Registration No. 33-85182
811-8820
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 4
MARKMAN MULTIFUND TRUST
(Exact Name of Registrant as Specified in Charter)
6600 FRANCE AVENUE SOUTH, SUITE 565, EDINA, MINNESOTA 55435
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (612)920-4848
Robert J. Markman
Markman MultiFund Trust
6600 France Avenue South, Suite 565
EDINA, MINNESOTA 55435
(Name and Address of Agent for Service)
Copies of all correspondence to:
Harvey E. Bines, Esq.
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
It is proposed that this filing will become effective:
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/ X/ immediately upon filing pursuant to Rule 485(b)
- ----
/ / on ( ) pursuant to Rule 485(b)
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/ / 60 days after filing pursuant to Rule 485(a)
- ----
/ / on ( ) pursuant to Rule 485(a)
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The Registrant has registered an indefinite number of shares under
the Securities Act of 1933, as amended, pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice for
the fiscal year ended December 31, 1995 was filed with the Commission on
February 23, 1996.
<PAGE>
MARKMAN MULTIFUND TRUST
Cross Reference Sheet
Pursuant to Rule 481(a)
Under the Securities Act of 1933
PART A
REGISTRATION STATEMENT CAPTION IN
CAPTION PROSPECTUS
ITEM NO.
1. Cover Page Cover Page
2. Synopsis Expense Information
3. Condensed Financial Financial Highlights;
Information Other Information
4. General Description Cover Page; The Funds;
of Registrant Investment Objectives;
Investment Policies and
Restrictions; How We
Invest; Risks and Other
Considerations; Other
Information; Appendix:
Ratings of Debt
Instruments
5. Management of Fund The Funds; How We Invest;
Management of the Trust;
Other Information
6. Capital Stock The Funds; Dividends,
Distributions and Taxes
7. Purchase of Securities How to Purchase Shares;
Being Offered Management of the Trust;
Shareholder Services
8. Redemption or Repurchase How to Redeem Shares
9. Pending Legal Proceedings Inapplicable
<PAGE>
PART B
REGISTRATION STATEMENT CAPTION IN STATEMENT
CAPTION OF ADDITIONAL INFORMATION
ITEM NO.
10. Cover Page Cover Page
11. Table of Contents Cover Page; Table of
Contents
12. General Information Inapplicable
and History
13. Investment Objectives Investment Objectives and
and Policies Policies; Investment
Restrictions
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Security
Principal Holders of Holders; Description of
Securities the Trust; Investment
Manager; Trustees and
Officers
16. Investment Advisory and Investment Manager;
Other Services Custodian; Transfer Agent
and Dividend Paying
Agent; How to Purchase
Shares (Prospectus);
Performance Information
17. Brokerage Allocation and Portfolio Transactions
Other Practices
18. Capital Stock and Other Description of the Trust
Securities
19. Purchase, Redemption and How to Purchase Shares
Pricing of Securities (Prospectus); Shareholder
Being Offered Services (Prospectus);
Redemption of Shares;
Special Redemptions
20. Tax Status Dividends, Distributions
and Taxation (Prospectus)
21. Calculations of Performance Information
Performance Data
22. Financial Statements Financial Statements
<PAGE>
PART C
The information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of the Registration Statement.
<PAGE>
The Markman
Multifunds
----------
Prospectus
APRIL 15, 1996
<PAGE>
TABLE OF CONTENTS
Expense Information.................................................... 2
Financial Highlights....................................................3
The Funds.............................................................. 4
Investment Objectives................................................. 4
Risks and Other Considerations......................................... 5
How We Invest......................................................... 14
Investment Policies and Restrictions.................................. 19
Management of the Trust............................................... 19
Determination of Net Asset Value...................................... 20
How to Purchase Shares................................................ 21
Shareholder Services.................................................. 22
How to Redeem Shares.................................................. 22
Dividends, Distributions and Taxes.................................... 24
Other Information..................................................... 25
Auditors.............................................................. 26
Legal Counsel......................................................... 26
Appendix: Ratings of Debt Instruments................................ A-1
<PAGE>
PROSPECTUS, April 15, 1996
The Markman Funds Logo
INVESTMENT ADVISER
Markman Capital Management, Inc.
6600 France Avenue South, Suite 565
Minneapolis, MN 55435
Toll-free: 1-800-395-4848
Telephone: (612) 920-4848
SHAREHOLDER SERVICES
c/o MGF Service Corporation
312 Walnut Street, 21st Floor
Cincinnati, OH 45202-3874
Toll-free: 1-800-707-2771
Telephone: (513) 629-2070
Markman MultiFund Trust (the "Trust") is an open-end non-diversified
management investment company. It consists of three separate series
portfolios. We refer to each portfolio in this prospectus as a "Fund" and the
three together as the "Funds." "We" are Markman Capital Management, Inc. We
manage each Fund separately. Each Fund has its own investment objectives and
strategies designed to meet different investment goals. The Funds seek to
achieve their investment objectives by investing in shares of other open- end
investment companies. The Funds, as well as the other open-end investment
companies in which they invest, are commonly called "mutual funds." This
strategy results in greater expenses than you would incur if you invested
directly in mutual funds. See "Risks and Other Considerations."
THE MARKMAN AGGRESSIVE GROWTH FUND seeks capital appreciation without regard
to current income.
THE MARKMAN MODERATE GROWTH FUND seeks growth of capital and a reasonable
level of current income.
THE MARKMAN CONSERVATIVE GROWTH FUND seeks to provide current income and low
to moderate growth of capital.
EACH FUND MAY INVEST IN MUTUAL FUNDS WHOSE ASSETS MAY CONSIST OF LOWER-RATED
AND NONRATED BONDS, COMMONLY KNOWN AS "JUNK BONDS", THAT ENTAIL GREATER RISKS,
INCLUDING DEFAULT RISKS, THAN THOSE FOUND IN HIGHER RATED SECURITIES. YOU
SHOULD CAREFULLY CONSIDER THESE RISKS BEFORE INVESTING. THE TOTAL PERCENTAGE
OF ASSETS THAT MAY BE INVESTED IN BELOW INVESTMENT GRADE BONDS BY A FUND AT
ANY ONE TIME IS UNCERTAIN; HOWEVER, IT IS EXPECTED THAT THE HIGHEST PERCENTAGE
OF EACH FUND'S ASSETS TO BE INVESTED IN BELOW INVESTMENT GRADE BONDS AT ANY
ONE TIME IS 15%. SEE "INVESTMENT OBJECTIVES" AT PAGE 4 AND "HIGH YIELD
SECURITIES AND THEIR RISKS" AT PAGE 12.
<PAGE>
The Funds are no load funds. They sell and redeem their shares at net asset
value. There are no sales loads or commissions imposed upon the purchase of
Fund shares or any fees imposed upon redemption. The Funds do not charge 12b-1
fees or deferred sales charges. The Funds may, however, invest in shares of
mutual funds that normally charge sales loads and/or pay their own 12b-1
distribution expenses. The Funds will not pay a sales load to buy these
underlying funds. Instead the Funds will use available quantity discounts or
waivers to avoid paying a sales load. The Trust will close to new investors
when net assets of the three Funds together reach $500 million. If you are a
shareholder of the Funds at the time the Funds close to new investors, you can
continue to make new investments in your previously established Fund accounts.
Markman Capital Management, Inc. specializes in the construction and
management of no-load mutual fund portfolios for our clients. As of the date
of this Prospectus, we provide investment management services to over 500
client accounts and have assets under management in excess of $400 million.
This Prospectus contains information about the Funds that you should consider
before investing. Please read the Prospectus care-fully and retain it for
future reference. A Statement of Additional Information dated April 15, 1996
has been filed with the Securities and Exchange Commission (the "SEC"). The
Statement of Addi-tional Information contains additional information about the
Funds and is hereby incorporated by reference into this Prospectus. The
Statement of Additional Information is available without charge and can be
obtained by writing or telephoning the Funds at the address and telephone
number shown above.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
EXPENSE INFORMATION
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
SALES LOAD IMPOSED ON PURCHASES None
SALES LOAD IMPOSED ON REINVESTED DIVIDENDS None
DEFERRED SALES LOAD None
EXCHANGE FEE None
REDEMPTION FEE None 1
<FN>
1. A wire transfer fee is charged by the Funds' Custodian in the case of
redemptions made by wire. Such fee is subject to change and is currently $8.00.
See "How to Redeem Shares," page 22.
</FN>
</TABLE>
<TABLE>
ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
<CAPTION>
Conservative Moderate Aggressive
Growth Fund Growth Fund Growth Fund
<S> <C> <C> <C>
MANAGEMENT FEES* 0.95% 0.95% 0.95%
12B-1 FEES** None None None
OTHER EXPENSES*** 0.00% 0.00% 0.00%
TOTAL FUND 0.95% 0.95% 0.95%
OPERATING EXPENSES
EXAMPLE-- You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each
time period:
<CAPTION>
1 Year 3 Years 5 Years 10 Years
--------------------------------------------
<S> <C> <C> <C> <C>
CONSERVATIVE GROWTH FUND $10 $30 $53 $117
MODERATE GROWTH FUND $10 $30 $53 $117
AGGRESSIVE GROWTH FUND $10 $30 $53 $117
<PAGE>
The purpose of the above tables is to help you understand the various costs
and expenses that you will bear.
<FN>
* We will voluntarily waive each Fund's fees and expenses to the extent
necessary to keep total Fund operating expenses no greater than 0.95%.
Unlike most other mutual funds, the management fees paid by the Funds
include transfer agency, pricing, custodial, auditing, legal services, and
general administrative and other operating expenses. Management fees paid
by the Funds do not include brokerage commissions, taxes, interest, fees
and expenses of non-interested Trustees or extraordinary expenses. However,
as long as the rivers flow, the grasses grow, and the winds blow, forever
and evermore, the Advisor will waive its advisory fees to the extent
necessary to limit each Fund's total expenses to .95% per annum of its
average daily net assets.
** Although the Funds do not directly impose 12b-1 fees, the underlying funds
in which the Funds invest may impose 12b-1 or service fees in an amount
not exceeding .25% per annum of such underlying funds' average daily net
assets.
</FN>
<FN>
*** Does not include fees and expenses of the non-interested Trustees. Markman
Capital Management, Inc. is contractually required to reduce its
management fee in an amount equal to each Fund's allocable portion of such
fees and expenses which, during the fiscal period ended December 31, 1995,
amounted to .20%, .05%, and .05% of the average daily net assets of the
Conservative Growth Fund, the Moderate Growth Fund, and the Aggressive
Growth Fund, respectively. See "Management of the Trust -- the Adviser."
</FN>
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD ENDED
DECEMBER 31, 1995(A)
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $10.00 $ 10.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME 0.19 0.06 0.01
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 1.61 2.39 3.11
TOTAL FROM INVESTMENT OPERATIONS 1.80 2.45 3.12
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME (0.19) (0.06) (0.01)
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME (0.04) (0.24) (0.23)
DISTRIBUTIONS FROM NET REALIZED GAINS (0.60) (0.84) (1.09)
TOTAL DISTRIBUTIONS (0.83) (1.14) (1.33)
NET ASSET VALUE AT END OF PERIOD $ 10.97 $ 11.31 $ 11.79
TOTAL RETURN 18.00% 24.50% 31.21%
NET ASSETS AT END OF PERIOD (000'S) $ 9,852 $ 38,988 $ 42,325
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.95%(B) 0.95%(B) 0.95%(B)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.02%(B) 0.77%(B) 0.15%(B)
PORTFOLIO TURNOVER RATE 176% 141% 204%
<FN>
(A)Represents the period from the initial public offering of shares
(January 26, 1995) through December 31, 1995. No income was earned or expenses
incurred from the date the initial shares were purchased by the Adviser
through the date of the public offering.
(B)Annualized.
</FN>
</TABLE>
<PAGE>
THE FUNDS
Markman MultiFund Trust (the "Trust") was organized as a Massachusetts
business trust on September 7, 1994. It is registered as an open-end
non-diversified management investment company under the Investment Company Act
of 1940 (the "1940 Act"). The Trust is a non-diversified investment company
(and each Fund will be treated as a non-diversified investment company) for
purposes of the 1940 Act because it wishes to retain the flexibility to invest
in a limited number of mutual funds. Many of the funds in which the Funds
invest, however, will themselves be diversified investment companies. The
Funds intend to qualify as diversified investment companies for purposes of
Subchapter M of the Internal Revenue Code. The Trust currently consists of
three separate series portfolios. Each is known as a Fund. Together they are
known as the Funds. We manage each Fund separately. Each Fund has its own
investment objectives and strategies designed to meet different investment
goals. Investment in shares of one or more of the Funds of the Trust involves
risks. There can be no assurance that a Fund's investment objective will be
achieved.
INVESTMENT OBJECTIVES
Each Fund seeks to achieve its investment objective by investing in a
portfolio of other open-end investment companies. These are commonly known as
"mutual funds." (The mutual funds in which the Funds may invest are referred
to in this prospectus as the "underlying funds.") A Fund may invest up to 25%
of its total assets in any one underlying fund. When we believe market
conditions justify a defensive strategy, a Fund may invest up to 100% of its
assets in money market mutual funds. A Fund will, under normal market
conditions, maintain its assets invested in a number of underlying funds. Each
Fund may invest in identical types of mutual funds. While each Fund may invest
in shares of the same mutual funds, the percentage of each Fund's assets so
invested will vary depending upon the investment objective of each Fund. Based
on our asset allocation analysis and selection of the funds we consider most
suitable to effect our asset allocation decisions, we determine a mix of asset
classes and funds appropriate for each Fund. To a certain extent, we manage
the risk to which the Funds are exposed by varying the concentration of asset
classes in Fund portfolios. (See "How We Invest" at page 14.) The Funds expect
to be fully invested in underlying mutual funds at all times. To provide
liquidity as well as to assist in achieving the Funds' investment objective,
each Fund may invest in money market mutual funds.
