate of 0.15% of the first $10 million, 0.10% of the next $20
million, 0.02% of the next $50 million and 0.01% in excess of $80 million of the
Portfolio's average net assets. Subject to a $4,000 annual minimum fee, each
class of shares of the Fund will incur an annual fee, payable monthly, which
will be the greater of $15 per shareholder account or 0.10% of the Fund's
average net assets, payable monthly, for stock transfer and dividend disbursing
services.

Mutual Funds Service Co. also serves as Administrator to the Fund pursuant
to an Administration Services Agreement. Services provided to the Fund include
coordinating and monitoring any third party services to the Fund; providing the
necessary personnel to perform administrative functions for the Fund; assisting
in the preparation, filing and distribution of proxy materials, periodic reports
to Trustees and shareholders, registration statements and other necessary
documents. The Fund incurs an annual fee, payable monthly, of .05% of the Fund's
average net assets. These fees are reviewable annually by the respective
Trustees of the Trust and the Portfolio.

For the year ended December 31, 1998, total payments to Mutual Funds
Service Co. by the Fund and the Portfolio amounted to $47,268.

ADDITIONAL INFORMATION

CUSTODIAN. Firstar Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202, is
custodian of the assets of the Portfolio. The custodian is responsible for the
safekeeping of the Portfolio's assets and the appointment of subcustodian banks
and clearing agencies. The custodian takes no part in determining the investment
policies of the Portfolio or in deciding which securities are purchased or sold
by the Portfolio. The Portfolio may, however, invest in obligations of the
custodian and may purchase or sell securities from or to the custodian.

AUDITORS. KPMG LLP, Two Nationwide Plaza, Columbus, Ohio 43215, serves as
the Trust's independent auditors. The auditors audit financial statements for
the Fund Complex and provide other assurance, tax, and related services.

PRINCIPAL HOLDERS OF OUTSTANDING SHARES

As of January 31, 1999, the following persons owned 5% or more of the
Fund's outstanding shares of beneficial interest:

Class Name and Address Number of Percent
OF SHARES OF OWNER SHARES OF CLASS
- --------- ---------------- ---------- --------

<PAGE>

Core Equity *Bellewood Children's Fund, Inc. 249,198.12(1)(2) 63.3%
Fund Class A c/o Greg Mathews
11103 Park Road
Anchorage, KY 40223-2424

Morgan Keegan & Co. Inc. 57,136.36(1) 14.5%
50 North Front Street
Memphis, TN 38103

Core Equity Morgan Keegan & Co. Inc. 29,257.05(1) 17.0%
Fund Class C 50 North Front Street
Memphis, TN 38103

David E. Caywood, TTEE 15,038.77(1)(2) 8.7%
David E. Caywood Pension Plan
100 N. Main Building, Suite 2400
Memphis, TN 38103

Magnolia Provision Corp. PSP 9,580.54(1)(2) 5.5%
115 East Jackson Avenue
Knoxville, TN 37915

(1) Indicates owner of record.
(2) Indicates beneficial owner.

<PAGE>

is favored by other shareholders. A control person could also cause a change in
the investment adviser or subadviser of the Portfolio that is opposed by other
shareholders.

To the knowledge of the Trust, the shareholders listed above own shares for
investment purposes and have no known intention of exercising any control of the
Fund.

FINANCIAL STATEMENTS

Financial statements for Core Equity Fund and Growth Stock Portfolio are
presented on the following pages.

<PAGE>

THE FLEX-PARTNERS UTILITY GROWTH FUND
CROSS REFERENCE SHEET TO FORM N-1A

PART B.

ITEM NO. STATEMENT OF ADDITIONAL INFORMATION

10(a) Front Cover Page
10(b) Table of Contents

11 Description of the Trust

12(a) Description of the Trust
12(b)(c)(d)(e) Investment Policies and Limitations

13(a) Description of the Trust
Trustees and Officers
13(b)(c)(d) Trustees and Officers
13(e) The Distributor

14(a) Not applicable
14(b) Principal Holders of Outstanding Shares
14(c) Trustees and Officers

15(a) Investment Adviser and Manager
Investment Subadviser
15(b) The Distributor
15(c) Investment Adviser and Manager
Investment Subadviser
15(d) Contracts With Companies Affiliated With the Manager
15(e) Not applicable
15(f)(g) The Distributor
15(h) Contracts with Companies Affiliated With the Manager
Additional Information

16(a)(b)(c)(d) Portfolio Transactions
16(e) Not applicable

17(a) Description of the Trust
17(b) Not applicable

18(a) Additional Purchase and Redemption Information
Flex-Partners Retirement Plans
18(b) Not applicable
18(c) Valuation of Portfolio Securities
18(d) Description of the Trust

19 Distributions and Taxes

20(a)(b)(c) The Distributor

21(a) Not applicable
21(b) Performance

22 Financial Statements

<PAGE>

UTILITY GROWTH FUND
A FUND OF THE FLEX-PARTNERS TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999

This Statement is not a prospectus but should be read in conjunction with
the Prospectus of The Flex-Partners (dated April 30, 1999). Please retain this
document for future reference. A copy of the Prospectus may be obtained from The
Flex-Partners, 6000 Memorial Drive, Dublin, Ohio 43017 or by calling
1-800-494-3539. Capitalized terms used and not otherwise defined herein have the
same meanings as defined in the Prospectus.

Each share of Class A and Class C represents an identical legal interest in
the investment portfolio of the Fund and has the same rights, except that the
Class C shares bear the higher expenses of a distribution plan for such class
which will cause the Class C shares to have a higher expense ratio and to pay
lower dividends than the Class A shares. Each class will have exclusive voting
rights with respect to its distribution plan. Although the legal rights of
holders of Class A and Class C shares are identical, the different expenses
borne by each class will result in different net asset values and dividends. The
two classes also have different exchange privileges and Class C shares
purchased, or acquired through the reinvestment of dividends and distributions,
on or before April 30, 1999 have a conversion feature.

TABLE OF CONTENTS PAGE

Description of the Trust
Investment Policies and Limitations
Risk Considerations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
Investment Adviser and Manager
Investment Subadviser
Trustees and Officers
The Distributor
Flex-Partners Retirement Plans
Contracts With Companies Affiliated With the Manager
Additional Information
Principal Holders of Outstanding Shares
Financial Statements

INVESTMENT ADVISER INVESTMENT SUBADVISER
R. Meeder & Associates, Inc. Miller/Howard Investments, Inc.

DISTRIBUTOR TRANSFER AGENT
Adviser Dealer Services, Inc. Mutual Funds Service Co.

<PAGE>

DESCRIPTION OF THE TRUST

The Trust has not retained an investment adviser for the Utility Growth
Fund because the Trust seeks to achieve the investment objectives of the Fund by
investing the Fund's assets in its corresponding Portfolio. The Portfolio has
retained the services of R. Meeder & Associates, Inc. as investment adviser.

INVESTMENT STRUCTURE. Unlike other mutual funds which directly acquire and
manage their own portfolio of securities, the Utility Growth Fund seeks to
achieve its investment objectives by investing all of its assets in the
Utilities Stock Portfolio, a separate registered investment company with the
same investment objectives as the Fund. Therefore, an investor's interest in the
Portfolio's securities is indirect. In addition to selling a beneficial interest
to the Fund, the Portfolio may sell beneficial interests to other mutual funds
or investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to sell
their shares at the same public offering price as the Fund. Investors in the
Fund should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
by contacting the Trust by calling: 1-800-325-FLEX, or (614) 760-2159.

The Utilities Stock Portfolio is organized as a trust under the laws of the
State of New York. The Portfolio's Declaration of Trust provides that the Fund
and other entities investing in the Portfolio (e.g., other investment companies,
insurance company separate accounts, and common and commingled trust funds) will
each be liable for all obligations of the Portfolio. However, the risk of the
Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund's investing in the Portfolio. In addition,
whenever the Trust is requested to vote on matters pertaining to the fundamental
policies of the Portfolio, the Trust will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by the Fund's shareholders.

<PAGE>

may become less diverse, resulting in increased portfolio risk. (However, this
possibility also exists for traditionally structured funds that have large or
institutional investors.) Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Trust to withdraw the Fund's interest in the
Portfolio. Any such withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution from the Portfolio). If
such securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund.

<PAGE>

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the Portfolio's assets that may be invested in
any security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Portfolio's acquisition of such security or other asset.
Accordingly, any subsequent change in values, net assets or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations.

The Fund's fundamental investment limitations cannot be changed without
approval by a majority of the outstanding voting securities (as defined in the
Investment Company Act of 1940) of the Fund. However, except for the fundamental
investment limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental and
may be changed by the Trustees without shareholder approval. THE FOLLOWING ARE
THE PORTFOLIO'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY;
PROVIDED THAT NOTHING IN THE FOLLOWING INVESTMENT RESTRICTIONS WILL PREVENT THE
FUND FROM INVESTING ALL OR PART OF THE FUND'S ASSETS IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH THE SAME INVESTMENT OBJECTIVE AS THE FUND. THE FUND OR
THE PORTFOLIO MAY NOT

(1) with respect to 75% of the Portfolio's total assets, purchase the
securities of any issuer (other than obligations issued or guaranteed by the
government of the United States or any of its agencies or instrumentalities) if,
as a result thereof, (a) more than 5% of the Portfolio's total assets would be
invested in the securities of such issuer or (b) the Fund would hold more than
10% of the voting securities of such issuer;

(2) issue senior securities except as permitted under the Investment
Company Act of 1940;

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(3) borrow money except that the Portfolio may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33-1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with the 33-1/3% limitation;

(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or instrumentalities)
if, as a result, more than 25% of the Portfolio's total assets would be invested
in the securities of companies whose principal business activities are in the
same industry except that the Portfolio, under normal circumstances, will invest
more than 25% of its total assets in securities of public utility companies;

(8) lend any security or make any other loan if, as a result, more than
33-1/3% of its total assets would be lent to other parties (but this limitation
does not apply to purchases of debt securities or to repurchase agreements).

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend to sell securities short unless
it owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short and provided that transactions in futures contracts
and options are not deemed to constitute selling securities short.

(ii) The Portfolio does not currently intend to purchase securities on
margin except that the Fund may obtain such short-term credits as are necessary
for the clearance of transactions and provided that margin payments in
connection with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.

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(iii) The Portfolio may borrow money only (a) from a bank, or from a
registered investment company for which the Manager serves as investment adviser
if an applicable exemptive order has been granted or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements are treated
as borrowings for purposes of fundamental investment limitation (3)). The
Portfolio will not purchase any security while borrowings representing more than
5% of its total assets are outstanding. The Portfolio will not borrow from other
funds advised by the Manager if total outstanding borrowings immediately after
such borrowing would exceed 15% of the Portfolio's total assets.

(iv) The Portfolio does not currently intend to purchase any security if,
as a result more than 10% of its net assets would be invested in securities that
are deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued, including repurchase agreements with remaining maturities in excess of
seven days or securities without readily available market quotes.

(v) The Portfolio does not currently intend to invest in securities of real
estate investment trusts that are not readily marketable or to invest in
securities of real estate limited partnerships that are not listed on the New
York Stock Exchange or the American Stock Exchange or traded on the NASDAQ
National Market System.

(vi) The Portfolio does not currently intend to lend assets other than
securities to other parties except by (a) lending money (up to 5% of the
Portfolio's net assets) to a registered investment company for which the Manager
serves as investment adviser or (b) acquiring loans, loan participations, or
other forms of direct debt instruments and in connection therewith assuming any
associated unfunded commitments of the sellers. (This limitation does not apply
to purchases or debt securities or to repurchase agreements.)

(vii) The Portfolio does not currently intend to purchase securities of
other investment companies.

This limitation does not apply to securities received as dividends, through
offers of exchange, or as a result of reorganization, consolidation, or merger.

(viii) The Portfolio does not currently intend to purchase the securities
of any issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5% of
its total assets would be invested in the securities of business enterprises
that, including predecessors, have a record of less than three years of
continuous operation.

(ix) The Portfolio does not currently intend to purchase warrants, valued
at the lower of cost or market, in excess of 5% of the Portfolio's net assets.
Included in that amount, but not to exceed 2% of the Portfolio's net assets, may

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be warrants that are not listed on the New York Stock Exchange or the American
Stock Exchange. Warrants acquired by the Portfolio in units or attached to
securities are not subject to these restrictions.

(x) The Portfolio does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.

(xi) The Portfolio does not currently intend to purchase the securities of
any issuer if those officers and Trustees of the Trust and those officers and
directors of the Manager or the Subadviser who individually own more than 1/2 of
1% of the securities of such issuer, together own more than 5% of such issuer's
securities.

(xii) The Portfolio does not currently intend to invest in electric
utilities whose generation of power is derived from nuclear reactors.

For the Portfolio's limitations on futures and options transactions, see
the section entitled "Limitations on Futures and Options Transactions" beginning
on page 17. For the Portfolio's limitations on short sales, see the section
entitled "Short Sales" on page 23.

MONEY MARKET INSTRUMENTS. When investing in money market instruments, the
Portfolio will limit its purchases, denominated in U.S. dollars, to the
following securities.

* U.S. Government Securities and Securities of its Agencies and
Instrumentalities - obligations issued or guaranteed as to principal
or interest by the United States or its agencies (such as the Export
Import Bank of the United States, Federal Housing Administration, and
Government National Mortgage Association) or its instrumentalities
(such as the Federal Home Loan Bank, Federal Intermediate Credit Banks
and Federal Land Bank), including Treasury bills, notes and bonds.

* Bank Obligations and Instruments Secured Thereby - obligations
including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of $1,000,000,000
or more, instruments secured by such obligations and obligations of
foreign branches of such banks, if the domestic parent bank is
unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may
also invest in obligations (including certificates of deposit and
bankers acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more if the domestic branch is subject to
the same regulation as United States banks. The Portfolio will not
invest at time of purchase more than 25% of its assets in obligations
of banks nor will the Portfolio invest more than 10% of its assets in
time deposits.

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* High quality Commercial Paper - The Portfolio may invest in commercial
paper rated no lower than A-2 by Standard & Poor's Corporation or
Prime-2 by Moody's Investors Services Inc. or, if not rated, issued by
a company having an outstanding debt issue rated at least A by
Standard & Poor's or Moody's.

* Private Placement Commercial Paper - Private placement commercial
paper consists of unregistered securities which are traded in public
markets to qualified institutional investors such as the Portfolio.
The Portfolio's risk is that the universe of potential buyers for the
securities should the Portfolio desire to liquidate a position is
limited to qualified dealers and institutions and therefore such
securities could have the effect of being illiquid.

* High Grade Corporate Obligations - obligations rated at least A by
Standard & Poor's or Moody's. See rating information below.

* Repurchase Agreements -- See Repurchase Agreements below.

The Subadviser exercises due care in the selection of money market
instruments. However, there is a risk that the issuers of the securities may not
be able to meet their obligations to pay interest or principal when due. There
is also a risk that some of the Portfolio's securities might have to be
liquidated prior to maturity at a price less than original amortized cost or
value face amount or maturity value to meet larger than expected redemptions.
Any of these risks if encountered could cause a reduction in net income or in
the net asset value of the Portfolio.

RATINGS

1. Moody's Investors Services Inc.'s Corporate Bond Rating:

Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

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A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

2. Standard and Poor's Corporation's Corporate Bond Rating:

AAA- Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they move
with interest rates and hence provide the maximum safety on all counts.

AA - Bonds rated AA also qualify as high grade obligations and in the
majority of instances differ from AAA issues only in small degree. Here too
prices move with the long-term money market.

BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.

3. A-1 and P-1 Commercial Paper Ratings:

Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated A or better. The issuer has access
to at least two additional channels of borrowing. Basic earnings and cash flow
have an upward trend. Typically the issuer's industry is well established and
the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1 A-2 or
A-3.

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The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.

4. Description of Permitted Money Market Investments:

Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short term credit needs.

U.S. Government Obligations - are bills, certificates of indebtedness,
notes and bonds issued by the U.S. Treasury and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, as in the case of
Federal Farm Credit Banks and Federal National Mortgage Association; and others
only by the credit of the agency authority or instrumentality; as for example,
Federal Home Loan Mortgage and Federal Home Loan Bank.

Repurchase Agreements - See Repurchase Agreements below.

Certificates of Deposit - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified or variable rate
of return, and are normally negotiable.

Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed accepted when
a bank guarantees their payment at maturity. Corporate Obligations - include
bonds and notes issued by corporations in order to finance longer term credit
needs.

<PAGE>

any demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Portfolio's rights and
obligations relating to the investment). Investments currently considered by the
Portfolio to be illiquid include repurchase agreements not entitling the holder
to payment of principal and interest within seven days, over-the-counter options
and non-government stripped fixed-rate mortgage-backed securities. Also, the
Subadviser may determine some restricted securities, government-stripped
fixed-rate mortgage-backed securities, loans and other direct debt instruments
and swap agreements to be illiquid. However, with respect to over-the-counter
options, the Portfolio writes all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the option and
the nature and terms of any agreement the Portfolio may have to close out the
option before expiration. In the absence of market quotations, illiquid
investments are priced at fair value as determined in good faith by the Board of
Trustees. If through a change in values, net assets or other circumstances, the
Portfolio were in a position where more than 10% of its net assets were invested
in illiquid securities, it would seek to take appropriate steps to protect
liquidity.

RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions pursuant to an exemption from registration under the Securities Act
of 1933 or in a registered public offering. Where registration is required, the
Portfolio may be obligated to pay all or part of the registration expense, and a
considerable period may elapse between the time it decides to seek registration
and the time the Portfolio may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the Portfolio might obtain a less favorable price
than prevailed when it decided to seek registration of the security.

REPURCHASE AGREEMENTS. In a repurchase agreement, the Portfolio purchases a
security and simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date within a number of days from the date
of purchase. The resale price reflects the purchase price plus an agreed upon
incremental amount which is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed upon price which obligation is in effect secured by the value
(at least equal to the amount of the agreed upon resale price and marked to
market daily) of the underlying security. The Portfolio may engage in repurchase
agreements with respect to any security in which it is authorized to invest.

The Portfolio's repurchase agreements will at all times be fully
collateralized in an amount at least equal to the purchase price, including
accrued interest earned on the underlying securities. The instruments held as
collateral are valued daily, and as the value of instruments declines, the
Portfolio will require additional collateral. If the seller defaults or becomes
insolvent and the value of the collateral securing the repurchase agreement
declines, the Portfolio may incur a loss.

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REVERSE REPURCHASE AGREEMENTS In a reverse repurchase agreement, a
Portfolio sells a portfolio instrument to another party, such as a bank or
broker-dealer, in return for cash and agrees to repurchase the instrument at a
particular price and time. While a reverse repurchase agreement is outstanding,
the Portfolio will maintain appropriate liquid assets in a segregated custodian
account to cover its obligation under the agreement. The Portfolio will enter
into reverse repurchase agreements only with parties whose creditworthiness has
been found satisfactory by the Subadviser. Such transactions may increase
fluctuations in the market value of the Portfolio's assets and may be viewed as
a form of leverage.

SECURITIES LENDING. The Portfolio may lend securities to parties such as
broker-dealers or institutional investors.

During the time portfolio securities are on loan, the borrower will pay the
Portfolio an amount equivalent to any dividend or interest paid on such
securities and earn additional income, or the Portfolio may receive an
agreed-upon amount of interest income from the borrower. In accordance with
applicable regulatory requirements, the Portfolio may lend up to 30% of the
value of its total assets. The risks in lending portfolio securities, as well as
with other extensions of secured credit, consist of possible delay in receiving
additional collateral or in recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially.

Securities lending allows the Portfolio to retain ownership of the
securities loaned and, at the same time, to earn additional income. Since there
may be delays in the recovery of loaned securities or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be made
only to parties deemed by the Subadviser to be of good standing. Furthermore,
they will only be made if in the Subadviser s judgment the consideration to be
earned from such loans would justify the risk.

The Subadviser understands that it is the current view of the SEC Staff
that the Portfolio may engage in loan transactions only under the following
conditions: (1) the Portfolio must receive 100% collateral in the form of cash
or cash equivalents (e.g. U.S. Treasury bills or notes) from the borrower; (2)
the borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Portfolio must be able to terminate the
loan at any time; (4) the Portfolio must receive reasonable interest on the loan
or a flat fee from the borrower, as well as amounts equivalent to any dividends,
interest or other distributions on the securities loaned and to any increase in
market value; (5) the Portfolio may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Trustees must be able to vote
proxies on the securities loaned, either by terminating the loan or by entering
into an alternative arrangement with the borrower.

<PAGE>

Cash received through loan transactions may be invested in any security in
which the Portfolio is authorized to invest. Investing this cash subjects that
investment as well as the security loaned to market forces (i.e. capital
appreciation or depreciation).

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase or
sell securities on a when-issued or delayed delivery basis. When-issued or
delayed delivery transactions arise when securities are purchased or sold by the
Portfolio with payment and delivery taking place as much as a month or more in
the future in order to secure what is considered to be an advantageous price and
yield to the Portfolio at the time of entering into the transaction. The
Portfolio's Custodian will maintain, in a segregated account of the Portfolio,
cash, U.S. Government securities or other liquid high-grade debt obligations
having a value equal to or greater than the Portfolio's purchase commitments;
the Custodian will likewise segregate securities sold on a delayed delivery
basis. The securities so purchased are subject to market fluctuation and no
interest accrues to the purchaser during the period between purchase and
settlement. At the time of delivery of the securities the value may be more or
less than the purchase price and an increase in the percentage of the
Portfolio's assets committed to the purchase of securities on a when-issued or
delayed delivery basis may increase the volatility of the Portfolio's net asset
value.

FOREIGN INVESTMENTS. Foreign investments can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies and of dividends and interest
from such securities can change significantly when foreign currencies strengthen
or weaken relative to the U.S. dollar. Foreign securities markets generally have
less trading volume and less liquidity than U.S. markets, and prices on some
foreign markets can be highly volatile.

Many foreign countries lack uniform accounting and disclosure standards
comparable to those applicable to U.S. companies, and it may be more difficult
to obtain reliable information regarding an issuer's financial condition and
operations.

In addition, the costs of foreign investing, including withholding taxes,
brokerage commissions, and custodial costs, are generally higher than for U.S.
investments.

Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.

<PAGE>

Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that the Subadviser will be able
to anticipate or counter these potential events.

The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.

The Portfolio may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid than
foreign securities of the same class that are not subject to such restrictions.

American Depository Receipts and European Depository Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
corporation held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.

<PAGE>

The Portfolio expects that any gain or loss on hedging transactions will be
substantially offset by any gain or loss on the securities underlying the
contracts or being considered for purchase. There can be no guarantee that the
Portfolio will be able to realize this objective, and there are some risks in
utilizing a hedging strategy.

FOREIGN CURRENCY TRANSACTIONS. The Portfolio may hold foreign currency
deposits from time to time and may convert dollars and foreign currencies in the
foreign exchange markets. Currency conversion involves dealer spreads and other
costs although commissions usually are not charged. Currencies may be exchanged
on a spot (i.e., cash) basis, or by entering into forward contracts to purchase
or sell foreign currencies at a future date and price. Forward contracts
generally are traded in an interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. The parties to a
forward contract may agree to offset or terminate the contract before its
maturity or may hold the contract to maturity and complete the contemplated
currency exchange.

The Portfolio may use currency forward contracts to manage currency risks
and to facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Portfolio.

In connection with purchases and sales of securities denominated in foreign
currencies, the Portfolio may enter into currency forward contracts to fix a
definite price for the purchase or sale in advance of the trade's settlement
date. This technique is sometimes referred to as a settlement hedge or
transaction hedge.

The Subadviser expects to enter into settlement hedges in the normal course
of managing the Portfolio's foreign investments. The Portfolio could also enter
into forward contracts to purchase or sell a foreign currency in anticipation of
future purchases or sales of securities denominated in foreign currency even if
the specific investments have not yet been selected by the Subadviser.

The Portfolio may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if the Portfolio owned securities denominated in pounds sterling, it could enter
into a forward contract to sell pounds sterling in return for U.S. dollars to
hedge against possible declines in the pound's value. Such a hedge sometimes
referred to as a "position hedge," would tend to offset both positive and

<PAGE>

negative currency fluctuations but would not offset changes in security values
caused by other factors. The Portfolio could also hedge the position by selling
another currency expected to perform similarly to the pound sterling - for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge sometimes referred
to as a "proxy hedge," could offer advantages in terms of cost, yield, or
efficiency, but generally would not hedge currency exposure as effectively as a
simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.

Under certain conditions, SEC guidelines require mutual funds to set aside
cash and appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC guidelines, the Portfolio will
segregate assets to cover currency forward contracts, if any, whose purpose is
essentially speculative. The Portfolio will not segregate assets to cover
forward contracts entered into for hedging purposes, including settlement hedges
position hedges and proxy hedges.

Successful use of forward currency contracts will depend on the
Subadviser's skill in analyzing and predicting currency values. Forward
contracts may substantially change the Portfolio's investment exposure to
changes in currency exchange rates and could result in losses to the Portfolio
if currencies do not perform as the Subadviser anticipates. For example, if a
currency's value rose at a time when the Subadviser had hedged the Portfolio by
selling that currency in exchange for dollars, the Portfolio would be unable to
participate in the currency's appreciation. If the Subadviser hedges currency
exposure through proxy hedges, the Portfolio could realize currency losses from
the hedge and the security position at the same time if the two currencies do
not move in tandem. Similarly, if the Subadviser increases the Portfolio's
exposure to a foreign currency and that currency's value declines, the Portfolio
will realize a loss. There is no assurance that the Subadviser's use of forward
currency contracts will be advantageous to the Portfolio or that it will hedge
at an appropriate time. The policies described in this section are
non-fundamental policies of the Portfolio.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Portfolio will not:
(a) sell futures contracts, purchase put options or write call options if, as a
result, more than 50% of the Portfolio's total assets would be hedged with
futures and options under normal conditions; (b) purchase futures contracts or
write put options if, as a result, the Portfolio's total obligations upon
settlement or exercise of purchased futures contracts and written put options
would exceed 25% of its total assets; or (c) purchase call options if, as a
result, the current value of option premiums for call options purchased by the
Portfolio would exceed 5% of the Portfolio's total assets. These limitations do
not apply to options attached to or acquired or traded together with their
underlying securities, and do not apply to securities that incorporate features
similar to options.

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The above limitations on the Portfolio's investments in futures contracts
and options and the Portfolio's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information may be changed
as regulatory agencies permit.

Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities prices, such as the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). Futures can be held until their delivery dates or can be closed
out before then if a liquid secondary market is available.

<PAGE>

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Portfolio
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Portfolio pays
the current market price for the option (known as the option premium). Options
have various types of underlying instruments, including specific securities,
indices of securities prices and futures contracts. The Portfolio may terminate
its position in a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the Fund will lose
the entire premium it paid. If the Portfolio exercises the option, it completes
the sale of the underlying instrument at the strike price. The Portfolio may
also terminate a put option position by closing it out in the secondary market
at its current price, if a liquid secondary market exists.

The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium paid, plus related
transaction costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price.

A call buyer typically attempts to participate in potential price increases
of the underlying instrument with risk limited to the cost of the option if
security prices fall. At the same time, the buyer can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.

WRITING PUT AND CALL OPTIONS. When the Portfolio writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium the Portfolio assumes the obligation to pay
the strike price for the option's underlying instrument if the other party to

<PAGE>

the option chooses to exercise it. When writing an option on a futures contract
the Portfolio will be required to make margin payments to an FCM as described
above for futures contracts. The Portfolio may seek to terminate its position in
a put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not liquid for
a put option the Portfolio has written, however, the Portfolio must continue to
be prepared to pay the strike price while the option is outstanding, regardless
of price changes and must continue to set aside assets to cover its position.

When the Portfolio writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Portfolio assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract the Portfolio will be required to
make margin payments to an FCM as described above for futures contracts. The
Portfolio may seek to terminate its position in a put option it writes before
exercise by closing out the option in the secondary market at its current price.
If the secondary market is not liquid for a put option the Portfolio has
written, however, the Portfolio must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.

If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer will
also profit because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This loss
should be less than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should mitigate the
effects of the decline.

Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument in return for the strike price, upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

The Portfolio may write only "covered" call options. An option written on a
security or currency is "covered" when, so long as the Portfolio is obligated
under the option, it owns the underlying security or currency. The Portfolio
will "cover" stock index options and options on futures contracts it writes by
maintaining in a segregated account either marketable securities, which in the
Subadviser's judgment correlate to the underlying index or futures contract or
an amount of cash, U.S. government securities or other liquid, high grade debt
securities equal in value to the amount the Portfolio would be required to pay
were the option exercised.

<PAGE>

COMBINED POSITIONS. The Portfolio may purchase and write options in
combination with each other or in combination with futures or forward contracts,
to adjust the risk and return characteristics of the overall position. For
example, the Portfolio may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose risk
and return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.

CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Portfolio's current or
anticipated investments exactly. The Portfolio may invest in options and futures
contracts based on securities with different issuers, maturities or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Portfolio's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments even if the underlying instruments match the Portfolio's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts.

The Fund may purchase or sell options and futures contracts with a greater
or lesser value than the securities it wishes to hedge or intends to purchase in
order to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in all cases.
If price changes in the Portfolio's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.

<PAGE>

price moves upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the Portfolio to enter into new positions or
close out existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and potentially could require the
Portfolio to continue to hold a position until delivery or expiration regardless
of changes in its value. As a result, the Portfolio's access to other assets
held to cover its options or futures positions could also be impaired.

OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and strike
price, the terms of over-the-counter options (options not traded on exchanges)
generally are established through negotiation with the other party to the option
contract. While this type of arrangement allows the Portfolio greater
flexibility to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.

OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. Currency futures
contracts are similar to forward currency exchange contracts, except that they
are traded on exchanges (and have margin requirements) and are standardized as
to contract size and delivery date. Most currency futures contracts call for
payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract. The purchaser of a
currency call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying currency.

The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The Portfolio
may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign currencies.
The Portfolio may also purchase and write currency options in conjunction with
each other or with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but may not
reflect other factors that affect the value of the Fund's investments. A
currency hedge, for example, should protect a Yen-denominated security from a
decline in the Yen, but will not protect the Portfolio against a price decline
resulting from deterioration in the issuer's creditworthiness. Because the value
of the Portfolio's foreign-denominated investments changes in response to many
factors other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Portfolio's investments exactly
over time.

<PAGE>

futures or option strategy is outstanding, unless they are replaced with other
suitable assets. As a result, there is a possibility that segregation of a large
percentage of the Portfolio's assets could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations.

SHORT SALES. The Portfolio may enter into short sales with respect to
stocks underlying its convertible security holdings. For example, if the
Subadviser anticipates a decline in the price of the stock underlying a
convertible security the Portfolio holds, it may sell the stock short. If the
stock price subsequently declines, the proceeds of the short sale could be
expected to offset all or a portion of the effect of the stock's decline on the
value of the convertible security. The Fund currently intends to hedge no more
than 15% of its total assets with short sales on equity securities underlying
its convertible security holdings under normal circumstances.

When the Portfolio enters into a short sale, it will be required to set
aside securities equivalent in kind and amount to those sold short (or
securities convertible or exchangeable into such securities) and will be
required to continue to hold them while the short sale is outstanding. The
Portfolio will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.

SOCIAL INVESTMENT POLICY. The Fund offers investors the opportunity for
capital appreciation, current income, and growth of income, in environmentally
and socially preferable equity investment strategies. The Fund provides a unique
opportunity to be involved in the equity market without being involved in many
areas of the economy that may be objectionable to an investor. The Portfolio
combines carefully selected and screened portfolios with positive social action
on policy issues through proxy voting and shareholder advocacy.

STOCK SELECTION PROCESS. The Subadviser makes use of third party research
from sources such as Investor Responsibility Resource Center (IRRC), the Council
on Economic Priorities (CEP), Franklin Research and Development Corp., Kinder,
Lyndenberg, and Domini, Value Line, and the internet to develop an overall
social profile and screen companies that meet its financial criteria, paying
particular attention to the following:

EXCLUSIONARY SCREENS

TOBACCO/ALCOHOL/GAMBLING/FIREARMS. The Portfolio is free from companies
with primary or subsidiary businesses involved in the alcohol, tobacco, gambling
and firearms industries.

<PAGE>

WEAPONS/MILITARISM. None of the companies in the Portfolio has a primary
involvement in the defense industry, and companies with greater than three
percent dependence on revenues from weapons production will be screened out.

NUCLEAR POWER. The Portfolio will not invest in any company involved in
nuclear power production. If a company merges with, acquires or is acquired by a
company that is involved in nuclear power production, the Portfolio will divest.

ANIMAL TESTING. The Portfolio will not invest in any company involved in
animal testing or animal usury.

EQUAL EMPLOYMENT OPPORTUNITY/LABOR ISSUES. The Portfolio is committed to
promoting workplace diversity (see section on proxy voting/shareholder
activism). If a company has unremediated or egregious problems in the area of
Equal Employment Opportunity (such as discrimination or harassment), Workplace
Safety (such as OSHA safety violations), or Union/Labor Issues (such as WARN act
violations), the fund will either divest or participate in shareholder action in
an attempt to work with the company to address the issues.

THE ENVIRONMENT. Excluding companies involved in nuclear power generation
is not the only positive environmental feature of the Fund.

The investment portfolio typically invests across all the essential service
areas: telephone, electric, water, and natural gas. Consideration is given to
natural gas not only because it's an environmentally preferable alternative
fuel, but because the industry shows tremendous potential as an area of growth.
In addition, the Portfolio seeks to invest in companies involved in energy
production from renewable and alternative resources, whenever such investments
are in keeping with the financial objectives and liquidity concerns of the
strategy.

The Portfolio seeks to exclude companies that have a history of
environmental negligence or a pattern of violation of environmental regulations.
If a company has unremediated or egregious problems in the area of environmental
performance, the Subadviser will either divest or participate in shareholder
action in an attempt to work with the company to address the issues.

INTERNATIONAL LABOR ISSUES. Sweatshop operations and slave labor are other
potential areas of concern. If these issues exist at companies the Portfolio
invests in, the Subadviser will work to open dialogue in an attempt to encourage
the company to adopt comprehensive supplier standards.

In the case of companies with Maquiladora operations, the Subadviser will
work to encourage the company to address any environmental problems or labor
related issues, such as below subsistence wages or unsafe working conditions.

<PAGE>

SHAREHOLDER ADVOCACY/PROXY VOTING GUIDELINES. Socially responsible
investing is a complex process involving education and choice. All companies
have the potential to improve their performance in a number of areas that affect
the environment and quality of life. Investors have an opportunity to engage
corporate management in dialogue about issues that are of concern to them.

Proxy voting is one of the best ways for an investor to communicate support
or disagreement with management policy. The Subadviser votes proxies on a case
by case basis, but will generally vote with management on most standard business
issues such as the appointment of independent auditors and the election of board
directors. In cases where a company's board lacks representation of women and
minorities, the Subadviser will vote against the board and send a letter to
management explaining their position and encourage diversity on the board.

In addition to the "standard" issues placed on the ballot by management,
there may be a number of other important issues put forward by shareholders for
inclusion on the ballot in the form of shareholder resolutions. Shareholder
resolutions can cover a wide range of issues, such as workplace diversity,
militarism, labor relations, and the environment. The primary goal of the
resolution process is not a vote, but to engage the company in a dialogue on an
issues. These resolutions are filed well in advance of the annual meeting, and
if dialogue with the company is fruitful, the filers may withdraw the resolution
before it even comes to a vote.

The Subadviser is an associate member of the Interfaith Center on Corporate
Responsibility (ICCR), and makes use of information from ICCR as well as
research from Investor Responsibility Resource Center (IRRC) to keep track of
resolutions as they are filed. When a resolution is filed on an issue of concern
for the Portfolio, a letter is sent to the company echoing the concern of the
filers and encouraging the company to enter a dialogue on the subject. In
addition, the Subadviser co-files resolutions on issues such as the
implementation of the Coalition for Environmentally Responsible Economies
(CERES) principles (1997: Enron Corporation, U.S. West, Inc.) and foreign
military sales reporting (1997: GTE Corporation).

The Subadviser will likely support and vote for resolutions such as those
requesting reports on workplace diversity, the implementation of the CERES
principles, reports on foreign military sales, implementation of the MacBride
principles, shareholder approval of golden parachute plans and other social and
environmental issues. When a vote on such a resolution is made, a position
letter is sent to management, in an effort to re-enforce the importance of the
issues, and to urge a greater level of management awareness.

PORTFOLIO TURNOVER. The portfolio turnover rate for 1998 was 51% (41% in
1997). The Subadviser expects the annual portfolio turnover rate will be 60% or
less. The portfolio turnover rate is calculated by dividing the lesser of sales
or purchases of portfolio securities by the average monthly value of the
Portfolio's securities, excluding securities having a maturity at the date of
purchase of one year or less.

<PAGE>

The portfolio turnover rate is calculated by dividing the lesser of sales
or purchases of portfolio securities by the average monthly value of the
Portfolio's securities, excluding securities having a maturity at the date of
purchase of one year or less.

Because the Subadviser may employ flexible defensive investment strategies
when market trends are not considered favorable, the Subadviser may occasionally
change the entire portfolio in the Portfolio. High transaction costs could
result when compared with other funds. Trading may also result in realization of
net short-term capital gains upon which shareholders may be taxed at ordinary
tax rates when distributed from a Fund. This defensive investment strategy can
produce high portfolio turnover ratios when calculated in accordance with SEC
rules. High portfolio turnover may involve correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
Portfolio.

RISK CONSIDERATIONS

By itself, the Utilities Stock Portfolio does not constitute a balanced
investment plan. Changes in interest rates may affect the value of the Utilities
Stock Portfolio's investments, and rising interest rates can be expected to
reduce the Utilities Stock Portfolio's net asset value. The Utility Growth
Fund's share price and total return fluctuate and your investment may be worth
more or less than your original cost when you redeem your shares.

Because the Utilities Stock Portfolio concentrates its investments in
public utility companies, its performance will depend in large part on
conditions in the public utility industries. Utility stocks have traditionally
been popular among more conservative stock market investors because they have
generally paid above average dividends. However, utility stocks can still be
affected by the risks of the stock market, as well as factors specific to public
utility companies.

Governmental regulation of public utility companies can limit their ability
to expand their business or to pass cost increases on to customers. Companies
providing power or energy-related services may also be affected by fuel
shortages or cost increases, environmental protection or energy conservation
regulations, as well as fluctuating demand for their services. Some public
utility companies are facing increased competition, which may reduce their
profits. All of these factors are subject to rapid change, which may affect
utility companies independently from the stock market as a whole.

In seeking its investment objectives, the Utilities Stock Portfolio may
invest in securities of foreign issuers. Foreign securities may involve a higher
degree of risk and may be less liquid or more volatile than domestic

<PAGE>

investments. Foreign securities usually are denominated in foreign currencies,
which means their value will be affected by changes in the strength of foreign
currencies relative to the U.S. dollar as well as the other factors that affect
security prices. Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there often is less
publicly available information about their operations. Generally, there is less
governmental regulation of foreign securities markets, and security trading
practices abroad may offer less protection to investors such as the Utilities
Stock Portfolio.

The value of such investments may be adversely affected by changes in
political or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of portfolios or
assets, or imposition of (or change in) exchange control or tax regulations in
those foreign countries. Additional risks of foreign securities include
settlement delays and costs, difficulties in obtaining and enforcing judgments,
and taxation of dividends at the source of payment.

The Subadviser intends to manage the Utilities Stock Portfolio actively in
pursuit of its investment objective. The Utilities Stock Portfolio does not
expect to trade in securities for short-term profits but, when circumstances
warrant, securities may be sold without regard to the length of time held.

PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolio by the Subadviser pursuant to authority contained in the
investment advisory agreement and investment subadvisory agreement. The
Subadviser is also responsible for the placement of transaction orders for
accounts for which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, the Subadviser considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer firm- the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions, and arrangements for payment of Portfolio
expenses.

The Fund's brokerage transactions involving securities of companies
headquartered in countries other than the United States will be conducted
primarily on the markets and principal exchanges of such countries. Foreign
markets are generally not as developed as those located in the United States,
which may result in higher transaction costs, delayed settlement and less
liquidity for trades effected in foreign markets. Transactions on foreign
exchanges are usually subject to fixed commissions that generally are higher
than negotiated commissions on U.S. transactions. There is generally less
government supervision and regulation of exchanges and brokers in foreign
countries than in the United States.

<PAGE>

The Portfolio may execute portfolio transactions with broker-dealers who
provide research and execution services to the Portfolio or other accounts over
which the Subadviser or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the advisability
of investing in purchasing or selling securities; the availability of securities
or the purchasers or sellers of securities; furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The selection of such broker-dealers generally is made by the
Subadviser (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by the
Subadviser's investment staff based upon the quality of research and execution
services provided.

The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolio may be useful to the Subadviser in rendering investment
management services to the Portfolio or its other clients, and conversely, such
research provided by broker-dealers who have executed transaction orders on
behalf of other Subadviser clients may be useful to the Subadviser in carrying
out its obligations to the Portfolio. The receipt of such research is not
expected to reduce the Subadviser's normal independent research activities;
however, it enables the Subadviser to avoid the additional expenses that could
be incurred if the Subadviser tried to develop comparable information through
its own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, the Subadviser must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers,
viewed in terms of a particular transaction or the Subadviser`s overall
responsibilities to the Portfolio and its other clients. In reaching this
determination, the Subadviser will not attempt to place a specific dollar value
on the brokerage and research services provided or to determine what portion of
the compensation should be related to those services.

The Subadviser is authorized to use research services provided by and to
place portfolio transactions with brokerage firms that have provided assistance
in the distribution of shares of the Fund or shares of other Flex-Partners'
funds or Flex-funds' funds to the extent permitted by law.

The Subadviser may allocate brokerage transactions to broker-dealers who
have entered into arrangements with the Subadviser under which the broker-dealer
allocates a portion of the commissions paid by the Portfolio toward payment of
the Portfolio's or the Fund's expenses, such as transfer agent fees of Mutual
Funds Service Co. or custodian fees. The transaction quality must, however, be
comparable to those of other qualified broker-dealers. For the year ended
December 31, 1998, directed brokerage payments of $2,246 were made to reduce
expenses of the Portfolio ($3,934 in 1997; $3,377 in 1996).

<PAGE>

The Trustees of the Portfolio periodically review the Subadviser's
performance of its responsibilities in connection with the placement of
portfolio transactions on behalf of the Portfolio and review the commissions
paid by the Portfolio over representative periods of time to determine if they
are reasonable in relation to the benefits to the Portfolio.

When two or more portfolios are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the portfolios involved to be
equitable to each portfolio. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Portfolio is
concerned. In other cases, however, the ability of the Portfolio to participate
in volume transactions will produce better executions and prices for the
Portfolio. It is the current opinion of the Trustees of the Portfolio that the
desirability of retaining the Manager as investment adviser to the Portfolio
outweighs any disadvantages that may be said to exist from exposure to
simultaneous transactions.

The Portfolio may effect transactions in its portfolio securities on
securities exchanges on a non-exclusive basis through Adviser Dealer Services,
Inc. (the "Distributor") in its capacity as a broker-dealer.

During the year ended December 31, 1998, the Utilities Stock Portfolio paid
total commissions of $31,922 ($15,202 in 1997; $13,594 in 1996) on the purchase
and sale of portfolio securities.

