APPENDIX H - FORM N-CSR
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03462
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The Flex-Funds Trust
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(Exact name of registrant as specified in charter)
6125 Memorial Drive Dublin, OH 43017
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(Address of principal executive offices) (Zip code)
Bruce Mckibben c/o The Flex-funds Trust 6125 Memorial Drive Dublin, OH 43017
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(Name and address of agent for service)
Registrant's telephone number, including area code: 800-325-3539
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Date of fiscal year end: 12/31/03
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Date of reporting period: 06/30/03
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Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. (S) 3507.
Item 1. Reports to Stockholders.
Include a copy of the report transmitted to stockholders pursuant to
Rule 30e-1 under the Act (17 CFR 270.30e-1).
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The Flex-funds
The Muirfield Fund
The Dynamic Growth Fund
The Aggressive Growth Fund
The Total Return Utilities Fund
The Highlands Growth Fund
The U.S. Government Bond Fund
The Money Market Fund
2003 Semiannual Report
June 30, 2003
[GRAPHIC]
The Flex-funds
Managed by a Meeder Financial Company
6125 Memorial Drive, Dublin Ohio, 43017
Call Toll Free 800-325-3539|760-2159
Fax: 614-766-6669|www.flexfunds.com
Email: flexfunds@meederfinancial.com
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The Flex-funds
2003 Semiannual Report
Table of Contents
Letter to Shareholders ...................................................2
The Dynamic Growth Fund ..................................................4
The Aggressive Growth Fund ...............................................5
The Muirfield Fund .......................................................6
The Highlands Growth Fund ................................................7
The Total Return Utilities Fund ..........................................8
The Money Market Fund ....................................................9
The U.S. Government Bond Fund ...........................................10
Portfolio Holdings & Financial Statements ...............................12
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2003 Semiannual Report | June 30, 2003 1
The Flex-funds
[PHOTO]
Robert S. Meeder Sr.
President
Letter to Shareholders
Can this "bull market phase" continue? Many investors are asking this
question after the strong performance of the stock market in the 2nd
Quarter - the best quarterly performance in 4 1/2 years. Several forces are
in place at present that would support the cause of a new bull market, but
the market does not move in a straight line. Investors should be aware that
there will be pullbacks and corrections along the way.
What is significant about the current economic environment is that the
government has adopted the uncommon approach of employing both fiscal and
monetary stimulus concurrently in order to jump-start the economy. Monetary
policy has been accommodative since the Federal Reserve began lowering
rates in 2001. But with the most recent cut of a quarter-point on June
25th, the Fed has augmented the most accommodative monetary policy in a
generation. As a result, interest rates declined to 45-year lows, fueling
strength in the housing market and a boom in mortgage refinancing. In
addition, real short-term interest rates are now negative, which
historically has been a positive for the equity market. The government has
added favorable fiscal policy to this accomodative monetary policy in the
form of tax relief legislation, which was passed by Congress and signed by
President Bush in May. In addition, the U.S. dollar has continued to
weaken, which makes U.S. exports more attractive to foreign buyers, and
companies have been reporting improving earnings for the 2nd Quarter. All
of these factors are supportive of a continued advance in the equity
market. The recent development of interest rate increases could put a
damper on the positive influence that interest rates provided in the 2nd
Quarter.
That's not to say the current equity market environment is without risk.
Corporate earnings will be in the spotlight as investors look for proof
that the economic environment is improving. There is a risk of a correction
or sideways trading in the stock market over the next several months as
investors digest the most recent run-up in stock prices, coinciding with
the time of year commonly referred to as the "summer doldrums". The 2nd
Quarter surge also buoyed investor optimism and led many investors to jump
on the equity bandwagon. Consequently, the market is somewhat extended as
of this writing. Price/earnings ratios are not at their long-term averages,
and some technical indicators turned from oversold to overbought by
quarter-end.
The story is somewhat different for bond investors. Bonds have enjoyed a
strong run over the last 20 years as yields dropped significantly since
1980. However, all good things usually come to an end. The current
consensus among bond market analysts is that bond prices have been
overextended for some time and are due to fall. Rates have been so low for
so long that investors began to anticipate an inevitable rise in interest
rates, with long-term rates rising late in the 2nd Quarter. Accordingly,
bond prices declined. Early indications in the 3rd Quarter seem to point
toward a potential end to the bull market for bonds. The Federal Reserve
recently stated its intention to keep rates stable for "a considerable
period" in an effort to accomodate swifter economic growth. As growth
accelerates, however, the mere suggestion of an increase in rates could
send bond prices into a downward spiral and boost yields across the board.
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2 2003 Semiannual Report | June 30, 2003
The Flex-funds
The low interest rate environment has dropped money market fund yields to
record lows. However, even in this low-yield environment, The Flex-funds
Money Market Fund continues to shine among its peer group, ranking among
the top 10 general-purpose money market funds for total return for the
12-month period ending June 30, 2003, according to iMoneyNet, Inc.
At this midpoint of the year, there is less uncertainty for investors to
contend with, and many forces are coming together to create more favorable
conditions in the equity market. The next six months, however, may pose
many challenges for the economy and for investors. Those who maintain their
discipline and patience throughout all phases of the market cycle are in a
good position to take advantage of the opportunities in the financial
markets when they arise.
Sincerely,
/s/ Robert S. Meeder
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Robert S. Meeder
President
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2003 Semiannual Report | June 30, 2003 3
The Flex-funds
The Dynamic Growth Fund
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Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 Since
as of June 30, 2003 months to date year years years Inception
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The Dynamic Growth Fund 16.82% 13.26% -4.24% -9.24% -- -12.47%/1/
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Meeder Asset Management, Inc.
Growth Accounts Composite 15.99% 13.32% -2.85% -8.45% 4.55% 11.51%/2/
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S&P 500 Index 15.39% 11.75% 0.25% -11.19% -1.61% -8.33%/3/
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Nasdaq Composite Index 21.00% 21.51% 10.91% -25.76% -3.05% -27.30%/3/
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Average Growth Fund 15.97% 12.80% -0.44% -11.44% -0.88% -9.12%/3/
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/1/ Inception Date:2/29/00. /2/ Inception Date: 12/31/94. /3/ Average annual
total return from 2/29/00 to 6/30/03. Source for index and average fund data:
Morningstar, Inc.
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Semiannual Market Perspective
[PHOTO]
Robert M. Wagner,
CFA
Portfolio Manager
For the six months ended June 30, 2003, The Dynamic Growth Fund outperformed
both the S&P 50 Index and the average growth fund, with a gain of 13.26%. In
comparison, the S&P 500 Index returned 11.75% over the same period, while the
average growth fund returned 12.80%, according to Morningstar.
As the year began, the Fund was invested in the areas of the equity market that
had been performing well from the October 2002 low: large-cap value and funds
closely correlated to the S&P 500 and Nasdaq 100 indices. The tech-laden Nasdaq
Composite Index has been one of the strongest performers over the last six
months, and we maintained exposure to this area of the market throughout the
period. Value stocks began to lag the overall market in the 1st Quarter, while
growth stocks gained relative strength. Therefore, we gradually reduced our
exposure to large-cap value throughout the 1st Quarter and added positions
targeting large- and small-cap growth stocks.
In the 2nd Quarter, relative strength among growth and value stocks rotated once
more, with value stocks gaining strength and growth stocks lagging the overall
market. As a result, we reduced our large-cap growth exposure in the 2nd
Quarter, while adding a position targeting large-cap value. In addition, we
increased our emphasis on small-cap stocks, which were the best performers from
the market low of March 11.
Conditions in the equity market are generally positive as we head into the
second half of 2003, but investors may soon be looking for evidence of the
effects of fiscal
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) Gabelli Growth Fund 29%
2) Federated Kaufmann Fund 22%
3) Fidelity Leveraged Co. Stock Fund 18%
4) AIM Basic Value 15%
5) Nasdaq 100 Futures 13%
6) Neuberger Berman Focus Trust 3%
Portfolio holdings are subject to change.
and monetary stimulus in the form of improving corporate earnings and
strengthening economic growth. We will continue to maintain our discipline and
seek out the most attractive areas for investment returns in the stock market.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June 30,
2003, and assume reinvestment of all dividend and capital gain distributions.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Expenses were waived and/or reimbursed in order to reduce the
operating expenses of The Dynamic Growth Fund during the periods shown above.
The returns for the Meeder Asset Management, Inc. Growth Accounts represent a
composite of the private accounts managed by Meeder Asset Management, manager of
The Flex-funds, which employ a similar investment strategy to The Dynamic Growth
Fund, and are net of investment advisory fees. We have included the returns
of these privately-managed accounts to present the long-term performance of the
investment strategies employed by The Dynamic Growth Fund. Please refer to the
disclosure on page 11 for a description of what these returns represent and what
they do not represent.
The S&P 500 Index is a widely recognized unmanaged index of common stock prices.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of all
NASDAQ National Market and Small Cap stocks. Past performance of an index does
not guarantee future results. It is not possible to invest directly in an index.
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4 2003 Semiannual Report | June 30, 2003
The Flex-funds
The Aggressive Growth Fund
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Performance Perspective
Average Annual Total Returns 3 Year 1 3 5 Since
as of June 30, 2003 months to date year years years Inception
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The Aggressive Growth Fund 18.12% 12.94% -5.75% -12.02% -- -16.78%/1/
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Meeder Asset Management, Inc.
Aggressive Growth Accounts Composite 16.67% 13.15% -4.99% -11.20% 6.64% 11.93%/2/
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Nasdaq Composite Index 21.00% 21.51% 10.91% -25.76% -3.05% -27.30%/3/
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Average Aggressive Growth Fund 18.03% 15.75% 0.29% -18.23% -0.81% -18.16%/3/
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/1/ Inception Date: 2/29/00. /2/ Inception Date: 12/31/94. /3/ Average annual
total return from 2/29/00 to 6/30/03. Source for index and average fund data:
Morningstar, Inc.
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Semiannual Market Perspective
[PHOTO]
Robert M. Wagner,
CFA
Portfolio Manager
At the start of 2003, The Aggressive Growth Fund was invested in large-cap value
funds and funds closely correlated to the S&P 500 and Nasdaq 100 indices.
Large-cap value had demonstrated good relative strength late last year, as had
the technology-laden Nasdaq Composite Index. These trends continued early in the
1st Quarter of 2003.
After the market peaked in mid-January, large-cap value began to demonstrate
weakness relative to the broad equity market. Consequently, we reduced our
exposure to this area of the market, and added exposure to small-cap and growth
stocks, which were demonstrating improved relative strength. We also added a
small allocation to precious metals in the Fund during the 1st Quarter.
In the 2nd Quarter, small-cap stocks continued to perform well, and we increased
our allocation to funds targeting this area of the market during the period. We
maintained our allocation to funds closely correlated to the Nasdaq 100 Index,
which also outperformed the overall equity market in the rally from the March 11
low.
Large-cap growth stocks, which had demonstrated good relative strength in the
1st Quarter, began to lag the broad equity market as the 2nd Quarter progressed.
Meanwhile, large-cap value stocks gained momentum and outperformed growth for
the three-month period. As this trend emerged, we added exposure to large-cap
value funds to the portfolio and reduced our exposure to large-cap growth.
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) Federated Kaufmann Fund - A 30%
2) Fidelity Leveraged Stock Fund 20%
3) Nasdaq 100 Futures 13%
4) Neuberger Berman Focus Trust Fund 12%
5) PBHG Clipper Focus Fund 10%
6) Gabelli Growth Fund 8%
7) Rydex Precious Metals Fund 5%
8) Cash Equivalents 2%
Portfolio holdings are subject to change.
At this midpoint of the year, the environment for equity investors appears to be
generally positive, with the twin forces of fiscal and monetary stimulus and a
reduced level of uncertainty creating a favorable environment for stocks.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June 30,
2003, and assume reinvestment of all dividend and capital gain distributions.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Expenses were waived and/or reimbursed in order to reduce the
operating expenses of The Aggressive Growth Fund during the periods shown above.
The returns for the Meeder Asset Management, Inc. Aggressive Growth Accounts
represent a composite of the private accounts managed by Meeder Asset
Management, Inc., manager of The Flex-funds, which employ a similar investment
strategy to The Aggressive Growth Fund. We have included the returns of these
privately-managed accounts to present the long-term performance of the
investment strategies employed by The Aggressive Growth Fund. Please refer to
the disclosure on page 11 for a description of what these returns represent and
what they do not represent.
The NASDAQ Composite Index is a broad-based capitalization-weighted index of all
NASDAQ National Market and Small Cap stocks. Past performance of an index does
not guarantee future results. It is not possible to invest directly in an index.
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2003 Semiannual Report | June 30, 2003 5
The Flex-funds
The Muirfield Fund
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Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 10 Since
as of June 30, 2003 months to date year years years years Inception
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The Muirfield Fund 14.33% 8.24% -0.85% -7.17% 0.05% 6.18% 8.17%/1/
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S&P 500 Index 15.39% 11.75% 0.25% -11.19% -1.61% 10.04% 11.49%/2/
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Nasdaq Composite Index 21.00% 21.51% 10.91% -25.76% -3.05% 8.71% 10.08%/2/
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Avg. Asset Allocation Fund 10.93% 8.76% 2.54% -2.46% 1.47% 7.25% 8.80%/2/
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/1/ Inception Date: 8/10/88. /2/ Average annual total return from 8/1/88 to
6/30/03. Source for index and average fund data: Morningstar, Inc.
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Semiannual Market Perspective
[PHOTO]
Robert S. Meeder, Sr.
Portfolio Manager
[PHOTO]
Kevin J. Kranz
Asst. Portfolio Manager
The Muirfield Fund returned 14.33% for the 2nd Quarter, compared with the 15.39%
return of the S&P 500, even though the Fund was not fully invested for the
entire three month period. This result is in line with our goal of participating
in most of a market advance, while protecting capital when market risk is high.
For the first half of 2003, the Fund gained 8.24%.
The major equity indices were weak during the 1st Quarter as uncertainty over
the looming war in Iraq weighed down investor confidence. As the outcome of
events in Iraq became more clear, investors gained confidence and the equity
market commenced a strong rally, accompanied by broad participation of stocks in
the advance. This breadth also shows up in the small and micro-cap stocks,
which performed much better than the S&P 500 in the 2nd Quarter. For example,
the leading index for the quarter was the Russell 2000 at 22.99%. Much of the
Fund's performance in the 2nd Quarter is attributable to our allocation to the
Nasdaq 100 Index and smaller cap stocks.
As of June 30th, The Muirfield Fund remains fully invested in the equity market
with no allocations to bonds or cash equivalents. The Fund is positioned to take
advantage of relative strength in both the technology sector and smaller
capitalization stocks. These areas have performed well throughout the quarter,
and still exhibit long-term and intermediate term relative strength to the S&P
500. Because the market can quickly rotate leadership, we also hold a position
in the large cap value style as a counterbalance.
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) Nasdaq 100 i-Shares 30%
2) The Yacktman Fund 23%
3) Federated Kaufmann Fund 22%
4) PBHG Mid Cap Fund 13%
5) Heartland Value Fund 12%
Portfolio holdings are subject to change.
Can this "bull market phase" continue? Many fundamental measures are positive,
from interest rates and U.S. government tax cuts to improving company earnings.
One fundamental measure is the historic value ratio, which is the ratio of the
S&P 500 earnings to the 90-day Treasury bill. This valuation measure has never
been more bullish, and indicates more long-term opportunity than risk in the
equity market.
Trend analysis is still positive, although it was tested in late June. The
market has held up well each time the trends have been tested. The technical
condition of the market is still positive, but many measures of market health
have been overbought for a good portion of the quarter. The market is poised for
long-term growth, but may need to consolidate a portion of this quarter's return
before advancing further.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June
30, 2003, and assume reinvestment of all dividend and capital gain
distributions. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost. Expenses were waived and/or reimbursed in
order to reduce the operating expenses of The Muirfield Fund during the
periods shown above. The S&P 500 Index is an widely recognized unmanaged index
of common stock prices. The NASDAQ Composite Index is a broad-based
capitalization-weighted index of all NASDAQ National Market and Small Cap
stocks. Past performance of an index does not guarantee future results. It is
not possible to invest directly in an index.
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6 2003 Semiannual Report | June 30, 2003
The Flex-funds
The Highlands Growth Fund
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Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 10 Since
as of June 30, 2003 months to date year years years years Inception
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The Highlands Growth Fund 16.35% 11.76% -2.40% -12.76% -3.18% 6.07% 6.79%/1/
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S&P 500 Index 15.39% 11.75% 0.25% -11.19% -1.61% 10.04% 12.48%/2/
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/1/ Inception Date: 3/20/85
/2/ Average annual total return from 3/29/85 to 6/30/03.
Source for index data: Morningstar, Inc.
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Semiannual Market Perspective
[PHOTO]
William L.Gurner
Portfolio Manager
The Highlands Growth Fund outperformed its benchmark index for the 2nd Quarter
of 2003, with a total return of 16.35%. In comparison, the S&P 500 Index
returned 15.39% for the same period. For the first six months of 2003, The
Highlands Growth Fund performed in line with the S&P 500 Index, gaining 11.76%
for the period compared with the 11.75% six month return of the benchmark index.
Everything we read early in the year said that stocks were going to retreat to
normal valuation levels, and that we would be fortunate to have single-digit
returns in 2003. However, the fact that stocks rebounded strongly this quarter
following the previous quarter's decline shows how little people know about what
the market will do over short time periods.
There are three powerful stimuli in place at present that should add a boost to
the U.S. economy in the second half of the year. First, interest rates are at
45-year lows. Second, the federal government has reduced individual income tax
rates, as well as capital gains and dividend income taxes in order to give the
economy a lift. Third, the weak dollar should stimulate exports and consequently
help multi-national corporations.
This market is different for a number of reasons. Many individual investors are
buying stocks because they are scared of missing a rally, and corporations have
been buying stocks because of their underfunded pension
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
Sector % of
Sector Manager Portfolio
- -------------------------------------------------------
1) Finance Clover 22%
2) Technology RCM 17%
3) Health Matrix 15%
4) Consumer Non-Durables Barrow Hanley 15%
5) Consumer Durables Barrow Hanley 7%
6) Materials & Services Dreyfus 6%
7) Utility W.H.Reaves & Co. 6%
8) Energy Mitchell Group 6%
9) Transportation Miller Howard 1%
10) Cash Equivalents 2%
11) S&P 500 Futures 3%
Portfolio holdings are subject to change.
plans. However, half of the daily trading volume currently comes from hedge
funds and program trading. Many lower quality stocks have performed well as of
late because of hedge funds covering short positions.
