THE FLEX-PARTNERS
[PHOTO]
1999 ANNUAL REPORT
December 31, 1999
LETTER TO SHAREHOLDERS page 1
1999 YEAR IN REVIEW page 2
TACTICAL ASSET ALLOCATION FUND page 6
UTILITY GROWTH FUND page 8
CORE EQUITY FUND page 10
INTERNATIONAL EQUITY FUND page 12
FINANCIAL STATEMENTS page 14
THE FLEX-PARTNERS FUNDS
P.O. Box 7177 Dublin OH 43017
TOLL FREE (800)494-FLEX
Distributed by Adviser Dealer Services, Inc.
<PAGE>
PERFORMANCE CAPSULE
Period and Average Annual Total Returns as of 12/31/99
Before Sales Charges
<TABLE>
<CAPTION>
Tactical Asset Utility Growth Core Equity International
Allocation Fund 1 Fund 2 Fund 3 Equity Fund 4
- ---------------------------------------------------------------------------------------------------------------
Class A Class C Class A Class C Class A Class C
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 year 15.62% 15.33% 20.34% 19.72% 21.16% 20.90% 30.07%
2 Years 21.83% 21.56% 14.18% 13.75% 21.97% 21.87% 24.82%
3 years 20.30% 20.26% 18.74% 18.39% -- -- --
Life of Fund 19.49% 17.50% 18.91% 18.63% 18.85% 18.71% 19.65%
Net of Sales Charges
Tactical Asset Utility Growth Core Equity International
Allocation Fund 1 Fund 2 Fund 3 Equity Fund 4*
- ---------------------------------------------------------------------------------------------------------------
Class A* Class C** Class A* Class C** Class A* Class C**
- ---------------------------------------------------------------------------------------------------------------
1 year 8.94% 13.94% 13.44% 18.22% 14.23% 19.40% 22.61%
2 years 18.25% 21.25% 10.85% 13.42% 18.43% 21.52% 21.19%
3 years 17.93% 20.26% 16.42% 18.39% -- -- --
Life of Fund 17.45% 17.50% 17.35% 18.63% 15.98% 18.71% 16.65%
<FN>
1 Inception Date for Class A Shares 8/1/96; for Class C Shares 6/1/95.
2 Inception Date 7/11/95 3 Inception Date 8/1/97. 4 Inception Date 9/2/97.
</FN>
</TABLE>
To obtain a prospectus containing more complete information about The
Flex-Partners Funds, including other fees and expenses that apply to a continued
investment in the Funds, 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.
Past performance does not guarantee future results. All performance figures
represents period total returns and average annual total returns for the periods
ended 12/31/99. Investment performance represents total return and assumes
reinvestment of all dividend and capital gain distributions. The investment
value and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost. The
Investment Adviser waived a portion of its management fees and/or reimbursed
expenses in order to reduce the operating expenses of The Tactical Asset
Allocation, Utility Growth, Core Equity, and International Equity Funds during
each of the periods shown above.
* Reflects deduction of 5.75% maximum sales charges. ** Reflects deduction of
contingent deferred sales charges as follows: 1.50% if redeemed within 18 months
from date of purchase; 0.75% if redeemed after 18 but within 24 months from date
of purchase; 0.00% thereafter.
<PAGE>
LETTER TO SHAREHOLDERS
Dear Flex-Partners Shareholder:
Happy New Year, and Happy New Millennium. It is not often that one has the
opportunity to greet clients to a new century, so I would like to take this
moment to wish you the best for the coming year and the new millennium.
Every company goes through a period of transition, and after 25 years now
is the time for transition for The Flex-Partners Funds and R. Meeder &
Associates. In the coming year, you will notice a number of changes that we hope
will make us a more responsive and a more focused investment management firm.
The first change you will notice in the Year 2000 is the addition of two
new mutual funds to our fund family The Growth Fund and The Aggressive Equity
Fund. These funds evolved from separately-managed portfolios we have managed for
clients of R. Meeder & Associates since 1995. The addition of these two funds
expands the range of investment options available in The Flex-Partners family of
mutual funds. Both the Growth and Aggressive Equity Funds will be available to
investors this Spring.
Many Flex-Partners shareholders have asked us about internet access to
their account information. We intend to begin providing shareholders secure
access to their Flex-Partners account through a new web site, to be launched by
mid-year. This information will include current account values, recent
transactions, and daily prices for The Flex-Partners funds.
Finally, and perhaps most significantly, The Flex-Partners and R. Meeder &
Associates will adopt a new identity in the Year 2000. This corporate makeover
has required much "soul searching" on our part. In this process, we have learned
a great deal about who we are as a company, and how you see us as a trusted
partner in your financial success. Our new identity will reflect our experience
and expertise, our vision for the future, and our commitment to remaining a
client-focused investment management firm.
After more than 25 years of helping investors achieve their financial
goals, R. Meeder & Associates has grown from a small, family-owned company with
a handful of specialized mutual funds, to a complete financial service provider
and mutual fund manager with over $2 billion in assets. Such growth has given us
many challenges over the years - challenges we believe we have met successfully.
We appreciate your continued trust in our investment management services. We are
excited about the year ahead at The Flex-Partners Funds and R. Meeder &
Associates, and look forward to growing with you in the years to come.
Sincerely,
/s/ Robert S. Meeder, Sr.
Robert S. Meeder, Sr.
President
The Flex-Partners Funds Annual Report * December 31, 1999 Page 1
<PAGE>
1999 YEAR IN REVIEW
1999 was another "Year of the Bull" on Wall Street, as the major equity
market indices finished at or near record levels. A closer examination of the
financial markets, however, shows that 1999 looks less like a bull and more like
a bumblebee, which according to modern aerodynamic theory should not be able to
fly. If you take a pea and lima bean, attach four fragile wings, six scrawny
legs, stubbly fur and an oversized head, what you get looks more like a
paperweight than an airborne insect.
The bumblebee defies most traditional models, and the same can be said of
the financial markets in 1999. In fact, this year marked the first time we ever
heard the term "new metrics" from an analyst explaining his methodology for
justifying the valuations of Internet stocks. It seems that one needs the new
"new math" to understand this methodology.
Sticking with the traditional metrics, a review of 1999 shows a rising
interest rate environment with yields on 30-year Treasury bonds increasing from
5.1% to almost 6.5% -- their highest level in over two years. (See Chart A at
right.) In the equity market, the indices pushed higher into record territory,
even though twice as many stocks declined (2557) as advanced (1182) on the New
York Stock Exchange. Advance/decline lines for most major indices finished the
year in strong down trends. (See Chart B at right.) And, as late as December 14,
the stock market was recording days with over 560 stocks making new 12-month
lows. (See Chart C on Page 3.)
Valuations that began the year in the nosebleed seats surged higher to
finish the year up near the blimp. (See Chart D on Page 3.) Participation was
limited to a few sectors, as only a handful of investors' favorite stocks
contributed to the majority of the market's annual gains. (See "1999 Financial
Highlights" sidebar on Page 4.) If one took all these variables, threw in a
wildcard called "Y2K", and plugged them into a traditional market model, one
could reasonably expect a lower equity market. Yet, like the bumblebee, the
market refused to obey the laws of finance and defied the investment models.
This year's returns for the various market indices mask the true nature of
the Market of 1999. It turns out that for the vast majority of stocks, the
traditional models did apply. An unweighted average of all the stocks on the New
York Stock Exchange only returned 1.0% for all of 1999. Small-cap and mid-cap
indices underperformed large-caps, as the mid-cap S&P 400 Index (+14.7%) and the
small-cap S&P 600 Index (+12.4%) trailed the S&P 500 for the year.* As late as
mid-October, most major indices were near or below where they were in early
January.
* The S&P 500, S&P 400, and S&P 600 Indices are unmanaged indices based on
market capitalization, incurring no sales charges, expenses, or fees. Past
performance of an index does not guarantee future results. It is not possible to
invest directly in an index.
[GRAPH] Chart A: 30 Year Treasury Bond Rate from December 1997 through December
1999. Source: Reuters Datalink.
[GRAPH] Chart B: NYSE Advance Decline Line from December 1998 through December
1999. Source: Reuters Datalink.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 2
<PAGE>
[GRAPH] Chart C: NYSE New Lows from December 1998 through December 1999.
Source: Reuters Datalink.
[GRAPH] Chart D: S&P 500 Historical P/E Ratio from 1929 through 1999.
** The Dow Jones Industrial Average is an unmanaged index of 30 selected stocks.
The NASDAQ Composite Index is an unmanaged index of all the stocks traded on the
NASDAQ exchange. These indices incur no sales charges, expenses, or fees. Past
performance of an index does not guarantee future results. It is not possible to
invest directly in an index.
The vast majority of 1999's market gains came after mid-October in a very
narrow market. Of the annual returns of the major indices, over 90% of the S&P
500, 60% of the Dow Jones Industrial Average, and 70% of the NASDAQ came in the
final 11 weeks of the year.** To add some perspective to this extraordinary
rally, the NASDAQ Index climbed from 3000 to 4000 in just seven weeks. Ten of
the NASDAQ's largest all-time point gains occurred in 1999, with 7 of these
occurring in the 4th Quarter alone.
While many indices were making new highs, most stocks were not. Nearly half
of the stocks on the NASDAQ exchange fell in price in 1999. The numbers are even
worse for the S&P 500, where less than half of the stocks had a positive return
for 1999, and almost two-thirds of those stocks returned less than 10% for the
year. The largest 100 companies in the S&P 500 contributed 17.1% to the Index's
total annual return - that's over 80% of the S&P 500's 21.04% annual return. To
put it another way, the other 400 stocks returned only 3.93%. If an investor did
not own these 100 stocks, they most likely did not participate in 1999's gains.
Some analysts have described 1999 as a "stealth bear market."
What then separated the winners from the losers? In a word, technology.
Technology stocks were responsible for 14 points of the S&P 500's 21% return for
the year. That means the technology sector contributed 65% to the gain of the
S&P 500 for 1999. Technology was also largely responsible for the divergence
between the S&P BARRA Growth and Value Indexes during 1999, which returned
28.25% and 12.72% respectively. While both indexes have technology stocks, the
Growth Index holds a greater concentration. In hindsight, it is easy to see why
we overweighted growth and technology stocks in many of our funds during 1999.
Technology and large-cap growth funds played a part in helping The
Flex-Partners Tactical Asset Allocation Fund achieve another year of
double-digit gains and outperform the average asset allocation fund. (See Page 7
for detailed fund performance information.) Our "Defensive Investing" strategy
is designed to manage the various risks of stock market investing by reducing
the Fund's exposure to equities when our investment discipline indicates the
risk/reward relationships in the stock market are not 100% positive.
Other funds also benefited from investments in the top-performing sectors
of the 1999 stock market. Telecommunications stocks enjoyed a strong year of
returns, which helped The Utility Growth Fund outperform both the average
The Flex-Partners Funds Annual Report * December 31, 1999 Page 3
<PAGE>
1999 YEAR IN REVIEW (Continued)
utility fund and the Dow Jones Utility Average. (See Page 8 for detailed fund
performance information.)
Global markets also experienced a positive year, rallying strongly from the
turmoil of 1998. The recovery helped The International Equity Fund outperform
the MSCI EAFE Index. (See Page 12 for detailed fund performance information.)
The Core Equity Fund performed in line with the S&P 500 Index, thanks to its
"sector neutral, style neutral" investment strategy. (See Page 10 for detailed
fund performance information.)
We believe the Year 2000 will be a challenging year for the financial
markets. It appears that we will finally be over Y2K, but its effects may still
linger through the economy. People who withdrew cash in preparation for an
emergency will have it burning a hole in their pockets, possibly perpetuating
consumers' spending spree. Inventories that were built up will need to be
reduced. 401(k) contributions and money withheld out of fear of a computer
glitch may also be reinvested back into the markets. Firms will have money once
spent on Y2K preparations go toward their bottom lines. If the market has
discounted a Y2K risk premium, it will disappear in the new year. However, Alan
Greenspan may throw cold water on the party by hiking interest rates. The Year
2000 is also an election year, and depending on the outcome, there may be relief
rallies in downtrodden sectors such as healthcare, pharmaceuticals and tobacco.
This is why we believe the high-risk market conditions we have grown accustomed
to in previous years may continue into the new year.
An evaluation such as this may give some investors cause for concern as we
head into the Year 2000. However, our investment disciplines are designed to
help us recognize new trends in the financial markets, giving us the flexibility
to invest our clients' assets in those sectors of the market that we perceive
have the most attractive prospects for returns.
1999 FINANCIAL MARKETS HIGHLIGHTS
ANNUAL ADVANCING & DECLINING ISSUES
ADVANCING DECLINING
ISSUES ISSUES
NYSE 1182 2557
S&P 500 241 256
NASDAQ 2629 2497
AMEX 352 561
Source: Columbus Dispatch
CONTRIBUTION TO 1999 TOTAL RETURN
OF THE S&P 500
Largest 100 Stocks 17 points
(over 80%)
Other 400 Stocks 4 points
(less than 20%)
Technology Sector 14 points
(over 65%)
Source: Salomon Smith Barney
The Flex-Partners Funds Annual Report * December 31, 1999 Page 4
<PAGE>
THE FLEX-PARTNERS FAMILY OF EQUITY MUTUAL FUNDS
Announcing two new mutual funds to The Flex-Partners family -- The Growth Fund
and The Aggressive Equity Fund. The addition of these two funds will offer
investors the opportunity to invest in some of the fastest-growing areas of the
market, and the flexibility to diversify your Flex-Partners portfolio.
The chart below demonstrates the risk spectrum for The Flex-Partners family of
equity mutual funds.