<PAGE>

VALUATION OF PORTFOLIO SECURITIES

Portfolio securities are valued by various methods depending on the primary
market or exchange on which they trade. Equity securities for which the primary
market is the U.S. are valued at last sale price or, if no sale has occurred, at
the closing bid price. Equity securities for which the primary market is outside
the U.S. are valued using the official closing price or the last sale price in
the principal market where they are traded. If the last sale price (on the local
exchange) is unavailable, the last evaluated quote or last bid price is normally
used. Short-term securities are valued either at amortized cost or at original
cost plus accrued interest, both of which approximate current value. Fixed
income securities are valued primarily by a pricing service that uses direct
exchange quotes and a vendor security valuation matrix which incorporates both
dealer-supplied valuations and electronic data processing techniques.

This twofold approach is believed to more accurately reflect fair value
because it takes into account appropriate factors such as institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data, without exclusive
reliance upon quoted, exchange, or over-the-counter prices.

Generally, the valuation of foreign and domestic equity securities, as well
as corporate bonds, U.S. government securities, money market instruments, and
repurchase agreements, is substantially completed each day at the close of the
New York Stock Exchange (NYSE).

The values of any such securities held by the Portfolio are determined as
of such time for the purpose of computing the Portfolio's net asset value.
Foreign security prices are furnished by independent brokers or quotation
services which express the value of securities in their local currency. The
Manager gathers all exchange rates daily at the close of the NYSE using the last
quoted price on the local currency and then translates the value of foreign
securities from their local currency into U.S. dollars. Any changes in the value
of forward contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of net asset value. If an extraordinary event that
is expected to materially affect the value of a portfolio security occurs after
the close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by the Board of Trustees.

<PAGE>

PERFORMANCE

The Fund may quote its performance in various ways. All performance
information supplied by the Fund in advertising is historical and is not
intended to indicate future returns. The Fund's share price and total returns
fluctuate in response to market conditions and other factors, and the value of
Fund shares when redeemed may be more or less than their original cost.

While average annual returns are a convenient means of comparing investment
alternatives, investors should realize that the Fund's performance is not
constant over time but changes from year to year, and that average annual
returns represent averaged figures as opposed to the actual year-to-year
performance of the Fund. Unlike some bank deposits or other investments which
pay a fixed yield for a stated period of time, the total return of the Fund will
vary depending upon interest rates, the current market value of the securities
held by the Utilities Stock Portfolio and changes in the Fund's expenses. In
addition, during certain periods for which total return quotations may be
provided, the Manager may have voluntarily agreed to waive portions of its fees
or reimburse Fund expenses on a month-to-month basis. Such waivers and
reimbursements will have the effect of increasing the Fund's net income (and
therefore its total return) during the period such waivers and reimbursements
are in effect.

Below are examples of the total return calculation for Utility Growth Fund
(Class A shares and Class C shares) assuming a hypothetical investment of $1,000
at the beginning of each period.

P(1+T)n = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the end of the base period

UTILITY GROWTH FUND (CLASS A SHARES):

TOTAL RETURN

Since Inception
1 Year (July 11, 1995)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998

Value of Account
At end of Period $ 1,021.13 $1,699.81

Value of Account
At beginning of Period 1,000.00 1,000.00
---------- ---------

Base Period Return $ 21.13 $ 699.81

Total Return 2.11% 16.50%

UTILITY GROWTH FUND (CLASS C SHARES):

TOTAL RETURN

Since Inception
1 Year (July 11, 1995)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998

Value of Account
At end of Period $ 1,065.71 $1,793.68

Value of Account
At beginning of Period 1,000.00 1,000.00
---------- ---------

Base Period Return $ 65.71 $ 793.68

Total Return 6.58% 18.31%

<PAGE>

illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted on a before-tax or after-tax basis. Total
returns yields and other performance information may be quoted numerically, or
in a table graph, or similar illustration.

HISTORICAL FUND RESULTS. The Fund's performance may be compared to the
performance of other mutual funds in general, or to the performance of
particular types of mutual funds. These comparisons may be expressed as mutual
fund rankings prepared by Lipper Analytical Services, Inc. (Lipper), an
independent service Located in Summit, New Jersey that monitors the performance
of mutual funds. Lipper generally ranks funds on the basis of total return,
assuming reinvestment of distributions, but does not take sales charges or
redemption fees into consideration, and total return is prepared without regard
to tax consequences. In addition to the mutual fund rankings, the Fund's
performance may be compared to mutual fund performance indices prepared by
Lipper.

In advertising materials, the Trust may reference or discuss its products
and services, which may include: other Flex-Partners or Flex-funds funds;
retirement investing; the effects of periodic investment plans and dollar cost
averaging; saving for college; and charitable giving. In addition, the Fund may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to Fund management, investment
philosophy, and investment techniques. The Fund may also reprint, and use as
advertising and sales literature, articles from Reflexions, a quarterly magazine
provided free of charge to Flex-Partners and Flex-funds shareholders.

<PAGE>

The Fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually would have an after-tax value of $1,949
after ten years, assuming tax was deducted from the return each year at a 31%
rate. An equivalent tax-deferred investment would have an after-tax value of
$2,100 after ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund is open for business and its net asset value per share (NAV) is
calculated each day the NYSE is open for trading. The NYSE has designated the
following holiday closings: New Year's Day, Martin Luther King Day (observed),
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). The NYSE may modify its holiday schedule at any time.

<PAGE>

Fund's NAV. Shareholders receiving securities or other property on redemption
may realize a gain or loss for tax purposes, and will incur any costs of sale,
as well as the associated inconveniences. All redemptions in kind will be of
readily marketable securities.

Shareholders of the Fund may exchange their Class C shares for Class C
shares of other Flex-Partners Funds. If Class C shares of the Fund are exchanged
for Class C shares of other Flex-Partners Funds, no contingent deferred sales
charge will be payable upon such exchange of Class C shares, but a contingent
deferred sales charge will be payable upon the redemption of Class C shares
acquired as a result of the exchange. The applicable sales charge will be that
imposed by the Fund in which shares were initially purchased and the purchase
date will be deemed to be the date of the initial purchase rather than the date
of the exchange. At any time after acquiring shares of other funds participating
in the Class C exchange privilege, the shareholder may again exchange those
shares (and any reinvested dividends and distributions) for Class C shares of
the Fund without subjecting such shares to any contingent deferred sales charge.
Shares of any fund participating in the Class C exchange privilege that were
acquired through reinvestment of dividends or distributions may be exchanged for
Class C shares of other funds without being subject to any contingent deferred
sales charge

Additional details about the exchange privilege and prospectuses for each
of the Flex-Partners Funds and The Flex-funds Money Market Fund are available
from the Fund's Transfer Agent. The exchange privilege may be modified
terminated or suspended on 60 days' notice, and any fund, including the Fund, or
the Distributor, has the right to reject any exchange application relating to
such fund's shares. The 60-day notification requirement may be waived if (i) the
only effect of a modification would be to reduce or eliminate an administrative
fee, redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the Fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder, or the fund to be acquired suspends the sale of its shares because
it is unable to invest amounts effectively in accordance with its investment
objective and policies.

<PAGE>

COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of the Fund
concurrently with Class A shares of other series of the Trust, the purchases may
be combined to take advantage of the reduced sales charges applicable to larger
purchases. See the table of breakpoints under "How to Buy Shares - Cumulative
Quantity Discount" in the Prospectus.

An eligible group of related Fund investors includes any combination of the
following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

(e) a trust created by the individual, the beneficiaries of which are
the individual, his or her spouse, parents or children;

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act
account created by the individual or the individual's spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

The Combined Purchase and Cumulative Purchase Privilege does not apply to
individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of the Class A
shares of the Fund and Class A shares of other Flex-Partners Funds to determine
the reduced sales charge. The value of existing holdings for purposes of
determining the reduced sales charge is calculated using the maximum offering
price (net asset value plus maximum sales charge) as of the previous business
day. See "Transaction Policies" in the Prospectus. The Transfer Agent must be
notified at the time of purchase that the investor is entitled to a reduced
sales charge. The reduced sales charges will be granted subject to confirmation
of the investor's holdings. Rights of accumulation are not available to
individual participants in the retirement and group plans described below under
"Flex-Partners Retirement Plans."

<PAGE>

LETTERS OF INTENT. Reduced sales charges are also available to investors
(or an eligible group of related investors) who enter into a written Letter of
Intent providing for the purchase, within a thirteen-month period, of Class A
shares of the Fund and Class A shares of other Flex-Partners Funds. All Class A
shares of the Fund and Class A shares of other Flex-Partners Funds which were
previously purchased and are still owned are also included in determining the
applicable reduction. The Transfer Agent must be notified at the time of
purchase that the investor is entitled to a reduced sales charge. The reduced
sales charges will be granted subject to confirmation of the investor's
holdings. Letters of Intent are not available to individual participants in
retirement and group plans described below under "Flex-Partners Retirement
Plans."

A Letter of Intent permits a purchase to establish a total investment goal
to be achieved by any number of investments over a thirteen-month period. Each
investment made during the period will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. Shares totaling 5% of the dollar amount of the Letter of Intent will
be held by the Transfer Agent in escrow in the name of the purchaser. The
effective date of a Letter of Intent may be back-dated up to 90 days, in order
that any investments made during this 90-day period, valued at the purchaser's
cost, can be applied to the fulfillment of the Letter of Intent goal.

The Letter of Intent does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the thirteen-month period, the purchaser is required to pay
the difference between the sales charge otherwise applicable to the purchases
made during this period and sales charges actually paid. Such payment may be
made directly to the Transfer Agent or, if not paid, the Transfer Agent will
liquidate sufficient escrowed shares to obtain such difference. If the goal is
exceeded in an amount which qualifies for a lower sales charge, a price
adjustment is made by refunding to the purchaser the amount of excess sales
charge, if any, paid during the thirteen-month period. Investors electing to
purchase Class A shares of the Fund pursuant to a Letter of Intent should
carefully read such Letter of Intent.

Further information about these programs and an application form can be
obtained from the Fund's Transfer Agent.

<PAGE>

is not necessarily recommended). Except as otherwise provided in the Prospectus,
to the extent such withdrawals exceed the current net asset value of reinvested
dividends, they may be subject to the contingent deferred sales charge. See "How
to Buy Shares - Class C Shares" and "Other Shareholder Services" in the
Prospectus.

Dividends and/or distributions on shares held under this plan are invested
in additional full and fractional shares at net asset value. The Transfer Agent
acts as agent for the shareholder in redeeming sufficient full and fractional
shares to provide the amount of the periodic withdrawal payment. The plan may be
terminated at any time.

DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. The Utility Growth Fund's
dividends, if any, are distributed at the end of the month and declared payable
to shareholders on the last business day of the month to shareholders of record
as of the previous business day. In December, the Fund may distribute an
additional ordinary income dividend (consisting of net short-term capital gains
and undistributed income) in order to preserve its status as a registered
investment company (mutual fund) under the Internal Revenue Code. Net long-term
capital gains, if any, also are declared and distributed in December.

Dividends paid by the Utility Growth Fund with respect to Class A shares
and Class C shares, to the extent any dividends are paid, will be calculated in
the same manner at the same time, on the same day and will be in the same amount
except that each class will bear its own distribution charges, resulting in
lower dividends for Class C shares. Distributions of net capital gains, if any,
will be paid in the same amount for Class A shares and Class C shares.

<PAGE>

income and therefore will increase (decrease) dividend distributions. The Fund
will send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.

Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends not as capital gains. Distributions from short-term
capital gains do not qualify for the dividends-received deduction.

If you request to have distributions mailed to you and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed for six
months, the Subadviser may reinvest your distributions at the then-current NAV.
All subsequent distributions will then be reinvested until you provide the
Subadviser with alternate instructions.

FOREIGN TAXES. Foreign governments may withhold taxes on dividends and
interest paid with respect to foreign securities. Because the Fund does not
currently anticipate that securities of foreign issuers will constitute more
than 25% of the Portfolio's total assets at the end of its fiscal year,
shareholders should not expect to claim a foreign tax credit or deduction on
their federal income tax returns with respect to foreign taxes withheld.

The Fund intends to qualify each year as a "regulated investment company"
for tax purposes so that it will not be liable for federal tax on income and
capital gains distributed to shareholders. In order to qualify as a regulated
investment company and avoid being subject to federal income or excise taxes at
the Fund level, the Fund intends to distribute substantially all of its net
investment income (consisting of the income it earns from its investment in the
Portfolio, less expenses) and net realized capital gains within each calendar
year as well as on a fiscal year basis. The Fund might deviate from this policy,
and incur a tax liability, if this were necessary to fully protect shareholder
values. The Fund intends to comply with other tax rules applicable to regulated
investment companies.

<PAGE>

The Utility Growth Fund qualified as a "regulated investment company" for
each of the last four fiscal years.

If the Portfolio purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any excess
distribution or gain from the disposition of such shares. Interest charges may
also be imposed on the Portfolio with respect to deferred taxes arising from
such distributions or gains.

At December 31, 1998, the Utility Growth Fund had unused capital loss
carryforwards of $7,287 available to offset future gains, if any, for Federal
income tax purposes. The capital loss carryforward expires 2006.

INVESTMENT ADVISER AND MANAGER

R. Meeder & Associates, Inc. (the "Manager") is the investment adviser and
manager for, and has an Investment Advisory Contract with, the Portfolio.

Pursuant to the Investment Advisory Contract with the Portfolio, the
Manager, subject to the supervision of the Portfolio's Board of Trustees and in
conformity with the stated objective and policies of the Fund, manages both the
investment operations of the Fund and the composition of the Portfolio's
portfolio, including the purchase, retention, disposition and loan of
securities. In connection therewith, the Manager is obligated to keep certain
books and records of the Portfolio. The Manager also administers the Fund's
corporate affairs, and in connection therewith, furnishes the Fund with office
facilities, together with those ordinary clerical and bookkeeping services which
are not being furnished by Firstar Bank, N.A., the Portfolio's custodian, and
Mutual Funds Service Co., the Fund's transfer and disbursing agent. The
management services of the Manager are not exclusive under the terms of the
Investment Advisory Agreement, and the Manager is free to, and does, render
management services to others.

<PAGE>

The Investment Advisory Contract provides that the Manager will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio in connection with the matters to which the Investment Advisory
Contract relates except for a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days' prior written notice by Majority Vote of the
Portfolio, by the Trustees of the Portfolio, or by the Manager.

Costs, expenses and liabilities of the Trust attributable to a particular
fund are allocated to that fund. Costs, expenses and liabilities which are not
readily attributable to a particular fund are allocated among all of the Trust's
funds. Thus, each fund pays its proportionate share of: the fees of the Trust's
independent auditors, legal counsel, custodian, transfer agent and accountants;
insurance premiums; the fees and expenses of Trustees who do not receive
compensation from R. Meeder & Associates or Miller/Howard Investments, Inc.;
association dues; the cost of printing and mailing confirmations, prospectuses,
proxies, proxy statements, notices and reports to existing shareholders; state
registration fees; distribution expenses within the percentage limitations of
each Class of Shares' distribution and service plan, including the cost of
printing and mailing of prospectuses and other materials incident to soliciting
new accounts; and other miscellaneous expenses.

The expenses of the Portfolio include the compensation of the Trustees who
are not affiliated with the Adviser or Subadviser; registration fees; membership
dues allocable to the Portfolio; fees and expenses of independent accountants,
of legal counsel and of any transfer agent or accountant of the Portfolio;
insurance premiums and other miscellaneous expenses.

Expenses of the Portfolio also include all fees under its Accounting and
Administrative Service Agreement; the expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to governmental offices and
commissions; expenses of meetings of investors and Trustees; the advisory fees
payable to the Manager under the Investment Advisory Contract and other
miscellaneous expenses.

The Board of Trustees of the Trust believe that the aggregate per share
expenses of the Fund and the Portfolio will be less than or approximately equal
to the expenses which the Fund would incur if it retained the services of an
investment adviser and the assets of the Fund were invested directly in the type
of securities being held by the Portfolio.

The Manager earns an annual fee, payable in monthly installments as
follows. The fee for the Portfolio is based upon the average net assets of the
Portfolio and is at the rate of 1% of the first $50 million, 0.75% of the next
$50 million and 0.60% in excess of $100 million of average net assets.

<PAGE>

The Manager has agreed to reduce its fees and/or absorb expenses to limit
the fund's total annual operating expenses to 1.75% of average daily net assets
for Class A Shares and 2.25% of average daily net assets for Class C shares. The
Manager may terminate this agreement after December 31, 1999.

For the year ended December 31, 1998, the Utilities Stock Portfolio paid
total fees to the Manager of $126,301 ($88,486 in 1997; $65,190 in 1996).

For the year ended December 31, 1998, the Manager reimbursed expenses
totaling $52,712 in the Utility Growth Fund.

R. Meeder & Associates, Inc. was incorporated in Ohio on February 1, 1974
and maintains its principal offices at 6000 Memorial Drive, Dublin, Ohio 43017.
The Manager is a wholly-owned subsidiary of Muirfield Investors, Inc. ("MII"), a
holding company which is controlled by Robert S. Meeder, Sr. through ownership
of common stock. MII conducts business only through its six subsidiaries, which
are the Manager; Mutual Funds Service Co., the Trust's transfer agent;
Opportunities Management Co., a venture capital investor; Meeder Advisory
Services, Inc., a registered investment adviser; OMCO, Inc., a registered
commodity trading adviser and commodity pool operator; and Adviser Dealer
Services, Inc., a broker-dealer.

<PAGE>

INVESTMENT SUBADVISER

Miller/Howard Investments, Inc., 141 Upper Byrdcliffe, Woodstock, New York
12498, serves as the Portfolio's Subadviser. Lowell G. Miller controls the
Subadviser through the ownership of voting common stock. Lowell G. Miller is a
Trustee of the Trust and the Portfolio. The Investment Subadvisory Agreement
provides that the Subadviser shall furnish investment advisory services in
connection with the management of the Portfolio. In connection therewith, the
Subadviser is obligated to keep certain books and records of the Portfolio. The
Manager continues to have responsibility for all investment advisory services
pursuant to the Investment Advisory Agreement and supervises the Subadviser's
performance of such services. Under the Investment Subadvisory Agreement, the
Manager, not the Portfolio, pays the Subadviser a fee, computed daily and
payable monthly, computed at the rate of .00% of the first $10 million; .40% of
the next $50 million; .30% of the next $40 million and .25% in excess of $100
million of the Portfolio's average net assets.

The Investment Subadvisory Agreement provides that the Subadviser will not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of portfolio
transactions for the Portfolio, except a loss resulting from misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment
Subadvisory Agreement provides that it will terminate automatically if assigned,
and that it may be terminated by the Manager without penalty to the Fund or the
Portfolio by the Manager, the Trustees of the Portfolio or by the vote of a
majority of the outstanding voting securities of the Portfolio upon not less
than 30 days' written notice. The Investment Subadvisory Agreement will continue
in effect for a period of more than two years from the date of execution only so
long as such continuance is specifically approved at least annually in
conformity with the 1940 Act. The Investment Subadvisory Agreement was approved
by the Board of Trustees of the Portfolio, including all of the Trustees who are
not parties to the contract or "interested persons" of any such party, and by
the shareholders of the Fund.

TRUSTEES AND OFFICERS

The Trust and the Portfolio are managed by their trustees and officers.
Their names, positions and principal occupations during the past five years are
listed below. Except as indicated, each individual has held the office shown or
other offices in the same company for the last five years. Except as otherwise
shown, all persons named as Trustees also serve in similar capacities for all
other mutual funds advised by the Manager, including The Flex-funds and the
corresponding portfolios of the Flex-Partners and The Flex-funds (collectively,
the "Fund Complex"). Unless otherwise noted, the business address of each
Trustee and officer is 6000 Memorial Drive, Dublin, Ohio 43017, which is also
the address of the Manager. Those Trustees who are "interested persons" (as
defined in the Investment Company Act of 1940) by virtue of their affiliation
with the Fund Complex are indicated by an asterisk (*).

<PAGE>

NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION

MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit Committee.

ROBERT S. MEEDER, JR.*, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.

WALTER L. OGLE, 60 Trustee Executive Vice President of
400 Interstate North Parkway Aon Consulting, an employee
Suite 1630 benefits consulting group.
Atlanta, GA 30339

<PAGE>

JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm and
North Palm Beach, FL 33408 division of Golden Bear
International, Inc.

PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer of
R. Meeder & Associates, Inc.;
President and a Director of
Adviser Dealer Services, Inc.

DONALD F. MEEDER*+, 60 Secretary/Treasurer Vice President of R. Meeder &
Associates, Inc.; Secretary
of Mutual Funds Service Co.,
the Fund's transfer agent;
Secretary of Adviser Dealer
Services, Inc.

<PAGE>

* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Flex-Partners and each Portfolio.

+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.

Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.

The following table shows the compensation paid by the Portfolio and the
Fund Complex as a whole to the Trustees of the Portfolio and the Fund Complex
during the fiscal year ended December 31, 1998.

COMPENSATION TABLE

Robert S. Meeder, Sr. None None None None

Milton S. Bartholomew $1,014 None None $13,525

Robert S. Meeder, Jr. None None None None

John M. Emery $ 757 None None $ 9,867

Richard A. Farr $ 750 None None $ 9,367

Russel G. Means $ 500 None None $ 7,867

Walter L. Ogle $1,026 None None $14,525

<PAGE>

Philip A. Voelker None None None None

Roger A. Blackwell $1,014 None None $13,525

Charles A. Donabedian $ 772 None None $12,525

James Didion None None None None

Jack W. Nicklaus II $ 500 None None $ 6,325

William L. Gurner None None None None

Lowell G. Miller None None None None

1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1998,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $507, Roger A. Blackwell - $1,013,
Charles A. Donabedian - $772, and Jack W. Nicklaus II - $500.

2 The Fund Complex consists of 15 investment companies.

Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per meeting for each of the five Portfolios. In addition, each such Trustee
earns an annual fee, payable quarterly, based on the average net assets in each
Portfolio based on the following schedule: Money Market Portfolio, 0.0005% of
the amount of average net assets between $500 million and $1 billion; 0.00025%
of the amount of average net assets exceeding $1 billion. For the other four
Portfolios, including the Portfolio, each Trustee is paid a fee of 0.00375% of
the amount of each Portfolio's average net assets exceeding $15 million. Members
of the Audit and Strategic Planning Committees for each of The Flex-Partners and
The Flex-funds Trusts, and the Portfolios are paid $500 for each Committee
meeting attended. Trustee fees for the Utilities Stock Portfolio totaled $7,332
for the year ended December 31, 1998 ($6,033 in 1997).

All other officers and Trustees serve without compensation from the Trust.

The Trustees and officers of the Fund and the Portfolio own, in the
aggregate, less than 1% of the Fund's total outstanding shares.

<PAGE>

THE DISTRIBUTOR

Adviser Dealer Services, Inc. (the "Distributor"), 6000 Memorial Drive,
Dublin, Ohio 43017, an affiliate of the Manager, acts as the distributor of the
Class A shares and the Class C shares of the Fund.

CLASS A SHARES. Class A shares are sold at net asset value plus the
applicable sales charge as shown in the table below. Class A shares also bear a
Rule 12b-1 fee of 0.25% per year (paid to the Distributor, Adviser Dealer
Services, Inc.) of their average net asset value. In addition, Class A shares
bear an asset based service fee of 0.25% per year. The sales charge on Class A
shares is allocated between the investment dealer and Adviser Dealer Services,
Inc. as shown below:

On August 4, 1994, the Board of Trustees, including a majority of the
Trustees who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Class A or Class C Plan or
in any agreement related to the Plan (the Rule 12b-1 Trustees), at a meeting
called for the purpose of voting on the Class A Plan, adopted a plan of
distribution for the Class A shares of the Fund. On August 4, 1994, the Board of
Trustees, including the Rule 12b-1 Trustees, at a meeting called for the purpose
of voting on the Class C Plan, adopted a plan of distribution for the Class C
shares of the Fund. The Class A Plan was approved by Class A shareholders of the
Fund. The Class C Plan was approved by Class C shareholders of the Fund.

<PAGE>

The Distributor also receives the proceeds of contingent deferred sales
charges paid by investors upon certain redemptions of Class C shares. See "How
to Buy Shares" in the Prospectus.

The Plans continue in effect from year to year, provided that each such
continuance is approved at least annually by a vote of the Board of Trustees,
including a majority vote of the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on such continuance. The Plans may be
terminated at any time, without penalty, by the vote of a majority of the
Trustees who are not interested persons or by the vote of the holders of a
majority of the outstanding shares of the Fund. Neither Plan may be amended to
increase materially the amounts to be spent for the services described therein
without approval by the shareholders of Class A and Class C, as applicable, and
all material amendments are required to be approved by the Board of Trustees in
the manner described above. The Fund will not be contractually obligated to pay
expenses incurred under either the Class A or Class C Plan if it is terminated
or not continued.

The table below states the amounts paid under the Fund distribution plan
for the year ended December 31, 1998.

DISTRIBUTION PLAN EXPENSES PAID BY THE FUND

TYPE OF EXPENSE AMOUNT PAID

Advertising $ 0
Printing and Mailing of Prospectuses $ 0
Compensation to Underwriters $ 7,446
Compensation to Broker-Dealers $ 5,887
Compensation to Sales Personnel $ 0
Interest, Carrying, or Other Financial Charges $ 0
---------
Total $13,333

<PAGE>

and Midwest Group Financial Services, Inc., for the year ended December 31, 1998
amounted to $119. Directed payments to parties with selling agreements amounted
to $6,668 in 1998. The balance of the payments made to Roosevelt & Cross,
Incorporated and Midwest Group Financial Services, Inc. were used to offset a
portion of the initial commissions paid to securities dealers for the sale of
Fund shares.

FLEX-PARTNERS RETIREMENT PLANS

INDIVIDUAL RETIREMENT ACCOUNTS (IRA):

DEDUCTIBLE CONTRIBUTIONS

All contributions (other than certain rollover contributions) must be made
in cash and are subject to the following limitations:

<PAGE>

made during such year or by the tax return filing date for such year (not
including extensions), if irrevocably designated for such year, in writing, when
such contribution is made.

<PAGE>

($10,000* - EXCESS AGI ) Maximum Allowable = Deduction
--------------------- X Deduction Limit
$10,000*

*For years after 2006, $20,000 if you are married, filing jointly.

NONDEDUCTIBLE CONTRIBUTIONS

ROTH INDIVIDUAL RETIREMENT ACCOUNTS (ROTH IRA):

CONTRIBUTIONS:

All contributions must be made in cash and are subject to the following
limitations:

<PAGE>

NO MAXIMUM AGE LIMIT. There is no maximum age limit for making a Roth IRA
contribution. Attainment of age 70 1/2 does not prevent you from contributing to
a Roth IRA.

(a) Subtract your AGI from $110,000 ($160,000 if married, filing jointly;
$10,000 if married, filing separately).

(b) Multiply the result in Step `a' by .1333 (.20 if married).

<PAGE>

(d) The result in Step `c' is your allowable contribution limit. If it is
more than $0, but less that $200, your allowable contribution limit is
$200.

INDIVIDUALS NOT ELIGIBLE TO MAKE CONTRIBUTIONS. If you are a single
taxpayer and your AGI is $110,000 or above ($160,000 or above if married and
filing jointly, or $10,000 or above if married and filing separately), you are
not permitted to make a Roth IRA contribution for the year. For this purpose, a
deductible Traditional IRA contribution is not allowed as a deduction in
computing AGI, and any amount of a rollover-conversion from a Traditional IRA to
a Roth IRA is not taken into account. Whether an individual, or his spouse, is
an active participant in an employer retirement plan is irrelevant for
determining whether he may make a Roth contribution.

ROLLING OVER/CONVERTING TRADITIONAL IRAS TO ROTH IRAS

<PAGE>

CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER

Mutual Funds Service Co., 6000 Memorial Drive, Dublin, Ohio 43017, a wholly
owned subsidiary of Muirfield Investors, Inc. and a sister company of R. Meeder
& Associates, Inc., provides accounting, administrative, stock transfer,
dividend disbursing, and shareholder services to the Fund and the Portfolio. The
minimum annual fee for accounting services for the Portfolio is $7,500. Subject
to the applicable minimum fee, the Portfolio's annual fee, payable monthly, is
computed at the rate of 0.15% of the first $10 million, 0.10% of the next $20
million, 0.02% of the next $50 million and 0.01% in excess of $80 million of the
Portfolio's average net assets. Subject to a $4,000 annual minimum fee, each
class of shares of the Fund will incur an annual fee, payable monthly, which
will be the greater of $15 per shareholder account or 0.10% of the Fund's
average net assets, payable monthly, for stock transfer and dividend disbursing
services.

For the year ended December 31, 1998, total payments to Mutual Funds
Service Co. by the Fund and the Portfolio amounted to $27,148.

ADDITIONAL INFORMATION

AUDITORS. KPMG LLP, Two Nationwide Plaza, Columbus, Ohio 43215, serves as
the trust's independent auditors. The auditors audit financial statements for
the Fund and provide other assurance, tax, and related services.

PRINCIPAL HOLDERS OF OUTSTANDING SHARES

As of January 31, 1999, the following persons owned 5% or more of a class
of the Fund's outstanding shares of beneficial interest:

<PAGE>

Class Name and Address Number of Percent
OF SHARES OF OWNER SHARES OF CLASS
- --------- ---------------- ---------- --------

Class A Donaldson Lufkin Jenrette 12,487.44(1) 15.4%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998

Bear Stearns Securities Corp. 7,488.75(1) 9.2%
1 Metrotech Center North
Brooklyn, NY 11201-3859

First Trust Corp. 4,909.26(1) 6.0%
P.O. Box 173301
Denver, CO 80217-3301

Laurie Cullig 4,732.66(1)(2) 5.8%
800 Illinois
Lawrence, KS 66044

Class C First Albany Corporation 69,097.56(1) 84.9%
41 State Street
Albany, NY 11797

First Albany Corporation 8,279.29(2) 12.0%
Timothy F. Murphy
41 State Street
Albany, NY 12207

First Albany Corporation 6,486.57(2) 9.4%
FBO James A. Hollerman
IRA Rollover
41 State Street
Albany, NY 11777

First Albany Corporation 5,699.40(2) 8.3%
FBO Harold Z. Schwartz
41 State Street
Albany, NY 11766

First Albany Corporation 4,267.13(2) 6.2%
Betty Jane Sullivan
41 State Street
Albany, NY 12207

First Albany Corporation 3,821.72(2) 5.6%
Ashley Legal Advertising
Corp.
41 State Street
Albany, NY 12207

(1) Indicates owner of record.
(2) Indicates beneficial owner.

To the knowledge of the Trust, the shareholders listed above own shares for
investment purposes and have no known intention of exercising any control of the
Fund.

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FINANCIAL STATEMENTS

Financial Statements for Utility Growth Fund and Utilities Stock Portfolio
are presented on the following pages.

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THE FLEX-PARTNERS
TACTICAL ASSET ALLOCATION FUND
CROSS REFERENCE SHEET TO FORM N-1A

PART B.

ITEM NO. STATEMENT OF ADDITIONAL INFORMATION

10(a) Front Cover Page
10(b) Table of Contents

11 Description of the Trust

12(a) Description of the Trust
12(b)(c)(d)(e) Investment Policies and Related Matters

13(a) Description of the Trust
Trustees and Officers
13(b)(c)(d) Trustees and Officers
13(e) The Distributor

14(a)
14(b) Principal Holders of Outstanding Shares
14(c) Trustees and Officers

15(a) Investment Adviser and Manager
15(b) The Distributor
15(c) Not applicable
15(d) Contracts with Companies Affiliated with the Manager
15(e) Not applicable
15(f)(g) The Distributor
15(h) Contracts with Companies Affiliated with the Manager
Additional Information

16(a)(b)(c)(d) Investment Policies and Related Matters
16(e) Not applicable

17(a) Investment Policies and Related Matters
17(b) Not applicable

18(a) Additional Purchase and Redemption Information
Flex-Partners Retirement Plans
18(b) Not applicable
18(c) Investment Policies and Related Matters
18(d) Description of the Trust

19 Distributions and Taxes

20(a)(b)(c) The Distributor

21(a) Not applicable
21(b) Calculation of Total Return

22 Financial Statements

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TACTICAL ASSET ALLOCATION FUND

A FUND OF THE FLEX-PARTNERS TRUST
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1999

This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus of The Flex-Partners dated April 30,
1999. A copy of the Prospectus may be obtained from The Flex-Partners, 6000
Memorial Drive, Dublin, Ohio 43017, or by calling: 1-800-494-3539. Capitalized
terms used and not otherwise defined herein have the same meanings as defined in
the Prospectus.

The Fund offers two classes of shares which may be purchased at the next
determined net asset value per share plus a sales charge which, at the election
of the investor, may be imposed (i) at the time of purchase (Class A shares) or
(ii) on a deferred basis (Class C shares). These alternatives permit an investor
to choose the method of purchasing shares that is most beneficial given the
amount of the purchase, the length of time the investor expects to hold the
shares, and other circumstances.

TABLE OF CONTENTS
PAGE

Description of the Trust
Investment Policies and Related Matters
General
The Mutual Fund Portfolio
Risk Considerations
Money Market Instruments and Bonds
Ratings
Hedging Strategies
Investment Restrictions
Portfolio Turnover
Purchase and Sale of Portfolio Securities
Valuation of Portfolio Securities
Calculation of Total Return
Additional Purchase and Redemption Information
Distribution and Taxes
Investment Adviser and Manager
Officers and Trustees
The Distributor
Flex-Partners Retirement Plans
Contracts with Companies Affiliated with the Manager
Additional Information
Principal Holders of Outstanding Shares
Financial Statements

INVESTMENT ADVISER TRANSFER AGENT
R. Meeder & Associates, Inc. Mutual Funds Service Co.

DISTRIBUTOR
Adviser Dealer Services, Inc.

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DESCRIPTION OF THE TRUST

The Trust has not retained an investment adviser for the Tactical Asset
Allocation Fund because the Trust seeks to achieve the investment objectives of
the Fund by investing the Fund's assets in its corresponding Portfolio. The
Portfolio has retained the services of R. Meeder & Associates, Inc. as
investment adviser.

INVESTMENT STRUCTURE. Unlike other mutual funds which directly acquire and
manage their own portfolio of securities, the Tactical Asset Allocation Fund
seeks to achieve its investment objectives by investing all of its assets in the
Mutual Fund Portfolio, a separate registered investment company with the same
investment objectives as the Fund. Therefore, an investor's interest in the
Portfolio's securities is indirect. In addition to selling a beneficial interest
to the Fund, the Portfolio may sell beneficial interests to other mutual funds
or investors. Such investors will invest in the Portfolio on the same terms and
conditions and will pay a proportionate share of the Portfolio's expenses.
However, the other investors investing in the Portfolio are not required to sell
their shares at the same public offering price as the Fund. Investors in the
Fund should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
by contacting the Trust by calling: 1-800-325-FLEX, or (614) 760-2159.

The Mutual Fund Portfolio is organized as a trust under the laws of the
State of New York. The Portfolio's Declaration of Trust provides that the Fund
and other entities investing in the Portfolio (e.g., other investment companies,
insurance company separate accounts, and common and commingled trust funds) will
each be liable for all obligations of the Portfolio. However, the risk of the
Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Portfolio
itself was unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither the Fund nor its shareholders will be adversely
affected by reason of the Fund's investing in the Portfolio. In addition,
whenever the Trust is requested to vote on matters pertaining to the fundamental
policies of the Portfolio, the Trust will hold a meeting of the Fund's
shareholders and will cast its vote as instructed by the Fund's shareholders.

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Trustees then in office will call a shareholders' meeting for the election of
Trustees. Any Trustee may be removed from office upon the vote of shareholders
holding at least two-thirds of the Trust's outstanding shares at a meeting
called for that purpose. The Trustees are required to call such a meeting upon
the written request of shareholders holding at least 10% of the Trust's
outstanding shares. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees of a
fund by a specified number of shareholders) the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees.

INVESTMENT POLICIES AND RELATED MATTERS

GENERAL

As described above, the Trust seeks to achieve the investment objective of
the Fund by investing all of its investable assets in the Mutual Fund Portfolio,
the Fund's corresponding portfolio having the same investment objective,
policies and restrictions as the Fund. Since the investment characteristics of
the Fund correspond directly to those of its corresponding portfolio, the
following is a discussion of the various investments of and techniques employed
by the Portfolio.

The investment policies set forth below in this section represent the
Portfolio's policies as of the date of this Statement of Additional Information.
The investment policies are not fundamental and they may be changed by the
Trustees of the Portfolio without shareholder approval. (No such change would be
made, however, without 30 days written notice to shareholders.)

The Manager of the Portfolio places a high degree of importance on
protecting portfolio values from severe market declines. Consequently, the
Portfolio's assets may at times be invested for defensive purposes in bonds and
money market instruments. (See "Money Market Instruments and Bonds" below.)

Because the Manager intends to employ flexible defensive investment
strategies when market trends are not considered favorable, the Manager may
occasionally change the entire portfolio of the Portfolio. High transaction
costs could result when compared with other funds.

THE MUTUAL FUND PORTFOLIO

The Manager will select mutual funds for inclusion in the Portfolio on the
basis of the industry classifications represented in their portfolios, their
specific portfolio holdings, their performance records, their expense ratios,
and the compatibility of their investment policies and objectives with those of
the Portfolio.

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Underlying funds may include funds which concentrate investments in a
particular industry sector, or which leverage their investments. The Portfolio
will not invest in other funds of The Flex-Partners family of funds or The
Flex-funds family of funds, the corresponding portfolios of which are also
managed by the Manager.

The Portfolio will generally purchase "no-load" mutual funds, which are
sold and purchased without a sales charge. However, the Portfolio may purchase
"load" mutual funds only if the load, or sales commission, is by previous
agreement waived for purchases or sales made by the Portfolio.

The Manager utilizes an asset allocation system for deciding when to invest
in mutual funds or alternatively in temporary investments such as are described
below. The use of this system entails recurring changes from a fully invested
position to a fully defensive position and vice-versa. (See "Additional
Investment Policies" in the Trust's Prospectus.)

Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in mutual funds. The Portfolio may at times desire
to gain exposure to the stock market through the purchase of "Index" funds
(funds which purchase stocks represented in popular stock market averages) with
a portion of its assets. "Index" funds may be purchased with a portion of the
Portfolio's assets at times when the Manager's selection process identifies the
characteristics of a particular index to be more favorable than those of other
mutual funds available for purchase. If, in the Manager's opinion, the Portfolio
should have exposure to certain stock indices and the Portfolio can efficiently
and effectively implement such a strategy by directly purchasing the common
stocks of a desired index for the Portfolio itself, it may invest up to 100% of
its assets to do so.

In purchasing shares of other mutual funds, the Portfolio will agree to
vote the shares in the same proportion as the vote of all other holders of such
shares.

The Portfolio has adopted certain investment restrictions which cannot be
changed except with the vote of a majority of the Portfolios outstanding
interests. These restrictions are applicable to the Portfolio and are described
elsewhere in this Statement of Additional Information. Investment restrictions
for the Portfolio differ from the restrictions applicable to the portfolios in
which other Flex-Partners' funds are invested, in that the Portfolio is
permitted to purchase the shares of other investment companies (mutual funds);
is permitted to invest more than 5% of its assets in the securities of any one
investment company (mutual fund); and may invest more than 25% of its assets in
any one industry.

The Portfolio may only purchase up to 3% of the total outstanding
securities of any underlying mutual fund. The holdings of any "affiliated
persons" of the Trust and the Portfolio, as defined in the Investment Company
Act, must be included in the computation of the 3% limitation. Accordingly, when
"affiliated persons" hold shares of an underlying mutual fund, the Portfolio
will be limited in its ability to fully invest in that mutual fund. The Manager
may then, in some instances, select alternative investments.

<PAGE>

The Investment Company Act also provides that an underlying mutual fund
whose shares are purchased by the Portfolio may be allowed to delay redemption
of its shares in an amount which exceeds 1% of its total outstanding securities
during any period of less than 30 days. Shares held by the Portfolio in excess
of 1% of a mutual fund's outstanding securities therefore may not be considered
readily disposable securities.

Under certain circumstances, an underlying mutual fund may determine to
make payment of a redemption by the Portfolio wholly or partly by a distribution
in kind of securities from its portfolio, in lieu of cash, in conformity with
rules of the Securities and Exchange Commission. In such cases, the Portfolio
may hold securities distributed by an underlying mutual fund until the Manager
determines that it is appropriate to dispose of such securities.

Portfolio investment decisions by an underlying mutual fund will be made
independent of investment decisions by other underlying mutual funds. Therefore,
an underlying mutual fund may be purchasing shares of a company whose shares are
simultaneously being sold by some other underlying mutual fund. The result of
this would be an indirect transaction expense (principally commissions) for the
Mutual Fund Portfolio, without its having changed its investment position.

The Portfolio may invest in common stocks based upon the criteria described
in its investment objectives. Because the Portfolio will only invest directly in
common stocks to replicate the performance of popular stock market indices, the
selection of stocks would be limited to those stocks found in a particular
index. Generally, investments in common stocks will not exceed 25% of the
Portfolio's net assets.

For temporary defensive purposes, the Portfolio may invest in (or enter
into repurchase agreements with banks and broker-dealers with respect to)
corporate bonds, U.S. Government securities commercial paper, certificates of
deposit or other money market instruments. The Portfolio may engage in hedging
transactions to the extent and for the purposes set forth in the Trust's
Prospectus.

RISK CONSIDERATIONS

The Mutual Fund Portfolio will be invested in securities which fluctuate in
market value, so net asset value per share will fluctuate as well. The Mutual
Fund Portfolio may have more than five percent of its assets invested in one
fund. If the underlying fund performs poorly, this could negatively impact the
value of the Mutual Fund Portfolio. Thus, there is no guarantee that a
shareholder will receive the full amount of his investment upon the redemption
of shares. The Mutual Fund Portfolio does, however, seek to minimize the risk of
loss through diversification and, at times, the use of hedging techniques and
defensive investment strategies. Hedging involves risks which are not present in
some other mutual funds with similar objectives (See "Hedging Strategies.")

<PAGE>

Although the Mutual Fund Portfolio will invest in a number of underlying
mutual funds, this practice will not eliminate investment risk. To the extent
that the Mutual Fund Portfolio invests in underlying funds which leverage
investments or concentrate investments in one industry, an investment in the
Mutual Fund Portfolio will indirectly entail the additional risks associated
with these practices. Leveraged mutual funds may have higher volatility than the
over-all market or other mutual funds. This may result in greater gains or
losses than the over-all market or other non-leveraged mutual funds. Mutual
funds which concentrate investments in a single industry lack normal
diversification and are exposed to losses stemming from negative industry-wide
developments.

An investor in Tactical Asset Allocation Fund should recognize that he may
invest directly in mutual funds and that by investing in mutual funds indirectly
through the Mutual Fund Portfolio, he will bear not only his proportionate share
of the expenses of the Mutual Fund Portfolio (including operating costs and
investment advisory and administrative fees) but also indirectly similar
expenses of the underlying mutual funds.

MONEY MARKET INSTRUMENTS AND BONDS

When investing in money market instruments or bonds, the Portfolio will
limit its purchases, denominated in U.S. dollars, to the following securities.

* Bank Obligations and Instruments Secured Thereby - obligations
(including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of $1,000,000,000
or more, instruments secured by such obligations, and obligations of
foreign branches of such banks, if the domestic parent bank is
unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may
also invest in obligations (including certificates of deposit and
bankers' acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more, if the domestic branch is subject to
the same regulation as United States banks. The Portfolio will not
invest at time of purchase more than 25% of its assets in obligations
of banks, nor will the Portfolio invest more than 10% of its assets in
time deposits.

