N-CSR 1 fp0004335_ncsr.htm fp0004335_ncsr.htm
 
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 811-3462

The Flex-funds Trust
6125 Memorial Drive
Dublin, OH   43017

Bruce McKibben
c/o The Flex-funds Trust
6125 Memorial Drive
Dublin, OH   43017

Registrant’s telephone number, including area code:  800-325-3539

Date of fiscal year end:  December 31, 2011

Date of reporting period:  December 31, 2011
 
 
 

 
 
Item 1.  Report to Stockholders.
 
 
 
 
 
 

 
 
TABLE OF CONTENTS

 
 Letter to Shareholders  1
The Quantex FundTM
4
The Aggressive Growth Fund
6
The Dynamic Growth Fund
8
The Strategic Growth Fund
10
The Muirfield Fund®
12
The Defensive Balanced Fund
14
The Utilities and Infrastructure Fund
16
The Total Return Bond Fund
18
The Money Market Fund
20
Shareholder Expense Analysis
22
Disclosures
23
Fund Holdings & Financial Statements
24
 
Our Mission Statement
 
Every day, our mission is to exceed, with integrity, passion, and discipline, the expectations of our shareholders’ and clients’ overall investment experience.
 
Core Values
 
The Client/Shareholder Is Our #1 Priority
Always remember whom we are serving. Our livelihood depends on providing a superior overall investment experience that exceeds the expectation of our shareholders and clients.
 
Clarity Of Purpose
Our organization has a clear, well-defined vision. All of our associates are committed to and understand how they will contribute to that vision.
 
Communication
We expect open and effective communication, full reporting, including good and bad news, and constructive feedback.
 
Integrity
We insist upon honesty and adhere to the highest ethical standards.
 
Excellence/ Innovation
Our associates strive each day for excellence in the work they perform, seek innovative ways to solve problems and introduce new ideas to take advantage of opportunities. We are a “Think Outside The Box” company.
 
Associate Well-Being
We value the success and well-being of our associates. We recognize and reward our associates’ contributions.
 
Respect For Others
Respect all people, value the differences among them and treat them as you would like to be treated.
 
Seek First To Understand
When interacting with others, place curiosity and understanding of their perspective FIRST, setting aside preconceived opinions and quick judgment.
 
Teamwork
We are a synergistic organization that works as a team to exceed our objectives.
 
Profit
We are profitable. Profitability enhances our services and capabilities, and affords everyone the opportunity to
further their financial well-being.
 
 
 

 
 
 
2011 Annual Report | December 31, 2011

 
Letter to Shareholders
December 31, 2011
 
The year ended December 31, 2011 proved difficult for investors in the face of renewed uncertainty.  Europe drove the financial news cycle, which lead to a heightened level of volatility in the capital markets.  Slow growth in the U.S. was met with negligible growth in Europe, and the possibility of a European recession is on the horizon.  Tepid growth and harsh austerity measures have led to political unrest in the developed world, while the upcoming U.S. presidential election has ensured that politics will continue to play a pivotal role.  Despite the presence of negative headlines, there were positive developments in 2011 as well.  Corporate earnings in the U.S. reached historically high levels while the S&P 500 Index remains nearly 20% below its peak in October 2007, which creates favorable valuations.  A strong jobs report at the beginning of 2012, along with a reduction in the unemployment rate to 8.5%, showed a marked improvement in the labor market.  Overall, the economic picture remains clouded by uncertainty as we await resolution to the European sovereign debt crisis, which depends on the actions of policymakers.
 
European Debt Problems Linger
 
The European debt crisis entered a dangerous new phase in 2011 as Italy faced increased credit market pressure and Italian bond yields spiked even higher.  Both Italy and Spain saw yields on their government bonds increase significantly throughout 2011 as investors shunned risky assets in favor of safe-havens, such as U.S. Treasuries.  This development is significant since Italy is the third largest Eurozone economy and is home to the third largest bond market in the world.  European leaders continue the struggle to find common ground in an effort to fight the crisis, with Germany opposed to creating “Eurobonds.”  In addition, Germany remains unsupportive in calls for the European Central Bank (ECB) to make large scale bond purchases that could help contain the bond yields of countries already under pressure.  As the primary creditor to European debtor nations, Germany’s actions are being followed closely.  In response to these issues, the credit ratings of several European countries, including France and Spain, have been lowered.
 
U.S. Debt Ceiling Debate
 
The debate in Congress over raising the U.S. debt ceiling was fraught with conflict as a compromise between Republicans and Democrats proved elusive.  For the first time, the Federal Government came perilously close to defaulting on its debt.  After much public disagreement, both political parties were able to reach a compromise.  Unfortunately, the package that was approved has been widely viewed as a short-term fix as opposed to a long-term solution.  The agreed upon deal consists of raising the debt ceiling and simultaneously cutting spending in similar amounts, allowing the U.S. to avoid a default.  The deal also delegated much of the decision making authority to a bipartisan deficit “Super Committee” consisting of 12 members
 
 
 
Page 1

 
 
 
2011 Annual Report | December 31, 2011

 
of Congress.  Unfortunately, the Super Committee was unable to reach a compromise, and any ultimate decision has again been delayed, potentially leading to automatic spending cuts in 2013.
 
U.S. Credit Rating Downgrade
 
On Friday August 5th, the credit rating agency Standard & Poor’s (S&P) downgraded the United States Government’s long-term credit rating.  The rating was cut one notch, from the highest rating of AAA to AA+.  The short-term debt rating was affirmed at A-1+, which is the highest short-term rating available at S&P.  Rather than reflecting the immediate inability of the U.S. to meet its obligations, the downgrade was viewed as a critique of the inability of Congress to reach a long-term debt and deficit reduction deal.  The downgrade of America’s credit rating sent a negative ripple into the equity markets, adding to mounting uncertainty about the global economy.  Ironically, Treasury yields continued to decline following the downgrade as U.S. Treasury securities are still perceived as a safe haven asset.  Despite the downgrade from S&P, the other two major rating agencies, Moody’s and Fitch, have both recently affirmed their AAA credit rating on the U.S.
 
Fed Remains Accommodative
 
Against the backdrop of lackluster economic growth and threats posed by the European sovereign debt crisis, the Federal Reserve continued down a path of easy monetary policy designed to keep interest rates extremely low.  This included additional language in Fed statements that commits to low rates into 2014, as well as a program called “Operation Twist”.  This consists of selling short-term treasury securities while simultaneously buying long-term treasuries, in an effort to suppress long-term interest rates.  The Fed’s actions, along with elevated levels of risk and volatility around the world, combined to drive U.S. treasury yields lower in 2011.  Low treasury yields impact many areas of the economy, and influence the interest rates that businesses pay for loans as well as mortgage rates for home buyers.
 
Economic Data Improving
 
Economic data in the U.S. continues to improve, and there is evidence that consumers are feeling more optimistic as we transition into 2012.  The Conference Board’s Consumer Confidence Index currently stands at 64.5, which is the highest level since April of 2011 and is significantly above the levels seen early in the recovery.  Although GDP growth has been relatively anemic compared to past recoveries, we still have had eight consecutive quarters of growth.  A key statistic related to manufacturing activity, the Institute for Supply Management’s (ISM) Manufacturing Index, was reported at 53.9 for December, and has remained above the expansionary level of 50 since August of 2009 (see Chart 1 on previous page).  The unemployment rate declined to 8.5% for December, and is currently at the lowest level since February of 2009.  Going forward, the current level of weekly initial jobless claims bodes well for the labor market.  Claims have recently held below 400,000, which is a level that many economists consider significant since it is believed that sustained job creation occurs below this level (see Chart 2).
 
 
 
Page 2

 
 
 
2011 Annual Report | December 31, 2011

 
Emerging market economies raise interest rates to stifle inflation
 
Since 2010, fast growing economies such as China and India have begun tightening monetary policy in an attempt to ward off rising rates of inflation.  For instance, the Reserve Bank of India embarked on an interest rate tightening cycle, while The People’s Bank of China has raised rates as well. China has also raised its bank reserve requirements in an effort to decrease its money supply and fight inflation. This stands in stark contrast to developed economies, which have generally maintained interest rates at historically low levels in an effort to boost economic growth.  However, as emerging market economies began tightening monetary policy, there was concern that such actions would slow their growth too much, especially against the backdrop of slowing growth in many developed economies.
 
Outlook for 2012
 
Many of the issues impacting 2011 are expected to persist well into 2012.  Uncertainty is ever present as the European sovereign debt crisis continues to weigh on the capital markets, while the political landscape in both the U.S. and Europe remains volatile.  Despite this, we have found several reasons to remain optimistic about the prospects for the domestic economy.  Corporate earnings are strong, which also creates favorable valuations in the stock market.  Job growth is showing signs of strength, which should aid the economic recovery, while manufacturing and consumer confidence
 
levels have both shown marked improvement since the start of the recovery.  The Federal Reserve has maintained its accommodative stance, which should preserve the low interest rate environment.  If European leaders can agree to a comprehensive solution to stem the sovereign debt crisis, then we believe the aforementioned factors could propel the U.S. economy to stronger than expected performance in 2012.
 
As we monitor the capital markets and our investment models, we will continuously evaluate our defensive position in The Muirfield Fund® and the equity portion of The Defensive Balanced Fund.  We will look for opportunities to adjust portfolio weights among growth and value stocks, large-, mid-, and small-caps, and domestic and international investments in order to enhance returns and manage risk for our clients.  We will also continue to proactively manage our sector exposures and will make adjustments as our investment models evolve.   We will continue to select mutual funds and ETFs that we believe are best positioned to outperform.   In our fixed income Funds, we will look to enhance returns by adjusting portfolio durations as well as manage credit quality.
 
On the following pages, you will find a review of how the The Flex-funds® Mutual Funds have performed.  Please read the commentaries to learn more about the investment decisions we made during the past year.  On behalf of all of the associates at Meeder Asset Management and The Flex-funds®, we thank you for the trust and confidence you have placed in our investment management services.
 