Tactical Asset Core Equity International
Allocation Fund Fund Equity Fund
- --------------------------------------------------------------------------------
CONSERVATIVE AGGRESSIVE
- --------------------------------------------------------------------------------
Utility Growth Fund* Aggressive
Growth Fund Growth Fund*
* Available in Spring 2000
The Flex-Partners Funds Annual Report * December 31, 1999 Page 5
<PAGE>
The Flex-Partners Funds 1999 Annual Report
TACTICAL ASSET ALLOCATION FUND
[PHOTO] Robert S. Meeder, Jr., Portfolio Manager
[PHOTO] Philip A. Voelker, Portfolio Manager
1999 was another year of double-digit returns for The Tactical Asset
Allocation Fund. For the 12 months ended December 31, the Fund returned 15.62%
for Class A Shares and 15.33% for Class C Shares before sales charges, comparing
favorably with the 9.40% return of the average asset allocation fund, according
to Morningstar.
The advance of stock market indices during 1999 was dramatic, but the Fund
spent part of the year in a defensive position with large allocations to cash
equivalent securities. The primary factors that dictated our defensive stances
during the year were the narrowness of the market and the increasing interest
rate environment. These two areas are two of the most important components in
our Defensive Investing discipline, and both were negative much of the year. In
fact, we never owned bonds this year due to our negative evaluation of the
interest rate environment.
When the Fund was exposed to the risk of the stock market, fund selection
was extremely important because of the narrowness of the market. During the
first 4 months of the year, funds were selected to emphasize large cap growth
and technology. In the second four months of 1999 (mid-April to mid-August) our
fund selection emphasized value stocks and energy issues. From mid August
through the end of the year, our fund selection emphasis returned to large-cap
and technology funds.
As we begin the Year 2000, we remain cautious when looking to increase our
exposure to the equity market. We continue to see a high-risk market, due to
extreme valuations, narrow advance/decline statistics, and an increasing
interest rate environment.
1999 PERFORMANCE
Average Annual Total Returns as of 12/31/99
- ----------------------------------------------------------------------------
Avg. Asset
Before Sales Charges Class A Class C Allocation Fund2
- -----------------------------------------------------------------------------
One Year 15.62% 15.33% 9.40%
Three Years 20.30% 20.26% 13.55%
Life of Fund 1 19.49% 17.50% --
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Avg. Asset
Net of Sales Charges Class A Class C Allocation Fund2
- ------------------------------------------------------------------------------
One Year 8.94% 13.94% 9.40%
Three Years 17.93% 20.26% 13.55%
Life of Fund 1 17.45% 17.50% --
- ------------------------------------------------------------------------------
1 Inception Date for Class A Shares 8/1/96; for Class C Shares 6/1/95.
2 According to Morningstar. Morningstar averages do not take into account
sales charges.
* Reflects deduction of 5.75% maximum sales charge.
** Reflects the deduction of contingent deferred sales charges as follows:
1.50% if redeemed within 18 months from date of purchase; 0.75% if redeemed
after 18 months but within 24 months from date of purchase; 0.00%
thereafter.
See additional performance information on inside front cover.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 6
<PAGE>
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
Tactical Asset Tactical Asset
Allocation Allocation Morningstar
Fund - Class A Fund - Class A Average Asset
Before Sales Charge After Sales Charge Allocation Fund
08/01/96 $10,000 $ 9,425 $10,000
12/31/96 10,551 9,944 11,005
06/30/97 12,055 11,362 12,046
12/31/97 12,375 11,664 12,865
06/30/98 13,114 12,360 13,959
12/31/98 15,887 14,973 14,303
06/30/99 17,685 16,668 14,883
12/31/99 18,368 17,312 15,539
GROWTH OF $10,000
Tactical Asset Tactical Asset
Allocation Allocation Morningstar
Fund - Class C Fund - Class C Average Asset
Before Sales Charge After Sales Charge Allocation Fund
06/01/95 $10,000 $ 9,850 $10,000
12/31/95 11,457 11,307 $11,118
06/30/96 12,174 12,024 $11,648
12/31/96 12,038 11,963 $12,507
06/30/97 13,783 13,783 $13,690
12/31/97 14,170 14,170 $14,621
06/30/98 15,003 15,003 $15,864
12/31/98 18,156 18,156 $16,255
06/30/99 20,193 20,193 $16,915
12/31/99 20,939 20,939 $17,659
[GRAPH] The following information was presented as a pie chart:
PORTFOLIO HOLDINGS as of December 31, 1999
1) Cash Equivalents 47.98%
2) Janus Mercury 33.51%
3) Federated S&P 500 Max Cap 9.82%
4) Invesco Strategic Financial Svcs 8.69%
The Flex-Partners Funds Annual Report * December 31, 1999 Page 7
<PAGE>
The Flex-Partners Funds 1999 Annual Report
UTILITY GROWTH FUND
[PHOTO] Lowell G. Miller, Portfolio Manager
For 1999, The Utility Growth Fund returned 20.34% for Class A Shares and
19.72% for Class C Shares before sales charges, outperforming both the 15.13%
annual return for the average utility fund, according to Morningstar, and the
- -6.02% annual return for the Dow Jones Utility Average.
Utility stocks suffered greatly in 1999 - their worst annual performance
since 1994 - even as the robust economy drove up demand for utility services and
improved the financial performance of many utility companies. Our strategy of
industry diversification, notably in our weighting toward the telecommunications
sector, helped the Fund outperform most large-cap utility stocks. We have been
saying for many years that the distribution of returns in the utility sector was
widening, and that deregulation would separate the winners from the losers. The
performance of the Fund in 1999 stamped a seal of approval on this view.
Strong performance from the telecom stocks in our portfolio helped the Fund
achieve good returns throughout the year. The gas and electric distribution
sector has also been ripe with opportunities, with deregulation driving
consolidations and buyouts within the industry. General lack of interest in the
utility sector, however, resulted in declines in some of our more traditional
holdings, even as they increased earnings and dividends. The silver lining here
is that the depressed values of these stocks allows us to add to our positions
at lower prices.
It has been more than five years since our expectations for the Fund were
as high as they are today. Should the bond market emerge, we believe the Fund is
in a good position to capture a possible upswing in the broad utilities sector.
BECAUSE THE UTILITY GROWTH FUND CONCENTRATES ITS INVESTMENTS IN PUBLIC UTILITY
COMPANIES, THE VALUE OF THE FUND'S SHARES MAY FLUCTUATE MORE THAN IF INVESTED IN
A GREATER NUMBER OF INDUSTRIES. CHANGES IN INTEREST RATES MAY ALSO AFFECT THE
VALUE OF UTILITY STOCKS, AND RISING INTEREST RATES CAN BE EXPECTED TO REDUCE THE
FUND'S NET ASSET VALUE.
1999 PERFORMANCE
Average Annual Total Returns as of 12/31/99
- -------------------------------------------------------------------------------
Dow Jones
Before Sales Charges Class A Class C Utility Avg.2
- -------------------------------------------------------------------------------
One Year 20.34% 19.72% -6.02%
Three Years 18.74% 18.39% 11.18%
Life of Fund 1 18.91% 18.63% --
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dow Jones
Net of Sales Charges Class A Class C Utility Avg.2
- -------------------------------------------------------------------------------
One Year 13.44% 18.22% -6.02%
Three Years 16.42% 18.39% 11.18%
Life of Fund 1 17.35% 18.63% --
- -------------------------------------------------------------------------------
1 Inception Date 7/11/95
2 The Dow Jones Utility Average is an unmanaged index incurring no sales
charges, expenses, or fees. It is not possible to invest directly in an
index.
* Reflects deduction of 5.75% maximum sales charge.
** Reflects the deduction of contingent deferred sales charges as follows:
1.50% if redeemed within 18 months from date of purchase; 0.75% if redeemed
after 18 months but within 24 months from date of purchase; 0.00%
thereafter.
See additional performance information on inside front cover.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 8
<PAGE>
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
Utility Growth Utility Growth
Fund - Class A Fund - Class A Dow Jones
Before Sales Charge After Sales Charge Utility Average
07/11/95 $10,000 $ 9,425 $10,000
12/31/95 11,511 10,849 11,483
06/30/96 12,072 11,378 11,550
12/31/96 12,963 12,218 12,527
06/30/97 13,650 12,865 12,522
12/31/97 16,646 15,689 15,409
06/30/98 17,718 16,699 16,906
12/31/98 18,035 16,998 18,317
06/30/99 20,345 19,175 18,898
12/31/99 21,703 20,455 17,214
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
Utility Growth Utility Growth
Fund - Class C Fund - Class C Dow Jones
Before Sales Charge After Sales Charge Utility Average
07/11/95 $10,000 $ 9,850 $10,000
12/31/95 11,507 11,357 11,483
06/30/96 12,044 11,894 11,550
12/31/96 12,940 12,790 12,527
06/30/97 13,601 13,526 12,522
12/31/97 16,596 16,596 15,409
06/30/98 17,649 17,649 16,906
12/31/98 17,936 17,936 18,317
06/30/99 20,189 20,189 18,898
12/31/99 21,474 21,474 17,214
The Dow Jones Utility Average is an unmanaged index, incurring no sales charges,
expenses or fees. Past performance of an index is not a guarantee of future
results. It is not possible to invest directly in an index.
[GRAPH] The following information was presented as a pie chart:
Sector Weightings as of December 31, 1999
1) Telecomm. Services 31.35%
2) Oil/Gas Domestic 12.98%
3) Natural Gas (Distributor) 12.76%
4) Water Utility 7.33%
5) Electric/Gas Utility 7.18%
6) Pipelines 7.16%
7) Natural Gas (diversified) 5.48%
8) Electric Integrated 4.67%
9) Electric Utility 4.07%
10) Utility 3.13%
11) Telecomm. Equipment 0.95%
12) Cash Equivalents 2.94%
The Flex-Partners Funds Annual Report * December 31, 1999 Page 9
<PAGE>
The Flex-Partners Funds 1999 Annual Report
CORE EQUITY FUND
[PHOTO] William L. Gurner, Portfolio Manager
For 1999, The Core Equity Fund performed in line with the S&P 500* --
thanks in large part to the Fund's "sector neutral, style neutral" investment
strategy. Through the market fluctuations of this past year, the Fund held to
its investment strategy and avoided the underperformance that hampered other
equity funds that employ a more style-focused strategy. For the 12 months ended
December 31, 1999, the Fund returned 21.16% for Class A Shares and 20.90% for
Class C Shares before sales charges, while the S&P 500 Index returned 21.04%
The stock market was relatively tame through the first half of the year,
and performance was broad across many market sectors. Interest rate worries and
inflation fears rattled investors in the 3rd Quarter, and led to a decline in
equity prices. The market surged back with an impressive 4th Quarter, as
technology stocks carried many indexes into record territory by year-end.
Advance/decline statistics for many market indices were narrower in 1999
than they were the previous year, making it difficult to outperform the market
with a diversified portfolio. Only two sectors of the S&P 500 outperformed the
index as a whole during 1999: technology gained 71.46% and capital goods gained
42.16%. The other sectors enjoyed positive performance for the year, with the
exception of transportation which declined -9.61%, and healthcare which declined
- -9.60%. Looking ahead to the coming year, we anticipate some moderation of the
volatility which has characterized the market over the last two years.
Technology should continue to fuel growth, although we see compelling valuation
and sound fundamental progress in the healthcare and finance sectors.
1999 PERFORMANCE
Average Annual Total Returns as of 12/31/99
- -----------------------------------------------------------------------
S&P 500
Before Sales Charges Class A Class C Index2
- -----------------------------------------------------------------------
One Year 21.16% 20.90% 21.04%
Life of Fund 1 18.85% 18.71% --
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
S&P 500
Net of Sales Charges Class A Class C Index2
- -----------------------------------------------------------------------
One Year 14.23% 19.40% 21.04%
Life of Fund 1 15.98% 18.71% --
1 Inception Date 8/1/97
2 The S&P 500 Composite Stock Index is an unmanaged index incurring no sales
charges, fees, or expenses. It is not possible to invest directly in an
index.
* Reflects deduction of 5.75% maximum sales charge.
** Reflects the deduction of contingent deferred sales charges as follows:
1.50% if redeemed within 18 months from date of purchase; 0.75% if redeemed
after 18 months but within 24 months from date of purchase; 0.00%
thereafter.
See additional performance information on inside front cover.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 10
<PAGE>
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
Core Equity Core Equity
Fund - Class A Fund - Class A Morningstar Average
Before Sales Charge After Sales Charge Growth Fund
08/01/97 $10,000 $ 9,425 $10,000
12/31/97 10,200 9,614 10,163
06/30/98 11,770 11,093 11,570
12/31/98 12,524 11,804 12,131
06/30/99 14,372 13,545 13,554
12/31/99 15,175 14,302 15,551
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
Core Equity Core Equity
Fund - Class C Fund - Class C Morningstar Average
Before Sales Charge After Sales Charge Growth Fund
08/01/97 $10,000 $ 9,850 $10,000
12/31/97 10,188 10,038 10,163
06/30/98 11,725 11,575 11,570
12/31/98 12,516 12,366 12,131
06/30/99 14,346 14,271 13,554
12/31/99 15,132 15,132 15,551
[GRAPH] The following information was presented as a pie chart:
SECTOR WEIGHTINGS as of December 31, 1999
SECTOR % OF
SECTOR MANAGER PORTFOLIO
- ------ ------- ---------
1) Technology RCM 27.54%
2) Finance Delta Capital 13.04%
3) Utilities Miller Howard 11.62%
4) Cons. Non-Dur. Barrow Hanley 9.26%
5) Health Alliance 8.87%
6) Energy Mitchell Group 5.93%
7) Cons. Durables Barrow Hanley 5.88%
8) Matls & Services Ashland 5.14%
9) Capital Goods Hallmark 4.91%
10) Transportation Miller Howard 0.64%
11) S&P 500 Futures 5.68%
12) Cash Equivalents 1.49%
The Flex-Partners Funds Annual Report * December 31, 1999 Page 11
<PAGE>
The Flex-Partners Funds 1999 Annual Report
INTERNATIONAL EQUITY FUND
[PHOTO] Charles Brand, Portfolio Manager
The International Equity Fund finished 1999 with a strong 4th Quarter
return of 20.57% before sales charges. For the year, the Fund returned 30.07%
before sales charges. This performance compares favorably against the MSCI EAFE
Index* which returned 16.99% for the quarter and 26.96% for the year.