The Highlands Growth Fund still maintains a quality portfolio with an emphasis
on diversification. We intend to outperform the market, but not at the risk of
owning lower quality stocks. Patience is important. Investors who chase hot
returns usually get burned.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June 30,
2003, and assume reinvestment of all dividend and capital gain distributions.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Expenses were waived and/or reimbursed in order to reduce the
operating expenses of The Highlands Growth Fund during the periods shown above.
The S&P 500 Index is a widely recognized unmanaged index of common stock prices.
Past performance of an index does not guarantee future results. It is not
possible to invest directly in an index.
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2003 Semiannual Report | June 30, 2003 7
The Flex-funds
The Total Return Utilities Fund
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Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 Since
as of June 30, 2003 months to date year years years Inception
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The Total Return Utilities Fund 15.08% 7.45% -3.70% -9.95% -1.27% 6.68%/1/
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New York Stock Exchange Utility Index 19.50% 10.14% 1.59% -16.89% -5.41 5.16%/2/
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Average Utility Fund 16.94% 12.46% 0.93% -10.22% -1.36% 6.78%/2/
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/1/ Inception Date: 6/21/95.
/2/ Average annual total return from 6/30/95 to 6/30/03.
Source for index data: Bloomberg. Source for average fund data: Morningstar,
Inc.
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Semiannual Market Perspective
[PHOTO]
Lowell G. Miller
Portfolio Manager
Fund performance for the first half of 2003 was driven by gas production and
distribution companies, which benefited from rising natural gas prices and
extreme winter weather conditions that stoked consumer demand for services, as
well as by our telecommunications holdings. The Baby Bells experienced
disappointing returns in the 1st Quarter, following an unfavorable regulatory
decision, but came back strongly in the 2nd Quarter. In addition, solid 1st
Quarter earnings from a number of our holdings aided our 2nd Quarter returns.
The beneficial change in dividend taxation, which was approved this past May,
has tipped market sentiment back in favor of the high-yielding, traditionally
conservative utilities sector. Mid-cap utilities, which comprise most of the
Fund's portfolio, did not receive as much of a boost following passage of the
tax relief bill as did the large-cap utilities. Nevertheless, our midcap
holdings are poised to continue their steady earnings recovery, accompanied by
regular dividend increases.
The seeds of improved investor sentiment toward the utilities sector are poised
to sprout. Many companies have successfully exited their high risk, unregulated
activities and nearly completed "back to basics" programs that re-emphasize
their traditional utility operations. Many utilities' balance sheets are as
strong as they have been since the early 1990's, while the operating environment
for many companies continues to stabilize. Tax relief has made many utility
stocks
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) Oil/Gas Domestic 29%
2) Telecomm. Services 19%
3) Electric/Gas Utility 16%
4) Electric Utility 9%
5) Natural Gas (Diversified) 8%
6) Electric Integrated 6%
7) Water Utility 4%
8) Distribution 3%
9) Cash Equivalents 6%
Portfolio holdings are subject to change.
more attractive to a wider pool of investors, and major regulatory reform is at
hand. Now, we are just waiting for some renewed economic activity to increase
demand for utilities' essential services.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June 30,
2003, and assume reinvestment of all dividend and capital gain distributions.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Expenses were waived and/or reimbursed in order to reduce the
operating expenses of The Total Return Utilities Fund during the periods shown
above.
Because The Total Return Utilities 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.
The New York Stock Exchange Utility Index is an unmanaged index of 256 utility
sector stocks. Past performance of an index does not guarantee future results.
It is not possible to invest directly in an index.
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8 2003 Semiannual Report | June 30, 2003
The Flex-funds
The Money Market Fund
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Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 10 Since
as of June 30, 2003 months to date year years years years Inception
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The Money Market Fund 0.24% 0.50% 1.25% 3.12% 3.98% 4.47% 5.51%/1/
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Average Money Market Fund 0.12% 0.26% 0.72% 2.55% 3.46% 4.07% 5.08%/2/
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Current & Effective Yields* 7-day simple yield: 0.84% 7-day compound yield: 0.84%
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/1/ Inception Date: 3/27/85 /2/ Average Annual total return from 3/31/85 to
6/30/03.
* Yield quotations more closely reflect the current earnings of The Money
Market Fund than do total return quotations.
Source for average money market fund data: Lipper, Inc.
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Semiannual Market Perspective
[PHOTO]
Joseph A. Zarr
Co-Portfolio Manager
[PHOTO]
Christopher M.
O'Daniel, CFA
Co-Portfolio Manager
The Flex-funds Money Market Fund continues to perform among the best funds in
its peer group, ranking in the top 10 general-purpose money market funds for
12-month total return as of June 30, 2003, according to iMoneyNet, Inc.
In addition, the Fund ranked among the top 5% of general purpose money market
funds for its 7-day compound yield as of July 1, 2003, according to iMoneyNet,
Inc.
Short-term interest rates fell throughout most of the first half of the year, as
the market anticipated additional rate cuts by the Federal Reserve, which
eventually came in the form of a quarter-point reduction on June 25th.
Throughout this period, the Fund sought to take advantage of the higher yields
that were available among very short-term securities, and to lock in higher
rates among select longer-term instruments. This approach helped the Fund retain
its strong performance relative to its peers, and gave us the flexibility to
adjust the portfolio in case rates moved higher.
Foreign affairs dominated the market in the 1st Quarter, as economic events took
a back seat to the conflict in Iraq. Upon the conclusion of the war, the market
began to focus again on the threat of deflation. Within its own ability, the
Federal Reserve is simply not going to let deflationary forces take root in the
U.S.
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) Variable Rate Notes 32%
2) Corporate Notes 26%
3) Commercial Paper 18%
4) Repurchase Agreements 17%
5) U.S. Gov't Agency Notes 7%
Portfolio holdings are subject to change.
as they have in Japan over the last 10 years. It is our view that the Fed wishes
to keep short-term rates low for some time, as a means of combating deflation
and supporting an improving economy. Therefore, we would expect yields on all
short-term instruments to remain relatively low until the economy begins to
expand at a more robust rate - which may not occur until late this year or early
next year.
Past performance does not guarantee future results. Except for the current and
effective yields, all performance figures represent period and average annual
total returns for the periods ended June 30, 2003, and assume reinvestment of
all dividend and capital gain distributions. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Expenses were
waived and/or reimbursed in order to reduce the operating expenses of The Money
Market Fund during the periods shown above. Without such waivers, the Fund's
rankings may have been lower. Investments in The Money Market Fund are neither
insured nor guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. Although the Fund seeks to perserve the value of your
invesment at $1.00 per share, it is possible to lose money by investing in The
Money Market Fund.
- --------------------------------------------------------------------------------
2003 Semiannual Report | June 30, 2003 9
The Flex-funds
The U.S. Government Bond Fund
- -------------------------------------------------------------------------------------------------------
Performance Perspective
Period & Average Annual Total Returns 3 Year 1 5 10 Since
as of June 30, 2003 months to date Year Year Year Inception
- -------------------------------------------------------------------------------------------------------
The U.S. Government Bond Fund -1.88% -1.36% 5.48% 4.94% 5.51% 6.56%/1/
- -------------------------------------------------------------------------------------------------------
Lehman Bros. Intermediate Government/Credit Index 2.71% 4.26% 10.82% 7.64% 6.87% n/a
- -------------------------------------------------------------------------------------------------------
Average General U.S. Government Bond Fund 1.41% 2.18% 7.30% 6.10% 5.79% n/a
- -------------------------------------------------------------------------------------------------------
/1/ Inception Date: 5/9/85. Source for index and average fund data: Morningstar,
Inc.
- --------------------------------------------------------------------------------
Semiannual Market Perspective
[PHOTO]
Joseph A. Zarr
Co-Portfolio Manager
[PHOTO]
Christopher M.
O'Daniel, CFA
Co-Portfolio Manager
During the first half of 2003, signs were emerging that the inverse relationship
between bonds and stocks that had been in place for much of the last two years
was starting to decouple. Bond prices rose in the 1st Quarter as the fear and
uncertainty surrounding the seemingly imminent war in Iraq caused stock prices
to fall. As the price trend in bonds was positive during this time, we adopted
a fully-invested position in long-term U.S. Treasuries. Once military action
commenced and its outcome became more certain, equities rallied once again and
bond prices fell, mandating that we adopted a fully-defensive position in
short-term Treasuries in April.
During the 2nd Quarter, bond investors turned away from international affairs
and looked closer to home for direction. Reported data reflected a mixed
picture for the U.S. economy, with continued growth at a slow pace, gradual
improvement in corporate earnings, and a rise in unemployment. It was up to the
Federal Reserve to provide some guidance to bond investors. The Fed sent signals
that it was beginning to concentrate on the ills of deflation instead of the
ravages of inflation. At that point, the market began to seriously consider
the likelihood of another Fed rate cut, possibly as much as a half-point
reduction in the Fed funds target rate by quarter-end.
Long-term rates followed short-term rates downward, and accordingly the trend in
bond prices turned positive. We adopted a partially-invested position in June,
targeting exposure to intermediate-term Treasuries out
[CHART]
Pie chart
Portfolio Holdings as of June 30, 2003
1) 10-year U.S. Treasury Notes 100%
2) 10-year Hedged Position* 30%
Net Portfolio Exposure 70%
* As of 6/30/03, the Fund had adopted a 30% short position as a defensive
measure.
Portfolio holdings are subject to change.
of our on-going concern that the bull market in bonds has become overextended.
Once the Fed announced a quarter-point cut in rates at its June 25th meeting,
bond yields halted its freefall and the price trend stabilized for the time
being.
At this midpoint of the year, evidence is emerging that long-term interest rates
are on the rise and the bond market is due for a correction. A downturn in the
price trend component of our discipline would mandate a more defensive position
in the Fund, as we seek to provide protection of investor capital.
Past performance does not guarantee future results. All performance figures
represent period and average annual total returns for the periods ended June 30,
2003, and assume reinvestment of all dividend and capital gain distributions.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost. Expenses were waived and/or reimbursed in order to reduce the
operating expenses of The U.S. Government Bond Fund during the periods shown
above.
The Lehman Brothers Intermediate Government/Credit Index is an unmanaged index
of fixed-rate bonds issued by the U.S. Government and its agencies that are
rated investment grade or higher, have one to ten years remaining until
maturity, and at least $100 million outstanding. The Lehman Brothers
Intermediate Government/Credit Index does not take into account the deduction of
expenses associated with a mutual fund, such as investment management and
accounting fees. One cannot invest directly in an index.
- --------------------------------------------------------------------------------
10 2003 Semiannual Report | June 30, 2003
PAST PERFORMANCE OF MEEDER ASSET MANAGEMENT, INC. GROWTH AND AGGRESSIVE GROWTH
ACCOUNTS COMPOSITES
Purpose of Past Performance. The performance information on Pages 4 and 5 is
provided to show the past performance of the advisor in managing substantially
similar accounts to The Dynamic Growth Fund and The Aggressive Growth Fund.
What Past Performance Does Not Represent. The past performance shown on Pages 4
and 5 does not represent the performance of the Growth Portfolio or The Dynamic
Growth Fund, or the Aggressive Growth Portfolio or The Aggressive Growth Fund.
You should not consider the past performance for account composites shown on
Pages 4 and 5 as an indication of the future performance of the Growth Portfolio
or The Dynamic Growth Fund, or the Aggressive Growth Portfolio or The Aggressive
Growth Fund.
Similar Accounts. Robert M. Wagner, CFA serves as the advisor's portfolio
manager for privately managed accounts having investment goals, policies,
strategies and risks substantially similar to those of the Growth Portfolio
and The Dynamic Growth Fund, and the Aggressive Growth Portfolio and The
Aggressive Growth Fund. Substantially all of the assets of these privately
managed accounts have invested in mutual funds.
Calculation of Past Performance. All returns presented were calculated on a
total return basis and include all dividends and interest, accrued income and
realized and unrealized gains and losses. All returns reflect the deduction of
investment advisory fees, brokerage commissions and execution costs paid by the
private accounts without providing for federal or state income taxes. Custodial
fees, if any, were not used to reduce performance returns. The advisor's
composite includes all actual, fee paying, discretionary, private accounts
managed by the advisor that have investment objectives, policies, strategies and
risks substantially similar to those of the Growth Portfolio and The Dynamic
Growth Fund, and the Aggressive Growth Portfolio and The Aggressive Growth Fund.
Cash and equivalents are included in performance returns. The returns of the
advisor's composite combine the individual accounts' returns by asset-weighting
each individual account's asset value as of the beginning of each quarter. The
yearly returns are computed by linking the returns of each quarter within the
calendar year.
Differences in Regulation. The private accounts that are included in the
advisor's composite are not subject to the same types of expenses to which the
Growth Portfolio or The Dynamic Growth Fund, or the Aggressive Growth Portfolio
or The Aggressive Growth Fund are subject nor to the diversification
requirements, specific tax restrictions and investment limitations imposed on
the Growth Portfolio and The Dynamic Growth Fund, or the Aggressive Growth
Portfolio and The Aggressive Growth Fund by federal securities laws.
- --------------------------------------------------------------------------------
2003 Semiannual Report | June 30, 2003 11
The Flex-funds
2003 Semiannual Report
Portfolio Holdings &
Financial Statements
- --------------------------------------------------------------------------------
12 2003 Semiannual Report | June 30, 2003
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Muirfield Fund
The Muirfield Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- 98.8%
Federated Kaufmann Fund -- Class A # 2,679,554 11,200,538
Heartland Value Fund # 135,516 5,435,573
Nasdaq-100 Index Tracking Stock # 519,700 15,565,015
PBHG Mid Cap Fund # 458,181 6,588,655
The Yacktman Fund 862,675 12,034,328
----------
Total Common Stocks
(Cost $44,653,022) 50,824,109
----------
Money Market Registered Investment Companies -- 0.1%
Fidelity Cash Reserves Money Market
Fund 43,092 43,092
----------
Total Money Market Registered
Investment Companies
(Cost $43,092) 43,092
----------
U.S. Government Obligations -- 0.2%
U.S. Treasury Bills
1.08%, due 11/20/03 22,100 22,018
0.92%, due 12/26/03 * 100,000 99,528
----------
Total U.S. Government Obligations
(Cost $121,556) 121,546
----------
Repurchase Agreements -- 1.0%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $524,233
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03,
value -- $523,268) 513,000 513,000
----------
Total Repurchase Agreements
(Cost $513,000) 513,000
----------
Total Investments -- 100.1%
(Cost $45,330,670) 51,501,747
----------
Liabilities less Other Assets -- (0.1%) (56,497)
Total Net Assets -- 100.0% 51,445,250
----------
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Futures Contracts
Long, Nasdaq 100 Futures, face amount
$723,900 expiring September 2003 6 722,700
----------
Total Futures Contracts 722,700
----------
Trustee Deferred Compensation **
The Flex-funds Dynamic Growth Fund 2,459 15,541
The Flex-funds Highlands Growth Fund 2,568 33,435
The Flex-funds Muirfield Fund 8,425 34,290
The Flex-funds Total Return Utilities
Fund 1,798 24,165
----------
Total Trustee Deferred Compensation
(Cost $135,814) 107,431
----------
# Represents non-income producing securities.
* Pledged as collateral on Futures.
** Assets of affiliates to The Muirfield Fund held for the benefit of the
Fund's Trustees in connection with the Trustee Deferred Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds
13
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Total Return Utilities Fund
The Total Return Utilities Fund
Shares or
Principal
Security Description Amount ($) Value ($)
-------------------- ---------- ----------
Common Stocks -- 94.0%
Distribution -- 2.7%
Vectren Corp. 21,925 549,221
----------
Electric/Gas Utility -- 16.3%
AGL Resources, Inc. 28,970 736,997
ATMOS Energy Corp. 25,995 644,676
MDU Resources Group, Inc. 26,205 877,605
NiSource, Inc. 56,240 1,068,560
----------
3,327,838
----------
Electric Integrated -- 5.6%
DPL, Inc. 23,085 367,975
IDACORP, Inc. 29,405 771,881
----------
1,139,856
----------
Electric Utility -- 8.9%
Cinergy Corp. 18,185 669,026
Keyspan Corp. 32,125 1,138,831
----------
1,807,857
----------
Natural Gas (Distributor) -- 12.3%
Equitable Resources, Inc. 19,980 813,985
Nicor, Inc. 29,580 1,097,714
Transcanada Corp. 34,340 603,354
----------
2,515,053
----------
Oil and Natural Gas -- 1.9%
EOG Resources, Inc. 9,360 391,622
----------
Oil/Gas (Domestic) -- 23.4%
Anadarko Petroleum Corp. 8,900 395,783
Burlington Resources, Inc. 8,070 436,345
Devon Energy, Corp. 7,760 414,384
Kinder Morgan Energy Partners, L.P. 33,238 1,313,566
Peoples Energy Corp. 16,885 724,198
Questar Corp. 44,440 1,487,340
----------
4,771,616
----------
Telecommunication Services -- 18.7%
Alltel Corp. 17,200 829,384
Bellsouth Corp. 22,520 599,708
CenturyTel, Inc. 18,080 630,088
SBC Communications, Inc. 23,035 588,544
Telephone & Data Systems 10,790 536,263
Verizon Communications, Inc. 15,758 621,653
----------
3,805,640
----------
Water Utility -- 4.2%
Philadelphia Suburban Corp. 35,480 865,002
----------
Total Common Stocks
(Cost $19,180,707) 19,173,705
----------
Shares or
Principal
Security Description Amount ($) Value ($)
-------------------- ---------- ----------
U.S. Government Obligations -- 0.0%
U.S. Treasury Bill, 1.08%, due 11/20/03 1,000 996
----------
Total U.S. Government Obligations
(Cost $996) 996
----------
Repurchase Agreements -- 6.0%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $1,240,582
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03,
value --$1,238,298) 1,214,000 1,214,000
----------
Total Repurchase Agreements
(Cost $1,214,000) 1,214,000
----------
Total Investments -- 100.0%
(Cost $20,395,703) 20,388,701
----------
Other Assets less Liabilities -- 0.0% 16,159
----------
Total Net Assets -- 100.0% 20,404,860
----------
Trustee Deferred Compensation *
The Flex-funds Dynamic Growth Fund 805 5,088
The Flex-funds Highlands Growth Fund 691 8,997
The Flex-funds Muirfield Fund 2,548 10,370
The Flex-funds Total Return Utilities Fund 528 7,096
----------
Total Trustee Deferred Compensation
(Cost $36,526) 31,551
----------
* Assets of affiliates to The Total Return Utilities Fund held for the benefit
of the Fund's Trustees in connection with the Trustees Deferred Compensation
Plan.
See accompanying notes to financial statements.