* High Quality Commercial Paper - The Portfolio may invest in commercial
paper rated no lower than "A-2" by Standard & Poor's Corporation or
"Prime-2" by Moody's Investors Services, Inc., or, if not rated,
issued by a company having an outstanding debt issue rated at least A
by Standard & Poor's or Moody's.

<PAGE>

* Private Placement Commercial Paper - Private placement commercial
paper ("Rule 144A securities") consists of unregistered securities
which are traded in public markets to qualified institutional
investors, such as the Portfolio. The Portfolio's risk is that the
universe of potential buyers for the securities, should the Portfolio
desire to liquidate a position, is limited to qualified dealers and
institutions, and therefore such securities could have the effect of
being illiquid.

* High Grade Corporate Obligations - obligations rated at least A by
Standard & Poor's or Moody's. See rating information below.

* Repurchase Agreements Pertaining to the Above - The Portfolio may
invest without limit in any of the above securities subject to
repurchase agreements with any Federal Reserve reporting dealer or
member bank of the Federal Reserve System. A repurchase agreement is
an instrument under which the purchaser (i.e., the Portfolio) acquires
ownership of a debt security and the seller agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and
price, thereby determining the yield during the purchaser's holding
period. This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities could be
any of those described above, some of which might bear maturities
exceeding one year. The Portfolio's risk is that the seller may fail
to repurchase the security on the delivery date. If the seller
defaults, the underlying security constitutes collateral for the
seller's obligation to pay. It is a policy of the Portfolio to make
settlement on repurchase agreements only upon proper delivery of the
underlying collateral. Repurchase agreements usually are for short
periods, such as one week or less, but could be longer. the Portfolio
may enter into repurchase agreements with its custodian (Firstar Bank,
N.A., Cincinnati) when it is advantageous to do so. The Portfolio will
not invest more than 10% of its assets, at the time of purchase, in
repurchase agreements which mature in excess of seven days.

The Manager exercises due care in the selection of money market instruments
and bonds. However there is a risk that the issuers of the securities may not be
able to meet their obligations to pay interest or principal when due. There is
also a risk that some of the Portfolio's securities might have to be liquidated
prior to maturity at a price less than original amortized cost or value, face
amount or maturity value to meet larger than expected redemptions. Any of these
risks, if encountered, could cause a reduction in net income or in the net asset
value of the Portfolio.

RATINGS

1. Moody's Investors Services, Inc.'s Corporate Bond Rating:

<PAGE>

stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Baa - Bonds which are rated Baa are considered as medium grade obligations
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length or time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

2. Standard and Poor's Corporation's Corporate Bond Rating:

AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.

A - Bonds rated A are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from adverse effect
of changes in economic and trade conditions. Interest and principal are regarded
as safe. They predominantly reflect money rates in their market behavior but, to
some extent, also economic conditions.

3. A-1 and P-1 Commercial Paper Ratings:

Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash

<PAGE>

requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1, A-2, or
A-3.

4. Description of Permitted Money Market Investments:

Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short term credit needs.

U.S. Government Obligations - are bills, certificates of indebtedness,
notes and bonds issued by the U.S. Treasury, and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, as in the case of
Federal Farm Credit Banks and Federal National Mortgage Association; and others
only by the credit of the agency, authority or instrumentality; as for example,
Federal Home Loan Mortgage and Federal Home Loan Bank.

Repurchase Agreements - A repurchase transaction occurs when an investor
buys a security and simultaneously agrees to resell it at a later date to the
person from whom it was bought, at a higher price.

The price differential represents interest for the period the security is
held. Repurchase transactions will normally be entered into with banks and
securities brokers. The Portfolio could suffer a loss if the bank or securities
broker with which the Portfolio had a repurchase agreement were to default.

Certificates of Deposit - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified or variable rate
of return, and are normally negotiable.

<PAGE>

Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed "accepted"
when a bank guarantees their payment at maturity.

Corporate Obligations - include bonds and notes issued by corporations in
order to finance longer term credit needs.

HEDGING STRATEGIES

The Manager may conduct a hedging program on behalf of the Portfolio for
the following reasons: (1) to keep cash on hand to meet shareholder redemptions
or other needs while simulating full investment in stocks; (2) to reduce the
fund's transaction costs or add value when these instruments are favorably
priced; (3) to forego taxes that would otherwise have to be paid on gains from
the sale of the fund's securities; and (4) to attempt to protect the value of
certain securities owned or intended to be purchased by the fund's while the
manager is making a change in the fund's investment position. Such a program
would involve entering into options or futures contracts (hedge transactions).

The objective of an option or futures contract transaction could be to
protect a profit or offset a loss in the Portfolio from future price erosion.
Or, the objective could be to acquire the right to purchase a fixed amount of
securities at a future date for a definite price. In either case, it would not
be necessary for a Portfolio to actually buy or sell the securities currently.
Instead, the hedge transaction would give the Portfolio the right at a future
date to sell, or in other instances buy, the particular securities under
consideration or similar securities. The value of shares of common stock or the
face amount of government bonds or notes covered by the hedge transaction would
be the same, or approximately the same, as the quantity held by the Portfolio or
the quantity under consideration for purchase.

In lieu of the sale of a security, an option transaction could involve the
purchase of a put option contract, which would give the Portfolio the right to
sell a common stock, government bond or futures contract on an index (see
below), at a specified price until the expiration date of the option. The
Portfolio will only purchase a put option contract on a stock or bond when the
number of shares of the issuer's stock or the face amount of government bonds
involved in the option transaction are equal to those owned by the Portfolio.
Limitations on the use of put option contracts on an index are described below.

Also, in lieu of the sale of securities, a futures transaction could
involve the sale of a futures contract which would require the Portfolio either
(a) to deliver to the other party to the contract the securities specified and
receive payment at the price contracted for, prior to the expiration date of the
contract, or (b) to make or entitle it to receive payments representing
(respectively) the loss or gain on the security or securities involved in the
futures contract.

<PAGE>

The securities involved in an option or futures contract may be stocks or
government bonds, or a group of stocks represented by a popular stock market
index, and they need not be exactly the same as those owned by the Portfolio.
The Manager will select the futures contract which involves a security, group of
securities, or index which it feels is closest to a mirror image of the
investments held by the Portfolio. However, the securities involved in the
contract need not be exactly the same as those owned by the Portfolio, and this
may entail additional risk, as described below.

To the extent that the Portfolio enters into futures contracts which sell
an index or group of securities short and which therefore could require the
Portfolio to pay the other party to the contract a sum of money measured by any
increase in a market index, the Portfolio will be exposing itself to an
indeterminate liability. On the other hand, the Portfolio should increase or
decrease in value to approximately the same extent as the market index or group
of securities, so any loss incurred on the contract should be approximately
offset by unrealized gains in the Portfolio's positions. Such an outcome is not
guaranteed, and it would be possible for the value of the index and the
Portfolio to move in opposite directions, in which case the Portfolio would
realize an unexpected gain or loss.

The Portfolio will only sell an index short when the Manager has decided to
reduce the Portfolio's risk for defensive purposes, and will close out the open
liability as soon as the Manager decides that a defensive posture is no longer
appropriate or the open liability represents an inappropriate risk in the
circumstances. In shorting an index, the Portfolio will segregate assets to the
full value of the contract and maintain and supplement such segregation to the
extent necessary until the short position is eliminated.

In lieu of the purchase of a security, an option transaction could involve
the purchase of a call option which would give the Portfolio the right to buy a
specified security (common stock or government bonds) or index aggregate at a
specified price until the expiration date of the option contract. Sufficient
cash or money market instruments will be segregated and maintained in reserve to
complete the purchase. The Portfolio will only purchase call options when the
shares of stock or face amount of bonds or value of the index aggregate included
in the option are equal to those planned to be purchased by the Portfolio.

In lieu of the purchase of securities, a futures transaction could involve
the purchase of a futures contract which would either (a) require the Portfolio
to receive and pay for the securities specified in the futures contract at the
price contracted for prior to the expiration date of the contract or (b) require
the Portfolio to make payment or receive payment representing (respectively) the
loss or gain on the security or securities involved in the contract. The
securities may be government bonds, stocks, or a group of stocks such as a
popular stock market index, and need not be exactly the same as those intended
to be purchased by the Portfolio. The Manager will select the contract
(therefore the group of securities) which it believes is most similar to those
desired to be purchased by the Portfolio.

<PAGE>

The Portfolio may sell any put or call option contracts it enters into.
Such a transaction would normally be used to eliminate or close out a hedged
position. The Portfolio may also buy or sell futures contracts to eliminate or
close out a hedged position.

Option contracts will be purchased through organized exchanges and will be
limited to those contracts which are cleared through the Options Clearing
Corporation. Organized exchanges which presently trade option contracts are the
Chicago Board Options Exchange, the American Stock Exchange, the Philadelphia
Stock Exchange, the Pacific Stock Exchange, and the New York Stock Exchange.

Futures contracts will only be entered into through an organized exchange.
The exchanges which presently trade financial futures contracts are the New York
Futures Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade
the Kansas City Board of Trade, and the International Monetary Market (at the
Chicago Mercantile Exchange).

Put and call options and financial futures contracts are valued on the
basis of the daily settlement price or last sale on the exchanges where they
trade. If an exchange is not open, or if there is no sale, the contract is
valued at its last bid quotation unless the trustees determine that such is not
a fair value. In the case of a futures contract which entails a potential
liability for a gain in a market index, the liability is valued at the last sale
of an offsetting contract or, if there was no sale, at the last asked quotation
unless the Trustees determine that such does not fully reflect the liability.

In conducting a hedging program for the Portfolio, the Manager may
occasionally buy a call on an index or futures contract and simultaneously sell
a put on the same index or futures contract. Or, in other circumstances, it may
sell a call and simultaneously buy a put on the same index or futures contract.

When conducting a hedging program on behalf of the Portfolio, the Portfolio
will establish and maintain with the Custodian segregated accounts for the
deposit and maintenance of margin requirements. Such deposits will be in the
form of cash or U.S. Government securities in amounts as shall be required from
time to time by the broker or the exchange on which the transactions are
effected for the Portfolio.

<PAGE>

exchanges, the Portfolio will not, on a net basis, have leverage exposure on any
long futures contracts that it establishes because of the cash set aside
requirement. All futures transactions can produce a gain or a loss when they are
closed, regardless of the purpose for which they have been established. Unlike
short futures contracts positions established to protect against the risk of a
decline in value of existing securities holdings, the long futures positions
established by the Portfolio to protect against reinvestment risk are intended
to protect the Portfolio against the risks of reinvesting portfolio assets that
arise during periods when the assets are not fully invested in securities.

These financial futures contracts or related options used by the Portfolio
to implement its hedging strategies are considered derivatives. The value of
derivatives can be affected significantly by even small market movements,
sometimes in unpredictable ways.

INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the Trust with
respect to the Fund and by the Portfolio as fundamental policies. Under the
Investment Company Act of 1940 (the "Act"), a "fundamental" policy may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund or the Portfolio, respectively, to which it relates, which is defined
in the Act as the lesser of (a) 67 percent or more of the shares present at a
shareholder meeting if the holders of more than 50 percent of the outstanding
shares are present or represented by proxy, or (b) more than 50 percent of the
outstanding shares ("Majority Vote"). The percentage limitations contained in
the restrictions listed below apply at the time of the purchase of the
securities. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Trust will hold a meeting of the Fund
shareholders and will cast its votes as instructed by the shareholders.

Provided that nothing in the following investment restrictions shall
prevent the Trust from investing all or part of the Fund's assets in the
Portfolio, the Fund nor the Portfolio may: (a) Issue senior securities; (b)
Borrow money except as a temporary measure, and then only in an amount not to
exceed 5% of the value of its net assets (whichever is less) taken at the time
the loan is made, or pledge its assets taken at value to any extent greater than
15% of its gross assets taken at cost; (c) Act as underwriter of securities of
other issuers; (d) Invest in real estate except for office purposes; (e)
Purchase or sell commodities or commodity contracts, except that it may purchase
or sell financial futures contracts involving U.S. Treasury Securities,
corporate securities, or financial indexes; (f) Lend its funds or other assets

<PAGE>

to any other person; however, the purchase of a portion of publicly distributed
bonds, debentures or other debt instruments, the purchase of certificates of
deposit, U.S. Treasury Debt Securities, and the making of repurchase agreements
are permitted, provided repurchase agreements with fixed maturities in excess of
7 days do not exceed 10% of its total assets; (g) Purchase any security if, as a
result, more than 10% of its net assets would be invested in securities that are
deemed to be liquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued, including repurchase agreements with remaining maturities in excess of
seven days or securities without readily available market quotes; (h) Purchase
any securities on margin, or participate in any joint or joint and several
trading account, provided, however, that it may open a margin account to the
extent necessary to engage in hedging transactions which are not precluded by
other particular restrictions; (i) Make any so-called "short" sales of
securities, except against an identical portfolio position (i.e., a "short sale
against the box"), but this restriction shall not preclude a futures contract
which sells short an index or group of securities; (j) Purchase or retain any
securities of an issuer, any of whose officers, directors or security holders is
an officer or director of the Trust or the Portfolio, if such officer or
director owns beneficially more than 1/2 of 1% of the issuer's securities or
together they own beneficially more than 5% of such securities; (k) Invest in
securities of companies which have a record of less than three years' continuous
operation if, at the time of such purchase, more than 5% of its assets (taken at
value) would be so invested; (l) Purchase participations or other direct
interests in oil, gas or other mineral exploration or development programs; and
(m) Invest in warrants.

Each of the Trust's and the Portfolio's operating policy is not to: (a)
Notwithstanding (b) above, pledge assets having a value in excess of 10% of its
gross assets; (b) Invest in oil, gas or mineral leases or programs; and (c)
Purchase real estate limited partnerships.

PORTFOLIO TURNOVER

The portfolio turnover rate for the fiscal year ended December 31, 1998 in
the Mutual Fund Portfolio was 128% (395% in 1997). Resultant turnover rates are
primarily a function of the Manager's response to market conditions. In the
Manager's opinion, it was in the best interest of the Portfolio to change its
portfolio from a fully invested position to a partially defensive position at
various times during the year.

Because the Manager may employ flexible defensive investment strategies
when market trends are not considered favorable, the Manager may occasionally
change the entire portfolio in the Mutual Fund Portfolio. High transaction costs
could result when compared with other funds. Trading may also result in
realization of net short-term capital gains upon which shareholders may be taxed
at ordinary tax rates when distributed from the Fund. This defensive investment
strategy can produce high portfolio turnover ratios when calculated in
accordance with SEC rules.

<PAGE>

PURCHASE AND SALE OF PORTFOLIO SECURITIES

All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolio by the Manager pursuant to authority contained in the
investment advisory agreement. The Manager is also responsible for the placement
of transaction orders for accounts for which it or its affiliates act as
investment adviser. In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, the Manager considers various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's execution
services rendered on a continuing basis; the reasonableness of any commissions,
and arrangements for payment of Portfolio expenses.

The Portfolio may execute portfolio transactions with broker-dealers who
provide research and execution services to the Portfolio or other accounts over
which the Manager or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the advisability
of investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The selection of such broker-dealers generally is made by the
Manager (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by the
Manager's investment staff based upon the quality of research and execution
services provided.

The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolio may be useful to the Manager in rendering investment
management services to the Portfolio or their other clients, and conversely,
such research provided by broker-dealers who have executed transaction orders on
behalf of other Manager's clients may be useful to the Manager in carrying out
its obligations to the Portfolio. The receipt of such research is not expected
to reduce the Manager's normal independent research activities; however, it
enables the Manager to avoid the additional expenses that could be incurred if
the Manager tried to develop comparable information through its own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, the Manager must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers viewed
in terms of a particular transaction or the Manager's overall responsibilities
to the Portfolio and their other clients. In reaching this determination, the
Manager will not attempt to place a specific dollar value on the brokerage and
research services provided or to determine what portion of the compensation
should be related to those services.

<PAGE>

The Manager is authorized to use research services provided by and to place
portfolio transactions with brokerage firms that have provided assistance in the
distribution of shares of the Fund or shares of other Flex-funds funds or
Flex-Partners funds to the extent permitted by law.

The Manager may allocate brokerage transactions to broker-dealers who have
entered into arrangements with the Manager under which the broker-dealer
allocates a portion of the commissions paid by the Portfolio toward payment of
the Portfolio or the Fund's expenses, such as transfer agent fees of Mutual
Funds Service Co. or custodian fees. The transaction quality must, however, be
comparable to those of other qualified broker-dealers.

The Trustees of the Portfolio periodically review the Manager's performance
of its responsibilities in connection with the placement of portfolio
transactions on behalf of the Portfolio and review the commissions paid by the
Portfolio over representative periods of time to determine if they are
reasonable in relation to the benefits to the Portfolio.

<PAGE>

For the year ended December 31, 1998, the Portfolio paid brokerage
commissions totaling $17,846 ($34,089 in 1997; $38,925 in 1996) on the purchase
and sale of common stock securities and futures contracts.

VALUATION OF PORTFOLIO SECURITIES

The assets of the Portfolio consist primarily of underlying mutual funds,
which are valued at their respective net asset values. The underlying funds
value securities in their portfolios for which market quotations are readily
available at their current market value (generally the last reported sale price)
and all other securities and assets at fair value pursuant to methods
established in good faith by the board of directors of the underlying fund.
Underlying money market funds with portfolio securities with a remaining
maturity of 13 months or less and a weighted average maturity not exceeding 90
days may use the amortized cost to value their securities.

Securities owned by the Portfolio and listed or traded on any national
securities exchange are valued at each closing of the New York Stock Exchange on
the basis of the last sale on such exchange each day that the exchange is open
for business. If there is no sale on that day, or if the security is not listed,
it is valued at its last bid quotation on the exchange or, in the case of
unlisted securities, as obtained from an established market maker. Futures
contracts are valued on the basis of the cost of closing out the liability;
i.e., at the settlement price of a closing contract or at the asked quotation
for such a contract if there is no sale. Money market instruments (certificates
of deposit, commercial paper, etc.) in the Portfolios, having maturities of 60
days or less, are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
available are to be valued by the Manager in good faith at its own expense under
the direction of the Trustees.

Other assets, which include cash, prepaid and accrued items and amounts
receivable as income on investments and from the sale of portfolio securities,
are carried at book value, as are all liabilities. Liabilities include accrued
expenses, sums owed for securities purchased, and dividends payable.

CALCULATION OF TOTAL RETURN

From time to time, the Fund may advertise its average annual total returns
for various periods of time. The Fund's "total return" refers to the change in
the value of an investment in the Fund over a stated period based on any change
in net asset value per share and including the value of any shares purchasable
with any dividends or capital gains distributed during such period. Period total
return may be annualized. Period and average annualized total return are
calculated separately for Class A shares and Class C shares. Average annual
total return smoothes out variations in performance and takes into account any
applicable initial or contingent deferred sales charges.

<PAGE>

An annualized total return is a compounded total return which assumes that
the period total return is generated over a one-year period, and that all
dividends and capital gain distributions are reinvested. An annualized total
return will be slightly higher than a period total return, if the period is
shorter than one year, because of the assumed reinvestment.

Unlike some bank deposits or other investments which pay a fixed yield for
a stated period of time, the total return of each Fund will vary depending upon
interest rates, the current market value of the securities held by the Fund's
corresponding Portfolio, and changes in the Fund's expenses.

When applicable, depending on the Fund, the periods of time shown will be
for a one-year period, a five-year period, a ten-year period (or relevant
portion thereof) and since inception. Period and average annualized total return
are calculated separately for Class A and Class C shares. The calculation
assumes the reinvestment of all dividends and distributions. Examples of the
total return calculation for the Fund will assume a hypothetical investment of
$1,000 at the beginning of each period.

It is computed by finding the average annual compounded rates of return
over the length of the base periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:

P(1+T)n = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the end of the base period

TACTICAL ASSET ALLOCATION FUND (CLASS A SHARES):

TOTAL RETURN

Since Inception
1 Year (August 1, 1996)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998
------------------ -----------------

Value of Account
At end of Period $1,209.34 $1,497.34

Value of Account
At beginning of Period $1,000.00 $1,000.00
--------- ---------

Base Period Return $ 209.34 $ 497.34

Total Return 20.95% 18.20%

<PAGE>

TACTICAL ASSET ALLOCATION FUND (CLASS C SHARES):

TOTAL RETURN

Since Inception
1 Year (June 1, 1995)
Period Ended Period Ended
DECEMBER 31, 1998 DECEMBER 31, 1998

Value of Account
At end of Period $1,266.09 $ 1,815.81

Value of Account
At beginning of Period 1,000.00 1,000.00
-------- ---------

Base Period Return $ 266.09 $ 815.81

Total Return 26.63% 18.11%

The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment results
and/or comparisons of its investment results to the Standard & Poor's 500
Composite Stock Price Index or other various unmanaged indices or results of
other mutual funds or investment or savings vehicles. The Fund's investment
results as used in such communications will be calculated on a total rate of
return basis in the manner set forth above. From time to time, fund rankings may
be quoted from various sources, such as Lipper Analytical Services, Inc. and
Morningstar Mutual Fund Report.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund is open for business and its net asset value per share (NAV) is
calculated each day the NYSE is open for trading. The NYSE has designated the
following holiday closings: New Year's Day, Martin Luther King Day, Washington's
Birthday (observed), Good Friday, Memorial Day (observed), Independence Day
(observed), Labor Day, Thanksgiving Day, and Christmas Day (observed). The NYSE
may modify its holiday schedule at any time.

The Fund s net asset value is determined as of the close of the NYSE
(normally 4:00 p.m. Eastern time). However, NAV may be calculated earlier if
trading on the NYSE is restricted or as permitted by the SEC. To the extent that
portfolio securities are traded in other markets on days when the NYSE is
closed, the Fund's NAV may be affected on days when investors do not have access
to the Fund to purchase or redeem shares.

<PAGE>

Shareholders of the Fund will be able to exchange their Class A shares for
Class A shares of any mutual fund that is a series of The Flex-Partners (each a
"Flex-Partners Fund"), and shares of The Flex-funds Money Market Fund. No fee or
sales load will be imposed upon the exchange. Shareholders of the Flex-funds
Money Market Fund who acquired such shares upon exchange of Class A shares of
the Fund may use the exchange privilege only to acquire Class A shares of a
Flex-Partners Fund.

Additional details about the exchange privilege and prospectuses for each
of the Flex-Partners Funds and The Flex-funds Money Market Fund are available
from the Fund's Transfer Agent. The exchange privilege may be modified,
terminated or suspended on 60 days' notice, and any fund, including the Fund, or
the Distributor has the right to reject any exchange application relating to
such fund's shares. The 60 day notification requirement may be waived if (i) the
only effect of a modification would be to reduce or eliminate an administrative
fee, redemption fee, or deferred sales charge ordinarily payable at the time of
an exchange, or (ii) the Fund suspends the redemption of the shares to be
exchanged as permitted under the 1940 Act or the rules and regulations
thereunder or the fund to be acquired suspends the sale of its shares because it
is unable to invest amounts effectively in accordance with its investment
objective and policies.

In the Prospectus, the Fund has notified shareholders that it reserves the
right at any time, without prior notice, to refuse exchange purchases by any
person or group if, in the Manager's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.

All redemptions in kind shall be of readily marketable securities.

COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases Class A shares of the Fund

<PAGE>

concurrently with Class A shares of other series of the trust, the purchases may
be combined to take advantage of the reduced sales charges applicable to larger
purchases. See the table of breakpoints under "How to Buy Shares Cumulative
Quantity Discount" in the Prospectus.

An eligible group of related Fund investors includes any combination of the
following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

(d) any company controlled by the individual (a person, entity or group
that holds 25% or more of the outstanding voting securities of a
corporation will be deemed to control the corporation, and a
partnership will bedeemed to be controlled by each of its general
partners);

(e) a trust created by the individual, the beneficiaries of which are the
individual, his or her spouse, parents or children;

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act account
created by the individual or the individuals spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

The Combined Purchase and Cumulative Purchase Privilege does not apply to
individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under Combined Purchase and Cumulative Purchase
Privilege, may aggregate the value of their existing holdings of the Class A
shares of the Fund and Class A shares of other Flex-Partners Funds to determine
the reduced sales charge. The value of existing holdings for purposes of
determining the reduced sales charge is calculated using the maximum offering
price (net asset value plus maximum sales charge) as of the previous business
day. See "Transaction Policies" in the Prospectus. The Transfer Agent must be
notified at the time of purchase that the investor is entitled to a reduced
sales charge. The reduced sales charges will be granted subject to confirmation
of the investor's holdings. Rights of accumulation are not available to
individual participants in the retirement and group plans described below under
"Flex-Partners Retirement Plans."

<PAGE>

shares of the Fund and Class A shares of other Flex-Partners Funds. All Class A
shares of the Fund and Class A shares of other Flex-Partners Funds which were
previously purchased and are still owned are also included in determining the
applicable reduction. The Transfer Agent must be notified at the time of
purchase that the investor is entitled to a reduced sales charge. The reduced
sales charges will be granted subject to confirmation of the investor's
holdings. Letters of Intent are not available to individual participants in
retirement and group plans described below under Flex-Partners Retirement Plans.

CONVERTIBLE CLASS C SHARES. Class C shares purchased, or acquired through
the reinvestment of dividends and distributions, on or before April 30, 1998
("convertible Class C shares") will automatically convert to Class A shares
seven years after the end of the calendar month in which the purchase order for
convertible Class C shares was accepted, on the basis of the relative net asset
values of the two classes and subject to the following terms: Class C shares
acquired through the reinvestment of dividends and distributions on or before
April 30, 1998 ("reinvested convertible Class C shares") will be converted to
Class A shares on a pro-rata basis only when convertible Class C shares not
acquired through reinvestment of dividends or distributions ("purchased
convertible Class C shares") are converted. The portion of reinvested
convertible Class C shares to be converted will be determined by the ratio that
the purchased convertible Class C shares eligible for conversion bear to the
total amount of purchased convertible Class C shares in the shareholder's
account. For the purposes of calculating the holding period, convertible Class C
shares will be deemed to have been issued on the sooner of: (a) the date on
which the issuance of convertible Class C shares occurred, or (b) for
convertible Class C shares obtained by an exchange or series of exchanges, the
date on which issuance of the original convertible Class C shares occurred. This

<PAGE>

conversion to Class A shares will relieve convertible Class C shares that have
been outstanding for at least seven years (a period of time sufficient for the
Distributor to have been compensated for distribution expenses related to such
convertible Class C shares) from the higher ongoing distribution fee paid by
convertible Class C shares. Only convertible Class C shares have this conversion
feature. Conversion of convertible Class C shares to Class A shares is
contingent on the availability of a private letter revenue ruling from the
Internal Revenue Service or an opinion of counsel affirming that such conversion
does not constitute a taxable event for the shareholder under the Internal
Revenue Code. If such revenue ruling or opinion of counsel is no longer
available, conversion of convertible Class C shares to Class A shares would have
to be suspended, and convertible Class C shares would continue to be subject to
the Class C distribution fee until redeemed.

Further information about these programs and an application form can be
obtained from the Distributor.

<PAGE>

DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. The Tactical Asset Allocation
Fund's dividends, if any, are declared payable on a quarterly basis. In
December, the Fund may distribute an additional ordinary income dividend
(consisting of net short-term capital gains and undistributed income) in order
to preserve its status as a registered investment company (mutual fund) under
the Internal Revenue Code. Net long-term capital gains, if any, also are
declared and distributed in December.

Dividends paid by the Tactical Asset Allocation Fund with respect to Class
A shares and Class C shares, to the extent any dividends are paid, will be
calculated in the same manner at the same time, on the same day and will be in
the same amount except that each class will bear its own distribution charges,
resulting in lower dividends for Class C shares. Distributions of net capital
gains, if any, will be paid in the same amount for Class A shares and Class C
shares.

If you request to have distributions mailed to you and the U.S. Postal
Service cannot deliver your checks, or if your checks remain uncashed for six
months, the Manager may reinvest your distributions at the then-current NAV. All
subsequent distributions will then be reinvested until you provide the Manager
with alternate instructions.

<PAGE>

investment income (consisting of the income it earns from its investment in the
Portfolio, less expenses) and net realized capital gains within each calendar
year as well as on a fiscal year basis. The Fund intends to comply with other
tax rules applicable to regulated investment companies.

The Tactical Asset Allocation Fund qualified as a "regulated investment
company" for each of the last four fiscal years.

INVESTMENT ADVISER AND MANAGER

R. Meeder & Associates, Inc. (the "Manager") is the investment adviser and
manager for, and has an Investment Advisory Contract with, the Portfolio.

Pursuant to the Investment Advisory Contract with the Portfolio, the
Manager, subject to the supervision of the Portfolio's Board of Trustees and in
conformity with the stated objective and policies of the Fund, manages both the
investment operations of the Fund and the composition of the Portfolio's
portfolio, including the purchase, retention, disposition and loan of
securities. In connection therewith, the Manager is obligated to keep certain
books and records of the Portfolio. The Manager also administers the Fund's
corporate affairs, and in connection therewith, furnishes the Fund with office
facilities, together with those ordinary clerical and bookkeeping services which
are not being furnished by Firstar Bank, N.A., the Portfolio's custodian, and
Mutual Funds Service Co., the Fund's transfer and disbursing agent. The
management services of the Manager are not exclusive under the terms of the
Investment Advisory Agreement and the Manager is free to, and does, render
management services to others.

<PAGE>

faith, gross negligence or reckless disregard of duty. the Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days' prior written notice by Majority Vote of the
Portfolio, by the Trustees of the Portfolio, or by the Manager.

Costs, expenses and liabilities of the Trust attributable to a particular
fund are allocated to that fund. Costs, expenses and liabilities which are not
readily attributable to a particular fund are allocated among all of the Trust's
funds. Thus, each fund pays its proportionate share of: the fees of the Trust's
independent auditors, legal counsel, custodian, transfer agent and accountants;
insurance premiums; the fees and expenses of Trustees who do not receive
compensation from R. Meeder & Associates; association dues; the cost of printing
and mailing confirmations, prospectuses, proxies, proxy statements, notices and
reports to existing shareholders; state registration fees; distribution expenses
within the percentage limitations of each Class of Shares' distribution and
service plan, including the cost of printing and mailing of prospectuses and
other materials incident to soliciting new accounts; and other miscellaneous
expenses.

The expenses of the Portfolio include the compensation of the Trustees who
are not affiliated with the Manager; registration fees; membership dues
allocable to the Portfolio; fees and expenses of independent accountants, of
legal counsel and of any transfer agent or accountant of the Portfolio;
insurance premiums and other miscellaneous expenses.

Expenses of the Portfolio also include all fees under its Accounting and
Administrative Service Agreement; the expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to governmental offices and
commissions; expenses of meetings of investors and Trustees; the advisory fees
payable to the Manager under the Investment Advisory Contract and other
miscellaneous expenses.

For the year ended December 31, 1998, the Mutual Fund Portfolio paid fees
to the Manager totaling $1,058,035 ($1,130,843 in 1997; $1,083,553 in 1996).

The Manager has agreed to reduce its fees and/or absorb expenses to limit
the fund's total annual operating expenses to 1.75% of average daily net assets

<PAGE>

for Class A Shares and 2.15% of average daily net assets for Class C shares. The
Manager may terminate this agreement after December 31, 1999.

For the year ended December 31, 1998, the Manager reimbursed expenses
totaling $56,876 in the Tactical Asset Allocation Fund.

The Manager may use its resources to pay expenses associated with the sale
of the Fund's shares. This may include payments to third parties such as banks
or broker-dealers that provide shareholder support services or engage in the
sale of the Fund's shares. However, the Fund does not pay the Manager any
separate fees for this service.

OFFICERS AND TRUSTEES

<PAGE>

NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION

MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit Committee.

ROBERT S. MEEDER, JR.*, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.

WALTER L. OGLE, 60 Trustee Executive Vice President of
400 Interstate North Parkway Aon Consulting, an employee
Suite 1630 benefits consulting group.
Atlanta, GA 30339

<PAGE>

JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm and
North Palm Beach, FL 33408 division of Golden Bear
International, Inc.

PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer of
R. Meeder & Associates, Inc.;
President and a Director of
Adviser Dealer Services, Inc.

DONALD F. MEEDER*+, 60 Secretary/Treasurer Vice President of R. Meeder &
Associates, Inc.; Secretary
of Mutual Funds Service Co.,
the Fund's transfer agent;
Secretary of Adviser Dealer
Services, Inc.

<PAGE>

* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Flex-Partners and each Portfolio.

+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.

Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.

The following table shows the compensation paid by the Portfolio and the
Fund Complex as a whole to the Trustees of the Portfolio and the Fund Complex
during the fiscal year ended December 31, 1998.

COMPENSATION TABLE

Robert S. Meeder, Sr. None None None None

Milton S. Bartholomew $5,673 None None $13,525

Robert S. Meeder, Jr. None None None None

John M. Emery $4,330 None None $ 9,867

Richard A. Farr $4,257 None None $ 9,367

Russel G. Means $4,007 None None $ 7,867

Walter L. Ogle $5,821 None None $14,525

Philip A. Voelker None None None None

<PAGE>

Roger A. Blackwell $5,668 None None $13,525

Charles A. Donabedian $5,505 None None $12,525

James Didion None None None None

Jack W. Nicklaus II $2,632 None None $ 6,325

William L. Gurner None None None None

Lowell G. Miller None None None None

1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1998,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $2,696, Roger A. Blackwell - $5,668,
Charles A. Donabedian - $5,505, and Jack W. Nicklaus II - $2,632.

2 The Fund Complex consists of 15 investment companies.

Each Trustee who is not an "interested person: is paid a meeting fee of
$250 per meeting for each of the five Portfolios. In addition, each such Trustee
earns an annual fee, payable quarterly, based on the average net assets in each
Portfolio based on the following schedule: Money Market Portfolio, 0.0005% of
the amount of average net assets between $500 million and $1 billion; 0.00025%
of the amount of average net assets exceeding $1 billion. For the other four
Portfolios, each Trustee is paid a fee of 0.00375% of the amount of each
Portfolio's average net assets exceeding $15 million. Members of the Audit and
Strategic Planning Committees for each of The Flex-Partners and The Flex-funds
Trusts, and the Portfolios are paid $500 for each Committee meeting attended.
All other officers and Trustees serve without compensation from the Trust.
Trustees fees for the Portfolio totaled $43,430 for the year ended December 31,
1998 ($36,609 in 1997; $4,162 in 1996).

All other officers and Trustees serve without compensation from the Trust.

The Trustees and officers of the Fund and the Portfolio own, in the
aggregate, less than 1% of the Fund's total outstanding shares.

THE DISTRIBUTOR

Adviser Dealer Services, Inc. (the "Distributor"), 6000 Memorial Drive,
Dublin, Ohio 43017, acts as the distributor of the Class A shares and the Class

<PAGE>

C shares of the Fund. The Distributor is an affiliate of the Manager and a
subsidiary of Muirfield Investors, Inc.

CLASS A SHARES. Class A shares are sold at net asset value plus the
applicable sales charge as shown in the table below. Class A shares also bear a
Rule 12b-1 fee of 0.25% per year (paid to the Distributor, Adviser Dealer
Services, Inc.) of their average net asset value. In addition, Class A shares
bear an asset based service fee of 0.25% per year. The sales charge on Class A
shares is allocated between the investment dealer and Adviser Dealer Services,
Inc. as shown below:

<PAGE>

The Distributor also receives the proceeds of contingent deferred sales
charges paid by investors upon certain redemptions of Class C shares. See "How
to Buy Shares" in the Prospectus.

The table below states the amounts paid under the Fund distribution plan
for the year ended December 31, 1998.

DISTRIBUTION PLAN EXPENSES PAID BY THE FUND

TYPE OF EXPENSE AMOUNT PAID
- --------------- -----------
Advertising $ 0
Printing and Mailing of Prospectuses $ 0
Compensation to Underwriters $ 35,645
Compensation to Broker-Dealers $ 67,689
Compensation to Sales Personnel $ 0
Interest, Carrying, or Other Financial Charges $ 0
---------
Total $103,334

<PAGE>

Pursuant to the Underwriting Agreement, the Fund has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act and the Investment Company Act of 1940. The
Underwriting Agreement was approved by the Board of Trustees, including a
majority of the Rule 12b-1 Trustees, on February 8, 1997. Total payments made by
the Fund to a former distributor of the Fund, Roosevelt & Cross, Incorporated,
and to the current distributor of the Fund, Adviser Dealer Services, Inc. for
the year ended December 31, 1998 amounted to $94 and $1,396, respectively. The
payments made were used to offset a portion of initial commissions paid to
securities dealers for the sale of Fund shares.

FLEX-PARTNERS RETIREMENT PLANS

INDIVIDUAL RETIREMENT ACCOUNTS (IRA):

DEDUCTIBLE CONTRIBUTIONS

All contributions (other than certain rollover contributions) must be made
in cash and are subject to the following limitations:

<PAGE>

($10,000* - EXCESS AGI ) Maximum Allowable = Deduction
--------------------- X Deduction Limit
$10,000*

*For years after 2006, $20,000 if you are married, filing jointly.

NONDEDUCTIBLE CONTRIBUTIONS

ROTH INDIVIDUAL RETIREMENT ACCOUNTS (ROTH IRA):

CONTRIBUTIONS:

All contributions must be made in cash and are subject to the following
limitations:

<PAGE>

NO MAXIMUM AGE LIMIT. There is no maximum age limit for making a Roth IRA
contribution. Attainment of age 70 1/2 does not prevent you from contributing to
a Roth IRA.

(a) Subtract your AGI from $110,000 ($160,000 if married, filing jointly;
$10,000 if married, filing separately).

(b) Multiply the result in Step `a' by .1333 (.20 if married).

<PAGE>

(d) The result in Step `c' is your allowable contribution limit. If it is
more than $0, but less that $200, your allowable contribution limit is
$200.

ROLLING OVER/CONVERTING TRADITIONAL IRAS TO ROTH IRAS

<PAGE>

CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER

For the year ended December 31, 1998, total payments to Mutual Funds
Service Co. by the Fund and the Portfolio amounted to $74,818.

ADDITIONAL INFORMATION

AUDITORS. KPMG LLP, Two Nationwide Plaza, Columbus, Ohio 43215 serves as
the Trust's independent auditors. The auditors examine financial statements for
the Fund and provide other assurance, tax, and related services.

<PAGE>

PRINCIPAL HOLDERS OF OUTSTANDING SHARES

As of January 31, 1999, the following persons owned 5% or more of the
Fund's outstanding shares of beneficial interest:

Class Name and Address Number of Percent
OF SHARES OF OWNER SHARES OF CLASS
- --------- ---------------- ---------- --------

Class A *Firstar Bank NA Cincinnati c/f 3,338.55(1)(2) 78.9%
Robert S. Meeder, Jr. IRA Rollover
P.O. Box 7177
Dublin, OH 43017

David Heineck 891.73(1)(2) 21.0%
Giuseppa Heineck, JTWROS
14323 133rd Avenue
Tigard, OR 97224

Class C First Trust Corp. 48,904.84(1) 5.0%
P.O. Box 173736
Denver, CO 80217

(1) Indicates owner of record.
(2) Indicates beneficial owner.

* Indicates control person. Control means beneficial ownership of more than 25%
of the shares of the Fund. Because of this control, a control person could
prevent a change in the investment adviser or subadviser of the Portfolio that
is favored by other shareholders. A control person could also cause a change in
the investment adviser or subadviser of the Portfolio that is opposed by other
shareholders.

To the knowledge of the Trust, the shareholders listed above own shares for
investment purposes and have no known intention of exercising any control of the
Fund.

FINANCIAL STATEMENTS

Financial statements for Tactical Asset Allocation Fund (formerly, The TAA
Fund) and the Mutual Fund Portfolio are presented on the following pages.

<PAGE>

THE FLEX-PARTNERS INTERNATIONAL EQUITY FUND
CROSS REFERENCE SHEET TO FORM N-1A

PART B.

ITEM NO. STATEMENT OF ADDITIONAL INFORMATION

10(a) Front Cover Page
10(b) Table of Contents

11 Description of the Trust

12(a) Description of the Trust
12(b) Investment Policies and Related Matters
Risk Considerations
12(c)(d)(e) Investment Policies and Related Matters

13(a) Description of the Trust
Trustees and Officers
13(b)(c)(d) Trustees and Officers
13(e) The Distributor

14(a)(b) Not applicable
14(c) Trustees and Officers

15(a) Investment Adviser and Manager
Investment Subadviser
15(b) The Distributor
15(c) Investment Adviser and Manager
Investment Subadviser
15(d)(e) Not applicable
15(f)(g) The Distributor
15(h) Contracts with Companies Affiliated With Manager
Additional Information

16(a)(b)(c)(d) Portfolio Transactions
16(e) Not applicable

17(a) Investment Policies and Related Matters
17(b) Not applicable

18(a) Aditional Purchase and Redemption Information
Flex-Partners Retirement Plan
18(b) Not applicable
18(c) Valuation of Portfolio Securities
18(d) Not applicable

19 Distributions and Taxes

20(a)(b) The Distributor
20(c) Not applicable

21(a) Not applicable
21(b) Performanc

22 Financial Statements

<PAGE>

INTERNATIONAL EQUITY FUND
A FUND OF THE FLEX-PARTNERS TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 30, 1999

This Statement is not a prospectus but should be read in conjunction with
the Prospectus of The Flex-Partners International Equity Fund (dated April 30,
1999). Please retain this document for future reference. A copy of the
Prospectus may be obtained from The Flex-Partners, 6000 Memorial Drive, Dublin,
Ohio 43017 or by calling 1-800-494-3539. Capitalized terms used and not
otherwise defined herein have the same meanings as defined in the Prospectus.

TABLE OF CONTENTS PAGE

Description of the Trust
Investment Policies and Related Matters
Risk Considerations
Portfolio Transactions
Valuation of Portfolio Securities
Performance
Additional Purchase and Redemption Information
Distributions and Taxes
Investment Adviser and Manager
Investment Subadviser
Trustees and Officers
The Distributor
Flex-Partners Retirement Plans
Contracts With Companies Affiliated With Manager
Additional Information
Financial Statements

INVESTMENT ADVISER INVESTMENT SUBADVISER
R. Meeder & Associates, Inc. Commercial Union Investment
Management, Limited

DISTRIBUTOR TRANSFER AGENT
Adviser Dealer Services, Inc. Mutual Funds Service Co.

<PAGE>

DESCRIPTION OF THE TRUST

The Trust has retained the services of R. Meeder & Associates, Inc. as
investment adviser of the International Equity Fund.

For descriptions of the investment objectives and policies of the Fund, see
"Investment Policies and Related Matters." For descriptions of the management
and expenses of the Fund, see "Investment Adviser and Manager" and "Trustees and
Officers."

<PAGE>

restriction pertaining to only one fund. In voting on a Distribution Plan,
approval of the Plan by the shareholders of a particular fund would make the
Plan effective as to that fund, whether or not it had been approved by the
shareholders of the other funds.

VOTING RIGHTS. When matters are submitted for shareholder vote,
shareholders of each fund will have one vote for each full share held and
proportionate, fractional votes for fractional shares held. A separate vote of a
fund is required on any matter affecting the fund on which shareholders are
entitled to vote. Shareholders of one fund are not entitled to vote on a matter
that does not affect that fund but that does require a separate vote of any
other fund. There normally will be no meetings of shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of
Trustees holding office have been elected by shareholders, at which time the
Trustees then in office will call a shareholders' meeting for the election of
Trustees. Any Trustee may be removed from office upon the vote of shareholders
holding at least two-thirds of the Trust's outstanding shares at a meeting
called for that purpose. The Trustees are required to call such a meeting upon
the written request of shareholders holding at least 10% of the Trust's
outstanding shares. Shareholders have under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees of a
fund by a specified number of shareholders) the right to communicate with other
shareholders in connection with requesting a meeting of shareholders for the
purpose of removing one or more Trustees.