Robert S. Meeder
President
The Flex-funds®
December 31, 2011
 
 
Page 3

 
 
 
2011 Annual Report | December 31, 2011

 
The Quantex Fund
 
The Quantex FundTM outperformed both the Russell 2000 and the S&P 400 Mid-Cap indices for the three year period ended 12/31/11.
 
The Flex-funds® Quantex Fund™ returned -4.05% for the year ended December 31, 2011.  For the same time period, the Russell 2000 and the S&P 400 Mid-Cap Indices returned -4.17% and -1.73%, respectively.  For the period ended December 31, 2011, The Quantex Fund™ has outperformed both the Russell 2000 Index and the S&P 400 Mid-Cap Index for the 3-year time period.
 
We have consistently employed our quantitative stock selection process since April 30, 2005 for The Quantex Fund™. We utilize rankings from our quantitative financial model to determine which securities are to be held in the Fund on an annual basis.  As a result, the Fund is rebalanced annually in January.  After rebalancing the Fund in January 2011, there was a strong preference for value holdings, with mid-cap value companies comprising 44% of the Fund, followed by mid-cap core with 26%, and mid-cap growth with 19%.  Small-cap holdings of 11% comprise the remainder according to our allocation analysis at the beginning of 2011.
 
Relative to the S&P 400 Mid-Cap Index, stock selection within the energy sector provided the greatest benefit to the Fund.  The largest detractor from performance was stock selection within the consumer discretionary sector, although the Fund’s overweight to the sector partially offset the negative selection impact.  Stock selection in the utilities sector also contributed to performance, while selection in the financial sector detracted from returns.  However, the Fund also benefited from other sector allocation decisions, including an overweight to the consumer staples and utilities sectors during 2011.
 
For the full year 2011, many stocks contributed positively to the performance of the Fund.  The top performing stock for the year was Cabot Oil & Gas, which was up nearly 101%.  Other top performers for the year include H&R Block (up 42%) and NiSource (up 40%).  The largest detractors from performance during the year were First Solar (down 74%), Sears Holdings (down 57%), and E*Trade Financial (down 50%).
 
 
Page 4

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
3
5
4/30/05 to
10
Inception
 
Year
Year
Year
12/31/112
Year
Date
The Flex-funds® Quantex Fund
Expense Ratios+: Current net 1.62% Gross 2.07%
-4.05%
28.00%
2.09%
5.93%
3.65%
3/20/85
Blended Index1
-2.94%
17.62%
1.77%
5.88%
6.37%
3/31/85
Russell 2000 Index
-4.17%
15.65%
0.15%
5.14%
5.64%
3/31/85
S&P 400 Mid-Cap Index
-1.73%
19.59%
3.31%
6.55%
7.03%
3/31/85
 

Growth of $10,000: 12/31/01 - 12/31/11
 
 
The Quantex Fund™ was previously  known  as  The Highlands Growth Fund. On April 30, 2005, The Highlands Growth Fund changed its name to The Quantex Fund™, also changing the Fund’s investment objective and strategies.  Due to this, the Russell 2000 Index and the S&P 400 Mid-Cap Index are more comparative indices for Fund performance.
 
The Growth of $10,000 chart compares the value of The Quantex Fund™ to the S&P 400 Mid-Cap Index and the Russell 2000 Index, the Fund’s broad-based benchmarks, and to the Blended Index, which consists of 50% of the Russell 2000 Index and 50% of the S&P 400 Mid-Cap Index.  The chart is intended to give you a general idea of how the Fund performed compared to these benchmarks over the period from December 31, 2001 to December 31, 2011. An understanding of the differences between the Fund and these indices is important. The benchmark indices do 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 

Top Ten Holdings as of December 31, 2011

1.
Cabot Oil & Gas Corp.
2.1%
2.
H&R Block, Inc.
1.4%
3.
Apollo Group, Inc.
1.4%
4.
NiSource, Inc.
1.4%
5.
AutoNation, Inc.
1.4%
6.
Novellus Systems, Inc.
1.3%
7.
Total System Services, Inc.
1.3%
8.
Dean Foods Co.
1.3%
9.
Tesoro Corp.
1.3%
10.
Airgas, Inc.
1.3%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Quantex Fund™ during the periods shown above. + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of contractual expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 5

 
 
 
2011 Annual Report | December 31, 2011

 
The Aggressive Growth Fund
 
The Fund seeks growth of capital by investing in actively managed mutual funds and exchange-traded funds that invest in equity securities.
 
The Flex-funds® Aggressive Growth Fund returned -7.15% for the year ended December 31, 2011.  By comparison, the S&P 500 Index returned 2.11% during the same time period.  Overall, our allocation to mid- and small-cap investments as well as underlying fund holdings caused the Fund to underperform its benchmark during 2011, and is discussed in more detail below.
 
We entered the first quarter with an overweight position among growth versus value investments, but reduced our growth overweight as the quarter progressed due to indications from our investment models. We also maintained our overweight in mid- and small-cap stocks, which benefited performance and has been a key component of our investment allocation since the stock market recovery commenced.  Sector exposure was concentrated among the energy and industrial materials sectors throughout the first quarter, and our growth exposure also resulted an overweight to the technology sector. We were underweight the consumer staples and healthcare sector. We also held a direct position in emerging market securities, which detracted from performance, but continued to avoid direct exposure to developed international markets.
 
During the second quarter, we maintained our overweight position among growth versus value investments.  We also maintained our overweight in mid- and small-cap stocks, which detracted from performance during the quarter.  Our sector exposure remained consistent with the first quarter, which was characterized by an overweight position among the energy and industrial materials, and technology sector; while being underweight the consumer staples and healthcare sector.  We continued to maintain a direct position in emerging market securities.
 
We began the third quarter with our overweight position to growth investments, and also maintained our overweight in mid- and small-cap stocks.  However, we reduced the size of our overweight position as the quarter progressed due to shifting preferences in our investment models.  We eliminated our direct exposure to the energy sector, but maintained our overweight to the technology sector and also became overweight to the healthcare sector.  Also, we exited our direct position in emerging market securities at the beginning of the third quarter.
 
In the fourth quarter, we remained overweight to growth versus value investments due to ongoing preference from our investment models.  We also maintained a position in mid- and small-cap stocks; however, we reduced our exposure further as the quarter progressed.  We continued to overweight the healthcare and technology sectors, while avoiding the financial and energy sectors.  Finally, we avoided direct exposure to all international markets.
 
 
Page 6

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
Year
3
Years
5
Years
10
Years
Inception
Date
The Flex-funds® Aggressive Growth Fund
Expense Ratios+: Current net 1.59% Gross 1.70%
-7.15%
12.55%
-1.58%
1.50%
12/31/94
S&P 500 Index
2.11%
14.13%
-0.25%
2.92%
2/29/00
 

Growth of $10,000: 12/31/01 - 12/31/11
 
 
The Growth of $10,000 chart compares The Aggressive Growth Fund’s value to the S&P 500 Index, the Fund’s broad-based benchmark. The chart is intended to give you a general idea of how the Fund performed compared to this benchmark over the period from December 31, 2001 to December 31, 2011. An understanding of the differences between the Fund and this index is important. The S&P 500 Index is a widely recognized unmanaged index of common stock prices that 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 

Top Ten Holdings as of December 31, 2011

1.
Harbor Capital Appreciation Fund
14.8%
2.
Allianz NFJ Dividend Value Fund
14.8%
3.
Wells Fargo Advantage Growth Fund
14.6%
4.
T. Rowe Price Value Fund
13.0%
5.
Columbia Dividend Income Fund
9.1%
6.
RS Technology Fund
5.5%
7.
Ivy Mid Cap Growth Fund
4.9%
8.
JPMorgan Mid Cap Value Fund
4.6%
9.
Health Care Select Sector SPDR Fund
4.6%
10.
iShares Russell 2000 Index Fund
4.4%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Aggressive Growth Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 7

 
 
 
2011 Annual Report | December 31, 2011

 
The Dynamic Growth Fund
 
The Fund seeks growth of capital by investing in actively managed mutual funds, exchange-traded funds, and stock index futures.
 
The Flex-funds® Dynamic Growth Fund returned -5.65% for the year ended December 31, 2011 compared to the S&P 500 Index return of 2.11% for the same time period.  The performance of the Fund relative to the S&P 500 during 2011 was driven by numerous factors. Our allocation decisions, which consisted of our exposure to mid- and small-caps, our position in growth versus value investments, as well as our temporary emerging market exposure detracted from performance during the year.  We also experienced an overall negative impact from our underlying fund holdings.
 
During the first quarter, we maintained our overweight allocation to growth investments versus value; however, we reduced this overweight during the quarter as our investment models began to shift toward a neutral position. Additionally, our investment models continued to maintain preference for mid- and small-cap companies, which has led us to maintain our overweight allocation to these investments.  We established an overweight position in the energy sector early in the first quarter, while also overweighting the industrial materials sector. We were underweight the consumer staples and healthcare sector. On an international basis, we continued to avoid direct exposure to developed international markets, but held exposure to emerging markets.
 
We entered the second quarter with an overweight allocation to growth investments versus value, and we maintained this positioning throughout the quarter due to indications from our investment models.  Additionally, our investment models continued to maintain preference for mid- and small-cap companies, which led us to preserve our overweight allocation to these investments.  Our overweight position in the energy and industrial materials sector, which was maintained from the first quarter, detracted from performance during the second quarter.  On an international basis, we continued to avoid direct exposure to developed international markets, but maintained exposure to emerging markets.
 
We began the third quarter with an overweight allocation to growth investments versus value, and we increased our growth positioning throughout the quarter due to indications from our investment models.  However, our investment models decreased preference for mid- and small-cap companies, which led us to reduce our overweight allocation to these investments.  Also during the third quarter, we were overweight to the healthcare and technology sector, while being underweight the financial and energy sectors.  On an international basis, we have avoided direct exposure to the developed international markets since December of 2009, and eliminated our exposure to emerging markets at the beginning of the third quarter.
 