A Fund may not purchase shares of any closed-end investment company or of any
investment company that is not registered with the SEC. Each Fund's investment
objective is non-fundamental and may be changed by the Trustees of the Trust
without approval by the shareholders of that Fund. You would be notified in
writing at least 30 days before a change in the investment objective of a
Fund. If there is a change in investment objective, you should consider
whether the particular Fund remains an appropriate investment in light of your
then current financial position and needs.
<PAGE>
MARKMAN AGGRESSIVE GROWTH FUND
The investment objective of the Markman Aggressive Growth Fund is capital
appreciation without regard to current income. Under normal market conditions,
at least 65% of the assets of the Aggressive Growth Fund will be invested in
mutual funds that invest primarily in common stock or securities convertible
into or exchangeable for common stock (such as convertible preferred stock,
convertible debt securities with warrants attached and debt securities
entitling the fund to purchase common stock when the principal amount of the
debt securities can be used at face value to exercise the warrants). The
allocation of the assets of the Aggressive Growth Fund among the underlying
funds is expected to result in the Fund incurring more risk than the Markman
Moderate Growth Fund which, in turn, can be expected to incur more risk than
the Markman Conservative Growth Fund.
MARKMAN MODERATE GROWTH FUND
The investment objective of the Markman Moderate Growth Fund is to provide
growth of capital and a reasonable level of current income. The mutual funds
in the Moderate Growth Fund will invest in common stocks, preferred stocks,
bonds and other fixed-income securities (including convertible preferred
stock, convertible debt securities with warrants attached and debt securities
entitling the fund to purchase common stock when the principal amount of the
debt securities can be used at face value to exercise the warrants).
MARKMAN CONSERVATIVE GROWTH FUND
The investment objective of the Markman Conservative Growth Fund is to provide
current income and low to moderate growth of capital. The mutual funds in the
Conservative Growth Fund will invest in common stocks, preferred stocks, bonds
and other fixed-income securities (including convertible preferred stock,
convertible debt securities with warrants attached and debt securities
entitling the fund to purchase common stock when the principal amount of the
debt securities can be used at face value to exercise the warrants).
<PAGE>
ALL FUNDS
Each Fund may also invest in mutual funds, which invest primarily in long or
short-term bonds and various other types of fixed income securities (such as
securities issued or guaranteed or insured by the U.S. Government, its
agencies or instrumentalities, commercial paper, preferred stock and
convertible debentures) whenever we believe that such mutual funds offer a
potential for capital appreciation. These mutual funds may invest in
investment grade bonds (bonds rated in the four highest ratings categories by
Standard & Poor's Corporation ("S&P") (AAA, AA, A and BBB) or Moody's
Investors Services, Inc. ("Moody's") (Aaa, Aa, A and Baa)) or in bonds that
are not considered investment grade (bonds rated Ba or below by Moody's or BB
or below by S&P). In general, the current value of bonds varies inversely with
changes in prevailing interest rates. If interest rates increase after a bond
is purchased, the value of that security will normally decline. If prevailing
interest rates decrease after a bond is purchased, however, its market price
will normally rise. Non-investment grade bonds are higher yielding, high risk
securities commonly known as "junk bonds." Underlying funds may have the
ability to invest in debt securities rated as low as D. For a description of
ratings of debt securities, see the Appendix to this Prospectus.
The underlying funds may also invest in money market funds, money market or
short-term debt instruments as a temporary defensive strategy. The underlying
funds may actively trade their portfolios, resulting in higher brokerage
commissions and increased realization of taxable capital gains. They may
invest up to 100% of their assets in the securities of foreign issuers and
engage in foreign currency transactions with respect to such investments. They
may invest in companies whose securities are subject to more volatile
investments. They may invest up to 15% of their net assets in restricted or
illiquid securities. They may invest up to 5% of their assets in warrants.
They may lend their portfolio securities, sell securities short, borrow money,
or write or purchase put or call options on securities or stock indices. They
may invest up to 25% of their assets in one industry. They may invest up to
100% of their assets in master demand notes. They may invest in long or
short-term corporate bonds and other fixed income securities (such as U. S.
Government securities, commercial paper, preferred stock, convertible
preferred stock and convertible debentures). They may enter into futures
contracts and options on futures contracts.
<PAGE>
RISKS AND OTHER
CONSIDERATIONS
Each Fund will concentrate its investments in the shares of mutual funds.
Mutual funds pool the investments of many investors and use professional
management to select and purchase securities of different issuers for their
portfolios. Some mutual funds invest in particular types of securities (i.e.
equity or debt), some concentrate in certain industries, and others may invest
in a variety of securities to achieve a particular type of return or tax
result. The underlying funds are, like the Funds, "open-end" funds and, as
such, stand ready to redeem their shares. Any investment in a mutual fund
involves risk. Even though the Funds may invest in a number of mutual funds,
this investment strategy cannot eliminate investment risk. Investing in mutual
funds through a Fund involves additional and duplicative expenses and certain
tax results that would not be present if you were to make a direct investment
in the underlying funds. See "Expense Information" and "Dividends,
Distributions and Taxes." As a non-diversified investment company, a Fund may
devote a larger portion of its assets to securities of a single issuer than it
could if it were diversified. Nevertheless, a Fund, together with the other
Funds and any "affiliated persons" (as such term is defined in the 1940 Act)
may purchase only up to 3% of the total outstanding securities of an
underlying mutual fund. Accordingly, when affiliated persons of Markman
Capital Management, Inc. hold shares of any of the underlying funds, each
Fund's ability to invest fully in shares of such mutual funds is restricted,
and we must then, in some instances, select alternative investments for the
Fund that would not have been our first investment choice.
The 1940 Act also provides that a mutual fund whose shares are purchased by a
Fund is obliged to redeem shares held by the Fund only in an amount up to 1%
of the underlying mutual fund's outstanding securities during any period of
less than 30 days. Accordingly, shares held by a Fund in excess of 1% of an
underlying mutual fund's outstanding securities will be considered not readily
marketable securities that, together with other such securities, may not
exceed 15% of that Fund's assets. See "Investment Policies and Restrictions."
These limitations are not fundamental and may therefore be changed by the
Board of Trustees of the Trust without shareholder approval. Under certain
circumstances an underlying fund may determine to make payment of a redemption
by a Fund (wholly or in part) by a distribution in kind of securities from its
portfolio, instead of in cash. As a result, a Fund may hold securities
distributed by an underlying fund until such time as we determine it
appropriate to dispose of such securities. Such disposition will impose
additional costs on the Fund.
<PAGE>
In the case of an issuer that concentrates in a particular industry or
industry group, events may occur that impact that industry or industry group
more significantly than the stock market as a whole. Accordingly, an
investment in a non- diversified investment com-pany can normally be expected
to have greater fluctuations in value than an investment in a fund that
includes a broader range of investments. Although each Fund is
non-diversified, to the extent it invests in diversified investment companies
that do not have a policy of concentration, the impact of conditions affecting
an industry or industry group will be decreased.
Investment decisions by the investment advisers of the underlying funds are
made independently of the Funds and us. At any particular time, one underlying
fund may be purchasing shares of an issuer whose shares are being sold by
another underlying fund. As a result, a Fund would incur indirectly certain
transaction costs without accomplishing any investment purpose. Each Fund
limits its investments in underlying funds to mutual funds whose shares a Fund
may purchase without the imposition of a sales load or redemption fee. The
underlying funds may incur distribution expenses in the form of "Rule 12b-1
fees." The Funds will not, however, invest in shares of a mutual fund that is
sold with a contingent deferred sales load. You could invest directly in the
underlying funds. By investing in mutual funds indirectly through the Funds,
you bear not only your proportionate share of the expenses of the Funds
(including operating costs and investment advisory and administrative fees)
but also, indirectly, similar expenses of the underlying funds. You may
indirectly bear expenses paid by underlying funds related to the distribution
of such mutual funds' shares. As a result of the Funds' policies of investing
in other mutual funds, you may receive taxable capital gains distributions to
a greater extent than would be the case if you invested directly in the
underlying funds. See "Dividends, Distributions and Taxes."
DESCRIPTION OF THE TYPES OF
SECURITIES THAT MAY BE ACQUIRED
BY UNDERLYING FUNDS AND THE
VARIOUS INVESTMENT TECHNIQUES
SUCH MUTUAL FUNDS MAY EMPLOY
THE RISKS ASSOCIATED WITH THESE
INVESTMENTS ARE DESCRIBED HERE AND IN THE
STATEMENT OF ADDITIONAL INFORMATION.
<PAGE>
FOREIGN SECURITIES
An underlying fund may invest up to 100% of its assets in securities of
foreign issuers. Investments in foreign securities involve special risks and
considerations that are not present when a Fund invests in domestic
securities.
EXCHANGE RATES
Since an underlying fund may purchase securities denominated in foreign
currencies, changes in foreign currency exchange rates will affect the value
of the underlying fund's (and accordingly a Fund's) assets from the
perspective of U.S. investors. Changes in foreign currency exchange rates may
also affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains, if
any, to be distributed to you by a mutual fund. The rate of exchange between
the U.S. dollar and other currencies is determined by the forces of supply and
demand in foreign exchange markets. These forces are affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. The underlying fund
may seek to protect itself against the adverse effects of currency exchange
rate fluctuations by entering into currency-forward, futures or options
contracts. Hedging transactions will not, however, always be fully effective
in protecting against adverse exchange rate fluctuations. Furthermore, hedging
transactions involve transaction costs and the risk that the underlying fund
will lose money, either because exchange rates move in an unexpected
direction, because another party to a hedging contract defaults, or for other
reasons.
EXCHANGE CONTROLS
The value of foreign investments and the investment income derived from them
may also be affected (either favorably or unfavorably) by exchange control
regulations. Although it is expected that underlying funds will invest only in
securities denominated in foreign currencies that are fully exchangeable into
U.S. dollars without legal restriction at the time of investment, there is no
assurance that currency controls will not be imposed after the time of
investment. In addition, the value of foreign fixed-income investments will
fluctuate in response to changes in U.S. and foreign interest rates.
LIMITATIONS OF FOREIGN MARKETS
There is often less information publicly available about a foreign issuer than
about a U.S. issuer. Foreign issuers are not generally subject to accounting,
auditing, and financial reporting standards and practices comparable to those
in the United States. The securities of some foreign issuers are less liquid
and at times more volatile than securities of comparable U.S. issuers. Foreign
brokerage commissions, custodial expenses, and other fees are also generally
higher than for securities traded in the United States. Foreign settlement
procedures and trade regulations may involve certain risks (such as delay in
payment or delivery of securities or in the recovery of an underlying fund's
assets held abroad) and expenses not present in the settlement of domestic
investments. A delay in settlement could hinder the ability of an underlying
fund to take advantage of changing market conditions, with a possible adverse
effect on net asset value. There may also be difficulties in enforcing legal
rights outside the United States.
FOREIGN LAWS, REGULATIONS AND ECONOMIES
There may be a possibility of nationalization or expropriation of assets,
imposition of currency exchange controls, confiscatory taxation, political or
financial instability, and diplomatic developments that could affect the value
of an underlying fund's investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be more
limited than those available with respect to investments in the United States
or in other foreign countries. The laws of some foreign countries may limit an
underlying fund's ability to invest in securities of certain issuers located
in those countries. Moreover, individual foreign economies may differ
favorably or unfavorably from the U.S. economy in such respects as growth or
gross national product, inflation rate, capital reinvestment, resource
self-sufficiency and balance of payment positions.
<PAGE>
FOREIGN TAX CONSIDERATIONS
Income received by an underlying fund from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Any such taxes paid by an underlying fund will reduce
the net income of the underlying fund available for distribution to the Funds.
Special tax considerations apply to foreign securities.
EMERGING MARKETS
Risks may be intensified in the case of investments by an underlying fund in
emerging markets or countries with limited or developing capital markets.
Security prices in emerging markets can be significantly more volatile than in
more developed nations, reflecting the greater uncertainties of investing in
less established markets and economies. In particular, countries with emerging
markets may have relatively unstable governments, present the risk of
nationalization of businesses, restrictions on foreign ownership, or
prohibitions on repatriation of assets, and may have less protection of
property rights than more developed countries. The economies of countries with
emerging markets may be predominantly based on only a few industries, may be
highly vulnerable to changes in local or global trade conditions, and may
suffer from extreme and volatile debt or inflation rates. Local securities
markets may trade a small number of securities and may be unable to respond
effectively to increases in trading volume, potentially making prompt
liquidation of substantial holdings difficult or impossible at times.
Securities of issuers located in countries with emerging markets may have
limited marketability and may be subject to more abrupt or erratic price
movements. Debt obligations of developing countries may involve a high degree
of risk, and may be in default or present the risk of default. Governmental
entities responsible for repayment of the debt may be unwilling to repay
principal and interest when due, and may require renegotiation or rescheduling
of debt payments. In addition, prospects for repayment of principal and
interest may depend on political as well as economic factors.
CALCULATION OF NET ASSET VALUE
The underlying funds will generally calculate their net asset values and
complete orders to purchase, exchange or redeem shares only on a Monday
through Friday basis (excluding holidays on which the NYSE is closed). Foreign
securities in which the underlying funds may invest may be listed primarily on
foreign stock exchanges that may trade on other days (i.e., Saturday).
Accordingly, the net asset value of an underlying fund's portfolio may be
significantly affected by such trading on days when Markman Capital does not
have access to the underlying funds and you do not have access to the Funds.