INVESTMENT POLICIES AND RELATED MATTERS

GENERAL

INVESTMENT APPROACH. The Subadviser's philosophy is founded on a top down,
theme-driven approach to investment management. The Subadviser aims to add value
to the Fund at all stages of the investment process, from the Subadviser's
strategic top down approach to asset allocation and currency hedging to the
Subadviser's sector and individual stock selection. While the Subadviser's
portfolio managers operate within a disciplined and structured environment, they
have a high degree of freedom over stock selection, enabling them to exercise
their individual flair.

<PAGE>

In seeking to meet its investment objective, the International Equity Fund
may invest in any type of security whose investment characteristics are
consistent with the Fund's investment program. These and some of the other
investment strategies the Fund may use are described below. Although these
strategies are regularly used by some investment companies and other
institutional investors in various markets, some of these strategies cannot at
the present time be used to a significant extent by the Fund in some of the
markets in which the Fund will invest and may not be available for extensive use
in the future.

When allocating investments among countries, the Subadviser will consider
various criteria, including the relative economic growth potential of the
various countries' economies; expected levels of inflation; government policies
influencing business conditions; and the outlook for currency relationships. By
investing in foreign securities, the Subadviser will attempt to take advantage
of differences between economic trends and performance of securities markets in
various countries.

ASSET ALLOCATION. Asset allocation decisions are made by the lead portfolio
manager. The Subadviser's lead portfolio manager takes a top down view,
considering the results of economic analysis, currency forecasts, political
issues and market valuations to establish structural guidelines to which the
portfolio must adhere. He or she seeks to contribute to performance by making
strategic switches between asset classes and geographical regions. Once these
asset allocation guidelines are set, stock selection decisions are made by
specialist regional portfolio managers in accordance with country and sector
strategy.

COUNTRY AND SECTOR STRATEGY. Country and sector strategy is determined
within the guidelines set by the Subadviser's portfolio manager following
consultation with their teams on the implications of trends in interest rates,
exchange rates and other economic fundamentals.

The objective is to pinpoint countries and sectors which are likely to
outperform based on where each market is in terms of its business cycle. The
Subadviser recognizes that different economic and monetary backgrounds result in
good performance by different groups of stocks and the Subadviser judges the
broad areas of a market (growth stocks, value stocks, interest rate sensitives,
etc.) which are likely to outperform at any particular stage of the cycle. At
the same the Subadviser pays close attention to the themes on which a market is
likely to concentrate at a particular time (such as brand values, takeover
activity, or balance sheet strength). Once all these factors are considered, a
formal country and sector strategy is constructed to which all relevant
portfolios must conform. In order to control risk and the extent of the view
taken, limits are set on the deviations that may be made from the country and
sector matrices.

EQUITY STOCK SELECTION. The Subadviser's portfolio managers have the
freedom to choose stocks within the framework of this matrix structure. In
reaching stock selection decisions, the Subadviser uses the commonly recognized
yardsticks of price/earnings ratios and dividend yields, comparing stocks to
market valuations, relevant sector variations and the history of the particular

<PAGE>

stock. The Subadviser looks for excesses of overvaluation/undervaluation in the
market which are tested against the Subadviser's top down view, and make a
qualitative judgment about what is already discounted in the market and what is
likely to occur in the future.

The continued holding of a stock is constantly tested against the reason
for purchase. Once valuation measures no longer warrant the holding of a
security, it is sold. If purchase was based on a single event which occurs, or
which now appears unlikely to occur, the stock would be sold. A change in top
down view may also necessitate a sale where a holding represents only a thematic
or sector view. Price targets are only set for short-term trading.

CURRENCY. The Subadviser treats currency as a separate asset class and it
is analyzed as such. The Subadviser does not believe in speculating in
currencies and it is the Subadviser's normal stance to take on the natural
currency exposure that comes with the Subadviser's portfolio positions. However,
when the Subadviser does take on a currency position, the Subadviser does so
because they believe a significant long-term trend is developing which suggests
hedging will both enhance returns and markedly contribute to reduced risk and
volatility in the Fund.

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted whenever an investment policy or limitation
states a maximum percentage of the Fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Fund's acquisition of such security or other asset.
Accordingly any subsequent change in net asset values or other circumstances
will not be considered when determining whether the investment complies with the
Fund's investment policies and limitations.

The Fund's fundamental investment limitations cannot be changed without
approval by a majority of the outstanding voting securities (as defined in the
Investment Company Act of 1940) of the Fund. However, except for the fundamental
investment limitations set forth below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental and
may be changed by the Trustees without shareholder approval. THE FOLLOWING ARE
THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH IN THEIR ENTIRETY;
PROVIDED THAT NOTHING IN THE FOLLOWING INVESTMENT RESTRICTIONS WILL PREVENT THE
FUND FROM INVESTING ALL OR PART OF THE FUND'S ASSETS IN AN OPEN-END MANAGEMENT
INVESTMENT COMPANY WITH THE SAME INVESTMENT OBJECTIVE AS THE FUND, PROVIDED SUCH
INVESTMENT IS APPROVED BY THE TRUSTEES. THE FUND MAY NOT

(1) with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than obligations issued or guaranteed by the government of
the United States or any of its agencies or instrumentalities or the securities
of other investment companies if otherwise permitted) if, as a result thereof,
(a) more than 5% of the Fund's total assets would be invested in the securities

<PAGE>

of such issuer or (b) the Fund would hold more than 10% of the voting securities
of such issuer;

(2) issue senior securities except as permitted under the Investment
Company Act of 1940;

(3) borrow money except that the Fund may borrow money from banks in an
amount not exceeding 33-1/3% of its total assets (including the amount borrowed)
less liabilities (other than borrowings);

(4) underwrite securities issued by others (except to the extent that the
Fund may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities);

(6) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);

(7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from purchasing or selling options and futures contracts or from investing
in securities or other instruments backed by physical commodities); or

(8) lend any security or make any other loan if as a result more than
33-1/3% of its total assets would be lent to other parties but this limitation
does not apply to purchases of debt securities or to repurchase agreements.

THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL AND MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.

(i) The Fund does not currently intend to sell securities short unless it
owns or has the right to obtain securities equivalent in kind and amount to the
securities sold short and provided that transactions in futures contracts and
options are not deemed to constitute selling securities short.

(ii) The Fund does not currently intend to purchase securities on margin
except that the Fund may obtain such short-term credits as are necessary for the
clearance of transactions and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.

<PAGE>

(iii) The Fund may borrow money only from a bank. The Fund will not
purchase any security while borrowings representing more than 5% of its total
assets are outstanding.

(iv) The Fund does not currently intend to purchase any security if as a
result more than 15% of its net assets would be invested in securities that are
deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are valued
including repurchase agreements with remaining maturities in excess of seven
days or securities without readily available market quotes.

(v) The Fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than 5% of
its total assets would be invested in the securities of business enterprises
that, including predecessors, have a record of less than three years of
continuous operation.

(vi) The Fund does not currently intend to purchase warrants, valued at the
lower of cost or market, in excess of 5% of the Fund's net assets. Included in
that amount, but not to exceed 2% of the Fund's net assets, may be warrants that
are not listed on the New York Stock Exchange or the American Stock Exchange.
Warrants acquired by the Fund in units or attached to securities are not subject
to these restrictions.

(vii) The Fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.

(viii) The Fund does not currently intend to purchase the securities of any
issuer if those officers and Trustees of the Trust and those officers and
directors of the Manager or the Subadviser who individually own more than 1/2 of
1% of the securities of such issuer, together own more than 5% of such issuer's
securities.

For the Fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions" herein. For
the Fund's limitations on short sales, see the section entitled "Short Sales"
herein.

MONEY MARKET INSTRUMENTS. When investing in U.S. money market instruments,
the Fund will limit its purchases, denominated in U.S. dollars, to the following
securities.

<PAGE>

* Bank Obligations and Instruments Secured Thereby - obligations
including certificates of deposit, time deposits and bankers'
acceptances) of domestic banks having total assets of $1,000,000,000
or more, instruments secured by such obligations and obligations of
foreign branches of such banks, if the domestic parent bank is
unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Fund may also
invest in obligations (including certificates of deposit and bankers
acceptances) of domestic branches of foreign banks having assets of
$1,000,000,000 or more if the domestic branch is subject to the same
regulation as United States banks. The Fund will not invest at time of
purchase more than 25% of its assets in obligations of banks nor will
the Fund invest more than 10% of its assets in time deposits. * High
Quality Commercial Paper - The Fund may invest in commercial paper
rated no lower than A-2 by Standard & Poor's Corporation or Prime-2 by
Moody's Investors Services Inc. or if not rated issued by a company
having an outstanding debt issue rated at least A by Standard & Poor's
or Moody's.

* Private Placement Commercial Paper - Private placement commercial
paper consists of unregistered securities which are traded in public
markets to qualified institutional investors such as the Fund. The
Fund's risk is that the universe of potential buyers for the
securities should the Fund desire to liquidate a position is limited
to qualified dealers and institutions and therefore such securities
could have the effect of being illiquid.

* High Grade Corporate Obligations - obligations rated at least A by
Standard & Poor's or Moody's. See rating information below.

* Repurchase Agreements -- See Repurchase Agreements below.

The Subadviser exercises due care in the selection of money market
instruments. However, there is a risk that the issuers of the securities may not
be able to meet their obligations to pay interest or principal when due. There
is also a risk that some of the Fund's securities might have to be liquidated
prior to maturity at a price less than original amortized cost or value face
amount or maturity value to meet larger than expected redemptions. Any of these
risks if encountered could cause a reduction in net income or in the net asset
value of the Fund.

RATINGS

1. Moody's Investors Services Inc.'s Corporate Bond Rating:

<PAGE>

Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

2. Standard and Poor s Corporation's Corporate Bond Rating:

AA - Bonds rated AA also qualify as high grade obligations and in the
majority of instances differ from AAA issues only in small degree. Here too
prices move with the long-term money market.

3. A-1 and P-1 Commercial Paper Ratings:

<PAGE>

the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1 A-2 or
A-3.

4. Description of Permitted Money Market Investments:

Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short term credit needs.

Repurchase Agreements - See Repurchase Agreements below.

Certificates of Deposit - are certificates issued against funds deposited
in a bank are for a definite period of time earn a specified or variable rate of
return and are normally negotiable.

Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed accepted when
a bank guarantees their payment at maturity.

Corporate Obligations - include bonds and notes issued by corporations in
order to finance longer term credit needs.

COMMON AND PREFERRED STOCKS. Stocks represent shares of ownership in a
company. Generally, preferred stock has a specified dividend and ranks after
bonds and before common stock in its claim on income for dividend payments and
on assets if the company is liquidated. After other claims are satisfied, common

<PAGE>

stockholders participate in company profits on a pro rata basis; profits may be
paid out in dividends or reinvested in the company to help it grow. Increases
and decreases in earnings are usually reflected in a company's stock price, so
common stocks generally have the greatest appreciation and depreciation
potential of all corporate securities. While most preferred stocks pay a
dividend, the Fund may purchase preferred stock where the issuer has omitted, or
is in danger of omitting, payment of its dividend. Such investments would be
made primarily for their capital appreciation potential.

CONVERTIBLE SECURITIES AND WARRANTS. The Fund may invest in debt or
preferred equity securities convertible into or exchangeable for equity
securities. Traditionally, convertible securities have paid dividends or
interest at rates higher than common stocks but lower than non-convertible
securities. They generally participate in the appreciation or depreciation of
the underlying stock into which they are convertible, but to a lesser degree. In
recent years, convertibles have been developed which combine higher or lower
current income with options and other features. Warrants are options to buy a
stated number of shares of common stock at a specified price any time during the
life of the warrants (generally, two or more years).

FIXED INCOME SECURITIES. The Fund may invest up to 10% of its total assets
in any type of investment-grade security. Such securities would be purchased in
companies which meet the investment criteria for the Fund. The price of a bond
fluctuates with changes in interest rates, rising when interest rates fall and
falling when interest rates rise.

ILLIQUID INVESTMENTS are investments that cannot be sold or disposed of in
the ordinary course of business at approximately the prices at which they are
valued. Under the supervision of the Board of Trustees, the Subadviser
determines the liquidity of the Fund's investments and through reports from the
Subadviser, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments the Subadviser may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features), and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days, over-the-counter options, and
non-government stripped fixed-rate mortgage-backed securities. Also, the
Subadviser may determine some restricted securities government-stripped
fixed-rate mortgage-backed securities loans and other direct debt instruments
and swap agreements to be illiquid. However, with respect to over-the-counter
options the Fund writes, all or a portion of the value of the underlying
instrument may be illiquid depending on the assets held to cover the option and
the nature and terms of any agreement the Fund may have to close out the option
before expiration. In the absence of market quotations, illiquid investments are
priced at fair value as determined in good faith by the Board of Trustees. If
through a change in values, net assets or other circumstances, the Fund were in
a position where more than 15% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.

<PAGE>

RESTRICTED SECURITIES generally can be sold in privately negotiated
transactions pursuant to an exemption from registration under the Securities Act
of 1933 or in a registered public offering. Where registration is required, the
Fund may be obligated to pay all or part of the registration expense and a
considerable period may elapse between the time it decides to seek registration
and the time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to seek registration of the security.

TEMPORARY INVESTMENTS. For temporary defensive purposes, the Fund may
invest up to 20% of its total assets in money market funds and the following
money market securities, denominated in U.S. dollars or in the currency of any
foreign country, issued by entities organized in the U.S. or any foreign
country: short-term (less than twelve months to maturity) and medium-term (not
greater than five years to maturity) obligations issued or guaranteed by the
U.S. government or the governments of foreign countries, their agencies or
instrumentalities; finance company and corporate commercial paper, and other
short-term corporate obligations, in each case rated Prime-1 by Moody's or A or
better by S&P or, if unrated, of comparable quality as determined by the
Subadviser; obligations (including certificates of deposit, time deposits and
bankers' acceptances) of banks; and repurchase agreements with banks and
broker-dealers with respect to such securities.

REPURCHASE AGREEMENTS. For temporary defensive purposes and for cash
management purposes, the Fund may enter into repurchase agreements with U.S.
banks and broker-dealers. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price which obligation is in effect secured by the
value (at least equal to the amount of the agreed upon resale price and marked
to market daily) of the underlying security. Under a repurchase agreement, the
Fund acquires a security from a U.S. bank or a registered broker-dealer who
simultaneously agrees to repurchase the security at a specified time and price.
The repurchase price is in excess of the purchase price by an amount which
reflects an agreed-upon rate of return, which is not tied to the coupon rate on
the underlying security. Under the 1940 Act, repurchase agreements are
considered to be loans collateralized by the underlying security and therefore
will be fully collateralized. However, if the seller should default on its
obligation to repurchase the underlying security, the Fund may experience delay
or difficulty in exercising its rights to realize upon the security and might
incur a loss if the value of the security declines, as well as incur disposition
costs in liquidating the security.

The Fund may engage in repurchase agreements with respect to any security
in which it is authorized to invest.

While it does not presently appear possible to eliminate all risks from
these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delays and costs to the Fund in
connection with bankruptcy proceedings), it is the Fund's current policy to
limit repurchase agreement transactions to parties whose creditworthiness has
been reviewed and found satisfactory by the Subadviser.

<PAGE>

BORROWING. As a fundamental policy, the Fund may borrow up to one-third of
the value of its total assets from banks to increase its holdings of portfolio
securities. Under the Investment Company Act of 1940, the Fund is required to
maintain continuous asset coverage of 300% with respect to such borrowings and
to sell (within three days) sufficient portfolio holdings to restore such
coverage if it should decline to less than 300% due to market fluctuations or
otherwise, even if such liquidations of the Fund's holdings may be
disadvantageous from an investment standpoint. Leveraging by means of borrowing
may exaggerate the effect of any increase or decrease in the value of portfolio
securities on the Fund's net asset value, and money borrowed will be subject to
interest and other costs (which may include commitment fees and/or the cost of
maintaining minimum average balances), which may or may not exceed the income or
gains received from the securities purchased with borrowed funds.

SECURITIES LENDING. The Fund may lend to broker-dealers portfolio
securities with an aggregate market value of up to one-third of its total assets
to generate income. Such loans must be secured by collateral (consisting of any
combination of cash, U.S. government securities or irrevocable letters of
credit) in an amount at least equal (on a daily market-to-market basis) to the
current market value of the securities loaned. The Fund may terminate the loans
at any time and obtain the return of the securities loaned within five business
days. The Fund will continue to receive any interest or dividends paid on the
loaned securities and will continue to retain any voting rights with respect to
the securities. In the event that the borrower defaults on its obligation to
return borrowed securities, because of insolvency or otherwise, the Fund could
experience delays and costs in gaining access to the collateral and could suffer
a loss to the extent that the value of the collateral falls below the market
value of the borrowed securities.

Securities lending allows the Fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be made
only to parties deemed by the Subadviser to be of good standing. Furthermore,
they will only be made if in the Subadviser's judgment the consideration to be
earned from such loans would justify the risk.

The Subadviser understands that it is the current view of the SEC Staff
that the Fund may engage in loan transactions only under the following
conditions: (1) the Fund must receive 100% collateral in the form of cash or
cash equivalents (e.g. U.S. Treasury bills or notes) from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.

<PAGE>

Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment as well as the security loaned to market forces (i.e. capital
appreciation or depreciation).

In addition, the costs of foreign investing, including withholding taxes,
brokerage commissions, and custodial costs, are generally higher than for U.S.
investments.

The Fund may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid than
foreign securities of the same class that are not subject to such restrictions.

ADR's are depositary receipts typically issued by a U.S. bank or trust
company which evidence ownership of underlying securities issued by a foreign

<PAGE>

corporation. EDR's and GDR's are typically issued by foreign banks or trust
companies, although they also may be issued by U.S. banks or trust companies,
and evidence ownership of underlying securities issued by either a foreign or a
U.S. corporation. Generally, depositary receipts in registered form are designed
for use in the U.S. securities market and depositary receipts in bearer form are
designed for use in securities markets outside the U.S. Depositary receipts may
not necessarily be denominated in the same currency as the underlying securities
into which they may be converted. Depositary receipts may be issued pursuant to
sponsored or unsponsored programs. In sponsored programs, an issuer has made
arrangements to have its securities traded in the form of depositary receipts.
In unsponsored programs, the issuer may not be directly involved in the creation
of the program. Although regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, in some cases it may be easier to
obtain financial information from an issuer that has participated in the
creation of a sponsored program. Accordingly, there may be less information
available regarding issuers of securities underlying unsponsored programs and
there may not be a correlation between such information and the market value of
the depositary receipts. Depositary receipts also involve the risks of other
investments in foreign securities, as discussed below. For purposes of the
Fund's investment policies, the Fund's investments in depositary receipts will
be deemed to be investments in the underlying securities.

OPTIONS ON SECURITIES OR INDICES. The Fund may write (i.e., sell) covered
put and call options and purchase put and call options on securities or
securities indices that are traded on U.S. and foreign exchanges or in the
over-the-counter markets. An option on a security is a contract that permits the
purchaser of the option, in return for the premium paid, the right to buy a
specified security (in the case of a call option) or to sell a specified
security (in the case of a put option) from or to the writer of the option at a
designated price during the term of the option. An option on a securities index
permits the purchaser of the option, in return for the premium paid, the right
to receive from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option. The Fund may write a
call or put option to generate income, and will do so only if the option is
"covered." This means that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or hold
a call at the same or lower exercise price, for the same exercise period, and on
the same securities as the written call. A put is covered if the Fund maintains
liquid assets with a value at least equal to the exercise price in a segregated
account, or holds a put on the same underlying securities at an equal or greater
exercise price.

FOREIGN CURRENCY TRANSACTIONS. The Fund may hold foreign currency deposits
from time to time and may convert dollars and foreign currencies in the foreign
exchange markets. Currency conversion involves dealer spreads and other costs
although commissions usually are not charged. Currencies may be exchanged on a
spot (i.e., cash) basis, or by entering into forward contracts to purchase or
sell foreign currencies at a future date and price. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date, which is individually negotiated and privately traded by currency

<PAGE>

traders and their customers. Forward contracts generally are traded in an
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract may
agree to offset or terminate the contract before its maturity or may hold the
contract to maturity and complete the contemplated currency exchange. The Fund
will generally not enter into a forward contract with a term of greater than one
year.

The Fund may use currency forward contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the Fund.

In connection with purchases and sales of securities denominated in foreign
currencies, the Fund may enter into currency forward contracts to fix a definite
price for the purchase or sale in advance of the trade's settlement date. This
technique is sometimes referred to as a settlement hedge or transaction hedge.

The Subadviser expects to enter into settlement hedges in the normal course
of managing the Fund's foreign investments. The Fund could also enter into
forward contracts to purchase or sell a foreign currency in anticipation of
future purchases or sales of securities denominated in foreign currency even if
the specific investments have not yet been selected by the Subadviser.

The Fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example, if
the Fund owned securities denominated in pounds sterling, it could enter into a
forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge sometimes referred
to as a "position hedge," would tend to offset both positive and negative
currency fluctuations but would not offset changes in security values caused by
other factors. The Fund could also hedge the position by selling another
currency expected to perform similarly to the pound sterling - for example, by
entering into a forward contract to sell Deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge sometimes referred to as a
"proxy hedge," could offer advantages in terms of cost, yield, or efficiency,
but generally would not hedge currency exposure as effectively as a simple hedge
into U.S. dollars. Proxy hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which the hedged securities
are denominated.

The Fund will not enter into forward contracts if, as a result, the Fund
will have more than 20% of its total assets committed to the consummation of
such contracts. Although forward contracts will be used primarily to protect the
Fund from adverse currency movements, they also involve the risk that
anticipated currency movements will not be accurately predicted.

Under certain conditions, SEC guidelines require mutual funds to set aside
cash and appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. As required by SEC, guidelines the Fund will
segregate assets to cover currency forward contracts, if any, whose purpose is
essentially speculative. The Fund will not segregate assets to cover forward
contracts entered into for hedging purposes including settlement hedges position
hedges and proxy hedges.

<PAGE>

Successful use of forward currency contracts will depend on the
Subadviser's skill in analyzing and predicting currency values. Forward
contracts may substantially change the Fund's investment exposure to changes in
currency exchange rates and could result in losses to the Fund if currencies do
not perform as the Subadviser anticipates. For example, if a currency's value
rose at a time when the Subadviser had hedged the Fund by selling that currency
in exchange for dollars, the Fund would be unable to participate in the
currency's appreciation. If the Subadviser hedges currency exposure through
proxy hedges, the Fund could realize currency losses from the hedge and the
security position at the same time if the two currencies do not move in tandem.
Similarly, if the Subadviser increases the Fund's exposure to a foreign currency
and that currency's value declines, the Fund will realize a loss. There is no
assurance that the Subadviser's use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time. The
policies described in this section are non-fundamental policies of the Fund.

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund will not: (a)
sell futures contracts, purchase put options or write call options if, as a
result, more than 50% of the Fund's total assets would be hedged with futures
and options under normal conditions; (b) purchase futures contracts or write put
options if, as a result, the Fund's total obligations upon settlement or
exercise of purchased futures contracts and written put options would exceed 25%
of its total assets; or (c) purchase call options if, as a result, the current
value of option premiums for call options purchased by the Fund would exceed 5%
of the Fund's total assets. The value of the underlying securities on which
options may be written at any one time will not exceed 15% of the total assets
of the Fund. These limitations do not apply to options attached to or acquired
or traded together with their underlying securities, and do not apply to
securities that incorporate features similar to options. The above limitations
on the Fund's investments in futures contracts and options and the Fund's
policies regarding futures contracts and options discussed elsewhere in this
Statement of Additional Information may be changed as regulatory agencies
permit.

FUTURES CONTRACTS. For hedging purposes only, the Fund may buy and sell
financial futures contracts, stock index futures contracts, foreign currency
futures contracts and options on any of the foregoing. A financial futures
contract is an agreement between two parties to buy or sell a specified debt
security at a set price on a future date. An index futures contract is an
agreement to take or make delivery of an amount of cash based on the difference
between the value of the index at the beginning and at the end of the contract
period. A futures contract on a foreign currency is an agreement to buy or sell
a specified amount of a currency for a set price on a future date.

When the Fund enters into a futures contract, it must make an initial
deposit, known as "initial margin," as a partial guarantee of its performance
under the contract. As the value of the security, index or currency fluctuates,
either party to the contract is required to make additional margin payments,
known as "variation margin," to cover any additional obligation it may have
under the contract. In addition, when the Fund enters into a futures contract,
it will segregate assets or "cover" its position in accordance with the 1940
Act. See "Asset Coverage for Futures and Options Positions."

<PAGE>

When the Fund purchases a futures contract, it agrees to purchase a
specified underlying instrument at a specified future date. When the Fund sells
a futures contract, it agrees to sell the underlying instrument at a specified
future date. The price at which the purchase and sale will take place is fixed
when the Fund enters into the contract.

The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Fund's exposure to positive and negative
price fluctuations in the underlying instrument, much as if it had purchased the
underlying instrument directly. When the Fund sells a futures contract, by
contrast, the value of its futures position will tend to move in a direction
contrary to the market. Selling futures contracts, therefore, will tend to
offset both positive and negative market price changes much as if the underlying
instrument had been sold.

FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However both the purchaser and seller are
required to deposit "initial margin" with a futures broker, known as a futures
commission merchant (FCM), when the contract is entered into. Initial margin
deposits are typically equal to a percentage of the contract's value.

If the value of either party's position declines, that party will be
required to make additional "variation margin" payments to settle the change in
value on a daily basis. The party that has a gain may be entitled to receive all
or a portion of this amount. Initial and variation margin payments do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitations. In the event of the bankruptcy of an FCM that holds margin on
behalf of the Fund, the Fund may be entitled to return of margin owed to it only
in proportion to the amount received by the FCM's other customers, potentially
resulting in losses to the Fund.

PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund pays the
current market price for the option (known as the option premium). Options have
various types of underlying instruments, including specific securities, indices
of securities prices and futures contracts. The Fund may terminate its position
in a put option it has purchased by allowing it to expire or by exercising the
option. If the option is allowed to expire, the Fund will lose the entire
premium it paid. If the Fund exercises the option, it completes the sale of the
underlying instrument at the strike price. The Fund may also terminate a put
option position by closing it out in the secondary market at its current price,
if a liquid secondary market exists.

<PAGE>

WRITING PUT AND CALL OPTIONS. When the Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium the Fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party to the option chooses
to exercise it. When writing an option on a futures contract, the Fund will be
required to make margin payments to an FCM as described above for futures
contracts. The Fund may seek to terminate its position in a put option it writes
before exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for a put option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes and must continue
to set aside assets to cover its position.

Writing a call option obligates the Fund to sell or deliver the option's
underlying instrument in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

COMBINED POSITIONS. The Fund may purchase and write options in combination
with each other or in combination with futures or forward contracts, to adjust
the risk and return characteristics of the overall position. For example, the
Fund may purchase a put option and write a call option on the same underlying
instrument, in order to construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another possible
combined position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of the

<PAGE>

written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.

CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund may invest in options and futures
contracts based on securities with different issuers, maturities or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Fund's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts.

The Fund may purchase or sell options and futures contracts with a greater
or lesser value than the securities it wishes to hedge or intends to purchase in
order to attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in all cases.
If price changes in the Fund's options or futures positions are poorly
correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.

LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract at
any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. In addition, exchanges may establish daily price fluctuation
limits for options and futures contracts, and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the Fund to enter into new positions or close
out existing positions. If the secondary market for a contract is not liquid
because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and potentially could require the Fund to
continue to hold a position until delivery or expiration regardless of changes
in its value. As a result, the Fund's access to other assets held to cover its
options or futures positions could also be impaired.

<PAGE>

OTC OPTIONS. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and strike
price, the terms of over-the-counter options (options not traded on exchanges)
generally are established through negotiation with the other party to the option
contract. While this type of arrangement allows the Fund greater flexibility to
tailor an option to its needs, OTC options generally involve greater credit risk
than exchange-traded options, which are guaranteed by the clearing organization
of the exchanges where they are traded.

OPTIONS AND FUTURES RELATING TO FOREIGN CURRENCIES. The Fund may purchase
put and call options and write covered put and call options on foreign
currencies for the purpose of protecting against declines in the U.S. dollar
value of foreign currency-denominated portfolio securities and against increases
in the U.S. dollar cost of such securities to be acquired. As in the case of
other kinds of options, however, the writing of an option on a foreign currency
constitutes only a partial hedge, up to the amount of the premium received, and
the Fund could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on a foreign currency may constitute an effective hedge against
fluctuations in exchange rates although, in the event of rate movements adverse
to the Fund's position, it may forfeit the entire amount of the premium plus
related transaction costs. Options on foreign currencies to be written or
purchased by the Fund are traded on U.S. and foreign exchanges or
over-the-counter.

Currency futures contracts are similar to forward currency exchange
contracts, except that they are traded on exchanges (and have margin
requirements) and are standardized as to contract size and delivery date. Most
currency futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency, which
generally is purchased or delivered in exchange for U.S. dollars, or may be a
futures contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the right
to sell the underlying currency.

The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. Currency
futures and options values can be expected to correlate with exchange rates, but
may not reflect other factors that affect the value of the Fund's investments. A
currency hedge, for example, should protect a Yen-denominated security from a
decline in the Yen, but will not protect the Fund against a price decline
resulting from deterioration in the issuer's creditworthiness. Because the value
of the Fund's foreign-denominated investments changes in response to many
factors other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the Fund's investments exactly over
time.

ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Fund will comply with
guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and if the guidelines so require, will set
aside appropriate liquid assets in a segregated custodial account in the amount
prescribed. Securities held in a segregated account cannot be sold while the
futures or option strategy is outstanding, unless they are replaced with other
suitable assets. As a result, there is a possibility that segregation of a large
percentage of the Fund's assets could impede portfolio management or the Fund's
ability to meet redemption requests or other current obligations.

<PAGE>

SHORT SALES. The Fund may enter into short sales "against the box" with
respect to stocks it owns or has the right to obtain. For example, if the
Subadviser anticipates a decline in the price of a stock it owns or has the
right to obtain, it may sell the stock short "against the box" by borrowing the
stock from a broker and then selling the borrowed stock. The Fund is then
obligated to replace the borrowed stock, but is able to close the open short
position by making delivery of the stock it owns or has the right to obtain. If
the stock price subsequently declines, the proceeds of the short sale could be
expected to offset all or a portion of the effect of the stock's decline. The
Fund currently intends to hedge no more than 15% of its total assets with short
sales on equity securities under normal circumstances.

When the Fund enters into a short sale, it will be required to set aside
securities equivalent in kind and amount to those sold short (or securities
convertible or exchangeable into such securities) and will be required to
continue to hold them while the short sale is outstanding. The Fund will incur
transaction costs, including interest expense, in connection with opening,
maintaining, and closing short sales.

CLOSED-END INVESTMENT COMPANIES. Some countries have authorized the
formation of closed-end investment companies to facilitate indirect foreign
investment in their capital markets. In accordance with the 1940 Act, the Fund
may invest up to 10% of its total assets in securities of closed-end investment
companies. This restriction on investments in securities of closed-end
investment companies may limit opportunities for the Fund to invest indirectly
in certain developing markets. Shares of certain closed-end investment companies
may at times be acquired only at market prices representing premiums to their
net asset values. If the Fund acquires shares of closed-end investment
companies, shareholders would bear both their proportionate share of expenses of
the Fund (including management and advisory fees) and, indirectly, the expenses
of such closed-end investment companies.

OPEN-END INVESTMENT COMPANIES. The Fund may invest in money market funds,
which are open-end investment companies, and foreign open-end investment
companies. The Fund may also invest all of its assets in an open-end investment
company having substantially the same investment objective as the Fund (See
"Investment Objectives and Policies"). Some countries have authorized the
formation of open-end investment companies to facilitate indirect foreign
investment in their capital markets. In accordance with the 1940 Act, the Fund
may invest up to 5% of the value of its total assets in the securities of any
single open-end investment company and up to 10% of the value of its total
assets in the securities of all open-end investment companies in which the Fund
invests.

The Fund and any "affiliated persons" (as defined in the 1940 Act) may
purchase in the aggregate only up to 3% of the total outstanding securities of
any underlying open-end investment company. Accordingly, when affiliated persons
hold shares of any of the underlying open-end investment companies, the Fund's
ability to invest fully in shares of those open-end investment companies is
restricted, and the Subadviser must then, in some instances, select alternative
investments that would not have been its first preference.

<PAGE>

The 1940 Act also provides that an underlying open-end investment company
whose shares are purchased by the Fund will be obligated to redeem shares held
by the Fund only in an amount up to 1% of the underlying open-end investment
company's outstanding securities during any period of less than 30 days. Shares
held by the Fund in excess of 1% of an underlying open-end investment company's
outstanding securities therefore, will be considered not readily marketable
securities which together with other such securities may not exceed 15% of the
Fund's assets.

Investment decisions by the investment advisors of the underlying open-end
investment companies are made independently of the Fund and its Subadviser.
Therefore, the investment advisor of one underlying open-end investment company
may be purchasing shares of the same issuer whose shares are being sold by the
investment adviser of another such investment company. The result of this would
be an indirect expense to the Fund without accomplishing any investment purpose.

By investing in an open-end investment company indirectly through the Fund,
an investor will bear not only his proportionate share of the expenses of the
Fund (including operating costs and investment advisory and administrative fees)
but also, indirectly, similar expenses of the underlying open-end investment
company. In addition, a shareholder of the Fund indirectly bears any expenses
paid by an underlying open-end investment company related to the distribution of
its shares.

PORTFOLIO TURNOVER. The portfolio turnover rate is calculated by dividing
the lesser of sales or purchases of portfolio securities by the average monthly
value of the Fund's securities, excluding securities having a maturity at the
date of purchase of one year or less.

High transaction costs could result when compared with other funds. High
portfolio turnover may involve correspondingly greater brokerage commissions and
other transaction costs which will be borne directly by the Fund. Trading may
also result in realization of net short-term capital gains upon which
shareholders may be taxed at ordinary tax rates when distributed from the Fund.

The portfolio turnover rate for the Fund for the year ended December 31,
1998 was 86% (13% for the period from inception on September 2, 1997 through
December 31, 1997). The Fund's portfolio turnover rate increased in 1998, its
first full calendar year of operation, because the Fund was in existence for
only four months during 1997.

RISK CONSIDERATIONS

As with any investment in securities, the value of, and income from, an
investment in the Fund can decrease as well as increase, depending on a variety
of factors which may affect the values and income generated by the Fund's
portfolio securities, including general economic conditions and market factors.
In addition to the factors which affect the value of individual securities, you
may anticipate that the value of the shares of the Fund will fluctuate with
movements in the broader equity and bond markets. A decline in the stock market
of any country in which the Fund is invested may also be reflected in declines
in the price of the shares of the Fund. Changes in currency valuations will also

<PAGE>

affect the price of the shares of the Fund. History reflects both decreases and
increases in stock markets and currency valuations, and these may occur
unpredictably in the future. The value of debt securities held by the Fund
generally will vary inversely with changes in prevailing interest rates.
Additionally, investment decisions made by the Subadviser will not always be
profitable or prove to have been correct. The Fund is not intended as a complete
investment program.

The Fund has the right to purchase securities in any foreign country,
developed or developing. You should consider carefully the substantial risks
involved in investing in securities issued by companies and governments of
foreign nations, which are in addition to the usual risks inherent in domestic
investments. These risks are often heightened for investments in developing
markets. See "Foreign Investments." There is the possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations (including, for example, withholding taxes on interest and dividends) or
other taxes imposed with respect to investments in foreign nations, foreign
exchange controls (which may include suspension of the ability to transfer
currency from a given country), foreign investment controls on daily stock
market movements, default in foreign government securities, political or social
instability, or diplomatic developments which could affect investment in
securities of issuers in foreign nations. In addition, in many countries there
is less publicly available information about issuers than is available in
reports about companies in the U.S. Foreign companies are not generally subject
to uniform accounting or financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to U.S. companies.
The Fund may encounter difficulties or be unable to vote proxies, exercise
shareholder rights, pursue legal remedies, and obtain judgments in foreign
courts. Also, some countries may withhold portions of income and dividends at
the source. These considerations generally are more of a concern in developing
countries, where the possibility of political instability (including revolution)
and dependence on foreign economic assistance may be greater than in developed
countries. Investments in companies domiciled in developing countries therefore
may be subject to potentially higher risks than investment in developed
countries.

Brokerage commissions, custodial services, and other costs relating to
investment in developing markets are generally more expensive than in the U.S.
Foreign securities markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlement has
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due to settlement
problems could result either in losses to the Fund due to subsequent declines in
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, could result in possible liability to the purchaser.

<PAGE>

Prior governmental approval of non-domestic investments may be required
under certain circumstances in some developing countries, and the extent of
foreign investment in domestic companies may be subject to limitation in other
developing countries. Foreign ownership limitations also may be imposed by the
charters of individual companies in developing countries to prevent, among other
concerns, violation of foreign investment limitations.

Repatriation of investment income, capital and proceeds of sales by foreign
investors may require governmental registration and/or approval in some
developing countries. The Fund could be adversely affected by delays in or a
refusal to grant any required governmental registration or approval for such
repatriation.

Further, the economies of developing countries generally are heavily
dependent upon international trade and, accordingly, have been and may continue
to be adversely affected by trade barriers, exchange controls, managed
adjustments in relative currency values and other protectionist measures imposed
or negotiated by the countries with which they trade. These economies also have
been and may continue to be adversely affected by economic conditions in the
countries with which they trade.

In many developing markets, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers and
listed companies than in the U.S. There is an increased risk, therefore, of
uninsured loss due to lost, stolen, or counterfeit stock certificates. In
addition, the foreign securities markets of many of the countries in which the
Fund may invest may also be smaller, less liquid, and subject to greater price
volatility than those in the U.S.

The Fund usually effects currency exchange transactions on a spot (i.e.,
cash) basis at the spot rate prevailing in the foreign exchange market. However,
some price spread on currency exchange transactions (to cover service charges)
will be incurred when the Fund converts assets from one currency to another.

Leveraging by means of borrowing may exaggerate the effect of any increase
or decrease in the value of portfolio securities on the Fund's net asset value,
and money borrowed will be subject to interest and other costs (which may
include commitment fees and/or the cost of maintaining minimum average balances)
which may or may not exceed the income or gains received from the securities
purchased with borrowed funds.

Use of futures contracts and related options is subject to special risk
considerations. A liquid secondary market for any futures or options contract
may not be available when a futures or options position is sought to be closed.
In addition, there may be an imperfect correlation between movements in the
securities or foreign currency on which the futures or options contract is based
and movements in the securities or currency in the Fund's portfolio. Use of
futures or options contracts is further dependent on the Subadviser's ability to
correctly predict movements in the securities or foreign currency markets and no
assurance can be given that its judgment will be correct. Successful use of
options on securities or securities indices is subject to similar risk
considerations. In addition, by writing covered call options, the Fund gives up
the opportunity, while the option is in effect, to profit from any price
increase in the underlying security above the option exercise price.

<PAGE>

There are further risk factors, including possible losses through the
holding of securities in domestic and foreign custodian banks and depositories,
described elsewhere in this Statement of Additional Information.

PORTFOLIO TRANSACTIONS

All orders for the purchase or sale of portfolio securities are placed on
behalf of the Fund by the Subadviser pursuant to authority contained in the
investment advisory agreement and investment subadvisory agreement. The
Subadviser is also responsible for the placement of transaction orders for
accounts for which it or its affiliates act as investment adviser. In selecting
broker-dealers, subject to applicable limitations of the federal securities
laws, the Subadviser considers various relevant factors, including, but not
limited to, the size and type of the transaction; the nature and character of
the markets for the security to be purchased or sold; the execution efficiency,
settlement capability, and financial condition of the broker-dealer firm; the
broker-dealer's execution services rendered on a continuing basis; the
reasonableness of any commissions; and arrangements for payment of Fund
expenses.

The Fund may execute portfolio transactions with broker-dealers who provide
research and execution services to the Fund or other accounts over which the
Subadviser or its affiliates exercise investment discretion. Such services may
include advice concerning the value of securities; the advisability of investing
in purchasing or selling securities; the availability of securities or the
purchasers or sellers of securities; furnishing analyses and reports concerning
issuers, industries, securities, economic factors and trends, portfolio
strategy, and performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and settlement). The
selection of such broker-dealers generally is made by the Subadviser (to the
extent possible consistent with execution considerations) in accordance with a
ranking of broker-dealers determined periodically by the Subadviser's investment
staff based upon the quality of research and execution services provided.

The receipt of research from broker-dealers that execute transactions on
behalf of the Fund may be useful to the Subadviser in rendering investment
management services to the Fund or the Subadviser's other clients, and
conversely, such research provided by broker-dealers who have executed
transaction orders on behalf of other Subadviser clients may be useful to the

<PAGE>

Subadviser in carrying out its obligations to the Fund. The receipt of such
research is not expected to reduce the Subadviser's normal independent research
activities; however, it enables the Subadviser to avoid the additional expenses
that could be incurred if the Subadviser tried to develop comparable information
through its own efforts.

Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the Fund
to pay such higher commissions, the Subadviser must determine in good faith that
such commissions are reasonable in relation to the value of the brokerage and
research services provided by such executing broker-dealers, viewed in terms of
a particular transaction or the Subadviser's overall responsibilities to the
Fund and its other clients. In reaching this determination, the Subadviser will
not attempt to place a specific dollar value on the brokerage and research
services provided or to determine what portion of the compensation should be
related to those services.

The Subadviser may allocate brokerage transactions to broker-dealers who
have entered into arrangements with the Subadviser under which the broker-dealer
allocates a portion of the commissions paid by the Fund toward payment of the
Fund's expenses, such as transfer agent fees of Mutual Funds Service Co. or
custodian fees. The transaction quality must, however, be comparable to those of
other qualified broker-dealers.

The Trustees periodically review the Subadviser's performance of its
responsibilities in connection with the placement of portfolio transactions on
behalf of the Fund and review the commissions paid by the Fund over
representative periods of time to determine if they are reasonable in relation
to the benefits to the Fund.

From time to time, the Trustees will review whether the recapture for the
benefit of the Fund of some portion of the brokerage commissions or similar fees
paid by the Fund on portfolio transactions is legally permissible and advisable.

The Fund seeks to recapture soliciting broker-dealer fees on the tender of
portfolio securities, but at present no other recapture arrangements are in
effect. The Trustees intend to continue to review whether recapture
opportunities are available and are legally permissible and, if so, to determine
in the exercise of their business judgment, whether it would be advisable for
the Fund to seek such recapture.

Although the Trustees and officers of the Trust are substantially the same
as those of other portfolios managed by the Manager, investment decisions for
the Fund are made independently from those of other portfolios managed by the
Manager or accounts managed by affiliates of the Manager. It sometimes happens

<PAGE>

that the same security is held in the portfolio of more than one of these funds
or accounts. Simultaneous transactions are inevitable when several portfolios
are managed by the same investment adviser, particularly when the same security
is suitable for the investment objective of more than one portfolio.

When two or more portfolios are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in accordance
with a formula considered by the officers of the portfolios involved to be
equitable to each portfolio. In some cases this system could have a detrimental
effect on the price or value of the security as far as the Fund is concerned. In
other cases, however, the ability of the Fund to participate in volume
transactions will produce better executions and prices for the Fund. It is the
current opinion of the Trustees that the desirability of retaining the Manager
as investment adviser to the Fund outweighs any disadvantages that may be said
to exist from exposure to simultaneous transactions.