International markets began the year mixed, but gradually gained strength
as recovery in Japan and the Far East took hold, and merger activity swept
across Europe and the United Kingdom. The key to the strong performance of the
Fund was stock selection and sector allocation. In Asia, large-cap stocks tended
to outperform, benefiting from a wave of restructuring across the region.
Exposure to capital equipment, electronics, telecommunications, and technology
stocks helped the Fund.
In Europe, merger activity and corporate restructuring aided the Fund
throughout the year. Technology and telecom stocks gained strength near the end
of the year and helped fund returns. Returns from European investments were
reduced by a 6% depreciation in the euro/dollar exchange rate, and U.K. markets
were hampered by interest rate worries. For the year ahead we expect Europe and
Asia to see further support from economic recovery and corporate restructuring.
The U.K. may continue to underperform, constrained by rising interest rates and
heavy pressure on corporate profit margins. We also expect the strong technology
rally to continue in 2000.
* The MSCI EAFE Index is an unmanaged index, incurring no sales charges,
expenses, or fees. Past performance of an index is not a guarantee of future
results. It is not possible to invest directly in an index.
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 may be
magnified in countries with emerging markets, since those countries may have
relatively unstable governments and less established economies.
1999 PERFORMANCE
Average Annual Total Returns as of 12/31/99
- -----------------------------------------------------------------
MSCI EAFE
Before Sales Charges Index2
- -----------------------------------------------------------------
One Year 30.07% 26.96%
Life of Fund 1 19.65% --
- -----------------------------------------------------------------
- -----------------------------------------------------------------
MSCI EAFE
Net of Sales Charges Index2
- -----------------------------------------------------------------
One Year 22.61% 26.96%
Life of Fund 1 16.65% --
1 Inception Date 9/2/97
2 The MSCI Europe Asia Far East (EAFE) Index is an unmanaged index incurring
no sales charges, fees, or expenses. It is not possible to invest directly
in an index.
* Reflects deduction of 5.75% maximum sales charge.
See additional performance information on inside front cover.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 12
<PAGE>
[GRAPH] The following information was presented as a graph:
GROWTH OF $10,000
International International MSCI Europe
Equity Fund Equity Fund Asia Far East
Before Sales Charge After Sales Charge (EAFE) Index
09/02/97 $10,000 $ 9,425 $10,000
12/31/97 9,744 9,184 9,733
06/30/98 11,232 10,586 11,284
12/31/98 11,671 11,000 11,680
06/30/99 11,986 11,297 12,143
12/31/99 15,180 14,308 14,829
[GRAPH] The following information was presented as a pie chart:
REGIONAL HOLDINGS as of 12/31/99
1) Europe (ex. U.K.) 48.61%
2) Japan 27.01%
3) United Kingdom 18.67%
4) Pacific Rim (ex Japan) 3.33%
5) Australia/New Zealand 2.38%
The Flex-Partners Funds Annual Report * December 31, 1999 Page 13
<PAGE>
The Flex-Partners Funds Annual Report * December 31, 1999
PORTFOLIO HOLDINGS & FINANCIAL STATEMENTS
The Flex-Partners Funds Annual Report * December 31, 1999 Page 14
<PAGE>
MUTUAL FUND PORTFOLIO
Portfolio of Investments as of December 31, 1999
<TABLE>
<CAPTION>
SHARES OR
INDUSTRIES/CLASSIFICATIONS FACE AMOUNT VALUE
-------------------------- ----------- -----
<S> <C> <C>
MUTUAL FUNDS - 52.1%
Federated S&P 500 Maxcap Fund 584,857 $ 17,528,154
Invesco Strategic Financial Services Fund 582,951 15,518,157
Janus Mercury Fund 1,365,662 59,829,654
Mutual Shares Fund 387 7,901
TOTAL MUTUAL FUNDS
(Cost $75,578,885 ) 92,883,866
MONEY MARKET MUTUAL FUNDS - 42.9%
Charles Schwab Money Market Fund 923,528 923,528
Fidelity Cash Reserve Money Market Fund 35,695,344 35,695,344
Fidelity Core Money Market Fund 40,000,000 40,000,000
TOTAL MONEY MARKET MUTUAL FUNDS
(Cost $76,618,872 ) 76,618,872
U.S.TREASURY BILLS - 0.0%
* 4.30%, due 01/06/00 30,100 30,083
TOTAL U.S. TREASURY BILLS
(Cost $30,083 ) 30,083
REPURCHASE AGREEMENT - 5.0%
Bank of America Securities LLC, 4.60%, 01/03/00,
(Collateralized by $9,262,172 various commercial
papers, 5.50%, 03/14/00 - 03/24/00,
market value - $9,155,608) 8,976,000 8,976,000
TOTAL REPURCHASE AGREEMENT
(Cost $8,976,000 ) 8,976,000
TOTAL INVESTMENTS - 100.0%
(Cost $161,203,840) $178,508,821
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 1,305 29,087
Flex-funds Muirfield Fund 2,048 12,962
Flex-funds Total Return Utilities Fund 421 8,516
Flex-Partners International Equity Fund 959 16,451
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $62,776 ) $67,016
<FN>
* 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.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 15
<PAGE>
UTILITIES STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1999
<TABLE>
<CAPTION>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
<S> <C> <C>
COMMON STOCKS - 100.0%
ELECTRIC/GAS UTILITY - 7.2%
AGL Resources, Inc. 21,955 $ 373,235
MDU Resources Group, Inc. 14,220 284,400
NiSource Inc. 16,355 292,346
UtiliCorp United, Inc. 19,998 388,701
1,338,682
ELECTRIC UTILITY - 11.9%
Cinergy Corp. 11,420 273,366
Keyspan Corp. 25,190 584,093
LG&E Energy Corp. 27,864 485,879
Scottish Power PLC - ADR 10,469 293,121
TECO Energy, Inc. 31,115 577,572
2,214,031
NATURAL GAS (DISTRIBUTOR) - 18.3%
Columbia Energy Group 8,905 563,241
Eastern Enterprises 7,975 458,064
MCN Energy Group Inc. 40655 965,556
Nicor Inc. 4,975 161,687
WICOR, Inc. 14075 410,814
Williams Cos., Inc. 27550 841,997
3,401,359
OIL/GAS (DOMESTIC) - 20.2%
Enron Corp. 10,445 463,497
El Paso Natural Gas Co. 28,420 1,103,051
Kinder Morgan Energy Partners, L.P. # 19,724 817,313
Kinder Morgan Inc. 25,680 518,415
Peoples Energy Corp. 10,585 354,598
Questar Corp. 33,345 500,175
3,757,049
TELECOMMUNICATION EQUIPMENT - 0.9%
P-Com, Inc. # 20,000 176,875
176,875
TELECOMMUNICATION SERVICES - 34.2%
Alltel Corp. 7,420 613,541
AT&T Corp. 10,635 535,073
BCE, Inc. 9,395 847,312
CenturyTel, Inc. 17,035 807,033
Global Crossings Ltd. # 21,585 1,079,237
GTE Corp. 9,585 676,342
MCI Worldcom Inc. # 10,613 563,126
SBC Communications, Inc. 9,650 470,438
U.S. West Communications Group 10,950 788,400
6,380,502
WATER UTILITY - 7.3%
American Water Works Co., Inc. 33,600 714,000
Azurix Corp. # 73,000 652,437
1,366,437
TOTAL COMMON STOCKS
(Cost $16,563,595 ) 18,634,935
The Flex-Partners Funds Annual Report * December 31, 1999 Page 16
<PAGE>
INDUSTRIES/CLASSIFICATIONS SHARES OR FACE AMOUNT VALUE
-------------------------- --------------------- -----
U.S. TREASURY BILLS - 0.0%
* 4.30%, due 01/06/00 1,000 1,000
TOTAL U.S. TREASURY BILLS
(Cost $1,000 ) 1,000
TOTAL INVESTMENTS - 100.0%
(Cost $16,564,595 ) $18,635,935
TRUSTEE DEFERRED COMPENSATION**
Flex-funds Highlands Growth Fund 234 5,206
Flex-funds Muirfield Fund 349 2,210
Flex-funds Total Return Utilities Fund 66 1,333
Flex-Partners International Equity Fund 183 3,133
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $11,090 ) $11,882
<FN>
ADR:American Depositary Receipts
L.P.Limited Partnership
# Represents non-income producing securities.
* Pledged as collateral on Letter of Credit.
** Assets of affiliates to the Utility Stock Portfolio held for the
benefit of the Portfolio's Trustees in connection with the Trustees
Deferred Compensation Plan.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 17
<PAGE>
GROWTH STOCK PORTFOLIO
Portfolio of Investments as of December 31, 1999
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
COMMON STOCKS - 92.9%
AEROSPACE/DEFENSE - 0.7%
Boeing Co. 3,900 $ 161,606
General Dynamics Corp. 600 31,650
Lockheed Martin Corp. 1,870 40,906
Northrup Grumman Corp. 200 10,813
Raytheon Co. - Class B 1,000 26,563
Textron, Inc. 740 56,749
United Technologies Corp. 2,000 130,000
458,287
AIR TRANSPORTATION - 0.3%
AMR Corp. # 725 48,575
Delta Air Lines, Inc. 685 34,122
Frontier Airlines # 1,990 22,636
Southwest Airlines 2,437 39,297
USAir Group # 1,000 32,063
176,693
ALUMINUM - 0.3%
Aluminum Company of America 2,460 204,180
AUTO & TRUCK - 1.2%
Ford Motor Co. 4,900 261,231
General Motors Corp. 5,000 363,438
Genuine Parts Co. 5,400 133,988
TRW, Inc. 620 32,201
790,858
BANKING - 1.1%
Washington Mutual Savings Bank 2,303 59,590
Wells Fargo Co. 15,900 642,956
702,546
BEVERAGE -- ALCOHOLIC - 0.3%
Anheuser-Busch Cos., Inc. 2,900 205,538
BEVERAGE -- SOFT DRINK - 1.2%
Coca-Cola Co. 9,000 524,250
Pepsico, Inc. 7,600 267,900
792,150
BROADCASTING - 0.3%
SFX Entertainment Inc. # 3,900 141,131
World Wrestling Federation Entertainment Co. # 1,000 17,250
158,381
BUILDING MATERIALS - 0.1%
Masco Corp. 1,860 47,198
Vulcan Materials Co. 590 23,563
70,761
CAPITAL GOODS - 0.1%
Eaton Corp. 367 26,653
Ingersoll-Rand 839 46,197
72,850
The Flex-Partners Funds Annual Report * December 31, 1999 Page 18
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
CHEMICAL -- DIVERSIFIED - 1.0%
Air Products & Chemicals, Inc. 570 19,131
Dow Chemical Co. 1,210 161,686
E.I. du Pont de Nemours & Co. 3,650 240,444
Imperial Chemical Industries 680 28,943
Monsanto Corp. 2,900 103,313
Praxair, Inc. 840 42,263
Rohm & Haas Co. 1,185 48,215
643,995
CHEMICAL -- SPECIALTY - 0.1%
Eastman Chemical Co. 500 23,844
MacDermid Inc. 800 32,850
Sigma Aldrich 610 18,338
75,032
COMMERCIAL SERVICES - 0.3%
Cendant Corp. # 4,600 122,188
Dun & Bradstreet 1,470 43,365
165,553
COMPUTERS & PERIPHERALS - 4.8%
Apple Computer # 720 74,025
Compaq Computer Corp. 6,710 182,428
Dell Computer Corp. # 10,210 520,710
EMC Corp./Mass # 5,460 596,505
Gateway 2000, Inc. # 1,500 108,094
IBM Corp. 7,830 845,640
Micron Technology, Inc. # 820 63,755
QRS Corporation Delaware # 320 33,380
Sanmina Corp # 850 84,894
Seagate Technology Inc. # 950 44,234
Sun Microsystems # 7,460 577,684
3,131,349
COMPUTER SOFTWARE & SERVICES - 8.0%
America Online, Inc. # 10,710 806,597
BMC Software, Inc. # 1,460 116,709
Ceridian Co. # 840 18,113
Computer Associates International Inc. 2,380 166,451
Computer Sciences Corp. # 790 74,754
Compuware Corp. # 820 30,545
Electronic Data System Corp. 2,450 163,997
Microsoft Corp. # 25,100 2,930,425
Novell, Inc. # 1,490 59,507
Oracle Corp. # 7,400 829,263
Unisys Corp. # 1,270 40,561
5,236,922
CONSUMER NON-DURABLE - 2.3%
Corning Inc. 1,240 159,883
Fortune Brands, Inc. 7,800 257,888
Gillette Co. 5,800 238,888
Haggar Corp. 11,500 130,813
Procter & Gamble Co. 6,500 712,156
1,499,628
COSMETICS - 0.5%
Avon Products Inc. 3,300 108,900
Kimberly Clark 3,300 215,325
324,225
Growth Stock Portfolio, continued on next page
The Flex-Partners Funds Annual Report * December 31, 1999 Page 19
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Growth Stock Portfolio, continued
DATA PROCESSING - 0.5%
Automatic Data Processing, Inc. 3,300 177,788
First Data Corp. 2,170 107,008
Fiserv, Inc. # 910 34,864
319,660
DIVERSIFIED - 1.2%
Honeywell International Inc. 3,402 196,253
Minnesota Mining & Manufacturing Co. 1,570 153,664
Norfolk Southern Corp. 1,830 37,515
PPG Industries, Inc. 830 51,927
Tyco International 7,860 306,540
745,899
DRUG - 5.5%
Abbott Labs 6,830 248,014
