INTERNATIONAL EQUITY FUND
1998 Annual Report
THE FLEX-PARTNERS
Distributed by Adviser Dealer Services, Inc.
P.O. Box 7177, Dublin, OH 43017 (800)494-FLEX
<PAGE>
INTERNATIONAL EQUITY FUND
PERFORMANCE CAPSULE
PERFORMANCE UPDATE
- -------------------------------------------------------------------------------
Period & Average Annual Total Returns
before deduction of sales charges as of 12/31/98
1 year....................................19.78%
Since Inception (9/2/97)..................12.34%
Net of sales charges as of 12/31/98*
1 year....................................14.97%
Since Inception (9/2/97)...................8.95%
QUARTERLY PERFORMANCE
- -------------------------------------------------------------------------------
Quarterly Total Returns for 1998 before deduction of sales charges
First Quarter.............................12.89%
Second Quarter.............................2.11%
Third Quarter............................-13.03%
Fourth Quarter............................19.48%
Quarterly Total Returns for 1998 net of sales charges
First Quarter..............................8.35%
Second Quarter............................-1.95%
Third Quarter............................-16.54%
Fourth Quarter............................14.69%
* Reflects the deduction of 4.00% maximum sales charges.
REGIONAL HOLDINGS as of 12/31/98
- -------------------------------------------------------------------------------
[CHART] The following information was presented as a pie chart:
United Kingdom 21.4%
Europe (ex-U.K.) 52.5%
Japan 21.4%
Far East (ex-Japan) 4.7%
GROWTH OF $10,000
- -------------------------------------------------------------------------------
International Equity Fund
(before deduction International Equity Fund Morningstar Average
of sales charges) (net of sales charges) Foreign Stock Fund
------------------------- ------------------------- -------------------
09/02/97 $10,000 $ 9,600 $10,000
09/30/97 $10,528 $10,106 $10,614
12/31/97 $ 9,743 $ 9,354 $ 9,742
03/31/98 $10,999 $10,559 $11,091
06/30/98 $11,231 $10,782 $11,014
09/30/98 $ 9,767 $ 9,377 $ 9,151
12/31/98 $11,671 $11,204 $10,563
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. 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. Performance
data represents total returns and average annual total returns for the periods
ended 12/31/98 and assumes reinvestment of all dividend and capital gain
distributions. The Investment Adviser reimbursed expenses in order to reduce the
operating expenses of the Fund during each of the periods shown above. To obtain
a prospectus containing more complete information about The International Equity
Fund, including other fees and expenses that apply to a continued investment in
the Fund, you may call The Flex-Partners at (800)494-3539 or write P.O. Box
7177, Dublin OH 43017. Please read the prospectus carefully before investing.
The Flex-Partners Funds are distributed by Adviser Dealer Services, Inc., which
is affiliated with The Flex-Partners and the Flex-funds.
International Equity Fund 1998 Annual Report Page 2
<PAGE>
The Flex-Partners 1998 Annual Report
INTERNATIONAL EQUITY FUND
[PHOTO] Michael Sparkes, Portfolio Manager
1998 marked the first full year for The International Equity Fund as a
member of The Flex-Partners family of mutual funds. We are pleased that the Fund
was able to outperform its peer group average during its first full year, with a
annual total return of 19.78% before deduction of sales charges. According to
Morningstar, the average foreign stock fund gained 12.68% during 1998.
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.
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 regards 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
greatly to the performance of the Fund during 1998.
The introduction of the new European common currency, or euro, on January
1, 1999 came with great fanfare and heightened expectations. The common currency
should have a positive effect on the economies of the participating countries,
reducing trade barriers and lowering operational costs for companies. Lower
inflation rates will likely follow, as more efficient manufacturing centers draw
increased production and single market pricing becomes more common. We continue
to favor investment in markets with good domestic demand, and remain watchful
for signs of growth in several countries.
In exchange for greater potential rewards, foreign investments involve greater
risk than U.S. investments. These risks include political and economic
uncertainties of foreign countries and currency fluctuations. These risks are
magnified in countries with emerging markets, which may have relatively unstable
governments and less established economies.
International Equity Fund 1998 Annual Report Page 3
<PAGE>
THE FLEX-PARTNERS
INTERNATIONAL EQUITY FUND
1998 ANNUAL REPORT
PORTFOLIO HOLDINGS AND FINANCIAL STATEMENTS
International Equity Fund 1998 Annual Report Page 4
<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
International Equity Fund 1998 Annual Report Page 5
<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
International Equity Fund 1998 Annual Report Page 6
<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
International Equity Fund 1998 Annual Report Page 7
<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
International Equity Fund 1998 Annual Report Page 8
<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
International Equity Fund 1998 Annual Report Page 9
<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
International Equity Fund 1998 Annual Report Page 10
<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.