The Flex-funds
14
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Highlands Growth Fund
The Highlands Growth Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- 96.1%
Capital Goods, Materials & Services -- 6.7%
(Subadvised by Dreyfus Service Corporation)
Agilent Technologies, Inc. # 1,300 25,415
Alcoa, Inc. 1,900 48,450
American Power Conversion # 2,100 32,781
American Standard Companies, Inc. # 625 46,206
Apollo Group, Inc. -- Class A # 750 46,350
Caterpillar, Inc. 1,100 61,226
Cendant Corp. # 2,600 47,632
Centex Corp. 250 19,447
Corporate Executive Board Co. # 1,500 60,765
CUNO, Inc. # 1,000 36,210
Dow Chemical 2,000 61,920
DuPont, E.I., de Nemours & Co. 1 42
Ecolab, Inc. 1,100 28,160
Emerson Electric Co. 800 40,880
Fluor Corp. 550 18,502
Inco, Ltd. # 800 16,912
Ingersoll-Rand Co. -- Class A 750 35,490
International Paper Co. 1,150 41,089
Iron Mountain, Inc. # 700 25,963
Jacobs Engineering Group, Inc. # 500 21,075
Johnson Controls, Inc. 492 42,115
Manpower, Inc. 600 22,254
Masco Corp. 3,080 73,458
Nextel Communication, Inc. -- Class A # 3,400 61,438
Omnicom Group, Inc. 570 40,869
PPG Industries, Inc. 690 35,011
Pactiv Corp. # 1 20
Paychex, Inc. 1,300 38,207
Power-One, Inc. # 2,650 18,868
Praxair, Inc. 740 44,474
Tetra Tech, Inc. # 1,100 19,140
Trex Co., Inc. # 800 31,400
Tyco International, Ltd. 5,870 111,413
Weyerhaeuser Co. 550 29,700
----------
1,282,882
----------
Consumer Durable Goods -- 7.5%
(Subadvised by Barrow, Hanley, Mewhinney & Strauss, Inc.)
Best Buy Co., Inc. # 1,500 65,880
Costco Wholesale Corp. # 2,100 76,860
General Motors Corp. 1,300 46,800
Home Depot, Inc. 5,900 195,408
Lowe's Companies, Inc. 3,000 128,850
Target Corp. 4,700 177,848
Wal-Mart Stores, Inc. 11,500 617,205
Walgreen Co. 4,400 132,440
----------
1,441,291
----------
Consumer Non-durable Goods -- 15.1%
(Subadvised by Barrow, Hanley, Mewhinney & Strauss, Inc.)
Action Performance Companies, Inc. 4,033 76,627
Aeropostale, Inc. # 5,000 107,400
Altria Group, Inc. 5,380 244,467
Anheuser-Busch Companies, Inc. 1,940 99,037
AOL Time Warner, Inc. # 8,810 141,753
Bunge Ltd. 2,640 75,504
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- continued
Carnival Corp. 1,980 64,370
Cedar Fair, LP 1,040 29,120
Circuit City Stores, Inc. 2,000 17,600
Clear Channel Communications, Inc # 1,800 76,302
Coca-Cola Co. 5,160 239,476
Colgate-Palmolive Co. 520 30,134
Comcast Corp. -- Special -- Class A # 4,620 133,934
ConAgra Foods, Inc. 3,340 78,824
Gannett Co. 1,100 84,491
Gillette Co. 1,340 42,692
Haggar Corp. 4,400 55,000
Hain Celestial Group, Inc. # 3,060 48,868
Imperial Tobacco Group -- ADR 1,720 62,281
Investors Financial Services Corp. 4,570 132,667
JAKKS Pacific, Inc. # 6,440 85,459
Kraft Foods, Inc. 1,600 52,080
Loews Corp. -- Carolina Group 1,340 36,180
McDonald's Corp. 3,040 67,062
Newell Rubbermaid, Inc. 2,400 67,200
Omnicom Group, Inc. 55 3,944
PepsiCo, Inc. 4,080 181,560
Procter & Gamble Co. 2,340 208,681
Starwood Hotels & Resorts Worldwide,
Inc. 1,920 54,893
Viacom, Inc. -- Class B # 3,773 164,729
Walt Disney Co. 3,380 66,755
Wendy's International, Inc. 2,900 84,013
----------
2,913,103
----------
Energy -- 5.7%
(Subadvised by The Mitchell Group, Inc.)
Amerada Hess Corp. 900 44,262
Apache Corp. 625 40,662
BP PLC ADR 1,148 48,239
Baker Hughes, Inc. 1,100 36,927
Cal Dive International, Inc. # 600 13,068
Chevron Texaco Corp. 2,356 170,103
Comstock Resources, Inc. # 1,700 23,256
ConocoPhillips 1,600 87,680
Devon Energy Corp. 838 44,749
Ensco International, Inc. 600 16,140
Exxon Mobil Corp. 7,324 263,005
FMC Technologies, Inc. # 1,300 27,365
Halliburton Co. 1,600 36,800
Kerr-McGee Corp. 900 40,320
Noble Corp. # 850 29,155
Pioneer Natural Resources Co. # 1,700 44,370
Schlumberger, Ltd. 1,500 71,355
W-H Energy Services, Inc. # 1,200 23,472
Westport Resources Corp. # 600 13,650
Willbros Group, Inc. # 1,400 14,546
----------
1,089,124
----------
The Flex-funds
15
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Highlands Growth Fund
The Highlands Growth Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- continued
Finance -- 21.5%
(Subadvised by Clover Partners LP)
Alliance Capital Management Holding,
LP 3,170 115,705
Ameren Corp. 450 19,845
American Express Co. 5,055 211,350
American International Group, Inc. 7,535 415,781
Astoria Financial Corp. 3,250 90,773
BB&T Corp. 6,710 230,153
Bank of America Corp. 4,395 347,337
Charter One Financial, Inc. 3,690 115,054
Citigroup, Inc. 14,715 629,802
Cullen/Frost Bankers, Inc. 3,430 110,103
FMC Technologies, Inc. # 400 8,420
Fifth Third Bancorp 1,340 76,943
General Electric Co. 19,625 562,845
Hartford Financial Services Group 1,810 91,152
M & T Bank Corp. 890 74,956
Mellon Financial Corp. 3,220 89,355
Merrill Lynch & Co., Inc. 3,855 179,951
Morgan Stanley 2,155 92,126
National Commerce Financial Corp. 2,350 52,147
Platinum Underwriters Holdings, Ltd. 5,670 153,884
Radian Group, Inc. 3,740 137,071
Southwest Bancorp of Texas # 2,130 69,246
Travelers Property Casualty Corp. --
Class A 3,925 62,407
Travelers Property Casualty Corp. --
Class B 2,895 45,654
Wachovia Corp. -- Preferred Dividend
Equalization 1,700 --
Willis Group Holdings, Ltd. 5,330 163,897
----------
4,145,957
----------
Health -- 14.5%
(Subadvised by Matrix Asset Advisors, Inc.)
Abbott Laboratories 5,525 241,774
AMGEN, Inc. # 3,200 211,008
Biomet, Inc. 1,900 54,511
Baxter International, Inc. 7,100 184,600
Boston Scientific Corp. # 575 35,133
Bristol-Myers Squibb Co. # 8,675 235,526
Guidant Corp. 4,075 180,889
HCA, Inc. 1,725 55,269
Johnson & Johnson 3,125 161,563
McKesson Corp. 1,875 67,013
Merck & Co., Inc. 6,225 376,924
Pfizer, Inc. 20,825 711,173
Wellpoint Health Networks, Inc. # 325 27,397
Wyeth 5,475 249,386
----------
2,792,166
----------
Technology -- 17.5%
(Subadvised by Dresdner RCM Global Investors, L.L.C.)
3 M Co. 1,455 187,666
Accenture, Ltd. -- Class A # 4,550 82,310
Alcatel SA -- Sposored ADR # 3,700 33,115
Amdocs, Ltd. # 5,330 127,920
Apple Computer, Inc. # 1,830 34,880
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- continued
BEA Systems, Inc. # 2,910 31,690
CDW Corp. # 1,180 54,056
Cannon, Inc. -- ADR 1,870 85,365
Cisco Systems, Inc. # 3,330 55,911
Computer Sciences Corp. # 1,030 39,264
Cypress Semiconductor Corp. # 6,100 73,200
Dell Computer Corp. # 3,505 111,599
Ebay, Inc. # 600 62,400
Emulex Corp. # 3,460 78,784
Globespanvirata, Inc. # 5,660 47,318
Great Plains Energy, Inc. 485 14,007
Helmerich & Payne 600 17,520
Hewlett-Packard Co. 10,480 223,224
International Business Machines Corp. 990 81,675
Intel Corp. 5,020 104,466
Jabil Circuit, Inc. # 1,840 40,664
Marvell Technology Group, Ltd. # 2,790 95,837
Maxim Integrated Products, Inc. 860 29,326
Mercury Interactive Corp. # 1,510 58,527
Microchip Technology, Inc. 2,700 66,825
Microsoft Corp. # 25,980 666,127
Nokia Corp. -- Spsonsored ADR 6,340 104,166
Northrop Grumman Corp. 930 80,250
QLOGIC Corp. # 1,990 95,997
Qualcomm, Inc. 2,030 73,140
SOHU.com, Inc. # 710 24,140
Sun Microsystems, Inc. # 11,440 53,196
Symantec Corp. # 910 39,958
Taiwan Semiconductor Manufacturing
Co., Ltd. -- ADR # 5,400 54,432
UTStarcom, Inc. # 3,590 127,948
United Technologies Corp. 1,305 92,433
Vectren Corp. 515 12,901
Veritas Software Corp. # 3,920 112,974
----------
3,375,211
----------
Transportation -- 1.3%
(Subadvised by Miller/Howard Investments, Inc.)
Burlington Northern Santa Fe Corp. 640 18,202
CSX Corp. 352 10,592
Delta Air Lines, Inc. 205 3,009
FedEx Corp. 505 31,325
Norfolk Southern Corp. 650 12,480
Ryder System, Inc. 100 2,562
Sabre Holdings Corp. 245 6,039
Southwest Airlines Co. 1,443 24,820
Union Pacific Corp. 415 24,078
United Parcel Service, Inc. -- Class B 1,915 121,985
----------
255,092
----------
Utilities -- 6.2%
(Subadvised by W.H. Reaves & Co., Inc.)
Alltel Corp. 950 45,809
BCE, Inc. 955 22,070
BellSouth Corp. 5,569 148,302
Boston Scientific Corp. # 550 33,605
Calpine Corp. # 2,665 17,589
Constellation Energy Group 2,950 101,185
The Flex-funds
16
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Highlands Growth Fund
The Highlands Growth Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Common Stocks -- continued
Dominion Resources, Inc. 1,320 84,836
Dow Chemical Co. 400 12,384
Ensco International, Inc. 400 10,760
Equitable Resources, Inc 615 25,055
Exelon Corp. 1,300 77,753
FPL Group, Inc. 950 63,508
FirstEnergy Corp. 2,300 88,435
Oneok, Inc. 4,785 93,930
SBC Communications, Inc. 4,575 116,891
Schwab, Charles Corp. 2,990 30,169
South Jersey Industries, Inc. 775 28,559
Verizon Communications, Inc. 4,745 187,192
----------
1,188,032
----------
Total Common Stocks
(Cost $17,807,187) 18,482,858
----------
U.S. Government Obligations -- 0.4%
U.S. Treasury Bills
1.08%, 07/03/03 * 50,000 49,993
1.14%, 07/24/03 * 25,000 24,981
1.08%, 11/20/03 9,000 8,967
----------
Total U.S. Government Obligations
(Cost $83,937) 83,941
----------
Repurchase Agreements -- 3.6%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $707,152
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03, value --
$705,850) 692,000 692,000
----------
Total Repurchase Agreements
(Cost $692,000) 692,000
----------
Total Investments -- 100.1%
(Cost $18,583,124) 19,258,799
----------
Liabilities less Other Assets -- (0.1%) (23,974)
----------
Total Net Assets -- 100.0% 19,234,825
----------
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Futures Contracts
Long, S&P 500 Futures, face amount
$486,650 expiring September 2003 2 486,650
----------
Total Futures Contracts 486,650
----------
Trustee Deferred Compensation **
The Flex-funds Dynamic Growth Fund 1,306 8,254
The Flex-funds Highlands Growth Fund 1,190 15,494
The Flex-funds Muirfield Fund 4,270 17,379
The Flex-funds Total Return Utilities
Fund 914 12,284
----------
Total Trustee Deferred Compensation
(Cost $64,686) 53,411
----------
ADR: American Depository Receipt
# Represents non-income producing securities.
* Pledged as collateral on Futures Contracts.
** Assets of affiliates to The Highlands Growth Fund held for the benefit of
the Fund's Trustees in connection with the Trustee Deferred Compensation
Plan.
See accompanying notes to financial statements.
The Flex-funds
17
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Dynamic Growth Fund
The Dynamic Growth Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ----------
Registered Investment Companies -- 85.4%
AIM Basic Value Fund -- Class A # 107,494 2,663,722
Federated Kaufmann Fund -- Class A # 928,381 3,880,637
Fidelity Leveraged Company Stock
Fund # 220,102 3,310,345
Gabelli Growth Fund -- AAA # 250,000 5,285,013
Neuberger Berman Focus Fund -- Trust
Class # 23,223 480,724
----------
Total Registered Investment Companies
(Cost $14,532,843) 15,620,441
----------
Money Market Registered Investment Companies -- 4.4%
Fidelity Cash Reserves Money Market
Fund 812,219 812,219
----------
Total Money Market Registered
Investment Companies
(Cost $812,219) 812,219
----------
U.S. Government Obligations -- 2.2%
U.S. Treasury Bill, 1.21%,
due 04/03/03 * 400,000 399,942
----------
Total U.S. Government Obligations
(Cost $399,942) 399,942
----------
Repurchase Agreements -- 9.5%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $1,781,165
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03,
value -- $1,777,886) 1,743,000 1,743,000
----------
Total Repurchase Agreements
(Cost $1,743,000) 1,743,000
----------
Total Investments -- 101.5%
(Cost $17,488,004) 18,575,602
----------
Liabilities less Other Assets -- (1.5%) (278,046)
----------
Total Net Assets -- 100.0% 18,297,556
----------
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ -----------
Futures Contracts
Long, Nasdaq 100 Futures, face amount
$2,413,000 expiring September 2003 20 2,409,000
-----------
Total Futures Contracts 2,409,000
-----------
Trustee Deferred Compensation **
The Flex-funds Dynamic Growth Fund 477 3,015
The Flex-funds Highlands Growth Fund 310 4,036
The Flex-funds Muirfield Fund 1,414 5,755
The Flex-funds Total Return Utilities
Fund 290 3,898
-----------
Total Trustee Deferred Compensation
(Cost $17,428) 16,704
-----------
# Represents non-income producing security.
* Pledged as collateral on Futures Contracts.
** Assets of affiliates to The Dynamic Growth Fund held for the benefit of the
Fund's Trustees in connection with the Trustee Deferred Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds
18
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Aggressive Growth Fund
The Aggressive Growth Fund
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ---------
Registered Investment Companies -- 83.9%
Federated Kaufmann Fund -- Class A # 529,636 2,213,879
Fidelity Leveraged Company Stock
Fund # 95,377 1,434,483
Gabelli Growth Fund-AAA # 26,453 559,231
Neuberger Berman Focus Fund -- Trust
Class # 41,781 864,871
PBHG Clipper Focus Fund 51,775 736,760
Rydex Series Precious Metals # 11,599 354,490
---------
Total Registered Investment Companies
(Cost $5,756,259) 6,163,714
---------
Money Market Registered Investment Companies -- 0.6%
Fidelity Cash Reserves Money Market
Fund 43,387 43,387
Total Money Market Registered
Investment Companies
(Cost $43,387) 43,387
---------
U.S. Government Obligations -- 2.7%
U.S. Treasury Bill, 1.08%, due 07/03/03 * 200,000 199,988
---------
Total U.S. Government Obligations
(Cost $199,988) 199,988
---------
Repurchase Agreements -- 13.0%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $972,845
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03,
value -- $971,054) 952,000 952,000
Total Repurchase Agreements
(Cost $952,000) 952,000
---------
Total Investments -- 100.2%
(Cost $6,951,634) 7,359,089
---------
Liabilities less Other Assets -- (0.2%) (11,981)
---------
Total Net Assets -- 100.0% 7,347,108
---------
Shares,
Principal
Amount ($),
Security Description or Contracts Value ($)
-------------------- ------------ ---------
Futures Contracts
Long, Nasdaq Futures, face amount
$965,200 expiring September 2003 8 963,600
---------
Total Futures Contracts 963,600
---------
Trustee Deferred Compensation **
The Flex-funds Dynamic Growth Fund 413 2,610
The Flex-funds Highlands Growth Fund 267 3,476
The Flex-funds Muirfield Fund 1,223 4,978
The Flex-funds Total Return Utilities Fund 250 3,360
---------
Total Trustee Deferred Compensation
(Cost $15,020) 14,424
---------
# Represents non-income producing securities.
* Pledged as collateral on Futures Contracts.
** Assets of affiliates to The Aggressive Growth Fund held for the benefit of
the Fund's Trustees in connection with the Trustee Deferred Compensation
Plan.
See accompanying notes to financial statements.
The Flex-funds
19
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The U.S. Government Bond Fund
Principal
Amount ($)
Security Description or Shares Value ($)
-------------------- ---------- ----------
U.S. Government Obligations -- 91.1%
U.S. Treasury Bill
1.08%, 11/20/03 4,800 4,782
U.S. Treasury Bill *
0.86%, 12/11/03 100,000 99,572
U.S. Treasury Note
3.625%, 05/15/13 13,000,000 13,117,813
----------
Total U.S. Government Obligations
(Cost $13,412,862) 13,222,167
----------
Repurchase Agreements -- 8.3%
Salomon Smith Barney, Inc., 1.43%,
07/01/03, (Collateralized by $1,230,363
Banco Santander Commercial Paper,
at 1.05%, due 09/02/03,
value -- $1,228,098) 1,204,000 1,204,000
----------
Total Repurchase Agreements
(Cost $1,204,000) 1,204,000
----------
Total Investments -- 99.4%
(Cost $14,616,862) 14,426,167
----------
Other Assets less Liabilities -- 0.6% 93,358
----------
Total Net Assets -- 100.0% 14,519,525
----------
Futures Contracts
Long, U.S. 10-Year Note Futures, face
amount $589,063 expiring September
2003 5 587,188
----------
Total Futures Contracts 587,188
----------
Call Options Written
10 Year Bond Future, Expiring
September 2003, Exercise Price at 121 50 10,156
----------
Total Call Options Written
(Premiums received $37,175) 10,156
----------
The U.S. Government Bond Fund
Principal
Amount ($)
Security Description or Shares Value ($)
-------------------- ---------- ----------
Put Options Bought
10 Year Bond Future, Expiring
September 2003, Exercise Price at 118 50 77,344
----------
Total Put Options Bought
(Premiums paid $37,825) 77,344
----------
Trustee Deferred Compensation **
The Flex-funds Dynamic Growth Fund 590 3,729
The Flex-funds Highlands Growth Fund 545 7,096
The Flex-funds Muirfield Fund 1,901 7,737
The Flex-funds Total Return Utilities
Fund 394 5,295
----------
Total Trustee Deferred Compensation
(Cost $28,038) 23,857
----------
* Pledged as collateral on Futures.