Bristol Myers Squibb 10,870 697,718
Eli Lilly & Co. 4,550 302,575
Merck & Co., Inc. 10,830 726,287
Pfizer, Inc. 20,210 655,562
Pharmacia & Upjohn 1,470 66,150
Schering Plough Corp. 9,550 404,681
Warner Lambert Co. 4,800 393,300
3,494,287
DRUGSTORE - 0.2%
Rite Aid Corp. 11,400 127,538
ELECTRIC -- INTEGRATED - 0.2%
Edison International 1,800 47,138
FPL Group, Inc. 960 41,100
Teco Energy Inc. 2,930 54,388
142,626
ELECTRIC UTILITY - 0.5%
AES Corp. # 2,460 183,885
Duke Power Co. 2,940 147,368
331,253
ELECTRICAL EQUIPMENT - 4.3%
General Electric Corp. 17,552 2,712,858
ELECTRONIC COMPONENT SEMICONDUCTORS - 4.6%
Advanced Micro Devices Inc. # 1,520 43,985
Applied Materials, Inc. # 1,880 238,173
Caliper Technology # 580 38,715
Epcos AG - Sponsored ADR # 1,650 122,925
Intel 14,750 1,214,109
KLA -Tencor Corp. # 600 66,825
LSI Logic Corp. # 810 54,675
Maxim Integrated Products Inc. # 1,100 51,906
Motorola, Inc. 3,600 530,100
STMicroelectronics NV 860 130,236
Texas Instruments Inc. 3,620 349,783
Xilinx Inc. # 2,360 107,306
2,948,738
The Flex-Partners Funds Annual Report * December 31, 1999 Page 20
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
ELECTRONIC COMPONENTS - 0.3%
Emerson Electric 3,674 210,796
ELECTRONICS - 0.1%
Rockwell International Corp. 840 40,215
Scientific Atlanta 680 37,995
78,210
FINANCE - 6.3%
Bank One Corp. 4,326 138,432
BankAmerica Corp. 10,214 512,615
Chase Manhattan Corp. 3,900 302,981
Equifax, Inc. 710 16,729
Fannie Mae 6,600 412,088
First Union Corp. 4,968 163,634
FleetBoston Financial Corp. 7,008 243,966
Freddie Mac 9,300 437,681
Lehman Brothers Holdings, Inc. 1,500 127,031
Mellon Bank Corp. 7,200 245,250
Merrill Lynch & Co. 800 66,650
Metris Cos., Inc. 10,000 356,875
Morgan Stanley Dean Witter & Co. 1,800 256,950
PNC Bank Corp. 3,100 137,950
Providian Financial Corp. 5,650 514,503
Ryder Systems, Inc. 310 7,576
SLM Holding Corp. 4,000 169,000
4,109,911
FINANCIAL SERVICES - 3.6%
American Express Co. 1,700 282,625
Associates First Capital 10,400 285,350
Avery Dennison Corp. 920 67,045
Capital One Financial Corp. 20,600 992,663
Citigroup Inc. 11,995 667,972
Concord EFS Inc. # 690 17,768
H&R Block, Inc. 1,370 59,938
2,373,361
FOOD -- DIVERSIFIED - 1.3%
General Mills 4,800 171,600
Hershey Food Corp. 2,700 128,081
Safeway Inc. # 3,300 117,975
Sara Lee Corp. 10,200 225,038
Sysco Corp. 5,700 225,506
868,200
FOREST PRODUCTS - 0.2%
Georgia Pacific Corp. 860 43,645
Weyerhauser Co. 1,120 80,430
Willamette Industries, Inc. 640 29,720
153,795
GOLD/SILVER MINING - 0.1%
Barrick Gold Corp. 2,090 36,967
HEALTH - 1.3%
American Home Products 5,820 228,435
Johnson & Johnson 6,910 644,358
872,793
Growth Stock Portfolio, continued on next page
The Flex-Partners Funds Annual Report * December 31, 1999 Page 21
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Growth Stock Portfolio, continued
INSTRUMENTS -- CONTROLS - 0.0%
Johnson Controls Inc. 432 24,570
24,570
INSTRUMENTS -- SCIENTIFIC - 0.1%
PE Biosystems Group 380 45,719
INTERNET SERVICE - 0.5%
Yahoo, Inc. # 740 320,189
INSURANCE -- MULTILINE - 2.2%
Allstate 6,700 160,800
American International Group 10,543 1,139,962
PMI Group 3,300 161,081
1,461,843
MACHINERY - 0.3%
Caterpillar, Inc. 1,813 85,324
Deere & Co. 1,197 51,920
Dover Corp. 1,071 48,597
185,841
MANUFACTURING - 0.1%
Mueller Industries, Inc. # 1,150 41,688
Owens Illinois # 780 19,549
61,237
MARKETING SERVICES - 0.2%
Omnicom Group, Inc. 1,205 120,500
MATERIALS & SERVICES - 0.4%
Champion International Corp. 425 26,323
Dana Corp. 970 29,039
Ecolab, Inc. 1,970 77,076
Illinois Tool Works, Inc. 1,730 116,883
Sherwin-Williams Co. 1,070 22,470
271,791
MEDICAL PRODUCTS - 1.3%
Amgen, Inc. # 4,600 276,288
Biogen Inc.# 400 33,800
Guidant Corp. # 810 38,070
Human Genome # 890 135,836
IDEC Pharmaceuticals Corp. # 980 96,285
MedImmune, Inc. # 1,260 209,003
Millennium Pharmaceutical # 400 48,800
838,082
MEDICAL HMO - 0.0%
Wellpoint Health Networks # 390 25,716
MEDICAL SERVICES - 0.4%
Columbia/HCA Healthcare Corp. 2,410 70,643
Health Management # 5,120 68,480
IMS Health, Inc. 1,080 29,363
Shared Medical Systems 310 15,791
Tenet Healthcare Corp. # 2,230 52,405
236,682
MEDICAL SUPPLIES - 0.5%
Boston Scientific Co. # 1,200 26,250
Cardinal Health Inc 1,220 58,408
The Flex-Partners Funds Annual Report * December 31, 1999 Page 22
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Medtronic, Inc. 6,970 253,969
338,627
MULTIMEDIA - 1.0%
Time Warner Inc. 6,300 456,356
Viacom Inc Class B # 3,000 181,313
637,669
NATURAL GAS DISTRIBUTOR - 0.3%
MCN Corp. 4,770 113,288
Williams Cos., Inc. 2,600 79,463
192,751
NETWORKING PRODUCTS - 2.9%
3COM Corp. # 980 46,060
Cisco Systems, Inc. # 16,860 1,806,128
Network Appliance # 840 69,773
1,921,961
OFFICE AUTOMATION & EQUIPMENT - 1.2%
Hewlett Packard 5,620 639,275
Pitney Bowes, Inc. 1,325 64,014
Xerox Corp. 2,180 49,595
752,884
OIL/GAS -- DOMESTIC - 0.8%
Atlantic Richfield 1,700 147,050
Baker Hughes 1,540 32,436
Burlington Resources 1,000 33,063
Devon Energy 1,200 39,450
Enron Corp. 3,000 133,125
Noble Affiliates Inc. 2,100 45,019
Noble Drilling Co. # 1,300 42,575
USX Marathon Group 2,800 69,125
541,843
OIL/GAS -- INTERNATIONAL - 2.7%
Chevron Corp. 3,200 277,200
Exxon Corp. 18,362 1,479,289
Transocean Sedco 621 20,913
1,777,402
OILFIELD SERVICES/EQUIPMENT - 0.6%
Coastal Corp. 1,900 67,331
Kerr-McGee Corp. 1,000 62,000
Schlumberger Ltd. 3,200 179,600
Smith International Inc. # 1,500 74,531
383,462
OIL & NATURAL GAS - 0.1%
Apache Corp. 1,200 44,325
Amerada Hess 500 28,375
Ocean Energy, Inc. # 10,160 78,740
151,440
PAPER & FOREST PRODUCTS - 0.2%
International Paper 2,185 123,316
Mead Corp. 840 36,488
159,804
Growth Stock Portfolio, continued on next page
The Flex-Partners Funds Annual Report * December 31, 1999 Page 23
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
Growth Stock Portfolio, continued
PETROLEUM -- INTEGRATED - 1.4%
Conoco, Inc. - Class B 4,500 111,938
Occidental Petroleum Corp. 3,600 77,850
Royal Dutch Petroleum 9,700 587,456
Texaco 3,100 168,369
945,613
PUBLISHING - 0.4%
The Reader's Digest Association, Inc. 9,500 277,875
RAILROAD TRANSPORTATION - 0.2%
Burlington Northern Santa Fe 2,005 48,621
Kansas City Southern Industries, Inc. 540 40,298
Union Pacific Corp. 765 33,421
122,340
RENTAL -- AUTO/EQUIPMENT - 0.4%
The Hertz Corp. 5,600 280,700
280,700
RESTAURANT - 0.7%
McDonalds Corp. 6,500 262,031
Wendy's International, Inc. 10,400 216,450
478,481
RETAIL GROCERY - 0.2%
Albertson's, Inc. 3,700 119,325
RETAIL STORE - 2.2%
Action Performance # 23,400 269,100
Amazon.Com # 500 38,063
Kmart # 40,000 402,500
PETsMART, Inc. # 30,000 172,500
WalMart Stores, Inc. 8,000 553,000
1,435,163
RUBBER/PLASTICS - 0.5%
Newell Rubbermaid Co. 10,700 310,300
S&L / THRIFTS -- SOUTHERN U.S. - 0.1%
Greater Atlantic Financial Corp. # 10,000 44,375
SERVICES - 0.1%
Paychex Inc. 1,675 67,000
STEEL - 0.0%
Nucor Corp. 410 22,473
TELECOMMUNICATION EQUIPMENT - 3.6%
General Instrument Corp. # 890 75,650
JDS Uniphase Corp. # 1,960 316,173
Loral Space & Communications Ltd. # 10,110 245,799
Metromedia Fiber Network Inc. - Class A # 3,880 185,998
Nokia Corp. - ADR - Class A 150 28,659
Nortel Networks 6,300 636,300
P-Com, Inc. # 8,760 77,471
QUALCOMM, Inc. # 3,280 577,690
Sprint Corp. PCS Group # 2,285 234,213
2,377,953
TELECOMMUNICATION SERVICES - 11.6%
AT&T Corp. 17,095 860,092
Bell Atlantic Corp. 8,590 528,822
BellSouth Corp. 10,980 514,001
The Flex-Partners Funds Annual Report * December 31, 1999 Page 24
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
- -------------------------- ------ -----
CenturyTel, Inc. 1,730 81,959
Global Crossing LTD # 24,429 1,221,450
GTE Corp. 5,320 375,393
Lucent Technologies Inc. 14,700 1,102,500
MCI Worldcom, Inc. # 19,167 1,017,049
Nextel Communications # 2,630 271,219
Qwest Communications # 4,090 175,870
SBC Communications 17,674 861,608
Sprint Corp. FON Group 2,370 159,531
Teleglobe Inc. 5,720 129,773
Tellabs, Inc. # 1,590 102,058
U.S. West, Inc. 2,665 191,880
7,593,205
TOBACCO - 0.7%
Gallaher Group, PLC - ADR 11,400 175,275
Philip Morris Cos. 12,500 287,500
462,775
TOYS - 1.9%
Hasbro Bradley Inc. 9,450 179,550
JAKKS Pacific Co. # 7,600 142,025
Toys "R" Us Inc. # 64,000 916,000
1,237,575
TRANSPORTATION - 0.1%
FDX Corp. # 1,000 40,938
TRUCKING/TRANSPORTATION LEASING - 0.0%
CSX, Corp. 1,017 31,908
WATER UTILITY - 0.2%
Azurix Corp. # 16,095 143,849
TOTAL COMMON STOCKS
(Cost $43,996,840 ) 60,677,701
U.S. TREASURY OBLIGATIONS - 0.9%
U.S. Treasury Bills
** 4.30% 01/06/00 6,000 5,997
* 5.04% 03/09/00 600,000 594,112
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $600,285 ) 600,109
REPURCHASE AGREEMENT - 6.2%
Bank of America Securities LLC, 4.60%,
01/03/00, (Collateralized by $4,165,707
various commercial papers, 5.50%,
03/14/00 - 03/24 4,037,000 4,037,000
TOTAL REPURCHASE AGREEMENT
(Cost $4,037,000 ) 4,037,000
TOTAL INVESTMENTS - 100.0%
(Cost $48,634,125 ) $65,314,810
Growth Stock Portfolio, continued on next page
The Flex-Partners Funds Annual Report * December 31, 1999 Page 25
<PAGE>
Growth Stock Portfolio, continued
CONTRACTS VALUE
--------- -----
FUTURES CONTRACTS
Long, S&P 500 Futures, face amount 10 3,710,500
$3,610,500 expiring March 2000
$3,710,500
TRUSTEE DEFERRED COMPENSATION***
Flex-funds Highlands Growth Fund 483 10,771
Flex-funds Muirfield Fund 775 4,908
Flex-funds Total Return Utilities Fund 171 3,462
Flex-Partners International Equity Fund 377 6,458
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $24,138 ) $25,599
ADR: American Depositary Receipt
# 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.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 26
<PAGE>
INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
<S> <C> <C>
COMMON STOCKS - 100.0%
ADVERTISING - 0.8%
Telefonica Publicidad e Informacion, SA# 2,800 $ 135,620
WPP Group PLC 2,620 41,525
177,145
AEROSPACE/DEFENSE - 0.6%
British Aerospace PLC 12,118 80,269
Finmeccanica Spa # 60,000 68,663
148,932
AIR TRANSPORT - 0.3%
Cathay Pacific Airways 6,000 10,690
Japan Airlines Co. 10,000 29,639
Singapore Airlines Ltd. 2,500 28,361
68,690
APPAREL - 0.2%
Alexon Group PLC # 3,181 5,910
Espirit Holdings Ltd. 12,000 12,967
Onward Kashiyama Co., Ltd. 2,000 27,389
46,266
AUTO & TRUCK - 3.2%
Autobacs Seven 300 9,831
Daimler Chrysler AG 1,700 131,575
GKN Ord. 2,934 46,217
Honda Motor Co., Ltd. 2,000 74,342
Nissan Motor Co., Ltd. 7,000 27,526
Toyota Motor Corp. 9,000 435,782
725,273
AUTOPARTS - 0.3%
Denso Corp. 3,000 71,603
BANKING - 12.6%
Abbey National PLC # 2,519 40,290
Allied Irish Banks PLC 7,632 86,727
Argentaria, Caja Postal y Banco 4,000 93,679
Hipotecario de Espana, SA
Asahi Bank Ltd. 5,000 30,813
Banca Nazionale del Lavoro # 31,440 104,467
Bank of Fukuoka Ltd. 4,000 27,741
Bank of Tokyo-Mitsubishi Ltd. 7,000 97,506
Bank of Yokohama Ltd. 5,000 23,036
Banque Nationale de Paris 750 68,965
Barclays PLC 3,548 102,147
Chiba Bank Ltd. 6,000 33,219
Christiania Bank Og Kreditkasse 19,100 93,931
Commonwealth Bank of Australia 2,050 35,325
Credit Lyonnais # 1,600 72,920
Credit Suisse Group 500 99,497
Dai-Ichi Kangyo Bank Ltd. 6,000 56,050
Daiwa Bank Ltd. 6,000 17,607
DBS Group Holdings Ltd. 2,395 39,246
Deutsche Bank AG 1,720 145,468
Entrium Direct Bankers AG # 4,700 71,715
Halifax PLC 3,230 35,824