International Equity Fund 1998 Annual Report Page 11
<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.
International Equity Fund 1998 Annual Report Page 12
<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 (loss) ($29,201) ($15,575)
Net realized gains (losses) from
investment and futures contract
transactions 381,420 (163,883)
Net change in unrealized appreciation
(depreciation) of investments 2,333,615 (114,004)
Net increase in net assets
resulting from operations 2,685,834 (293,462)
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
In excess of net investment income (50,938) ---
From net realized gains (98,118) ---
Net decrease in net assets resulting
from dividends and distributions (149,056) ---
CAPITAL TRANSACTIONS:
Issued 5,048,139 12,536,720
Reinvested 149,026 ---
Redeemed (1,650,643) (53,190)
Net increase (decrease) in net assets
resulting from capital share
transactions 3,546,522 12,483,530
TOTAL INCREASE (DECREASE)
IN NET ASSETS 6,083,300 12,190,068
NET ASSETS - Beginning of period 12,190,068 ---
NET ASSETS - End of period 18,273,368 $12,190,068
SHARE TRANSACTIONS:
Issued 376,007 1,004,830
Reinvested 10,299 ---
Redeemed (123,624) (4,358)
Change in shares 262,682 1,000,472
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.
International Equity Fund 1998 Annual Report Page 13
<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
The investment objective of the International Equity Fund (the "Fund") is to
seek long-term growth from investing primarily in equity securities of foreign
issuers.
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
Securities owned by the Fund are valued at 3:00 pm Eastern Time based on the
last sales price, or, lacking any sales, at the closing bid prices. The Fund
obtains prices from independent pricing services which use valuation techniques
approved by the Board of Trustees.
Repurchase Agreements
The Fund may engage in repurchase agreement transactions whereby the Fund takes
possession of an underlying debt instrument subject to an obligation of the
seller to repurchase the instrument from the Fund and an obligation of the fund
to resell the instrument at an agreed upon price and term. At all times, the
Fund 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 Fund 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 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 Fund are maintained in U.S. dollars. The value of
securities, other assets and liabilities of the 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 Fund does 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 Fund may enter into forward foreign currency exchange contracts ("forwards")
for purposes of hedging against either specific transactions or portfolio
positions. Forwards are agreements between two parties to exchange currencies at
a set price on a future date. The market value of forwards fluctuates with
changes in currency exchange rates. The forward is marked-to-market daily, and
the change in market value is recorded by the Fund as unrealized appreciation or
depreciation. When the forward is offset by entry into a closing transaction or
extinguished by delivery of the currency, the Fund records a realized gain or
loss equal to the fluctuation in value during the period the forward was open.
Risks may arise upon entering forwards from the potential inability of
counterparties to meet the terms of the forwards or from unanticipated
fluctuations in the value of the foreign currency relative to the U.S. dollar.
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.
International Equity Fund 1998 Annual Report Page 14
<PAGE>
Distributions to Shareholders
Dividends to shareholders are recorded on the ex-dividend date. The Fund
declares dividends from net investment income on an annual basis and 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 the Fund have been deferred and are
being amortized by Fund on a straight-line basis over a five-year period.
Investment Income & Expenses
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 each Portfolio with investment management, research,
statistical and advisory services. Under an Investment Subadvisory Agreements
with RMA, Commercial Union Investment Management, LTD serves as subadvisor of
the Fund. For such services, the Fund pays 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 the Fund.
In compensation for such services, the 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
from 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 (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 Fund
currently has a 2.00% annual expense limitation as a percentage of average daily
net assets.
Certain officers and trustees of the Funds are also officers or directors of
MII, RMA and MFSCo.
Pursuant to Rule 12b-1 of the Act, the Fund has adopted a Distribution Plan (the
"Plan") with Advisor Dealer Services (the "Distributor"). Under the provisions
of the Plan, the Fund pays the Distributor an annual fee, at a maximum rate of
0.25% of average daily net assets of Fund shares. Additionally, the Fund has
adopted a Service Plan with the Distributor. Under the provisions of the Service
Plan, the Fund pays the Distributor an annual fee, at a maximum rate of 0.25% of
average daily net assets, 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 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 $19,961.
International Equity Fund 1998 Annual Report Page 15
<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 - International Equity Fund (Fund), including the portfolio
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 Fund'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
Flex-Partners Trust - International Equity Fund 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
International Equity Fund 1998 Annual Report Page 16
<PAGE>
THE FLEX-PARTNERS
P.O. Box 7177
Dublin, Ohio 43017