** Assets of affiliates to The U.S. Government Bond Fund held for the benefit
of the Fund's Trustees in connection with the Trustee Deferred Compensation
Plan.
See accompanying notes to financial statements.
The Flex-funds
20
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money Market Portfolio
Money Market Portfolio
Principal
Coupon/ Amount ($)
Yield Maturity or Shares Value ($)
------- -------- ---------- ----------
Commercial Papers -- 18.0%
Archer Daniels Midland
Co.** 1.08% 11/12/03 10,000,000 9,959,800
Cargill, Inc. 1.06% 11/03/03 5,000,000 4,981,597
Duff & Phelps Utility &
Corporate Bond Trust,
Inc.** 1.13% 09/02/03 4,750,000 4,740,607
Pfizer, Inc.** 0.92% 08/12/03 3,800,000 3,795,838
Schering-Plough Corp. 1.21% 08/12/03 8,000,000 7,988,707
Toyota Motor Credit Corp. 1.05% 11/25/03 5,000,000 4,978,562
----------
Total Commercial Papers
(Cost $36,445,111) 36,445,111
----------
Corporate Obligations -- 56.9%
Abbott Laboratories 5.60% 10/01/03 505,314 505,314
American General Finance
Corp. 5.75% 11/01/03 1,010,000 1,024,724
Aquarium Holdings, KY 1.15%* 07/03/03 108,000 108,000
Associates Corp. 6.88% 08/01/03 1,000,000 1,003,730
Associates Corp. 5.75% 11/01/03 7,000,000 7,106,330
Austin Printing Co., Inc. 1.12%* 07/03/03 1,955,000 1,955,000
Bath Technologies, Inc. 1.15%* 07/03/03 1,340,000 1,340,000
Bear Stearns Co., Inc. 6.70% 08/01/03 2,108,000 2,116,864
Beaver Creek Enterprise 1.12%* 07/03/03 1,640,000 1,640,000
Cascade Plaza Project 1.12%* 07/03/03 8,395,000 8,395,000
Citigroup, Inc. 6.75% 08/15/03 350,000 352,041
Clark Grave Vault Co. 1.15%* 07/03/03 1,350,000 1,350,000
Coughlin Family Property,
Inc. 1.15%* 07/03/03 1,880,000 1,880,000
Espanola/Nambe 1.12%* 07/03/03 1,185,000 1,185,000
First Colony Corp. 6.63% 08/01/03 7,000,000 7,031,731
Florida Power & Light 5.79% 09/15/03 3,500,000 3,531,874
Fortune Brands, Inc. 8.50% 10/01/03 1,250,000 1,272,062
General Electric Capital
Corp. 5.38% 04/23/04 1,220,000 1,259,092
General Electric Capital
Corp. 7.13% 11/01/03 1,600,000 1,628,972
General Electric Capital
Corp. 6.75% 09/11/03 520,000 524,876
Gordon Flesch Co. Project 1.12%* 07/03/03 900,000 900,000
Hancor, Inc. 1.12%* 07/03/03 200,000 200,000
Isaac Tire, Inc. 1.15%* 07/03/03 870,000 870,000
J.P. Morgan 8.50% 08/15/03 2,675,000 2,698,640
J.P. Morgan 4.49% 08/01/03 500,000 500,837
J.P. Morgan 5.69% 02/10/04 3,000,000 3,077,901
Keiser Street, Inc. 1.12%* 07/03/03 1,825,000 1,825,000
K.L. Morris, Inc. 1.15%* 07/03/03 2,095,000 2,095,000
Martin Wheel Co, Inc. 1.32%* 07/03/03 2,420,000 2,420,000
Mellon Funding Corp. 5.75% 11/15/03 1,500,000 1,524,616
Merrill Lynch & Co., Inc. 5.70% 02/06/04 1,500,000 1,538,209
MetLife Insurance Co.*** 1.38%* 10/01/03 12,000,000 12,000,000
Mubea, Inc. 1.12%* 07/03/03 7,650,000 7,650,000
Nations Bank 6.50% 08/15/03 200,000 201,022
Osco Industries, Inc. 1.12%* 01/25/03 1,500,000 1,500,000
O.K.I. Supply Co. 1.15%* 07/03/03 1,550,000 1,550,000
Parker Hannifin 5.65% 09/15/03 8,000,000 8,074,244
Presrite Corp. 1.12%* 07/03/03 340,000 340,000
Principal
Coupon/ Amount ($)
Yield Maturity or Shares Value ($)
' ------- -------- ---------- -----------
Corporate Obligations -- continued
Pro Tire, Inc. 1.15%* 07/03/03 1,045,000 1,045,000
Procter & Gamble Co. 5.25% 09/15/03 3,375,000 3,402,085
R.I. Lampus Co. 1.12%* 07/03/03 790,000 790,000
Salomon Smith Barney 7.20% 02/01/04 2,101,000 2,171,345
Seariver Maritime, Inc. 1.34%* 07/03/03 4,900,000 4,900,000
SGS Tool Co. 1.12%* 07/03/03 720,000 720,000
Southern California Gas 5.75% 11/15/03 300,000 304,893
Wells Fargo 9.13% 02/01/04 1,000,000 1,044,391
White Castle Project 1.12%* 07/03/03 6,750,000 6,750,000
-----------
Total Corporate Obligations
(Cost $115,303,794) 115,303,794
-----------
U.S. Government Agency Obligations -- 7.3%
Federal Farm Credit Bank 5.15% 12/03/03 100,000 101,585
Federal Home Loan Bank 7.32%* 07/02/03 800,000 800,129
Federal Home Loan Bank 6.75% 08/01/03 300,000 312,389
Federal Home Loan Bank 5.79% 07/28/03 250,000 250,632
Federal Home Loan Bank 5.17% 04/05/04 515,000 524,946
Federal Home Loan Bank 5.08% 11/06/03 150,000 151,950
Federal Home Loan Bank 4.13% 08/15/03 500,000 501,313
Federal Home Loan Bank 3.25% 02/13/04 510,000 515,998
Federal Home Loan Bank 1.42% 05/24/04 1,720,000 1,720,000
Federal Home Loan Bank 1.30% 06/30/04 5,000,000 5,000,000
Federal Home Loan Bank 1.30% 06/07/04 5,000,000 5,000,000
-----------
Total U.S. Government Agency Obligations
(Cost $14,878,942) 14,878,942
-----------
The Flex-funds
21
Schedule of Investments in Securities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money Market Portfolio
Principal
Coupon/ Amount ($)
Yield Maturity or Shares Value ($)
------- -------- ---------- -----------
U.S. Treasury Obligations -- 0.0%
U.S. Treasury Bill 1.08% 11/20/03 63,100 62,831
---------- -----------
Total U.S. Treasury Obligations
(Cost $62,831) 62,831
-----------
Repurchase Agreements -- 17.2%
Salomon Smith Barney,
Inc., (Collateralized by
$35,499,660 Banco
Santander Commercial
Paper, at 1.05%, due
09/02/03, value --
$35,434,301) 1.43% 07/01/03 34,739,000 34,739,000
-----------
Total Repurchase Agreements
(Cost $34,739,000) 34,739,000
-----------
Total Investments -- 99.4%
(Cost $201,429,678) (a) 201,429,678
-----------
Other Assets less Liabilities -- 0.6% 1,189,783
-----------
Total Net Assets --100.0% 202,619,461
-----------
Money Market Portfolio
Principal
Amount ($)
or Shares Value ($)
---------- -----------
Trustee Deferred Compensation ****
The Flex-funds Dynamic Growth Fund 1,124 7,104
The Flex-funds Highlands Growth Fund 1,137 14,804
The Flex-funds Muirfield Fund 3,943 16,048
The Flex-funds Total Return Utilities Fund 905 12,163
-----------
Total Trustee Deferred Compensation
(Cost $50,119) 50,119
-----------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate security. Interest rate is as of June 30, 2003. Maturity date
reflects the next rate change date.
** Represents a restricted security purchased under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended. Security is
restricted as to resale to institutional investors, but has been deemed
liquid in accordance with guidelines approved by the Board of Trustees. As
of June 30, 2003, securities restricted as to resale to institutional
investors represented 9.2% of the Portfolio.
*** Illiquid security. The sale or disposition of such security would not be
possible in the ordinary course of business within seven days at
approximately the value at which the Fund has valued the security. As of
June 30, 2003, illiquid securities represented 6.0% of the Portfolio.
**** Assets of affiliates to the Money Market Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
See accompanying notes to financial statements.
The Flex-funds
22
[THIS PAGE INTENTIONALLY LEFT BLANK]
23
Statements of Assets & Liabilities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The The Total
Muirfield Return
Fund Utilities Fund
------------ --------------
Assets
Investments, at value* $ 50,988,747 $ 19,174,701
Repurchase agreements, at value* 513,000 1,214,000
Trustee deferred compensation investments, at value 107,431 31,551
Cash 861 922
Receivable for securities sold -- --
Put options bought (premiums paid $37,825) -- --
Receivable for net variation margin on futures contracts 1,200 --
Investments in corresponding portfolio, at value N/A N/A
Receivable from investment advisor -- --
Interest and dividend receivable 54 42,955
Prepaid expenses/other assets 19,717 38,765
- ----------------------------------------------------------------------------------------------------------------
Total Assets 51,631,010 20,502,894
- ----------------------------------------------------------------------------------------------------------------
Liabilities
Payable for securities purchased -- --
Payable for Trustee Deferred Compensation Plan 107,431 31,551
Call options written (premiums received $37,175) -- --
Payable for capital stock redeemed -- --
Dividends payable -- 33,406
Payable to investment advisor 40,759 16,360
Accrued distribution plan fees (12b-1) 5,729 --
Accrued transfer agent, fund accounting, and administrative fees 8,791 5,004
Other accrued liabilities 23,050 11,713
- ----------------------------------------------------------------------------------------------------------------
Total Liabilities 185,760 98,034
- ----------------------------------------------------------------------------------------------------------------
Net Assets 51,445,250 20,404,860
- ----------------------------------------------------------------------------------------------------------------
Net Assets
Capital 76,854,819 31,232,055
Accumulated undistributed (distributions in excess of) net investment income (253,707) 11,406
Accumulated undistributed net realized gain (loss) from investments (31,326,939) (10,831,599)
Net unrealized appreciation (depreciation) of investments 6,171,077 (7,002)
- ----------------------------------------------------------------------------------------------------------------
Total Net Assets $ 51,445,250 $ 20,404,860
- ----------------------------------------------------------------------------------------------------------------
Capital Stock Outstanding (indefinite number of shares authorized, $0.10 par value) 12,645,799 1,518,474
Net Asset Value, Offering and Redemption Price Per Share $ 4.07 $ 13.44
- ----------------------------------------------------------------------------------------------------------------
* Investments, at cost $ 45,330,670 $ 20,395,703
- ----------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
The Flex-funds
24
- --------------------------------------------------------------------------------
The U.S. The Money
The Highlands The Dynamic The Aggressive Government Market
Growth Fund Growth Fund Growth Fund Bond Fund Fund
----------- ------------ -------------- ----------- ------------
$18,572,965 $ 16,832,602 $ 6,407,089 $13,222,167 N/A
692,000 1,743,000 952,000 1,204,000 N/A
53,411 16,704 14,424 23,857 N/A
521 929 156 651 N/A
86,613 -- -- -- N/A
-- -- -- 77,344 N/A
-- 4,000 1,600 1,875 N/A
N/A N/A N/A N/A $189,689,100
-- 2,231 2,588 498 5,982
18,362 700 71 51,532 N/A
22,752 6,583 6,241 15,166 82,755
--------------------------------------------------------------------
19,446,624 18,606,749 7,384,169 14,597,090 189,777,837
--------------------------------------------------------------------
116,106 -- -- -- N/A
53,411 16,704 14,424 23,857 N/A
-- -- -- 10,157 N/A
-- 259,276 -- -- --
-- -- -- 21,928 146,597
14,828 10,889 4,334 4,650 N/A
6,350 2,314 2,788 4,040 33,731
5,075 4,238 1,568 2,964 28,654
16,029 15,772 13,947 9,969 7,159
--------------------------------------------------------------------
211,799 309,193 37,061 77,565 216,141
--------------------------------------------------------------------
19,234,825 18,297,556 7,347,108 14,519,525 189,561,696
--------------------------------------------------------------------
27,253,036 27,427,549 16,213,203 14,379,238 189,561,696
(10,078) (84,185) (32,026) 155,537 --
(8,683,808) (10,133,406) (9,241,524) 108,908 --
675,675 1,087,598 407,455 (124,158) --
--------------------------------------------------------------------
$19,234,825 $ 18,297,556 $ 7,347,108 $14,519,525 $189,561,696
--------------------------------------------------------------------
1,477,809 2,894,010 1,357,622 651,311 189,561,696
$ 13.02 $ 6.32 $ 5.41 $ 22.29 $ 1.00
--------------------------------------------------------------------
$18,589,290 $ 17,488,004 $ 6,951,634 $14,550,325 N/A
--------------------------------------------------------------------
The Flex-funds
25
Statements of Operations
For the Six Months Ended June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The The Total
Muirfield Return Utilities
Fund Fund
----------- ----------------
Net Investment Income (Loss) from Corresponding Portfolio*
Interest $ 90,852 $ 362
Dividends -- 248,468
Expenses net of reductions (155,787) (66,014)
- -------------------------------------------------------------------------------------------------
Total Net Investment Income (Loss) from Corresponding Portfolio (64,935) 182,816
- -------------------------------------------------------------------------------------------------
Investment Income**
Interest 16,853 2,800
Dividends -- 159,031
- -------------------------------------------------------------------------------------------------
Total Investment Income 16,853 161,831
- -------------------------------------------------------------------------------------------------
Fund Expenses
Investment advisor** 105,044 41,169
Transfer agent 28,448 10,895
Fund accounting** 8,305 5,185
Administrative 11,853 4,540
Trustee** 3,900 2,704
Audit 4,259 4,182
Legal 1,793 3,342
Custody** 1,170 945
Printing 3,842 2,076
Distribution plan (12b-1) 16,595 22,202
Postage 5,973 4,631
Registration and filing 5,865 6,157
Insurance 780 379
Other 7,798 6,238
- -------------------------------------------------------------------------------------------------
Total Expenses Before Reductions 205,625 114,645
- -------------------------------------------------------------------------------------------------
Expenses reimbursed by investment advisor -- --
Expenses paid indirectly -- (1,495)
- -------------------------------------------------------------------------------------------------
Net Expenses 205,625 113,150
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (253,707) 231,497
- -------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) from Investments from
Corresponding Portfolio*
Net realized gains (losses) from futures contracts (81,542) --
Net realized gains (losses) from investments (2,826,968) (1,311,837)
Net change in unrealized appreciation (depreciation) of investments 771,086 133,519
- -------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) from Investments from
Corresponding Portfolio (2,137,424) (1,178,318)
- -------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Investments**
Net realized gains (losses) from futures contracts 4,873 --
Net realized gains (losses) from investments 1,104,343 (346,106)
Net change in unrealized appreciation (depreciation) of investments 5,205,487 2,562,670
- -------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss) from Investments from
Corresponding Portfolio 6,314,703 2,216,564
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Net Change in Net Assets Resulting from Operations $ 3,923,572 $ 1,269,743
- -------------------------------------------------------------------------------------------------
* This information represents activity for each fund, except The Money Market
Fund, for the period January 1, 2003 through April 13, 2003.
** This information represents activity for each fund, except The Money Market
Fund, for the period April 14, 2003 through June 30, 2003.
See accompanying notes to financial statements.
The Flex-funds
26
- --------------------------------------------------------------------------------
The U.S.