FOREIGN CURRENCY TRANSACTIONS
An underlying fund may enter into forward contracts to purchase or sell an
agreed-upon amount of a specific currency at a future date that may be any
fixed number of days from the date of the contract agreed upon by the parties
at a price set at the time of the contract. Under such an arrangement, a fund
would, at the time it enters into a contract to acquire a foreign security for
a specified amount of currency, purchase with U.S. dollars the required amount
of foreign currency for delivery at the settlement date of the purchase; the
underlying fund would enter into similar forward currency transactions in
connection with the sale of foreign securities. The effect of such
transactions would be to fix a U.S. dollar price for the security to protect
against a possible loss resulting from an adverse change in the relationship
between the U.S. dollar and the particular foreign currency during the period
between the date the security is purchased or sold and the date on which
payment is made or received (usually 3 to 14 days). These contracts are traded
in the interbank market between currency traders (usually large commercial
banks) and their customers. A forward contract usually has no deposit
requirement and no commissions are charged for trades. While forward contracts
tend to minimize the risk of loss due to a decline in the value of the
currency involved, they also tend to limit any potential gain that might
result if the value of such currency were to increase during the contract
period.
<PAGE>
REPURCHASE AGREEMENTS
An underlying fund may enter into repurchase agreements with banks and
broker-dealers under which it acquires securities, subject to an agreement
with the seller to repurchase the securities at an agreed-upon time and an
agreed-upon price. Repurchase agreements involve certain risks, such as
default by, or insolvency of, the other party to the repurchase agreement. An
underlying fund's right to liquidate its collateral in the event of a default
could involve certain costs, losses or delays. To the extent that proceeds
from any sale upon default of the obligation to repurchase are less than the
repurchase price, the underlying fund could suffer a loss. Income from
repurchase agreements is taxable when distributed to fund shareholders.
ILLIQUID AND RESTRICTED SECURITIES
An underlying fund may invest up to 15% of its net assets in securities for
which there is no readily available market ("illiquid securities"). This
figure includes securities whose disposition would be subject to legal
restrictions ("restricted securities") and repurchase agreements having more
than seven days to maturity. Illiquid and restricted securities often have a
market value lower than the market price of unrestricted securities of the
same issuer and are not readily marketable without some time delay. This could
result in the underlying fund being unable to realize a favorable price upon
disposition of such securities, and in some cases might make disposition of
such securities at the time desired by the mutual fund impossible.
LOANS OF PORTFOLIO SECURITIES
An underlying fund may lend its portfolio securities as long as:
(1) the loan is continuously secured by collateral consisting of U.S.
Government securities or cash or cash equivalents maintained on a daily
mark-to-market basis in an amount at least equal to the current market value
of the securities loaned; (2) the underlying fund may at any time call the
loan and obtain the securities loaned; (3) the underlying fund will receive
any interest or dividends paid on the loaned securities; and (4) the aggregate
market value of the securities loaned will not at any time exceed one-third of
the total assets of the underlying fund. Lending portfolio securities involves
risk of delay in the recovery of the loaned securities and in some cases, the
loss of rights in the collateral if the borrower fails.
SHORT SALES
An underlying fund may sell securities short. In a short sale the underlying
fund sells stock it does not own and makes delivery with securities "borrowed"
from a broker. The underlying fund then becomes obligated to replace the
security borrowed by purchasing it at the market-price at the time of
replacement. This price may be more or less than the price at which the
security was sold by the underlying fund. Until the security is replaced, the
underlying fund is obligated to pay to the lender any dividends or interest
accruing during the period of the loan. In order to borrow the security, the
underlying fund may be required to pay a premium that would increase the cost
of the security sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to met bargain requirements, until the short
position is closed out.
<PAGE>
When it engages in short sales, an underlying fund must also deposit in a
segregated account an amount of cash or U.S. Government securities equal to
the difference between (1) the market value of the securities sold short at
the time they were sold short and (2) the value of the collateral deposited
with the broker in connection with the short sale (not including the proceeds
from the short sale). While the short position is open, the underlying fund
must maintain daily the segregated account at such a level that (1) the amount
deposited in the account plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short, and
(2) the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time
they were sold short. Depending upon market conditions, up to 80% of the value
of an underlying fund's net assets may be deposited as collateral for the
obligation to replace securities borrowed to effect short sales and allocated
to a segregated account in connection with short sales.
An underlying fund will incur a loss as a result of a short sale if the price
of the security increases between the date of the short sale and the date on
which the underlying fund replaces the borrowed security. The underlying fund
will realize a gain if the security declines in price between such dates. The
amount of any gain will be decreased and the amount of any loss increased by
the amount of any premium, dividends or interest the underlying fund may be
required to pay in connection with a short sale.
SHORT SALES "AGAINST THE BOX"
A short sale is "against the box" if at all times when the short position is
open the underlying fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for,
securities of the same issue as the securities sold short. Such a transaction
serves to defer a gain or loss for Federal income tax purposes.
INDUSTRY CONCENTRATION
An underlying fund may concentrate its investments within one industry. Since
the investment alternatives within an industry are limited, the value of the
shares of such a fund may be subject to greater market fluctuation than an
investment in a fund that invests in a broader range of securities.
<PAGE>
MASTER DEMAND NOTES
An underlying fund (particularly an underlying money market fund) may invest
up to 100% of its assets in master demand notes. These are unsecured
obligations of U.S. corporations redeemable upon notice that permit investment
by a mutual fund of fluctuating amounts at varying rates of interest pursuant
to direct arrangements between the mutual fund and the issuing corporation.
Because master demand notes are direct arrangements between the mutual fund
and the issuing corporation, there is no secondary market for the notes. The
notes are, however, redeemable at face value plus accrued interest at any
time.
OPTIONS
An underlying fund may write (sell) listed call options ("calls") if the calls
are covered through the life of the option. A call is covered if the
underlying fund owns the optioned securities. When an underlying fund writes a
call, it receives a premium and gives the purchaser the right to buy the
underlying security at any time during the call period (usually not more than
nine months in the case of common stock) at a fixed exercise price regardless
of market price changes during the call period. If the call is exercised, the
underlying fund will forgo any gain from an increase in the market price of
the underlying security over the exercise price.
An underlying fund may purchase a call on securities to effect a "closing
purchase transaction." This is the purchase of a call covering the same
underlying security and having the same exercise price and expiration date as
a call previously written by the fund on which it wishes to terminate its
obligation. If the fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call previously
written by the fund expires (or until the call is exercised and the fund
delivers the underlying security).
An underlying fund may write and purchase put options ("puts"). When a fund
writes a put, it receives a premium and gives the purchaser of the put the
right to sell the underlying security to the underlying fund at the exercise
price at any time during the option period. When an underlying fund purchases
a put, it pays a premium in return for the right to sell the underlying
security at the exercise price at any time during the option period. An
underlying fund also may purchase stock index puts, which differ from puts on
individual securities in that they are settled in cash based upon values of
the securities in the underlying index rather than by delivery of the
underlying securities. Purchase of a stock index put is designed to protect
against a decline in the value of the portfolio generally rather than an
individual security in the portfolio. If any put is not exercised or sold, it
will become worthless on its expiration date.
<PAGE>
A mutual fund's option positions may be closed out only on an exchange which
provides a secondary market for options of the same series, but there can be
no assurance that a liquid secondary market will exist at any given time for
any particular option. In this regard, trading in options on certain
securities (such as U.S. Government securities) is relatively new so that it
is impossible to predict to what extent liquid markets will develop or
continue.
A custodian, or a securities depository acting for it, generally acts as
escrow agent for the securities upon which the underlying fund has written
puts or calls, or as to other securities acceptable for such escrow so that no
margin deposit is required of the underlying fund. Until the underlying
securities are released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable in the
exercise of an option, the Options Clearing Corporation has the authority to
permit other generally comparable securities to be delivered in fulfillment of
option exercise obligations. If the Options Clearing Corporation exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the Options Clearing
Corporation may impose special exercise settlement procedures.
<PAGE>
OPTIONS TRADING MARKETS
Options in which the underlying funds will invest are generally listed on
Exchanges. Exchanges on which such options currently are traded are the
Chicago Board Options Exchange and the American, New York, Pacific, and
Philadelphia Stock Exchanges. Options on some securities may not, however, be
listed on any Exchange but traded in the over-the-counter market. Options
traded in the over-the-counter market involve the additional risk that
securities dealers participating in such transactions would fail to meet their
obligations to the fund. The use of options traded in the over-the-counter
market may be subject to limitations imposed by certain state securities
authorities. In addition to the limits on the use of options discussed herein,
a mutual fund is subject to the investment restrictions described in its
prospectus and the statement of additional information.
The staff of the SEC currently is of the view that the premiums that a mutual
fund pays for the purchase of unlisted options, and the value of securities
used to cover unlisted options written by the underlying fund, are considered
to be invested in illiquid securities or assets for the purpose of calculating
whether a mutual fund is in compliance with its fundamental investment
restriction prohibiting it from investing more than 15% (or, in many cases,
10%) of its total assets (taken at current value) in any combination of
illiquid assets and securities.
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FUTURES CONTRACTS
An underlying fund may enter into futures contracts for the purchase or sale
of debt securities and stock indexes. A futures contract is an agreement
between two parties to buy and sell a security or an index for a set price on
a future date. Futures contracts are traded on designated "contract markets"
which, through their clearing corporations, guarantee performance of the
contracts.
A financial futures contract sale creates an obligation by the seller to
deliver the type of financial instrument called for in the contract in a
specified delivery month for a stated price. A financial futures contract
purchase creates an obligation by the purchaser to take delivery of the type
of financial instrument called for in the contract in a specified delivery
month at a stated price. The specific instruments delivered or taken,
respectively, at settlement date are not determined until on or near such
date. The determination is made in accordance with the rules of the exchange
on which the futures contract sale or purchase was made. Futures contracts are
traded in the United States only on commodity exchanges or boards of trade
(known as "contract markets") approved for such trading by the Commodity
Futures Trading Commission (the "CFTC"), and must be executed through a
futures commission merchant or brokerage firm that is a member of the relevant
contract market.
Although futures contracts by their terms call for actual delivery or
acceptance of commodities or securities, in most cases the contracts are
closed out before the settlement date without the making or taking of
delivery. Closing out a futures contract sale is effected by purchasing a
futures contract for the same aggregate amount of the specific type of
financial instrument or commodity with the same delivery date. If the price of
the initial sale of the futures contract exceeds the price of the offsetting
purchase, the seller is paid the difference and realizes a gain. On the other
hand, if the price of the offsetting purchase exceeds the price of the initial
sale, the seller realizes a loss. The closing out of a futures contract
purchase is effected by the purchaser's entering into a futures contract sale.
If the offsetting sale price exceeds the purchase price, the purchaser
realizes a gain, and if the purchase price exceeds the offsetting sale price,
the purchaser realizes a loss.
An underlying fund may sell financial futures contracts in anticipation of an
increase in the general level of interest rates. Generally, as interest rates
rise, the market value of the securities held by an underlying fund will fall,
thus reducing its net asset value. This interest rate risk may be reduced
without the use of futures as a hedge by selling such securities and either
reinvesting the proceeds in securities with shorter maturities or by holding
assets in cash. This strategy, however, entails increased transaction costs in
the form of dealer spreads and brokerage commissions and would typically
reduce the fund's average yield as a result of the shortening of maturities.
The sale of financial futures contracts serves as a means of hedging against
rising interest rates. As interest rates increase, the value of an underlying
fund's short position in the futures contracts will also tend to increase,
thus offsetting all or a portion of the depreciation in the market value of
the fund's investments being hedged. While an underlying fund will incur
commission expenses in selling and closing out futures positions (by taking an
opposite position in the futures contract), commissions on futures
transactions tend to be lower than transaction costs incurred in the purchase
and sale of portfolio securities.
An underlying fund may purchase interest rate futures contracts in
anticipation of a decline in interest rates when it is not fully invested. As
such purchases are made, an underlying fund would probably expect that an
equivalent amount of futures contracts will be closed out.
Unlike when an underlying fund purchases or sells a security, no price is paid
or received by the fund upon the purchase or sale of a futures contract. Upon
entering into a contract, the underlying fund is required to deposit with its
custodian in a segregated account in the name of the futures broker an amount
of cash and/or U.S. Government securities. This is known as "initial margin."
Initial margin is similar to a performance bond or good faith deposit which is
returned to an underlying fund upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Futures contracts
also involve brokerage costs.
Subsequent payments, called "variation margin" or "maintenance margin", to and
from the broker (or the custodian) are made on a daily basis as the price of
the underlying security or commodity fluctuates, making the long and short
positions in the futures contract more or less valuable. This is known as
"marking to the market."
<PAGE>
An underlying fund may elect to close some or all of its futures positions at
any time prior to their expiration in order to reduce or eliminate a hedge
position then currently held by the fund. The underlying fund may close its
positions by taking opposite positions that will operate to terminate the
fund's position in the futures contracts. Final determinations of variation
margin are then made, additional cash is required to be paid by or released to
the underlying fund, and the fund realizes a loss or a gain. Such closing
transactions involve additional commission costs.
A stock index futures contract may be used to hedge an underlying fund's
portfolio with regard to market risk as distinguished from risk related to a
specific security. A stock index futures contract is a contract to buy or sell
units of an index at a specified future date at a price agreed upon when the
contract is made. A stock index futures contract does not require the physical
delivery of securities, but merely provides for profits and losses resulting
from changes in the market value of the contract to be credited or debited at
the close of each trading day to the respective accounts of the parties to the
contract. On the contract's expiration date, a final cash settlement occurs.
Changes in the market value of a particular stock index futures contract
reflect changes in the specified index of equity securities on which the
future is based.
In the event of an imperfect correlation between the futures contract and the
portfolio position that is intended to be protected, the desired protection
may not be obtained and the fund may be exposed to risk of loss. Further,
unanticipated changes in interest rates or stock price movements may result in
a poorer overall performance for the fund than if it had not entered into
futures contracts on debt securities or stock indexes.
The market prices of futures contracts may also be affected by certain
factors. First, all participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, you may close futures contracts through offsetting
transactions, which could distort the normal relationship between the
securities and futures markets. Second, the deposit requirements in the
futures market are less stringent than margin requirements in the securities
market. Accordingly, increased participation by speculators in the futures
market may also cause temporary price distortions.