During the fourth quarter, we maintained our overweight position to growth versus value investments due to preference from our investment models.  We also maintained a position in mid- and small-cap stocks; however, we reduced our exposure as the quarter progressed.  We continued to overweight the healthcare and technology sectors, while avoiding the financial and energy sectors.  Finally, we continued to avoid direct exposure to developed international and emerging markets.
 
 
Page 8

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
Year
3
Years
5
Years
10
Years
Inception
Date
The Flex-funds® Dynamic Growth Fund
Expense Ratios+: Current net 1.39% Gross 1.55%
-5.65%
12.00%
-1.96%
1.75%
2/29/00
S&P 500 Index
2.11%
14.13%
-0.25%
2.92%
2/29/00
 

Growth of $10,000: 12/31/01 - 12/31/11
 
 
The Growth of $10,000 chart compares The Dynamic Growth Fund’s value to the S&P 500 Index, the Fund’s broad-based benchmark. The chart is intended to give you a general idea of how the Fund performed compared to this benchmark over the period from December 31, 2001 to December 31, 2011. An understanding of the differences between the Fund and this index is important. The S&P 500 Index is a hypothetical unmanaged index of common stocks that 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 

Top Ten Holdings as of December 31, 2011

1.
Allianz NFJ Dividend Value Fund
14.9%
2.
Harbor Capital Appreciation Fund
13.2%
3.
Wells Fargo Advantage Growth Fund
13.1%
4.
T. Rowe Price Value Fund
10.2%
5.
Columbia Dividend Income Fund
9.2%
6.
Alger Capital Appreciation Fund
7.4%
7.
PowerShares QQQ Trust
6.0%
8.
Health Care Select Sector SPDR Fund
5.1%
9.
Blackrock Equity Dividend Fund
4.5%
10.
Consumer Staples Select Sector SPDR Fund
3.8%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Dynamic Growth Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 9

 
 
 
2011 Annual Report | December 31, 2011

 
The Strategic Growth Fund
 
The Fund seeks growth of capital by investing in actively managed mutual funds and exchange-traded funds using a targeted asset allocation structure.
 
The Flex-funds® Strategic Growth Fund returned -8.34% for the year ended December 31, 2011, compared to the custom benchmark return of -1.93% for the same period.  The Fund also underperformed the broader market during the year, as measured by the S&P 500 Index, which returned 2.11%.  The Strategic Growth Fund is fully invested in the equity market at all times, and holds a fixed allocation across six distinct investment categories. The mix of investments selected to represent each investment category is variable and actively managed by using our strategic fund selection process.  The current target allocation is comprised of the following: 25% large-cap, 20% mid-cap, 17.5% international, 12.5% small-cap, 12.5% real estate, and 12.5% commodities.  Within each respective category, we seek to identify funds that will outperform their peers through an evaluation process based on valuation factors, measures of volatility, and risk-adjusted returns.  Funds that fall out of favor within our models are sold and replaced with funds ranked higher by our evaluation process.
 
The Fund’s performance during 2011 versus the S&P 500 can be directly attributed to several of the asset allocation categories.  While the S&P 500 posted a modest gain of 2.11% during the year, several of the other asset allocation categories significantly underperformed the broader market.  For instance, the MSCI Emerging Markets Index declined by 20.34% in 2011, while the MSCI EAFE Index of developed international stocks declined by 12.13% during the year (be advised that one cannot invest directly in an index).  The two aforementioned categories comprise approximately 17.5% of the Fund’s allocation.  Furthermore, the Russell 2000 Index of small-cap stocks and the S&P 400 Mid-Cap Index of mid-cap stocks declined by 4.17% and 1.73%, respectively.  These categories comprise nearly 33% of the Fund’s allocation.  The only asset allocation category to outperform the S&P 500 Index during 2011 was the Dow Jones REIT Index, which increased by 9.39% during the year.
 
The Fund also underperformed the custom benchmark during 2011, which is the result of underperformance of underlying fund holdings against their respective benchmark indexes.  For instance, our commodity holding of the Van Eck Global Hard Assets fund declined 16.62% in 2011, and underperformed its respective benchmark.
 
 
Page 10

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
Year
3
Years
8/25/08 to
12/31/114
5
Years
Since
Inception
Inception
Date
The Flex-funds® Strategic Growth Fund
Expense Ratios+: Current net 1.39% Gross 1.57%
-8.34%
14.29%
-0.77%
-2.21%
-0.60%
1/31/06
Blended Index3
-1.93%
15.29%
-0.42%5
0.11%
1.55%
1/31/06
S&P 500 Index
2.11%
14.13%
1.65%5
-0.25%
1.84%
1/31/06


Growth of $10,000: 1/31/06 - 12/31/11
 
 
The Growth of $10,000 chart compares The Strategic Growth Fund’s value to the S&P 500 Index, the Fund’s broad-based benchmark, and the Blended Index, which consists of 25% of the S&P 500 Index, 20% of the S&P 400 Index, 12.5% of the Russell 2000 Index, 12.5% of the Dow Jones US Select REIT Index, 12.5% of the S&P GSCI Index, 12% of the MSCI EAFE Index, and 5.5% of the MSCI Emerging Markets Index. The chart is intended to give you a general idea of how the Fund performed compared to these indices over the period from its inception on January 31, 2006 to December 31, 2011. An understanding of the differences between the Fund and these indices is important. The benchmark indices are hypothetical unmanaged indices of common stock that do 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 

Top Ten Holdings as of December 31, 2011

1.
Nuveen Real Estate Securities Fund
12.7%
2.
Wells Fargo Advantage Growth Fund
12.5%
3.
Allianz NFJ Dividend Value Fund
11.7%
4.
JPMorgan Mid Cap Value Fund
8.6%
5.
Oppenheimer International Growth Fund
8.5%
6.
Ivy Mid Cap Growth Fund
8.3%
7.
Wells Fargo Advantage Emerging Markets Equity Fund
8.2%
8.
RidgeWorth Small Cap Value Equity Fund
6.1%
9.
Lord Abbett Developing Growth Fund
6.1%
10.
Invesco Energy Fund
5.8%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Strategic Growth Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 11

 
 
 
2011 Annual Report | December 31, 2011

 
The Muirfield Fund®
 
The Fund seeks growth of capital by investing in actively managed mutual funds and exchange-traded funds using a “Defensive Investing” strategy.
 
The Flex-funds Muirfield Fund® returned -7.55% for the year ended December 31, 2011. The Fund’s performance compared to the S&P 500 Index during 2011 was the result of multiple factors.  Our defensive positioning detracted from performance and was the result of heightened volatility that occurred in the stock market.  In the invested portion of the Fund, our exposure to mid- and small-caps as well as our temporary emerging market exposure detracted from performance during the year.  We also experienced an overall negative impact from our underlying fund holdings.
 
In The Muirfield Fund®, we entered 2011 essentially fully-invested in the stock market. We had maintained a fully-invested position since the fourth quarter of 2010 as a result of our investment models, which continued to indicate a favorable risk/reward relationship in the stock market.  However, as stock market declines materialized during the third quarter, we noted significant deterioration of the trend and technical components of our quantitative investment model.  As a result, we increased our defensive posture by adopting a 20% position in fixed-income investments.  Despite the stock market volatility, we noted that nearly all of the interest rate, fundamental, and valuation factors in our quantitative investment model remained positive, but we preferred to be cautious given the uncertainties present in the global capital markets.  As volatility eased during the fourth quarter, we noted improvements in some of the trend and technical components of our quantitative investment model, which led us to increase our stock market exposure as the quarter progressed.  As a result, we ended the year with a 10% defensive position in The Muirfield Fund®.
 
We managed our industry and sector exposure throughout the year and initiated changes in sector allocations in the Fund as stock market conditions progressed.  During the first quarter, we continued to add to our energy position, which resulted in an overweight exposure to the sector and benefited our performance. We also remained overweight to the industrial materials sector, while being underweight the consumer staples and healthcare sectors.  As the second quarter progressed, we eliminated our energy overweight and subsequently established an overweight to the healthcare sector following indications from our investment models.  In addition to remaining overweight to the healthcare sector, we established an overweight to the technology sector while being underweight the financial and energy sectors in the third quarter.  We maintained this sector positioning through the end of 2011, which was additive to performance during the third quarter but detracted from performance in the fourth quarter.
 
Throughout 2011, we maintained an overweight allocation to growth investments versus value, which benefited our performance. We also entered 2011 with an overweight exposure to mid- and small-cap investments.  However, we reduced our overweight during the third quarter as these capitalization ranges underperformed large-caps following steep stock market declines.  Overall, our exposure to mid- and small-cap investments detracted from performance in 2011.
 
Regarding international exposure, we entered 2011 with a position in emerging markets, and continued to avoid direct exposure to the developed international markets.  However, we also eliminated our emerging markets position early in the third quarter, and avoided direct exposure to all international investments for the remainder of the year.
 