Hang Seng Bank Ltd. 3,600 41,101
The Flex-Partners Funds Annual Report * December 31, 1999 Page 27
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
HSBC Holdings PLC 20,157 281,194
HypoVereinsbank AG 1,400 95,988
Industrial Bank of Japan Ltd. 6,000 57,811
ING Groep NV 2,796 168,238
Malayan Banking Bhd 2,000 7,106
Mitsubishi Trust 2,000 17,607
National Australia Bank Ltd. 3,190 48,829
National Bank of Greece SA 780 57,593
Overseas-Chinese Banking Corp., Ltd. 3,150 28,929
Royal Bank of Scotland Group PLC 2,063 36,596
San Paolo - IMI SpA 5,600 75,835
Sanwa Bank Ltd. 4,000 48,636
Schroders PLC 975 19,627
Softbank Corp. 200 191,333
Sumitomo Bank Ltd. 9,000 123,164
Sumitomo Trust 4,000 26,998
Tokai Bank Ltd. 5,000 31,498
Unicredito Italiano Spa 25,000 122,470
United Overseas Bank Ltd. 2,112 18,635
2,875,361
BEVERAGE -- ALCOHOLIC - 0.5%
Bass PLC 2,244 27,934
Diageo PLC 7,240 58,251
Foster's Brewing Group Ltd. 8,300 23,828
Fraser & Neave Ltd. 1,000 3,692
113,705
BROADCASTING -- CABLE TV - 0.7%
British Sky Broadcasting Group PLC 3,910 62,949
Reuters Holdings PLC 4,268 58,576
Television Broadcasts Ltd. 1,000 6,818
Tokyo Broadcasting System, Inc. 1,000 33,845
162,188
BROADCASTING & PUBLISHING - 0.4%
Austar United Communications Ltd. # 3,900 15,629
News Corporation Ltd. 8,660 84,143
99,772
BUILDING & CONSTRUCTION - 1.8%
Acciona SA 1,500 84,324
AMEC plc 3,000 11,972
Compagnie de Saint Gobain 400 74,968
CRH PLC 5,040 108,271
Obayashi Corp. 14,000 66,145
RMC Group PLC 1,684 23,126
Sekisui House 3,000 26,558
Tostem Corp. 1,000 17,950
413,314
BUILDING MATERIALS - 0.1%
Meyer International PLC 2,150 13,356
CHEMICALS - 1.6%
Clariant 215 102,600
Denki Kagaku Kogyu 7,000 20,884
Imperial Chemical Industries 2,150 22,769
Laporte 1,130 9,858
Nippon Sanso Corp. 4,000 11,738
SGL Carbon AG 1,000 66,254
Shin-Etsu Chemical Co., Ltd. # 3,000 129,121
363,224
The Flex-Partners Funds Annual Report * December 31, 1999 Page 28
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
CHEMICALS -- DIVERSIFIED - 1.5%
Aventis SA 4,550 262,281
BOC Group PLC 530 11,388
Dainippon Ink & Chemicals 3,000 8,892
Henkel KGaA 1,150 75,615
358,176
COMPUTERS & PERIPHERALS - 2.9%
Atos SA # 425 70,224
Fujitsu Ltd. 5,000 227,918
Itochu Techno-Science Corp. 100 62,310
Logica PLC 1,630 42,056
Misys PLC 2,982 46,491
NEC Corp. 3,000 71,457
Netcom AB # 1,150 81,060
The Sage Group PLC # 4,790 58,466
659,982
CONTAINERS -- PAPER & PLASTIC - 0.1%
Bunzl PLC 6,100 33,606
CONSUMER DURABLES - 0.2%
Unilever PLC 6,582 48,437
COSMETICS - 0.4%
Kao Corp. 3,000 85,542
DATA PROCESSING - 0.0%
Industri-Matematik International Corp. - 2,000 12,250
ADR #
DISTRIBUTION WHOLESALER - 0.3%
Marubeni Corp. 10,000 41,964
Mitsui & Co. 5,000 34,970
76,934
DIVERSIFIED - 2.8%
Arriva PLC 146 571
Bodycote International PLC 1,407 6,797
Brambles Industries Ltd. 1,050 29,056
Broken Hill Proprietary Co., Ltd. 3,850 50,588
Granada Group PLC 2,954 29,947
Hays PLC 900 14,337
Hutchison Whampoa Ltd. 8,000 116,293
Invensys PLC 8,738 47,575
Lagardere SCA 2,000 108,416
Mitsubishi Corp. 5,000 38,589
Swire Pacific Ltd. 3,000 17,714
Vivendi 2,000 179,990
639,873
DRUG - 2.1%
Pharmacia & Upjohn, Inc. 1,700 77,347
Rhodia SA 4,050 91,232
Roche Holdings AG 7 83,181
Sankyo Co., Ltd. 2,000 41,084
Smithkline Beecham PLC 13,842 176,669
469,513
ELECTRIC PRODUCTION -- MISCELLANEOUS - 1.5%
Chubu Electric Power Co., Inc. 1,800 29,316
CLP Holdings Ltd. 7,500 34,540
The Flex-Partners Funds Annual Report * December 31, 1999 Page 29
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
Hitachi Ltd. 11,000 176,465
Sanyo Electric Co., Ltd. 9,000 36,535
Scottish Power PLC 4,963 37,605
Tenaga Nasional Bhd 1,000 2,579
Tokyo Electric Power Co. 1,400 37,523
354,563
ELECTRONIC COMPONENT -- MISCELLANEOUS - 7.4%
Arm Holdings PLC # 220 14,846
Electrocomponents PLC 2,150 23,811
Epcos AG # 970 72,543
Hirose Electric Co., Ltd. 500 112,051
Idec Izumi Corp. 2,000 22,890
Johnson Electric Holdings Ltd. 2,000 12,838
Kyocera Corp. 700 181,454
Mabuchi Motor Co., Ltd. 900 156,970
Matsushita Electric Industrial Co., Ltd. 4,000 110,731
Minebea Co., Ltd. 2,000 34,295
Murata Manufacturing Co., Ltd. 1,000 234,765
Perlos Oyj # 4,000 140,539
Sony Corp. 1,000 296,390
STMicroelectronics NV 1,100 168,727
Sumitomo Electric Industries 4,000 46,210
Yakult Honsha Co., Ltd. 6,000 52,235
1,681,295
ENGINEERING RESEARCH & DEVELOPMENT - 0.1%
Sembcorp Industries Ltd. 3,000 4,088
Singapore Technologies Engineering Ltd. 6,000 9,292
13,380
ENTERTAINMENT/MEDIA - 0.3%
Pearson PLC 2,146 69,480
FINANCE - 1.8%
Acom Co., Ltd. 500 48,958
Lend Lease Corp., Ltd. 1,300 18,225
Lloyds TSB Group PLC 12,052 150,805
Nomura Securities Co., Ltd. 5,000 90,238
Orix Corp. 100 22,518
Takefuji Corp. 400 50,044
380,788
FINANCIAL SERVICES - 0.8%
Daiwa Securities Group, Inc. 4,000 62,565
Legal & General Group PLC 16,724 45,528
Unidanmark A/S 1,150 81,105
189,198
FOOD -- DIVERSIFIED - 2.7%
Cadbury Schweppes PLC 5,920 35,771
Carrefour SA 750 137,854
Danone 300 70,470
Nestle SA 100 183,401
Nippon Meat Packers, Inc. 2,000 25,922
Nissin Food Products 1,000 23,525
Royal Canin SA 1,300 91,285
Tesco PLC 16,517 50,234
618,462
HOTEL/GAMING - 0.7%
Accor SA 2,800 134,833
The Flex-Partners Funds Annual Report * December 31, 1999 Page 30
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
Genting Bhd 1,000 3,553
Hilton Group PLC 6,073 19,451
157,837
HOUSEHOLD PRODUCTS - 1.3%
Asahi Glass Co., Ltd. 5,000 38,687
Electrolux AB 4000 100,897
Hunter Douglas NV 2,714 73,560
Societe Europeenne des Satellites 500 72,779
285,923
INSURANCE -- MULTILINE - 0.6%
Allied Zurich AG # 3,516 41,439
Prudential Corp., PLC 3,625 71,450
Royal & Sun Alliance Insurance Group PLC 3,477 26,486
139,375
INSURANCE - 2.3%
Axa 1,050 145,879
Fortis AG 2,500 89,895
Muenchener Rueckversicherungs - 430 108,561
Gesellschaft AG
Skandia Forsakrings AB 4,500 136,317
Tokio Marine & Fire Insurance Co. 4,000 46,757
527,409
INTERNET -- SOFTWARE - 0.8%
Brokat Infosystems AG # 520 104,922
Freenet.de AG # 750 82,065
186,987
INVESTMENT COMPANIES - 0.5%
Amvescap PLC 1,100 12,796
NH Hoteles SA # 7,000 78,561
Parques Reunidos SA # 3,000 16,262
Sime Darby Bhd 1,000 1,269
108,888
MACHINERY - 3.0%
Amada Co., Ltd. 6,000 32,808
Kubota Corp. 11,000 42,072
Mannesmann AG 1,200 290,313
Schneider Electric SA 1,500 117,375
Sidel SA 750 77,171
Toshiba Machine Co., Ltd. 15,000 24,210
Usinor SA 5,000 93,609
677,558
MANUFACTURING - 2.0%
ABB Ltd. # 891 109,099
FKI PLC 4,770 18,495
Mitsubishi Heavy Industries Ltd. 9,000 30,021
NTN Corp. 8,000 23,633
Siemens AG 1,200 152,686
Veba AG 2,500 120,889
454,823
MEDICAL PRODUCTS - 3.6%
AstraZeneca Group PLC 4,068 168,776
Glaxo Wellcome PLC 7,537 213,094
Novartis AG 215 316,045
Takeda Chemical Industries 2,000 98,797
Terumo Corp. 1,000 26,704
823,416
The Flex-Partners Funds Annual Report * December 31, 1999 Page 31
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
MINING - 0.5%
Mitsui Mining & Smelting Co., Ltd. 5,000 23,623
Rio Tinto Ltd. 1,590 34,179
Rio Tinto PLC 2,260 54,586
112,388
NETWORKING PRODUCT - 0.5%
Equant NV # 1,000 113,134
OFFICE AUTOMATION & EQUIPMENT - 0.3%
Canon, Inc. 2,000 79,429
OIL & NATURAL GAS - 7.1%
Amp Ltd. 2,140 23,661
BG PLC 7,196 46,501
British Petroleum Co., PLC 44,658 449,130
Centrica PLC # 12,070 34,223
ENI SpA 16,650 91,259
Hong Kong & China Gas Co., Ltd. 8,800 12,056
LASMO PLC 6,900 13,126
Nippon Oil Co. 4,000 17,607
PowerGen PLC 1,900 13,660
Repsol - YPF, SA 6,500 150,206
Royal Dutch Petroleum Co. 5,250 320,692
Shell Transport & Trading Co. 1,618 13,449
Tokyo Gas Co. 23,000 56,021
Total Fina SA 2,748 365,512
1,607,103
OPTICAL SUPPLIES - 0.1%
Paris Miki, Inc. 400 28,720
PAPER & FOREST PRODUCTS - 1.5%
Nippon Paper Industries Co., Ltd. 2,000 11,014
Stora Kopparbergs Bergslags Aktiebolag 14,877 256,019
UPM - Kymmene Oyj 1,600 64,246
331,279
PRINTING -- COMMERCIAL - 0.2%
Dai Nippon Printing Co., Ltd. 3,000 47,833
PROTECTION -- SAFETY EQUIPMENT - 0.5%
Secom Co., Ltd. 1,000 110,046
PUBLISHING - 1.0%
Johnston Press PLC 2,046 12,065
Singapore Press Holdings Ltd. 946 20,499
South China Morning Post Holdings Ltd. 9,000 7,757
Verenigde Nederlandse Uitgeversbedrijven 3,400 178,095
Verenigd Bezit
218,416
REAL ESTATE MANAGEMENT & INVESTMENT - 1.5%
British Land Co., PLC 3,668 24,297
Chelsfield PLC 1,620 8,218
Cheung Kong Holdings Ltd. 6,000 76,221
City Developments Ltd. 4,000 23,409
DBS Land Ltd. 1,000 1,969
HKR International Ltd. 12,080 8,469
Land Securities PLC 2,094 23,478
Mitsubishi Estate Co., Ltd. 9,000 87,773
New World Development Co., Ltd. 4,000 9,005
Sun Hung Kai Properties Ltd. 5,000 52,100
Westfield Holdings Ltd. 4,200 26,157
341,096
The Flex-Partners Funds Annual Report * December 31, 1999 Page 32
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
RECREATION - 0.2%
TAB Ltd. 9,590 17,514
TABCORP Holdings Ltd. 2,800 18,972
36,486
RETAIL - 0.8%
Coles Myer Ltd. 3,200 16,540
Cycle & Carriage Ltd. 1,000 3,091
Isetan Co., Ltd. 7,000 51,355
Matalan PLC 600 16,503
Next PLC 2,200 21,113
Otsuka Kagu Ltd. 200 53,800
Ryohin Keikaku Co. Ltd. 100 20,063
182,465
RETAIL GROCERY - 0.7%
Ito-Yokado Co., Ltd. 1,000 108,579
Superdiplo SA # 3,000 57,219
165,798
RETAIL STORE - 0.2%
Debenhams PLC 1,627 5,099
Kingfisher PLC 3,277 36,372
41,471
SHIP BUILDING - 0.0%
Keppel Corp., Ltd. 2,000 5,234
STEEL -- INTEGRATED - 0.6%
Corus Group PLC 9,900 25,751
Kawasaki Steel Corp. 23,000 41,172
Nippon Steel Corp. 28,000 65,460
132,383
TELECOMMUNICATIONS - 5.9%
Cable & Wireless PLC 26,062 75,268
DDI Corp. 1 13,695
Deutsche Telekom AG 3,500 251,213
Europolitan Holdings AB 3,500 61,882
Fujikura 7,000 27,800
Nippon Telegraph & Telephone Corp. 27 462,193
Portugal Telecom SA 12,800 139,929
PT Multimedia # 1,250 70,859
Singapore Telecommunications Ltd. 12,000 24,778
Swisscom AG 170 68,834
Telecom Corporation of New Zealand Ltd. 7,300 34,249
Telestra Corp., Ltd. # 1,100 3,881
Versatel Telecom International NV # 3,000 105,404
1,339,985
TELECOMMUNICATION EQUIPMENT - 8.6%
Alcatel Alsthom 950 217,434
France Telecom SA 2,700 355,875
Marconi PLC 5,158 91,291
Nokia Oyj 2,850 514,975
Telefonaktiebolaget LM Ericsson 4,900 315,928
Teleste Corp. 6,325 102,859
Vodafone AirTouch PLC 72,805 360,811
1,959,173
TELECOMMUNICATION SERVICES - 4.1%
British Telecommunications PLC 14,574 356,247
The Flex-Partners Funds Annual Report * December 31, 1999 Page 33
<PAGE>
SHARES OR FACE
INDUSTRIES/CLASSIFICATIONS AMOUNT VALUE
-------------------------- ------ -----
China Telecom Ltd. # 2,000 12,504
KPNQwest NV # 2,500 165,886
Rank Group PLC 2,537 8,034
Sonera Group Oyj 2,500 170,780
Telekom Malaysia Bhd 1,000 3,869
Telestra Corp., Ltd. 11,300 61,467
Thus PLC # 2,000 12,537
United Pan-Europe Communications NV # 1,100 140,238
931,562
TEXTILE PRODUCTS - 0.1%
Toray Industries, Inc. 3,000 11,621
TOBACCO - 0.2%
British American Tobacco Bhd 200 1,527
British American Tobacco PLC 6,120 34,779
36,306
TRANSPORTATION - 1.6%
East Japan Railway Co. 9 48,508
Malaysia International Shipping Bhd 1,000 1,645
National Express Group PLC 989 11,664
Neptune Orient LNS # 2,000 2,677
Nippon Yusen KK 6,000 24,533
Peninsular and Oriental Steam Navigation Co. 2,449 40,872
Railtrack Group PLC 1,999 33,588
Stagecoach Holdings PLC 2,700 6,958
TNT Post Group NV 2,220 63,402