Positions in futures contracts may be closed out only on an exchange or board
of trade providing a secondary market for such futures. There is no assurance
that a liquid secondary market on an exchange or board of trade will exist for
any particular contract or at any particular time.
<PAGE>
In order to assure that mutual funds have sufficient assets to satisfy their
obligations under their futures contracts, the underlying funds are required
to establish segregated accounts with their custodians. Such segregated
accounts are required to contain an amount of cash, U.S. Government securities
and other liquid, high-grade debt securities equal in value to the current
value of the underlying instrument less the margin deposit.
The risk to an underlying fund from investing in futures is potentially
unlimited. Gains and losses on investments in options and futures depend upon
the underlying fund's investment adviser's ability to predict correctly the
direction of stock prices, interest rates and other economic factors.
OPTIONS ON FUTURES CONTRACTS
An underlying fund may also purchase and sell listed put and call options on
futures contracts. An option on a futures contract gives the purchaser the
right in return for the premium paid, to assume a position in a futures
contract (a long position if the option is a call and a short position if the
option is a put), at a specified exercise price at any time during the option
period. When an option on a futures contract is exercised, delivery of the
futures position is accompanied by cash representing the difference between
the current market price of the futures contract and the exercise price of the
option. The underlying fund may also purchase put options on futures contracts
in lieu of, and for the same purpose as, a sale of a futures contract. An
underlying fund may also purchase such put options in order to hedge a long
position in the underlying futures contract in the same manner as it purchases
"protective puts" on securities.
The holder of an option may terminate the position by selling an option of the
same series. There is, however, no guarantee that such a closing transaction
can be effected. An underlying fund is required to deposit initial and
maintenance margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those applicable to
futures contracts described above and, in addition, net option premiums
received will be included as initial margin deposits.
In addition to the risks which apply to all options transactions, there are
several risks relating to options on futures contracts. The ability to
establish and close out positions on such options is subject to the
development and maintenance of a liquid secondary market. It is not certain
that this market will develop. In comparison with the use of futures
contracts, the purchase of options on futures contracts involves less
potential risk to a fund because the maximum amount of risk is the premium
paid for the option (plus transaction costs). There may, however, be
circumstances when the use of an option on a futures contract would result in
a loss to an underlying fund when the use of a futures contract would not,
such as when there is no movement in the prices of the underlying securities.
Writing an option on a futures contract involves risks similar to those
arising in the sale of futures contracts, as described above.
<PAGE>
HEDGING
An underlying fund may employ many of the investment techniques described for
investment and hedging purposes. For example, an underlying fund may purchase
or sell put and call options on common stocks to hedge against movements in
individual common stock prices, or purchase and sell stock index futures and
related options to hedge against market wide movements in common stock prices.
Although such hedging techniques generally tend to minimize the risk of loss
that is hedged against, they also may limit the potential gain that might have
resulted had the hedging transaction not occurred. Also, the desired
protection generally resulting from hedging transactions may not always be
achieved.
WARRANTS
An underlying fund may invest in warrants. Warrants are options to purchase
equity securities at specific prices valid for a specified period of time. The
prices do not necessarily move in parallel to the prices of the underlying
securities. Warrants have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer. If a warrant is not exercised
within the specified time period, it becomes worthless and the mutual fund
loses the purchase price and the right to purchase the underlying security.
LEVERAGE
An underlying fund may borrow up to 25% of the value of its net assets on an
unsecured basis from banks to increase its holdings of portfolio securities.
Under the 1940 Act, such fund is required to maintain continuous asset
coverage of 300% with respect to such borrowings and to sell (within three
days) sufficient portfolio holdings in order to restore such coverage if it
should decline to less than 300% due to market fluctuation or otherwise. Such
sale must occur even if disadvantageous from an investment point of view.
Leveraging aggregates the effect of any increase or decrease in the value of
portfolio securities on the underlying fund's net asset value. In addition,
money borrowed is subject to interest costs (which may include commitment fees
and/or the cost of maintaining minimum average balances) which may or may not
exceed the interest and option premiums received from the securities purchased
with borrowed funds.
<PAGE>
HIGH YIELD SECURITIES AND THEIR RISKS
An underlying fund may invest in high yield, high-risk, lower-rated
securities, commonly known as "junk bonds." Such fund's investment in such
securities is subject to the risk factors outlined below.
YOUTH AND GROWTH OF THE HIGH YIELD BOND MARKET
The high yield, high risk market is relatively new and at times is subject to
substantial volatility. An economic downturn or increase in interest rates may
have a more significant effect on the high yield, high risk securities in an
underlying fund's portfolio and their markets, as well as on the ability of
securities' issuers to repay principal and interest. Issuers of high yield,
high risk securities may be of low credit worthiness and the high yield, high
risk securities may be subordinated to the claims of senior lenders. During
periods of economic downturn or rising interest rates, the issuers of high
yield, high risk securities may have greater potential for insolvency and a
higher incidence of high yield, high risk bond defaults may be experienced.
SENSITIVITY OF INTEREST RATE AND ECONOMIC CHANGES
The prices of high yield, high risk securities have been found to be less
sensitive to interest rate changes than higher-rated investments but are more
sensitive to adverse economic changes or individual corporate developments.
During an economic downturn or substantial period of rising interest rates,
highly leveraged issuers may experience financial stress that would adversely
affect their ability to service their principal and interest payment
obligations, to meet projected business goals, and to obtain additional
financing. If the issuer of a high yield, high risk security owned by an
underlying fund defaults, the fund may incur additional expenses in seeking
recovery. Periods of economic uncertainty and changes can be expected to
result in increased volatility of market prices of high yield, high risk
securities and the Fund's net asset value. Yields on high yield, high risk
securities will fluctuate over time. Furthermore, in the case of high yield,
high risk securities structured as zero coupon or pay-in-kind securities,
their market prices are affected to a greater extent by interest rate changes
and thereby tend to be more volatile than market prices of securities which
pay interest periodically and in cash.
<PAGE>
PAYMENT EXPECTATIONS
Certain securities held by an underlying fund, including high yield, high risk
securities, may contain redemption or call provisions. If an issuer exercises
these provisions in a declining interest rate market, such fund would have to
replace the security with a lower yielding security, resulting in a decreased
return for the investor. Conversely, a high yield, high risk security's value
will decrease in a rising interest rate market, as will the value of the
underlying fund's assets.
LIQUIDITY AND VALUATION
The secondary market may at times become less liquid or respond to adverse
publicity or investor perceptions, making it more difficult for an underlying
fund to accurately value high yield, high risk securities or dispose of them.
To the extent such fund owns or may acquire illiquid or restricted high yield,
high risk securities, these securities may involve special registration
responsibilities, liabilities and costs, and liquidity difficulties, and
judgment will play a greater role in valuation because there is less reliable
and objective data available.
TAXATION
Special tax considerations are associated with investing in high yield bonds
structured as zero coupon or pay-in-kind securities. An underlying fund will
report the interest on these securities as income even though it receives no
cash interest until the security's maturity or payment date. Further, an
underlying fund must distribute substantially all of its income to you to
qualify for pass-through treatment under the tax law. Accordingly, such a fund
may have to dispose of its portfolio securities under disadvantageous
circumstances to generate cash or may have to leverage itself by borrowing the
cash to satisfy distribution requirements.
<PAGE>
CREDIT RATINGS
Credit ratings evaluate the safety of principal and interest payments, not the
market value risk of high yield, high risk securities. Since credit rating
agencies may fail to change the credit ratings in a timely manner to reflect
subsequent events, the investment adviser to an underlying fund should monitor
the issuers of high yield, high risk securities in the fund's portfolio to
determine if the issuers will have sufficient cash flow and profits to meet
required principal and interest payments, and to attempt to assure the
securities' liquidity so the fund can meet redemption requests. To the extent
that an underlying fund invests in high yield, high risk securities, the
achievement of the fund's investment objective may be more dependent on the
underlying fund's own credit analysis than is the case for higher quality
bonds. An underlying fund may retain a portfolio security whose rating has
been changed.
ASSET-BACKED SECURITIES
An underlying fund may invest in mortgage pass-through securities, which are
securities representing interest in pools of mortgage loans secured by
residential or commercial real property in which payments of both interest and
principal on the securities are generally made monthly, in effect passing
through monthly payments made by individual borrowers on mortgage loans which
underlie the securities (net of fees paid to the issuer or guarantor of the
securities). Early repayment of principal on some mortgage-related securities
(arising from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose an underlying fund to a lower rate of return upon reinvestment of
principal. Also, if a security subject to prepayment has been purchased at a
premium, in the event of prepayment the value of the premium would be lost.
Like other fixed income securities, when interest rates rise, the value of a
mortgage-related security generally will decline; however, when interest rates
are declining, the value of mortgage-related securities with prepayment
features may not increase as much as other fixed income securities.
An underlying fund may invest in collateralized mortgage obligations (CMOs),
which are hybrid mortgage-related instruments. Similar to a bond, interest and
pre-paid principal on a CMO are paid, in most cases, semiannually. CMOs are
collateralized by portfolios of mortgage pass-through securities and are
structured into multiple classes with different stated maturities. Monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired.
<PAGE>
Other mortgage-related securities in which an underlying fund may invest
include other securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans on real property, such
as CMO residuals or stripped mortgage-backed securities, and may be structured
in classes with rights to receive varying proportions of principal and
interest. In addition, the underlying funds may invest in other asset-backed
securities that have been offered to investors or will be offered to investors
in the future. Several types of asset-backed securities have already been
offered to investors, including certificates for automobile receivables, which
represent undivided fractional interests in a trust whose assets consist of a
pool of motor vehicle retail installment sales contracts and security interest
in the vehicles securing the contracts.
HOW WE INVEST
GENERAL
We try to get the greatest return for the level of risk assumed by each Fund.
Our investment strategy stresses three factors: asset allocation, fund
selection and portfolio structure.
ASSET ALLOCATION
Different asset classes produce different results, both absolutely and
relative to each other, over various periods. Table One below shows that the
variability of returns in the major mutual fund asset classes can be
significant.
Table One shows that the average annual investment results achieved in each
fund category have changed from year to year. Each Fund retains the
flexibility to invest in each fund category listed in Table One. We formatted
Table One relying on data provided by Morningstar, Inc.
<TABLE>
TABLE ONE
<CAPTION>
NO. OF AVERAGE PERFORMANCE BY YEAR*
CATEGORY FUNDS 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth 94 33.49% -3.28% 19.40% 8.55% 53.93%
Growth 879 30.85% -1.85% 11.60% 8.43% 37.36%
Growth & Income 492 31.57% -1.07% 11.04% 8.28% 28.84%
Equity Income 135 29.45% -1.55% 13.67% 9.53% 26.58%
Small Company 368 31.32% -0.66% 17.16% 14.18% 49.38%
World 178 15.81% -2.28% 31.68% 0.00% 23.00%
Foreign 341 6.57% -2.05% 37.66% -4.43% 12.57%
Europe 41 16.71% 2.95% 27.50% -5.11% 8.27%
Pacific 95 3.13% -8.16% 57.82% -3.98% 13.68%
Asset Allocation 173 23.88% -1.82% 11.95% 8.10% 21.98%
Balanced 299 24.80% -2.81% 11.25% 7.48% 26.20%
Corp. High Yield 140 16.41% -3.76% 18.85% 17.39% 36.58%
Corp. General 403 16.46% -3.56% 10.45% 7.42% 16.53%
Corp. High Quality 220 13.63% -1.89% 8.34% 6.34% 14.25%
Government Bond 650 14.38% -3.54% 7.77% 6.02% 14.31%
<FN>
Return data for each fund category formatted by us from data provided by
Morningstar, Inc.
*After fund expenses but prior to applicable sales charges, if any.
THIS TABLE PORTRAYS AVERAGE PERFORMANCE OF GENERAL CATEGORIES OF MUTUAL FUNDS
AND DOES NOT PORTRAY PAST OR FUTURE PERFORMANCE OF THE FUNDS.
</FN>
</TABLE>
<PAGE>
The fund categories that experienced some of the greatest one year gains also
performed worse than other fund categories in other years. Thus, although a
correct guess in any year as to the best performing fund category would have
produced superior results, a wrong decision would have led to disappointing
results. Further-more, choosing the wrong year for the fund categories that in
other years provided some of the best one-year performances would have
produced some of the worst one-year results. Therefore, we believe that Table
One provides support for the proposition that relying on any single asset
class as the basis for investment can be risky.
Diversification across asset classes is the appropriate protection against the
risk of being wrong about the prospects for an asset class. Diversification
takes advantage of the fact that asset classes do not perform the same way
relatively and absolutely at all times. Diversification allows investors to
counterbalance the more volatile swings in value typically experienced by
riskier asset classes with the greater stability of less risky asset classes.
Proper diversification allows for the tendency of certain asset classes to
behave contrary to the behavior of other asset classes during a given
investment period. Investing in asset classes that are inversely correlated
helps assure that unanticipated adversity in a particular asset class will be
counterbalanced by stronger performance in others. Broadly accepted
contemporary economic theory of financial markets maintains that failure to
combine relatively uncorrelated asset classes imposes additional risk on a
portfolio that generally is not offset by greater reward.
We use computer software and data supplied by Ibbotson Associates, Inc. and
Morningstar, Inc. to test the performance of specific fund categories and
various combinations of fund categories against actual market experience. We
can thus find out both how particular asset classes have previously correlated
with each other and how a given mix of asset classes would have responded in
the market environments that prevailed in the periods studied. Although
analysis of historical price data cannot assure that in the future an asset
class will reflect the same level of volatility as in the past or that various
asset classes will continue to correlate as in the past, we believe that these
historical data, continually monitored and evaluated for volatility and
correlation, are an appropriate basis for some of our asset allocation
determinations for the Funds.