 
Page 12

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
Year
3
Years
5
Years
10
Years
Inception
Date
The Flex-funds Muirfield Fund®
Expense Ratios+: Current net 1.39% Gross 1.56%
-7.55%
7.40%
-1.50%
2.63%
8/10/88
Blended Index6
1.55%
8.75%
0.80%
2.83%
8/10/88
S&P 500 Index
2.11%
14.13%
-0.25%
2.92%
8/10/88


Growth of $10,000: 12/31/01 - 12/31/11
 
 
The Growth of $10,000 chart compares the value of The Muirfield Fund® to the S&P 500 Index, the Fund’s broad-based benchmark, and to an index composed of 60% of the S&P 500 Index and 40% of 90-day T-bills. The chart is intended to give you a general idea of how the Fund performed compared to these indices over the period from December 31, 2001 to December 31, 2011. An understanding of the differences between the Fund and these indices is important. The benchmark indices are hypothetical unmanaged indices of common stocks and 90-day T-bills that do 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 

Top Ten Holdings as of December 31, 2011

1.
Allianz NFJ Dividend Value Fund
13.4%
2.
Wells Fargo Advantage Growth Fund
12.0%
3.
Harbor Capital Appreciation Fund
11.6%
4.
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/12
11.3%
5.
T. Rowe Price Value Fund
9.0%
6.
Columbia Dividend Income Fund
8.1%
7.
Alger Capital Appreciation Fund
6.7%
8.
PowerShares QQQ Trust
5.4%
9.
Health Care Select Sector SPDR Fund
4.6%
10.
Blackrock Equity Dividend Fund
4.1%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Muirfield Fund® during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 13

 
 
 
2011 Annual Report | December 31, 2011

 
The Defensive Balanced Fund
 
The Fund seeks income and growth of capital by investing in actively managed mutual funds and exchange-traded funds using a “Defensive Investing” strategy.
 
The Flex-funds® Defensive Balanced Fund returned -4.49% for the year ended December 31, 2011.  The Defensive Balanced Fund will always invest at least 30% of its assets in fixed-income securities.  The Fund will also hold a minimum 30% allocation in equity securities, with additional investments determined by our defensive equity discipline.   The Fund’s performance lagged the S&P 500 Index during 2011, and was driven by a number of factors including our allocation decisions, defensive positioning, and underlying fund holdings.
 
In the equity portion of the Fund, we entered 2011 essentially fully-invested in the stock market. We had maintained a fully-invested position since the fourth quarter of 2010 as a result of our investment models, which continued to indicate a favorable risk/reward relationship in the stock market.  However, as stock market declines materialized during the third quarter, we noted significant deterioration of the trend and technical components of our quantitative investment model.  As a result, we increased our defensive posture by adopting a 20% position in fixed-income investments.  Despite the stock market volatility, we noted that nearly all of the interest rate, fundamental, and valuation factors in our quantitative investment model remained positive, but we preferred to be cautious given the uncertainties present in the global capital markets.  As volatility eased during the fourth quarter, we noted improvements in some of the trend and technical components of our quantitative investment model, which led us to increase our stock market exposure as the quarter progressed.  As a result, we ended the year with a 10% defensive position.
 
Throughout 2011, we maintained an overweight allocation to growth investments versus value, which benefited our performance. We also entered 2011 with an overweight exposure to mid- and small-cap investments.  However, we reduced our overweight during the third quarter as these capitalization ranges underperformed large-caps following steep stock market declines.  Overall, our exposure to mid- and small-cap investments detracted from performance in 2011.  Regarding international exposure, we entered 2011 with a position in emerging markets, and continued to avoid direct exposure to the developed international markets.  However, we also eliminated our emerging markets position early in the third quarter, and avoided direct exposure to all international investments for the remainder of the year.
 
We also managed our industry and sector exposure throughout the year and initiated changes in sector allocations in the Fund as stock market conditions progressed. During the first quarter, we continued to add to our energy position, which resulted in an overweight exposure to the sector and benefited our performance. We also remained overweight to the industrial materials sector, while being underweight the consumer staples and healthcare sectors.  As the second quarter progressed, we eliminated our energy overweight and subsequently established an overweight to the healthcare sector following indications from our investment models.  In addition to remaining overweight to the healthcare sector, we established an overweight to the technology sector while being underweight in the financial and energy sectors in the third quarter.  We maintained this sector positioning through the end of 2011, which was additive to performance during the third quarter but detracted from performance in the fourth quarter.
 
In the fixed-income portion of the Fund, the target allocation was overweight in investment grade corporate bond funds throughout 2011.  During much of the past year, the environment for investing in this sector remained favorable.  The financial position of bond issuers was bolstered by historically low interest rates, steady profit growth, and a recovering economy in the United States.  In combination, these factors have provided for a low probability of expected issuer defaults.   The duration of the fixed-income portion of the Fund was maintained mostly in line with our benchmark during 2011, consistent with readings from our fixed-income models that favored this position.
 
 
Page 14

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
3
8/25/08 to
5
Since
Inception
 
Year
Year
12/31/118
Year
Inception
Date
The Flex-funds® Defensive Balanced Fund
-4.49%
6.32%
1.00%
-0.87%
0.22%
1/31/06
Expense Ratios+: Current net 1.44% Gross 1.60%
Blended Index7
2.91%
7.96%
1.63%5
2.45%
3.38%
1/31/06
S&P 500 Index
2.11%
14.13%
1.65%5
-0.25%
1.84%
1/31/06
 

Growth of $10,000: 1/31/06 - 12/31/11
 
 
The Growth of $10,000 chart compares The Defensive Balanced Fund’s value to the S&P 500 Index, the Fund’s broad-based benchmark, and to the Blended Index, which is comprised of 42% of the S&P 500 Index, 28% of the average 90-day U.S. T-bill and 30% of the Barclays Intermediate-Term Government/Credit Index.  The chart is intended to give you a general idea of how the Fund performed compared to these indices over the period from its inception on January 31, 2006 through December 31, 2011. An understanding of the differences between the Fund and these indices is important. The benchmark indices are hypothetical unmanaged indices of common stock that do 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.
 
Past performance does not guarantee future results. The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 
 

Top Ten Holdings as of December 31, 2011

1.
Allianz NFJ Dividend Value Fund
9.2%
2.
Wells Fargo Advantage Growth Fund
8.4%
3.
Harbor Capital Appreciation Fund
8.0%
4.
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/12
6.5%
5.
T. Rowe Price Value Fund
6.4%
6.
Federated Bond Fund
6.2%
7.
Prudential Total Return Bond Fund
6.1%
8.
DoubleLine Total Return Bond Fund
6.1%
9.
Putnam Income Fund
6.0%
10.
Columbia Dividend Income Fund
5.3%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Defensive Balanced Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 15

 
 
 
2011 Annual Report | December 31, 2011

 
The Utilities and Infrastructure Fund
(Formerly known as The Total Return Utilities Fund)
 
The Fund outperformed the Russell 3000 Utilities benchmark for the 3-, 5-, and 10-year periods ended December 31, 2011.
 
 
The Flex-funds® Utilities and Infrastructure Fund returned 3.93% for the year ended December 31, 2011.  The Fund has outperformed the Russell 3000 Utilities benchmark for the 3- 5-, and 10-year periods ended December 31, 2011.
 
We experienced many opportunities across different industries during the first quarter. Natural gas companies with both production and delivery exposure performed well, despite ongoing low natural gas pricing. El Paso led our list, and was joined by Southern Union, National Fuel Gas, ONEOK, and MDU Resources. Battery and power management newcomer EnerSys hit a succession of new highs after beating expectations with a 61% earnings advance. Communications chip maker Qualcomm rose, as its chips have become extremely popular in new cellphones and tablets.  Telecommunications companies were among our underperformers, despite big final-week runs in AT&T and Verizon. American Tower was negatively impacted by AT&T’s offer for T-Mobile, as investors assumed it would mean less need for towers and fewer customers.
 
During a volatile second quarter for equities, the utilities sector was one of the stronger performing segments of the stock market.  Our best performers comprised a mix of various industries.  Southern Union increased following a pair of offers, while American Water Works exceeded earnings expectations once again and raised its dividend 4.5%.  We experienced a gain from Millicom International Cellular on a rally to fair value, and received a boost from dominant Canadian telecom BCE, which beat earnings expectations and raised its financial forecast.  On the downside, many of our infrastructure enablers declined as a result of the poor broad market conditions that prevailed during the quarter, and included stocks like American Superconductor, GE, Cisco, driller Ensco, global engineering and construction firm Fluor, battery company EnerSys, and Veolia Environnement.
 
Although traditional utilities performed well in the third quarter, our exposure to more economically sensitive areas such as energy, enabling companies, and selected telecommunications companies detracted from our performance.  NiSource was the strongest contributor to performance, and benefited from extensive legacy assets in the Marcellus Shale.  Independent transmission company ITC Holdings announced new projects and expected success in its existing business. While the company is not the cheapest stock we own, its business is unique, monopolistic, and may expand much more than previously estimated.  On the downside, National Fuel Gas fell after announcing that it had not found a partner for its Marcellus Shale properties at an acceptable price. Following a multi-year run of acquisitions, Veolia Environnement has been shedding assets. Between the general international stock-price degradation and additional difficulty of making asset sales in this cautious environment, the stock price declined significantly.
 
In the fourth quarter, stocks connected to corporate transactions and potential mergers and acquisitions candidates dominated portfolio news.  Both Kinder Morgan and El Paso posted strong fourth quarter returns, following the former’s $38 billion offer for the latter.  NiSource also performed well as investors postulated its potential as a takeover candidate.  Stocks that detracted from performance for the quarter included Veolia Environnement, which is struggling to reduce debt levels from earlier expansions and NII Holdings, which suffered from heightened competition in Latin America.
 
 
Page 16

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
Year
3
Years
5
Years
10
Years
Inception
Date
The Flex-funds Utilities and Infrastructure Fund9
Expense Ratios+: Current net 1.90% Gross 2.05%
3.93%
15.71%
2.70%
4.07%
6/21/95
Russell 3000 Utilities Index
12.46%
11.77%
1.73%
3.33%
6/30/95


Growth of $10,000: 12/31/01 - 12/31/11
 
 
The Growth of $10,000 chart compares The Utilities and Infrastructure Fund’s value to the Russell 3000 Utilities Index, the Fund’s broad-based benchmark. The chart is intended to give you a general idea of how the Fund performed compared to this benchmarks over the period from December 31, 2001 to December 31, 2011.  An understanding of the differences between the Fund and this index is important.  The benchmark 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.
 