Tokyu Corp. 6,000 14,614
Yamato Transport Co., Ltd. 3,000 116,209
364,670
TRAVEL SERVICES - 0.8%
Airtours PLC 1,880 11,542
Amadeus Global Travel Distribution SA # 10,750 169,964
181,506
WATER UTILITY - 0.2%
Kurita Water Industries Ltd. 2,000 31,772
Severn Trent PLC 568 5,644
37,416
TOTAL COMMON STOCKS
(Cost $17,080,297 ) 22,748,044
TOTAL INVESTMENTS - 100.0%
(Cost $17,080,297 ) 22,748,044
TRUSTEE DEFERRED COMPENSATION*
Flex-funds Highlands Growth Fund 223 4,977
Flex-funds Muirfield Fund 348 2,200
Flex-funds Total Return Utilities Fund 74 1,497
Flex-Partners International Equity Fund 173 2,973
TOTAL TRUSTEE DEFERRED COMPENSATION
(Cost $10,980 ) $11,647
</TABLE>
The Flex-Partners Funds Annual Report * December 31, 1999 Page 34
<PAGE>
ADR: American Depositary Receipt
# Represents non-income producing securities.
* 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 12/31/99.
Australia - 2.23% Malaysia - 0.09%
Belgium - 0.71% Netherlands - 5.35%
Denmark - 0.36% New Zealand - 0.15%
Finland - 4.36% Norway - 0.41%
France - 13.18% Portugal - 0.93%
Germany - 8.50% Singapore - 0.94%
Greece - 0.25% Spain - 2.79%
Hong Kong - 2.30% Sweden - 4.52%
Ireland - 0.86% Switzerland - 4.23%
Italy - 2.03% United Kingdom -
Japan - 27.01% United States - 0.13%
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 35
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
TACTICAL ASSET UTILITY CORE
ALLOCATION GROWTH EQUITY
FUND FUND FUND
<S> <C> <C> <C>
Assets:
Investment in corresponding
portfolio, at value $22,727,739 $4,246,417 $12,347,322
Receivable for capital stock issued 29,582 --- 339,702
Receivable from investment adviser 583 14,890 6,048
Unamortized organization costs 3,631 2,657 5,166
Other assets 5,649 5,201 4,792
Total Assets 22,767,184 4,269,165 12,703,030
Liabilities:
Payable for capital stock redeemed 2,496 1,675 1,102
Dividends payable 336 396 ---
Accrued transfer agent and
administrative fees 3,165 822 1,456
Accrued 12b-1 and shareholder
service fees -- Class A 755 2,525 8,763
Accrued 12b-1 and shareholder
service fees -- Class C 58,438 8,463 13,582
Organizational costs due to adviser 4,524 3,472 2,108
Other accrued liabilities 5,191 13,667 56,874
Total Liabilities 74,905 31,020 83,885
Net Assets 22,692,279 4,238,145 12,619,145
Components of Net Assets:
Capital 21,858,833 3,385,401 10,175,946
Accumulated undistributed (distributions
in excess of) net investment income 358,444 (1,159) (1,853)
Accumulated undistributed net realized gains
(losses) from investment transaction (427,817) 434,295 11,673
Net unrealized appreciation of investments
of investments 902,819 419,608 2,433,379
Total Net Assets $22,692,279 $4,238,145 $12,619,145
Net Assets:
Class A Shares $624,722 $2,081,748 $7,113,091
Class C Shares 22,067,557 2,156,397 5,506,054
22,692,279 4,238,145 12,619,145
Outstanding units of beneficial interest
(shares): (indefinite number of shares
authorized, $0.10 par value)
Class A Shares 49,968 105,517 389,176
Class C Shares 1,559,910 110,727 301,859
1,609,878 216,244 691,035
Net asset value -- redemption price per share:
Class A Shares $12.50 $19.73 $18.28
Class C Shares * $14.15 $19.47 $18.24
Sales charge -- Class A Shares 5.75% 5.75% 5.75%
Maximum offering price per share --
Class A Shares (100%/(100% - sales
charge) of net asset value
adjusted to nearest cent) $13.26 $20.93 $19.40
<FN>
* Redemption price varies based upon holding period.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 36
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TACTICAL ASSET UTILITY CORE
ALLOCATION GROWTH EQUITY
FUND FUND FUND
<S> <C> <C> <C>
Net Investment Income from
Corresponding Portfolio:
Interest $447,830 $8,790 $53,200
Dividends 23,091 111,123 115,735
Expenses (156,877) (49,687) (126,019)
Total Net Investment Income from
Corresponding Portfolio 314,044 70,226 42,916
Fund Expenses:
Administrative fee 9,089 1,838 5,481
Transfer agent fees 21,997 8,211 11,613
Shareholder service -- Class A Shares 488 4,415 18,594
Shareholder service -- Class C Shares 44,957 4,777 8,810
Audit fees 1,995 1,997 1,944
Legal fees 1,542 1,082 919
Printing 7,273 1,622 2,023
Amortization of organizational costs 8,308 5,851 2,000
Postage 560 646 734
12b-1 fees -- Class A Shares 488 4,415 18,594
12b-1 fees -- Class C Shares 134,872 14,332 26,431
Registration and filing fees 16,310 12,859 13,969
Insurance 333 1,555 42
Other expenses 5,907 2,504 3,499
Total Expenses 254,119 66,104 114,653
Expenses reimbursed
by investment adviser (23,443) (40,486) (38,740)
Net Expenses 230,676 25,618 75,913
NET INVESTMENT INCOME (LOSS) 83,368 44,608 (32,997)
NET REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
Net realized gains (losses) from
futures contracts (709,204) --- 45,611
Net realized gains (losses) from
investment transactions 3,933,976 1,032,830 10,561
Net change in unrealized appreciation
of investments (909,565) (459,097) 1,925,520
NET GAIN FROM INVESTMENTS 2,315,207 573,733 1,981,692
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,398,575 $618,341 $1,948,695
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 37
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
INTERNATIONAL
EQUITY
FUND
Assets:
Investments, at value (cost $17,080,297) $22,748,044
Cash 717,323
Receivable for capital stock issued 8,493
Dividends, interest and tax reclaims
receivable, at value 49,180
Receivable from investment adviser 10,190
Unamortized organization costs 15,553
Trustee Deferred Compensation Plan asset, 11,647
at value ($10,980)
Other assets 7,220
Total Assets 23,567,650
Liabilites:
Accrued management fees 18,652
Accrued fund accounting fees 2,361
Accrued transfer agent fees 1,787
Accrued administrative fees 1,359
Accrued 12b-1 distribution and shareholder service fees 27,506
Trustee Deferred Compensation Plan, at value 11,647
Other accrued liabilities 30,212
Total Liabilities 93,524
Net Assets $23,474,126
Components of Net Assets:
Capital $17,359,464
Accumulated undistributed net realized gains
from investment and foreign currency transactions 446,914
Net unrealized appreciation of
investments and foreign currency 5,667,748
Total Net Assets $23,474,126
Outstanding units of beneficial interest (shares): 1,351,211
Net asset value -- redemption price per share: $17.37
Maximum sales charge 5.75%
Maximum offering price per share
(100%/(100% - sales charge) of net asset value
adjusted to nearest cent) $18.43
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
INTERNATIONAL
EQUITY
FUND
Investment Income:
Interest $2,759
Dividends 364,500
Foreign taxes withheld (38,471)
Total Investment Income 328,788
Expenses:
Investment management fees 191,375
Administration fees 9,569
Distribution (12b-1) fees 45,690
Fund accounting fees 29,999
Transfer agent fees 19,138
Audit fees 16,870
Legal fees 1,109
Custody fees 106,725
Trustees fees and expenses 9,570
Postage expense 1,233
Registration expense 8,731
Printing expense 3,248
Amortization of organizational costs 5,825
Other expenses 4,650
Total Expenses 453,732
Expenses reimbursed by investment adviser (70,780)
Net Expenses 382,952
NET INVESTMENT LOSS (54,164)
NET REALIZED AND UNREALIZED GAINS
FROM INVESTMENTS:
Net realized gains from investments
and foreign currency transactions 2,041,862
Net change in unrealized appreciation
of investments 3,448,137
NET GAIN FROM INVESTMENTS 5,489,999
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $5,435,835
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 38
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $83,368 $1,993 $81,375 $44,608 $25,965 $18,643
Net realized gains from investment and
futures contract transactions 3,224,772 16,691 3,208,081 1,032,830 476,568 556,262
Net change in unrealized appreciation
of investments (909,565) 29,830 (939,395) (459,097) (184,055) (275,042)
Net increase in net assets
resulting from operations 2,398,575 48,514 2,350,061 618,341 318,478 299,863
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (83,332) (1,970) (81,362) (44,608) (25,965) (18,643)
In excess of net investment income --- --- --- (966) (966) ---
From net realized gains (3,224,772) (16,691) (3,208,081) (593,913) (213,464) (380,449)
In excess of net realized gains (347,380) (44,469) (302,911) --- --- ---
Net decrease in net assets resulting
from dividends and distributions (3,655,484) (63,130) (3,592,354) (639,487) (240,395) (399,092)
CAPITAL TRANSACTIONS:
Issued 12,993,531 621,513 12,372,018 4,161,745 727,872 3,433,873
Reinvested 3,646,140 63,034 3,583,106 625,059 226,485 398,574
Redeemed (7,730,764) (103,955) (7,626,809) (3,376,965) (500,964) (2,876,001)
Net increase (decrease) in net assets
resulting from capital share
transactions 8,908,907 580,592 8,328,315 1,409,839 453,393 956,446
TOTAL INCREASE IN NET ASSETS 7,651,998 565,976 7,086,022 1,388,693 531,476 857,217
NET ASSETS - Beginning of period 15,040,281 58,746 14,981,535 2,849,452 1,550,272 1,299,180
NET ASSETS - End of period $22,692,279 $624,722 $22,067,557 $4,238,145 $2,081,748 $2,156,397
SHARE TRANSACTIONS:
Issued 870,788 49,320 821,468 196,019 35,483 160,536
Reinvested 278,268 5,411 272,857 32,155 11,528 20,627
Redeemed (520,515) (8,998) (511,517) (166,022) (24,885) (141,137)
Change in shares 628,541 45,733 582,808 62,152 22,126 40,026
</TABLE>
<TABLE>
<CAPTION>
CORE EQUITY FUND INTERNATIONAL
TOTAL CLASS A CLASS C EQUITY FUND
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) ($32,997) ($16,936) ($16,061) ($54,164)
Net realized gains from investment and
futures contract transactions 56,172 173,049 (116,877) 2,041,862
Net change in unrealized appreciation
of investments 1,925,520 1,119,695 805,825 3,448,137
Net increase in net assets
resulting from operations 1,948,695 1,275,808 672,887 5,435,835
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
From net investment income --- --- --- ---
In excess of net investment income --- --- --- ---
From net realized gains (100,611) (100,611) --- (1,691,362)
In excess of net realized gains (87,247) --- (87,247) ---
Net decrease in net assets resulting
from dividends and distributions (187,858) (100,611) (87,247) (1,691,362)
CAPITAL TRANSACTIONS:
Issued 13,859,799 5,554,357 8,305,442 1,527,830
Reinvested 185,510 99,657 85,853 1,622,117
Redeemed (11,027,500)(5,090,750)(5,936,750) (1,693,662)
Net increase (decrease) in net assets
resulting from capital share
transactions 3,017,809 563,264 2,454,545 1,456,285
TOTAL INCREASE IN NET ASSETS 4,778,646 1,738,461 3,040,185 5,200,758
NET ASSETS - Beginning of period 7,840,499 5,374,630 2,465,869 18,273,368
NET ASSETS - End of period $12,619,145 $7,113,091 $5,506,054 $23,474,126
SHARE TRANSACTIONS:
Issued 822,113 333,876 488,237 99,602
Reinvested 10,559 5,668 4,891 99,846
Redeemed (653,451) (301,269) (352,182) (111,391)
Change in shares 179,221 38,275 140,946 88,057
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 39
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
TACTICAL ASSET ALLOCATION FUND UTILITY GROWTH FUND
TOTAL CLASS A CLASS C TOTAL CLASS A CLASS C
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $53,931 $216 $53,715 $29,239 $17,208 $12,031
Net realized gains (losses) from
investment and futures contract
transactions 902,170 3,583 898,587 (5,391) (22,770) 17,379
Net change in unrealized