The Highlands The Dynamic The Aggressive Government The Money
Growth Fund Growth Fund Growth Fund Bond Fund Market Fund
----------- ----------- -------------- ---------- -----------
$ 1,714 $ 13,036 $ 6,952 $ -- $1,377,659
93,407 -- -- 141,678 --
(67,516) (53,675) (26,200) (30,443) (187,154)
-----------------------------------------------------------------
27,605 (40,639) (19,248) 111,235 1,190,505
-----------------------------------------------------------------
2,927 9,593 4,789 63,830 N/A
63,459 -- -- -- N/A
-----------------------------------------------------------------
66,386 9,593 4,789 63,830 N/A
-----------------------------------------------------------------
39,910 28,273 11,208 12,396 N/A
10,705 8,561 3,401 4,350 74,892
5,060 4,838 2,242 4,167 N/A
4,461 4,281 1,701 3,625 47,692
2,770 2,410 1,720 2,044 N/A
4,182 4,259 4,285 4,388 3,602
2,539 3,131 3,038 2,307 3,016
1,995 1,584 1,170 581 N/A
3,229 849 857 1,013 28,360
12,490 4,281 2,381 7,975 63,234
4,385 1,076 996 1,407 30,700
7,529 1,891 1,621 2,548 12,756
450 291 186 200 2,412
4,883 4,580 4,139 3,339 30,536
-----------------------------------------------------------------
104,588 70,305 38,945 50,340 297,200
-----------------------------------------------------------------
(146) (17,166) (21,378) (1,107) (65,980)
(373) -- -- -- --
-----------------------------------------------------------------
104,069 53,139 17,567 49,233 231,220
-----------------------------------------------------------------
-----------------------------------------------------------------
(10,078) (84,185) (32,026) 125,832 959,285
-----------------------------------------------------------------
2,039 124,550 (8,451) (2,648) --
(1,542,265) (1,045,793) (379,422) (155,670) --
1,268,083 800,078 177,746 (153,159) --
-----------------------------------------------------------------
(272,143) (121,165) (210,127) (311,477) --
-----------------------------------------------------------------
110,593 383,168 263,843 (6,328) N/A
(298,569) 1,329,962 426,808 65,756 N/A
2,429,347 616,856 386,115 (87,252) N/A
-----------------------------------------------------------------
2,241,371 2,329,986 1,076,766 (27,824) N/A
-----------------------------------------------------------------
-----------------------------------------------------------------
$ 1,959,150 $ 2,124,636 $ 834,613 $(213,469) $ 959,285
-----------------------------------------------------------------
The Flex-funds
27
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2003 (unaudited) and Year Ended December 31,
2002
- --------------------------------------------------------------------------------
The Total Return The Highlands
The Muirfield Fund Utilities Fund Growth Fund
------------------------- ------------------------- -------------------------
2003 2002 2003 2002 2003 2002
----------- ------------ ----------- ------------ ----------- ------------
Operations
Net investment income (loss) $ (253,707) $ (232,622) $ 231,497 $ 557,173 $ (10,078) $ (51,058)
Net realized gain (loss) from
investments and futures
contracts (1,799,294) (3,689,880) (1,657,943) (7,125,558) (1,728,202) (4,865,896)
Net change in unrealized
appreciation (depreciation) of
investments 5,976,573 (2,492,162) 2,696,189 (2,972,730) 3,697,430 (2,729,883)
- -------------------------------------------------------------------------------------------------------------------
Net change in net assets
resulting from operations 3,923,572 (6,414,664) 1,269,743 (9,541,115) 1,959,150 (7,646,837)
- -------------------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income -- (57,484) (219,165) (557,165) -- --
From net realized gain from
investments and futures
contracts -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Net change in net assets
resulting from distributions -- (57,484) (219,165) (557,165) -- --
- -------------------------------------------------------------------------------------------------------------------
Capital Transactions
Issued 6,950,779 13,711,061 3,880,460 8,997,088 5,134,778 22,555,197
Reinvested -- 56,679 182,190 542,534 -- --
Redeemed (7,072,692) (21,228,768) (3,841,773) (11,575,027) (6,218,859) (28,796,756)
- -------------------------------------------------------------------------------------------------------------------
Net change in net assets
resulting from capital
transactions (121,913) (7,461,028) 220,877 (2,035,405) (1,084,081) (6,241,559)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Total Change in Net Assets 3,801,659 (13,933,176) 1,271,455 (12,133,685) 875,069 (13,888,396)
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- Beginning of
Period 47,643,591 61,576,767 19,133,405 31,267,090 18,359,756 32,248,152
- -------------------------------------------------------------------------------------------------------------------
Net Assets -- End of Period $51,445,250 $ 47,643,591 $20,404,860 $ 19,133,405 $19,234,825 $ 18,359,756
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of) net
investment income $ (253,707) $ (232,622) $ 11,406 $ (1,347) $ (10,078) $ (51,058)
- -------------------------------------------------------------------------------------------------------------------
Share Transactions
Issued 1,871,898 3,323,158 308,245 595,226 439,701 1,710,021
Reinvested -- 15,074 14,944 38,578 -- --
Redeemed (1,901,574) (5,148,173) (315,454) (801,364) (538,489) (2,218,167)
- -------------------------------------------------------------------------------------------------------------------
Net change in shares (29,676) (1,809,941) 7,735 (167,560) (98,788) (508,146)
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
The Flex-funds
28
- --------------------------------------------------------------------------------
The Dynamic The Aggressive The U.S. Government The Money
Growth Fund Growth Fund Bond Fund Market Fund
- -------------------------- ------------------------ -------------------------- ----------------------------
2003 2002 2003 2002 2003 2002 2003 2002
- ------------ ------------ ----------- ----------- ------------ ------------ ------------- -------------
$ (84,185) $ (136,087) $ (32,026) $ (90,795) $ 125,832 $ 314,412 $ 959,285 $ 3,551,609
791,887 (5,901,026) 302,778 (3,435,659) (98,890) 835,522 -- --
1,416,934 574,259 563,861 516,860 (240,411) 127,891 -- --
- -----------------------------------------------------------------------------------------------------------------
2,124,636 (5,462,854) 834,613 (3,009,594) (213,469) 1,277,825 959,285 3,551,609
- -----------------------------------------------------------------------------------------------------------------
-- -- -- -- (125,832) (314,412) (959,285) (3,551,609)
-- -- -- -- -- (165,565) -- --
- -----------------------------------------------------------------------------------------------------------------
-- -- -- -- (125,832) (479,977) (959,285) (3,551,609)
- -----------------------------------------------------------------------------------------------------------------
11,119,904 15,800,899 576,336 2,321,604 17,092,768 24,045,883 119,493,380 279,654,157
-- -- -- -- 95,920 456,776 812,757 3,508,939
(12,040,937) (16,370,079) (1,109,352) (4,645,062) (16,556,141) (24,154,363) (117,024,166) (318,477,532)
- -----------------------------------------------------------------------------------------------------------------
(921,033) (569,180) (533,016) (2,323,458) 632,547 348,296 3,281,971 (35,314,436)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
1,203,603 (6,032,034) 301,597 (5,333,052) 293,246 1,146,144 3,281,971 (35,314,436)
- -----------------------------------------------------------------------------------------------------------------
17,093,953 23,125,987 7,045,511 12,378,563 14,226,279 13,080,135 186,279,725 221,594,161
- -----------------------------------------------------------------------------------------------------------------
$ 18,297,556 $ 17,093,953 $ 7,347,108 $ 7,045,511 $ 14,519,525 $ 14,226,279 $ 189,561,696 $ 186,279,725
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
$ (84,185) $ (136,087) $ (32,026) $ (90,795) $ 155,537 $ 155,537 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------
1,962,712 2,625,849 117,878 415,706 753,142 1,056,785 119,493,380 279,654,157
-- -- -- -- 4,198 20,334 812,757 3,508,939
(2,129,605) (2,701,879) (231,875) (842,790) (730,213) (1,063,983) (117,024,166) (318,477,532)
- -----------------------------------------------------------------------------------------------------------------
(166,893) (76,030) (113,997) (427,084) 27,127 13,136 3,281,971 (35,314,436)
- -----------------------------------------------------------------------------------------------------------------
The Flex-funds
29
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Muirfield Fund
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period $ 3.76 $ 4.25 $ 4.95 $ 6.32 $ 6.88 $ 5.47
- --------------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income (loss) (0.02) (0.02) 0.01 0.20 0.09 0.08
Net gains (losses) on securities and futures (both
realized and unrealized) 0.33 (0.47) (0.58) (1.23) 0.89 1.51
- --------------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.31 (0.49) (0.57) (1.03) 0.98 1.59
- --------------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income -- -- (0.13) (0.19) (0.09) (0.08)
From net capital gains -- -- -- (0.15) (1.45) (0.10)
- --------------------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.13) (0.34) (1.54) (0.18)
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 4.07 $ 3.76 $ 4.25 $ 4.95 $ 6.32 $ 6.88
- --------------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) 8.24% (11.42%) (11.52%) (16.50%) 16.43% 29.33%
Ratios/Supplemental Data
Net assets, end of period ($000) $ 51,445 $ 47,644 $ 61,577 $ 97,912 $155,827 $125,547
Ratio of net expenses to average net assets(2) 1.52% 1.41% 1.31% 1.20% 1.21% 1.24%
Ratio of net investment income (loss) to average
net assets(2) (1.07%) (0.43%) 0.11% 2.97% 1.33% 1.23%
Ratio of expenses to average net assets before
reductions(2)(4) 1.52% 1.46% 1.37% 1.20% 1.21% 1.24%
Portfolio turnover rate(1)(3) 195.69% 277.99% 297.81% 405.88% 787.66% 128.31%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
See accompanying notes to financial statements.
The Flex-funds
30
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Total Return Utilities Fund
2003 2002 2001 2000 1999 1998
------- -------- -------- ------- ------- -------
Net Asset Value, Beginning of Period $ 12.66 $ 18.63 $ 22.17 $ 20.34 $ 19.01 $ 17.72
- -------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income 0.16 0.34 0.35 0.26 0.30 0.25
Net gains (losses) on securities (both realized
and unrealized) 0.77 (5.97) (3.56) 3.73 3.45 1.29
- -------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.93 (5.63) (3.21) 3.99 3.75 1.54
- -------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income (0.15) (0.34) (0.33) (0.28) (0.30) (0.25)
From net capital gains -- -- -- (1.79) (2.12) --
Tax return of capital -- -- -- (0.09) -- --
- -------------------------------------------------------------------------------------------------------
Total Distributions (0.15) (0.34) (0.33) (2.16) (2.42) (0.25)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.44 $ 12.66 $ 18.63 $ 22.17 $ 20.34 $ 19.01
- -------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) 7.45% (30.36%) (14.57%) 20.03% 20.01% 8.77%
Ratios/Supplemental Data
Net assets, end of period ($000) $20,405 $ 19,133 $ 31,267 $24,740 $13,893 $10,455
Ratio of net expenses to average net asset(2) 1.97% 1.81% 1.72% 1.78% 1.80% 1.80%
Ratio of net investment income to average net
assets(2) 2.55% 2.32% 1.66% 1.22% 1.48% 1.35%
Ratio of expenses to average net assets
before reductions(2)(4) 1.99% 1.88% 1.80% 1.85% 1.99% 2.11%
Portfolio turnover rate(1)(3) 15.90% 31.61% 22.74% 37.07% 69.20% 51.36%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
See accompanying notes to financial statements.
The Flex-funds
31
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Highlands Growth Fund
2003 2002 2001 2000 1999 1998
------- -------- -------- ------- ------- -------
Net Asset Value, Beginning of Period $ 11.65 $ 15.47 $ 18.66 $ 22.37 $ 21.23 $ 18.55
- ----------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income (loss) (0.01) (0.03) -- (0.01) (0.01) 0.06
Net gains (losses) on securities and futures (both
realized and unrealized) 1.38 (3.79) (2.49) (2.17) 4.37 4.32
- ----------------------------------------------------------------------------------------------------------
Total from Investment Operations 1.37 (3.82) (2.49) (2.18) 4.36 4.38
- ----------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income -- -- -- -- -- (0.06)
From net capital gains -- -- (0.70) (1.53) (3.22) (1.64)
- ----------------------------------------------------------------------------------------------------------
Total Distributions -- -- (0.70) (1.53) (3.22) (1.70)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.02 $ 11.65 $ 15.47 $ 18.66 $ 22.37 $ 21.23
- ----------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) 11.76% (24.69%) (13.33%) (9.76%) 21.16% 23.67%
Ratios/Supplemental Data
Net assets, end of period ($000) $19,235 $ 18,360 $ 32,248 $44,049 $53,087 $43,908
Ratio of net expenses to average net assets(2) 1.92% 1.76% 1.64% 1.43% 1.56% 1.69%
Ratio of net investment income (loss) to average
net assets(2) (0.11%) (0.20%) (0.23%) (0.04%) (0.04%) 0.31%
Ratio of expenses to average net assets before
reductions(2)(4) 1.93% 1.79% 1.66% 1.43% 1.57% 1.70%
Portfolio turnover rate(1)(3) 55.44% 53.61% 36.99% 58.03% 51.22% 79.98%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
See accompanying notes to financial statements.
The Flex-funds
32
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Dynamic Growth Fund
2003 2002 2001 2000*
-------- -------- -------- --------
Net Asset Value, Beginning of Period $ 5.58 $ 7.37 $ 8.52 $ 10.00
- -------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income (loss) (0.03) (0.04) -- 0.04
Net gains (losses) on securities and futures (both realized and
unrealized) 0.77 (1.75) (1.15) (1.39)
- -------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.74 (1.79) (1.15) (1.35)
- -------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income -- -- -- (0.13)
- -------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- (0.13)
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 6.32 $ 5.58 $ 7.37 $ 8.52
- -------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of distributions)(1) 13.26% (24.29%) (13.47%) (13.54%)
Ratios/Supplemental Data
Net assets, end of period ($000) $ 18,298 $ 17,094 $ 23,126 $ 20,399
Ratio of net expenses to average net assets(2) 1.25% 1.18% 1.03% 1.10%
Ratio of net investment income (loss) to average net assets(2) (0.98%) (0.69%) (0.62%) 0.53%
Ratio of expenses to average net assets before reductions(2)(4) 1.45% 1.35% 1.34% 1.30%
Portfolio turnover rate(1)(3) 182.57% 391.64% 131.21% 257.72%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
* Commenced operations on February 29, 2000.
See accompanying notes to financial statements.
The Flex-funds
33
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Aggressive Growth Fund
2003 2002 2001 2000*
-------- --------- --------- ---------
Net Asset Value, Beginning of Period $ 4.79 $ 6.52 $ 7.86 $ 10.00
- ------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income (loss) (0.02) (0.06) -- (0.01)
Net gains (losses) on securities and futures (both realized and
unrealized) 0.64 (1.67) (1.34) (2.11)
- ------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.62 (1.73) (1.34) (2.12)
- ------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income -- -- -- (0.02)
- ------------------------------------------------------------------------------------------------------
Total Distributions -- -- -- (0.02)
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 5.41 $ 4.79 $ 6.52 $ 7.86
- ------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of distributions)(1) 12.94% (26.53)% (17.04)% (21.24)%
Ratios/Supplemental Data
Net assets, end of period ($000) $ 7,347 $ 7,046 $ 12,379 $ 12,079
Ratio of net expenses to average net assets(2) 1.29% 1.22% 1.03% 1.10%
Ratio of net investment income (loss) to average net assets(2) (0.94)% (0.95)% (0.69)% (0.11)%
Ratio of expenses to average net assets before reductions(2)(4) 1.92% 1.67% 1.52% 1.32%
Portfolio turnover rate(1)(3) 182.45% 349.42% 126.69% 302.02%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
* Commenced operations on February 29, 2000.
See accompanying notes to financial statements.
The Flex-funds
34
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The U.S. Government Bond Fund
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period $ 22.79 $ 21.41 $ 21.92 $ 21.33 $ 22.14 $ 21.19
- --------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income 0.19 0.54 0.79 1.10 0.88 0.97
Net gains (losses) on securities and futures
(both realized and unrealized) (0.50) 1.65 (0.51) 0.59 (0.81) 1.02
- --------------------------------------------------------------------------------------------------------
Total from Investment Operations (0.31) 2.19 0.28 1.69 0.07 1.99
- --------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income (0.19) (0.54) (0.79) (1.10) (0.88) (0.97)
From net capital gains -- (0.27) -- -- -- (0.07)
- --------------------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.81) (0.79) (1.10) (0.88) (1.04)
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.29 $ 22.79 $ 21.41 $ 21.92 $ 21.33 $ 22.14
- --------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) (1.36%) 10.34% 1.23% 8.15% 0.35% 9.62%
Ratios/Supplemental Data
Net assets, end of period ($000) $ 14,520 $ 14,226 $ 13,080 $ 13,340 $ 12,422 $ 11,294
Ratio of net expenses to average net
assets(2) 1.10% 1.10% 1.07% 1.00% 1.00% 1.00%
Ratio of net investment income to average
net assets(2) 1.74% 2.43% 3.58% 5.12% 4.10% 4.52%
Ratio of expenses to average net assets
before reductions(2)(4) 1.11% 1.13% 1.13% 1.30% 1.18% 1.16%
Portfolio turnover rate(1)(3) 336.34% 407.99% 503.20% 375.47% 352.23% 225.11%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Represents turnover rate of corresponding portfolio, if applicable.
(4) Ratio includes reductions in corresponding portfolio, if applicable.
See accompanying notes to financial statements.
The Flex-funds
35
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited) and
Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Money Market Fund
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income 0.005 0.016 0.040 0.060 0.049 0.052
- ----------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.005 0.016 0.040 0.060 0.049 0.052
- ----------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income (0.005) (0.016) (0.040) (0.060) (0.049) (0.052)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.005) (0.016) (0.040) (0.060) (0.049) (0.052)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) 0.50% 1.59% 4.10% 6.20% 4.96% 5.31%
Ratios/Supplemental Data
Net assets, end of period ($000) $189,562 $186,280 $221,594 $233,227 $232,023 $154,255
Ratio of net expenses to average net assets(2) 0.44% 0.44% 0.44% 0.41% 0.41% 0.40%
Ratio of net investment income to average net
assets(2) 1.01% 1.58% 4.00% 6.01% 4.88% 5.19%
Ratio of expenses to average net assets before
reductions(1)(3) 0.68% 0.66% 0.62% 0.60% 0.54% 0.59%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Ratio includes reductions in corresponding portfolio.
See accompanying notes to financial statements.
The Flex-funds
36
Notes to Financial Statements
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. The Trust offers seven
separate series, and it is presently comprised of seven separate funds as
follows: The Muirfield Fund(R) ("Muirfield"), The Total Return Utilities Fund
("TRUF"), The Highlands Growth Fund(R) ("Highlands"), The Dynamic Growth Fund
("Dynamic"), The Aggressive Growth Fund ("Aggressive"), The U.S. Government
Bond Fund ("Bond"), and The Money Market Fund ("Money Market") (each a "Fund"
and collectively the "Funds"). Money Market invests all of its investable
assets in a corresponding open-end management investment company, the Money
Market Portfolio ("Portfolio"). As of June 30, 2003, Money Market owns 94% of
the Portfolio. There is another partner in this Portfolio that owns a de
minimis position.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of Money Market.
Use of estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") 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.
Security valuation. Securities that 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. Bond values the securities held at
3:00 P.M. Eastern Time. The Funds obtain prices from independent pricing
services, which use valuation techniques approved by the Board of Trustees
("Trustees").
Money market securities held in the Funds, except Money Market, 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
or less 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 Fund, except Money Market, may engage in
repurchase agreement transactions whereby the Fund takes possession of an
underlying debt instrument subject to an obligation of the seller to repurchase
the instrument from the Fund and an obligation of the Fund to resell the
instrument at an agreed upon price and term. At all times, the Fund maintains
the value of collateral, including accrued interest, at least 100% of the
amount of the repurchase agreement, plus accrued interest. If the seller
defaults or the fair value of the collateral declines, realization of the
collateral by the Funds may be delayed or limited.
Futures & options. Each Fund, except Money Market, 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 fund,
or which it intends to purchase. Such transactions may be considered trading
activity under GAAP. 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 fund or on those that are being considered for purchase.
To the extent that the Fund enters into futures contracts on an index or group
of securities, the Fund exposes itself to an indeterminate liability and will
be required to pay or receive a sum of money measured by the change in the
value of the index. Upon entering into a futures contract, the Fund 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
Funds record realized gains or losses for the daily variation margin.
The Flex-funds
37
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 Fund to the
loss of the premium paid if the Fund 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 Funds may write covered call or put options for which premiums received are
recorded as liabilities and are subsequently adjusted to current value of the
options written. When written options are closed or exercised, premiums
received are offset against the proceeds paid, and the Fund records realized
gains or losses for the difference. When written options expire, the liability
is eliminated, and the Fund records realized gains for the entire amount of
premiums received.