The Fund may effect transactions in its portfolio securities on securities
exchanges on a non-exclusive basis through Adviser Dealer Services, Inc., the
distributor of the Fund's shares and an affiliate of the Manager (the
"Distributor"), in its capacity as a broker-dealer.

Brokerage commissions paid by the Fund on the purchase and sale of
securities amounted to $73,916 for the year ended December 31, 1998 ($51,807 for
the period from the Fund's inception on September 2, 1997 through December 31,
1997).

VALUATION OF PORTFOLIO SECURITIES

This twofold approach is believed to more accurately reflect fair value
because it takes into account appropriate factors such as institutional trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics, and other market data, without exclusive
reliance upon quoted, exchange, or over-the-counter prices.

Securities and other assets for which there is no readily available market
are valued in good faith by the Board of Trustees. The procedures set forth
above need not be used to determine the value of the securities owned by the
Fund if, in the opinion of the Board of Trustees, some other method (e.g.,
closing over-the-counter bid prices in the case of debt instruments traded on an
exchange) would more accurately reflect the fair market value of such
securities.

<PAGE>

The values of any such securities held by the Fund are determined as of
such time for the purpose of computing the Fund's net asset value. Foreign
security prices are furnished by independent brokers or quotation services which
express the value of securities in their local currency. The Manager gathers all
exchange rates daily at approximately 3:00 p.m. Eastern time using the last
quoted price on the local currency and then translates the value of foreign
securities from their local currency into U.S. dollars. Any changes in the value
of forward contracts due to exchange rate fluctuations and days to maturity are
included in the calculation of net asset value. If an extraordinary event that
is expected to materially affect the value of a portfolio security occurs after
the close of an exchange on which that security is traded, then the security
will be valued as determined in good faith by the Board of Trustees.

PERFORMANCE

The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment results
and/or comparisons of its investment results to the Morgan Stanley Capital
International - Europe Australia, Far East (EAFE) Index, the Morgan Stanley
Capital International Emerging Markets Free Index, or other various unmanaged
indices or results of other mutual funds or investment or savings vehicles. All
performance information supplied by the Fund in advertising is historical and is
not intended to indicate future returns. The Fund's share price and total
returns fluctuate in response to market conditions and other factors, and the
value of Fund shares when redeemed may be more or less than their original cost.

TOTAL RETURN CALCULATIONS. The Fund may provide period and average
annualized "total return" quotations. The Fund's "total return" refers to the
change in the value of an investment in the Fund over a stated period based on
any change in net asset value per share and including the value of any shares
purchasable with any dividends or capital gains distributed during such period.
Period total return may be annualized. Average annual total return smoothes out
variations in performance and takes into account any applicable initial or
contingent deferred sales charges.

Total returns quoted in advertising reflect all aspects of the Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value over the period.
Average annual returns will be calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period, and then calculating the annually compounded percentage rate that would

<PAGE>

have produced the same result if the rate of growth or decline in value had been
constant over the period. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that the Fund's
performance is not constant over time but changes from year to year and that
average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.

In addition to average annual returns, the Fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments or series of redemptions over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns may be quoted on a before-tax or after-tax basis. Total
returns yields and other performance information may be quoted numerically, or
in a table graph, or similar illustration.

P(1+T)(to the nth power) = ERV
P = initial investment of $1,000
T = average annual total return
n = Number of years
ERV = ending redeemable value at the end of the base period

INTERNATIONAL EQUITY FUND:

TOTAL RETURN

Since Inception
1 Year (1.334 Years)
Period Ended Period Ended
DECEMBER 31,1997 DECEMBER 31, 1998

Value of Account
At end of Period $ 1,129.11 $ 1,100.28

Value of Account

At beginning of 1,000.00 1,000.00
-------- --------

Base Period Return $ 129.11 $ 100.28

Average Total Return 12.92% 7.46%

<PAGE>

In advertising materials, the Trust may reference or discuss its products
and services, which may include: other Flex-Partners or Flex-funds funds;
retirement investing; the effects of periodic investment plans and dollar cost
averaging; saving for college; and charitable giving. In addition, the Fund may
quote financial or business publications and periodicals, including model
portfolios or allocations, as they relate to Fund management, investment
philosophy, and investment techniques. The Fund may also reprint, and use as
advertising and sales literature, articles from Reflexions, a quarterly magazine
provided free of charge to Flex-Partners and Flex-funds shareholders.

<PAGE>

The Fund may be available for purchase through retirement plans or other
programs offering deferral of, or exemption from, income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually would have an after-tax value of $1,949
after ten years, assuming tax was deducted from the return each year at a 31%
rate. An equivalent tax-deferred investment would have an after-tax value of
$2,100 after ten years, assuming tax was deducted at a 31% rate from the
tax-deferred earnings at the end of the ten-year period.

Unmanaged indexes that the Fund may use include the following:

MORGAN STANLEY CAPITAL INTERNATIONAL -- SELECT EMERGING MARKETS INDEX -- is
an unpublished index which includes common stocks of companies located in the
countries 12 emerging markets.

MORGAN STANLEY CAPITAL INTERNATIONAL -- EAFE (FREE) INDEX -- is an
arithmetic, market value-weighted average of the performance of over 1,000
securities listed on the stock exchanges of countries in Europe, Australia and
the Far East.

MSCI EMF INDEX -- an arithmetic, market value-weighted average of the
performance of securities listed on the stock exchanges of twenty-two developing
countries.

MSCI EAFE + SELECT EMF INDEX -- an arithmetic, market value-weighted
average of the performance of securities listed on the stock markets of Europe,
Australia, the Far East and fourteen developing countries.

FT - ACTUARIES WORLD INDEX -- includes approximately 2,400 securities from
24 countries including the U.S.

FT - ACTUARIES EURO-PACIFIC INDEX -- a subset of the FT Actuaries World
Index, which excludes companies in the U.S., Canada, Mexico and South Africa.

<PAGE>

SALOMON-RUSSELL PRIMARY MARKET INDEX -- consists of the approximately 700
largest stocks within 23 countries.

SALOMON-RUSSELL EXTENDED MARKET INDEX -- consists of approximately 1,000
medium and small capitalization stocks from 23 countries.

SALOMON-RUSSELL BROAD MARKET INDEX -- consists of all of the stocks within
the Primary Market Index and the Extended Market Index.

RUSSELL UNIVERSE OF NON-U.S. EQUITY PORTFOLIOS -- a universe of separate
accounts and pooled funds available to U.S. investors, which invest in
international equities.

RUSSELL UNIVERSE OF WORLD EQUITY PORTFOLIOS -- a universe of
equity-oriented global portfolios.

LIPPER INTERNATIONAL UNIVERSE -- a universe of mutual funds that invest in
international equities.

LIPPER DIVERSIFIED INTERNATIONAL UNIVERSE -- a universe of mutual funds
that invest in international equities from more than one country.

LIPPER INTERNATIONAL AVERAGE -- the average return of the portfolios
included in the Lipper International Universe.

LIPPER DIVERSIFIED INTERNATIONAL AVERAGE -- the average return of the
portfolios included in the Lipper Diversified International Universe.

STANDARD AND POOR'S 500 COMPOSITE STOCK PRICE INDEX -- is a well
diversified list of 500 companies representing the U.S. stock market.

WILSHIRE 5000 EQUITY INDEX -- consists of more than 6,000 common equity
securities, covering all stocks in the U.S. for which daily pricing is
available.

WILSHIRE 4500 EQUITY INDEX -- consists of all stocks in the Wilshire 5000
except for the 500 stocks in the Standard and Poor's 500 Index.

SALOMON BROTHERS HIGH-GRADE CORPORATE BOND INDEX -- consists of publicly
issued, non-convertible corporate bonds rated Aa or Aaa. It is a value-weighted,
total return index, including approximately 800 issues with maturities of 12
years or greater.

<PAGE>

BARING EMERGING MARKETS INDEX -- a diversified index of approximately 250
relatively liquid stocks from 13 emerging market countries.

SALOMON BROTHERS BROAD INVESTMENT-GRADE BOND -- is a market-weighted index
that contains approximately 4,700 individually priced investment-grade corporate
bonds rated BBB or better, U.S. Treasury and agency issues and mortgage
pass-through securities.

SHEARSON LEHMAN LONG-TERM TREASURY BOND -- is composed of all bonds covered
by the Shearson Lehman Hutton Treasury Bond Index with maturities of 10 years or
greater.

NASDAQ INDUSTRIAL INDEX -- is composed of more than 3,000 industrial
issues. It is a value-weighted index calculated on price change only and does
not include income.

COMPOSITE INDEX -- 65% Standard & Poor's 500 Index and 35% Lehman Long-Term
Corporate AA or Better Bond Index.

COMPOSITE INDEX -- 65% Lehman Long-Term Corporate AA or Better Bond Index
and a 35% weighting in a blended equity composite (75% Standard & Poor's/BARRA
Value Index and 25% Standard & Poor's Utilities Index).

LEHMAN LONG-TERM CORPORATE AA OR BETTER BOND INDEX -- consists of all
publicly issued, fixed rate, nonconvertible investment grade,
dollar-denominated, SEC-registered corporate debt rated AA or AAA.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Fund is open for business and its net asset value per share (NAV) is
calculated each day the NYSE is open for trading. The NYSE has designated the
following holiday closings: New Year's Day, Martin Luther King Day (observed),
Washington's Birthday (observed), Good Friday, Memorial Day (observed),
Independence Day (observed), Labor Day, Thanksgiving Day, and Christmas Day
(observed). The NYSE may modify its holiday schedule at any time.

The Fund's net asset value is determined as of 3:00 p.m. Eastern time. To
the extent that portfolio securities are traded in other markets on days when
the NYSE is closed, the Fund's NAV may be affected on days when investors do not
have access to the Fund to purchase or redeem shares.

If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in securities
or other property, valued for this purpose as they are valued in computing the
Fund's NAV. Shareholders receiving securities or other property on redemption
may realize a gain or loss for tax purposes, and will incur any costs of sale,
as well as the associated inconveniences.

Shareholders of the Fund will be able to exchange their shares for Class A
shares of any mutual fund that is a series of The Flex-Partners (each a
"Flex-Partners Fund"), and shares of The Flex-funds Money Market Fund. No fee or
sales load will be imposed upon the exchange. Shareholders of The Flex-funds
Money Market Fund who acquired such shares upon exchange of shares of the Fund
may use the exchange privilege only to acquire shares of the Fund or Class A
shares of a Flex-Partners Fund.

<PAGE>

In the Prospectus, the Fund has notified shareholders that it reserves the
right at any time, without prior notice to refuse exchange purchases by any
person or group if, in the Subadviser's judgment, the Fund would be unable to
invest effectively in accordance with its investment objective and policies, or
would otherwise potentially be adversely affected.

COMBINED PURCHASE AND CUMULATIVE PURCHASE PRIVILEGE. If an investor or
eligible group of related investors purchases shares of the Fund concurrently
with Class A shares of other series of the Trust, the purchases may be combined
to take advantage of the reduced sales charges applicable to larger purchases.
See the table of breakpoints under "How to Buy Shares - Cumulative Quantity
Discount" in the Prospectus.

An eligible group of related Fund investors includes any combination of the
following:

(a) an individual;

(b) the individual's spouse, their children and their parents;

(e) a trust created by the individual, the beneficiaries of which are
the individual, his or her spouse, parents or children;

(f) a Uniform Gifts to Minors Act/Uniform Transfers to Minors Act
account created by the individual or the individual's spouse; and

(g) one or more employee benefit plans of a company controlled by an
individual.

<PAGE>

The Combined Purchase and Cumulative Purchase Privilege does not apply to
individual participants in retirement and group plans described below under
"Flex-Partners Retirement Plans."

RIGHTS OF ACCUMULATION. Reduced sales charges are also available through
Rights of Accumulation, under which an investor or an eligible group of related
investors, as described above under "Combined Purchase and Cumulative Purchase
Privilege," may aggregate the value of their existing holdings of shares of the
Fund and Class A shares of other Flex-Partners Funds to determine the reduced
sales charge. The value of existing holdings for purposes of determining the
reduced sales charge is calculated using the maximum offering price (net asset
value plus maximum sales charge) as of the previous business day. See "How Net
Asset Value is Determined" in the Prospectus. The Transfer Agent must be
notified at the time of purchase that the investor is entitled to a reduced
sales charge. The reduced sales charges will be granted subject to confirmation
of the investor's holdings. Rights of accumulation are not available to
individual participants in the retirement and group plans described below under
"Flex-Partners Retirement Plans."

LETTERS OF INTENT. Reduced sales charges are also available to investors
(or an eligible group of related investors) who enter into a written Letter of
Intent providing for the purchase, within a thirteen-month period, of shares of
the Fund and Class A shares of other Flex-Partners Funds. All shares of the Fund
and Class A shares of other Flex-Partners Funds which were previously purchased
and are still owned are also included in determining the applicable reduction.
The Transfer Agent must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charges will be granted
subject to confirmation of the investor's holdings. Letters of Intent are not
available to individual participants in retirement and group plans described
below under "Flex-Partners Retirement Plans."

The Letter of Intent does not obligate the investor to purchase, nor the
Fund to sell, the indicated amount. In the event the Letter of Intent goal is
not achieved within the thirteen-month period, the purchaser is required to pay
the difference between the sales charge otherwise applicable to the purchases
made during this period and sales charges actually paid. Such payment may be
made directly to the Transfer Agent or, if not paid, the Transfer Agent will
liquidate sufficient escrowed shares to obtain such difference. If the goal is
exceeded in an amount which qualifies for a lower sales charge, a price
adjustment is made by refunding to the purchaser the amount of excess sales
charge, if any, paid during the thirteen-month period. Investors electing to
purchase shares of the Fund pursuant to a Letter of Intent should carefully read
such Letter of Intent.

<PAGE>

Further information about these programs and an application form can be
obtained from the Fund's Transfer Agent.

SYSTEMATIC WITHDRAWAL PROGRAM. A systematic withdrawal plan is available
for shareholders having shares of the Fund with a minimum value of $10,000,
based upon the offering price. The plan provides for monthly, quarterly or
annual checks in any amount, but not less than $100 (which amount is not
necessarily recommended).

Furthermore, each withdrawal constitutes a redemption of shares, and any
gain or loss realized must be recognized for federal income tax purposes. In
addition, withdrawals made concurrently with purchases of additional shares are
inadvisable because of the applicable sales charges to the purchase of shares.
Each shareholder should consult his or her own tax adviser with regard to the
tax consequences of the plan, particularly if used in connection with a
retirement plan.

DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. The International Equity Fund's
dividends, if any, will be declared payable to shareholders on at least an
annual basis. In December, the Fund may distribute an additional ordinary income
dividend (consisting of net short-term capital gains and undistributed income)
in order to preserve its status as a registered investment company (mutual fund)
under the Internal Revenue Code. Net long-term capital gains, if any, also are
declared and distributed in December.

A portion of the Fund's dividends derived from certain U.S. government
obligations may be exempt from state and local taxation. Gains (losses)
attributable to foreign currency fluctuations are generally taxable as ordinary
income and therefore will increase (decrease) dividend distributions. The Fund
will send each shareholder a notice in January describing the tax status of
dividends and capital gain distributions for the prior year.

<PAGE>

FOREIGN TAXES. Foreign governments may impose taxes on the International
Equity Fund and its investments and these taxes generally will reduce the
International Equity Fund's distributions. However, an offsetting tax credit or
deduction may be available to you. If so, your tax statement will show more
taxable income or capital gains than were actually distributed by the
International Equity Fund, but will also show the amount of the available
offsetting credit or deduction.

The Fund intends to qualify each year as a "regulated investment company"
for tax purposes so that it will not be liable for federal tax on income and
capital gains distributed to shareholders. In order to qualify as a regulated
investment company and avoid being subject to federal income or excise taxes at
the Fund level, the Fund intends to distribute substantially all of its net
investment income (consisting of the income it earns from its investment in the
Portfolio, less expenses) and net realized capital gains within each calendar
year as well as on a fiscal year basis. The Fund might deviate from this policy,
and incur a tax liability, if this were necessary to fully protect shareholder
values. The Fund intends to comply with other tax rules applicable to regulated
investment companies.

The International Equity Fund qualified as a "regulated investment company"
for each of the last two fiscal years.

If the Fund purchases shares in certain foreign investment entities,
defined as passive foreign investment companies (PFICs) in the Internal Revenue
Code, it may be subject to U.S. federal income tax on a portion of any excess
distribution or gain from the disposition of such shares. Interest charges may
also be imposed on the Portfolio with respect to deferred taxes arising from
such distributions or gains.

<PAGE>

INVESTMENT ADVISER AND MANAGER

R. Meeder & Associates, Inc. (the "Manager") is the investment adviser and
manager for, and has an Investment Advisory Contract with, the Fund.

Pursuant to the Investment Advisory Contract with the Fund, the Manager,
subject to the supervision of the Fund's Board of Trustees and in conformity
with the stated objective and policies of the Fund, manages both the investment
operations of the Fund and the composition of the Fund's portfolio, including
the purchase, retention, disposition and loan of securities. In connection
therewith, the Manager is obligated to keep certain books and records of the
Fund. The Manager also administers the Fund's corporate affairs, and in
connection therewith, furnishes the Fund with office facilities, together with
those ordinary clerical and bookkeeping services which are not being furnished
by State Street Bank and Trust Company, the Fund's custodian and Mutual Funds
Service Co., the Fund's transfer and disbursing agent. The management services
of the Manager are not exclusive under the terms of the Investment Advisory
Agreement and the Manager is free to, and does, render management services to
others.

The Investment Advisory Contract for the Fund was separately approved by a
vote of a majority of the Trustees, including a majority of those Trustees who
are not "interested persons" (as defined in the Investment Company Act of 1940)
of the Trust. The Investment Advisory Contract is to remain in force so long as
renewal thereof is specifically approved at least annually by a majority of the
Trustees or by vote of a majority of the outstanding voting securities of the
Fund, and in either case by vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) at a
meeting called for the purpose of voting on such renewal.

The Investment Advisory Contract provides that the Manager will not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the matters to which the Investment Advisory
Contract relates except for a loss resulting from willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. The Investment Advisory
Contract will terminate automatically if assigned and may be terminated without
penalty at any time upon 60 days' prior written notice by Majority Vote of the
Fund, by the Trustees of the Trust, or by the Manager.

<PAGE>

funds. Thus, each fund pays its proportionate share of: the fees of the Trust's
independent auditors, legal counsel, custodian, transfer agent and accountants;
insurance premiums; the fees and expenses of Trustees who do not receive
compensation from R. Meeder & Associates or Commercial Union Investment
Management, Limited; association dues; the cost of printing and mailing
confirmations, prospectuses, proxies, proxy statements, notices and reports to
existing shareholders; state registration fees; distribution expenses within the
percentage limitations of the distribution and service plan, including the cost
of printing and mailing of prospectuses and other materials incident to
soliciting new accounts; and other miscellaneous expenses.

Expenses of the Fund also include all fees under its Accounting and
Administrative Service Agreement; expenses of meetings of shareholders and
Trustees; the advisory fees payable to the Manager under the Investment Advisory
Contract and other miscellaneous expenses.

The Manager earns an annual fee at the rate of 1% of the average net assets
of the Fund, payable in monthly installments.

For the year ended December 31, 1998, the Fund paid investment advisory
fees to the Manager totaling $160,304 ($36,268 for the period from the Fund's
inception on September 2, 1997 through December 31, 1997).

The Manager has agreed to reduce its fees and/or absorb expenses to limit
the fund's total annual operating expenses to 2.00%. The Manager may terminate
this agreement after December 31, 1999.

For the year ended December 31, 1998, the Manager reimbursed expenses
totaling $27,903 in the International Equity Fund.

<PAGE>

and officer of the Trust and each Portfolio. Each of Messrs. Donald F. Meeder
and Wesley F. Hoag is an officer of the Trust and each Portfolio. Mr. Robert S.
Meeder, Sr. is a director of the Distributor. Mr. Voelker is President and a
director of the Distributor. Messrs. Donald F. Meeder and Craver are officers of
the Distributor.

INVESTMENT SUBADVISER

Commercial Union Investment Management, Limited ("CUIM"), St. Helen's, 1
Undershaft, London, England EC3P 3DQ, serves as the Fund's Subadviser. CUIM is a
wholly-owned subsidiary of CGU plc., an international insurance and financial
services organization that was formed by the recent merger of Commercial Union
and General Accident. The Investment Subadvisory Agreement provides that the
Subadviser shall furnish investment advisory services in connection with the
management of the Fund. In connection therewith, the Subadviser is obligated to
keep certain books and records of the Fund. The Manager continues to have
responsibility for all investment advisory services pursuant to the Investment
Advisory Agreement and supervises the Subadviser's performance of such services.
Under the Investment Subadvisory Agreement, the Manager, not the Fund, pays the
Subadviser a fee, computed daily and payable monthly, in an amount equal to 100%
of the investment advisory fees received by the Manager under its investment
advisory contract with the Fund with regard to the first $10 million of average
net assets of the Fund, 30% of such advisory fees received by the Manager with
regard to the next $10 million of average net assets of the Fund and 65% of such
advisory fees received by the Manager with regard to average net assets of the
Fund greater than $20 million.

The Investment Subadvisory Agreement provides that the Subadviser will not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of portfolio
transactions for the Fund, except a loss resulting from misfeasance, bad faith,
gross negligence or reckless disregard of duty. The Investment Subadvisory
Agreement provides that it will terminate automatically if assigned, and that it
may be terminated without penalty by the Manager, the Subadviser, the Trustees
or by the vote of a majority of the outstanding voting securities of the Fund
upon not less than 60 days' written notice. The Investment Subadvisory Agreement
will continue in effect for a period of more than two years from the date of
execution only so long as such continuance is specifically approved at least
annually in conformity with the 1940 Act. The Investment Subadvisory Agreement
was approved by the Trustees, including all of the Trustees who are not parties
to the contract or "interested persons" of any such party, and by the
shareholders of the Fund.

As of January 31, 1999, the Subadviser owned beneficially and of record 64%
of the issued and outstanding shares of the Fund. As a result, the Subadviser
controls the Fund. Because of this control, the Subadviser could prevent a
change in the investment advisers or subadvisers (including the Subadviser
itself) of the Fund that is favored by other shareholders. The Subadviser could
also cause a change in the investment advisers or subadvisers of the Fund that
is opposed by other shareholders.

<PAGE>

TRUSTEES AND OFFICERS

The Trust is managed by its trustees and officers. Their names, positions
and principal occupations during the past five years are listed below. Except as
indicated, each individual has held the office shown or other offices in the
same company for the last five years. Except as otherwise shown, all persons
named as Trustees also serve in similar capacities for other funds advised by
the Manager, including The Flex-funds and the corresponding portfolios of The
Flex-Partners and The Flex-funds (collectively, the "Fund Complex"). Unless
otherwise noted, the business address of each Trustee and officer is 6000
Memorial Drive, Dublin, Ohio 43017, which is also the address of the Manager.
Those Trustees who are "interested persons" (as defined in the Investment
Company Act of 1940) by virtue of their affiliation with the Trust, the Manager,
the Subadviser or other subadvisers are indicated by an asterisk (*).

The Trust is managed by its Trustees and officers. Their names, positions
and principal occupations during the past five years are listed below:

NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION

MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit Committee.

ROBERT S. MEEDER, JR.*, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.

<PAGE>

WALTER L. OGLE, 60 Trustee Executive Vice President of
400 Interstate North Parkway Aon Consulting, an employee
Suite 1630 benefits consulting group.
Atlanta, GA 30339

JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm and
North Palm Beach, FL 33408 division of Golden Bear
International, Inc.

PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer of
R. Meeder & Associates, Inc.;
President and a Director of
Adviser Dealer Services, Inc.

DONALD F. MEEDER*+, 60 Secretary/Treasurer Vice President of R. Meeder &
Associates, Inc.; Secretary
of Mutual Funds Service Co.,
the Fund's transfer agent;
Secretary of Adviser Dealer
Services, Inc.

<PAGE>

* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Flex-Partners and each Portfolio.

+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.

Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.

The following table shows the compensation paid by the Fund and Fund
Complex as a whole to the Trustees of the Fund and the Fund Complex during the
fiscal year ended December 31, 1998.

COMPENSATION TABLE

Pension or Total
Retirement Compensation
Benefits from
Aggregate Accrued as Estimated Registrant and
Compensation Part of Annual Fund Complex
TRUSTEE from the Portfolio Benefits Upon Paid TO
FUND(1) EXPENSE RETIREMENT TRUSTEE(1)(2)
----------- ------- ------------- -----------

Robert S. Meeder, Sr. None None None None

Milton S. Bartholomew $1,050 None None $13,525

Robert S. Meeder, Jr. None None None None

John M. Emery $ 773 None None $ 9,867

<PAGE>

Richard A. Farr $ 764 None None $ 9,367

Russel G. Means $ 514 None None $ 7,867

Walter L. Ogle $1,066 None None $14,525

Philip A. Voelker None None None None

Roger A. Blackwell $1,050 None None $13,525

Charles A. Donabedian $ 809 None None $12,525

James Didion None None None None

Jack W. Nicklaus II $ 533 None None $ 6,325

William L. Gurner None None None None

Lowell G. Miller None None None None

1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1998,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $542, Roger A. Blackwell - $1,050,
Charles A. Donabedian - $809, and Jack W. Nicklaus II - $533.

2 The Fund Complex consists of 15 investment companies.

Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per meeting for each of the five Portfolios and the Fund. In addition, each
such Trustee earns an annual fee, payable quarterly, based on the average net
assets in each Portfolio and the Fund based on the following schedule: Money
Market Portfolio, 0.0005% of the amount of average net assets between $500
million and $1 billion; 0.00025% of the amount of average net assets exceeding
$1 billion. For the other four Portfolios and the Fund, each Trustee is paid a
fee of 0.00375% of the amount of each Portfolio and the Fund's average net
assets exceeding $15 million. Members of the Audit and Strategic Planning
Committees for each of The Flex-Partners and The Flex-funds Trusts, and the
Portfolios are paid $500 for each Committee meeting attended. Trustee fees for
the Fund totaled $7,594 for the year ended December 31, 1998 ($2,462 for the
period from the Fund's inception on September 2, 1997 through December 31,
1997). All other officers and Trustees serve without compensation from the
Trust.

The Trustees and officers of the Trust own, in the aggregate, less than 1%
of the Fund's total outstanding shares.

<PAGE>

THE DISTRIBUTOR

Pursuant to a plan of distribution (the "Plan") adopted by the Fund under
Rule 12b-1 under the 1940 Act and an underwriting agreement (the Underwriting
Agreement) the Distributor incurs the expenses of distributing the Fund's
shares. See "Distribution Plans" in the Prospectus.

Fund shares are sold at net asset value plus the applicable sales charge as
shown in the table below. Shares also bear a Rule 12b-1 fee of 0.25% per year
(paid to the Distributor, Adviser Dealer Services, Inc.) of their average net
asset value. In addition, Fund shares bear an asset based service fee of 0.25%
per year. The sales charge on Fund shares is allocated between the investment
dealer and Adviser Dealer Services, Inc. as shown below:

The Board of Trustees, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or in any agreement related to the Plan
(the Rule 12b-1 Trustees), at a meeting called for the purpose of voting on the
Plan, adopted a plan of distribution for the shares of the Fund. The Plan was
approved by shareholders of the Fund.

The Plan continues in effect from year to year, provided that each such
continuance is approved at least annually by a vote of the Board of Trustees,
including a majority vote of the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on such continuance. The Plan may be
terminated at any time, without penalty, by the vote of a majority of the
Trustees who are not interested persons or by the vote of the holders of a
majority of the outstanding shares of the Fund. The Plan may be amended to
increase materially the amounts to be spent for the services described therein
without approval by shareholders and all material amendments are required to be

<PAGE>

approved by the Board of Trustees in the manner described above. The Fund will
not be contractually obligated to pay expenses incurred under the Plan if it is
terminated or not continued.

Pursuant to the Plan, the Board of Trustees will review at least quarterly
a written report of the distribution expenses incurred on behalf of the shares
of the Fund by the Distributor. The report includes an itemization of the
distribution expenses and the purposes of such expenditures. In addition, as
long as the Plan remains in effect, the selection and nomination of Trustees who
are not interested persons of the Fund shall be committed to the Trustees who
are not interested persons of the Fund.

The table below states the amounts paid under the Fund distribution plan
for the year ended December 31, 1998.

DISTRIBUTION PLAN EXPENSES PAID BY THE FUND

TYPE OF EXPENSE AMOUNT PAID

Advertising $ 0
Printing and Mailing of Prospectuses $ 0
Compensation to Underwriters $9,890
Compensation to Broker-Dealers $ 22
Compensation to Sales Personnel $ 0
Interest, carrying, or other financial charges $ 0
---------
Total $9,912

FLEX-PARTNERS RETIREMENT PLANS

<PAGE>

INDIVIDUAL RETIREMENT ACCOUNTS (IRA):

DEDUCTIBLE CONTRIBUTIONS

All contributions (other than certain rollover contributions) must be made
in cash and are subject to the following limitations:

<PAGE>

penalties for premature distribution, excess accumulation (failure to take a
required distribution) and prohibited transaction; designation of beneficiaries
and distribution in the event of your spouse's death; income and estate tax
treatment of withdrawals and distributions.

($10,000* - EXCESS AGI ) Maximum Allowable = Deduction
--------------------- X Deduction Limit
$10,000*

*For years after 2006, $20,000 if you are married, filing jointly.

NONDEDUCTIBLE CONTRIBUTIONS

<PAGE>

ROTH INDIVIDUAL RETIREMENT ACCOUNTS (ROTH IRA):

CONTRIBUTIONS:

All contributions must be made in cash and are subject to the following
limitations:

NO MAXIMUM AGE LIMIT. There is no maximum age limit for making a Roth IRA
contribution. Attainment of age 70 1/2 does not prevent you from contributing to
a Roth IRA.

<PAGE>

(a) Subtract your AGI from $110,000 ($160,000 if married, filing jointly;
$10,000 if married, filing separately).

(b) Multiply the result in Step `a' by .1333 (.20 if married).

(d) The result in Step `c' is your allowable contribution limit. If it is
more than $0, but less that $200, your allowable contribution limit is
$200.

ROLLING OVER/CONVERTING TRADITIONAL IRAS TO ROTH IRAS

You are allowed to roll over, transfer, or "convert" your Traditional IRAs
to Roth IRAs beginning in 1998. Regardless of whether a Traditional IRA is

<PAGE>

rolled over/converted to a Roth IRA in 1998 or afterwards, the
rollover/conversion amount is subject to federal income taxation (but no 10%
penalty tax).

CONTRACTS WITH COMPANIES AFFILIATED WITH THE MANAGER

Mutual Funds Service Co., 6000 Memorial Drive, Dublin, Ohio 43017, a wholly
owned subsidiary of Muirfield Investors, Inc. and a sister company of R. Meeder
& Associates, Inc., provides accounting, stock transfer, dividend disbursing,
and shareholder services to the Fund. The minimum annual fee for accounting
services for the Fund is $30,000. Subject to the applicable minimum fee, the
Fund's annual fee, payable monthly, is computed at the rate of 0.03% of the
first $100 million, 0.02% of the next $150 million, and 0.01% in excess of $250
million of the Fund's average net assets. Subject to a $4,000 annual minimum
fee, the Fund will incur an annual fee of the greater of $15 per shareholder
account or 0.10% of the Fund's average net assets, payable monthly, for stock
transfer and dividend disbursing services.

Mutual Funds Service Co. also serves as Administrator to the Fund pursuant
to an Administration Services Agreement. Services provided to the Fund include
coordinating and monitoring any third party services to the Fund; providing the
necessary personnel to perform administrative functions for the Fund; assisting
in the preparation, filing and distribution of proxy materials, periodic reports
to Trustees and shareholders, registration statements and other necessary
documents. The Fund incurs an annual administrative fee, payable monthly, of
.05% of the Fund's average net assets subject to a minimum annual fee of
$30,000. These fees are reviewable annually by the Trustees of the Trust.

For the year ended December 31, 1998, total payments to Mutual Funds
Service Co. by the Fund amounted to $54,458 ($15,515 for the period from the
Fund's inception on September 2, 1997 through December 31, 1997).

General Counsel for the Manager performed substantially all of the legal
services in connection with the organization and registration of the Fund with
the Securities and Exchange Commission. The Fund paid the Manager $25,415 for
these legal services.

<PAGE>

ADDITIONAL INFORMATION

CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, is custodian of the assets of the Fund. The
custodian is responsible for the safekeeping of the Fund's assets and the
appointment of subcustodian banks and clearing agencies. The custodian takes no
part in determining the investment policies of the Fund or in deciding which
securities are purchased or sold by the Fund. The Fund may, however, invest in
obligations of the custodian and may purchase or sell securities from or to the
custodian.

FINANCIAL STATEMENTS

The financial statements for the Fund are presented on the following pages.

<PAGE>

Growth Stock Portfolio
Portfolio of Investments as of December 31, 1998

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

COMMON STOCKS - 94.3%

ADVERTISING SALES - 0.4%
Outdoor Systems, Inc. # 7,600 $ 228,000

AEROSPACE/DEFENSE - 1.3%
B.F. Goodrich Co. 1,891 67,840
Boeing Co. 3,900 127,481
General Dynamics Corp. 440 25,960
Lockheed Martin Corp. 820 69,495
Northrup Grumman Corp. 250 18,281
Raytheon Co. - Class B # 2,000 106,500
Textron, Inc. 1,240 94,163
United Technologies Corp. 1,480 160,950
670,670

AIR TRANSPORTATION - 0.3%
AMR Corp. # 910 54,031
Delta Air Lines, Inc. 770 40,040
Southwest Airlines 1,685 38,228
USAir Group # 470 24,440
156,739

ALUMINUM - 0.2%
Aluminum Company of America 1,230 91,712

AUTO & TRUCK - 1.5%
Ford Motor Co. 6,500 381,469
General Motors Corp. 5,000 357,812
TRW, Inc. 620 34,759
774,040

BANKING - 0.2%
Washington Mutual Savings Bank 2,303 88,378

BEVERAGE--ALCOHOLIC - 0.6%
Anheuser-Busch Cos., Inc. 2,400 157,500
Canadaigua Wine Co. # 2,400 138,750
296,250

BEVERAGE--SOFT DRINK - 1.8%
Coca-Cola Co. 6,000 402,000
Pepsico, Inc. 7,300 298,388
Whitman Corp. 9,400 238,525
938,913

BUILDING MATERIALS - 0.2%
Crane Co. 495 14,943
Masco Corp. 1,860 53,475
Willbros Group # 1,500 8,344
76,762

CAPITAL GOODS - 0.1%
Ingersoll-Rand 611 28,870

CHEMICAL--DIVERSIFIED - 1.1%
Air Products & Chemicals, Inc. 1,550 62,000
E.I. du Pont de Nemours & Co. 4,780 255,730
Monsanto Corp. 2,950 140,125
Praxair, Inc. 1,140 40,185
Rohm & Haas Co. 1,685 50,761
548,801

CHEMICAL--SPECIALTY - 0.1%
Sigma Aldrich 910 26,731

COMMERCIAL SERVICES - 0.1%
Dun & Bradstreet 1,470 46,397

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

COMPUTERS & PERIPHERALS - 4.5%
Allied Waste Industries, Inc. # 1,260 29,768
Compaq Computer Corp. 8,850 371,700
Dell Computer Corp. # 6,100 446,444
EMC Corp./Mass # 2,825 240,125
Gateway 2000, Inc. # 600 30,712
IBM 4,890 901,594
Micron Technology, Inc. # 1,270 64,214
Seagate Technology, Inc. # 1,470 44,468
Sun Microsystems # 1,880 160,975
2,290,000

COMPUTER SOFTWARE & SERVICES - 4.6%
America Online, Inc. # 210 32,550
BMC Software, Inc. # 1,260 56,149
Ceridian Co. # 420 29,321
Computer Associates International, Inc. 2,895 123,399
Computer Sciences Corp. # 600 38,550
Electronic Data System Corp. 1,700 85,319
Microsoft Corp. # 12,110 1,679,506
National Data Corp. 770 37,489
Network Associates, Inc. # 400 26,500
Novell, Inc. # 1,800 32,625
Oracle Corp. # 4,940 213,038
Parametric Technology Co. # 1,400 22,750
2,377,196

CONSTRUCTION - 0.1%
Centex Corp. 830 37,402

CONSUMER NON-DURABLE - 2.7%
Fortune Brands, Inc. 7,800 246,675
Haggar Corp. 11,500 131,531
Procter & Gamble Co. 10,000 913,125
Tupperware Corp. 6,500 106,844
1,398,175

CONTAINERS - METAL/GLASS - 0.0%
Crown Cork & Seal Co., Inc. 670 20,644

COPPER - 0.0%
Phelps Dodge Corp. 380 19,332

COSMETICS - 1.3%
International Flavors & Fragrances, Inc. 6,700 296,056
Playtex Products, Inc. # 23,300 374,256
670,312

DATA PROCESSING - 0.6%
Automatic Data Processing, Inc. 1,800 144,337
Fiserv, Inc. # 920 47,323
First Data Corp. 2,820 89,888
281,548

DIVERSIFIED - 1.2%
Allied Signal, Inc. 2,190 97,044
Minnesota Mining & Manufacturing Co. 1,650 117,356
National Service Industries 500 19,000
Norfolk Southern Corp. 1,830 57,988
PPG Industries, Inc. 1,130 65,752
Tyco International 3,483 262,749
619,889

DRUG - 8.2%
Abbott Labs 6,700 328,300
Bristol Myers Squibb 5,940 794,846
Elan Corp. plc # 451 31,507
Eli Lilly & Co. 4,290 381,274
Merck & Co., Inc. 5,800 855,500
Pfizer, Inc. 7,780 972,500
Schering Plough Corp. 10,500 580,125
Warner Lambert Co. 3,730 280,449
4,224,501

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

DRUGSTORE - 0.1%
Longs Drug Stores 2,000 75,000

ELECTRIC--INTEGRATED - 0.4%
Edison International 1,830 51,011
FPL Group, Inc. 860 52,998
Texas Utilities Co. 1,930 90,107
194,116

ELECTRIC UTILITY - 0.6%
AES Corp. 3,850 182,394
American Electric Power, Inc. 740 34,826
Duke Power Co. 1,690 108,266
325,486

ELECTRICAL EQUIPMENT - 3.3%
General Electric Corp. 16,519 1,684,938

ELECTRONIC COMPONENT SEMICONDUCTORS - 3.3%
Applied Materials, Inc. # 1,880 80,252
Intel 9,880 1,171,398
KLA -Tencor Corp. # 700 30,362
Linear Tech Corp. 250 22,391
Motorola, Inc. 2,960 180,745
STMicroelectronic NV # 250 19,516
Texas Instruments, Inc. 2,300 196,938
1,701,602

ELECTRONIC COMPONENTS - 0.4%
AMP, Inc. 900 46,856
Emerson Electric 2,544 153,912
200,768

ELECTRONICS - 0.1%
Rockwell International Corp. 1,360 66,045

FINANCE - 9.4%
Banc One Corp. 8,926 455,784
Bank of Boston Corp. 3,300 128,494
Chase Manhattan Corp. 3,900 276,900
Citigroup, Inc, 7,997 397,351
Equifax, Inc. 1,250 42,734
Federal Home Loan Mortgage Corp. 5,700 367,294
Federal National Mortgage Corp. 6,600 488,400
First Union Corp. 7,968 484,554
Fleet Financial Group, Inc. 3,100 138,531
Lehman Brothers Holdings, Inc. 1,500 66,094
Mellon Bank Corp. 3,600 247,500
Merrill Lynch & Co. 800 53,400
Morgan Stanley Dean Witter & Co. 1,800 127,800
Metris Cos., Inc. 2,200 110,687
PNC Bank Corp. 3,100 167,400
Providian Financial Corp. 7,350 551,250
Ryder Systems, Inc. 360 9,360
SunTrust Banks, Inc. 900 68,850
Wells Fargo & Co. 15,900 635,006
4,817,389

FINANCIAL SERVICES - 3.9%
American Express Co. 1,700 174,250
Associates First Capital 10,400 440,700
Avery Dennison Corp. 620 27,939
BankAmerica Corp. 10,214 614,117
Capital One Financial Corp. 6,200 713,000
H&R Block, Inc. 1,370 61,650
2,031,656

FOOD - MISCELLANEOUS - 0.5%
International Home Foods, Inc. # 14,900 251,437

FOREST PRODUCTS - 0.2%
Georgia Pacific Corp. 430 25,182
Weyerhauser Co. 1,120 56,910

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

Willamette Industries, Inc. 640 21,440
103,532

HEALTH - 1.4%
American Home Products 5,670 319,646
Johnson & Johnson 5,040 422,730
742,376

INSTRUMENTS--CONTROLS - 0.2%
Honeywell, Inc. 500 37,656
Parker Hannifin Corp. 1,770 57,967
95,623

INSTRUMENTS--SCIENTIFIC - 0.0%
Perkin Elmer Corp. 190 18,537

INSURANCE--LIFE - 0.5%
AFLAC, Inc. 2,000 87,750
SunAmerica, Inc. 2,000 164,000
251,750

INSURANCE--MULTILINE - 1.6%
Allstate 4,400 169,400
American International Group 6,725 649,803
819,203

MACHINERY - 0.4%
Caterpillar, Inc. 1,499 68,954
Deere & Co. 2,484 81,662
Dover Corp. 840 30,765
Lancer Corp. # 3,700 40,700
222,081

MACHINERY--CONSTRUCTION & MINING - 0.2%
Case Corp. 3,192 69,626
Halliburton Co. 1,900 56,287
125,913

MANUFACTURING - 0.2%
Corning, Inc. 1,110 49,950
Mueller Industries, Inc. # 1,750 35,547
Owens Illinois # 780 23,888
109,385

MARKETING SERVICES - 0.1%
Omnicom Group, Inc. 1,135 65,830

MATERIALS & SERVICES - 0.7%
Champion International Corp. 425 17,213
Dana Corp. 970 39,649
Deluxe Corp. 910 33,272
Ecolab, Inc. 1,970 71,289
Hercules, Inc. 660 17,985
Illinois Tool Works, Inc. 1,730 100,340
Service Corp. International 1,570 59,758
Sherwin-Williams Co. 1,070 31,431
370,937

MEDICAL PRODUCTS - 1.0%
Algos Pharmaceutical Corp. # 2,240 58,240
Amgen, Inc. # 900 94,106
Centor, Inc. # 1,500 67,688
GelTex Pharmaceuticals, Inc. # 5,140 116,293
IDEC Pharmaceuticals Corp. # 1,020 47,940
MedImmune, Inc. # 1,550 154,128
538,395

MEDICAL SERVICES - 0.8%
Columbia/HCA Healthcare Corp. 2,620 64,845
Genzyme Corp. # 2,050 101,987
Genzyme Molecular Oncology # 1 2
HBO & Co. 3,940 113,029
IMS Health, Inc. 540 40,736
Shared Medical Systems 490 24,439
Tenet Healthcare Corp. # 1,820 47,775
392,813

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

MEDICAL SUPPLIES - 0.5%
Boston Scientific Co. # 1,000 26,813
IDEXX Laboratories, Inc. # 1,370 36,862
Medtronic, Inc. 2,860 212,444
276,119

MINING - 0.1%
Barrick Gold Corp. 2,090 40,755
Newmont Mining Corp. 1,510 27,558
68,313