Past performance does not guarantee future results.  The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 
 

Top Ten Holdings as of December 31, 2011

1.
NiSource, Inc.
8.9%
2.
American Water Works Co., Inc.
5.1%
3.
Questar Corp.
4.9%
4.
National Fuel Gas Co.
4.4%
5.
MDU Resources Group, Inc.
4.1%
6.
Williams Companies, Inc.
3.9%
7.
AT&T, Inc.
3.8%
8.
Enterprise Products Partners, L.P.
3.8%
9.
QUALCOMM, Inc.
3.7%
10.
National Grid PLC - ADR
3.5%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Utilities and Infrastructure Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets as shown in the most current Fund Prospectus. Please see additional disclosures on page 23.
 
 
Page 17

 
 
 
2011 Annual Report | December 31, 2011

 
The Total Return Bond Fund
 
The Fund seeks to maximize current income and capital growth primarily through investment in fixed-income securities or investments that provide exposure to fixed-income securities.
 
As of December 31, 2011, the Flex-funds® Total Return Bond Fund returned -0.57% since the Fund’s inception on June 30, 2011.  This performance placed the Fund in the top 55% of the Fund’s peer group. Over the aforementioned time period the Fund’s benchmark, the Barclays Aggregate Bond Index, returned 4.99%.  All of the Fund’s underperformance versus the benchmark was experienced during the third quarter of 2011.
 
During the third quarter of 2011, political, economic, and banking system risks dominated the news headlines, creating above average volatility across all fixed-income sectors.  As fears over a potential European debt crisis increased, investors looked for safety in U.S. Government securities, leading to strong outperformance by these securities during the quarter.  The Fund was underweight these securities relative to its benchmark which detracted from the Fund’s performance.  However, the Fund did hold more U.S. Government securities than its peers, leading it to finish within the top 28% of the category for the quarter.  Additionally, the Fund maintained exposure to both high yield corporate bonds and emerging market bonds throughout the quarter, which detracted from performance.
 
During the fourth quarter of 2011, European leaders took steps towards a solution to the developing debt crisis.  This prompted fixed income investors to once again take on risk as they began buying high yield corporate bonds in search of increased yield.  The Fund’s exposure to corporate bonds, both high yield and investment grade, added to its performance for the quarter, and ultimately led to outperformance versus the benchmark.  The Fund did maintain some exposure to U.S. Treasury securities, which detracted from the performance of the Fund.
 
 
Page 18

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
Since
Inception
Inception
Date
The Flex-funds® Total Return Bond Fund
Expense Ratios+: Current net 0.99% Gross 1.41%
-0.57%
6/30/11
Barclays Aggregate Bond Index
4.99%
6/30/11


Growth of $10,000: 7/31/11 - 12/31/11
 
 
The Growth of $10,000 chart compares The Total Return Bond Fund’s value to the Barclays Aggregate Bond Index, the Fund’s broad-based benchmark.  The chart is intended to give you a general idea of how the Fund performed compared to this benchmark over the period from June 30, 2011 to December 31, 2011.  An understanding of the differences between the Fund and this index is important.  The index is a hypothetical unmanaged index that 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.
 
Past performance does not guarantee future results.  The chart and the table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.
 

 
 

Top Ten Holdings as of December 31, 2011

1.
Federated Bond Fund
11.9%
2.
Prudential Total Return Bond Fund
11.7%
3.
DoubleLine Total Return Bond Fund
11.7%
4.
iShares JPMorgan Emerging Bond Fund
9.6%
5.
Putnam Income Fund
8.0%
6.
iShares iBoxx $High Yield Corporate Bond Fund
7.3%
7.
SPDR Barclays Capital High Yield Bond Fund
7.2%
8.
iShares iBoxx $Investment Grade Corporate Bond Fund
4.6%
9.
iShares Barclays Intermediate Credit Bond Fund
4.4%
10.
TCW Emerging Markets Income Fund
3.9%
 
As a percentage of total investments
 
Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of The Total Return Bond Fund during the periods shown above. This waiver is voluntary and may be terminated at any time.  + The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. The Gross Expense Ratio is a percentage of the Fund’s average daily net assets, not including acquired fund fees and expenses, as shown in the most current Fund Prospectus. Please see Additional Disclosures on page 23.
 
 
Page 19

 
 
 
2011 Annual Report | December 31, 2011

 
The Money Market Fund
 
For 2011, the retail class finished the year ranked second out of 264 general purpose money market funds as measured by Lipper. The Fund has been in the top 10% of all retail money market funds every year since its inception in 1985.
 
The Flex-funds ® Money Market Fund enjoyed continued success versus the competition in 2011, with both the retail and institutional share classes ranking among the top general purpose money market funds in the country.   For 2011, the retail class finished the year ranked 2nd out of 264 general purpose money market funds as measured by Lipper.  Equally as impressive, the Fund also ranked 2nd out of 249 general purpose money funds for the three year period ending December 31, 2011.  More importantly, the Fund has been in the top 10% of all retail money market funds every year since its inception in 1985.
 
We entered the first quarter of 2011 in a similar market environment which has faced the Fund over the past couple of years.   As it stands, an aggressively low Fed Funds target rate continued to keep yields low on eligible investment options within the money market arena, and offered no optimism that the probability of higher short-term rates would come soon.  During 2011, debates escalated over the current policy; however, the target rate of 0.00% to 0.25% seems cemented based on recent Fed statements.  Yield spreads of higher quality investments as compared to U.S. Treasury bills showed limited value throughout the year.  At times, value was presented in longer dated offerings, with the Fund in position to take advantage of the opportunity.
 
During 2011, we maintained a weighted average maturity that was in line or slightly below that of our peers.  Holdings in the Fund remained allocated toward investments with superior credit quality, as we believed the risk and reward relationship favored this position.  Our sector allocation favored an overweight in high quality liquid investments and short-term investment grade corporate debt.  At the end of 2011, the Fund’s composition was as follows: 37% U.S. Government agency securities, 34% corporate obligations, 13% in other money market funds, 8% in bank obligations, 7% in commercial paper, and 1% certificates of deposit.
 
As we complete the year, we believe the Fund is positioned to maintain its strong performance during a difficult environment. As we continuously monitor the markets and our strategy, we will remain vigilant and keep in mind the best interests of our shareholders.
 
 
Page 20

 
 
 
2011 Annual Report | December 31, 2011

 
Period & Average Annual Total Returns as of December 31, 2011 (Unaudited)
 
 
1
3
5
10
Since
Inception
 
Year
Year
Year
Year
Inception
Date
The Flex-funds® Money Market Fund- Retail Class
0.11%
0.32%
1.69%
1.95%
4.40%
3/27/85
Current & Effective Yields*
7-day Compound: 0.11%               7-day Simple 0.11%
Lipper Average General Purpose Money Market Fund
0.02%
0.07%
1.36%
1.56%
4.11%
3/31/85
The Flex-funds® Money Market Fund- Instl Class
0.20%
0.41%
1.81%
-
2.41%
12/28/04
Current & Effective Yields*
7-day Compound: 0.17%               7-day Simple 0.17%
Lipper Average General Purpose Money Market Fund
0.02%
0.07%
1.36%
-
2.07%
12/31/04

 
 
 

 
Performance quoted represents past performance.  Past performance does not guarantee future results. All performance figures represent average annual total returns for the periods ended December 31, 2011, 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. Current performance may be higher or lower than the performance quoted.  Current month-end performance may be obtained at www.flexfunds.com or by calling 1.800.325.3539.   Management fees were waived and/or expenses were reimbursed in order to reduce the operating expenses of both the retail class and the institutional class of The Money Market Fund during the periods shown above. 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 preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in The Money Market Fund. Source for average general purpose money market fund data: Lipper, Inc.
 
 
Page 21

 
 
 
2011 Annual Report | December 31, 2011

 
Shareholder Expense Analysis (Unaudited)
 
Shareholders of mutual funds pay ongoing expenses, such as advisory fees, distribution and service fees (12b-1 fees) and other fund expenses. The following examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
 
The examples below are based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from June 30, 2011 to December 31, 2011.
 
ACTUAL EXPENSES: The first table below provides information about actual account values and actual expenses. You may use the information in this table, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (e.g.: an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the line under the heading “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
 
ACTUAL EXPENSES
Beginning
Account Value
(6/30/2011)
Ending
Account Value (12/31/2011)
Expenses Paid
During Period1
(6/30/2011 - 12/31/2011)
Expense Ratio
(Annualized)
The Quantex Fund
$1,000.00
$901.30
$8.15
1.70%
The Aggressive Growth Fund
1,000.00
898.10
7.80
1.63%
The Dynamic Growth Fund
1,000.00
917.60
6.72
1.39%
The Strategic Growth Fund
1,000.00
884.70
6.46
1.36%
The Muirfield Fund
1,000.00
900.40
6.66
1.39%
The Defensive Balanced Fund
1,000.00
932.10
6.77
1.39%
The Utilities and Infrastructure Fund
1,000.00
982.00
9.64
1.93%
The Total Return Bond Fund
1,000.00
994.30
4.98
0.99%
The Money Market Fund - Retail Class
1,000.00
1,000.50
1.41
0.28%
The Money Market Fund - Institutional Class
1,000.00
1,000.80
1.01
0.20%
 
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES: The second table below provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and assumed rates of return of 5% per year before expenses, which are not the Funds’ actual returns. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds to other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
HYPOTHETICAL EXAMPLE
(5% return before expenses)
Beginning
Account Value
(6/30/2011)
Ending
Account Value (12/31/2011)
Expenses Paid
During Period1
(6/30/2011- 12/31/2011)
Expense Ratio
(Annualized)
The Quantex Fund
$1,000.00
$1,016.64
$8.64
1.70%
The Aggressive Growth Fund
1,000.00
1,016.99
8.29
1.63%
The Dynamic Growth Fund
1,000.00
1,018.20
7.07
1.39%
The Strategic Growth Fund
1,000.00
1,018.35
6.92
1.36%
The Muirfield Fund
1,000.00
1,018.20
7.07
1.39%
The Defensive Balanced Fund
1,000.00
1,018.20
7.07
1.39%
The Utilities and Infrastructure Fund
1,000.00
1,015.48
9.80
1.93%
The Total Return Bond Fund
1,000.00
1,020.21
5.04
0.99%
The Money Market Fund - Retail Class
1,000.00
1,023.79
1.43
0.28%
The Money Market Fund - Institutional Class
1,000.00
1,024.20
1.02
0.20%

Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees or exchange fees. Therefore, the second table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if any transactional costs were included, your costs would have been higher.
 