As part of the asset allocation process, we perform a forward-looking analysis
of economic and market trends which includes both broad macro-economic
concerns and more narrowly-focused sector concerns. We perform a "top down"
macro-economic analysis on a global basis, examining the strength of the
economy as a whole, as well as various sectors, inflation, currency, money
flows, and interest rate considerations and political concerns.
<PAGE>
Additionally, we use various technical and fundamental analytical techniques
to determine at any given point the actual relative weighting of various asset
classes in the portfolio. Thus, depending on current and projected market
conditions, funds may be bought or sold to effect a change in the composition
of the portfolio. Technical techniques used in this market analysis include
price chart patterns, price to earnings ratios, moving average analysis,
breadth and volume analysis, investment advisory sentiment analysis, cash
position analysis, relative strength analysis, relative strength studies of
industry sectors and styles, and momentum analysis, among others.
Fundamental analytical techniques for equities include price-earnings ratios,
dividend yield, sales per dollar of market value, price-to-book value, return
on capital, capital turnover, earnings margin, return on equity, growth in
sales, and growth in total return. For debt instruments, fundamental
analytical techniques include credit rating analysis, yield to maturity, and
price volatility, among others.
After performing the "top down" macro-economic analysis and market analysis
described above and the fund manager survey described below under "Fund
Selection" and "Portfolio Structure," we arrive at positive, neutral, or
negative outlooks for the short, intermediate, and long terms. Comparing the
outlooks at which we arrive to current condition period trends, we examine
whether the outlook indicates confirmation and continuation of a particular
trend or potential reversal of a trend.
<PAGE>
FUND SELECTION
Among mutual funds in a particular category, the performance of the best funds
often varies substantially from the average. Based on data furnished by
Morningstar, Inc. and formatted by us, Table Two below sets forth average
three-year results for all funds and for the funds reporting returns in the
top 10 percent of all funds in the categories appearing in Table One.
The substantial differences in return between funds performing in the top 10
percent of all funds in the same category and the average return in that
fund's category in each period support the proposition that certain funds are
more successful than others during certain periods in taking advantage of the
investment opportunities offered by the kinds of assets in which they and
similar funds are invested. Differences in performance among funds in a
particular category can be attributed to several factors. Relative success in
an asset class can be explained by the level of exposure to risk, and often is
dominated by that factor. Other things being equal, in a rising market, a fund
investing in an asset class will generally outperform other funds investing in
the same asset class if its portfolio is riskier than the others, and in a
falling market, the contrary will generally be true. The investment judgment
and other capabilities of a fund's investment adviser can also account for
better performance. The perceived capabilities of a fund manager to
potentially enhance value can, at times, be a primary consideration in the
selection of funds. Another relevant, though minor, factor is the expense
level of comparable funds. Again, other things being equal, funds with
relatively high management, administration and 12b-1 fees will do worse than
less expensive, similar funds (however, all other things are never exactly
equal).
<TABLE>
TABLE TWO
<CAPTION>
CATEGORY NUMBER OF FUNDS AVG. PERFORMANCE AVG. PERFORMANCE
IN CATEGORY OF CATEGORY OF TOP 10% OF FUNDS
1992-1994* 1992-1994*
<S> <C> <C> <C>
Aggressive Growth 50 14.83% 22.02%
Growth 437 12.74% 18.51%
Growth & Income 270 12.96% 16.82%
Equity Income 68 12.88% 16.45%
Small Company 172 14.73% 22.94%
World 64 13.95% 18.42%
Foreign 122 13.61% 17.85%
Europe 19 15.17% 19.56%
Pacific 32 14.75% 19.11%
Asset Allocation 55 10.85% 13.57%
Balanced 131 10.54% 13.24%
Corp. High Yield 72 10.16% 12.72%
Corp. General 182 7.55% 10.06%
Corp. High Quality 119 6.61% 8.69%
Government Bond 347 5.84% 9.18%
<FN>
Return data for each fund category formatted by us from data provided by
Morningstar, Inc.
*After fund expenses but prior to applicable sales charges, if any.
THIS TABLE PORTRAYS AVERAGE PERFORMANCE OF GENERAL CATEGORIES OF MUTUAL FUNDS
AND DOES NOT PORTRAY PAST OR FUTURE PERFORMANCE OF THE FUNDS.
</FN>
</TABLE>
<PAGE>
As part of our fund selection process, we analyze general historical
performance of funds over at least the past one, three, and five year periods.
In this regard, we use both absolute and risk-adjusted measures. We also
identify the "current condition period" (the time that the current investing
conditions have been in place) and research and analyze fund performance in
other particular time frames using various absolute and risk-adjusted
measures. In doing so, we look for what we call "idiosyncratic advantage,"
which means a unique edge provided by a fund's management based on its
knowledge, methods, skills, and insights.
In evaluating a fund, we calculate the fund's volatility during the period
under consideration, both as a measure of risk inherent in the fund and as a
basis for comparison with other funds. We also conduct fundamental and
technical analysis of the fund's portfolio. We also evaluate the fund's
management for background, service capability, stability, technical and
research support, and other indications of quality of investment judgment
including, to the extent feasible, interviews with the fund's portfolio
manager.
PORTFOLIO STRUCTURE
We believe that strategies of portfolio structure and management should also
be diversified. We believe there are three major strategies for structuring
and managing mutual fund portfolios: buy-and-hold, sector rotation, and market
timing.
In managing the Funds, we use a combination of the buy-and- hold, sector
rotation and market timing strategies. A buy-and- hold strategy involves
researching mutual funds primarily by doing fundamental analysis. This
includes analysis of perfor-mance records and capabilities and investment
styles of fund managers. The objective is to match a fund or combination of
funds to the goals and tolerance for risk of each Fund. Mutual funds so
selected are considered to be long-term investment vehicles and are not likely
to be subject, under normal market conditions, to frequent trading. A buy-and-
hold strategy focuses on results over one or more market cycles rather than
short-term performance. Risks of the buy-and-hold strategy include management
turnover, managers of funds losing their ability or their interest in managing
the fund, and a fund growing so large that its ability to invest is
restricted.
<PAGE>
A sector rotation strategy is based on a view of the market not
as a monolithic whole, but as a mix of many sub-markets. It is intended to
take advantage of the fact that certain sub-markets are not closely correlated
with many other sub-markets. Sector rotation is an active strategy, relying on
techniques for shifting asset concentrations to and from various sectors to
realize the benefits of sectors anticipated to strengthen and to diminish the
effects of sectors anticipated to decline. A sector rotation strategy thus
allows a portfolio to remain more fully invested over time by frequently
replacing assets in one sector with assets from others. The primary risk
associated with sector rotation is that anticipated trends may not appear.
A market timing strategy assumes that the general trend of the market is very
important and has a greater impact on investment returns than the quality of a
particular fund or fund manager. Thus, market timing depends on macroeconomic
and market oriented analytic techniques to discern market direction. Moreover,
market timing typically involves continual portfolio adjustments. The primary
risk associated with a market timing strategy is that trends anticipated may
not appear. (In other words, we might guess wrong.)
The assumption is that there is limited correlation between certain sectors
(utility stocks vs. technology stocks, for example) and that at any given
point there are likely to be one or more sectors that are outperforming
or have the potential to outperform the overall market. A sector rotator
will thus likely stay fully invested over time, but may well frequently
buy and sell in order to move assets from one sector to another. On the
other hand, a market timer will stay fully invested only when he or she
believes the market is going up and will hold varying percentages of cash, up
to 100% cash, depending on his or her level of confidence that the market is
going down.
We integrate these three investment strategies by structuring the portfolio
like a "daisy." The core investment portfolio of a Fund -- the center part of
the daisy -- will consist of funds that we expect to hold for the long term.
We select each Fund's core portfolio by giving priority to managers of funds
that have the potential to do well under various market conditions. We
evaluate a fund's performance potential by close analysis of the historical
record, including determining how the persons who actually managed a fund
performed. Therefore, we may choose a relatively new fund for inclusion in a
Fund's core portfolio if the portfolio manager of the fund has an appropriate
performance record. Although no assurance can be given that a Fund will
achieve its investment objectives, the goal of a fund included in the core
portfolio will be to outperform, on a risk-adjusted basis, a comparable market
average.
<PAGE>
A buy-and-hold strategy will predominate in the selection of the core
portfolio for each Fund. Thus, we will not trade funds in a Fund's core
portfolio frequently, although a fund's proportion of the core portfolio may
vary over time. Further, we may eliminate funds from or introduce funds into
the core portfolio from time to time because of changes in the management of a
fund, long- term shifts in the markets in which a fund invests, or for other
reasons. We anticipate that the percentage of a Fund that will be invested in
its core portfolio will vary over time, but will typically remain between 40
and 60 percent of the Fund's portfolio.
The balance of each Fund's portfolio (the petals of the daisy) will consist of
funds selected primarily based on sector rotation and market timing
strategies.
The "petals" funds will, in our judgment, have the potential to enhance
performance over the short to intermediate term (six to twenty-four months).
We will seek performance enhancement in several ways. During periods of
anticipated upward market moves, performance enhancement may result in
additional investment or greater concentration in funds having higher
volatilities compared with the market than a Fund typically includes in its
portfolio. During such periods, we will also invest in sector funds that will
intensify the impact of certain sectors that, in our judgment, are currently
or are likely to experience stronger performance than other sectors. On the
other hand, during periods of market uncertainty, or anticipated significant
downward pressure, performance enhancement would mean the selection of funds
that historically have been more stable than the general market. Sometimes, we
would move part of the portfolio out of stock or bond funds and into money
market funds or short-term fixed income funds. We would also typically reduce
risk exposure in certain sectors by liquidating or reducing a Fund's
investment in sector funds. In selecting petal funds, we regard the long- term
track record of funds and managers to be a lesser consideration.
Market timing and sector rotation strategies are complex, involve risk that
contemporary economic theory of financial markets suggests may not be fully
compensated measured by expected return, and are highly dependent on
subjective judgments. Further, any strategy designed to enhance returns also
enhances risk of loss and thus carries with it the potential instead for
reducing gains or causing losses. There can be no assurance that in carrying
out market timing and sector rotation strategies, we will successfully enhance
the performance of the Funds.
<PAGE>
Based on our asset allocation analysis and selection of the funds we consider
most suitable to effect our asset allocation decisions, we determine a mix of
asset classes and funds appropriate for each Fund. To a certain extent, we
manage the risk to which the Funds are exposed by varying the concentration of
asset classes in Fund portfolios.
INVESTMENT POLICIES AND RESTRICTIONS
Each Fund has adopted certain fundamental investment policies. These policies
may not be changed without the vote of a majority of that Fund's outstanding
voting securities, as defined under "Other Information -- Voting." Each Fund
has also adopted certain investment policies that are not fundamental and
therefore may be changed by the Board of Trustees of the Trust without
shareholder approval. Under each Fund's fundamental investment policies, no
Fund may (1) invest more than 25% of its total assets in the securities of
mutual funds that concentrate themselves (i.e., invest more than 25% of their
assets) in any one industry. (Through its portfolio investments, however, a
Fund may indirectly invest more than 25% of its assets in one industry), (2)
borrow money, (except that as a temporary measure for extraordinary or
emergency purposes -- including meeting redemptions without having to sell
portfolio securities immediately -- a Fund may borrow from a bank in an amount
not in excess of 5% of the Fund's total assets), or (3) pledge or hypothecate
its assets, except that a Fund may pledge up to 5% of its total assets to
secure such borrowings for temporary or emergency purposes or to effect
redemptions. A Fund will not make additional investments at any time during
which it has outstanding borrowings. Under each Fund's non-fundamental
policies, no Fund may (1) invest more than 25% of its assets in the shares of
any one mutual fund, (2) purchase or otherwise acquire the securities of any
mutual fund (except in connection with a merger, consolidation, acquisition of
substantially all of the assets or reorganization of another investment
company) if, as a result, a Fund and its affiliates (including the other
Funds) would own more than 3% of the total outstanding stock of such mutual
fund, or (3) purchase a security which is not readily marketable if, as a
result, more than 15% of that Fund's assets would consist of such securities.
For this purpose, securities that are not readily marketable include
repurchase agreements maturing in more than seven days (see page 8 to this
Prospectus) and shares of an underlying fund in an amount exceeding 1% of the
total outstanding securities of such mutual fund. See "Risks and Other
Considerations." Each Fund may invest in money market funds. These and other
investment strategies and restrictions are discussed in the section titled
"Risks and Other Considerations" to this Prospectus and in the Statement of
Additional Information.
The underlying funds may, but will not necessarily, have the same investment
objective and policies as the Funds. For example, although the Aggressive
Growth Fund will not borrow money for investment purposes, it may invest up to
25% of its total assets in a mutual fund that borrows money for investment
purposes (i.e., a mutual fund that engages in leveraging). A general
discussion of the investments that may be made by underlying funds and the
risks associated with such investments is found under "Investment Objectives"
and "Investment Policies and Restrictions" and in the section titled "Risks
and Other Considerations" in this Prospectus.
<PAGE>
MANAGEMENT OF THE TRUST
THE TRUSTEES
The business and affairs of the Trust are managed under the direction of the
Board of Trustees. Additional information about the Trustees, as well as the
executive officers of the Trust, may be found in the Trust's Statement of
Additional Information under "Trustees and Officers."
THE ADVISER
We maintain our principal office at 6600 France Avenue South, Suite 565,
Edina, Minnesota 55435. In addition to serving as investment adviser to the
Trust and its Funds, we provide investment supervisory services on a
continuous basis to individuals, pension and profit sharing plans,
corporations, partnerships, trusts and estates (including charitable
organizations) and other financial professionals through our Professional Fund
Advisor service. We specialize in the construction and management of no load
mutual fund portfolios for our clients. As of the date of this Prospectus, we
provide investment management services to over 500 client accounts and have
assets under management in excess of $400 million. Pursuant to an Investment
Management Agreement with the Trust, we provide investment management services
to each Fund. We are responsible for the investment management of each Fund's
assets, including the responsibility for making investment decisions and
placing orders for the purchase and sale of the Funds' investments directly
with the issuers or with brokers or dealers we select. See "Portfolio
Transactions." We also furnish to the Board of Trustees of the Trust, which
controls the Trust and the Funds and has overall responsibility for the
business and affairs of the Trust and the Funds, periodic reports on the
investment performance of the Funds. Unlike most mutual funds, the management
fees paid by the Funds to us include transfer agency, pricing, custodial,
auditing and legal services, and general administrative and other operating
expenses of each Fund except brokerage commissions, taxes, interest, fees and
expenses of non-interested Trustees and extraordinary expenses.