MULTIMEDIA - 0.5%
CBS Corp. # 7,300 239,531

NATURAL GAS DISTRIBUTOR - 0.1%
Williams Companies, Inc. 1,300 40,544

NETWORKING PRODUCTS - 1.6%
3Com Corp. # 1,900 85,144
Cisco Systems, Inc. # 8,027 745,006
830,150

OFFICE AUTOMATION & EQUIPMENT - 1.1%
Hewlett Packard 5,770 394,163
Pitney Bowes, Inc. 1,325 87,533
Xerox Corp. 890 105,020
586,716

OIL/GAS--DOMESTIC - 1.7%
Amoco Corp. 4,000 238,000
Atlantic Richfield 1,100 71,912
Baker Hughes 1,640 28,905
Burlington Resources 1,500 53,719
Devon Energy 1,200 36,825
Enron Corp. 400 22,825
Mobil Corp. 4,000 348,500
Murphy Oil Corp. 400 16,500
Noble Drilling Co. # 1,300 16,819
USX Marathon Group 1,800 54,225
888,230

OIL/GAS--INTERNATIONAL - 2.1%
Chevron Corp. 3,500 290,281
Exxon Corp. 11,050 808,031
1,098,312

OILFIELD SERVICES/EQUIPMENT - 0.4%
Coastal Corp. 1,900 66,737
Kerr-McGee Corp. 1,000 38,250
Schlumberger LTD 2,200 101,888
Union Pacific Resources 1,500 13,594
220,469

OIL & NATURAL GAS - 0.4%
Amerada Hess 500 24,875
K N Energy, Inc. # 1,100 41,319
MCN Energy Group, Inc. 4,840 92,263
Ocean Energy, Inc. # 1,560 9,945
Seagull Energy Corp. # 2,900 18,306
186,708

PAPER & FOREST PRODUCTS - 0.3%
Bemis Co., Inc. 360 13,657
Fort James Corp. 1,060 42,400
International Paper 1,615 72,372
Mead Corp. 840 24,623
153,052

PETROLEUM--INTEGRATED - 1.6%
Occidental Petroleum Corp. 1,600 27,000
Phillips Petroleum 1,600 68,200

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

Royal Dutch Petroleum 11,400 545,775
Texaco 2,900 153,700
Unocal Corp. 1,000 29,188
823,863

PROTECTION--SAFETY EQUIPMENT - 0.6%
Lo-Jack Corp. # 25,500 302,812

PUBLISHING - 0.7%
The Reader's Digest Association, Inc. 14,000 352,625

RADIO - 0.8%
Chancellor Media Corp. # 4,900 234,587
Infinity Broadcasting Corp. # 6,200 169,725
404,312

RAILROAD TRANSPORTATION - 0.3%
Burlington Northern Santa Fe 2,370 81,172
Union Pacific Corp. 1,240 55,877
137,049

RENTAL--AUTO/EQUIPMENT - 0.6%
Budget Group Inc. # 9,400 149,225
The Hertz Corp. 3,600 164,250
313,475

RESTAURANT - 1.2%
Brinker International, Inc. # 8,300 239,662
Wendy's International, Inc. 17,100 372,994
612,656

RETAIL GROCERY - 0.6%
Albertsons, Inc. 5,000 318,438

RETAIL STORE - 3.4%
Kmart # 40,000 612,500
PETsMART, Inc. # 22,500 247,500
Sears, Roebuck & Co. 5,000 212,500
WalMart Stores, Inc. 8,000 651,500
1,724,000

SERVICES - 0.1%
Paychex, Inc. 1,397 71,858

TELECOMMUNICATION EQUIPMENT - 1.0%
General Instrument Corp. # 620 21,041
Loral Space & Communications Ltd. # 5,460 97,256
Newbridge Networks Corp. # 1,700 51,638
Nokia Corp. - ADR - A 380 45,766
Northern Telecom LTD 2,470 123,500
P-Com, Inc. # 8,760 34,903
QUALCOMM, Inc. # 2,550 132,122
506,226

TELECOMMUNICATION SERVICES - 10.5%
Airtouch Communications # 2,730 197,754
Ameritech Corp. 5,510 349,196
Ascend Communications, Inc. # 1,280 84,160
AT&T 9,000 681,750
BCE, Inc. 3,420 129,746
Bell Atlantic Corp. 7,730 417,420
BellSouth Corp. 9,600 478,800
Frontier Corp. 3,470 117,980
GTE Corp. 4,580 297,700
Leap Wireless International, Inc. # 550 3,987
Lucent Technologies, Inc. 6,205 682,162
MediaOne Group, Inc. # 3,130 147,110
MCI Communication 10,288 738,164
PT Indosat - ADR 7,370 90,282
Qwest Communications International, Inc. # 4,240 212,000

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

SBC Communications 7,550 404,869
Sprint Corp. 1,890 158,996
Sprint Corp. - PCS Group # 945 21,853
Tellabs, Inc. # 820 56,221
U.S. West, Inc. 1,825 117,941
5,388,091

TOBACCO - 3.2%
Gallaher Group, plc - ADR 7,200 195,750
Imperial Tobacco 5,000 105,625
Philip Morris Companies 16,900 904,150
UST, Inc. 12,000 418,500
1,624,025

TRANSPORTATION - 0.1%
FDX Corp. # 738 65,820

TRUCKING/TRANSPORTATION LEASING - 0.1%
CSX, Corp. 1,097 45,525

WASTE DISPOSAL--NON-HAZARDOUS - 0.3%
Waste Management, Inc. 3,048 142,113

- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost 37,878,933 ) 48,537,106
- --------------------------------------------------------------------------------

U.S. TREASURY OBLIGATIONS - 0.8%

U.S. Treasury Bills
** 5.02%, 01/07/99 6,000 5,996
* 4.33%, 02/04/99 200,000 199,182
* 4.37%, 03/04/99 200,000 198,470

- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost 403,673 ) 403,648
- --------------------------------------------------------------------------------

REPURCHASE AGREEMENT - 4.9%

Prudential Securities, 5.10%, 01/04/99,
(Collateralized by $2,468,000 FNMA Remic Series
Pool #93020J, 7.00%, 03/25/23,
market value - $2,557,465) 2,509,000 2,509,000

- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost 2,509,000 ) 2,509,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost 40,791,606 ) 51,449,754
- --------------------------------------------------------------------------------

FUTURES CONTRACTS CONTRACTS VALUE

Long, S&P 500 Futures, face amount $2,055,875
expiring March 1999 7 2,179,625

- --------------------------------------------------------------------------------
TOTAL FUTURES CONTRACTS 2,179,625
- --------------------------------------------------------------------------------

TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 230 4,888
Flex-funds Muirfield Fund 247 1,702
Flex-funds Total Return Utilities Fund 30 573
Flex-Partners International Equity Fund 154 2,234

- --------------------------------------------------------------------------------
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost 8,594) 9,397
- --------------------------------------------------------------------------------

ADR American Depositary Receipt
FNMA Federal National Mortgage Association
Remic Real Estate Mortgage Investment Conduit
# Represents non-income producing securities.
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
***Assets of affiliates to the Growth Stock Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.

See accompanying notes to financial statements.

<PAGE>

Mutual Fund Portfolio
Portfolio of Investments as of December 31, 1998

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----

MUTUAL FUNDS - 96.6%
Federated S&P 500 Maxcap Fund 632,669 $ 16,057,133
Fidelity OTC Portfolio Fund 856,653 37,375,785
Gabelli Growth 720,481 25,505,045
Janus Twenty Fund 546,887 29,149,088
MFS Investor Growth - Class A 690,955 10,993,091
Mutual Shares Fund 352 6,870
Rydex OTC Fund 375,152 15,516,274

- --------------------------------------------------------------------------------
TOTAL MUTUAL FUNDS
(Cost $111,404,738) 134,603,286
- --------------------------------------------------------------------------------

MONEY MARKET MUTUAL FUNDS - 1.9%
Charles Schwab Money Market Fund 889,006 889,006
Fidelity Core Money Market Fund 1,771,471 1,771,471

- --------------------------------------------------------------------------------
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $2,660,477 ) 2,660,477
- --------------------------------------------------------------------------------

U.S.TREASURY BILLS - 1.4%
** 5.02%, due 01/07/99 30,100 30,075
* 4.39%, due 02/04/99 $2,000,000 1,991,708

- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $2,021,783 ) 2,021,783
- --------------------------------------------------------------------------------

REPURCHASE AGREEMENT - 0.1%
Prudential Securities, 5.10%, 01/04/99,
(Collateralized by $90,000 FNMA Remic
Series Pool #93020J, 7.00%, 03/25/23,
market value - $93,263) 91,000 91,000

- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $91,000 ) 91,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost $116,177,998) $139,376,546
- --------------------------------------------------------------------------------

FUTURES CONTRACT CONTRACTS VALUE

Long, S&P 500 Futures, face amount $6,274,000
expiring March 1999 20 $6,227,500

- --------------------------------------------------------------------------------
TOTAL FUTURES CONTRACT $6,227,500
- --------------------------------------------------------------------------------

TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 687 14,585
Flex-funds Muirfield Fund 778 5,355
Flex-funds Total Return Utilities Fund 76 1,437
Flex Partners International Equity Fund 442 6,390

- --------------------------------------------------------------------------------
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $25,368 ) $27,767
- --------------------------------------------------------------------------------

FNMA Federal National Mortgage Association
Remic Real Estate Mortgage Investment Conduit
* Pledged as collateral on futures contracts.
** Pledged as collateral on Letter of Credit.
***Assets of affiliates to the Mutual Fund Portfolio held for the benefit of the
Portfolio's Trustees in connection with the Trustee Deferred Compensation
Plan.

See accompanying notes to financial statements.

<PAGE>

Utilities Stock Portfolio
Portfolio of Investments as of December 31, 1998

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

COMMON STOCKS - 97.5%

ELECTRIC/GAS UTILITY - 8.0%
AGL Resources, Inc. 12,100 $ 279,056
MDU Resources Group, Inc. 5,000 131,562
NIPSCO Industries, Inc. 9,400 286,113
UtiliCorp United, Inc. 10,000 366,875
1,063,606

ELECTRIC UTILITY - 10.9%
Cinergy Corp. 7,800 268,125
LG&E Energy Corp. 13,944 394,789
New Century Energies, Inc. 5,600 273,000
PacifiCorp 9,800 206,413
TECO Energy, Inc. 10,400 293,150
1,435,477

NATURAL GAS (DISTRIBUTOR) - 21.1%
Bay State Gas Co.
Consolidated Natural Gas Co. 8,200 442,800
KeySpan Energy Corp. 22,100 685,100
MCN Corp. 22,270 424,522
Peoples Energy Corp. 6,990 278,726
TransCanada Pipelines Ltd. 8,100 119,475
WICOR, Inc. 11,200 244,300
Williams Cos., Inc. 19,140 596,929
2,791,852

OIL/GAS (DOMESTIC) - 11.8%
El Paso Natural Gas Co. 8,440 293,817
Enron Corp. 5,830 332,674
Kinder Morgan Energy Partners, L.P. 14,824 537,370
Questar Corp. 20,200 391,375
1,555,236

TELECOMMUNICATION EQUIPMENT - 2.9%
Loral Space & Communications Ltd. 14,890 265,228
P-Com, Inc. # 30,000 119,531
384,759

TELECOMMUNICATION SERVICES - 40.0%
AT&T Corp. 4,000 303,000
AirTouch Communications, Inc. # 5,400 391,162
Alltel Corp. 7,900 472,519
BCE, Inc. 12,040 456,768
Frontier Corp. 19,300 656,200
GTE Corp. 5,000 325,000
MCI WorldCom, Inc. # 7,420 532,385
Qwest Communications International, Inc.# 13,491 674,550
SBC Communications, Inc. 12,740 683,183
Sprint Corp. 4,300 361,737
Sprint Corp. - PCS Group # 2,150 49,719
U.S. West Communications Group 5,900 381,288
5,287,511

WATER UTILITY - 2.8%
American Water Works Co., Inc. 10,900 367,875

- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $9,492,932 ) $12,886,316
- --------------------------------------------------------------------------------

U.S. TREASURY BILLS - 0.0%

* 5.02%, due 01/07/99 1,000 999

- --------------------------------------------------------------------------------
TOTAL U.S. TREASURY BILLS
(Cost $999 ) 999
- --------------------------------------------------------------------------------

<PAGE>

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
- -------------------------- --------------------- -----

REPURCHASE AGREEMENT - 2.5%

Prudential Securities, 5.10%, 01/04/99,
(Collateralized by $320,00 FNMA Remic
Series Pool #93020J, 7.00%, 03/25/23,
market value - $331,600 325,000 325,000

- --------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(Cost $325,000 ) 325,000
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost $9,818,931 ) $13,212,315
- --------------------------------------------------------------------------------

TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 120 2,550
Flex-funds Muirfield Fund 120 826
Flex-funds Total Return Utilities 14 274
Flex Partners International Equit 85 1,231

- --------------------------------------------------------------------------------
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $4,465 ) $4,881
- --------------------------------------------------------------------------------

FNMA Federal National Mortgage Association

Remic Real Estate Mortgage Investment Conduit

# Represents non-income producing securities.

* Pledged as collateral on Letter of Credit.

** Assets of affiliates to the Utility Stock Portfolio held for the benefit
with the Trustees Deferred Compensation Plan.

See accompanying notes to financial statements.

<PAGE>

International Equity Fund
Portfolio of Investments as of December 31, 1998

INDUSTRIES/CLASSIFICATIONS SHARES OR FACE
AMOUNT VALUE

COMMON STOCKS - 96.5%

AEROSPACE/DEFENSE - 1.2%
British Aerospace plc 10,207 $ 86,700
Finmeccanica SpA # 97,100 99,697
Rolls-Royce plc 5,064 20,812
207,209

AGRICULTURE & FOOD - 0.0%
Kuala Lumpur Kepong Bhd 2,000 2,431

AIR TRANSPORT - 0.4%
BAA plc 2,577 29,929
British Airways plc 1,262 8,546
Japan Airlines Co. # 9,000 23,777
Singapore Airlines Ltd. 1,500 11,182
73,434

APPAREL - 0.7%
Alexon Group plc 3,181 10,136
Castellum AB 5,700 61,884
Espirit Holdings Ltd. 20,000 8,649
Onward Kashiyama Co., Ltd. 3,000 40,374
121,043

AUTO & TRUCK - 2.6%
Daimler Chrysler AG # 1,906 188,254
Honda Motor Co., Ltd. 3,000 98,673
Nissan Motor Co., Ltd. 4,000 12,270
Toyota Motor Corp. 6,000 163,303
462,500

AUTOPARTS - 0.5%
Denso Corp. 2,000 37,058
GKN plc 3,824 51,125
Torotrak plc # 2,831 4,027
92,210

BANKING - 13.2%
Abbey National plc 3,259 69,789
Argentaria, Caja Postal y Banco Hipotecar 4,000 103,747
Asahi Bank Ltd. 11,000 40,374
Australia & New Zealand Banking Group L 3,300 21,354
Banca Nazionale del Lavoro # 26,600 79,773
Bank of East Asia, Ltd. 3,000 5,247
Bank of Tokyo-Mitsubishi Ltd. 8,000 82,981
Banque Cantonale de Geneve 320 80,379
Banque Nationale de Paris 2,335 192,368
Barclays plc 3,741 80,484
Compahnie Financiere de Paribas 800 69,560
Credito Italiano 25,000 148,509
Credit Suisse Group 500 78,267
Dai-Ichi Kangyo Bank Ltd. 6,000 32,022
Den Danske Bank 400 53,737
Development Bank of Singapore Ltd. 1,200 10,982
HSBC Holdings plc 4,596 125,186
Halifax plc 2,574 36,511
Hang Seng Bank Ltd. 3,400 30,502
ING Groep NV 2,764 168,635
Industrial Bank of Japan Ltd. 7,000 32,333
Istituto Bancario San Paolo di Torino SpA 5,600 99,170
Julius Baer Holding AG 24 79,767
Malayan Banking Bhd 4,000 5,746
National Australia Bank Ltd. 2,760 41,305
National Bank of Greece SA 816 183,573
National Westminster Bank plc 1,732 33,372
Overseas-Chinese Banking Corp., Ltd. 2,000 13,455
Royal Bank of Scotland Group plc 2,334 37,554
Sanwa Bank Ltd. 4,000 30,887

<PAGE>

Schroders plc 975 17,618
Sumitomo Bank Ltd. 6,000 61,704
Tokai Bank Ltd. 6,000 28,405
Union Bank of Switzerland # 618 189,877
United Overseas Bank Ltd. 1,000 6,485
2,371,658

BEVERAGE -- ALCOHOLIC - 2.2%
Diageo plc 9,030 101,494
Foster's Brewing Group Ltd. 8,300 22,247
Fraser & Neave Ltd. 1,000 2,897
Heineken NV 1,800 108,382
Kirin Brewery Co., Ltd. 2,000 25,533
Pernod Ricard 1,600 103,974
Scottich & Newcastle plc 3,062 34,721
399,248

BROADCASTING -- CABLE TV - 0.4%
British Sky Broadcasting Group plc 4,966 38,071
Reuters Holdings plc 2,832 29,710
67,781

BROADCASTING & PUBLISHING - 0.5%
News Corporation Ltd. 6,600 43,395
Pearson plc 2,146 42,777
86,172

BUILDING & CONSTRUCTION - 2.6%
Blue Circle Industries plc 3,444 19,885
Grupo Acciona Sa 1,500 122,696
Obayashi Corp. 15,000 72,077
RMC Group plc 1,064 14,517
Sekisui House Ltd. 3,000 31,783
Suez Lyonnaise des Eaux 840 172,632
Taisei Corp. 10,000 19,238
Tostem Corp. 1,000 19,859
472,687

BUILDING MATERIALS - 0.6%
CRH plc 5,000 86,477
Wolseley plc 4,385 27,689
114,166

CHEMICALS - 0.6%
Laporte plc 2,490 19,307
Shin-Etsu Chemical Co., Ltd. 4,000 96,457
115,764

CHEMICALS -- DIVERSIFIED - 2.4%
Henkel KGaA 2,200 196,818
Hoechst AG 2,200 91,276
Montedison SpA 100,000 133,120
Sekisui Chemical Co., Ltd. 4,000 26,951
448,165

COMPUTERS & PERIPHERALS - 1.6%
Cap Gemini 1,122 180,171
Fujitsu Ltd. 5,000 66,713
SAP AG 75 35,809
282,693

CONSUMER DURABLES - 0.4%
Unilever plc 6,900 77,553

COSMETICS - 1.0%
Kao Corp. 4,000 90,428
L'OREAL 115 83,172
173,600

DATA PROCESSING - 0.1%
Industri-Matematik International
Corp. ADR # 2,000 10,000

DISTRIBUTION WHOLESALER - 0.4%
Marubeni Corp. 7,000 12,039
Mitsui & Co. 12,000 67,130
79,169

<PAGE>

DIVERSIFIED - 1.3%
Arriva plc 2,100 13,208
BTR plc 5,400 11,052
Brambles Industries Ltd. 1,050 25,438
Broken Hill Proprietary Co., Ltd. 2,350 17,008
Granada Group plc 3,639 64,576
Hutchison Whampoa Ltd. 7,500 52,762
Keppel Corp., Ltd. 2,000 5,430
Rio Tinto Ltd. 1,590 18,627
Swire Pacific Ltd. 3,000 13,631
Williams plc 1,100 6,177
227,909

DRUG - 3.0%
Rhone-Poulenc SA 2,800 144,160
Sankyo Co., Ltd. 2,000 43,796
Sanofi SA 945 155,639
Smithkline Beecham plc 13,860 194,524
538,119

ELECTRIC PRODUCTION -- MISCELLANEOUS - 2.2%
CLP Holdings Ltd. 5,000 25,042
Chubu Electric Power Co., Inc. 4,000 80,853
Endesa SA 3,400 90,224
Hitachi Ltd. 6,000 37,235
National Grid Group plc 7,307 58,115
Scottish Power plc 3,683 37,719
Sharp Corp. 2,000 18,068
Tenaga Nasional Bhd 3,000 3,812
Tokyo Electric Power Co. 1,400 34,629
385,697

ELECTRONIC COMPONENT -- MISCELLANEOUS - 2.4%
Fanuc Ltd. 1,000 34,310
Hirose Electric Co., Ltd. 600 42,076
Johnson Electric Holdings Ltd. 2,000 5,137
Mabuchi Motor Co., Ltd. 900 69,018
Matsushita Electric Industrial Co., Ltd. 4,000 70,889
Omron Corp. 3,000 41,171
Sony Corp. 1,000 72,963
Toshiba Corp. 11,000 65,631
Yokogawa Electric Corp. 4,000 19,859
421,054

ENGINEERING RESEARCH & DEVELOPMENT - 0.1%
Sembcorp Industries Ltd. # 3,000 3,454
Singapore Technologies Engineering Ltd. 6,000 5,636
9,090

FINANCE - 1.8%
Credit Saison Co., Ltd. 2,900 71,602
Garban plc # 67 258
Lend Lease Corp., Ltd. 2,200 29,483
Lloyds TSB Group plc 13,412 190,357
Nomura Securities Co., Ltd. 3,000 26,198
317,898

FINANCIAL SERVICES - 0.9%
Acom Co., Ltd. 500 32,182
Legal & General Group plc 1,831 23,840
Northern Rock plc 1,636 15,625
Unidanmark A/S 1,000 90,348
161,995

FOOD -- DIVERSIFIED - 3.1%
Associated British Foods plc 2,100 19,602
Cadbury Schweppes plc 2,060 35,099
Danone 300 85,929
J Sainsbury plc 1,200 9,339
Nestle SA 60 130,615
Royal Canin SA 3,300 206,767
Tesco plc 21,367 61,328
548,679

<PAGE>

FOOD -- RETAIL - 1.3%
Koninklijke Ahold NV 2,500 92,450
Laurus NV 1,279 32,304
Nissin Food Products 3,000 75,667
Somerfield plc 1,500 9,996
Whitbread plc 1,293 16,480
226,897

HOTEL/GAMING - 0.7%
Accor SA 560 121,303
Genting Bhd 1,400 2,166
Ladbroke Group plc 2,173 8,678
132,147

HOUSEHOLD PRODUCTS - 1.3%
Asahi Glass Co., Ltd. 11,000 68,362
Benckiser NV 1,900 124,527
Nippon Sheet Glass Co., Ltd. 13,000 36,650
229,539

HUMAN RESOURCES - 0.4%
Vedior 4,000 78,862

INSURANCE -- MULTILINE - 1.6%
Allied Zurich AG # 5,597 83,761
CNP Assurances # 3,080 93,624
ERGO Versicherungs Gruppe AG 570 94,116
Royal & Sun Alliance Insurance Group plc 2,162 17,501
289,002

INSURANCE -- PROPERTY/CASUALTY - 0.0%
Allianz AG 12 4,402

INSURANCE - 3.5%
AMP Ltd. # 1,800 22,522
Assicurazioni Generali 4,356 182,282
Fortis AG # 500 181,208
Guardian Royal Exchange plc 3,459 19,338
Prudential Corp., plc 3,625 54,797
Skandia Forsakrings AB 9,100 139,214
Tokio Marine & Fire Insurance Co. 3,000 35,905
635,266

INVESTMENT COMPANIES - 0.6%
Corp. Financiera Reunida SA # 7,000 102,018
Sime Darby Bhd 4,000 3,300
105,318

MACHINERY - 2.1%
Kubota Corp. 20,000 59,754
Mannesmann AG 2,300 263,765
Toshiba Machine Co., Ltd. 23,000 47,102
370,621

MANUFACTURING - 2.7%
FKI plc 12,045 26,956
General Electric Co. plc 7,728 69,436
Mitsubishi Heavy Industries Ltd. 18,000 70,215
Morgan Crucible Co., plc 1,923 8,879
RWE AG 2,400 131,492
Siemens AG 2,600 167,817
TI Group plc 1,200 6,474
481,269

MEDICAL PRODUCTS - 6.2%
Glaxo Wellcome plc 9,153 313,882
Hoya Corp. 1,000 48,760
Novartis AG 250 491,445
Takeda Chemical Industries 2,000 77,130
Yamanouchi Pharmaceutical Co., Ltd. 3,000 96,811
Zeneca Group plc 2,049 89,495
1,117,523

<PAGE>

MINING - 0.2%
Rio Tinto plc 1,800 20,785
Sumitomo Metal Mining Co. 7,000 22,776
43,561

OIL & NATURAL GAS - 4.9%
Australia Gas & Light 1,300 9,337
BG plc 11,180 70,642
British Petroleum Co., plc 21,612 322,562
Centrica plc # 17,585 35,331
Elf Aquitain SA 1,300 150,340
Hong Kong & China Gas Co., Ltd. 8,000 10,068
Nippon Oil Co. 6,000 20,958
Royal Dutch Petroleum Co. 2,450 122,063
Tokyo Gas Co. 26,000 68,460
Total SA 700 70,927
880,688

PAPER & FOREST PRODUCTS - 0.8%
Nippon Paper Industries Co. 6,000 27,341
Stora Kopparbergs Bergslags Aktiebolag 10,250 113,812
141,153

PHOTOGRAPHIC EQUIPMENT & SUPPLIES - 0.4%
Fuji Photo Film 2,000 74,470

PRINTING -- COMMERCIAL - 0.2%
Dai Nippon Printing Co., Ltd. 2,000 31,951

PROTECTION -- SAFETY EQUIPMENT - 0.5%
Secom Co., Ltd. 1,000 82,981

PUBLISHING - 1.1%
Johnston Press plc 5,266 18,882
Reed International plc 2,541 20,231
Singapore Press Holdings Ltd. 946 10,263
South China Morning Post Holdings Ltd. 9,000 4,647
United News & Media plc 673 5,829
Verenigde Nederlandse Uitgeversbedrijven
Verenigd Bezit 3,700 139,585
199,437

REAL ESTATE MANAGEMENT & INVESTMENT - 1.2%
British Land Co., plc 1,233 9,119
Cheung Kong Holdings Ltd. 4,000 29,302
City Developments Ltd. 4,000 17,454
HKR International Ltd. 12,080 7,446
Henderson Land Development Co., Ltd. 1,000 5,215
Hysan Development Co., Ltd. 3,000 4,511
Land Securities plc 1,094 13,106
Mitsubishi Estate Co., Ltd. 8,000 71,846
New World Development Co., Ltd. 4,000 10,146
Sun Hung Kai Properties Ltd. 5,000 36,950
Westfield Holdings Ltd. 2,700 13,579
218,674

RECREATION - 0.2%
TAB Ltd. # 9,590 18,705
TABCORP Holdings Ltd. 2,800 17,174
35,879

RETAIL - 0.3%
Great Universal Stores plc 2,832 29,663
JUSCO Co., Ltd. 1,000 20,258
49,921
RETAIL GROCERY - 2.0%
Ito-Yokado Co., Ltd. 1,000 70,038
Superdiplo SA # 9,500 267,853
Woolworths Ltd. 5,000 16,775
354,666

RETAIL STORE - 1.7%
ASDA Group plc 3,900 10,399

<PAGE>

Debenhams plc 1,627 9,719
Family Mart Co., Ltd. 1,000 50,002
Kingfisher plc 3,347 36,199
Marks & Spencer 4,608 31,474
Marui Co. 3,000 57,847
Metro AG 1,300 103,813
299,453

STEEL -- INTEGRATED - 0.4%
Nippon Steel Corp. 30,000 54,523
Sumitomo Metal Industries Ltd. 18,000 20,586
75,109

TELECOMMUNICATIONS - 3.7%
Cable & Wireless plc 3,591 44,185
Nippon Telegraph & Telephone Corp. 25 193,268
Singapore Telecommunications Ltd. 12,000 18,764
Societe Europeenne des Satellites # 500 81,944
Swisscom AG # 300 125,591
Telecom Corporation of New Zealand Ltd. 6,900 30,910
Telecom Italia SpA 18,850 161,190
Telefonica SA bonus rights 2,000 14
655,866

TELECOMMUNICATION EQUIPMENT - 4.2%
Alcatel Alsthom 340 41,633
Nokia Oyj 1,000 122,450
Olivetti SpA # 60,000 209,231
Storebrand ASA # 13,250 99,999
Telefonaktiebolaget LM Ericsson 1,400 33,335
Telefonica de Espana 2,000 89,067
Vodafone Group plc 9,388 152,145
747,860

TELECOMMUNICATION SERVICES - 4.7%
Barry Callebaut AG # 450 102,221
British Telecommunications plc 15,268 229,782
China Telecom Ltd. # 4,000 6,945
Hong Kong Telecommunications Ltd. 22,000 38,479
Panafon Hellenic Telecom SA # 6,730 178,439
Sonera Group Oyj # 8,600 152,865
Telecel-Comunicacaoes Pessoais SA 500 102,210
Telekom Malaysia Bhd 2,000 3,297
Telestra Corp., Ltd. # 5,900 27,322
841,560

TIRE & RUBBER - 0.3%
Bridgestone Corp. 2,000 45,480

TOBACCO - 1.5%
BAT Industries plc 1,221 10,834
Gallaher Group plc 3,147 21,325
Japan Tobacco, Inc. 4 40,072
Rothmans of Pall Mall Bhd 400 1,606
Tabacalera SA 8,000 202,130
275,967

TRANSPORTATION - 1.5%
East Japan Railway Co. 13 72,724
FirstGroup plc 2,601 17,246
Malaysia International Shipping Bhd 1,000 913
National Express Group plc 989 18,365
Nippon Yusen Kabushiki Kaisha 5,000 15,825
Peninsular and Oriental Steam
Navigation Co. 3,449 40,745
Railtrack Group plc 1,049 27,438
Tokyu Corp. 7,000 18,431
Yamato Transport Co., Ltd. 4,000 56,030
267,717

WATER UTILITY - 0.1%
Anglian Water plc 950 13,183
Pennon Group plc 543 10,499
23,682

TOTAL COMMON STOCKS
(Cost $15,062,948 ) 17,284,845

<PAGE>

REPURCHASE AGREEMENTS - 3.5%

State Street Bank, 4.35%, 01/04/99,
(Collateralized by $455,000 U.S. Treasury
Notes, 8.75%, 05/15/17, market value - $633,232) 622,000 622,000

TOTAL REPURCHASE AGREEMENTS
(Cost $622,000 ) 622,000

TOTAL INVESTMENTS - 100.0%
(Cost $15,684,948 ) 17,906,845

TRUSTEE DEFERRED COMPENSATION*

Flex-funds Highlands Growth Fund 105 2222
Flex-funds Muirfield Fund 103 705
Flex-funds Total Return Utilities Fund 16 297
Flex Partners International Equity Fund 68 986

TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $3,860 ) $4,210

# Represents non-income producing securities.

ADR American Depositary Receipt

* Assets of affiliates to the International Equity Fund held for the benefit
of the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.

Portfolio Composition by Country of Domicile as of 12/31/98.

United Kingdom - 21.5% Hong Kong - 1.7%
Japan - 21.4% Finland - 1.6%
France - 10.8% Belgium - 1.5%
Switzerland - 7.4% Denmark - 0.8%
Germany - 7.4% Portugal - 0.6%
Italy - 6.4% Norway - 0.6%
Spain - 5.7% Singapore - 0.6%
Netherlands - 5.0% Ireland - 0.5%
Sweden - 2.1% New Zealand - 0.2%
Greece - 2.1% Malaysia - 0.1%
Australia - 2.0%

See accompanying notes to financial statements.

<PAGE>

STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998

CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND FUND FUND
Assets:
Investment in corresponding
portfolio, at value $7,995,706 $15,089,067 $2,847,030
Receivable for capital stock issued 12,144 --- 1,130
Receivable from investment adviser 3,232 666 10,834
Unamortized organization costs 7,167 11,938 8,508
Other assets 5,080 4,445 6,655
Total Assets 8,023,329 15,106,116 2,874,157

Liabilites:
Payable for capital stock redeemed 115,672 7,665 1,000
Dividends payable 618 --- 199
Accrued transfer agent and
administrative fees 994 2,399 527
Accrued 12b-1 and shareholder
service fees -- Class A 4,483 7 2,038
Accrued 12b-1 and shareholder
service fees -- Class C 5,754 43,103 2,363
Organizational costs due to adviser 2,108 --- ---
Other accrued liabilities 53,201 12,661 18,578
Total Liabilities 182,830 65,835 24,705

Net Assets 7,840,499 15,040,281 2,849,452

Components of Net Assets:
Capital 7,158,137 12,949,926 1,975,562
Accumulated undistributed (distributions
in excess of) net investment income (1,235) --- 576
Accumulated undistributed net realized
gains (losses) from investment
transactions 175,738 277,971 (5,391)
Net unrealized appreciation of investments
(depreciation) of investments 507,859 1,812,384 878,705
Total Net Assets $7,840,499 $15,040,281 $2,849,452

Net Assets:
Class A Shares $5,374,630 $58,746 $1,550,272
Class C Shares 2,465,869 14,981,535 1,299,180
7,840,499 15,040,281 2,849,452

Outstanding units of beneficial interest (shares):
(indefinite number of shares authorized, $0.10 par value)
Class A Shares 350,901 4,235 83,391
Class C Shares 160,913 977,102 70,701
511,814 981,337 154,092

Net asset value -- redemption price per share:
Class A Shares $15.32 $13.87 $18.59
Class C Shares * $15.32 $15.33 $18.38

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) $15.96 $14.45 $19.36

* Redemption price varies based upon holding period.

See accompanying notes to financial statements.

<PAGE>

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

CORE TACTICAL ASSET UTILITY
EQUITY ALLOCATION GROWTH
FUND FUND FUND

Net Investment Income from Corresponding Portfolio:
Interest $12,886 $303,199 $5,356
Dividends 26,342 40,988 81,912
Expenses (25,581) (126,061) (39,182)
Total Net Investment Income from
Corresponding Portfolio 13,647 218,126 48,086

Fund Expenses:
Administrative fee 1,045 6,846 1,318
Transfer agent fees 8,019 17,922 7,676
Shareholder service -- Class A Shares 2,787 119 3,466
Shareholder service -- Class C Shares 2,440 34,112 3,122
Audit fees 2,710 3,744 2,465
Legal fees 1,685 739 912
Printing 2,455 5,206 806
Amortization of organizational costs 2,017 8,308 5,611
Postage 1,118 4,637 1,994
12b-1 fees -- Class A Shares 2,787 119 3,546
12b-1 fees -- Class C Shares 7,319 102,337 9,443
Registration and filing fees 10,052 22,179 25,156
Insurance 1 1,087 739
Other expenses 2,353 13,716 5,305
Total Expenses 46,788 221,071 71,559

Expenses reimbursed
by investment adviser (33,064) (56,876) (52,712)

Net Expenses 13,724 164,195 18,847

NET INVESTMENT INCOME (77) 53,931 29,239

NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:

Net realized gains (losses) from
futures contracts 112,828 433,446 ---
Net realized gains (losses) from
investment transactions 178,827 468,724 (5,391)
Net change in unrealized appreciation
(depreciation) of investments 502,895 2,504,806 288,302
NET GAIN (LOSS) FROM INVESTMENTS 794,550 3,406,976 282,911

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $794,473 $3,460,907 $312,150

See accompanying notes to financial statements.

<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998

INTERNATIONAL
EQUITY
FUND
Assets:
Investments, at value (cost $15,062,948) $17,284,845
Repurchase agreements, at cost 622,000
Cash and foreign currency, at value (cost 304,795
Receivable for capital stock issued 10,183
Receivable for investments sold 628,867
Dividends, interest and tax reclaims
receivable, at value 48,651
Receivable from investment adviser 9,883
Unamortized organization costs 21,378
Trustee Deferred Compensation Plan asset, 4,210
Other assets 4,467
Total Assets 18,939,279

Liabilites:
Payable for investments purchased 622,000
|| Payable for capital stock redeemed ---
Dividends payable 30
Accrued management fees 15,014
Accrued fund accounting fees 2,362
Accrued transfer agent fees 1,427
Accrued administrative fees 1,179
Accrued 12b-1 distribution and shareholder 9,591
Trustee Deferred Compensation Plan, at val 4,210
Other accrued liabilities 10,098
Total Liabilities 665,911

Net Assets $18,273,368

Components of Net Assets:
Capital $16,013,374
Accumulated undistributed (distributions in excess
of) net investment income (80,139)
Accumulated undistributed net realized gains (losses)
from investment and foreign currency tr 120,522
Net unrealized appreciation (depreciation) of
investments and foreign currency 2,219,611
Total Net Assets $18,273,368

Net Assets: $18,273,368

Outstanding units of beneficial interest (s 1,263,154

Net asset value -- redemption price per sha $14.47

Maximum sales charge 4.00%

Maximum offering price per share
(100%/(100% - sales charge) of net asset value
adjusted to nearest cent) $15.07

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
INTERNATIONAL
EQUITY
FUND
Investment Income:
Interest $36,933
Dividends 280,472
Foreign taxes withheld (25,981)
Total Investment Income 291,424

Expenses:
Investment management fees 160,304
Administration fees 8,429
Distribution (12b-1) fees 20,998
Fund accounting fees 29,999
Transfer agent fees 16,030
Audit fees 6,476
Legal fees 569
Custody fees 72,672
Trustees fees and expenses 8,091
Postage expense 640
Registration expense 12,650
Printing expense 1,329
Amortization of organizational costs 5,825
Other expenses 4,516
Total Expenses 348,528

Expenses reimbursed by investment adviser (27,903)

Net Expenses 320,625

NET INVESTMENT INCOME (LOSS) (29,201)

NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:

Net realized gains (losses) from investments
and foreign currency transactions 381,420
Net change in unrealized appreciation
(depreciation) of investments 2,333,615
NET GAIN (LOSS) FROM INVESTMENTS 2,715,035

NET INCREASE (INCREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $2,685,834

See accompanying notes to financial statements.

<PAGE>

<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998

<CAPTION>
CORE EQUITY FUND TACTICAL ASSET ALLOCATION 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 (loss) ($77) $983 ($1,060) $53,931 $216 $53,715
Net realized gains (losses) from investment
and futures contract transactions 291,655 189,663 101,992 902,170 3,583 898,587
Net change in unrealized appreciation
(depreciation) of investments 502,895 390,385 112,510 2,504,806 9,221 2,495,585
Net increase in net assets
resulting from operations 794,473 581,031 213,442 3,460,907 13,020 3,447,887

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (983) (983) --- (53,931) (216) (53,715)
In excess of net investment income (175) (175) --- --- --- ---
From net realized gains (115,378) (76,889) (38,489) (288,528) (1,127) (287,401)
Net decrease in net assets resulting
from dividends and distributions (116,536) (78,047) (38,489) (342,459) (1,343) (341,116)

CAPITAL TRANSACTIONS:
Issued 9,795,113 4,836,253 4,958,860 1,537,614 9,651 1,527,963
Reinvested 113,551 76,538 37,013 343,504 1,343 342,161
Redeemed (3,071,047) (286,572) (2,784,475) (4,496,048) (5) (4,496,043)
Net increase (decrease) in net assets
resulting from capital share
transactions 6,837,617 4,626,219 2,211,398 (2,614,930) 10,989 (2,625,919)

TOTAL INCREASE (DECREASE)
IN NET ASSETS 7,515,554 5,129,203 2,386,351 503,518 22,666 480,852

NET ASSETS - Beginning of period 324,945 245,427 79,518 14,536,763 36,080 14,500,683

NET ASSETS - End of period $7,840,499 $5,374,630 $2,465,869 $15,040,281 $58,746 $14,981,535

SHARE TRANSACTIONS:
Issued 702,814 347,932 354,882 124,826 875 123,951
Reinvested 7,470 5,036 2,434 23,573 101 23,472
Redeemed (224,121) (21,437) (202,684) (354,387) --- (354,387)

Change in shares 486,163 331,531 154,632 (205,988) 976 (206,964)
</TABLE>

<TABLE>
<CAPTION>
UTILITY GROWTH FUND INTERNATIONAL
TOTAL CLASS A CLASS C EQUITY FUND
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income (loss) $29,239 $17,208 $12,031 ($29,201)
Net realized gains (losses) from
investment and futures contract
transactions (5,391) (22,770) 17,379 381,420
Net change in unrealized appreciation
(depreciation) of investments 288,302 206,323 81,979 2,333,615
Net increase in net assets
resulting from operations 312,150 200,761 111,389 2,685,834

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (28,275) (16,244) (12,031) ---
In excess of net investment income (388) --- (388) (50,938)
From net realized gains --- --- --- (98,118)
Net decrease in net assets resulting
from dividends and distributions (28,663) (16,244) (12,419) (149,056)

CAPITAL TRANSACTIONS:
Issued 1,234,768 899,057 335,711 5,048,139
Reinvested 27,166 15,269 11,897 149,026
Redeemed (1,264,535) (833,891) (430,644) (1,650,643)

Net increase (decrease) in net assets
resulting from capital share
transactions (2,601) 80,435 (83,036) 3,546,522

TOTAL INCREASE (DECREASE)
IN NET ASSETS 280,886 264,952 15,934 6,083,300

NET ASSETS - Beginning of period 2,568,566 1,285,320 1,283,246 12,190,068

NET ASSETS - End of period $2,849,452 $1,550,272 $1,299,180 18,273,368

SHARE TRANSACTIONS:
Issued 76,704 57,353 19,351 376,007
Reinvested 1,567 876 691 10,299
Redeemed (72,921) (48,837) (24,084) (123,624)

Change in shares 5,350 9,392 (4,042) 262,682
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<CAPTION>
CORE EQUITY FUND * TACTICAL ASSET ALLOCATION 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 71 $112 ($41) $128,691 $991 $127,700
Net realized gains (losses) from investment
transactions, futures contracts
and foreign currency 1,363 1,001 362 2,929,816 7,934 2,921,882
Net change in unrealized appreciation (depreciation)
of investments and foreign currency 4,964 3,709 1,255 (664,958) 15,665 (680,623)

Net increase (decrease) in net assets
resulting from operations 6,398 4,822 1,576 2,393,549 24,590 2,368,959

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (112) (112) --- (128,691) (991) (127,700)
From net realized gains (1,363) (1,001) (362) (2,929,816) (7,934) (2,921,882)
In excess of net realized gains (539) (436) (103) (335,671) (926) (334,745)

Net decrease in net assets resulting
from dividends and distributions (2,014) (1,549) (465) (3,394,178) (9,851) (3,384,327)

CAPITAL TRANSACTIONS:
Issued 641,428 563,486 77,942 983,507 11,333 972,174
Reinvested 2,014 1,549 465 3,352,428 9,851 3,342,577
Redeemed (322,881) (322,881) --- (2,877,993) (136,573) (2,741,420)

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

TOTAL INCREASE (DECREASE)
IN NET ASSETS 324,945 245,427 79,518 457,313 (100,650) 557,963

NET ASSETS - Beginning of period --- --- --- 14,079,450 136,730 13,942,720

NET ASSETS - End of period $324,945 $245,427 $79,518 $14,536,763 $36,080 $14,500,683

SHARE TRANSACTIONS:
Issued 50,902 44,658 6,244 64,263 786 63,477
Reinvested 159 122 37 271,118 864 270,254
Redeemed (25,410) (25,410) --- (190,148) (9,279) (180,869)

Change in shares 25,651 19,370 6,281 145,233 (7,629) 152,862
</TABLE>

<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<CAPTION>
UTILITY GROWTH FUND INTERNATIONAL
TOTAL CLASS A CLASS C EQUITY FUND*
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income $33,999 $16,465 $17,534 ($15,575)
Net realized gains (losses) from investment
transactions, futures contracts
and foreign currency 234,211 116,754 117,457 (163,883)
Net change in unrealized appreciation (depreciation)
of investments and foreign currency 363,380 167,064 196,316 (114,004)
Net increase (decrease) in net assets
resulting from operations 631,590 300,283 331,307 (293,462)

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (33,999) (16,465) (17,534) ---
From net realized gains (234,211) (116,754) (117,457) ---
In excess of net realized gains --- --- --- ---
Net decrease in net assets resulting
from dividends and distributions (268,210) (133,219) (134,991) ---

CAPITAL TRANSACTIONS:
Issued 376,081 155,854 220,227 12,536,720
Reinvested 260,528 128,843 131,685 ---
Redeemed (1,323,208) (543,220) (779,988) (53,190)
Net increase (decrease) in net assets resulting from
capital share transactions (686,599) (258,523) (428,076) 12,483,530

TOTAL INCREASE (DECREASE)
IN NET ASSETS (323,219) (91,459) (231,760) 12,190,068

NET ASSETS - Beginning of period 2,891,785 1,376,779 1,515,006 ---

NET ASSETS - End of period $2,568,566 $1,285,320 $1,283,246 $12,190,068

SHARE TRANSACTIONS:
Issued 24,093 9,531 14,562 1,004,830
Reinvested 15,263 7,494 7,769 ---
Redeemed (83,469) (34,239) (49,230) (4,358)

Change in shares (44,113) (17,214) (26,899) 1,000,472

<FN>
* For the period from commencement of operations, August 1, 1997, and
September 2, 1997 for the Core Equity Fund and International Equity Fund,
respectively, through December 31, 1997.
</FN>
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS
CORE EQUITY FUND

<CAPTION>
Year ended August 1, 1997* to
December 31, 1998 December 31, 1997
CLASS A CLASS C CLASS A CLASS C

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.67 $12.66 $12.50 $12.50

Income from Investment Operations:
Net investment income --- (0.01) 0.01 (0.01)
Net gains (losses) from investments 2.88 2.90 0.24 0.24
Total from investment operations 2.88 2.89 0.25 0.23

Less Dividends and Distributions:
From net investment income --- --- (0.01) ---
From net realized gains (0.23) (0.23) (0.05) (0.05)
In excess of net realized gains --- --- (0.02) (0.02)

Total distributions (0.23) (0.23) (0.08) (0.07)

Net Asset Value, End of Period $15.32 $15.32 $12.67 $12.66

Total Return 22.78% 22.85% 2.00%(2) 1.88%(2)

Ratios/Supplementary Data
Net assets, end of period ($000) $5,375 $2,466 $245 $80
Ratio of expenses to
average net assets 1.80% 1.97% 2.00%(3) 2.25%(3)
Ratio of net investment income to
average net assets 0.09% -0.11% 0.10%(3) (0.13%)(3)
Ratio of expenses to average net assets
before waiver of fees 3.13% 3.85% 9.50%(3) 16.67%(3)
Ratio of net investment income to average
net assets before waiver of fees -1.24% -1.99% (7.40%)(3) (14.55%)(3)
Portfolio turnover(1) 79.98% 79.98% 129.79% 129.79%

<FN>
* Date of commencement of operations
(1) Represents turnover rate of corresponding portfolio
(2) Not Annualized
(3) Annualized
</FN>
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS
TACTICAL ASSET ALLOCATION FUND

<CAPTION>
Year ended Year ended Year ended June 1, 1995*
December 31, 1998 December 31, 1997 December 31, 1996 to Dec. 31, 1995
CLASS A CLASS C CLASS A CLASS C CLASS A** CLASS C CLASS C

<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.07 $12.25 $12.56 $13.52 $12.50 $13.26 $12.50

Income from Investment Operations:
Net investment income 0.05 0.05 0.40 0.14 0.14 0.10 (0.02)
Net gains (losses) from investments 3.07 3.38 1.78 2.26 0.55 0.57 1.84
Total from investment operations 3.12 3.43 2.18 2.40 0.69 0.67 1.82

Less Dividends and Distributions:
From net investment income (0.05) (0.05) (0.40) (0.14) (0.14) (0.10) ---
From net realized gains (0.27) (0.30) (2.93) (3.17) (0.49) (0.31) (1.06)
In excess of net realized gains --- --- (0.34) (0.36) --- --- ---

Total distributions (0.32) (0.35) (3.67) (3.67) (0.63) (0.41) (1.06)

Net Asset Value, End of Period $13.87 $15.33 $11.07 $12.25 $12.56 $13.52 $13.26

Total Return 28.38% 28.13% 17.29% 17.71% 5.51%(2) 5.07% 14.57%(2)

Ratios/Supplementary Data
Net assets, end of period ($000) $59 $14,982 $36 $14,501 $137 $13,943 $11,524
Ratio of expenses to
average net assets 2.00% 2.10% 2.00% 2.10% 1.73%(3) 2.00% 1.97%(3)
Ratio of net investment income to
average net assets 0.45% 0.39% 0.99% 0.86% 2.60%(3) 0.75% (0.29%)(3)
Ratio of expenses to average net assets
before waiver of fees 10.38% 2.48% 6.16% 2.50% 5.23%(3) 2.40% 2.80%(3)
Ratio of net investment income to average
net assets before waiver of fees -7.93% 0.01% (3.17%) 0.46% (0.90%)(3) 0.35% (1.12%)(3)
Portfolio turnover(1) 128.31% 128.31% 395.42% 395.42% 297.41% 297.41% 186.13%

<FN>
* Date of commencement of operations
** August 1, 1996 (date of commencement of operations) to December 31, 1996
(1) Represents turnover rate of corresponding portfolio.
(2) Not Annualized
(3) Annualized
</FN>
</TABLE>

See accompanying notes to financial statements.