appreciation of investments 2,504,806 9,221 2,495,585 288,302 206,323 81,979
Net increase in net assets
resulting from operations 3,460,907 13,020 3,447,887 312,150 200,761 111,389
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (53,931) (216) (53,715) (28,275) (16,244) (12,031)
In excess of net investment income --- --- --- (388) --- (388)
From net realized gains (288,528) (1,127) (287,401) --- --- ---
Net decrease in net assets resulting
from dividends and distributions (342,459) (1,343) (341,116) (28,663) (16,244) (12,419)
CAPITAL TRANSACTIONS:
Issued 1,537,614 9,651 1,527,963 1,234,768 899,057 335,711
Reinvested 343,504 1,343 342,161 27,166 15,269 11,897
Redeemed (4,496,048) (5) (4,496,043) (1,264,535) (833,891) (430,644)
Net increase (decrease) in net assets
resulting from capital share
transactions (2,614,930) 10,989 (2,625,919) (2,601) 80,435 (83,036)
TOTAL INCREASE (DECREASE)
IN NET ASSETS 503,518 22,666 480,852 280,886 264,952 15,934
NET ASSETS - Beginning of period 14,536,763 36,080 14,500,683 2,568,566 1,285,320 1,283,246
NET ASSETS - End of period $15,040,281 $58,746 $14,981,535 $2,849,452 $1,550,272 $1,299,180
SHARE TRANSACTIONS:
Issued 124,826 875 123,951 76,704 57,353 19,351
Reinvested 23,573 101 23,472 1,567 876 691
Redeemed (354,387) --- (354,387) (72,921) (48,837) (24,084)
Change in shares (205,988) 976 (206,964) 5,350 9,392 (4,042)
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
CORE EQUITY FUND INTERNATIONAL
TOTAL CLASS A CLASS C EQUITY FUND
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (77) $983 ($1,060) ($29,201)
Net realized gains (losses) from
investment and futures contract
transactions 291,655 189,663 101,992 381,420
Net change in unrealized
appreciation of investments 502,895 390,385 112,510 2,333,615
Net increase in net assets
resulting from operations 794,473 581,031 213,442 2,685,834
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment income (983) (983) --- ---
In excess of net investment income (175) (175) --- (50,938)
From net realized gains (115,378) (76,889) (38,489) (98,118)
Net decrease in net assets resulting
from dividends and distributions (116,536) (78,047) (38,489) (149,056)
CAPITAL TRANSACTIONS:
Issued 9,795,113 4,836,253 4,958,860 5,048,139
Reinvested 113,551 76,538 37,013 149,026
Redeemed (3,071,047) (286,572) (2,784,475) (1,650,643)
Net increase (decrease) in net assets
resulting from capital share
transactions 6,837,617 4,626,219 2,211,398 3,546,522
TOTAL INCREASE (DECREASE)
IN NET ASSETS 7,515,554 5,129,203 2,386,351 6,083,300
NET ASSETS - Beginning of period 324,945 245,427 79,518 12,190,068
NET ASSETS - End of period $7,840,499 $5,374,630 $2,465,869 $18,273,368
SHARE TRANSACTIONS:
Issued 702,814 347,932 354,882 376,007
Reinvested 7,470 5,036 2,434 10,299
Redeemed (224,121) (21,437) (202,684) (123,624)
Change in shares 486,163 331,531 154,632 262,682
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 40
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
TACTICAL ASSET ALLOCATION FUND
<CAPTION>
Year ended Year ended Year ended Year ended 6/1/95* to
December 31, 1999 December 31, 1998 December 31, 1997 December 31, 1996 12/31/95
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C CLASS A** CLASS C CLASS C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.87 $15.33 $11.07 $12.25 $12.56 $13.52 $12.50 $13.26 $12.50
Income from Investment Operations:
Net investment income 0.06 0.06 0.05 0.05 0.40 0.14 0.14 0.10 (0.02)
Net gains (losses) from investments 1.80 1.99 3.07 3.38 1.78 2.26 0.55 0.57 1.84
Total from investment operations 1.86 2.05 3.12 3.43 2.18 2.40 0.69 0.67 1.82
Less Dividends and Distributions:
From net investment income (0.06) (0.06) (0.05) (0.05) (0.40) (0.14) (0.14) (0.10) ---
From net realized gains (0.87) (2.90) (0.27) (0.30) (2.93) (3.17) (0.49) (0.31) (1.06)
In excess of net realized gains (2.30) (0.27) --- --- (0.34) (0.36) --- --- ---
Total distributions (3.23) (3.23) (0.32) (0.35) (3.67) (3.67) (0.63) (0.41) (1.06)
Net Asset Value, End of Period $12.50 $14.15 $13.87 $15.33 $11.07 $12.25 $12.56 $13.52 $13.26
Total Return 15.62% 15.33% 28.38% 28.13% 17.29% 17.71% 5.51%(1) 5.07% 14.57%(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $625 $22,068 $59 $14,982 $36 $14,501 $137 $13,943 $11,524
Ratio of expenses to
average net assets 1.77% 2.13% 2.00% 2.10% 2.00% 2.10% 1.73%(2) 2.00% 1.97%(2)
Ratio of net investment income to
average net assets 1.02% 0.45% 0.45% 0.39% 0.99% 0.86% 2.60%(2) 0.75% (0.29%)(2)
Ratio of expenses to average net
assets before waiver of fees(3) 3.66% 2.24% 10.38% 2.48% 6.16% 2.50% 5.23%(2) 2.40% 2.80%(2)
Ratio of net investment income to
average net assets before waiver
of fees(3) -0.87% 0.34% -7.93% 0.01% (3.17%) 0.46% (0.90%)(2) 0.35% (1.12%)(2)
Portfolio turnover(4) 787.66% 787.66% 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) Not Annualized
(2) Annualized
(3) Ratio includes fees waived in corresponding portfolio.
(4) Represents turnover rate of corresponding portfolio.
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 41
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
UTILITY GROWTH FUND
FOR THE YEAR ENDED DECEMBER 31, 1999
UTILITY GROWTH FUND
CLASS A CLASS C
Net Asset Value, Beginning of Period $18.59 $18.38
Income from Investment Operations:
Net investment income (loss) 0.29 0.20
Net gains from investments 3.44 3.38
Total from investment operations 3.73 3.58
Less Dividends and Distributions:
From net investment income (0.29) (0.20)
In excess of net investment income (0.01) ---
From net realized gains (2.29) (2.29)
In excess of net realized gains --- ---
Total distributions (2.59) (2.49)
Net Asset Value, End of Period $19.73 $19.47
Total Return 20.34% 19.72%
Ratios/Supplementary Data
Net assets, end of period ($000) $2,082 $2,156
Ratio of expenses to
average net assets 1.82% 2.25%
Ratio of net investment income to
average net assets 1.47% 0.97%
Ratio of expenses to average net assets
before waiver of fees (1) 2.89% 3.37%
Ratio of net investment income to average
net assets before waiver of fees (1) 0.40% -0.15%
Portfolio turnover 69.20%(2) 69.20%(2)
(1) Annualized ratio includes fees waived and directed brokerage payments in
corresponding portfolio.
(2) Represents turnover rate of corresponding portfolio.
<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.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 42
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
CORE EQUITY FUND
<CAPTION>
Year ended Year ended August 1, 1997* to
December 31, 1999 December 31, 1998 December 31, 1997
CLASS A CLASS C CLASS A CLASS C CLASS A CLASS C
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.32 $15.32 $12.67 $12.66 $12.50 $12.50
Income from Investment Operations:
Net investment income (0.04) (0.05) --- (0.01) 0.01 (0.01)
Net gains (losses) from investments 3.27 3.24 2.88 2.90 0.24 0.24
Total from investment operations 3.23 3.19 2.88 2.89 0.25 0.23
Less Dividends and Distributions:
From net investment income --- --- --- --- (0.01) ---
From net realized gains (0.27) (0.27) (0.23) (0.23) (0.05) (0.05)
In excess of net realized gains --- --- --- --- (0.02) (0.02)
Total distributions (0.27) (0.27) (0.23) (0.23) (0.08) (0.07)
Net Asset Value, End of Period $18.28 $18.24 $15.32 $15.32 $12.67 $12.66
Total Return 21.16% 20.90% 22.78% 22.85% 2.00%(1) 1.88%(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $7,113 $5,506 $5,375 $2,466 $245 $80
Ratio of expenses to
average net assets 1.77% 1.99% 1.80% 1.97% 2.00%(2) 2.25%(2)
Ratio of net investment income to
average net assets -0.23% -0.46% 0.09% -0.11% 0.10%(2) (0.13%)(2)
Ratio of expenses to average net assets
before waiver of fees(3) 2.02% 2.55% 3.13% 3.85% 9.50%(2) 16.67%(2)
Ratio of net investment income to average
net assets before waiver of fees(#) -0.48% -1.02% -1.24% -1.99% (7.40%)(2) (14.55%)(2)
Portfolio turnover(4) 51.22% 51.22% 79.98% 79.98% 129.79% 129.79%
<FN>
* Date of commencement of operations
(1) Not Annualized
(2) Annualized
(3) Ratio includes fees waived and/or directed brokerage payments received in
corresponding portfolio
(4) Represents turnover rate of corresponding portfolio
</FN>
</TABLE>
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 43
<PAGE>
FINANCIAL HIGHLIGHTS
INTERNATIONAL EQUITY FUND
Year ended Year ended 9/2/97* to
12/31/99 12/31/98 12/31/97
Net Asset Value, Beginning of Period $14.47 $12.18 $12.50
Income from Investment Operations:
Net investment income (0.04) (0.02) (0.02)
Net gains (losses) from investments 4.31 2.43 (0.30)
Total from investment operations 4.27 2.41 (0.32)
Less Dividends and Distributions:
In excess of net investment income --- (0.04) ---
From net realized gains (1.37) (0.08) ---
Total distributions (1.37) (0.12) ---
Net Asset Value, End of Period $17.37 $14.47 $12.18
Total Return 30.07% 19.78% (2.56%)(1)
Ratios/Supplementary Data
Net assets, end of period ($000) $23,474 $18,273 $12,190
Ratio of expenses to
average net assets 2.00% 2.00% 2.00%(2)
Ratio of net investment income to
average net assets -0.28% -0.18% (0.43%)(2)
Ratio of expenses to average net assets
before waiver of fees 2.37% 2.17% 2.68%(2)
Ratio of net investment income to average
net assets before waiver of fees -0.65% -0.35% (1.11%)(2)
Portfolio turnover 72.52% 86.13% 12.71%
* Date of commencement of operations
(1) Not Annualized
(2) Annualized
See accompanying notes to financial statements.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 44
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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:
Tactical Asset Allocation Fund (formerly TAA Fund), Utility Growth Fund
(formerly BTB Fund), Core Equity Fund, International Equity Fund (each a "Fund"
and collectively the "Funds") and Institutional Fund. The financial statements
of the Institutional Fund are not in this report. 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, 1999
- ---- --------- -----------------
Tactical Asset Allocation Fund Mutual Fund Portfolio 13%
Utility Growth Fund Utilities Stock Portfolio 24%
Core Equity Fund Growth Stock Portfolio 19%
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 separately reported.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
VALUATION OF INVESTMENTS
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. These prices are obtained from independent pricing services which use
valuation techniques approved by the Board of Trustees. If prices cannot be
obtained through independent pricing services, methods of valuation are used
that have been approved by the Board of Trustees.
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 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
forwards fluctuates with changes in currency exchange rates. The forward is
The Flex-Partners Funds Annual Report * December 31, 1999 Page 45
<PAGE>
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. Tactical Asset
Allocation Fund and Core Equity 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. Accordingly, timing differences
relating to shareholder distributions are reflected in the components of net
assets and permanent book and tax differences relating to shareholder
distributions have been reclassified to capital.