For the services provided to the Funds, we receive from each Fund
a fee, payable monthly, at the annual rate of 0.95% of each Fund's average
daily net assets. We are contractually obligated to reduce our management fee
in an amount equal to each Fund's allocable portion of the fees and expenses
of the Trust's non-interested Trustees. Most investment companies pay lower
investment management fees. Most, if not all of such investment companies,
however, also pay, in addition to an investment management fee, certain of
their own expenses, while we pay almost all of the Funds' expenses, as
described above, out of investment management fees we receive from the Funds.
Robert J. Markman, Chairman of the Board of Trustees and President of the
Trust, serves as the Portfolio Manager of the Trust and is responsible for the
day to day management of the Funds. From 1981-1990, Mr. Markman was a
registered representative of Linsco Private Ledger Financial Services and a
partner of Webb Markman & Co. He has served as President of Markman Capital
since its organization in September 1990.
<PAGE>
THE TRANSFER AGENT
The Trust has retained MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio
45201-5354, to serve as the Funds' transfer agent, dividend paying agent and
shareholder service agent. MGF Service Corp. is a subsidiary of Leshner
Financial, Inc., of which Robert H. Leshner is the controlling shareholder.
Certain of the Trust's officers are also officers of MGF Service Corp.
MGF Service Corp. also provides accounting and pricing services
to the Funds. For its services to the Funds, MGF Service Corp. receives a
monthly fee from Markman Capital out of the investment management fee paid by
each Fund to Markman Capital, for calculating daily net asset value per share
and maintaining such books and records as are necessary to enable MGF Service
Corp. to perform its duties.
THE ADMINISTRATOR
MGF Service Corp. has also been retained to provide administrative services to
the Funds. In this capacity, MGF Service Corp. supplies executive,
administrative and regulatory services, supervises the preparation of the
Funds' tax returns, and coordinates the preparation of reports to shareholders
and reports to and filings with the SEC and state securities authorities.
Markman Capital pays MGF Service Corp. monthly, out of the investment
management fee Markman Capital receives from each Fund, a fee for these
administrative services at the annual rate of 0.04% of aggregate average daily
net assets of the Funds up to $200 million, 0.03% of aggregate average daily
net assets of the Funds between $200 million and $500 million, and 0.02% of
aggregate average daily net assets of the Funds of $500 million or more.
THE CUSTODIAN
The Board of Trustees of the Trust has also approved a Custodian Agreement
between the Trust and Fifth Third Bank pursuant to which the Bank provides
custodial services to the Trust and each of the Funds. The principal business
address of the Bank is 38 Fountain Square Plaza, Cincinnati, Ohio 45202.
<PAGE>
PORTFOLIO TRANSACTIONS
Pursuant to the Investment Management Agreement, Markman Capital places orders
for the purchase and sale of portfolio securities for a Fund's accounts with
brokers or dealers, selected by it in its discretion or directly with issuers
or in privately arranged transactions in which a premium may be paid by a
Fund.
Each Fund is actively managed and has no restrictions upon portfolio turnover.
Each Fund's rate of portfolio turnover may be greater than that of many other
mutual funds. A 100% annual portfolio turnover rate would be achieved if each
security in a Fund's portfolio (other than securities with less than one year
remaining to maturity) were replaced once during the year. Trading also may
result in realization of net short-term capital gains that would not otherwise
be realized, and shareholders are taxed on such gains when distributed from
that Fund at ordinary income tax rates. High turnover increases the
possibility that the Funds would not qualify as regulated investment companies
under Subchapter M of the Internal Revenue Code; a Fund will not qualify as a
regulated investment company if it derives more than 30% of its gross income
from gains (without offset for losses) from the sale or other disposition of
securities held for less than three months. See "Dividends, Distributions and
Taxes." There is no limit on the portfolio turnover rates of the underlying
funds.
DETERMINATION OF
NET ASSET VALUE
The net asset value per share of each Fund is calculated at 4:00 p.m. EST,
Monday through Friday, on each day that the New York Stock Exchange (the
"NYSE") is open for trading (which excludes the following national business
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day). The net
asset value per share of each Fund is calculated by dividing the sum of the
value of the securities held by the Fund plus cash or other assets minus all
liabilities (including estimated accrued expenses) by the total number of
outstanding shares of the Fund, rounded to the nearest cent.
Shares of the underlying funds are valued at their respective net asset values
under the 1940 Act. The underlying funds value securities in their portfolios
for which market quotations are readily available at their current market
value (generally the last reported sale price) and all other securities and
assets at fair value pursuant to methods established in good faith by the
Board of Trustees or Directors of the underlying mutual fund. Money market
funds with portfolio securities that mature in one year or less may use the
amortized cost or penny-rounding methods to value their securities. Securities
having 60 days or less remaining to maturity generally are valued at their
amortized cost, which approximates market value.
<PAGE>
Other assets of each Fund are valued at their current market value
if market quotations are readily available and, if market quotations are not
available, they are valued at fair value pursuant to methods established in
good faith by the Board of Trustees.
HOW TO PURCHASE SHARES
Shares of the Funds are offered as an investment vehicle for individuals,
institutions, corporations and fiduciaries. Each Fund may invest in underlying
funds, which are sold with a sales charge; however, the Funds will use various
quantity discount programs and/or applicable waivers to avoid imposition of
any sales loads. Prospectuses, sales material and applications can be obtained
from MGF Service Corp. at the address and telephone number listed on the back
cover of this Prospectus.
Shares of each Fund are sold without a sales charge at the next price
calculated after receipt of an order in proper form by the Funds. The minimum
initial investment in a Fund is $25,000, except that the Trust reserves the
right, in its sole discretion, to waive the minimum initial investment amount
for certain investors, or to waive or reduce the minimum initial investment
for tax-deferred retirement plans. The minimum subsequent investment is $500.
The minimum initial investment is waived for purchases by Trustees, officers
and employees of the Trust, of MGF Service Corp., and of Markman Capital and
private clients of Markman Capital, including members of such persons'
immediate families. Each Fund also reserves the right to waive the minimum
initial investment for financial intermediaries. All purchase payments are
invested in full and fractional shares. The Trust is authorized to reject any
purchase order.
Shares of each Fund are sold on a continuous basis at the net asset value next
determined after receipt of a purchase order by the Trust. Investors should
note, however, that due to time constraints involved in the pricing of shares
of mutual funds such as the Funds, the net asset value of Fund shares reported
in newspapers will lag the Funds' actual net asset value by one business day.
Purchase orders received by dealers prior to 4:00 p.m. EST on any business
day, and transmitted to the Trust's transfer agent, MGF Service Corp., by 5:00
p.m. EST that day are confirmed at the net asset value determined as of the
close of the regular session of trading on the NYSE on that day. It is the
responsibility of dealers to transmit properly completed orders so that they
will be received by MGF Service Corp. by 5:00 p.m. EST. Broker-dealers or
other agents may charge you a fee for effecting transactions. Direct purchase
orders received by MGF Service Corp. by 4:00 p.m. EST are confirmed at that
day's net asset value. Direct investments received by MGF Service Corp. after
4:00 p.m. and orders received from dealers after 5:00 p.m. are confirmed at
the net asset value next determined on the following business day.
You may open an account and make an initial investment in any Fund by sending
a check and a completed account application form to MGF Service Corp., P.O.
Box 5354, Cincinnati, Ohio 45201-5354. Checks should be made payable to the
Markman MultiFund Trust. An account application kit is included with this
Prospectus.
<PAGE>
The Trust mails to shareholders confirmations of all purchases or redemptions
of shares of the Funds. Certificates representing shares will not be issued.
The Trust reserves the rights to limit the amount of investments and to refuse
to sell to any person.
The Funds' account application contains certain provisions in favor of the
Trust, MGF Service Corp. and certain of their affiliates, excluding such
entities from certain liabilities (including, among others, losses resulting
from unauthorized shareholder transactions) relating to the various services
(for example, telephone redemptions and exchanges) made available to
investors.
If an order to purchase shares is cancelled because your check does not clear,
you will be responsible for any resulting losses or fees incurred by the Trust
or MGF Service Corp. in the transaction.
You may also purchase shares of the Funds by wire. Please call MGF Service
Corp. (Nationwide call toll-free 800-707-2771; in Cincinnati call
513-629-2070) for instructions. You should be prepared to give the name in
which the account is to be established, the address, telephone number, and
taxpayer identification number for the account, and the name of the bank that
will wire the money.
Investments in a Fund will be made at the Fund's net asset value next
determined after a wire is received together with the account information
outlined above. If the Trust does not receive timely and complete account
information, there may be a delay in the investment of money and any accrual
of dividends. To make an initial wire purchase, you must mail a completed
account application to MGF Service Corp. Banks may impose a charge for sending
a wire. There is presently no fee for receipt of wired funds, but MGF Service
Corp. reserves the right to charge shareholders for this service upon thirty
days' prior notice to shareholders.
You may purchase and add shares to your account by mail or by bank wire.
Checks should be sent to MGF Service Corp., P.O. Box 5354, Cincinnati, Ohio
45201-5354. Checks should be made payable or endorsed to the Markman MultiFund
Trust. Bank wires should be sent as outlined above. Each additional purchase
request must contain the account name and number to permit proper crediting.
<PAGE>
SHAREHOLDER SERVICES Contact MGF Service Corp. (Nationwide call toll-free
1-800-707-2771; in Cincinnati call 513-629-2070) for additional information
about the shareholder services described below.
AUTOMATIC WITHDRAWAL PLAN
If the shares in your account have a value of at least $25,000, you may elect
to receive, or may designate another person to receive, monthly, quarterly, or
annual payments in a specified amount. There is no charge for this service.
ACCESS TO THE PORTFOLIO MANAGER
If the shares in your account have a value of at least $100,000, you may
contact Mr. Robert Markman directly by telephone. If you qualify, call MGF
Service Corp. at the above telephone number to obtain your special access
toll-free telephone number direct to Mr. Markman.
TAX-DEFERRED RETIREMENT PLANS
Shares of the Funds are available for purchase in connection with the
following tax-deferred retirement plans:
- -- Keogh Plans for self-employed individuals
- -- Individual retirement account (IRA) plans for individuals and their
non-employed spouses
- -- Qualified pension and profit-sharing plans for employees, including those
profit-sharing plans with a 401(k) provision
- -- 403(b)(7) custodial accounts for employees of public school systems,
hospitals, colleges and other non-profit organizations meeting certain
requirements of the Internal Revenue Code
<PAGE>
AUTOMATIC INVESTMENT PLAN
You may make automatic monthly investments in the Funds from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $25,000 and $500 under the plan. MGF
Service Corp. pays the costs associated with these transfers, but reserves the
right, upon thirty days' written notice, to make reasonable charges for this
service. A depository institution may impose its own charge for debiting your
account, which would reduce the return from an investment in a Fund.
HOW TO REDEEM SHARES
Shares of the Funds may be redeemed on each day that the Trust is open for
business. You will receive the net asset value per share next determined after
receipt by MGF Service Corp. of a redemption request in the form described
below. Payment is ordinarily sent by mail or by wire within three business
days after tender in such form, provided that payment in redemption of shares
purchased by check will be effected only after the check has been collected,
which may take up to fifteen days from the purchase date. To eliminate this
delay, you may purchase shares of the Funds by certified check or by wire.
BY TELEPHONE
Shares of the Funds may also be redeemed by telephone. The proceeds will be
sent by mail to the address designated on your account or wired directly to
your existing account in any commercial bank or brokerage firm in the United
States as designated on the application. To redeem by telephone, call MGF
Service Corp. (Nationwide call toll-free 800-707-2771; in Cincinnati call
513-629-2070). The redemption proceeds will usually be sent by mail or by wire
within three business days after receipt of telephone instructions. IRA
accounts are not redeemable by telephone.
The telephone redemption privilege is automatically available to you. You may
change the bank or brokerage account designated under this procedure at any
time by writing to MGF Service Corp. with the signature guaranteed by any
eligible guarantor institution (including banks, brokers and dealers,
municipal securities brokers and dealers, government securities brokers and
dealers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations) or by completing a
supplemental telephone redemption authorization form. Contact MGF Service
Corp. to obtain this form. Further documentation will be required to change
the designated account if shares are held by a corporation, fiduciary or other
organization.
<PAGE>
Neither the Trust, MGF Service Corp., nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The investor will bear the risk of any such loss. The Trust or
MGF Service Corp. or both will employ reasonable procedures to determine that
telephone instructions are genuine. If the Trust and/or MGF Service Corp. do
not employ such procedures, they may be liable for losses due to unauthorized
or fraudulent instructions. Such procedures may include, among others,
requiring forms of personal identification prior to acting upon telephone
instructions, providing written confirmation of the transactions and/or tape
recording telephone instructions.
BY MAIL
Shares of the Funds may also be redeemed by written request to MGF Service
Corp. The request must state the number of shares or the dollar amount to be
redeemed and the relevant account number. The request must be signed exactly
as your name appears on the Trust's account records. If the shares to be
redeemed have a value of $25,000 or more, your signature must be guaranteed by
any of the eligible guarantor institutions outlined above.
Written redemption requests may also direct that the proceeds be deposited
directly in the bank account or brokerage account designated on an investor's
account application for telephone redemptions. Proceeds of redemptions
requested by mail are mailed within three business days following receipt of
instructions in proper form.