Transactions in options during the six months ended June 30, 2003, were as
follows:
Number of Premiums
U.S. Government Bond Fund Contracts Received/(Paid)
------------------------- --------- ---------------
Options outstanding at December 31, 2002 -- $ --
Options written 50 37,175
Options bought 50 (37,825)
Options outstanding at June 30, 2003 100 $ (650)
Valuation of investments. Money Market records its investment in the
corresponding Portfolio at value. Valuation of securities held by the Portfolio
is discussed in the Portfolio's notes to financial statements included
elsewhere in this report.
Federal income taxes. It is each Fund's policy to continue to comply with the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all of its
taxable income and net capital gains to its shareholders. Therefore, no federal
income tax provision is required.
Distributions to shareholders. Distributions to shareholders are recorded on
the ex-dividend date. Muirfield, Highlands, Dynamic, and Aggressive declare and
pay dividends from net investment income, if any, on a quarterly basis. TRUF
declares and pays dividends from net investment income on a monthly basis. Bond
and Money Market declare dividends from net investment income on a daily basis
and pay such dividends on a monthly 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
GAAP. These differences are primarily due to deferrals of certain losses,
expiring capital loss carryforwards, and differing treatments of unrealized
gains and losses of futures contracts held by each Fund. 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 within the components of net
assets. Differences identified and reclasses made for the period ended December
31, 2002 were as follows:
Undistributed Undistributed
Net Net Realized
Investment Gains and
Capital Income Losses
--------- ------------- -------------
The Muirfield Fund(R) $(232,594) $232,622 $28
The Total Return Utilities Fund (421) 421 --
The Highlands Growth Fund(R) (51,058) 51,058 --
The Dynamic Growth Fund (136,087) 136,087 --
The Aggressive Growth Fund (90,795) 90,795 --
Investment income & expenses. Money Market records daily its proportionate
share of the corresponding Portfolio's income, expenses, and realized and
unrealized gains and losses. In addition, the Fund accrues its own expenses.
Expenses incurred by the Trust that do not specifically relate to an individual
Fund of the Trust are allocated to the Funds based on each Fund's relative net
assets or other appropriate basis.
The Flex-funds
38
Other. The Funds, except Money Market, 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.
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 shares of The Flex-funds. Deferred
amounts remain in the Funds, except Money Market, until distributed in
accordance with the Plan.
2. Investment Transactions
For the six months ended June 30, 2003, the cost of purchases and proceeds from
sales or maturities of long-term investments for the Funds were as follows:
Purchases Sales
----------- ------------
The Muirfield Fund(R) $77,255,736 $100,355,683
The Total Return Utilities Fund 3,100,429 26,119,802
The Highlands Growth Fund(R) 10,559,256 33,371,959
The Dynamic Growth Fund 24,263,117 35,603,175
The Aggressive Growth Fund 9,245,311 13,286,973
The U.S. Government Bond Fund 45,879,127 59,663,762
As of June 30, 2003, the aggregate cost basis of investments and unrealized
appreciation (depreciation) for federal income tax purposes was as follows:
Net unrealized
Cost basis Unrealized Unrealized appreciation
of investments appreciation depreciation (depreciation)
-------------- ------------ ------------ --------------
The Muirfield Fund(R) $45,330,670 $6,171,901 $ (824) $6,171,077
The Total Return Utilities Fund 20,440,629 2,104,407 (2,156,335) (51,928)
The Highlands Growth Fund(R) 19,238,994 1,861,165 (1,841,360) 19,805
The Dynamic Growth Fund 17,488,004 1,107,236 (19,638) 1,087,598
The Aggressive Growth Fund 7,091,785 446,317 (179,013) 267,304
The U.S. Government Bond Fund 14,567,200 66,915 (207,948) (141,033)
3. Investment Advisory Fees and Other Transactions with Affiliates
Meeder Asset Management, Inc. ("MAM"), a wholly-owned subsidiary of Meeder
Financial, Inc. ("Meeder"), provides each Fund, except Money Market, with
investment management, research, statistical and advisory services. Under
separate Investment Subadvisory Agreements with MAM, Miller/Howard Investments,
Inc. ("Miller/Howard") and Sector Capital Management, L.L.C. ("Sector Capital")
serve as subadvisors of TRUF and Highlands, respectively. Sub-subadvisors,
selected by Sector Capital, subject to the review and approval of the Trustees
of Highlands, are responsible for the selection of individual portfolio
securities for the assets of the Fund assigned to them by Sector Capital.
For such services the Funds, except Money Market, pay a fee at the following
annual rates: Muirfield, TRUF, and Highlands, 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 subadvisor to TRUF, Miller/Howard 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 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 subadvisor to
Highlands, Sector Capital 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 pays all
sub-subadvisors 0.25% on all average net assets; Dynamic and Aggressive, 0.75%
of average daily net assets up to $200 million and 0.60% of average daily net
assets exceeding $200 million; Bond, 0.40% of average daily net assets up to
$100 million and 0.20% of average daily net assets exceeding $100 million.
During the six months ended June 30, 2003, Sector Capital voluntarily waived
$146 of investment advisory fees in Highlands.
The Flex-funds
39
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of Meeder, 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
calculated as follows: For Muirfield, TRUF, Highlands, Dynamic, and Aggressive,
such fee is equal to the greater of $15 per active shareholder account or 0.12%
of each Fund's average daily net assets. For Bond, such fee is equal to the
greater of $15 per active shareholder account or 0.08% of the Fund's average
daily net assets. For Money Market, such fee is equal to the greater of $20 per
active shareholder account or 0.08% of the Fund's average daily net assets.
MFSCo is entitled to receive an annual minimum fee of $4,000 for each Fund. For
Fund's which are subject to an expense cap and which are above the expense cap,
the basis point fee will be reduced by 0.02%.
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.
Mutual Funds Service Co. serves as accounting services agent for each Fund,
except Money Market. In compensation for such services, each Fund 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.
MAM has agreed to reduce its fees and/or reimburse expenses (excluding
interest, taxes, brokerage fees, and extraordinary expenses), to limit Dynamic,
Aggressive, and Bond's total annual operating expenses to 1.25%, 1.50%, and
1.10% of average daily net assets, respectively. Prior to June 6, 2003, the
expense limitation for Aggressive was 1.25% of average daily net assets. MAM
has also agreed to reduce its fees and/or reimburse expenses to the extent
necessary to achieve an effective yield for Money Market that will rank in the
top 10% of yields for all general purpose money market funds in 2003. Such
reduction and/or reimbursement is limited to the total of fees charged to each
Fund by MAM and MFSCo. For the six months ended June 30, 2003, MAM reimbursed
$17,166, $21,378, $1,107, and $65,980 to Dynamic, Aggressive, Bond, and Money
Market, respectively.
Adviser Dealer Services, Inc. ("ADS"), an affiliated broker-dealer of MAM, has
an arrangement with TRUF and Highlands whereby a portion of the commissions
received from security trades directed through it will be used to help pay
expenses of the aforementioned Funds. For the six months ended June 30, 2003,
ADS received $3,267 and $2,530 in commissions in connection with the purchase
and sale of investments for TRUF and Highlands, respectively. For the same time
period ADS paid $1,495 and $373 of TRUF and Highlands, respectively, expenses
under this arrangement.
Pursuant to Rule 12b-1 of the 1940 Act, a mutual fund can adopt a written plan
to pay certain expenses out of fund assets relating to the sale and
distribution of its shares. Muirfield, Highlands, Bond, and Money Market have
adopted a distribution plan with an annual limitation of 0.20% of average daily
net assets. TRUF, Dynamic, and Aggressive have adopted a distribution plan with
an annual limitation of 0.25% of average daily net assets. However, the Funds
expensed what was actually incurred during the six months ended June 30, 2003.
4. Federal Tax Information
The tax characteristics of dividends paid by the Funds during the year ended
December 31, 2002 were as follows:
Net Short-Term Total Dividends
Ordinary Income Capital Gains Paid/1/
--------------- -------------- ---------------
The Muirfield Fund(R) $ 78,095 $ -- $ 78,095
The Total Return Utilities Fund 557,378 -- 557,378
The U.S. Government Bond Fund 314,826 165,565 480,391
The Money Market Fund 3,571,277 -- 3,571,277
The Flex-funds
40
As of December 31, 2002, the components of accumulated earnings/(deficit) on a
tax basis for the Funds were as follows:
Accumulated Total
Undistributed Capital and Unrealized Accumulated
Ordinary Dividends Other Gains Appreciation/ Earnings/
Income Payable and (Losses) (Depreciation)/2/ (Deficit)
------------- --------- ------------ ---------------- ------------
The Muirfield Fund(R) $ 802 $ (802) $(29,522,241) $ 189,101 $(29,333,140)
The Total Return Utilities Fund -- (926) (9,128,696) (2,748,151) (11,877,773)
The Highlands Fund(R) -- -- (6,295,227) (3,682,134) (11,254,629)
The Dynamic Growth Fund -- -- (10,921,093) (333,536) (11,254,629)
The Aggressive Growth Fund -- -- (9,401,451) (299,257) (9,700,708)
The U.S. Government Bond Fund 156,351 (814) 224,673 99,378 479,588
The Money Market Fund 14,147 (14,147) -- -- --
For federal income tax purposes, the following Funds have capital loss
carryforwards as of December 31, 2002, which are available to offset future
capital gains, if any. To the extent that these carryforwards are used to
offset future capital gains, it is probable that the gains that are offset will
not be distributed to shareholders:
Amount Expires
----------- -------
The Muirfield Fund(R) $14,770,866 2008
The Muirfield Fund(R) 11,066,871 2009
The Muirfield Fund(R) 3,660,017 2010
The Total Return Utilities Fund 612,252 2009
The Total Return Utilities Fund 8,516,444 2010
The Highlands Growth Fund(R) 869,381 2009
The Highlands Growth Fund(R) 5,224,895 2010
The Dynamic Growth Fund 3,185,661 2008
The Dynamic Growth Fund 726,971 2009
The Dynamic Growth Fund 7,008,461 2010
The Aggressive Growth Fund 4,745,009 2008
The Aggressive Growth Fund 618,687 2009
The Aggressive Growth Fund 4,037,755 2010
Under current tax laws, net capital losses incurred after October 31, within a
Fund's fiscal year are deemed to arise on the first business day of the
following fiscal year for tax purposes. For the year ended December 31, 2002,
the Funds deferred post October capital losses of:
Post-October
Capital Losses
--------------
The Muirfield Fund(R) $ 24,487
The Highlands Growth Fund(R) 200,951
/1/ Total dividends paid may differ from the amount reported in the Statement
of Changes in Net Assets because for tax purposes dividends are recognized when
actually paid.
/2/ The differences between book- and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to: deferral of losses
on wash sales, the realization for tax purposes of unrealized gains/(losses) on
certain derivative instruments, and the difference between book and tax
amortization methods for premium and market discount.
The Flex-funds
41
Statement of Assets & Liabilities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money
Market
Portfolio
------------
Assets
Investments, at value* $166,690,678
Repurchase agreements, at value* 34,739,000
Trustee deferred compensation investments, at value 50,119
Cash 797
Interest and dividend receivable 1,236,030
Prepaid expenses/other assets 43
----------------------------------------------------------------
Total Assets 202,716,667
----------------------------------------------------------------
Liabilities
Payable for Trustee Deferred Compensation Plan 50,119
Payable to investment advisor 22,605
Accrued fund accounting fees 5,132
Other accrued liabilities 19,350
----------------------------------------------------------------
Total Liabilities 97,206
----------------------------------------------------------------
----------------------------------------------------------------
Total Net Assets $202,619,461
----------------------------------------------------------------
* Investments, at cost $201,429,678
----------------------------------------------------------------
See accompanying notes to financial statements.
The Flex-funds
42
Statement of Operations
For the Six Months Ended June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money
Market
Portfolio
----------
Investment Income
Interest $1,533,844
--------------------------------------------------------------
Total Investment Income 1,533,844
--------------------------------------------------------------
Expenses
Investment advisor 339,843
Fund accounting 28,966
Trustee 4,505
Audit 3,648
Custodian 8,322
Legal 2,474
Insurance 1,824
Other 1,482
--------------------------------------------------------------
Total Expenses Before Reductions 391,064
--------------------------------------------------------------
Investment advisor fees waived (182,581)
--------------------------------------------------------------
Total Net Expenses 208,483
--------------------------------------------------------------
--------------------------------------------------------------
Net Investment Income (Loss) 1,325,361
--------------------------------------------------------------
--------------------------------------------------------------
Net Change in Net Assets Resulting from Operations $1,325,361
--------------------------------------------------------------
See accompanying notes to financial statements.
The Flex-funds
43
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2003 (unaudited) and the Year Ended
December 31, 2002
- --------------------------------------------------------------------------------
Money Market Portfolio
----------------------------
2003 2002
------------- -------------
Operations
Net investment income (loss) $ 1,325,361 $ 4,658,599
- ---------------------------------------------------------------------------------------------------------------------
Net change in net assets resulting from operations 1,325,361 4,658,599
- ---------------------------------------------------------------------------------------------------------------------
Transactions of Investors' Beneficial Interests
Contributions 134,968,757 325,392,543
Withdrawals (144,552,092) (389,503,659)
- ---------------------------------------------------------------------------------------------------------------------
Net change in net assets resulting from transactions of investors' beneficial interests (9,583,335) (64,111,116)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Change in Net Assets (8,257,974) (59,452,517)
- ---------------------------------------------------------------------------------------------------------------------
Net Assets -- Beginning of Period 210,877,435 270,329,952
- ---------------------------------------------------------------------------------------------------------------------
Net Assets -- End of Period $ 202,619,461 $ 210,877,435
- ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
The Flex-funds
44
Financial Highlights
Ratios/Supplementary Data For Six Months Ended June 30, 2003 (unaudited)
and Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
Money Market Portfolio
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- ---------- --------
Total Return(1) 0.62% 1.83% 4.54% 6.61% 5.37% 5.71%
Net assets, end of period ($000) $202,619 $210,877 $270,330 $297,206 $1,104,197 $798,269
Ratio of net expenses to average net assets(2) 0.20% 0.20% 0.21% 0.19% 0.18% 0.18%
Ratio of net investment income to average net
assets(2) 1.25% 1.83% 4.26% 6.05% 5.07% 5.39%
Ratio of expenses to average net assets before
reductions(2) 0.37% 0.36% 0.35% 0.30% 0.30% 0.30%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
See accompanying notes to financial statements.
The Flex-funds
45
Notes to Financial Statements
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Money Market Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The Portfolio is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a no-load,
open-ended management investment company, which was organized as a trust under
the laws of the State of New York. For federal income tax purposes, the
Portfolio qualifies as a partnership, and each investor in the Portfolio is
treated as the owner of its proportionate share of the net assets, income,
expenses, and realized and unrealized gains and losses of the Portfolio.
Accordingly, as a "pass-through" entity, the Portfolio pays no income dividend
or capital gain distribution.
Use of estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") 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.
Security valuation. Money market securities held in the Portfolio are valued
at amortized cost, which approximates value. In compliance with Rule 2a-7 of
the 1940 Act, the amortized values are compared to prices obtained from
independent pricing services that use valuation techniques approved by the
Board of Trustees ("Trustees").
Repurchase agreements. The Portfolio may engage in repurchase agreement
transactions whereby the Portfolio takes possession of an underlying debt
instrument subject to an obligation of the seller to repurchase the instrument
from the Portfolio and an obligation of the Portfolio to resell the instrument
at an agreed upon price and term. At all times, the Portfolio maintains the
value of collateral, including accrued interest, at least 100% of the amount of
the repurchase agreement, plus accrued interest. If the seller defaults or the
fair value of the collateral declines, realization of the collateral by the
Portfolio may be delayed or limited.
Federal income taxes. The Portfolio will be treated as a partnership for
federal income tax purposes. As such, each investor in the Portfolio will be
subject to taxation on its share of the Portfolio's ordinary income and capital
gains. It is the Portfolio's policy to continue to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to it. Therefore, no
federal income tax provision is required.
Other. The Portfolio records security transactions on the trade date. Gains
and losses realized from the sale of securities are determined on the specific
identification basis. Interest income (including amortization of premium and
accretion of discount) is recognized as earned.
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 shares of The Flex-funds. Deferred
amounts remain in the Portfolio until distributed in accordance with the Plan.
2. Investment Transactions
As of June 30, 2003, the aggregate cost basis of investments for federal income
tax purposes was $201,429,678.
The Flex-funds
46
3. Investment Advisory Fees and Other Transactions with Affiliates
Meeder Asset Management, Inc. ("MAM"), a wholly-owned subsidiary of Meeder
Financial, Inc. ("Meeder"), provides the Portfolio with investment management,
research, statistical and advisory services. For such services the Portfolio
pays a fee at the following annual rates: 0.40% of average daily net assets up
to $100 million and 0.25% of average daily net assets exceeding $100 million.
During the six months ended June 30, 2003, MAM agreed to reduce $182,581 of
investment advisory fees in the Portfolio.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of Meeder, serves
as accounting services agent for the Portfolio. In compensation for such
services, the Portfolio pays MFSCo an annual fee equal to the greater of:
a. 0.15% of the first $10 million of average daily net assets,
0.10% of the next $20 million of average daily net assets,
0.02% of the next $50 million of average daily net assets, and
0.01% in excess of $80 million of average daily net assets, or
b. $30,000.
The Flex-funds
47
Trustees and Officers (unaudited)
- --------------------------------------------------------------------------------
Certain trustees and officers of the Funds and Portfolio are also officers or
directors of Meeder, MAM and MFSCo. The Trustees oversee the management of the
Trust and the Portfolio and elect their officers. The officers are responsible
for the Funds' and Portfolio's day-to-day operations. The Trustees' and
officers' names, addresses, years of birth, positions held with the Trust, and
length of service as a Flex-funds Trustee are listed below. Also included is
each Board member's principal occupation during, at least, the past five years.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Except as otherwise shown, all
persons named as Trustees also serve in similar capacities for all other mutual
funds advised by MAM, including The Flex-funds, Meeder Advisor Funds, and the
corresponding portfolios of The Flex-funds and Meeder Advisor Funds
(collectively, the "Fund Complex"). Those Trustees who are "interested
persons", as defined in the 1940 Act, by virtue of their affiliation with the
Fund Complex are indicated by an asterisk (*).
Name, Address/1/, Principal Occupation
and Year Position and During Past
of Birth Length of Service/2/ Five Years
- ------------------------- -------------------------- --------------------------
Robert S. Meeder, Sr.* Trustee and President Chairman of Meeder Asset
Year of Birth: 1929 Management, Inc., an
investment advisor;
Chairman and Director of
Mutual Funds Service Co.,
the Fund Complex's
transfer agent; Director
of Adviser Dealer
Services, Inc., the Fund
Complex's Distributor.