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, Miller/Howard Investments, Inc., Sector Capital Management,
Inc., and Commercial Union Investment Management, Ltd. serve as subadviser of
the Utilities Stock Portfolio, the Growth 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.
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
to the Fund by RMA and MFSCo. The limitations currently in place are as follows:
The Flex-Partners Funds Annual Report * December 31, 1999 Page 46
<PAGE>
ANNUAL EXPENSE LIMITATION
AS A PERCENTAGE OF
FUND AVERAGE DAILY NET ASSETS
- ---- ------------------------
Tactical Asset Allocation Fund - Class A 1.75%*
Tactical Asset Allocation Fund - Class C 2.15%*
Utility Growth Fund - Class A 1.75%*
Utility Growth Fund - Class C 2.25%
Core Equity Fund - Class A 1.75%*
Core Equity Fund - Class C 2.00%*
International Equity Fund 2.00%
* Prior to May 1, 1999, the annual expense limitation had * been 2.00%, 2.10%,
2.00%, 1.80% and 1.95% of average daily * net assets of the Tactical Asset
Allocation Fund Class A and * Class C, Utility Growth Fund Class A and Core
Equity Fund * Class A and Class C, 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 Adviser 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, 1999, the cost of purchases and proceeds from
sales or maturities of long-term investments for the International Equity Fund
were $13,730,741 and $14,232,933, respectively. The cost of investments for
federal income tax purposes and for financial reporting purposes is
substantially the same.
5. FEDERAL TAX INFORMATION (Unaudited)
During the year ended December 31, 1999, the Funds declared long-term capital
gain distributions in the following amounts:
AMOUNT
------
Tactical Asset Allocation Fund $222,706
Utility Growth Fund 462,179
Core Equity Fund 70,637
International Equity Fund 982,477
The Flex-Partners Funds Annual Report * December 31, 1999 Page 47
<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 Tactical Asset Allocation
Fund, the Core Equity Fund, and Utility Growth Fund and International Equity
Fund), including the portfolio of investments for the International Equity Fund,
as of December 31, 1999, 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, 1999, 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,
1999, 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 11, 2000
The Flex-Partners Funds Annual Report * December 31, 1999 Page 48
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
Assets:
Investments, at market value* $169,532,821 $18,635,935 $61,277,810
Repurchase agreements, at cost* 8,976,000 --- 4,037,000
Trustee deferred compensation investments, 67,016 11,882 25,599
at market value
Cash 699 --- 556
Receivable for securities sold --- 695,684 ---
Receivable for net variation margin on futures --- --- 8,500
contracts
Receivable from corresponding Fund --- --- ---
Interest and dividend receivable 168,932 45,025 43,604
Prepaid/Other assets 667 1,954 630
Total Assets 178,746,135 19,390,480 65,393,699
Liabilities:
Payable for securities purchased --- --- 64,139
Payable for Trustee Deferred Compensation Plan 67,016 11,882 25,599
Payable to custodian for cash overdraft --- 1,292,032 ---
Payable to investment adviser 110,669 17,541 51,743
Accrued audit fees 12,952 13,984 14,813
Accrued custodian fees 2,531 958 8,237
Accrued trustee fees 4,988 --- 6,307
Accrued fund accounting fees 4,737 2,198 3,690
Other accrued liabilities 2,148 792 1,699
Total Liabilities 205,041 1,339,387 176,227
Net Assets $178,541,094 $18,051,093 $65,217,472
Net Assets:
Capital 161,236,113 15,979,753 48,528,287
Net unrealized appreciation (depreciation) of 17,304,981 2,071,340 16,689,185
investments
Net Assets $178,541,094 $18,051,093 $65,217,472
*Securities at cost $161,203,840 $16,564,595 $48,634,125
</TABLE>
See accompanying notes to financial statements
The Flex-Partners Funds Annual Report * December 31, 1999 Page 49
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
MUTUAL UTILITIES GROWTH
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
NET INVESTMENT INCOME
Interest $3,795,724 $32,181 $285,463
Dividends 197,740 459,721 627,091
Total Investment Income 3,993,464 491,902 912,554
Expenses:
Investment advisory fees 1,214,387 149,369 570,139
Accounting fees 52,656 19,937 40,870
Trustees fees and expenses 47,730 8,682 27,375
Audit fees 12,967 13,999 14,827
Custodian fees 12,095 3,310 27,806
Other expenses 8,715 6,292 6,868
Legal fees 448 372 971
Insurance 193 85 109
Total Expenses 1,349,191 202,046 688,965
Investment advisory fees waived --- --- ---
Directed brokerage payments received --- --- (6,058)
Total Net Expenses 1,349,191 202,046 682,907
NET INVESTMENT INCOME 2,644,273 289,856 229,647
REALIZED AND UNREALIZED GAIN (LOSS)
FROM INVESTMENTS:
Net realized gain (loss) from futures (5,791,888) --- 245,618
contracts
Net realized gain (loss) from investments 33,288,636 3,637,703 5,094,690
Net change in unrealized appreciation
(depreciation) of investments (5,909,917) (1,322,044) 6,025,737
NET GAIN (LOSS) ON INVESTMENTS 21,586,831 2,315,659 11,366,045
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $24,231,104 $2,605,515 $11,595,692
See accompanying notes to financial statements
The Flex-Partners Funds Annual Report * December 31, 1999 Page 50
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $2,644,273 $289,856 $229,647
Net realized gain (loss) from investments
and futures contracts 27,496,748 3,637,703 5,340,308
Net change in unrealized appreciation
(depreciation) of investments (5,909,917) (1,322,044) 6,025,737
Net increase in net assets
resulting from operations 24,231,104 2,605,515 11,595,692
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 67,402,736 11,399,891 105,405,498
Withdrawals (53,900,433) (9,173,858) (102,951,461)
Net increase in net assets resulting from
transactions of investors' beneficial interests 13,502,303 2,226,033 2,454,037
TOTAL INCREASE IN NET ASSETS 37,733,407 4,831,548 14,049,729
NET ASSETS - Beginning of period 140,807,687 13,219,545 51,167,743
NET ASSETS - End of period $178,541,094 $18,051,093 $65,217,472
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MUTUAL UTILITIES GROWTH
FUND STOCK STOCK
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $2,040,969 $218,745 $335,278
Net realized gain (loss) from investments
and futures contracts 8,222,183 (364,390) 4,583,800
Net change in unrealized appreciation
(depreciation) of investments 23,909,375 1,126,399 4,790,713
Net increase in net assets
resulting from operations 34,172,527 980,754 9,709,791
TRANSACTIONS OF INVESTORS' BENEFICIAL INTERESTS:
Contributions 21,876,913 6,977,776 74,136,798
Withdrawals (59,774,446) (5,408,703) (66,072,809)
Net increase (decrease) in net assets
resulting from transactions of investors'
beneficial interests (37,897,533) 1,569,073 8,063,989
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,725,006) 2,549,827 17,773,780
NET ASSETS - Beginning of period 144,532,693 10,669,718 33,393,963
NET ASSETS - End of period $140,807,687 $13,219,545 $51,167,743
</TABLE>
See accompanying notes to financial statements
The Flex-Partners Funds Annual Report * December 31, 1999 Page 51
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
MUTUAL FUND PORTFOLIO
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $178,541 $140,808 $144,533 $135,540 $122,109
Ratio of Expenses to Average Net Assets 0.86% 0.91% 0.89% 0.87% 0.95%
Ratio of Net Investment Income to
Average Net Assets 1.69% 1.56% 2.08% 1.86% 1.26%
Portfolio Turnover Rate 787.66% 128.31% 395.42% 297.41% 186.13%
</TABLE>
<TABLE>
UTILITIES STOCK PORTFOLIO
<CAPTION>
Period from
Year Ended December 31, June 21, 1995* to
1999 1998 1997 1996 December 31, 1995
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $18,051 $13,220 $10,670 $7,964 $4,291
Ratio of Expenses to Average Net Assets 1.35% 1.44% 1.60% 1.61% 2.32%(1)
Ratio of Net Investment Income to
Average Net Assets 1.94% 1.73% 1.79% 2.24% 2.09%(1)
Ratio of Expenses to Average Net Assets
before directed brokerage payments 1.35% 1.46% 1.65% 1.66% 2.40%(1)
Ratio of Net Investment Income to Average Net
Assets before directed brokerage payments 1.94% 1.71% 1.74% 2.19% 2.01%(1)
Portfolio Turnover Rate 69.20% 51.36% 41.22% 50.79% 5.06%
<FN>
(1) Annualized
* Date of commencement of operations
</FN>
</TABLE>
<TABLE>
GROWTH STOCK PORTFOLIO
<CAPTION>
Year Ended December 31,
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Assets, End of Period ($000) $65,217 $51,168 $33,394 $24,414 $24,537
Ratio of Expenses to Average Net Assets 1.15% 1.25% 1.34% 1.24% 1.25%
Ratio of Net Investment Income to
Average Net Assets 0.39% 0.77% 0.83% 2.33% 3.78%
Ratio of Expenses to Average Net Assets
before waiver of fees 1.16% 1.26% 1.34% 1.24% 1.25%
Ratio of Net Investment Income to Average
Net Assets before waiver of fees 0.38% 0.76% 0.83% 2.33% 3.78%
Portfolio Turnover Rate 51.22% 79.98% 129.79% 81.66% 337.57%
</TABLE>
See accompanying notes to financial statements
The Flex-Partners Funds Annual Report * December 31, 1999 Page 52
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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 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 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 financial statements of the Funds are included elsewhere in this report.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENTS
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.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 53
<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 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 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, 1999, the Portfolios had the following
activity in futures contracts:
LONG CONTRACTS
Number of contracts Notional amount
MUTUAL FUND PORTFOLIO:
Outstanding, beginning of year 20 $6,274,000
Contracts opened 1,052 23,319,887
Contracts closed (1,072) (29,593,887)
Outstanding, end of year --- $---
GROWTH STOCK PORTFOLIO:
Outstanding, beginning of year 7 $2,055,875
Contracts opened 324 107,321,562
Contracts closed (321) (105,766,937)
Outstanding, end of year 10 $3,610,500
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.
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.
The Flex-Partners Funds Annual Report * December 31, 1999 Page 54
<PAGE>
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, Miller/Howard Investments, Inc. and Sector Capital
Management, Inc. serve as subadvisor of the Utilities Stock Portfolio and Growth
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. As subadviser to the Utilities Stock Portfolio,
Miller/Howard Investments, Inc. is paid 0.00% of the 1.00% of average daily net
assets up to $10 million, 0.40% of the 1.00% of average daily net assets
exceeding $10 million up to $50 million, 0.40% of the 0.75% of average daily net
assets net assets exceeding $50 million up to $60 million, 0.30% of the 0.75% of
average daily net assets exceeding $60 million up to $100 million and 0.25% of
the 0.60% of average daily net assets exceeding $100 million. As subadviser to
the Growth Stock Portfolio, Sector Capital Management, Inc. is paid 0.30% of the
1.00% of average daily net assets up to $25 million, 0.70% of the 1.00% of
average daily net assets exceeding $25 million up to $50 million, 0.40% of the
0.75% of average daily net assets exceeding $50 million up to $100 million and
0.35% of the 0.60% of average daily net assets exceeding $100 million. Sector
Capital Management, Inc. pays all sub-subadvisers 0.25% on all average net
assets.
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, 1999, 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 $673,341,588 $671,730,867
Utilities Stock Portfolio 12,829,792 9,928,610
Growth Stock Portfolio 28,470,710 27,440,601
As of December 31, 1999, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for Federal income tax purposes was as follows:
COST BASIS UNREALIZED UNREALIZED NET UNREALIZED
PORTFOLIO OF INVESTMENTS APPRECIATION DEPRECIATION APPRECIATION
- --------- -------------- ------------ ------------ -------------
Mutual Fund Portfolio $161,988,907 $17,305,018 ($785,104) $16,519,914
Utilities Stock Portfolio 16,742,303 3,217,376 (1,323,744) 1,893,632
Growth Stock Portfolio 48,859,539 19,887,220 (3,423,449) 16,463,771
The Flex-Partners Funds Annual Report * December 31, 1999 Page 55
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of the Mutual Fund Portfolio,
Utilities Stock Portfolio and Growth Stock Portfolio
We have audited the accompanying statements of assets and liabilities of the
Mutual Fund Portfolio, Utilities Stock Portfolio and Growth Stock Portfolio
(Portfolios), including the portfolios of investments, as of December 31, 1999,
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, 1999, 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
Mutual Fund Portfolio, Utilities Stock Portfolio and Growth Stock Portfolio at
December 31, 1999, 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 11, 2000
The Flex-Partners Funds Annual Report * December 31, 1999 Page 56
<PAGE>
MANAGER AND INVESTMENT ADVISER
R. Meeder & Associates
6000 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
SUBADVISER/THE UTILITIES STOCK PORTFOLIO
Miller/Howard Investments, Inc.
141 Upper Byrdcliffe Road, P.O. Box 549
Woodstock, New York 12498
SUBADVISER/THE GROWTH STOCK PORTFOLIO
Sector Capital Management L.L.C.
5350 Poplar Avenue, Suite 490
Memphis, Tennesse 38119
BOARD OF TRUSTEES
Milton S. Bartholomew
Dr. Roger D. Blackwell
James Didion
Charles Donabedian
Robert S. Meeder, Sr.
Robert S. Meeder, Jr.
Jack Nicklaus II
Walter L. Ogle
Philip A. Voelker
CUSTODIAN
Firstar Bank, N.A. Cincinnati
Cincinnati, Ohio 45201
TRANSFER AGENT DIVIDEND DISBURSING AGENT
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, Ohio 43017
AUDITORS
KPMG LLP
Columbus, Ohio 43215
<PAGE>
THE FLEX-PARTNERS
R. Meeder & Associates, Investment Manager
P.O. Box 7177, Dublin, OH 43017