<PAGE>

<TABLE>
FINANCIAL HIGHLIGHTS
UTILITY GROWTH FUND

<CAPTION>
Year ended Year ended Year ended July 11, 1995*
December 31, 1998 December 31, 1997 December 31, 1996 to Dec. 31, 1995
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.37 $17.17 $15.09 $14.91 $14.26 $14.27 $12.50 $12.50

Income from Investment Operations:
Net investment income 0.23 0.16 0.22 0.19 0.29 0.26 0.12 0.10
Net gains (losses) from investments 1.20 1.21 4.03 3.99 1.48 1.49 1.76 1.77
Total from investment operations 1.43 1.37 4.25 4.18 1.77 1.75 1.88 1.87

Less Dividends and Distributions:
From net investment income (0.21) (0.16) (0.22) (0.19) (0.29) (0.26) (0.12) (0.10)
From net realized gains --- --- (1.75) (1.73) (0.65) (0.85) --- ---

Total distributions (0.21) (0.16) (1.97) (1.92) (0.94) (1.11) (0.12) (0.10)

Net Asset Value, End of Period $18.59 $18.38 $17.37 $17.17 $15.09 $14.91 $14.26 $14.27

Total Return 8.34% 8.08% 28.41% 28.25% 12.61% 12.45% 15.11%(2) 15.07%(2)

Ratios/Supplementary Data
Net assets, end of period ($000) $1,550 $1,299 $1,285 $1,283 $1,377 $1,515 $641 $782
Ratio of expenses to
average net assets 2.00% 2.25% 2.00% 2.25% 1.75% 2.00% 1.75%(3) 2.00%(3)
Ratio of net investment income to
average net assets 1.20% 0.93% 1.36% 1.21% 2.03% 1.85% 2.17%(3) 1.72%(3)
Ratio of expenses to average net assets
before waiver of fees 3.80% 4.31% 4.03% 4.51% 4.37% 4.65% 22.70%(3) 13.37%(3)
Ratio of net investment income to average
net assets before waiver of fees -0.60% -1.13% (0.67%) (1.05%) (0.59%) (0.80%) (18.78%)(3) (9.55%)(3)
Portfolio turnover(1) 51.36% 51.36% 41.22% 41.22% 50.79% 50.79% 5.06% 5.06%

<FN>
* Date of commencement of operations
(1) Represents turnover rate of corresponding portfolio
(2) Not Annualized
(3) Annualized
</FN>
</TABLE>

See accompanying notes to financial statements.

<PAGE>

FINANCIAL HIGHLIGHTS
INTERNATIONAL EQUITY FUND

Year ended Sept. 2, 1997* to
Dec. 31, 1998 Dec. 31, 1997

Net Asset Value, Beginning of Period $12.18 $12.50

Income from Investment Operations:
Net investment income (0.02) (0.02)
Net gains (losses) from investments 2.43 (0.30)
Total from investment operations 2.41 (0.32)

Less Dividends and Distributions:
In excess of net investment income (0.04) ---
From net realized gains (0.08) ---

Total distributions (0.12) ---

Net Asset Value, End of Period $14.47 $12.18

Total Return 19.78% (2.56%)(1)

Ratios/Supplementary Data
Net assets, end of period ($000) $18,273 $12,190
Ratio of expenses to
average net assets 2.00% 2.00%(2)
Ratio of net investment income to
average net assets -0.18% (0.43%)(2)
Ratio of expenses to average net assets
before waiver of fees 2.17% 2.68%(2)
Ratio of net investment income to average
net assets before waiver of fees -0.35% (1.11%)(2)
Portfolio turnover 86.13% 12.71%

* Date of commencement of operations
(1) Not Annualized
(2) Annualized

See accompanying notes to financial statements.

<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

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. 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, 1998
- ---- --------- -----------------
Core Equity Fund Growth Stock Portfolio 16%
Tactical Asset Allocation Fund Mutual Fund Portfolio 11%
Utility Growth Fund Utilities Stock Portfolio 21%

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.

Securities owned by the International Equity Fund are valued at 3:00 pm Eastern
Time based on the last sales price, or, lacking any sales, at the closing bid
prices.

Deferred Trustee Compensation

Under a Deferred Compensation Plan (the "Plan") non-interested Trustees may
elect to defer receipt of a portion of their annual compensation. Under the
Plan, deferred amount are invested in the shares of the Flex-funds and
Flex-Partners Funds. Deferred amounts remain in the Funds until distributed in
accordance with the Plan.

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

<PAGE>

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.

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.

Investment Income & Expenses

The funds record daily their proportionate share of the Portfolios' income,
expenses, and realized and unrealized gains and losses. In addition, the Funds
accrue their own 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.

3. AGREEMENTS AND TRANSACTIONS WITH AFFILIATES

R. Meeder & Associates (RMA), a wholly-owned subsidiary of Muirfield Investors,
Inc. (MII), provides each Portfolio with investment management, research,
statistical and advisory services. 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. In compensation for such services, 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 is entitled to receive an annual minimum
fee of $4,000 for each Fund.

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.

<PAGE>

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 is limited to the total of fees charged
the Fund by RMA and MFSCo. The limitations currently in place are as follows:

Annual expense limitation as a
Fund percentage of average daily net assets

Core Equity Fund -- Class A 1.80%*
Core Equity Fund -- Class C 1.95%*
Tactical Asset Allocation Fund -- Class A 2.00%
Tactical Asset Allocation Fund -- 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%

* Prior to March 31, 1998, the annual expense limitation had been 2.00% and
2.25% of average daily net assets of the Core Equity Fund Class A shares and
Class C shares, respectively.

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") with Advisor Dealer Services (the "Distributor"). Under the
provisions of the Plans, each Fund pays 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, to reimburse securities dealers for personal services
or maintenance of shareholder accounts.

4. SECURITIES TRANSACTIONS

For the year ended December 31, 1998, the cost of purchases and proceeds from
sales or maturities of long-term investments for the International Equity Fund
were $16,273,751 and $12,981,439, respectively. The cost of investments for
federal income tax purposes and for financial reporting purposes is
substantially the same.

5. FEDERAL INCOME TAX INFORMATION (unaudited)

Capital gain distributions from long-term capital gains for the year ended
December 31, 1998 were as follows:

Core Equity Fund $115,378
Tactical Asset Allocation Fund 281,319
International Equity Fund 19,961

<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, Utility Growth Fund and International Equity Fund),
including the portfolio of investments for the International Equity Fund, as of
December 31, 1998, 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, 1998, by
confirmation with the custodian 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 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,
1998, and 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 LLP
Columbus, Ohio
February 19, 1999

<PAGE>

STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998

<TABLE>
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
Assets:
<S> <C> <C> <C>
Investments, at market value* $139,285,546 $48,940,754 $12,887,315
Repurchase agreements, at cost* 91,000 2,509,000 325,000
Trustee deferred compensation investments, at 27,767 9,397 4,881
market value
Cash 3,600 3,954 3,499
Receivable for securities sold 12,500,000 --- ---
Receivable for net variation margin on futures 16,350 5,300 ---
Interest receivable 8,018 356 46
Dividends receivable --- 45,431 22,698
Prepaid/Other assets 13,925 1,819 3,437

Total Assets 151,946,206 51,516,011 13,246,876

Liabilites:
Payable for securities purchased 11,000,000 262,923 ---
Payable for Trustee Deferred Compensation Plan 27,767 9,397 4,881
Payable to investment adviser 92,531 43,454 10,658
Accrued audit fees 6,136 5,775 6,356
Accrued legal fees 919 458 915
Accrued custodian fees 3,293 5,131 799
Accrued trustee fees 2,108 --- ---
Accrued fund accounting fees 4,447 3,470 1,547
Other accrued liabilities 1,318 17,660 2,175

Total Liabilities 11,138,519 348,268 27,331

Net Assets $140,807,687 $51,167,743 $13,219,545

Net Assets:
Capital 117,592,789 40,504,295 9,826,161
Net unrealized appreciation (depreciation) 23,214,898 10,663,448 3,393,384
from investments
Net Assets $140,807,687 $51,167,743 $13,219,545

*Securities at cost $116,177,998 $40,791,606 $9,818,931
</TABLE>

See accompanying notes to financial statements

<PAGE>

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
NET INVESTMENT INCOME
<S> <C> <C> <C>
Interest $2,842,845 $351,842 $24,854
Dividends 385,119 526,542 375,953

Total Investment Income 3,227,964 878,384 400,807

Expenses:
Investment advisory fees 1,058,035 435,886 126,301
Audit fees 9,823 9,599 10,135
Custodian fees 13,496 27,603 3,257
Trustees fees and expenses 44,320 15,022 7,382
Legal fees 1,576 10,572 1,066
Amortization of organization cost 224 --- 8,357
Accounting fees 50,050 38,204 18,154
Insurance 1,918 373 88
Other expenses 7,553 10,278 9,568

Total Expenses 1,186,995 547,537 184,308

Investment advisory fees waived --- (4,431) ---
Directed brokerage payments received --- --- (2,246)

Total Net Expenses 1,186,995 543,106 182,062

NET INVESTMENT INCOME 2,040,969 335,278 218,745

REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:

Net realized gain from futures contracts 3,842,750 1,087,862 ---
Net realized gain (loss) from investments 4,379,433 3,495,938 (364,390)
Net change in unrealized appreciation
(depreciation) of investments 23,909,375 4,790,713 1,126,399

NET GAIN ON INVESTMENTS 32,131,558 9,374,513 762,009

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $34,172,527 $9,709,791 $980,754
</TABLE>

See accompanying notes to financial statements

<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
<S> <C> <C> <C>
Net investment income $2,040,969 $335,278 $218,745
Net realized gain (loss) from investments
and futures contracts 8,222,183 4,583,800 (364,390)
Net change in unrealized appreciation
(depreciation) of investments 23,909,375 4,790,713 1,126,399
Net increase in net assets
resulting from operations 34,172,527 9,709,791 980,754

TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 21,876,913 74,136,798 6,977,776
Withdrawals (59,774,446) (66,072,809) (5,408,703)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests (37,897,533) 8,063,989 1,569,073

TOTAL INCREASE (DECREASE) IN NET ASSETS (3,725,006) 17,773,780 2,549,827

NET ASSETS - Beginning of period 144,532,693 33,393,963 10,669,718

NET ASSETS - End of period $140,807,687 $51,167,743 $13,219,545
</TABLE>

STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
MUTUAL GROWTH UTILITIES
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
<S> <C> <C> <C>
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
</TABLE>

See accompanying notes to financial statements

<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
MUTUAL FUND PORTFOLIO

<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994

<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $140,808 $144,533 $135,540 $122,109 $83,185
Ratio of Expenses to Average Net Assets 0.91% 0.89% 0.87% 0.95% 1.01%
Ratio of Net Investment Income to
Average Net Assets 1.56% 2.08% 1.86% 1.26% 2.76%
Portfolio Turnover Rate 128.31% 395.42% 297.41% 186.13% 168.17%
</TABLE>

<TABLE>
GROWTH STOCK PORTFOLIO

<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994

<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $51,168 $33,394 $24,414 $24,537 $22,169
Ratio of Expenses to Average Net Assets 1.25% 1.34% 1.24% 1.25% 1.23%
Ratio of Net Investment Income to
Average Net Assets 0.77% 0.83% 2.33% 3.78% 2.35%
Ratio of Expenses to Average Net Assets
before waiver of fees 1.26% 1.34% 1.24% 1.25% 1.23%
Ratio of Net Investment Income to Average
Net Assets before waiver of fees 0.76% 0.83% 2.33% 3.78% 2.35%
Portfolio Turnover Rate 79.98% 129.79% 81.66% 337.57% 102.76%
</TABLE>

<TABLE>
UTILITIES STOCK PORTFOLIO

<CAPTION>
Period
Year Ended December 31, June 21, 1995* to
1998 1997 1996 December 31, 1995

<S> <C> <C> <C> <C>
Net Assets, End of Period ($000) $13,220 $10,670 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.44% 1.60% 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 1.73% 1.79% 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.46% 1.65% 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 1.71% 1.74% 2.19% 2.01%(1)
Portfolio Turnover Rate 51.36% 41.22% 50.79% 5.06%

<FN>
(1) Annualized
* Date of commencement of operations
</FN>
</TABLE>

See accompanying notes to financial statements

<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

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 Mutual Fund Portfolio seeks growth of capital through investment in the
shares of other mutual funds.

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 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

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.

Deferred Trustee Compensation

Under a Deferred Compensation Plan (the "Plan") non-interested Trustees may
elect to defer receipt of a portion of their annual compensation. Under the
Plan, deferred amounts are invested in the shares of the Flex-funds and
Flex-Partners Funds. Deferred amounts remain in the Portfolios until distributed
in accordance with the Plan.

<PAGE>

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.
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 in 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, 1998, the Portfolios had the following
activity in futures contracts and written option contracts:

LONG CONTRACTS
NUMBER OF CONTRACTS NOTIONAL AMOUNT
- --------------------------------------------------------------------------------
MUTUAL FUND PORTFOLIO:
Outstanding, beginning of year 110 $25,064,900
Contracts opened 1,282 132,898,050
Contracts closed (1,372) (151,688,950)
Outstanding, end of year 20 6,274,000

Growth Stock Portfolio:
Outstanding, beginning of year 7 $1,711,037
Contracts opened 321 82,010,900
Contracts closed (321) (81,666,062)
Outstanding, end of year 7 2,055,875

Letter of Credit

Each Portfolio has pledged as collateral a U.S. Government security, cash or
other high-grade debt security solely for the benefit of ICI Mutual Insurance
Co. for the Portfolios' fidelity bond coverage.

Income Taxes

The Portfolios will be treated as a partnership for Federal income tax purposes.
As such, each investor in the Portfolios will be subject to taxation on its
share of the Portfolios' ordinary income and capital gains. 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 Mutual Fund Portfolio and Growth Stock 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), 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 subadvisor 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, 1998, the cost of purchases and proceeds from
sales or maturities of long-term investments for the Portfolios were as follows:

Portfolio Purchases Sales
- --------- --------- -----
Mutual Fund Portfolio $199,485,528 $145,269,691
Growth Stock Portfolio 37,169,893 29,958,979
Utilities Stock Portfolio 7,985,042 6,219,080

As of December 31, 1998, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax was as follows:

Net unrealized
Cost basis of Unrealized Unrealized appreciation
Portfolio investments appreciation depreciation (depreciation)
- --------- ----------- ------------ ------------ --------------
Mutual Fund Portfolio $116,197,093 $23,275,127 ($79,324) $23,195,803
Growth Stock Portfolio 40,817,038 11,886,639 (1,248,623) 10,638,016
Utilities Stock Portfolio 9,818,931 3,663,864 (270,480) 3,393,384

<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, 1998,
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, 1998, 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 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 Portfolios at
December 31, 1998, and 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 LLP
Columbus, Ohio
February 19, 1999

<PAGE>

THE FLEX-PARTNERS
CROSS REFERENCE SHEET TO FORM N-1A
FOR THE INSTITUTIONAL FUND

PART B.

ITEM NO. STATEMENT OF ADDITIONAL INFORMATION

10(a) Front Cover Page
10(b) Table of Contents

11 Description of the Trust

12(a) Description of the Trust
12(b)(c)(d)(e) Investment Policies and Related Matters

13(a) Description of the Trust
Officers and Trustees
13(b)(c)(d) Officers and Trustees
13(e) Not applicable

14(a) Principal Holders of Outstanding Shares
14(b) Not applicable
14(c) Officers and Trustees

15(a) Investment Adviser and Manager
15(b)(c)(d)(e)(f) Not applicable
15(g) Distribution Plan
15(h) Additional Information

16 Not applicable

17(a) Investment Policies and Related Matters
17(b) Not applicable

18(a) Investment Policies and Related Matters
18(b) Not applicable
18(c) Investment Policies and Related Matters
18(d) Description of the Trust

19 Not applicable

20 Not applicable

21(a) Investment Policies and Related matters
21(b) Not applicable

22 Financial Statements

<PAGE>

THE INSTITUTIONAL FUND
6000 Memorial Drive
Dublin, Ohio 43017
STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1999

This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of The Institutional Fund dated April 30,
1999. A copy of the Prospectus may be obtained from The Institutional Fund c/o
R. Meeder & Associates Inc. at the above address or by calling: 1-800-325-FLEX
or (614) 760-2159. Capitalized terms used and not otherwise defined herein have
the same meanings as defined in the Prospectus.

TABLE OF CONTENTS
PAGE

Description of the Trust
Investment Policies and Related Matters
General
The Portfolio
Money Market Instruments
Ratings
Investment Restrictions
Purchase and Sale of Portfolio Securities
Valuation of Portfolio Securities
Calculation of Yield
Investment Adviser and Manager
Officers and Trustees
Distribution Plan
Other Services
Additional Information
Financial Statements

<PAGE>

DESCRIPTION OF THE TRUST

BACKGROUND

The Flex-Partners (the "Trust") was organized as a Massachusetts business
trust on June 22, 1992. All of the Trust's constituent funds are diversified
open-end management companies. The Trust's offices are at 6000 Memorial Drive,
Dublin, OH 43017. The business and affairs of the Trust are under the direction
of its Board of Trustees.

The Trust has not retained an investment adviser for The Institutional Fund
because the Trust seeks to achieve the investment objectives of the Fund by
investing the Fund's assets in its corresponding Portfolio. The Portfolio has
retained the services of R. Meeder & Associates, Inc. as investment adviser.

INVESTMENT STRUCTURE

Unlike other mutual funds which directly acquire and manage their own
portfolio of securities, The Institutional Fund seeks to achieve its investment
objectives by investing all of its assets in the Money Market Portfolio, a
separate registered investment company with the same investment objectives as
the Fund. Therefore, an investor's interest in the Portfolio's securities is
indirect. In addition to selling a beneficial interest to the Fund, the
Portfolio may sell beneficial interests to other mutual funds or investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund. Investors in the Fund should be
aware that these differences may result in differences in returns experienced by
investors in the different funds that invest in the Portfolio. Such differences
in returns are also present in other mutual fund structures. Information
concerning other holders of interests in the Portfolio is available by
contacting the Trust by calling: 1-800-325-FLEX, or (614) 760-2159.

The Portfolio, in which all the assets of the Fund will be invested, is
organized as a trust under the laws of the State of New York. The Portfolio's
Declaration of Trust provides that the Fund and other entities investing in the
Portfolio (e.g., other investment companies, insurance company separate
accounts, and common and commingled trust funds) will each be liable for all
obligations of the Portfolio. However, the risk of the Fund incurring financial
loss on account of such liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations. Accordingly, the Trustees of the Trust believe that neither the
Fund nor its shareholders will be adversely affected by reason of the Fund's
investing in the Portfolio. In addition, whenever the Trust is requested to vote
on matters pertaining to the fundamental policies of the Portfolio, the Trust
will hold a meeting of the Fund's shareholders and will cast its vote as
instructed by the Fund's shareholders.

<PAGE>

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. (However, this
possibility also exists for traditionally structured funds that have large or
institutional investors.) Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as do the Fund's shareholders.
Certain changes in the Portfolio's investment objectives, policies or
restrictions may require the Trust to withdraw the Fund's interest in the
Portfolio. Any such withdrawal could result in a distribution in kind of
portfolio securities (as opposed to a cash distribution from the Portfolio). If
such securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund.

The Trust may withdraw the investment of the Fund from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Board of Trustees
would consider what action might be taken, including the investment of all the
assets of the Fund in another pooled investment entity having the same
investment objectives as the Fund or the retaining of an investment adviser to
manage the Fund's assets in accordance with the investment policies with respect
to the Fund's Portfolio. The inability to find an adequate investment pool or
investment adviser could have a significant impact on shareholders' investment
in the Fund.

As stated in "Investment Policies and Other Matters," except as otherwise
expressly provided herein, the Fund's investment objectives and policies are not
fundamental and may be changed by Trustees without shareholder approval.

<PAGE>

For descriptions of the investment objectives and policies of the
Portfolio, see "Investment Policies and Other Matters." For descriptions of the
management and expenses of the Portfolio, see "Investment Adviser and Manager"
and "Officers and Trustees."

SHARES OF BENEFICIAL INTEREST

The Trust's Declaration of Trust permits the Trust to offer and sell an
unlimited number of full and fractional shares of beneficial interest in each of
the Trust's existing Funds and to create additional Funds. All shares have a par
value of $.10 per share, are fully paid, non-assessable and fully transferable
when issued. All shares are issued as full or fractional shares.

A fraction of a share has the same rights and privileges as a full share.
Each Fund of the Trust will issue its own series of shares of beneficial
interest. The shares of each Fund represent an interest only in that Fund's
assets (and profits or losses) and in the event of liquidation, each share of a
particular Fund would have the same rights to dividends and assets as every
other share of that Fund.

Each full or fractional share has a proportionate vote. On some issues,
such as the election of Trustees, all shares of the Trust vote together as one
series. On an issue affecting a particular Fund, only its shares vote as a
separate series. An example of such an issue would be a fundamental investment
restriction pertaining to only one Fund. In voting on a Distribution Plan,
approval of the Plan by the shareholders of a particular Fund would make the
Plan effective as to that Fund, whether or not it had been approved by the
shareholders of the other Funds.

When matters are submitted for shareholder vote, shareholders of each Fund
will have one vote for each full share held and proportionate, fractional votes
for fractional shares held. A separate vote of a Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
one Fund are not entitled to vote on a matter that does not affect that Fund but
that does require a separate vote of any other Fund. There normally will be no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of Trustees holding office have been elected
by shareholders, at which time the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Any Trustee may be removed
from office upon the vote of shareholders holding at least two-thirds of the
Trust's outstanding shares at a meeting called for that purpose. The Trustees
are required to call such a meeting upon the written request of shareholders
holding at least 10% of the Trust's outstanding shares. Shareholders have under
certain circumstances (e.g., upon application and submission of certain
specified documents to the Trustees of a Fund by a specified number of
shareholders) the right to communicate with other shareholders in connection
with requesting a meeting of shareholders for the purpose of removing one or
more Trustees.

<PAGE>

TRUSTEE LIABILITY

The Declaration of Trust provides that the Trustees, if they have exercised
reasonable care, will not be liable for any neglect or wrongdoing, but nothing
in the Declaration of Trust protects Trustees against any liability to which
they would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
their office.

INVESTMENT POLICIES AND RELATED MATTERS

GENERAL

As described in the Prospectus, the Fund seeks to achieve its investment
objective by investing all of its investable assets in the Money Market
Portfolio (the "Portfolio"), a corresponding open-end management investment
company having the same investment objective, policies and restrictions as the
Fund. Since the investment characteristics of the Fund correspond directly to
those of the Portfolio, the following is a discussion of the various investments
of and techniques employed by the Portfolio.

THE PORTFOLIO

The Portfolio seeks to maintain a constant net asset value of $1.00 per
share, although there is no assurance it will be able to do so. To do so, the
Portfolio utilizes the amortized cost method of valuing its portfolio securities
pursuant to a rule adopted by the Securities and Exchange Commission. The rule
also prescribes portfolio quality and maturity standards. The Portfolio will be
managed in accordance with the requirements of this rule.

<PAGE>

MONEY MARKET INSTRUMENTS

The Portfolio will limit its purchases, denominated in U.S. dollars, to the
following securities:

* Bank Obligations and Instruments Secured Thereby - obligations
(including certificates of deposit, time deposits and bankers
acceptances) of domestic banks having total assets of $1,000,000,000
or more, instruments secured by such obligations and obligations of
foreign branches of such banks, if the domestic parent bank is
unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may
also invest in obligations (including certificates of deposit and
bankers acceptances) of domestic branches of foreign banks having
assets of $1,000,000,000 or more, if the domestic branch is subject to
the same regulation as United States banks. The Portfolio will not
invest at time of purchase more than 25% of its assets in obligations
of banks, nor will the Portfolio invest more than 10% of its assets in
time deposits.

* High Quality Commercial Paper - The Portfolio, which is subject to
specific quality criteria and diversification requirements, may invest
in commercial paper rated in either one of the two highest categories
by at least two nationally recognized rating services, or, if not
rated, guaranteed by a company having commercial paper rated in either
one of the two highest categories by at least two nationally
recognized rating services.

* Private Placement Commercial Paper - Private placement commercial
paper ("Rule 144A securities") consist of unregistered securities
which are traded in public markets to qualified institutional
investors, such as the Portfolio. The Portfolio's risk is that the
universe of potential buyers for the securities, should the Portfolio
desire to liquidate a position, is limited to qualified dealers and
institutions, and therefore such securities could have the effect of
being illiquid.

* High Grade Corporate Obligations - obligations rated at least A by
Standard & Poor's or Moody's. See rating information below.

<PAGE>

an instrument under which the purchaser (i.e., the Portfolio) acquires
ownership of a debt security and the seller agrees, at the time of the
sale, to repurchase the obligation at a mutually agreed upon time and
price, thereby determining the yield during the purchaser's holding
period. This results in a fixed rate of return insulated from market
fluctuations during such period. The underlying securities might bear
maturities exceeding one year. The Portfolio's risk is that the seller
may fail to repurchase the security on the delivery date. If the
seller defaults, the underlying security constitutes collateral for
the seller's obligation to pay. It is a policy of the Portfolio to
make settlement on repurchase agreements only upon proper delivery of
the underlying collateral. Repurchase agreements usually are for short
periods, such as one week or less, but could be longer. The Portfolio
may enter into repurchase agreements with its custodian (Firstar Bank,
N.A., Cincinnati) when it is advantageous to do so. The Portfolio will
not invest more than 10% of its assets, at time of purchase, in
repurchase agreements which mature in excess of seven days.

* Funding Agreements - also known as guaranteed investment contracts,
issued by insurance companies. Pursuant to such agreements, the
Portfolio invests an amount of cash with an insurance company, and the
insurance company credits such investment on a monthly basis with
guaranteed interest that is based on an index. Funding agreements
provide that this guaranteed interest will not be less than a certain
minimum rate. Funding agreements also provide for adjustment of the
interest rate monthly and are considered variable rate instruments.
The Portfolio will only purchase a funding agreement (i) when the
Manager has determined that the funding agreement presents minimal
credit risks to the Portfolio and is of comparable quality to
instruments that are rated high quality by a nationally recognized
statistical rating organization that is not an affiliated person, as
defined in the Investment Company Act of 1940, of the issuer, or any
insurer, guarantor, or provider of credit support for the instrument,
and (ii) if it may receive all principal of, and accrued interest on,
a funding agreement upon written notice and within a period of time
not to exceed 397 days. Because the Portfolio may not receive the
principal amount of a funding agreement from the insurance company on
seven days' notice or less, the funding agreement is considered an
illiquid investment and, together with other investments in the
Portfolio that are not readily marketable, may not exceed 10% of the
Portfolio's assets. In determining average weighted portfolio
maturity, a funding agreement will be deemed to have a maturity equal
to the number of days remaining until the principal amount can be
recovered through demand or the next interest reset date, whichever is
earlier.

R. Meeder & Associates, Inc. (the "Manager") exercises due care in the
selection of money market instruments. However, there is a risk that the issuers
of the securities may not be able to meet their obligations to pay interest or
principal when due. There is also a risk that some of the Portfolio's securities
might have to be liquidated prior to maturity at a price less than original
amortized cost or value, face amount or maturity value to meet larger than
expected redemptions. Any of these risks, if encountered, could cause a
reduction in net income or in the net asset value of the Portfolio.

<PAGE>

RATINGS

1. Moody's Investors Services, Inc.'s Corporate Bond Rating:

Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

2. Standard and Poor's Corporation's Corporate Bond Rating:

AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.

<PAGE>

3. A-1 and P-1 Commercial Paper Ratings:

Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is rated A or better. The issuer has access
to at least two additional channels of borrowing. Basic earnings and cash flow
have an upward trend. Typically, the issuer's industry is well established and
the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A- 1, A-2, or
A-3.

4. Description of Permitted Money Market Investments:

Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short-term credit needs.

U.S. Government Obligations - are bills, certificates of indebtedness,
notes and bonds issued by the U.S. Treasury and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, as in the case of
Federal Farm Credit Banks and Federal National Mortgage Association; and others
only by the credit of the agency, authority or instrumentality; as for example,
Federal Home Loan Mortgage and Federal Home Loan Bank.

<PAGE>

represents interest for the period the security is held. Repurchase transactions
will normally be entered into with banks and securities brokers. The Portfolio
could suffer a loss if the bank or securities broker with which the Portfolio
had a repurchase agreement were to default.

Certificates of Deposit - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified or variable rate
of return and are normally negotiable.

Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed accepted when
a bank guarantees their payment at maturity.

Corporate Obligations - include bonds and notes issued by corporations in
order to finance longer term credit needs, and funding agreements.

Funding Agreements - see "Money Market Instruments - Funding Agreements"
above.

INVESTMENT RESTRICTIONS

The investment restrictions below have been adopted by the Fund and by the
Portfolio as fundamental policies. Under the Investment Company Act of 1940 (the
"Act"), a fundamental policy may not be changed without the vote of a majority
of the outstanding voting securities of the Fund or Portfolio, respectively, to
which it relates, which is defined in the Act as the lesser of (a) 67 percent or
more of the shares present at a shareholder meeting if the holders of more than
50 percent of the outstanding shares are present or represented by proxy, or (b)
more than 50 percent of the outstanding shares ("Majority Vote"). The percentage
limitations contained in the restrictions listed below apply at the time of the
purchase of the securities. Whenever the Fund is requested to vote on a change
in the investment restrictions of the Portfolio, the Fund will hold a meeting of
its shareholders and will cast its votes as instructed by the shareholders.

Provided that nothing in the following investment restrictions shall
prevent the Fund from investing all or part of its assets in an open-end
management investment company with the same investment objective as the Fund,
neither the Fund nor the Portfolio may:

(a) Issue senior securities;

(b) Borrow money except as a temporary measure, and then only in an amount
not to exceed 5% of the value of its net assets (whichever is less)
taken at the time the loan is made, or pledge its assets taken at
value to any extent greater than 15% of its gross assets taken at
cost;

(d) Invest in real estate except for office purposes;

<PAGE>

(e) Purchase or sell commodities or commodity contracts, except that it
may purchase or sell financial futures contracts involving U.S.
Treasury Securities, corporate securities, or financial indexes;

(f) Lend its funds or other assets to any other person, however, the
purchase of a portion of publicly distributed bonds, debentures or
other debt instruments, the purchase of certificates of deposit, U.S.
Treasury Debt Securities, and the making of repurchase agreements are
permitted, provided repurchase agreements with fixed maturities in
excess of 7 days do not exceed 10% of its total assets;

(g) Purchase more than 10% of any class of securities, including voting
securities of any issuer, except that the purchase of U.S. Treasury
debt instruments shall not be subject to this limitation;

(h) Invest more than 5% of its total assets (taken at value) in the
securities of any one issuer, other than obligations of the U.S.
Treasury: provided, however, that this restriction shall not be
applicable to any separate investment series of the Trust or a
Portfolio which is created specifically to invest in the shares of
other investment companies;

(i) Purchase any securities on margin, or participate in any joint or
joint and several trading account, provided, however, that it may open
a margin account to the extent necessary to engage in hedging
transactions which are not precluded by other particular restrictions;

(j) Make any so-called short sales of securities, except against an
identical portfolio position (i.e., a "short sale against the box"),
but this restriction shall not preclude a futures contract which sells
short an index or group of securities;

(k) Invest more than 25% of its total assets at time of purchase (taken at
value) in the securities of companies in any one industry; provided,
however, that this restriction shall not be applicable to any separate
investment series of the Trust or a Portfolio which is created
specifically to invest in the shares of other investment companies;

(l) Invest in securities of other investment companies, except for
purchases by the Portfolio (or the Fund) in the open market involving
only customary brokerage commissions, or except as part of a merger,
consolidation or other acquisition; provided, however, that this
restriction shall not be applicable to any separate investment series
of the Trust or a Portfolio which is created specifically to invest in
the shares of other investment companies;

(m) Purchase or retain any securities of an issuer, any of whose officers,
directors or security holders is an officer or director of the Trust
or a Portfolio if such officer or director owns beneficially more than
1/2 of 1% of the issuer's securities or together they own beneficially
more than 5% of such securities;

<PAGE>

(n) Invest in securities of companies which have a record of less than
three years continuous operation if, at the time of such purchase,
more than 5% of its assets (taken at value) would be so invested;

(o) Purchase participations or other direct interests in oil, gas or other
mineral exploration or development programs;

(p) Invest in warrants; and

(q) Invest more than 10% of its assets in restricted securities and
securities for which market quotations are not readily available and
repurchase agreements which mature in excess of seven days; however,
this shall not prohibit the purchase of money market instruments or
other securities which are not precluded by other particular
restrictions.

In order to comply with certain state investment restrictions, each of the
Fund's and the Portfolio's operating policy is not to: (a) Notwithstanding (b)
above, pledge assets having a value in excess of 10% of its gross assets; (b)
Invest in oil, gas or mineral leases or programs; and (c) Purchase real estate
limited partnerships.

PURCHASE AND SALE OF PORTFOLIO SECURITIES

The Portfolio's purchases and sales of securities usually are principal
transactions. Securities are normally purchased directly from the issuer or from
an underwriter or market maker for the securities. There usually are no
brokerage commissions paid for such purchases. The Portfolio does not anticipate
paying brokerage commissions. Any transaction for which the Portfolio pays a
brokerage commission will be effected at the best price and execution available.
Purchases from underwriters of securities include a commission or concession
paid by the issuer to the underwriter, and purchases from dealers serving as
market makers are purchased at the offered price.

Allocation of transactions, including their frequency, to various dealers
is determined by the Adviser in its best judgment and in a manner deemed to be
in the best interest of the investors in the Portfolio rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.

Investment decisions for the Portfolio will be made independently from
those for any other account or investment company that is or may in the future
become managed by the Adviser or its affiliates. If, however, the Portfolio and
other investment companies or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. When purchases or sales of the same security for the Portfolio and for
investment companies managed by the Adviser occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantages available to large denomination purchases or sales.

<PAGE>

VALUATION OF PORTFOLIO SECURITIES

The Money Market Portfolio will value its securities by the amortized cost
method as it maintains a dollar-weighted average portfolio maturity of 90 days
or less. Portfolio securities for which market quotations are not readily
available are to be valued by the Manager in good faith at its own expense under
the direction of the Trustees.

CALCULATION OF YIELD

The Fund will calculate its yield quotations based on the net change,
exclusive of realized and unrealized gains or losses, in the value of a
hypothetical account over a seven calendar day base period. The following is an
example of the yield calculations for the seven days ended December 31, 1998.

Simple yield:

Value of hypothetical account at end of period $1.00097808

Value of hypothetical account at beginning of period 1.00000000

Base period return $ .00097808
------------
Current seven day yield (.00097808 x (365/7)) 5.10%
Effective yield:

Effective yield [(.00097808 + 1)365/7 ] - 1 5.22%

Yields reflect the Manager's agreement to limit expenses to the extent
necessary to limit the Fund's annual operating expenses to 0.25%. The Manager
may terminate this limitation after December 31, 1999. Investors should
recognize that yields are not necessarily representative of future results, but
will vary as a function of market conditions and expenses incurred.

INVESTMENT ADVISER AND MANAGER

R. Meeder & Associates, Inc. (the "Manager") is the investment adviser and
manager for the Money Market Portfolio. The Investment Advisory Contract for the
Portfolio was approved by a vote of a majority of the Trustees, including a
majority of those Trustees who are not "interested persons" (as defined in the

<PAGE>

Investment Company Act of 1940) of the Portfolio. The contract is to remain in
force so long as renewal thereof is specifically approved at least annually by a
majority of the Trustees or by vote of a majority of outstanding shares of the
Portfolio, and in either case by vote of a majority of the Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) at a
meeting called for the purpose of voting on such renewal.

The Investment Advisory Contract will terminate automatically if assigned
and may be terminated without penalty at any time upon 60 days' prior written
notice by Majority Vote of the Portfolio, by the Trustees of the Portfolio, or
by the Manager.

Costs, expenses and liabilities of the Trust attributable to a particular
Fund are allocated to that Fund. Costs, expenses and liabilities which are not
readily attributable to a particular Fund are allocated among all of the Trust's
Funds. Thus, each Fund pays its proportionate share of: the fees of the Trust's
independent auditors, legal counsel, custodian, transfer agent and accountants;
insurance premiums; the fees and expenses of Trustees who do not receive
compensation from R. Meeder & Associates; association dues; the cost of printing
and mailing confirmations, prospectuses, proxies, proxy statements, notices and
reports to existing shareholders; state registration fees; distribution expenses
within the limitation of each Fund's Distribution Plan, including the cost of
printing and mailing of prospectuses and other materials incident to soliciting
new accounts; and other miscellaneous expenses.

Expenses of the Portfolio also include all fees under its Administrative
Services Agreement; the expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Portfolio's
custodian for all services to the Portfolio, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of preparing
and mailing reports to investors and to governmental officers and commissions;
expenses of meetings of investors and Trustees; the advisory fees payable to the
Adviser under the Advisory Contract and other miscellaneous expense.

The Board of Trustees of the Trust believes that the aggregate per share
expenses of the Fund and the Portfolio will be less than or approximately equal
to the expenses which the Fund would incur if it retained the services of an
investment adviser and the assets of the Fund were invested directly in the type
of securities being held by the Portfolio.

The Manager earns an annual fee, payable in monthly installments, at the
rate of 0.40% of the first $100 million and 0.25% in excess of $100 million, of
average net assets.

For the year ended December 31, 1998, the Money Market Portfolio paid fees
to the Manager totaling $2,029,468 ($1,436,168 in 1997; $1,060,982 in 1996).

The Manager has agreed to limit expenses to the extent necessary to limit
the Fund's annual operating expenses to 0.26%. The Manager may terminate this
limitation after December 31, 1999.

<PAGE>

For the year ended December 31, 1998, the Manager waived fees totaling
$901,787 (661,390 in 1997; 512,876 in 1996) in the Money Market Portfolio.