Milton S. Bartholomew Trustee Retired; formerly a
Year of Birth: 1929 practicing attorney in
Columbus, Ohio; member of
the Fund Complex's Audit
Committee.
Roger D. Blackwell Trustee Professor of Marketing
Year of Birth: 1940 and Consumer Behavior,
The Ohio State
University; President of
Blackwell Associates,
Inc., a strategic
consulting firm.
Robert S. Meeder, Jr.* Trustee and Vice President President of Meeder Asset
Year of Birth: 1961 Management, Inc.
Walter L. Ogle Trustee Retired; formerly
Year of Birth: 1937 Executive Vice President
of Aon Consulting, an
employee benefits
consulting group; member
of the Fund Complex's
Audit Committee.
Charles A. Donabedian Trustee President, Winston
Year of Birth: 1943 Financial, Inc., which
provides a variety of
marketing consulting
services to investment
management companies;
CEO, Winston Advisors,
Inc., an investment
advisor; member of the
Fund Complex's Audit
Committee.
James W. Didion Trustee Retired; formerly
Year of Birth: 1930 Executive Vice President
of Core Source, Inc., an
employee benefit and
Workers' Compensation
administration and
consulting firm
(1991-1997).
Jack W. Nicklaus Trustee Designer, Nicklaus
Year of Birth: 1961 Design, a golf course
design firm and division
of The Nicklaus Companies.
/1 /The address of each Trustee is 6125 Memorial Drive, Dublin, OH 43017.
/2 /Each Trustee serves for an indefinite term, until his or her resignation,
death, or removal.
* Robert S. Meeder, Sr. is deemed an "interested person" of the Trust by virtue
of his position as Chairman of Meeder Asset Management, Inc., the Advisor of
the Portfolio. Robert S. Meeder, Jr. is deemed an "interested person" of the
Trust by virtue of his position as President of Meeder Asset Management, Inc.,
the Advisor of the Portfolio.
The Flex-funds
48
================================================================================
------------------------------------------
Manager and Investment Advisor:
Meeder Asset Management
6125 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
Subadvisor/The Total Return Utilities Fund
Miller/Howard Investments, Inc.
141 Upper Byrdcliffe Road, P.O. Box 549
Woodstock, New York 12498
Subadvisor/The Highlands Growth Fund
Sector Capital Management L.L.C.
51 Germantown Court, Suite 309
Cordova, TN 38018
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
Custodian
U.S. Bank, N.A.
Cincinnati, Ohio 45201
Transfer Agent Dividend Disbursing Agent
Mutual Funds Service Co.
6125 Memorial Drive
Dublin, Ohio 43017
Auditors
KPMG LLP
Columbus, Ohio 43215
------------------------------------------
================================================================================
================================================================================
The Flex-funds
Managed by a Meeder Financial Company
6125 Memorial Drive, Dublin Ohio, 43017
Call Toll Free 800-325-3539 | 1760-2159
Fax: 614-766-6669 | www.flexfunds.com
Email: flexfunds@meederfinancial.com
================================================================================
================================================================================
The Flex-funds
The Money Market Fund
2003 Semiannual Report
June 30, 2003
[GRAPHIC]
The Flex-funds
Managed by a Meeder Financial Company
6125 Memorial Drive, Dublin Ohio, 43017
Call Toll Free 800-325-3539 | 760-2159
Fax: 614-766-6669 | www.flexfunds.com
Email: flexfunds@meederfinancial.com
================================================================================
The Flex-funds
The Money Market Fund
- --------------------------------------------------------------------------------
Performance Perspective
Period & Average Annual Total Returns 3 Year 1 3 5 10 Since
as of June 30, 2003 months to date year years years years Inception
- ---------------------------------------------------------------------------------------------------
The Money Market Fund 0.24% 0.50% 1.25% 3.12% 3.98% 4.47% 5.51%/1/
- ---------------------------------------------------------------------------------------------------
Average Money Market Fund 0.12% 0.26% 0.72% 2.55% 3.46% 4.07% 5.08%/2/
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Current & Effective Yields* 7-day simple yield: 0.84% 7-day compound yield: 0.84%
- ---------------------------------------------------------------------------------------------------
/1/ Inception Date: 3/27/85 /2/ Average Annual total return from 3/31/85 to
6/30/03.
* Yield quotations more closely reflect the current earnings of The Money Market
Fund than do total return quotations.
Source for average money market fund data: Lipper, Inc.
- --------------------------------------------------------------------------------
Semiannual Market Perspective
[PHOTO]
Joseph A. Zarr
Co-Portfolio Manager
The Flex-funds Money Market Fund continues to perform among the best funds in
its peer group, ranking in the top 10 general-purpose money market funds for
12-month total return as of June 30, 2003, according to iMoneyNet, Inc.
[PHOTO]
Christopher M. O'Daniel, CFA
Co-Portfolio Manager
In addition, the Fund ranked among the top 5% of general purpose money market
funds for its 7-day compound yield as of July 1, 2003, according to iMoneyNet,
Inc.
Short-term interest rates fell throughout most of the first half of the year, as
the market anticipated additional rate cuts by the Federal Reserve, which
eventually came in the form of a quarter-point reduction on June 25th.
Throughout this period, the Fund sought to take advantage of the higher yields
that were available among very short-term securities, and to lock in higher
rates among select longer-term instruments. This approach helped the Fund retain
its strong performance relative to its peers, and gave us the flexibility to
adjust the portfolio in case rates moved higher.
Foreign affairs dominated the market in the 1st Quarter, as economic events took
a back seat to the conflict in Iraq. Upon the conclusion of the war, the market
began to focus again on the threat of deflation. Within its own ability, the
Federal Reserve is simply not going to let deflationary forces take root in the
U.S.
[CHART]
[Pie chart]
- --------------------------------------------------------------------------------
Portfolio Holdings as of June 30, 2003
1) Variable Rate Notes 32%
2) Corporate Notes 26%
3) Commercial Paper 18%
4) Repurchase Agreements 17%
5) U.S. Gov't Agency Notes 7%
Portfolio holdings are subject to change.
- --------------------------------------------------------------------------------
as they have in Japan over the last 10 years. It is our view that the Fed wishes
to keep short-term rates low for some time, as a means of combating deflation
and supporting an improving economy. Therefore, we would expect yields on all
short-term instruments to remain relatively low until the economy begins to
expand at a more robust rate -- which may not occur until late this year or
early next year.
Past performance does not guarantee future results. Except for the current and
effective yields, all performance figures represent period and average annual
total returns for the periods ended June 30, 2003, and assume reinvestment of
all dividend and capital gain distributions. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Expenses were
waived and/or reimbursed in order to reduce the operating expenses of The Money
Market Fund during the periods shown above. Without such waivers, the Fund's
rankings may have been lower. Investments in The Money Market Fund are neither
insured nor guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency. Although the Fund seeks to perserve the value of your
invesment at $1.00 per share, it is possible to lose money by investing in The
Money Market Fund.
- --------------------------------------------------------------------------------
2003 Semiannual Report | June 30, 2003 1
Schedule of Portfolio Investments
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money Market Portfolio
Principal
Coupon/ Amount ($)
Yield Maturity or Shares Value ($)
------- -------- ---------- -----------
Commercial Papers -- 18.0%
Archer Daniels Midland
Co.** 1.08% 11/12/03 10,000,000 9,959,800
Cargill, Inc. 1.06% 11/03/03 5,000,000 4,981,597
Duff & Phelps Utility &
Corporate Bond Trust,
Inc.** 1.13% 09/02/03 4,750,000 4,740,607
Pfizer, Inc.** 0.92% 08/12/03 3,800,000 3,795,838
Schering-Plough Corp. 1.21% 08/12/03 8,000,000 7,988,707
Toyota Motor Credit Corp. 1.05% 11/25/03 5,000,000 4,978,562
-----------
Total Commercial Papers
(Cost $36,445,111) 36,445,111
-----------
Corporate Obligations -- 56.9%
Abbott Laboratories 5.60% 10/01/03 505,314 505,314
American General Finance
Corp. 5.75% 11/01/03 1,010,000 1,024,724
Aquarium Holdings, KY 1.15%* 07/03/03 108,000 108,000
Associates Corp. 6.88% 08/01/03 1,000,000 1,003,730
Associates Corp. 5.75% 11/01/03 7,000,000 7,106,330
Austin Printing Co., Inc. 1.12%* 07/03/03 1,955,000 1,955,000
Bath Technologies, Inc. 1.15%* 07/03/03 1,340,000 1,340,000
Bear Stearns Co., Inc. 6.70% 08/01/03 2,108,000 2,116,864
Beaver Creek Enterprise 1.12%* 07/03/03 1,640,000 1,640,000
Cascade Plaza Project 1.12%* 07/03/03 8,395,000 8,395,000
Citigroup, Inc. 6.75% 08/15/03 350,000 352,041
Clark Grave Vault Co. 1.15%* 07/03/03 1,350,000 1,350,000
Coughlin Family Property,
Inc. 1.15%* 07/03/03 1,880,000 1,880,000
Espanola/Nambe 1.12%* 07/03/03 1,185,000 1,185,000
First Colony Corp. 6.63% 08/01/03 7,000,000 7,031,731
Florida Power & Light 5.79% 09/15/03 3,500,000 3,531,874
Fortune Brands, Inc. 8.50% 10/01/03 1,250,000 1,272,062
General Electric Capital
Corp. 5.38% 04/23/04 1,220,000 1,259,092
General Electric Capital
Corp. 7.13% 11/01/03 1,600,000 1,628,972
General Electric Capital
Corp. 6.75% 09/11/03 520,000 524,876
Gordon Flesch Co. Project 1.12%* 07/03/03 900,000 900,000
Hancor, Inc. 1.12%* 07/03/03 200,000 200,000
Isaac Tire, Inc. 1.15%* 07/03/03 870,000 870,000
J.P. Morgan 8.50% 08/15/03 2,675,000 2,698,640
J.P. Morgan 4.49% 08/01/03 500,000 500,837
J.P. Morgan 5.69% 02/10/04 3,000,000 3,077,901
Keiser Street, Inc. 1.12%* 07/03/03 1,825,000 1,825,000
K.L. Morris, Inc. 1.15%* 07/03/03 2,095,000 2,095,000
Martin Wheel Co, Inc. 1.32%* 07/03/03 2,420,000 2,420,000
Mellon Funding Corp. 5.75% 11/15/03 1,500,000 1,524,616
Merrill Lynch & Co., Inc. 5.70% 02/06/04 1,500,000 1,538,209
MetLife Insurance Co.*** 1.38%* 10/01/03 12,000,000 12,000,000
Mubea, Inc. 1.12%* 07/03/03 6,400,000 6,400,000
Mubea, Inc. 1.12%* 07/03/03 1,250,000 1,250,000
Nations Bank 6.50% 08/15/03 200,000 201,022
Osco Industries, Inc. 1.12%* 01/25/03 1,500,000 1,500,000
O.K.I. Supply Co. 1.15%* 07/03/03 1,550,000 1,550,000
Parker Hannifin 5.65% 09/15/03 8,000,000 8,074,244
Presrite Corp. 1.12%* 07/03/03 340,000 340,000
Principal
Coupon/ Amount ($)
Yield Maturity or Shares Value ($)
------- -------- ---------- -----------
Corporate Obligations -- continued
Pro Tire, Inc. 1.15%* 07/03/03 1,045,000 1,045,000
Procter & Gamble Co. 5.25% 09/15/03 3,375,000 3,402,085
R.I. Lampus Co. 1.12%* 07/03/03 790,000 790,000
Salomon Smith Barney 7.20% 02/01/04 2,101,000 2,171,345
Seariver Maritime, Inc. 1.34%* 07/03/03 4,900,000 4,900,000
SGS Tool Co. 1.12%* 07/03/03 720,000 720,000
Southern California Gas 5.75% 11/15/03 300,000 304,893
Wells Fargo 9.13% 02/01/04 1,000,000 1,044,391
White Castle Project 1.12%* 07/03/03 6,750,000 6,750,000
-----------
Total Corporate Obligations
(Cost $115,303,794) 115,303,794
-----------
U.S. Government Agency Obligations -- 7.3%
Federal Farm Credit Bank 5.15% 12/03/03 100,000 101,585
Federal Home Loan Bank 7.32%* 07/02/03 800,000 800,129
Federal Home Loan Bank 6.75% 08/01/03 300,000 312,389
Federal Home Loan Bank 5.79% 07/28/03 250,000 250,632
Federal Home Loan Bank 5.17% 04/05/04 515,000 524,946
Federal Home Loan Bank 5.08% 11/06/03 150,000 151,950
Federal Home Loan Bank 4.13% 08/15/03 500,000 501,313
Federal Home Loan Bank 3.25% 02/13/04 510,000 515,998
Federal Home Loan Bank 1.42% 05/24/04 1,720,000 1,720,000
Federal Home Loan Bank 1.30% 06/30/04 5,000,000 5,000,000
Federal Home Loan Bank 1.30% 06/07/04 5,000,000 5,000,000
-----------
Total U.S. Government Agency Obligations
(Cost $14,878,942) 14,878,942
-----------
U.S. Treasury Obligations -- 0.0%
U.S. Treasury Bill 1.08% 11/20/03 63,100 62,831
-----------
Total U.S. Treasury Obligations
(Cost $62,831) 62,831
-----------
Repurchase Agreements -- 17.2%
Salomon Smith Barney,
Inc., (Collateralized by
$35,499,660 Banco
Santander Commercial
Paper, at 1.05%, due
09/02/03, value --
$35,434,301) 1.43% 07/01/03 34,739,000 34,739,000
-----------
Total Repurchase Agreements
(Cost $34,739,000) 34,739,000
-----------
Total Investments -- 99.4%
(Cost $201,429,678) (a) 201,429,678
-----------
Other Assets less
Liabilities -- 0.6% 1,189,783
-----------
Total Net Assets --100.0% 202,619,461
-----------
2
Schedule of Portfolio Investments
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money Market Portfolio
Principal
Amount ($)
or Shares Value ($)
---------- -----------
Trustee Deferred Compensation****
The Flex-funds Dynamic Growth Fund 1,124 7,104
The Flex-funds Highlands Growth Fund 1,137 14,804
The Flex-funds Muirfield Fund 3,943 16,048
The Flex-funds Total Return Utilities Fund 905 12,163
-----------
Total Trustee Deferred Compensation
(Cost $50,119) 50,119
-----------
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate security. Interest rate is as of June 30, 2003. Maturity date
reflects the next rate change date.
** Represents a restricted security purchased under Rule 144A, which is exempt
from registration under the Securities Act of 1933, as amended. Security is
restricted as to resale to institutional investors, but has been deemed
liquid in accordance with guidelines approved by the Board of Trustees. As
of June 30, 2003, securities restricted as to resale to institutional
investors represented 9.2% of the Portfolio.
*** Illiquid security. The sale or disposition of such security would not be
possible in the ordinary course of business within seven days at
approximately the value at which the Fund has valued the security. As of
June 30, 2003, illiquid securities represented 6.0% of the Portfolio.
****Assets of affiliates to the Money Market Portfolio held for the benefit of
the Portfolio's Trustees in connection with the Trustee Deferred
Compensation Plan.
See accompanying notes to financial statements.
3
Statement of Assets and Liabilities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Money
Market
Fund
------------
Assets
Investments in corresponding portfolio, at value $189,689,100
Receivable from investment advisor 5,982
Prepaid expenses/other assets 82,755
-----------------------------------------------------------------------------
Total Assets 189,777,837
-----------------------------------------------------------------------------
Liabilities
Dividends payable 146,597
Accrued distribution plan fees (12b-1) 33,731
Accrued transfer agent, fund accounting, and administrative fees 28,654
Other accrued liabilities 7,159
-----------------------------------------------------------------------------
Total Liabilities 216,141
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Net Assets $189,561,696
-----------------------------------------------------------------------------
Net Assets
Capital $189,561,696
-----------------------------------------------------------------------------
Total Net Assets $189,561,696
-----------------------------------------------------------------------------
Capital Stock Outstanding 189,561,696
(indefinite number of shares authorized, $0.10 par value)
Net Asset Value, Offering and Redemption Price Per Share $ 1.00
See accompanying notes to financial statements.
4
Statement of Operations
For the Six Months Ended June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
The Money
Market
Fund
----------
Net Investment Income from Corresponding Portfolio
Interest $1,377,659
Expenses net of reductions (187,154)
--------------------------------------------------------------------
Total Net Investment Income from Corresponding Portfolio 1,190,505
--------------------------------------------------------------------
Fund Expenses
Fund accounting 47,692
Administrative 74,892
Audit 3,602
Legal 3,016
Printing 28,360
Distribution plan (12b-1) 63,234
Postage 30,700
Registration and filing 12,756
Insurance 2,412
Other 30,536
--------------------------------------------------------------------
Total Expenses Before Reductions 297,200
--------------------------------------------------------------------
Expenses reimbursed by investment advisor (65,980)
--------------------------------------------------------------------
Net Expenses 231,220
--------------------------------------------------------------------
--------------------------------------------------------------------
Net Investment Income 959,285
--------------------------------------------------------------------
--------------------------------------------------------------------
Net Change in Net Assets Resulting from Operations $ 959,285
--------------------------------------------------------------------
See accompanying notes to financial statements.
5
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2003 (unaudited) and Year Ended
December 31, 2002
- --------------------------------------------------------------------------------
The Money Market Fund
----------------------------
2003 2002
------------- -------------
Operations
Net investment income $ 959,285 $ 3,551,609
- ----------------------------------------------------------------------------------------------------------
Net change in net assets resulting from operations 959,285 3,551,609
- ----------------------------------------------------------------------------------------------------------
Distributions to Shareholders
From net investment income (959,285) (3,551,609)
- ----------------------------------------------------------------------------------------------------------
Net change in net assets resulting from distributions (959,285) (3,551,609)
- ----------------------------------------------------------------------------------------------------------
Capital Transactions
Issued 119,493,380 279,654,157
Reinvested 812,757 3,508,939
Redeemed (117,024,166) (318,477,532)
- ----------------------------------------------------------------------------------------------------------
Net change in net assets resulting from capital transactions 3,281,971 (35,314,436)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Total Change in Net Assets 3,281,971 (35,314,436)
- ----------------------------------------------------------------------------------------------------------
Net Assets--Beginning of Period 186,279,725 221,594,161
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net Assets--End of Period $ 189,561,696 $ 186,279,725
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Accumulated undistributed (distributions in excess of) net investment income $ -- $ --
- ----------------------------------------------------------------------------------------------------------
Share Transactions
Issued 119,493,380 279,654,157
Reinvested 812,757 3,508,939
Redeemed (117,024,166) (318,477,532)
- ----------------------------------------------------------------------------------------------------------
Net change in shares 3,281,971 (35,314,436)
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
6
Financial Highlights
For a Share Outstanding Through Six Months Ended June 30, 2003 (unaudited)
and Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
The Money Market Fund
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- -------- --------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Income from Investment Operations
Net investment income 0.005 0.016 0.040 0.060 0.049 0.052
- ----------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.005 0.016 0.040 0.060 0.049 0.052
- ----------------------------------------------------------------------------------------------------------
Less Distributions
From net investment income (0.005) (0.016) (0.040) (0.060) (0.049) (0.052)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.005) (0.016) (0.040) (0.060) (0.049) (0.052)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------------------------------------
Total Return (assumes reinvestment of
distributions)(1) 0.50% 1.59% 4.10% 6.20% 4.96% 5.31%
Ratios/Supplemental Data
Net assets, end of period ($000) $189,562 $186,280 $221,594 $233,227 $232,023 $154,255
Ratio of net expenses to average net assets(2) 0.44% 0.44% 0.44% 0.41% 0.41% 0.40%
Ratio of net investment income to average net
assets(2) 1.01% 1.58% 4.00% 6.01% 4.88% 5.19%
Ratio of expenses to average net assets before
reductions(1)(3) 0.68% 0.66% 0.62% 0.60% 0.54% 0.59%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
(3) Ratio includes reductions in corresponding portfolio.