1  Expenses are equal to the Funds’ annualized expense ratios, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the total number of days in the six-month period).
 
 
Page 22

 
 
 
2011 Annual Report | December 31, 2011

 
Disclosures
 
Past performance is not a guarantee of future results. All performance figures represent total returns and average annual total returns or current and effective yields for the periods ended December 31, 2011. Investment performance assumes reinvestment of all dividend and capital gain distributions. The investment return and principal value of an investment will fluctuate so an investor’s shares or units, when redeemed, may be worth more or less than their original cost. Management fees and/or expenses were waived and/or reimbursed in The Flex-funds® during the periods shown to reduce expenses.  All expenses, management fees, reimbursements or waivers for the Funds are voluntary and may be terminated at any time, except for Quantex Fund TM.  The Quantex Fund TM management fee waiver is contractual and can be terminated annually by the Adviser on its renewal date, April 29, 2012.
 
1
The blended index consists of 50% of the Russell 2000 Index and 50% of the S&P 400 Mid-Cap Index.
 
2
The Quantex Fund™ was previously known as The Highlands Growth Fund. On April 30, 2005, The Highlands Growth Fund changed its name to The Quantex Fund™, also changing the Fund’s investment objective and strategies. The Highlands Growth Fund focused on large-cap equities, while The Quantex Fund™ utilizes quantitative investment strategies that invest primarily in small- and mid-cap equities. Due to this change in strategies on April 30, 2005, the S&P 500 Index is a more comparative index for Fund performance prior to April 30, 2005. The Russell 2000 Index and S&P 400 Mid-Cap Index are more comparative indices for Fund performance after April 30, 2005.
 
3
The blended index consists of 25% of the S&P 500 Index, 20% of the S&P 400 Index, 12.5% of the Russell 2000 Index, 12.5% of the Dow Jones US Select REIT Index, 12.5% of the S&P GSCI Index, 12% of the MSCI EAFE Index, and 5.5% of the MSCI Emerging Markets Index.
 
4
On August 25, 2008, The Focused Growth Fund became known as The Strategic Growth Fund and its investment strategy changed. This Fund will pursue its goal by investing primarily in open-end or closed-end investment companies that seek capital growth or appreciation without regard to current income. In addition, this Fund will always have set allocations to U.S. large-cap equities, U.S. mid-cap equities, U.S. small-cap equities, non-U.S./International (including emerging markets) equities, real estate equities and commodity based equities.
 
5
Specified index returns are calculated for the period 8/31/08 to 12/31/11.
 
6
The blended index is comprised of 60% of the S&P 500 Index and 40% of the average 90-day U.S. T-bill.
 
7
The blended index consists of 42% of the S&P 500 Index, 28% of the average 90-day U.S. T-bill and 30% of the Barclays Intermediate-Term Government/Credit Index.
 
8
On August 25, 2008, The Defensive Growth Fund became known as The Defensive Balanced Fund and its investment strategy changed. This Fund will always invest at least 30% and may invest up to 70% of its assets primarily in equity mutual funds. In addition, this Fund will always invest at least 30% and may invest up to 70% of its assets primarily in investment grade bonds, money market instruments, or exchange traded funds.
 
9
The Utilities and Infrastructure Fund was previously known as The Total Return Utilities Fund. On June 30, 2011, the Total Return Utilities Fund changed its name to The Utilities and Infrastructure Fund. Its investment objective and strategy remained unchanged.
 
+
The current net expense ratio is based on average daily net assets for the year ended 12/31/11, including effect of voluntary and/or contractual expense waivers and reimbursements. This ratio may increase or decrease depending on fluctuations in Fund net assets. Gross Expense Ratios are percentages of the Funds’ assets, not including acquired fund fees and expenses, as they are shown in the most recent Prospectus.
 
*
The current and effective yields quoted for The Money Market Fund are as of December 31, 2011.   Yield quotations more closely reflect the current earnings of The Money Market Fund than do total return quotations.   To obtain the current 7-day yields for The Money Market Fund, call The Flex-funds® Shareholder Services Department toll free at 800-325-3539 or 614-760-2159.   Investments in The Money Market Fund (either class) are not a deposit and are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.   Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in The Money Market Fund (either class).
 
To obtain a prospectus containing more information about The Flex-funds®, including other fees and expenses that apply to a continued investment in the Funds, you may call (800)325-3539, or write to P.O. Box 7177, Dublin, OH 43017. Please read the prospectus carefully before investing.
 
Note on comparative indices: Returns for an index do not reflect fees, brokerage commissions, or other expenses associated with investing. One cannot invest directly in an index. Source for equity index data: Bloomberg LP. Source for fixed income index data: Morningstar, Inc. Source for average general-purpose money market fund performance: Lipper, Inc.
 
 
Page 23

 
 
 
2011 Annual Report | December 31, 2011

 
2011 Annual Report
Fund Holdings & Financial Statements
 
 
 
 
 
Page 24

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Muirfield Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Registered Investment Companies — 88.5%
 
Alger Capital Appreciation Fund
    406,730       8,024,776  
Allianz NFJ Dividend Value Fund
    1,414,785       16,199,289  
BlackRock Equity Dividend Fund
    272,817       4,962,537  
Columbia Dividend Income Fund
    721,692       9,829,452  
Consumer Staples Select Sector SPDR Fund
    125,450       4,075,870  
Harbor Capital Appreciation Fund
    380,778       14,050,702  
Health Care Select Sector SPDR Fund
    159,025       5,516,577  
Ivy Mid Cap Growth Fund
    238,316       4,037,065  
JPMorgan Mid Cap Value Fund
    147,315       3,498,728  
PowerShares QQQ Trust
    117,630       6,567,283  
RidgeWorth Small Cap Value Equity Fund
    309,652       3,833,495  
T. Rowe Price Value Fund
    481,867       10,861,286  
Wells Fargo Advantage Growth Fund
    425,250       14,505,272  
Total Registered Investment Companies (Cost $107,052,603)
            105,962,332  
 
Money Market Registered Investment Companies — 0.2%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    295,130       295,130  
Total Money Market Registered Investment Companies (Cost $295,130)
            295,130  
 
Floating Rate Demand Notes — 11.3%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    13,583,772       13,583,772  
Total Floating Rate Demand Notes (Cost $13,583,772)
            13,583,772  
 
U.S. Government Obligations — 0.7%
 
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    800,000       799,971  
Total U.S. Government Obligations (Cost $799,851)
            799,971  
Total Investments — 100.7% (Cost $121,731,356)(a) 
            120,641,205  
Liabilities less Other Assets ­— (0.7%)
            (854,663 )
Total Net Assets — 100.0%
            119,786,542  

The Muirfield Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    2,290       16,946  
The Flex-funds Defensive Balanced Fund
    1,180       10,832  
The Flex-funds Dynamic Growth Fund
    734       5,637  
The Flex-funds Muirfield Fund
    3,897       20,147  
The Flex-funds Quantex Fund
    2,566       56,041  
The Flex-funds Utilities & Infrastructure Fund
    261       6,280  
Total Trustee Deferred Compensation (Cost $96,835)
            115,883  
 
   
Long
Contracts
 
   
Unrealized
Appreciation
(Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors 500 expiring March 2012, notional value $2,505,200
    8       90,640  
Total Futures Contracts
            90,640  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $792,550. Cost for federal income tax purposes of $122,523,906 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 1,495,767  
Unrealized depreciation
    (3,378,468 )
Net unrealized appreciation (depreciation)
  $ (1,882,701 )
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
Pledged as collateral on futures contracts.
 
****
Assets of affiliates to The Muirfield Fund held for the benefit of the Fund’s Trustees in connection with the Trustee Deferred Compensation Plan.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 25

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Dynamic Growth Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Registered Investment Companies — 96.8%
 
Alger Capital Appreciation Fund
    340,396       6,716,022  
Allianz NFJ Dividend Value Fund
    1,182,822       13,543,310  
BlackRock Equity Dividend Fund
    225,679       4,105,095  
Columbia Dividend Income Fund
    611,825       8,333,051  
Consumer Staples Select Sector SPDR Fund
    105,250       3,419,572  
Harbor Capital Appreciation Fund
    324,271       11,965,601  
Health Care Select Sector SPDR Fund
    132,800       4,606,832  
Ivy Mid Cap Growth Fund
    190,033       3,219,165  
JPMorgan Mid Cap Value Fund
    114,106       2,710,014  
PowerShares QQQ Trust
    97,425       5,439,238  
RidgeWorth Small Cap Value Equity Fund
    224,777       2,782,736  
T. Rowe Price Value Fund
    411,250       9,269,583  
Wells Fargo Advantage Growth Fund
    347,959       11,868,886  
Total Registered Investment Companies (Cost $88,148,000)
            87,979,105  
 
Money Market Registered Investment Companies — 0.4%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    392,637       392,637  
Total Money Market Registered Investment Companies (Cost $392,637)
            392,637  
 
Floating Rate Demand Notes — 2.0%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    1,806,669       1,806,669  
Total Floating Rate Demand Notes (Cost $1,806,669)
            1,806,669  
 
U.S. Government Obligations — 0.9%
 
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    800,000       799,971  
Total U.S. Government Obligations (Cost $799,851)
            799,971  
Total Investments — 100.1% (Cost $91,147,157)(a) 
            90,978,382  
Liabilities less Other Assets — (0.1%)
            (75,892 )
Total Net Assets — 100.0%
            90,902,490  
 