THROUGH BROKER-DEALERS
Shares may also be redeemed by placing a wire redemption request through a
securities broker or dealer. Broker-dealers or other agents may impose a fee
for this service. You will receive the net asset value per share next
determined after receipt by the Trust or its agent of your wire redemption
request. It is the responsibility of broker-dealers to promptly transmit wire
redemption orders.
ADDITIONAL REDEMPTION INFORMATION
For each wire redemption you will be charged an $8 processing fee by the
Trust's Custodian. The Trust reserves the right, upon thirty days' written
notice, to change the processing fee. All charges will be deducted from
shareholder accounts by redemption of shares in the account. Your bank or
brokerage firm may also impose a charge for processing the wire. In the event
that wire transfer of funds is impossible or impracticable, the redemption
proceeds will be sent by mail to the designated account.
<PAGE>
Redemption requests may direct that the proceeds be deposited directly in a
shareholder's account with a commercial bank or other depository institution
by way of an Automated Clearing House (ACH) transaction. There is currently no
charge for ACH transactions. Contact MGF Service Corp. for more information
about ACH transactions.
At the discretion of the Trust, corporate shareholders and other associations
may be required to furnish an appropriate certification authorizing
redemptions to ensure proper authorization. The Trust reserves the right to
require you to close your account if at any time the value of the shares is
less than $25,000 (based on actual amounts invested, unaffected by market
fluctuations) or such other minimum amount as the Trust may from time to time
determine. After notification of the Trust's intention to close your account,
you will be given sixty days to increase the value of your account to the
minimum amount.
The Trust reserves the right to suspend the right of redemption or to postpone
the date of payment for more than three business days under unusual
circumstances as determined by the SEC.
EXCHANGE PRIVILEGE
Shares of the Funds may be exchanged for each other at net asset value. You
may request an exchange by sending a written request to MGF Service Corp. The
request must be signed exactly as your name appears on the Trust's account
records. Exchanges may also be requested by telephone. If you are unable to
execute a transaction by telephone (for example during times of unusual market
activity) you should consider requesting that the exchange be made by mail. An
exchange will be effected at the next determined net asset value after receipt
of a request by MGF Service Corp.
Exchanges may only be made for shares of Funds then offered for sale in your
state of residence and are subject to the applicable minimum initial
investment requirements. The exchange privilege may be modified or terminated
by the Board of Trustees upon 60 days' prior notice to you. An exchange
results in a sale of Fund shares, which may cause you to recognize a capital
gain or loss.
<PAGE>
DIVIDENDS, DISTRIBUTIONS
AND TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). In
any year in which a Fund qualifies as a regulated investment company and
distributes substantially all of its investment company taxable income (which
includes, among other items, the excess of net short-term capital gains over
net long-term capital losses) and its net capital gains (the excess of net
long-term capital gains over net short-term capital losses) the Fund will not
be subject to Federal income tax to the extent it distributes to you such
income and capital gains in the manner required under the Code. Amounts not
distributed on a timely basis in accordance with a calendar year distribution
requirement are subject to a nondeductible 4% excise tax. To avoid imposition
of the excise tax, each Fund must distribute for each calendar year an amount
equal to the sum of (1) at least 98% of its net ordinary income (excluding any
capital gains or losses) for the calendar year, (2) at least 98% of the excess
of its capital gains over capital losses (adjusted for certain ordinary
losses) realized during the one-year period ending October 31 of such year,
and (3) all ordinary income and capital gains for previous years that were not
distributed during such years. A distribution will be treated as paid on
December 31 of the calendar year if it is declared by a Fund in October,
November or December of that year with a record date in such a month and paid
by the Fund during January of the following calendar year. Such distributions
will be taxable to you in the calendar year in which the distributions are
declared, rather than the calendar year in which the distributions are
received. Each Fund intends to distribute its income in accordance with this
requirement to prevent application of the excise tax. Each year the Trust will
notify you of the tax status of dividends and distributions.
Income received by a Fund from a mutual fund in that Fund's portfolio
(including dividends and distributions of short-term capital gains) will be
distributed by the Fund (after deductions for expenses) and will be taxable to
you as ordinary income. Because the Funds are actively managed and may realize
taxable net short-term capital gains by selling shares of a mutual fund in its
portfolio with unrealized portfolio appreciation, investing in a Fund rather
than directly in the underlying funds may result in increased tax liability to
you since the Fund must distribute its gains in accordance with certain rules
under the Code. A Fund's ability to dispose of shares of underlying funds held
less than three months may be limited by requirements relating to a Fund's
qualification as a regulated investment company for federal income tax
purposes.
<PAGE>
Distributions of net capital gains (the excess of net long-term capital gains
over net short-term capital losses) received by a Fund from the underlying
funds, as well as net long-term capital gains realized by a Fund from the
purchase and sale (or redemption) of mutual fund shares or other securities
held by a Fund for more than one year, will be distributed by the Fund and
will be taxable to you as long-term capital gains (even if you have held the
shares for less than one year). If a shareholder who has received a capital
gains distribution suffers a loss on the sale of his or her shares not more
than six months after purchase, the loss will be treated as a long-term
capital loss to the extent of the capital gains distribution received.
Long-term capital gains, including distributions of net capital gains are
currently subject to a maximum federal tax rate of 28% which is less than the
maximum rate imposed on other types of taxable income. Capital gains may be
advantageous since, unlike ordinary income, they may be offset by capital
losses.
For purposes of determining the character of income received by a Fund when an
underlying fund distributes net capital gains to a Fund, the Fund will treat
the distribution as a long-term capital gain, even if the Fund has held shares
of the underlying fund for less than one year. Any loss incurred by a Fund on
the sale of such mutual fund's shares held for six months or less, however,
will be treated as a long-term capital loss to the extent of the gain
distribution.
The tax treatment of distributions from a Fund is the same whether the
distributions are received in additional shares or in cash. Share-holders
receiving distributions in the form of additional shares will have a cost
basis for Federal income tax purposes in each share received equal to the net
asset value of a share of the Fund on the reinvestment date.
A Fund may invest in mutual funds with capital loss carry-forwards. If such a
mutual fund realizes capital gains, it will be able to offset the gains to the
extent of its loss carry -forwards in determining the amount of capital gains
which must be distributed to shareholders. To the extent that gains are offset
in this manner, distributions to a Fund and its shareholders will not be
characterized as capital gain dividends but may be ordinary income.
Depending upon your residence for tax purposes, distributions may also be
subject to state and local taxes, including withholding taxes. You should
consult your own tax adviser regarding the tax consequences of ownership of
shares of a Fund in your particular circumstances.
<PAGE>
The Funds are generally required to withhold Federal income tax at a rate of
31% ("backup withholding") from dividends paid to you if (1) you fail to
furnish the Trust with and to certify your correct taxpayer identification
number or social security number, (2) the Internal Revenue Service (the "IRS")
notifies the Trust that you have failed to report properly certain interest
and dividend income to the IRS and to respond to notices to that effect or (3)
you fail to certify that you are not subject to backup withholding.
Each Fund will distribute investment company taxable income and any net
realized capital gains at least annually. All dividends and distributions will
be reinvested automatically at net asset value in additional shares of the
Fund making the distribution, unless you notify the Fund in writing of your
election to receive distributions in cash.
OTHER INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust on September 7,
1994. The Trust currently consists of three separately managed portfolios --
the Markman Aggressive Growth Fund, the Markman Moderate Growth Fund and the
Markman Conservative Growth Fund. The Board of Trustees of the Trust has the
power to establish additional series of the Trust in the future. The
capitalization of the Trust consists solely of an unlimited number of shares
of beneficial interest with no par value. When issued, shares of the Funds are
fully paid, non-assessable and freely transferable.
Under Massachusetts law, shareholders of the Trust could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Declaration of Trust of the Trust, however, disclaims liability of the
shareholders, Trustees and officers of the Trust for acts or obligations of
the Trust that are binding only upon the assets and property of the Trust and
requires that notice of the disclaimer be given in each contract or obligation
entered into or executed by the Trust or the Trustees. The Declaration of
Trust provides for indemnification out of Trust property for all loss and
expense of any shareholder held personally liable for the obligations of the
Trust. The risk of a shareholder incurring financial loss because of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meet its obligations and is remote.
<PAGE>
VOTING
Shareholders of each Fund have the right to vote for the election of Trustees
and on any matters which by law or the provisions of the Declaration of Trust
they may be entitled to vote upon. The Trust is not required to hold annual
meetings of its shareholders and does not intend to do so. See "Description of
the Trust" in the Statement of Additional Information.
The Declaration of Trust of the Trust provides that the holders of not less
than two-thirds of the outstanding shares of the Trust may remove a person
serving as Trustee either by declaration in writing or at a meeting called for
such purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of any person serving as Trustee if requested in
writing to do so by the holders of not less than 10% of the outstanding shares
of the Trust.
Shares of the Trust entitle their holders to one vote per share
(with proportionate voting for fractional shares). As used in this Prospectus,
the term "vote of a majority of the outstanding shares" of the Fund (or of the
Trust) means the vote of the lesser of: (1) 67% of the shares of the Fund (or
the Trust) present at a meeting of shareholders if the holders of more than
50% of the outstanding shares are present in person or by proxy or (2) more
than 50% of the outstanding shares of the Fund (or the Trust). In compliance
with applicable provisions of the 1940 Act, shares of the mutual funds owned
by the Trust will be voted in the same proportion as the vote of all other
holders of the shares of such funds.
PERFORMANCE INFORMATION
From time to time a Fund may advertise its "average annual total return" in
advertisements or reports to shareholders or prospective shareholders.
Quotations of "average annual total return" will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in a
Fund over periods of 1, 5, and 10 years (up to the life of the Fund). A Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of
a period, assuming no activity in the account other than reinvestment of
dividends and capital gains distributions. A nonstandardized return may also
indicate average annual compounded rates of return over periods other than
those specified for "average annual total return." A nonstandardized quotation
of total return will always be accompanied by a Fund's "average annual total
return" as described above.
<PAGE>
All total return figures will reflect the deduction of a proportional share
of Fund expenses on an annual basis, and will assume that all dividends and
distributions are reinvested when paid. Quotations of total return reflect
only the performance of a hypothetical investment in the Funds during the
particular time period on which the calculations are based. Total return for a
Fund will vary based upon changes in market conditions and the level of the
Fund's expenses and should not be considered an indication of future
performance.
The Funds may also compare their performance with that of other mutual funds
as listed in the rankings prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc., or similar independent services that monitor mutual fund
performance, and with appropriate securities indices, which may assume
reinvestment of dividends but usually do not reflect deductions for
administrative and management costs and expenses. For more complete
information on the methods used to calculate each Fund's total return, see the
Statement of Additional Information. Additional information about the Funds'
performance will be contained in the Funds' Annual Report to Shareholders,
which may be obtained without charge from MGF Service Corp. at the address or
telephone number listed on the back cover of this Prospectus.
USE OF MORNINGSTAR, INC. DATA
THE FUNDS ARE NOT PROMOTED, SPONSORED OR ENDORSED BY, NOR IN ANY WAY
AFFILIATED WITH MORNINGSTAR, INC. MORNINGSTAR, INC. IS NOT RESPONSIBLE FOR
AND HAS NOT REVIEWED THE FUNDS, THIS PROSPECTUS, NOR ANY ASSOCIATED
LITERATURE OR PUBLICATIONS. MORNINGSTAR, INC. MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THEIR ACCURACY, OR COMPLETENESS,
OR OTHERWISE.
MORNINGSTAR, INC. RESERVES THE RIGHT, AT ANY TIME AND WITHOUT NOTICE, TO
ALTER, AMEND, TERMINATE OR IN ANY WAY CHANGE HOW IT CATEGORIZES AND COMPILES
INFORMATION ON MUTUAL FUNDS AND HAS NO OBLIGATION TO TAKE THE NEEDS OF THE
FUNDS, THEIR SHAREHOLDERS OR ANY OTHER PRODUCT OR PERSON INTO CONSIDERATION IN
COMPUTING ITS REPORTS.
MORNINGSTAR, INC.'S PUBLICATION OF ITS VARIOUS REPORTS IN NO WAY SUGGESTS OR
IMPLIES ANY OPINION BY MORNINGSTAR, INC. AS TO THE ATTRACTIVENESS
OR APPROPRIATENESS OF INVESTMENT IN THE FUNDS. MORNINGSTAR, INC. MAKES
NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY, COMPLETENESS,
RELIABILITY, OR OTHERWISE OF ANY DATA INCLUDED IN ITS REPORTS AND USED
HEREIN. MORNINGSTAR, INC. MAKES NO REPRESENTATION OR WARRANTY REGARDING THE
USE, OR THE RESULTS OF USE, OF ITS REPORTS OR ANY DATA IN ITS REPORTS AND
USED HEREIN. MORNINGSTAR, INC. MAKES NO OTHER EXPRESS OR IMPLIED
WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY KIND, INCLUDING,
WITHOUT MEANS OR LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO ANY DATA INCLUDED IN ITS REPORTS AND USED
HEREIN.
<PAGE>
SHAREHOLDER INQUIRIES
All shareholder inquiries should be directed to the Trust at the
telephone number and address shown on the back cover of this Prospectus for
MGF Service Corp.
AUDITORS
Arthur Andersen LLP, 425 Walnut Street, Cincinnati, Ohio 45202, serves as
independent accountant for the Trust and will audit the financial statements
of the Funds annually.
LEGAL COUNSEL
Sullivan & Worcester, Boston, Massachusetts, is legal counsel to the Trust.
- ------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus or in the
Statement of Additional Information, and, if given or made, such other
information or representations must not be relied upon as having been
authorized by the Funds. This Prospectus does not constitute an offering by
the Trust in any jurisdiction in which such offering may not be lawfully made.