See accompanying notes to financial statements.
7
Notes to Financial Statements
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Flex-funds Trust (the "Trust") was organized in 1982 and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as a
diversified, open-end management investment company. At June 30, 2003, the
Trust consisted of seven separate series. The accompanying financial statements
relate only to The Money Market Fund (the "Fund"). The Fund invests all of its
investable assets in a corresponding open-end management investment company
(the "Portfolio"). The Fund, the Portfolio into which the Fund invests and the
percentage of the Portfolio owned by the Fund is as follows:
Percentage of
Portfolio Owned by
Fund as of
Fund Portfolio June 30, 2003*
---- --------- ------------------
The Money Market Fund Money Market Portfolio 94%
* There is a partner of the Portfolio that owns a de minimis position.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are included elsewhere in this report and should be read in
conjunction with the financial statements of the Fund.
Use of estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Valuation of investments. The Fund records its investment in the corresponding
Portfolio at value. Valuation of securities held by the Portfolio is discussed
in the notes of the Portfolio's notes to financial statements included
elsewhere in this report.
Federal income taxes. It is the Fund's policy to continue to comply with the
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to distribute substantially all of its
taxable income and net capital gains to its shareholders. Therefore, no federal
income tax provision is required.
Distributions to shareholders. Distributions to shareholders are recorded on
the ex-dividend date. The Fund declares dividends from net investment income on
a daily basis and pays such dividends on a monthly basis. The Fund distributes
net capital gains, if any, on an annual basis.
Distributions from net investment income and from net capital gains are
determined in accordance with income tax regulations which may differ from
GAAP. These differences are primarily due to deferrals of certain losses,
expiring capital loss carryforwards, and differing treatments of unrealized
gains and losses of futures contracts held by the Fund's corresponding
Portfolio. 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 within the components of net assets.
Investment income & expenses. The Fund records daily its proportionate share
of the corresponding Portfolio's income, expenses, and realized and unrealized
gains and losses. In addition, the Fund accrues its own expenses. Expenses
incurred by the Trust that do not specifically relate to an individual fund of
the Trust are allocated to the Fund based on the Fund's relative net assets or
other appropriate basis.
2. Agreements and Other Transactions with Affiliates
Meeder Asset Management, Inc. ("MAM"), a wholly-owned subsidiary of Meeder
Financial, Inc. ("Meeder"), provides the Portfolio with investment management,
research, statistical and advisory services.
Mutual Funds Service Co. ("MFSCo"), a wholly-owned subsidiary of Meeder, serves
as stock transfer, dividend disbursing and shareholder services agent for the
Fund. In compensation for such services, the Fund pays MFSCo an
8
annual fee equal to the greater of $20 per active shareholder account or 0.08%
of the Fund's average daily net assets. MFSCo is entitled to receive an annual
minimum fee of $4,000 from the Fund. The Fund is currently subject to an
expense cap, thus the basis point fee has been reduced by 0.02%.
MFSCo provides the Trust with certain administrative services. In compensation
for such services, the Fund pays MFSCo an annual fee equal to 0.05% of the
Fund's average daily net assets.
MAM has agreed to reduce its fees and/or reimburse expenses, including expenses
allocated from its respective Portfolio (excluding interest, taxes, brokerage
fees, and extraordinary expenses) to the extent necessary to achieve an
effective yield for the Fund that will rank in the top 10% of yields for all
general purpose money market funds in 2003. Such reduction and/or reimbursement
is limited to the total of fees charged to the Fund by MAM and MFSCo. For the
six months ended June 30, 2003, MAM and MFSCo, collectively, reimbursed $65,980
to the Fund.
Pursuant to Rule 12b-1 of the 1940 Act, a mutual fund can adopt a written plan
to pay certain expenses out of fund assets relating to the sale and
distribution of its shares. The Fund has adopted a distribution plan that
limits the Fund, on an annual basis, to pay 0.20% of average daily net assets
for such expenses. However, the Fund expensed what was actually incurred during
the six months ended June 30, 2003.
3. Federal Tax Information
The Fund paid dividends, characterized for tax purposes as ordinary income, of
$3,571,277 during the year ended December 31, 2002./1/
As of December 31, 2002, the components of accumulated earnings/(deficit) on a
tax basis for the Fund was as follows:
Accumulated Total
Undistributed Capital and Unrealized Accumulated
Ordinary Dividends Other Gains Appreciation/ Earnings/
Income Payable and (Losses) (Depreciation) (Deficit)
------------- --------- ------------ -------------- -----------
$14,147 $14,147 $-- $-- $--
/1/ Total dividends paid may differ from the amount reported in the Statement
of Changes in Net Assets because for tax purposes dividends are recognized
when actually paid.
9
Statement of Assets & Liabilities
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money
Market
Portfolio
------------
Assets
Investments, at value* $166,690,678
Repurchase agreements, at value* 34,739,000
Trustee deferred compensation investments, at value 50,119
Cash 797
Interest and dividend receivable 1,236,030
Prepaid expenses/other assets 43
----------------------------------------------------------------
Total Assets 202,716,667
----------------------------------------------------------------
Liabilities
Payable for Trustee Deferred Compensation Plan 50,119
Payable to investment advisor 22,605
Accrued fund accounting fees 5,132
Other accrued liabilities 19,350
----------------------------------------------------------------
Total Liabilities 97,206
----------------------------------------------------------------
----------------------------------------------------------------
Total Net Assets $202,619,461
----------------------------------------------------------------
----------------------------------------------------------------
* Investments, at cost $201,429,678
----------------------------------------------------------------
See accompanying notes to financial statements.
10
Statement of Operations
For the Six Months Ended June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
Money
Market
Portfolio
----------
Investment Income
Interest $1,533,844
--------------------------------------------------------------
Total Investment Income 1,533,844
--------------------------------------------------------------
Expenses
Investment advisor 339,843
Fund accounting 28,966
Trustee 4,505
Audit 3,648
Custodian 8,322
Legal 2,474
Insurance 1,824
Other 1,482
--------------------------------------------------------------
Total Expenses Before Reductions 391,064
--------------------------------------------------------------
Investment advisor fees waived (182,581)
--------------------------------------------------------------
Total Net Expenses 208,483
--------------------------------------------------------------
--------------------------------------------------------------
Net Investment Income (Loss) 1,325,361
--------------------------------------------------------------
--------------------------------------------------------------
Net Change in Net Assets Resulting from Operations $1,325,361
--------------------------------------------------------------
See accompanying notes to financial statements.
11
Statements of Changes in Net Assets
For the Six Months Ended June 30, 2003 (unaudited) and the Year Ended
December 31, 2002
- --------------------------------------------------------------------------------
Money Market Portfolio
----------------------------
2003 2002
------------- -------------
Operations
Net investment income (loss) $ 1,325,361 $ 4,658,599
- ---------------------------------------------------------------------------------------------------------------------
Net change in net assets resulting from operations 1,325,361 4,658,599
- ---------------------------------------------------------------------------------------------------------------------
Transactions of Investors' Beneficial Interests
Contributions 134,968,757 325,392,543
Withdrawals (144,552,092) (389,503,659)
- ---------------------------------------------------------------------------------------------------------------------
Net change in net assets resulting from transactions of investors' beneficial interests (9,583,335) (64,111,116)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Total Change in Net Assets (8,257,974) (59,452,517)
- ---------------------------------------------------------------------------------------------------------------------
Net Assets--Beginning of Period 210,877,435 270,329,952
- ---------------------------------------------------------------------------------------------------------------------
Net Assets--End of Period $ 202,619,461 $ 210,877,435
- ---------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
12
Financial Highlights
Ratios/Supplementary Data For Six Months Ended June 30, 2003 (unaudited)
and Each Fiscal Year Ended December 31,
- --------------------------------------------------------------------------------
Money Market Portfolio
2003 2002 2001 2000 1999 1998
-------- -------- -------- -------- ---------- --------
Total Return(1) 0.62% 1.83% 4.54% 6.61% 5.37% 5.71%
Net assets, end of period ($000) $202,619 $210,877 $270,330 $297,206 $1,104,197 $798,269
Ratio of net expenses to average net assets(2) 0.20% 0.20% 0.21% 0.19% 0.18% 0.18%
Ratio of net investment income to average net
assets(2) 1.25% 1.83% 4.26% 6.05% 5.07% 5.39%
Ratio of expenses to average net assets before
reductions(2) 0.37% 0.36% 0.35% 0.30% 0.30% 0.30%
(1) Not annualized for periods of less than one full year.
(2) Annualized for periods of less than one full year.
See accompanying notes to financial statements.
13
Notes to Financial Statements
June 30, 2003 (unaudited)
- --------------------------------------------------------------------------------
1. Organization and Significant Accounting Policies
The Money Market Fund (the "Fund") invests all of its investable assets in a
corresponding open-end management investment company (a "Portfolio") having the
same investment objective as the Fund. The Portfolio is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a no-load,
open-ended management investment company, which was organized as a trust under
the laws of the State of New York. For federal income tax purposes the
Portfolio qualifies as a partnership, and each investor in the Portfolio is
treated as the owner of its proportionate share of the net assets, income,
expenses, and realized and unrealized gains and losses of the Portfolio.
Accordingly, as a "pass-through" entity, the Portfolio pays no income dividend
or capital gain distribution.
Use of estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") 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.
Security valuation. Money market securities held in the Portfolio are valued
at amortized cost, which approximates value. In compliance with Rule 2a-7 of
the 1940 Act, the amortized values are compared to prices obtained from
independent pricing services that use valuation techniques approved by the
Board of Trustees ("Trustees").
Repurchase agreements. The Portfolio may engage in repurchase agreement
transactions whereby the Portfolio takes possession of an underlying debt
instrument subject to an obligation of the seller to repurchase the instrument
from the Portfolio and an obligation of the Portfolio to resell the instrument
at an agreed upon price and term. At all times, the Portfolio maintains the
value of collateral, including accrued interest, at least 100% of the amount of
the repurchase agreement, plus accrued interest. If the seller defaults or the
fair value of the collateral declines, realization of the collateral by the
Portfolio may be delayed or limited.
Federal income taxes. The Portfolio will be treated as a partnership for
federal income tax purposes. As such, each investor in the Portfolio will be
subject to taxation on its share of the Portfolio's ordinary income and capital
gains. It is the Portfolio's policy to continue to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to it. Therefore, no
federal income tax provision is required.
Other. The Portfolio records security transactions on the trade date. Gains
and losses realized from the sale of securities are determined on the specific
identification basis. Interest income (including amortization of premium and
accretion of discount) is recognized as earned.
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 shares of The Flex-funds. Deferred
amounts remain in the Portfolio until distributed in accordance with the Plan.
2. Investment Transactions
As of June 30, 2003, the aggregate cost basis of investments for federal income
tax purposes was $201,429,678.
3. Investment Advisory Fees and Other Transactions with Affiliates
Meeder Asset Management, Inc. ("MAM"), a wholly-owned subsidiary of Meeder
Financial, Inc. ("Meeder"), provides the Portfolio with investment management,
research, statistical and advisory services. For such services the Portfolio
pays a fee at the following annual rates: 0.40% of average daily net assets up
to $100 million and 0.25% of average daily net assets exceeding $100 million.
During the six months ended June 30, 2003, MAM agreed to reduce $182,581 of
investment advisory fees in the Portfolio.
Mutual Funds Service Co. ("MFSCo"), a wholly owned subsidiary of Meeder, serves
as accounting services agent for the Portfolio. In compensation for such
services, the Portfolio pays MFSCo an annual fee equal to the greater of:
a. 0.15% of the first $10 million of average daily net assets, 0.10% of the
next $20 million of average daily net assets, 0.02% of the next $50
million of average daily net assets, and 0.01% in excess of $80 million
of average daily net assets,
or
b. $30,000.
14
Trustees and Officers (unaudited)
- --------------------------------------------------------------------------------
Certain trustees and officers of the Portfolio are also officers or directors
of Meeder, MAM and MFSCo. The Trustees oversee the management of the Trust, the
Fund, and the Portfolio and elect their officers. The officers are responsible
for the Fund's and the Portfolio's day-to-day operations. The Trustees' and
officers' names, addresses, years of birth, positions held with the Trust, and
length of service as a Flex-funds Trustee are listed below. Also included is
each Board member's principal occupation during, at least, the past five years.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Except as otherwise shown, all
persons named as Trustees also serve in similar capacities for all other mutual
funds advised by MAM, including The Flex-funds, Meeder Advisor Funds, and the
corresponding portfolios of The Flex-funds and Meeder Advisor Funds
(collectively, the "Fund Complex"). Those Trustees who are "interested
persons", as defined in the 1940 Act, by virtue of their affiliation with the
Fund Complex are indicated by an asterisk (*).
Name, Address(1), and Principal Occupation During
Year of Birth Position and Length of Service(2) Past Five Years
- ------------- --------------------------------- ---------------------------------------
Robert S. Meeder, Sr.* Trustee and President Chairman of Meeder Asset
Year of Birth: 1929 Management, Inc., an investment
advisor; Chairman and Director of
Mutual Funds Service Co., the Fund
Complex's transfer agent; Director of
Adviser Dealer Services, Inc., the
Fund Complex's Distributor.
Milton S. Bartholomew Trustee Retired; formerly a practicing attorney
Year of Birth: 1929 in Columbus, Ohio; member of the
Fund Complex's Audit Committee.
Roger D. Blackwell Trustee Professor of Marketing and Consumer
Year of Birth: 1940 Behavior, The Ohio State University;
President of Blackwell Associates,
Inc., a strategic consulting firm.
Robert S. Meeder, Jr.* Trustee and Vice President President of Meeder Asset
Year of Birth: 1961 Management, Inc.
Walter L. Ogle Trustee Retired; formerly Executive Vice
Year of Birth: 1937 President of Aon Consulting, an
employee benefits consulting group;
member of the Fund Complex's Audit
Committee.
Charles A. Donabedian Trustee President, Winston Financial, Inc.,
Year of Birth: 1943 which provides a variety of marketing
consulting services to investment
management companies; CEO,
Winston Advisors, Inc., an investment
advisor; member of the Fund
Complex's Audit Committee.
James W. Didion Trustee Retired; formerly Executive Vice
Year of Birth: 1930 President of Core Source, Inc., an
employee benefit and Workers'
Compensation administration and
consulting firm (1991 - 1997).
Jack W. Nicklaus Trustee Designer, Nicklaus Design, a golf
Year of Birth: 1961 course design firm and division of The
Nicklaus Companies.
(1) The address of each Trustee is 6125 Memorial Drive, Dublin, OH 43017.
(2) Each Trustee serves for an indefinite term, until his or her resignation,
death, or removal.
* Robert S. Meeder, Sr. is deemed an "interested person" of the Trust by
virtue of his position as Chairman of Meeder Asset Management, Inc., the
Advisor of the Portfolio. Robert S. Meeder, Jr. is deemed an "interested
person" of the Trust by virtue of his position as President of Meeder Asset
Management, Inc., the Advisor of the Portfolio.
15
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Manager and Investment Advisor:
Meeder Asset Management
6125 Memorial Drive
P.O. Box 7177
Dublin, Ohio 43017
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
Custodian
U.S. Bank, N.A.
Cincinnati, Ohio 45201
Transfer Agent Dividend Disbursing Agent
Mutual Funds Service Co.
6125 Memorial Drive
Dublin, Ohio 43017
Auditors
KPMG LLP
Columbus, Ohio 43215
- --------------------------------------------------------------------------------
================================================================================
The Flex-funds
Managed by a Meeder Financial Company
6125 Memorial Drive, Dublin Ohio, 43017
Call Toll Free 800-325-3539 | 760-2159
Fax: 614-766-6669 | www.flexfunds.com
Email: flexfunds@meederfinancial.com
================================================================================
Item 2. Code of Ethics.
Not applicable (disclosure required in annual report on N-CSR only).
Item 3. Audit Committee Financial Expert.
Not applicable (disclosure required in annual report on N-CSR only).
Item 4. Principal Accountant Fees and Services.
Not applicable (disclosure required in annual report on N-CSR only).
Items 5-6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures.
(a) Based on our evaluation conducted within 90 days of the filing date, hereof,
the design and operation of the registrant's disclosure controls and procedures
are effective to ensure that material information relating to the registrant is
made known to the certifying officers by others within the appropriate entities,
particularly during the period in which Forms N-CSR are being prepared, and the
registrant's disclosure controls and procedures allow timely preparation and
review of the information for the registrant's Form N-CSR and the officer
certifications of such Form N-CSR.
(b) There were no significant changes in the registrant's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Item 10. Exhibits.
(a) Not applicable.
(b) Certifications of principal executive officer and principal financial
officer, under Rule 30a-2 of the Investment Company Act of 1940. Filed herewith
as EX-99.CERT.
(c) Certifications of principal executive officer and principal financial
officer, under Section 906 of the Sarbanes-Oxley Act of 2002, and 18 U.S.C.
ss.1350.
Filed herewith as EX-99.906.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Flex-funds
By: /s/ Bruce E. McKibben, Treasurer
Bruce E. McKibben, Treasurer
Date: September 3, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Bruce E. McKibben, Treasurer
Bruce E. McKibben, Treasurer
Date: September 3, 2003
By: /s/ Robert S. Meeder, Sr., Chairman and President
Robert S. Meeder, Sr., Chairman and President
Date: September 3, 2003