The Manager's officers and directors are as set forth as follows: Robert S.
Meeder, Sr., Chairman and Sole Director; Philip A. Voelker, Senior Vice
President and Chief Investment Officer; Donald F. Meeder, Vice President and
Secretary; Sherrie L. Acock, Vice President; Robert S. Meeder, Jr., President;
Thomas E. Line, Chief Operating Officer; Michael J. Sullivan, Vice President of
Sales and Marketing, and Wesley F. Hoag, Vice President and General Counsel. Mr.
Robert S. Meeder, Sr. is President and a Trustee of the Trust and the Portfolio.
Mr. Robert S. Meeder, Jr. and Philip A. Voelker each are a Trustee and officer
of the Trust and the Portfolio. Each of Messrs. Donald F. Meeder and Wesley F.
Hoag is an officer of the Trust and the Portfolio.

OFFICERS AND TRUSTEES

NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION

ROBERT S. MEEDER, SR.*+, 70 Trustee/President Chairman of R. Meeder &
Associates, Inc., an
investment adviser; Chairman
and Director of Mutual Funds
Service Co., the Fund's
transfer agent.

<PAGE>

MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit Committee.

ROBERT S. MEEDER, JR.*, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.

WALTER L. OGLE, 60 Trustee Executive Vice President of
400 Interstate North Parkway Aon Consulting, an employee
Suite 1630 benefits consulting group.
Atlanta, GA 30339

JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm and
North Palm Beach, FL 33408 division of Golden Bear
International, Inc.

PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer of
R. Meeder & Associates, Inc.

<PAGE>

JAMES B. CRAVER*, 55 Assistant Secretary Practicing Attorney; Special
42 Miller Hill Road Counsel to Flex-Partners,
Box 811 Flex-funds and their
Dover, MA 02030 Portfolios; Senior Vice
President of Signature
Financial Group, Inc.
(January 1991 to August 1995).

DONALD F. MEEDER*+, 60 Secretary/Treasurer Vice President of R. Meeder &
Associates, Inc.; Secretary
of Mutual Funds Service Co.,
the Fund's transfer agent.

* Interested Person of the Trust (as defined in the Investment Company Act of
1940), The Flex-funds, Flex-Partners and each Portfolio.

+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.

Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.

<PAGE>

The following table shows the compensation paid by the Portfolios and
the Fund Complex as a whole to the Trustees of the Portfolio and the Fund
Complex during the fiscal year ended December 31, 1998.

COMPENSATION TABLE

Robert S. Meeder, Sr. None None None None

Milton S. Bartholomew $2,737 None None $13,525

Robert S. Meeder, Jr. None None None None

John M. Emery $1,743 None None $ 9,867

Richard A. Farr $1,365 None None $ 9,367

Russel G. Means $1,115 None None $ 7,867

Walter L. Ogle $3,499 None None $14,525

Philip A. Voelker None None None None

Roger A. Blackwell $2,741 None None $13,525

Charles A. Donabedian $2,851 None None $12,525

James Didion None None None None

Jack W. Nicklaus II $1,110 None None $6,325

William L. Gurner None None None None

Lowell G. Miller None None None None

1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1998,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $1,505, Roger A. Blackwell - $2,741,
Charles A. Donabedian - $2,851, and Jack W. Nicklaus II - $1,110.

2 The Fund Complex consists of 15 investment companies.

<PAGE>

Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per meeting for each of the five Portfolios. In addition, each such Trustee
earns an annual fee, payable quarterly, based on the average net assets in each
Portfolio based on the following schedule: Money Market Portfolio, 0.0005% of
the amount of average net assets between $500 million and $1 billion; 0.0025% of
the amount of average net assets exceeding $1 billion. For the other four
Portfolios, each Trustee is paid a fee of 0.00375% of the amount of each
Portfolio's average net assets exceeding $15 million. Members of the Audit and
Strategic Planning Committees for each of The Flex-Partners and The Flex-funds
Trusts, and the Portfolios are paid $500 for each Committee meeting attended.
Trustees fees for the Portfolio totaled $19,126 for the year ended December 31,
1998 ($9,598 in 1997). All other officers and Trustees serve without
compensation from any Portfolio.

The Trustees and officers of the Fund and the Portfolio own, in the
aggregate, less than 1% of the Fund's total outstanding shares.

DISTRIBUTION PLAN

Rule 12b-1 (the Rule) under the Investment Company Act of 1940 (the "Act")
describes the circumstances under which an investment company such as the Fund
may, directly or indirectly, bear the expenses of distributing its shares. The
Rule defines such distribution expenses to include the cost of any activity
which is primarily intended to result in the sale of Fund shares.

The Fund has adopted a Distribution Plan (the "Plan") which authorizes,
among other things, payment of incentives in the form of commissions and fees
advertising, the services of public relations consultants, and direct
solicitation. Possible recipients include securities brokers, attorneys,
accountants, investment advisers, investment performance consultants, pension
actuaries, and service organizations. Another class of recipients is banks.
Currently, The Glass-Steagall Act and other applicable laws, among other things,
prohibit banks from engaging in the business of underwriting, selling or
distributing securities. Since the only function of banks who may be engaged as
participating organizations, is to perform administrative and shareholder
servicing functions, the Fund believes that such laws should not preclude banks
from acting as participating organizations; however, future changes in either
federal or state statutes or regulations relating to the permissible activities
of banks and their subsidiaries or affiliates, as well as judicial or
administrative decisions or interpretations of statutes or regulations could
prevent a bank from continuing to perform all or a part of its shareholder
service activities. If a bank were prohibited from so acting, its shareholder
customers would be permitted to remain shareholders of the Fund and alternative
means for continuing the servicing of such shareholders would be sought. In such
event, changes in the operation of the Fund might occur and a shareholder being
serviced by such bank might no longer be able to avail himself, or itself, of

<PAGE>

any automatic investment or other services then being provided by the bank. It
is not expected that shareholders would suffer any adverse financial
consequences as a result of any of these occurrences. In addition, state
securities laws on this issue may differ from the interpretations of federal law
expressed herein and banks and financial institutions may be required to
register as dealers pursuant to state law.

The Fund may expend as much as, but not more than, 3/100 of 1% of the
Fund's average net assets annually pursuant to the Plan. A report of the amounts
so expended in the Fund and the purpose of the expenditures must be made to and
reviewed by the Board of Trustees at least quarterly. In addition, the Plan
provides that it may not be amended to increase materially the costs which the
Fund may bear for distribution pursuant to the Plan without shareholder approval
of the Plan, and that other material amendments of the Plan must be approved by
the Board of Trustees, and by the Trustees who are not interested persons of the
Fund (as defined in the Act) and who have no direct or indirect financial
interest in the operation of the Plan, by vote cast in person at a meeting
called for the purpose of voting on the Plan.

The Plan is terminable at any time by vote of a majority of the Trustees
who are not interested persons and who have no direct or indirect financial
interest in the operation of the Plan or by vote of a majority of the Fund's
shares. Any service agreement terminates upon assignment and is terminable
without penalty at any time by a vote of a majority of the Trustees who are not
interested persons and who have no direct or indirect financial interest in the
operation of any of the Plans, upon not more than 60 days written notice to the
service organization, or by the vote of the holders of a majority of the Fund's
shares, or, upon 15 days notice, by a party to a service agreement.

The Plan was approved by the Fund's Board of Trustees, who made a
determination that there is a reasonable likelihood that the Plan will benefit
the Fund. The Plan has been approved by shareholders and will continue in effect
only if approved at least annually by the Board of Trustees.

Total payments made by the Fund to parties with service agreements for the
year ended December 31, 1998 amounted to $164,123 ($63,003 in 1997; $37,963 in
1996). In addition, expenditures were approved by the Board of Trustees in the
amount of $14,655 ($18,087 in 1997; $6,566 in 1996 for printing and mailing of
prospectuses, periodic reports and other sales materials to prospective
investors. Other expenditures amounted to $162 for the year ended December 31,
1997 ($0 in 1997; $0 in 1996).

OTHER SERVICES

CUSTODIAN - Firstar Bank, N.A., Firstar Bank Center, 425 Walnut Street,
Cincinnati, Ohio 45202, is custodian of all of the Portfolio's assets.

AUDITORS - KPMG LLP, Two Nationwide Plaza, Columbus, Ohio, 43215, has been
retained as independent auditors for the Fund.

<PAGE>

STOCK TRANSFER AGENT - Mutual Funds Service Co., 6000 Memorial Drive,
Dublin, Ohio 43017, a wholly owned subsidiary of Muirfield Investors, Inc. and a
sister company of R. Meeder & Associates, Inc., provides to the Fund and
Portfolio accounting, administrative, stock transfer, dividend disbursing, and
shareholder services. The minimum annual fee for the Money Market Portfolio is
$30,000. Subject to the applicable minimum fee, the Portfolio's annual fee,
payable monthly, is computed at the rate of 0.15% of the first $10 million,
0.10% of the next $20 million, 0.02% of the next $50 million and 0.01% in excess
of $80 million of the Portfolio's average net assets. The fee for The Money
Market Fund is the greater of $20 per shareholder account or 0.06% of the Fund's
average net assets.

Mutual Funds Service Co. also serves as Administrator to the Trust.
Services provided to the Trust include coordinating and monitoring any third
party services to the Trust; providing the necessary personnel to perform
administrative functions for the Trust, assisting in the preparation, filing and
distribution of proxy materials, periodic reports to Trustees and shareholders,
registration statements and other necessary documents. The Fund incurs an annual
fee, payable monthly, of 0.05% of the Fund's average net assets. These fees are
reviewable annually by the respective Trustees of the Trust and the Portfolio.
For the year ended December 31, 1998, total payments to Mutual Funds Service Co.
amounted to $749,751 for the Fund and Portfolio collectively.

REPORTS TO SHAREHOLDERS - The Fund provides shareholders with quarterly
reports of investments and other information, semi-annual financial statements,
and annual reports.

PRINCIPAL HOLDERS OF OUTSTANDING SHARES

As of April 29, 1999, the following persons owned 5% or more of the
Fund's outstanding shares of the Fund:

Name and Address Amount of Shares Percent
OF RECORD OWNER of Record OF FUND
- ------------------- ---------------- -------

Salomon Smith Barney, Inc. 843,062,564 94%
Book Entry Account
Mutual Funds, 22nd Floor
388 Greenwich St.
New York, NY 10013

<PAGE>

To the knowledge of the Trust, the shareholders listed above own shares for
investment purposes and have no known intention of exercising any control of the
Fund.

FINANCIAL STATEMENTS

Financial statements for The Institutional Fund and the Money Market
Portfolio are presented on the following pages. Persons interested in obtaining
information about any of the other Funds and/or Portfolios should contact the
Investment Adviser to obtain a copy of the Fund or Portfolio's current
Registration Statement.

<PAGE>

Money Market Portfolio
Portfolio of Investments as of December 31, 1998

<TABLE>
<CAPTION>
COUPON/ FACE
YIELD MATURITY AMOUNT AMORTIZED COST
----- -------- ------ --------------
COMMERCIAL PAPER - 56.2%
<S> <C> <C> <C> <C>
AlliedSignal, Inc. 5.60% 01/29/99 30,000,000 $ 29,869,333
American Home Products Corp.*** 5.10% 02/19/99 5,000,000 4,965,292
American Home Products Corp.*** 5.00% 03/12/99 3,000,000 2,970,833
American Honda Finance Corp. 5.20% 01/29/99 22,000,000 21,911,022
Bankers Trust Corp. 5.04% 05/10/99 25,000,000 24,548,500
CSW Credit, Inc. 5.22% 03/12/99 32,650,000 32,318,603
Carolina Power & Light Co. 4.82% 08/20/99 20,000,000 19,381,433
Credit Suisse First Boston 5.20% 02/24/99 15,350,000 15,230,270
Duff & Phelps Utility and Corporate Bond Trust, Inc. 5.00% 04/20/99 1,000,000 984,861
Duff & Phelps Utility and Corporate Bond Trust, Inc. 5.00% 04/28/99 6,815,000 6,704,256
Duff & Phelps Utility and Corporate Bond Trust, Inc. 4.92% 05/13/99 5,000,000 4,909,800
Duff & Phelps Utility and Corporate Bond Trust, Inc. 4.95% 05/17/99 7,000,000 6,869,100
Eaton Corp.*** 5.38% 03/02/99 10,000,000 9,910,333
Eaton Corp.*** 4.87% 07/19/99 7,475,000 7,273,771
Edison International*** 5.51% 01/22/99 22,227,000 22,156,722
Ford Motor Credit Co. 5.46% 02/17/99 30,000,000 29,786,150
General Electric Capital Corp. 5.44% 03/09/99 20,000,000 19,797,511
Greenwich Asset Funding, Inc.*** 5.34% 01/14/99 30,000,000 29,942,150
J.P. Morgan & Co., Inc. 5.05% 02/19/99 18,311,000 18,185,137
LG&E Capital Corp. 4.92% 05/21/99 25,000,000 24,521,667
Monsanto Co. 5.10% 03/02/99 21,300,000 21,109,897
S.C. Johnson & Son, Inc. 5.20% 03/09/99 20,000,000 19,806,445
Signet Finance*** 5.51% 01/26/99 25,000,000 24,904,340
Toronto-Dominion Holdings USA, Inc. 5.46% 02/02/99 35,000,000 34,830,133
Xerox Credit Corp. 5.47% 02/03/99 7,000,000 6,964,901
Xerox Credit Corp. 5.40% 05/03/99 7,000,000 6,871,900

- ----------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost$446,724,360 ) 446,724,360
- ----------------------------------------------------------------------------------------------------------------

CORPORATE OBLIGATIONS - 41.1%
ABT 95 Series A-3 5.54%* 01/15/99 20,000,000 20,000,000
Aquarium Holdings KY*** 5.60%* 01/07/99 12,000,000 12,000,000
Bank One Corp. 5.75% 05/17/99 500,000 500,060
Bank One Wisconsin 5.74% 05/11/99 1,000,000 1,000,082
Bear Stearns Corp. 5.24%* 01/05/99 20,000,000 20,000,000
Boeing Capital Corp. 5.87%* 02/27/99 5,000,000 5,011,669
Care Life Project*** 5.30%* 01/07/99 1,225,000 1,225,000
Caterpillar Financial Services Corp. 6.07% 02/09/99 2,135,000 2,135,556
Caterpillar, Inc. 6.80% 08/24/99 500,000 503,499
Chase Manhattan Bank 8.50% 02/15/99 8,300,000 8,326,515
Chase Manhattan Bank 10.00% 06/15/99 3,750,000 3,819,869
Chrysler Financial Corp. 6.37% 06/21/99 2,700,000 2,708,468
Clark Grave Vault Co.*** 5.60%* 01/07/99 2,700,000 2,700,000
Comerica 9.75% 05/01/99 5,000,000 5,061,659
Consolidated Edison*** 5.44%* 01/04/99 8,250,000 8,251,244
Coughlin Family Properties, Inc.*** 5.60%* 01/07/99 4,220,000 4,220,000
D.E.D.E. Realty*** 5.60%* 01/07/99 3,850,000 3,850,000
Danis Construction Co.*** 5.60%* 01/07/99 900,000 900,000
Doren, Inc.*** 5.30%* 01/07/99 500,000 500,000
Eaton Corp. 6.38% 04/01/99 1,742,000 1,745,032
Espanola/Nambe*** 5.30%* 01/07/99 2,115,000 2,115,000
First USA/Bank One 5.75% 01/15/99 1,000,000 999,996
First USA/Bank One 5.42% 01/15/99 5,000,000 5,000,313
Ford Motor Credit Co. 5.63% 01/15/99 1,100,000 1,099,938
General America Life Insurance**** 5.35%* 03/21/99 10,000,000 10,000,000
General Motors Acceptance Corp. 7.75% 01/15/99 100,000 100,068
General Motors Acceptance Corp. 6.55% 06/04/99 2,400,000 2,408,192
General Motors Acceptance Corp. 8.63% 06/15/99 5,420,000 5,489,411
Hancor, Inc.*** 5.30%* 01/07/99 600,000 600,000
Household Finance 7.13% 04/30/99 10,000,000 10,044,817
Isaac Tire, Inc.*** 5.60%* 01/07/99 1,000,000 1,000,000
J.C. Penney Co., Inc. 6.88% 06/15/99 1,000,000 1,004,847
John Deere 6.43% 08/09/99 10,000,000 10,044,974
Key Corp. 6.63% 06/01/99 20,000,000 20,103,102
Merrill Lynch 7.75% 03/01/99 1,650,000 1,655,294

<PAGE>

COUPON/ FACE
YIELD MATURITY AMOUNT AMORTIZED COST
----- -------- ------ --------------

Merrill Lynch 6.38% 03/30/99 500,000 501,270
Merrill Lynch 5.49%* 02/25/99 10,280,000 10,292,233
Morgan Stanley 5.63% 03/01/99 4,850,000 4,849,711
Mubea, Inc.*** 5.30%* 01/07/99 5,400,000 5,400,000
Mubea, Inc.*** 5.30%* 01/07/99 3,750,000 3,750,000
National City Bank 6.00% 03/23/99 14,200,000 14,211,842
NationsBank Corp. 5.39%* 03/17/99 3,000,000 3,003,134
NationsBank Corp. 8.50% 03/01/99 1,095,000 1,099,645
O.K.I. Supply Co.*** 5.60%* 01/07/99 2,150,000 2,150,000
Osco Industries, Inc.*** 5.30%* 01/07/99 2,700,000 2,700,000
Presrite Corp.*** 5.30%* 01/07/99 1,870,000 1,870,000
Pro Tire, Inc.*** 5.60%* 01/07/99 1,200,000 1,200,000
R.I. Lampus Co.*** 5.30%* 01/07/99 2,275,000 2,275,000
RSD Technology*** 5.30%* 01/07/99 4,305,000 4,305,000
Seariver Maritime, Inc. 5.20%* 01/04/99 6,400,000 6,400,000
Surgery Financing Co.*** 5.30%* 01/07/99 6,585,000 6,585,000
Signa Finance 5.71% 03/02/99 3,000,000 3,000,660
Signature Brands (called 8/15/99) 13.00% 08/15/02 18,500,000 20,767,190
SunAmerica, Inc. 9.00% 01/15/99 2,500,000 2,502,839
Transamerica Finance 6.80% 03/15/99 6,435,000 6,452,728
Travelers 5.50% 01/15/99 500,000 500,002
Triangle Funding 5.32%* 03/29/99 7,500,000 7,500,000
Westpac Banking Corp. 5.67% 01/07/99 10,000,000 9,999,787
White Castle Project*** 5.30%* 01/07/99 9,000,000 9,000,000
World Trade Finance 5.48%* 03/01/99 20,000,000 20,000,000

- ----------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(Cost$326,440,646 ) 326,440,646
- ----------------------------------------------------------------------------------------------------------------

U.S. GOVERNMENT AGENCY OBLIGATIONS - 0.5%

Student Loan Marketing Assoc. 4.89% 08/03/99 4,350,000 4,350,856

- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,350,856 ) 4,350,856
- ----------------------------------------------------------------------------------------------------------------

U.S. TREASURY OBLIGATIONS - 0.0%

** U.S. Treasury Bill 5.02% 01/07/99 63,100 63,048

- ----------------------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $63,048 ) 63,048
- ----------------------------------------------------------------------------------------------------------------

REPURCHASE AGREEMENTS - 2.2%

Prudential Securities, 5.10%, 01/04/99,
(Collateralized by $16,750,00001/04/99
FNMA Remic Series Pool #93020J, 7.00%, 03/25/23,
market value - $17,357,188) 5.10% 01/04/99 17,022,000 17,022,000

- ----------------------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost $17,022,000 ) 17,022,000
- ----------------------------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.0%
(Cost$794,600,910 )(a) $794,600,910
- ----------------------------------------------------------------------------------------------------------------

TRUSTEE DEFERRED COMPENSATION***** SHARES VALUE
Flex-funds Highlands Growth Fund 260 5,573
Flex-funds Muirfield Fund 351 2,429
Flex-funds Total Return Utilities Fund 56 1,074
Flex Partners International Equity Fund 167 2,429

- ----------------------------------------------------------------------------------------------------------------
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $10,454 ) $11,505
- ----------------------------------------------------------------------------------------------------------------

<FN>
(a)Cost for federal income tax and financial reporting purposes are the same.

FNMA Federal National Mortgage Association

Remic Real Estate Mortgage Investment Conduit

* Variable rate security. Interest rate is as of December 31, 1998. Maturity
date reflects the next rate change date.

** Pledged as collateral on Letter of Credit.

***Security is restricted as to resale to institutional investors, but has been
deemed liquid in accordance with guidelines approved by the Board of
Trustees.

****Illiquid security. The sale or disposition of such security would not be
possible in the ordinary course of business within seven days at which the
Fund has valued the security.

*****Assets of affiliates to the Money Market Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
</FN>
</TABLE>

See accompanying notes to financial statements.

<PAGE>

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998

INSTITUTIONAL
FUND
Assets:
Investment in corresponding portfolio at value $644,168,647
Unamortized organization costs 1,545
Other assets 547,809

Total Assets 644,718,001

Liabilites:
Dividends payable 2,803,759
Accrued transfer agent and administrative fees 60,185
Accrued 12b-1 distribution fees 18,714
Other accrued liabilities 4,064

Total Liabilities 2,886,722

Net Assets 641,831,279

Net Assets:
Capital 641,831,279

Net Assets $641,831,279

Capital Stock Outstanding (indefinite shares authorized, 641,831,279
$0.100 par value)

Net Asset Value, Offering and
Redemption Price Per Share $1.00

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

INSTITUTIONAL
FUND
Net Investment Income from Corresponding Portfolio:
Interest $32,365,749
Expenses net of waivers (1,042,949)
Total Net Investment Income from Corresponding Portfolio 31,322,800

Fund Expenses:
Administrative fee 289,804
Transfer agent fees 347,768
Audit fees 5,889
Legal fees 5,065
Printing 974
Amortization of organizational costs 3,194
Distribution plan 150,681
Postage 617
Registration and filing fees 64,008
Insurance 2,070
Other expenses 14,108
Total Expenses 884,178

Expenses reimbursed by investment adviser (534,049)
Net Expenses 350,129

NET INVESTMENT INCOME 30,972,671

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $30,972,671

See accompanying notes to financial statements

<PAGE>

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998

Year ended Year ended
Dec. 31, 1998 Dec. 31, 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income $30,972,671 $20,394,527
Net increase in net assets
resulting from operations 30,972,671 20,394,527

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (30,972,671) (20,394,527)
Net decrease in net assets resulting
from dividends and distributions (30,972,671) (20,394,527)

CAPITAL TRANSACTIONS:
Issued 3,426,758,647 3,337,084,529
Reinvested 1,615,388 3,043,438
Redeemed (3,202,537,096) (3,156,276,005)
Net increase in net assets resulting from
capital share transactions 225,836,939 183,851,962

TOTAL INCREASE IN NET ASSETS 225,836,939 183,851,962

NET ASSETS - Beginning of period 415,994,340 232,142,378

NET ASSETS - End of period $641,831,279 $415,994,340

SHARE TRANSACTIONS:
Issued 3,426,758,647 3,337,084,529
Reinvested 1,615,388 3,043,438
Redeemed (3,202,537,096) (3,156,276,005)

Change in shares 225,836,939 183,851,962

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 June 15, 1994*
to Dec. 31, 1994

<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.000 $1.000 $1.000 $1.000 $1.000

Income from Investment Operations
Net investment income 0.054 0.054 0.053 0.059 0.026
Total from investment operations 0.054 0.054 0.053 0.059 0.026
Less Distributions
Dividends from net investment income (0.054) (0.054) (0.053) (0.059) (0.026)
Total distributions (0.054) (0.054) (0.053) (0.059) (0.026)
Net Asset Value, End of Period $1.000 $1.000 $1.000 $1.000 $1.000
Total Return 5.49% 5.53% 5.43% 6.01% 4.80%(1)

Ratios/Supplementary Data
Net assets, end of period ($000) $641,831 $415,994 $232,142 $113,205 $59,494
Ratio of expenses to average net assets 0.24% 0.25% 0.25% 0.25% 0.20%(1)
Ratio of net investment income to average net assets 5.34% 5.41% 5.30% 5.87% 4.51%(1)
Ratio of expenses to average net assets before
waiver of fees (2) 0.45% 0.47% 0.46% 0.55% 0.46%(1)
Ratio of net investment income to average net assets
before waiver of fees (2) 5.13% 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, 1998

1. ORGANIZATION

Percentage of Portfolio
Owned by Fund as of
Fund Portfolio December 31, 1998
- ---- --------- -----------------
Institutional Fund Money Market Portfolio 81%

The financial statements of the Portfolio, including the Portfolio of
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.

2. SIGNIFICANT ACCOUNTING POLICES

Valuation of Investments

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.

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.

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.

Investment Income & Expenses

The fund records daily its proportionate share of the Portfolios' income,
expense, and realized and unrealized gains and losses. In addition, the fund
accrues its own 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.

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.

<PAGE>

Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of MII, serves as
stock transfer, dividend disbursing and shareholder services agent for the Fund.
In compensation for such services, 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 is entitled to receive an annual minimum fee of $4,000
for the Fund.

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.

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 Fund and trustees of the Trust and the Portfolio 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, 1998, 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 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, 1998, and 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 LLP
Columbus, Ohio
February 19, 1999

<PAGE>

STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998

MONEY
MARKET
PORTFOLIO
Assets:
Investments, at market value* $777,578,910
Repurchase agreements, at cost* 17,022,000
Trustee deferred compensation investments, at 11,505
market value
Cash 59,912
Receivable for securities sold ---
Receivable for net variation margin on futures ---
Interest receivable 4,790,576
Dividends receivable ---
Prepaid/Other assets 8,722

Total Assets 799,471,625

Liabilites:
Payable for securities purchased ---
Payable for Trustee Deferred Compensation Plan 11,505
Payable to corresponding Fund 1,055,191
Payable to investment adviser 107,200
Accrued audit fees 9,231
Accrued legal fees 660
Accrued custodian fees 6,635
Accrued trustee fees ---
Accrued fund accounting fees 10,510
Other accrued liabilities 1,370

Total Liabilities 1,202,302

Net Assets $798,269,323

Net Assets:
Capital 798,269,323
Net unrealized appreciation (depreciation) ---
from investments
Net Assets $798,269,323

*Securities at cost $794,600,910

STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

MONEY
MARKET
PORTFOLIO
NET INVESTMENT INCOME
Interest $41,916,923
Dividends ---

Total Investment Income 41,916,923

Expenses:
Investment advisory fees 2,029,468
Audit fees 15,235
Custodian fees 49,680
Trustees fees and expenses 24,375
Legal fees 5,664
Amortization of organization cost ---
Accounting fees 112,179
Insurance 5,759
Other expenses 9,492

Total Expenses 2,251,852

Investment advisory fees waived (901,787)
Directed brokerage payments received ---

Total Net Expenses 1,350,065

NET INVESTMENT INCOME 40,566,858

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 ON INVESTMENTS ---

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $40,566,858

See accompanying notes to financial statements

<PAGE>

STATEMENTS OF CHANGES IN NET ASSETS

Year ended Year ended
Dec. 31, 1998 Dec. 31, 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment income $40,566,858 $28,315,164
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 40,566,858 28,315,164

TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 3,894,846,315 3,784,994,914
Withdrawals (3,724,162,497) (3,579,221,656)
Net increase (decrease) in net assets resulting
from transactions of investors' beneficial
interests 170,683,818 205,773,258

TOTAL INCREASE (DECREASE) IN NET ASSETS 211,250,676 234,088,422

NET ASSETS - Beginning of period 587,018,647 352,930,225

NET ASSETS - End of period $798,269,323 $587,018,647

<TABLE>
MONEY MARKET PORTFOLIO

<CAPTION>
Year Ended December 31,
1998 1997 1996 1995 1994

<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $798,269 $587,019 $352,930 $256,126 $224,523
Ratio of Expenses to Average Net Assets 0.18% 0.18% 0.19% 0.21% 0.19%
Ratio of Net Investment Income to
Average Net Assets 5.39% 5.47% 5.34% 5.87% 4.28%
Ratio of Expenses to Average Net Assets,
before waiver of fees 0.30% 0.31% 0.33% 0.37% 0.39%
Ratio of Net Investment Income to Average
Net Assets, before waiver of fees 5.27% 5.34% 5.20% 5.70% 4.08%
</TABLE>

See accompanying notes to financial statements

<PAGE>

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998

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 Fund, the Portfolio into which the
Fund invests and the percentage of the Portfolio owned by the Fund is as
follows:

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 Funds are included elsewhere in
this report.

2. SIGNIFICANT ACCOUNTING POLICES

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.

Deferred Trustee Compensation

Letter of Credit

The Portfolio has pledged as collateral a U.S. Government security, cash or
other high-grade debt security solely for the benefit of ICI Mutual Insurance
Co. for the Portfolio's fidelity bond coverage.

Income Taxes

The Portfolio will be treated as a partnership for Federal income tax purposes.
As such, each investor in the Portfolio will be subject to taxation on its share
of the Portfoliosl ordinary income and capital gains. 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.

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 six months ended June 30, 1998, 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, 1998, the aggregate cost basis of investments for Federal
income tax was $794,600,910.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Trustees of
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, 1998, 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, 1998, by confirmation with the custodian 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 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, 1998, 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 LLP
Columbus, Ohio
February 19, 1999

<PAGE>

PART C

OTHER INFORMATION

Item 23. EXHIBITS - TACTICAL ASSET ALLOCATION FUND, UTILITY GROWTH FUND, CORE
EQUITY FUND AND INTERNATIONAL EQUITY FUND:

(a) Declaration of Trust (effective June 22, 1992) -- filed as an exhibit
to Registrant's initial Registration Statement on Form N-1A filed with
the Commission on June 25, 1992, which exhibit is incorporated herein
by reference.

(b) By-laws of the Trust -- filed as an exhibit to Registrant's initial
Registration Statement on Form N-1A filed with the Commission on June
25, 1992, which exhibit is incorporated herein by reference.

(d) Not Applicable.

(e) Underwriting Agreement between the Trust and Adviser Dealer Services,
Inc. and specimen dealer agreement between Adviser Dealer Services,
Inc. and dealers -- filed as an exhibit to Registrant's Fifteenth
Post-Effective Amendment to the Registration Statement on Form N-1A
filed with the Commission on June 18, 1997, which exhibit is
incorporated herein by reference.

(f) Deferred Compensation Plan for Independent Trustees -- filed as an
exhibit to Registrant's Nineteenth Post-Effective Amendment to the
Registration Statement on Form N-1A filed with the Commission on March
2, 1999, which exhibit is incorporated herein by reference.

(g) Custodian Agreement between the Registrant and Firstar Bank, N.A. --
filed as an exhibit to Registrant's First Post-Effective Amendment to
the Registration Statement on Form N-1A filed with the Commission on
April 12, 1993, which exhibit is incorporated herein by reference.
Custodian Agreement between the Registrant and State Street Bank and
Trust Company -- filed as an exhibit to Registrant's Sixteenth
Post-Effective Amendment to the Registration Statement on Form N-1A
filed with the Commission on August 28, 1997, which exhibit is
incorporated herein by reference.

(h) Administrative Services Agreement between the Tactical Asset
Allocation and Utility Growth Funds and Mutual Funds Service Co. --
filed as an exhibit to Registrant's Seventh Post-Effective Amendment
to the Registration Statement on Form N-1A filed with the Commission
on February 18, 1995, which exhibit is incorporated herein by
reference. Administrative Services and Accounting Services Agreements
between the Core Equity Fund and Mutual Funds Service Co. -- filed as
an exhibit to Registrant's Thirteenth Post-Effective Amendment to the

<PAGE>

Registration Statement on Form N-1A filed with the Commission on March
13, 1997, which exhibit is incorporated herein by reference.
Administration and Accounting Services Agreements between the
International Equity Fund and Mutual Funds Service Co. -- filed as an
exhibit to Registrant's Fifteenth Post-Effective Amendment to the
Registration Statement on Form N-1A filed with the Commission on June
18, 1997, which exhibit is incorporated herein by reference.

(i) Opinion and Consent of Counsel -- filed as an exhibit to Registrant's
initial Registration Statement on Form N-1A filed with the Commission
on June 25, 1992, which exhibit is incorporated herein by reference.

(j) Consent of KPMG LLP, Independent Auditors is filed herewith.

(k) Not Applicable.

(l) Investment Representation Letter of Initial Shareholder filed as an
exhibit to Registrant's Eighth Post-Effective Amendment to the
Registration Statement on Form N-1A filed with the Commission on April
29, 1995, which exhibit is incorporated herein by reference.

(m) 12b-1 and Service Plans for the Class A Shares and Class C Shares of
Utility Growth Fund -- reference is made to the exhibits referred to
in Part C, Item 24(b)(15) of Registrant's Fourth Post-Effective
Amendment to the Registration Statement on Form N-1A filed with the
Commission on or about October 3, 1994, and is incorporated herein by
reference. 12b-1 and Service Plans for the Class A Shares and Class C
Shares of The Tactical Asset Allocation Fund -- reference is made to
the exhibits referred to in Part C, Item 24(b)(15) of the Registrant's
Seventh Post-Effective Amendment to the Registration Statement on Form
N-1A filed with the Commission on or about February 18, 1995, and is
incorporated herein by reference. 12b-1 and Service Plans for Class A
Shares and Class C Shares of the Core Equity Fund (formerly The CEF
Fund) dated September 23, 1996 -- filed as an exhibit to Registrant's
Thirteenth Post-Effective Amendment to the Registration Statement on
Form N-1A filed with the Commission on March 13, 1997, which exhibit
is incorporated herein by reference. 12b-1 and Service Plan for the
International Equity Fund dated February 8, 1997 -- filed as an
exhibit to Registrant's Fifteenth Post-Effective Amendment to the
Registration Statement on Form N-1A filed with the Commission on June
18, 1997, which exhibit is incorporated herein by reference.

(n) Financial Data Schedules for Core Equity, Utility Growth, Tactical
Asset Allocation and International Equity Funds are filed herewith.

<PAGE>

(o) Multiple Class Plans for Utility Growth Fund and Tactical Asset
Allocation Fund are filed as an exhibit to Registrant's Ninth
Post-Effective Amendment to the Registration Statement on Form N-1A
filed with the Commission on or about April 28, 1995, which exhibit is
incorporated herein by reference. Multiple Class Plan for the Core
Equity Fund (formerly the CEF Fund) -- filed as an exhibit to
Registrant's Thirteenth Post-Effective Amendment to the Registration
Statement on Form N-1A filed with the Commission on March 13, 1997,
which exhibit is incorporated herein by reference.

(p) Powers of Attorney of Trustees of Registrant and each Portfolio are
incorporated by reference herein.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

Item 25. INDEMNIFICATION

Reference is made to Section 5.3 of the Declaration of Trust filed as an
exhibit to the Registrant's initial Registration Statement on Form N-1A
filed with the Commission on June 25, 1992. As provided therein, each Fund
is required to indemnify its officers and trustees against claims and
liability arising in connection with the affairs of each Fund, except
liability arising from breach of trust, bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. Each Fund is obligated to
undertake the defense of any action brought against any officer, trustee or
shareholder, and to pay the expenses thereof if he acted in good faith and
in a manner he reasonably believed to in or not opposed to the best
interest of each Fund, and with respect to any criminal action had no
reasonable cause to believe his conduct was unlawful. Other conditions are
applicable to the right of indemnification as set forth in the Declaration
of Trust. In applying these provisions, each Fund will comply with the
provisions of Investment Company Act.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Not applicable.

Item 27. PRINCIPAL UNDERWRITERS.

(a) Jefferson Funds

<PAGE>

(b) Positions and Positions and
Name and Principal Offices with Offices with
BUSINESS ADDRESS UNDERWRITER REGISTRANT
---------------- ----------- ----------

Robert S. Meeder, Sr.* Director Trustee,
President

Philip A. Voelker* Director, Trustee,
Vice President Vice President

Joseph A. Zarr* President None

Donald F. Meeder* Secretary Secretary,
Treasurer

Ronald C. Paul* Treasurer None

James B. Craver Asst. Secretary, Assistant
P. O. Box 811 Asst. Treasurer Secretary
Dover, MA 02030-0811

Mark D. Maxwell* Asst. Secretary None

*6000 Memorial Drive, Dublin, OH 43017

Item 28. LOCATION OF ACCOUNTS AND RECORDS.

Registrant's Declaration of Trust, By-laws, and Minutes of Trustees' and
Shareholders' Meetings, and contracts and like documents are in the
physical possession of Mutual Funds Service Co., or R. Meeder & Associates,
Inc., at 6000 Memorial Drive, Dublin, Ohio 43017. Certain custodial records
are in the custody of Firstar Bank, N.A., custodian of the Core Equity,
Utility Growth and Tactical Asset Allocation Funds, at 425 Walnut Street,
Cincinnati, Ohio 45202; and State Street Bank and Trust Company, custodian
of the International Equity Fund, at 225 Franklin Street, Boston,
Massachusetts 02110. All other records are kept in the custody of R. Meeder
& Associates, Inc. and Mutual Funds Service Co., 6000 Memorial Drive,
Dublin, OH 43017.

<PAGE>

Item 29. MANAGEMENT SERVICES.

None.

Item 30. UNDERTAKINGS

Registrant undertakes to call a meeting of shareholders for the purpose of
voting upon the question of removal of one or more directors, if requested
to do so by the holders of at least 10% of the Registrant's outstanding
shares, and will assist communications among shareholders as set forth
within Section 16(c) of the 1940 Act.

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

Item 23. EXHIBITS - THE INSTITUTIONAL FUND:

(d) Not Applicable.

(e) Not Applicable.

(g) Custodian Agreement -- Between the Registrant and Firstar Bank, N.A.
filed as an exhibit to Registrant's First Post-Effective Amendment to
the Registration Statement on Form N-1A filed with the Commission on
April 12, 1993, which exhibit is incorporated herein by reference.

<PAGE>

(h) Administration Services Agreement between the Fund and Mutual Funds
Service Co. filed as an exhibit to Registrant's Seventh Post-Effective
Amendment to the Registration Statement on Form N-1A filed with the
Commission on or before February 18, 1995, which exhibit is
incorporated herein by reference.

(j) Consent of KPMG LLP, Independent Auditors is filed herewith.

(k) Not Applicable.

(m) 12b-1 Plan for The Institutional Fund -- reference is made to the
exhibits referred to in Part C, Item 24(b)(15) of Registrant's Second
Post-Effective Amendment to the Registration Statement on Form N-1A
filed with the Commission on or about April 18, 1994, and is
incorporated herein by reference.

(n) Financial Data Schedule for The Institutional Fund is filed herewith.

(o) Not Applicable.

(p) Powers of Attorney of Trustees of Registrant and each Portfolio are
incorporated by reference herein.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

None.

Item 25. INDEMNIFICATION

Reference is made to Section 5.3 of the Declaration of Trust filed as an
exhibit to the Registrant's initial Registration Statement on Form N-1A
filed with the Commission on June 25, 1992. As provided therein, the Fund
is required to indemnify its officers and trustees against claims and
liability arising in connection with the affairs of the Fund, except
liability arising from breach of trust, bad faith, willful misfeasance,
gross negligence or reckless disregard of duties. The Fund is obligated to
undertake the defense of any action brought against any officer, trustee or
shareholder, and to pay the expenses thereof if he acted in good faith and
in a manner he reasonably believed to in or not opposed to the best
interest of the Fund, and with respect to any criminal action had no

<PAGE>

reasonable cause to believe his conduct was unlawful. Other conditions are
applicable to the right of indemnification as set forth in the Declaration
of Trust. In applying these provisions, the Fund will comply with the
provisions of Investment Company Act.

Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Not applicable.

Item 27. PRINCIPAL UNDERWRITERS.

Not Applicable.

Item 28. LOCATION OF ACCOUNTS AND RECORDS.

Registrant's Declaration of Trust, By-laws, and Minutes of Trustees' and
Shareholders' Meetings, and contracts and like documents are in the
physical possession of Mutual Funds Service Co., or R. Meeder & Associates,
Inc., at 6000 Memorial Drive, Dublin, Ohio 43017. Certain custodial records
are in the custody of Firstar Bank, N.A., the Fund's custodian, at 425
Walnut Street, Cincinnati, Ohio 45202. All other records are kept in the
custody of R. Meeder & Associates, Inc. and Mutual Funds Service Co., 6000
Memorial Drive, Dublin, OH 43017.

Item 29. MANAGEMENT SERVICES.

None.

Item 30. UNDERTAKINGS

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that this Amendment to
its Registration Statement meets all of the requirements for effectiveness of
this Amendment to its Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dublin, and the State of Ohio on the 30th day of
April, 1999.

THE FLEX-PARTNERS

BY: /s/ Wesley F. Hoag
-----------------------------
Wesley F. Hoag
Vice President

Pursuant to the requirements of the Securities Act, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

APRIL 30, 1999 /s/ Wesley F. Hoag
-------------------------- __________________________________
Date Signed Wesley F. Hoag
Vice President

Pursuant to Powers of Attorney
for Robert S. Meeder, Sr., Milton S. Bartholomew,
Roger D. Blackwell, James W. Didion, Charles A. Donabedian,
Robert S. Meeder, Jr., Jack Nicklaus II,
Walter L. Ogle and Philip A. Voelker
Trustees of The Flex-Partners

APRIL 30, 1999 /s/ Wesley F. Hoag
------------------ --------------------------------
Date Signed Wesley F. Hoag
Executed by Wesley F. Hoag
Pursuant to Powers of Attorney

<PAGE>

SIGNATURES

Mutual Fund Portfolio (the "Portfolio") has duly caused this Post-Effective
Amendment to the Registration on Form N-1A of The Flex-Partners (File No.
33-48922) to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dublin and State of Ohio on the 30th day of April,
1999.

MUTUAL FUND PORTFOLIO

By: /s/ Wesley F. Hoag
----------------------------
Wesley F. Hoag

This Post-Effective Amendment to the Registration Statement on Form N-1A of
The Flex-Partners (File No. 33-48922) has been signed below by the following
persons in the capacities with respect to the Portfolio indicated on April 30,
1999.

SIGNATURE TITLE

Robert S. Meeder, Sr.* President and Trustee
- --------------------------
ROBERT S. MEEDER, SR.

Milton S. Bartholomew* Trustee
- --------------------------
MILTON S. BARTHOLOMEW

Roger D. Blackwell* Trustee
- --------------------------
ROGER D. BLACKWELL

James W Didion* Trustee
- --------------------------
JAMES W. DIDION

Charles A. Donabedian* Trustee
- --------------------------
CHARLES A. DONABEDIAN

Thomas E. Line* Principal Financial Officer and
- -------------------------- Principal Accounting Officer
THOMAS E. LINE

/S/ Donald F. Meeder Secretary/Treasurer
- --------------------------
DONALD F. MEEDER

Robert S. Meeder, Jr.* Vice President and Trustee
- --------------------------
ROBERT S. MEEDER, JR.

Jack W. Nicklaus II* Trustee
- --------------------------
JACK W. NICKLAUS II

Walter L. Ogle* Trustee
- --------------------------
WALTER L. OGLE

Philip A. Voelker* Vice President and Trustee
- --------------------------
PHILIP A. VOELKER

*By: /S/ Wesley F. Hoag
----------------------
Wesley F. Hoag
Executed by Wesley F. Hoag on behalf
of those indicated pursuant to Powers of Attorney

<PAGE>

SIGNATURES

Utilities Stock Portfolio (the "Portfolio") has duly caused this
Post-Effective Amendment to the Registration Statement on Form N-1A of The
Flex-Partners to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Dublin and State of Ohio on the 30th day of April,
1999.

UTILITIES STOCK PORTFOLIO

By: /s/ Wesley F. Hoag
----------------------------
Wesley F. Hoag

This Registration Statement on Form N-1A of The Flex-Partners has been
signed below by the following persons in the capacities with respect to the
Portfolio indicated on April 30, 1999.