The Dynamic Growth Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    1,658       12,269  
The Flex-funds Defensive Balanced Fund
    846       7,766  
The Flex-funds Dynamic Growth Fund
    533       4,093  
The Flex-funds Muirfield Fund
    1,942       10,040  
The Flex-funds Quantex Fund
    1,060       23,150  
The Flex-funds Utilities & Infrastructure Fund
    189       4,547  
Total Trustee Deferred Compensation (Cost $53,128)
            61,865  
 
   
Long
Contracts
 
   
Unrealized
Appreciation
(Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors 500 expiring March 2012, notional value $2,818,350
    9       76,345  
Total Futures Contracts
            76,345  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $418,568. Cost for federal income tax purposes of $91,565,725 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 2,195,709  
Unrealized depreciation
    (2,783,052 )
Net unrealized appreciation (depreciation)
  $ (587,343 )
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
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.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 26

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Aggressive Growth Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Registered Investment Companies — 97.3%
 
Allianz NFJ Dividend Value Fund
    416,502       4,768,950  
Columbia Dividend Income Fund
    214,557       2,922,263  
Consumer Staples Select Sector SPDR Fund
    30,125       978,761  
Harbor Capital Appreciation Fund
    129,370       4,773,742  
Health Care Select Sector SPDR Fund
    42,700       1,481,263  
iShares Russell 2000 Index Fund
    19,025       1,403,094  
Ivy Mid Cap Growth Fund
    92,794       1,571,922  
JPMorgan Mid Cap Value Fund
    62,451       1,483,201  
Lord Abbett Developing Growth Fund, Inc.
    59,411       1,247,040  
RS Technology Fund
    104,949       1,765,243  
T. Rowe Price Value Fund
    184,941       4,168,565  
Wells Fargo Advantage Growth Fund
    128,073       4,707,982  
Total Registered Investment Companies (Cost $31,895,541)
            31,272,026  
 
Money Market Registered Investment Companies — 1.3%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    423,510       423,510  
Total Money Market Registered Investment Companies (Cost $423,510)
            423,510  
 
Floating Rate Demand Notes — 0.6%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    200,086       200,086  
Total Floating Rate Demand Notes (Cost $200,086)
            200,086  
 
U.S. Government Obligations — 0.9%
 
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    300,000       299,989  
Total U.S. Government Obligations (Cost $299,944)
            299,989  
Total Investments — 100.1% (Cost $32,819,081)(a) 
            32,195,611  
Liabilities less Other Assets — (0.1%)
            (28,294 )
Total Net Assets — 100.0%
            32,167,317  
 
The Aggressive Growth Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    915       6,771  
The Flex-funds Defensive Balanced Fund
    479       4,397  
The Flex-funds Dynamic Growth Fund
    291       2,235  
The Flex-funds Muirfield Fund
    1,205       6,230  
The Flex-funds Quantex Fund
    697       15,222  
The Flex-funds Utilities & Infrastructure Fund
    104       2,502  
Total Trustee Deferred Compensation (Cost $32,830)
            37,357  
 
   
Long
Contracts
 
   
Unrealized Appreciation (Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors 500 expiring March 2012, notional value $626,300
    2       22,660  
Total Futures Contracts
            22,660  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $368,788. Cost for federal income tax purposes of $33,187,869 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 424,557  
Unrealized depreciation
    (1,416,815 )
Net unrealized appreciation (depreciation)
  $ (992,258 )
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
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.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 27

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Defensive Balanced Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Registered Investment Companies — 89.3%
 
Alger Capital Appreciation Fund
    197,572       3,898,100  
Allianz NFJ Dividend Value Fund
    692,560       7,929,810  
BlackRock Equity Dividend Fund
    138,378       2,517,093  
Columbia Dividend Income Fund
    334,335       4,553,642  
Consumer Staples Select Sector SPDR Fund
    61,025       1,982,702  
DoubleLine Total Return Bond Fund
    474,927       5,238,450  
Federated Bond Fund
    575,806       5,280,145  
Harbor Capital Appreciation Fund
    185,411       6,841,658  
Health Care Select Sector SPDR Fund
    81,575       2,829,837  
Ivy Mid Cap Growth Fund
    120,268       2,037,332  
JPMorgan Mid Cap Value Fund
    74,592       1,771,563  
PIMCO GNMA Fund
    316,260       3,719,218  
PowerShares QQQ Trust
    59,425       3,317,697  
Prudential Total Return Bond Fund
    375,357       5,251,250  
Putnam Income Fund
    753,244       5,152,187  
RidgeWorth Small Cap Value Equity Fund
    141,329       1,749,656  
T. Rowe Price Value Fund
    241,932       5,453,138  
Wells Fargo Advantage Growth Fund
    211,096       7,200,496  
Total Registered Investment Companies (Cost $77,663,402)
            76,723,974  
 
Money Market Registered Investment Companies — 1.2%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    994,119       994,119  
Total Money Market Registered Investment Companies (Cost $994,119)
            994,119  
 
Floating Rate Demand Notes — 6.5%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    5,534,924       5,534,924  
Total Floating Rate Demand Notes (Cost $5,534,924)
            5,534,924  
 
U.S. Government Obligations — 2.9%
 
Federal Home Loan Bank, 3.375%, due 06/12/2020
    1,000,000       1,092,243  
Federal Home Loan Bank, 3.625%, due 06/11/2021
    1,000,000       1,103,732  
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    300,000       299,989  
Total U.S. Government Obligations (Cost $2,497,503)
            2,495,964  
Total Investments — 99.9% (Cost $86,689,948)(a) 
            85,748,981  
Other Assets less Liabilities — 0.1%
            48,320  
Total Net Assets — 100.0%
            85,797,301  
 
The Defensive Balanced Fund
 
Security Description
 
 
Shares or
Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    1,462       10,819  
The Flex-funds Defensive Balanced Fund
    771       7,078  
The Flex-funds Dynamic Growth Fund
    463       3,556  
The Flex-funds Muirfield Fund
    1,281       6,623  
The Flex-funds Quantex Fund
    546       11,925  
The Flex-funds Utilities & Infrastructure Fund
    166       3,994  
Total Trustee Deferred Compensation (Cost $41,205)
            43,995  
 
   
Long
Contracts
 
   
Unrealized
Appreciation
(Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors 500 expiring March 2012, notional value $1,878,900
    6       67,980  
Total Futures Contracts
            67,980  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $347,751. Cost for federal income tax purposes of $87,037,699 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 772,562  
Unrealized depreciation
    (2,061,280 )
Net unrealized appreciation (depreciation)
  $ (1,288,718 )
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
Pledged as collateral on futures contracts.
 
****
Assets of affiliates to The Defensive Balanced Fund held for the benefit of the Fund’s Trustees in connection with the Trustee Deferred Compensation Plan.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 28

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Strategic Growth Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Registered Investment Companies — 94.0%
 
Allianz NFJ Dividend Value Fund
    863,303       9,884,820  
Invesco Energy Fund #
    128,514       4,886,119  
Ivy Mid Cap Growth Fund
    415,850       7,044,506  
JPMorgan Mid Cap Value Fund
    307,639       7,306,434  
Lord Abbett Developing Growth Fund, Inc.
    245,063       5,143,864  
Nuveen Real Estate Securities Fund
    568,413       10,782,802  
Oppenheimer International Growth Fund
    282,292       7,204,092  
RidgeWorth Small Cap Value Equity Fund
    417,201       5,164,951  
Van Eck Global Hard Assets Fund
    110,024       4,768,456  
Wells Fargo Advantage Emerging Markets Fund
    343,820       6,927,969  
Wells Fargo Advantage Growth Fund
    286,671       10,538,023  
Total Registered Investment Companies (Cost $83,082,158)
            79,652,036  
 
Money Market Registered Investment Companies — 1.7%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    1,437,882       1,437,882  
Total Money Market Registered Investment Companies (Cost $1,437,882)
            1,437,882  
 
Floating Rate Demand Notes — 3.9%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    3,308,182       3,308,182  
Total Floating Rate Demand Notes (Cost $3,308,182)
            3,308,182  
 
U.S. Government Obligations — 0.4%
 
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    300,000       299,989  
Total U.S. Government Obligations (Cost $299,944)
            299,989  
Total Investments — 100.0% (Cost $88,128,166)(a) 
            84,698,089  
Liabilities less Other Assets — (0.0%)
            (26,295 )
Total Net Assets — 100.0%
            84,671,794  
 
The Strategic Growth Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    1,247       9,228  
The Flex-funds Defensive Balanced Fund
    662       6,077  
The Flex-funds Dynamic Growth Fund
    396       3,041  
The Flex-funds Muirfield Fund
    1,094       5,656  
The Flex-funds Quantex Fund
    457       9,981  
The Flex-funds Utilities & Infrastructure Fund
    142       3,417  
Total Trustee Deferred Compensation (Cost $35,651)
            37,400  
 
   
Long
Contracts
 
   
Unrealized Appreciation (Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors Mid Cap 400 expiring March 2012, notional value $3,509,200
    8       147,140  
Standard & Poors 500 expiring March 2012, notional value $1,252,600
    4       (5,930 )
Total Futures Contracts
            141,210  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $317,330. Cost for federal income tax purposes of $88,445,496 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 843,081  
Unrealized depreciation
    (4,590,488 )
Net unrealized appreciation (depreciation)
  $ (3,747,407 )
 
#
Represents non-income producing securities.
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
Pledged as collateral on futures contracts.
 
****
Assets of affiliates to The Strategic Growth Fund held for the benefit of the Fund’s Trustees in connection with the Trustee Deferred Compensation Plan.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 29

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Quantex Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Common Stocks — 94.7%
 
Business Services — 10.4%
           
Apollo Group, Inc. #
    4,550       245,109  
Cintas Corporation
    6,440       224,176  
DeVry, Inc.
    3,750       144,225  
H&R Block, Inc.
    15,130       247,073  
Interpublic Group of Companies, Inc./The
    16,975       165,167  
Monster Worldwide, Inc. #
    7,630       60,506  
Robert Half International, Inc.
    5,880       167,345  
R.R. Donnelly & Sons Company
    10,310       148,773  
Ryder System, Inc.
    3,420       181,739  
Total System Services, Inc.
    11,690       228,656  
(Cost $1,788,769)
            1,812,769  
Consumer Goods — 12.3%
               
Avery Dennison Corp.
    4,240       121,603  
Bemis Company, Inc.
    5,510       165,741  
Constellation Brands, Inc. #
    8,130       168,047  
Dean Foods Company #
    20,370       228,144  
Harman International Industries, Inc.
    3,890       147,976  
Hormel Food Corp.
    7,020       205,616  
International Flavors & Fragrances, Inc.
    3,235       169,579  
Masco Corp.
    14,220       149,025  
MeadWestvaco Corp.
    6,890       206,355  
Owens-Illinois, Inc. #
    5,870       113,761  
Pitney Bowes, Inc.
    7,440       137,938  
Sealed Air Corp.
    7,075       121,761  
Tyson Foods, Inc.
    10,460       215,894  
(Cost $2,281,573)
            2,151,440  
Consumer Services — 12.7%
               
Abercrombie and Fitch Co.
    3,120       152,381  
Airgas, Inc.
    2,880       224,870  
AutoNation, Inc. #
    6,385       235,415  
Big Lots, Inc. #
    5,895       222,595  
D.R. Horton, Inc.
    15,100       190,411  
Expedia, Inc.
    3,590       104,182  
GameStop Corp. #
    7,870       189,903  
Lennar Corp.
    9,590       188,444  
PulteGroup, Inc. #
    23,943       151,080  
RadioShack Corp.
    9,745       94,624  
Sears Holding Corp. #
    2,440       77,543  
SUPERVALU, Inc.
    18,690       151,763  
TripAdvisor, Inc. #
    3,590       90,504  
Urban Outfitters, Inc. #
    5,040       138,902  
(Cost $2,268,543)
            2,212,617  
Energy — 7.4%
               
Cabot Oil & Gas Corp.
    4,760       361,284  
Diamond Offshore Drilling, Inc.
    2,680       148,097  
Helmerich & Payne, Inc.
    3,720       217,099  
Rowan Companies, Inc. #
    5,160       156,503  
Sunoco, Inc.
    4,470       183,359  
Tesoro Corp. #
    9,710       226,826  
(Cost $1,148,501)
            1,293,168  
Financial Services — 11.3%
               
Apartment Investment & Management Company @
    6,975       159,797  
Assurant, Inc.
    4,670       191,750  
 
The Quantex Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Common Stocks — continued
 
Bank of Montreal
    3,275       179,503  
Cincinnati Financial Corporation
    5,670       172,708  
E*TRADE Financial Corp. #
    11,252       89,566  
Equifax, Inc.
    5,060       196,024  
Federated Investors, Inc.
    6,890       104,384  
First Horizon National Corp.
    15,282       122,256  
Janus Capital Group, Inc.
    13,880       87,583  
NASDAQ OMX Group, Inc./The #
    7,590       186,031  
People's United Financial, Inc.
    12,860       165,251  
Torchmark Corp.
    4,510       195,689  
Wells Fargo & Co. Preferred #
    1        
Zions Bancorporation
    7,440       121,123  
(Cost $2,200,368)
            1,971,665  
Hardware — 9.7%
               
Advanced Micro Devices, Inc. #
    22,010       118,854  
Jabil Circuit, Inc.
    8,950       175,957  
JDS Uniphase Corp. #
    12,442       129,895  
Lexmark International, Inc.
    5,170       170,972  
LSI Corp. #
    30,060       178,857  
MEMC Electronic Materials, Inc. #
    15,980       62,961  
Molex, Inc.
    7,925       189,091  
Novellus Systems, Inc. #
    5,570       229,985  
QLogic Corp. #
    10,575       158,625  
Tellabs, Inc.
    26,565       107,323  
Teradyne, Inc. #
    12,820       174,737  
(Cost $1,878,171)
            1,697,257  
Healthcare — 4.8%
               
Coventry Health Care, Inc. #
    6,810       206,820  
DENTSPLY International, Inc.
    5,260       184,047  
Patterson Companies, Inc.
    5,875       173,430  
PerkinElmer, Inc.
    6,970       139,400  
Tenet Healthcare Corp. #
    26,915       138,074  
(Cost $866,609)
            841,771  
Industrial Materials — 6.3%
               
AK Steel Holding Corp.
    11,000       90,860  
FLIR Systems, Inc.
    6,050       151,673  
Goodyear Tire & Rubber Company/The #
    15,190       215,242  
Leggett & Platt, Inc.
    7,915       182,362  
SAIC, Inc. #
    11,360       139,614  
Snap-on, Inc.
    3,180       160,972  
Titanium Metals Corp.
    10,480       156,990  
(Cost $1,258,764)
            1,097,713  
Media — 3.6%
               
Gannett Company, Inc.
    11,930       159,504  
Meredith Corp.
    5,195       169,617  
Scripps Networks Interactive
    3,470       147,197  
Washington Post Company/The
    405       152,608  
(Cost $673,895)
            628,926  
Software — 3.0%
               
Compuware Corp. #
    15,430       128,378  
Dun & Bradstreet Corp./The
    2,190       163,878  
Iron Mountain, Inc.
    7,210       222,068  
(Cost $524,499)
            514,324  
 
 
Page 30

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Quantex Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Common Stocks — continued
 
Utilities — 13.2%
               
AGL Resources Inc.
    3,022       127,698  
CMS Energy Corp.
    9,665       213,403  
FirstEnergy Corp.
    4,945       219,063  
Integrys Energy Group, Inc.
    3,720       201,550  
MetroPCS Communications, Inc. #
    14,260       123,777  
NiSource, Inc.
    10,210       243,100  
NRG Energy, Inc. #
    9,210       166,885  
Pepco Holdings, Inc.
    9,860       200,158  
Pinnacle West Capital Corp.
    4,340       209,101  
Quanta Services, Inc. #
    9,030       194,506  
SCANA Corp.
    4,430       199,616  
TECO Energy, Inc.
    10,110       193,505  
(Cost $2,067,894)
            2,292,362  
Total Common Stocks (Cost $16,957,586)
            16,514,012  
 
Money Market Registered Investment Companies — 1.9%
 
The Flex-funds Money Market Fund - Institutional Class, 0.17%*
    323,007       323,007  
Total Money Market Registered Investment Companies (Cost $323,007)
            323,007  
 
Floating Rate Demand Notes — 2.3%
 
Caterpillar Financial Power Investment Floating Rate Demand Note, 0.60%, 1/1/2012**
    400,059       400,059  
Total Floating Rate Demand Notes (Cost $400,059)
            400,059  
 
U.S. Government Obligations — 1.1%
 
U.S. Treasury Bill, 0.102%, due 3/8/2012***
    200,000       199,993  
Total U.S. Government Obligations (Cost $199,963)
            199,993  
Total Investments — 100.0% (Cost $17,880,615)(a) 
            17,437,071  
Liabilities less Other Assets ­— (0.0%)
            (3,522 )
Total Net Assets — 100.0%
            17,433,549  
 
Trustee Deferred Compensation****
 
The Flex-funds Aggressive Growth Fund
    692       5,121  
The Flex-funds Defensive Balanced Fund
    362       3,323  
The Flex-funds Dynamic Growth Fund
    219       1,682  
The Flex-funds Muirfield Fund
    1,509       7,802  
The Flex-funds Quantex Fund
    1,064       23,238  
The Flex-funds Utilities & Infrastructure Fund
    79       1,901  
Total Trustee Deferred Compensation (Cost $35,536)
            43,067  

The Quantex Fund
 
   
Long
Contracts
 
   
Unrealized
Appreciation
(Depreciation) ($)
 
 
Futures Contracts
 
Standard & Poors Mid Cap 400 expiring March 2012, notional value $877,300
    2       36,785  
Total Futures Contracts
            36,785  
 
(a)
Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses deferred for federal income tax reporting in the amount of $158,145. Cost for federal income tax purposes of $18,038,760 differs from value by net unrealized appreciation (depreciation) of securities as follows:
 
Unrealized appreciation
  $ 1,413,058  
Unrealized depreciation
    (2,014,747 )
Net unrealized appreciation (depreciation)
  $ (601,689 )
 
#
Represents non-income producing securities.
 
@
Real estate investment trust.
 
*
Investment in affiliate. The yield shown represents the 7-day yield in effect at December 31, 2011.
 
**
Floating rate security. The rate shown represents the rate in effect at December 31, 2011.
 
***
Pledged as collateral on Futures Contracts.
 
****
Assets of affiliates to The Flex-funds Quantex Fund held for the benefit of the Fund’s Trustees in connection with the Trustee Deferred Compensation Plan.
 
The accompanying notes are an integral part of these financial statements.
 
 
Page 31

 
 
 
2011 Annual Report | December 31, 2011

Schedule of Investments
December 31, 2011

The Utilities and Infrastructure Fund
 
Security Description
 
 
Shares or Principal
Amount ($)
 
   
Fair
Value ($)
 
 
Common Stocks — 99.0%
 
Electric Utility — 14.0%
           
AES Corp. #
    60,812       720,014  
General Electric Co.
    60,565       1,084,719  
ITC Holdings Corp.
    9,583       727,158  
MDU Resources Group, Inc.
    61,484       1,319,447  
Northeast Utilities
    20,068       723,853  
(Cost $4,316,165)
            4,575,191  
Natural Gas Distribution — 14.9%
               
Energy Transfer Equity, L.P.
    17,674       717,211  
MarkWest Energy Partners, L.P.
    20,397       1,123,059  
National Grid PLC - ADR
    23,300       1,129,584  
ONEOK, Inc.
    7,639       662,225  
Williams Companies, Inc./The
    38,615       1,275,067  
(Cost $4,134,561)