- ------------------------------------------------------------------------------
<PAGE>
APPENDIX
RATINGS OF DEBT INSTRUMENTS
STANDARD & POOR'S CORPORATION ("S&P")
CORPORATE BOND RATINGS
An S&P corporate bond rating is a current assessment of the credit worthiness
of an obligor, with respect to a specific obligation. This assessment may take
into consideration obligors such as guarantors, insurers or lessees. The debt
rating is not a recommendation to purchase, sell or hold a security inasmuch
as it does not comment as to market price or suitability for a particular
investor. The ratings are based on current information furnished by the issuer
or obtained by S&P from other sources it considers reliable. S&P does not
perform any audit in connection with the ratings and may, on occasion, rely on
unaudited financial information.
The ratings are based, in varying degrees, on the following considerations:
(a) likelihood of default capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (b) nature of and provisions of the obligation; and
(c) protection afforded by and relative position of the obligation in the
event of bankruptcy reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights. To provide more
detailed indications of credit quality, ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
A provisional rating is sometimes used by S&P. It assumes the
successful completion of the project being financed by the debt being rated
and indicates that payment of debt service requirements is largely or entirely
dependent upon the successful and timely completion of the project. This
rating, however, while addressing credit quality subsequent to completion of
the project, makes no comment on the likelihood of, or the risk of default
upon failure of, such completion.
<PAGE>
Bond ratings are as follows:
AAA -- Bonds rated AAA have the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A -- Bonds rated A have strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC -- Bonds rated BB, B, CCC or CC are regarded on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C -- The rating C is reserved for income bonds on which no interest is being
paid.
D -- Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
<PAGE>
S&P NOTE RATINGS
An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria are used in making that assessment: (a)
Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note), and (b) Source of
payment (the more dependent the issue is on the market for its refinancing,
the more likely it will be treated as a note).
Note ratings are as follows:
SP-1 -- Very strong or strong capacity to pay principal and
interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
Demand Bonds. S&P assigns "Dual" ratings to all long-term debt issues that
have as part of their provisions a demand or double feature. The first rating
addresses the likelihood of repayment of principal and interest as due, and
the second rating addresses only the demand feature. The long-term debt rating
symbols are used for bonds to denote the long-term maturity and the commercial
paper rating symbols are used to denote the put options (for example,
"AAA/A-1+). For the newer "Demand Notes," S&P note rating symbols, combined
with the commercial paper symbols, are used (for example, "SP-1+/A-1+").
<PAGE>
MOODY'S CORPORATE BOND RATINGS
Moody's ratings are as follows:
Aaa -- Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of great amplitude or there may be other elements
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present that suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3, in each generic rating
classification from Aa through Baa in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Ba -- Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments, or of maintenance of
other terms of the contract over any long period of time, may be small.
<PAGE>
Caa -- Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca -- Bonds rated Ca represent obligations that are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
C -- Bonds rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
MOODY'S NOTE RATINGS. Moody's Short-Term Loan Ratings -- Moody's ratings for
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit
risk and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of
major importance in bond risk are of lesser importance over the short run.
Rating symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support, or
demonstrated broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are
ample, although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security elements are
accounted for, but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4 -- This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and, although not
distinctly or predominantly speculative, there is specific risk.
You may use the Investor Application and Request Forms included in the most
recent Markman MultiFunds Quarterly Report to invest directly in the
Markman MultiFunds. The minimum direct investment is $25,000.
<PAGE>
If you want to invest less than $25,000, you may purchase the Markman
MultiFunds through Charles Schwab & Company (1-800-266-5623) Fidelity
Investments (1-800-544-7558), and Jack White and Company (1-800-323-3263),
among others.
FOR ADDITIONAL FORMS OR ANSWERS TO ANY QUESTIONS, call the Markman MultiFunds
at 1-800-707-2771 between the hours of 8:30 AM and 5:00 PM EST.
(In Cincinnati: 513-629-2070).
For a CURRENT UPDATE ON OUR VIEWS ON THE MARKET and what funds are in each of
the portfolios call the Hotline at 1-800-975-5463.
For UPDATED FUND PRICES AS OF THE CLOSE OF THE PREVIOUS DAY, call
1-800-536-8679.
To order additional prospectuses call 1-800-232-4792.
INVESTMENT ADVISER
Markman Capital Management, Inc.
6600 France Avenue South
Suite 565
Minneapolis, Minnesota 55435
ADMINISTRATOR AND TRANSFER AGENT
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
CUSTODIAN
Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45202
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202
LEGAL COUNSEL
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
<PAGE>
The Markman MultiFunds Logo
INVESTMENT ADVISER
Markman Capital Management, Inc.
6600 France Avenue South, Suite 565
Minneapolis, Minnesota 55435
Toll-free: 1-800-395-4848
Telephone: (612) 920-4848
SHAREHOLDER SERVICES
c/o MGF Service Corporation
312 Walnut Street, 21st Floor
Cincinnati, OH 45202-3874
Toll-free: 1-800-707-2771
Telephone: (513) 629-2070
<PAGE>
April 15, 1995
STATEMENT OF ADDITIONAL INFORMATION
MARKMAN MULTIFUND TRUST
312 Walnut Street
21st Floor
Cincinnati, Ohio 45202
(800) 707-2771
This Statement of Additional Information is not a prospectus, but expands upon
and supplements the information contained in the Prospectus of Markman
MultiFund Trust (the "Trust"), dated April 15, 1996, as supplemented from time
to time. The Statement of Additional Information should be read in conjunction
with the Prospectus. The Trust's Prospectus may be obtained by writing to the
Trust at the above address or by telephoning the Trust nationwide toll-free at
800-707-2771.
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TABLE OF CONTENTS
PAGE
I. INVESTMENT OBJECTIVES AND POLICIES.................. 3
II. INVESTMENT RESTRICTIONS............................. 3
III. TRUSTEES AND OFFICERS............................... 5
IV. PRINCIPAL SECURITY HOLDERS.......................... 7
V. INVESTMENT MANAGER.................................. 8
VI. TRANSFER AGENT AND DIVIDEND PAYING AGENT............ 9
VII. REDEMPTION OF SHARES................................ 9
VIII. ADMINISTRATOR....................................... 10
IX. SPECIAL REDEMPTIONS................................. 10
X. CUSTODIAN........................................... 10
XI. PORTFOLIO TRANSACTIONS.............................. 11
XII. PERFORMANCE INFORMATION............................. 11
A. Total Return.................................... 11
B. Non-Standardized Total Return................... 12
C. Other Information Concerning Fund Performance... 12
XIII. DESCRIPTION OF THE TRUST............................ 18
XIV. ADDITIONAL INFORMATION.............................. 19
XV. FINANCIAL STATEMENTS................................. 20
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I. INVESTMENT OBJECTIVES AND POLICIES
Markman MultiFund Trust (the "Trust") is an open-end, non-diversified
management investment company, registered as such under the Investment Company
Act of 1940. The Trust currently consists of three separate portfolios
(series), each with different investment objectives (the "Funds"). The Funds
seek to achieve their investment objectives by investing in shares of other
open-end investment companies ("mutual funds"). As of the date of this
Statement of Additional Information, the Trust's series are:
MARKMAN AGGRESSIVE GROWTH FUND seeks capital appreciation without regard
to current income.
MARKMAN MODERATE GROWTH FUND seeks long-term growth of capital and a
reasonable level of income.
MARKMAN CONSERVATIVE GROWTH FUND seeks to provide current income and low
to moderate growth of capital.
II. INVESTMENT RESTRICTIONS
FUNDAMENTAL INVESTMENT POLICIES. Each Fund has adopted certain
fundamental investment policies. These fundamental investment policies cannot
be changed unless the change is approved by the lesser of (1) 67% of more of
the voting securities present at a meeting, if the holders of more than 50% of
the outstanding voting securities of the Fund are present or represented by
proxy, or (2) more than 50% of the outstanding voting securities of the Fund.
These fundamental policies provide that a Fund may not:
1. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests therein, except that a Fund may purchase
securities issued by issuers, including real estate investment
trusts, which invest in real estate or interests therein.
2. Make loans.
3. Purchase the securities of an issuer if one or more of the Trustees
or officers of the Trust individually owns more than one half of 1%
of the outstanding securities of such issuer and together
beneficially own more than 5% of such securities.
4. Make short sales of securities
5. Invest in puts, calls, straddles, spreads or combinations
thereof.
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6. Purchase securities on margin, except that a Fund may obtain such
short-term credits as may be necessary for the clearance of
purchases and sales of securities.
7. Purchase or acquire commodities or commodity contracts.
8. Act as an underwriter of securities of other issuers except to the
extent that in selling portfolio securities, it may be deemed to be
an underwriter for purposes of the Securities Act of 1933.
9. Issue senior securities, except as appropriate to evidence
indebtedness that the Fund is permitted to incur.
10. Purchase or sell interests in oil, gas or other mineral
leases, exploration or development programs (although it may
invest in companies which own or invest in such interests).
11. Invest more than 25% of its total assets in the securities
of investment companies which themselves concentrate
although each Fund will itself concentrate its investments
in investment companies.
As non-fundamental policies a Fund may not:
1. Invest in securities for the purpose of exercising control over
or management of the issuer.
2. Purchase securities of any closed-end investment company or any
investment company the shares of which are not registered in the
United States.
3. Invest in warrants, valued at the lower of cost or market value, in
excess of 5% of the value of its net assets. Included within that
amount, but not to exceed 2% of a Fund's net assets, may be warrants
which are not listed on the New York Stock Exchange or the American
Stock Exchange.
4. Invest in real estate limited partnerships.
The mutual funds in which the Funds may invest may, but need not, have
the same investment policies as a Fund. Although all of the Funds may from
time to time invest in shares of the same underlying mutual fund, the
percentage of each Fund's assets so invested may vary, and Markman Capital
will determine that such investments are consistent with the investment
objectives and policies of each Fund. The investments that may, in general, be
made by underlying funds in which the Funds may invest, as well as the risks
associated with such investments, are described in the Prospectus and in the
Appendix to the Prospectus.
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III. TRUSTEES AND OFFICERS
The following is a list of the Trustees and executive officers of the
Trust and their aggregate compensation from the Trust for the fiscal year
ended December 31, 1995. As described below, certain of the executive officers
of the Trust are affiliates of organizations that provide services to the
Trust. These organizations are Markman Capital Management, Inc., the Funds'
investment adviser, and MGF Service Corp., the Funds' transfer agent and
administrator. Emilee Markman is married to Robert J. Markman.
COMPENSATION
NAME AGE POSITION HELD FROM TRUST
- ---- --- ------------- ----------
Richard Edwin Dana 49 Trustee $ 6,000
+Peter Dross 39 Trustee 6,000
*Judith E. Fansler 45 Trustee 0
+Susan Gale 43 Trustee 6,000
Susan M. Hawkes 31 Trustee 6,000
*Richard W. London 53 Trustee 0
Melinda S. Machones 41 Trustee 6,000
*Emilee Markman 42 Trustee 6,000
*Robert J. Markman 44 Chairman of the Board 0
of Trustees and President
+Michael J. Monahan 45 Trustee 5,250
Robert G. Dorsey 39 Vice President 0
Mark J. Seger 34 Treasurer 0
John F. Splain 39 Secretary 0
* An "interested person" of the Trust as such term is defined in the
Investment Company Act of 1940.
+ Member of Audit Committee.
The principal occupations of the Trustees and executive officers of
the Trust during the past five years are set forth below:
SUSAN M. HAWKES, 3311 139th Avenue, N.W., Andover, Minnesota 55304
- -President/Sole Proprietor, Anything is Possible and kidvironments, Andover,
Minnesota (Anything is Possible is a consulting firm offering customized
experiential work shops for personal effectiveness, team building and
leadership; kidvironments creates custom interior and exterior environments
for children of any age) (August 1994-Present); Contract Employee, Lifespring,
San Rafael, California (Lifespring offers experiential personal effectiveness
courses internationally) (August 1994- Present); Executive Vice President,
Personal Empowerment Resource Center! ("PERC!"), Minneapolis, Minnesota (PERC!
offered experiential personal effectiveness courses) (April 1992-July 1994);
Director of Marketing, The Gaughan Companies, Coon Rapids, Minnesota (real
estate management and development) (November 1989 - January 1992).
RICHARD EDWIN DANA, 748 Goodrich Avenue, Saint Paul, Minnesota 55105
- -Managing Member, JET Construction and Remodeling L.L.C.
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PETER DROSS, 2424 Mendelssohn Lane, Golden Valley, Minnesota 55427
- -Director of Development, The Center for Victims of Torture, Minneapolis,
Minnesota (provider of treatment and rehabilitation services to survivors of
politically-motivated torture (May 1993-Present); Executive Director,
Minneapolis Chamber Symphony (September 1990-December 1992).
JUDITH E. FANSLER, 6600 France Avenue South, Suite 565, Edina,
Minnesota 55435 -- Chief Operating Officer, Markman Capital Management,
Inc.
SUSAN GALE, 235 King Creek Road, Golden Valley, Minnesota 55416
- -Homemaker.
RICHARD W. LONDON, 6600 France Avenue South, Suite 565, Edina,
Minnesota 55435 -- Chief Financial Officer, Markman Capital Management,
Inc. (December 1991-Present); Registered Representative, Paine Webber
(broker-dealer) (May 1989-December 1991).
MELINDA S. MACHONES, 2138 Ponderosa Circle, Duluth, Minnesota 55811 --
Director of Information Technology, College of St. Scholastica (December
1994 to Present); Principal, INDUS Systems (computer consulting) (September
1993-Present); Manager, International Business Machines Corporation (1977-
1993).
EMILEE MARKMAN, 5320 Kellogg Avenue South, Edina, Minnesota 55425
- -Student (January 1994 - Present); Registered Representative, American Asset
Management, Inc. (April 1990 - December 1993).
ROBERT J. MARKMAN, 6600 France Avenue South, Edina, Suite 565,
Minnesota 55435 -- President, Treasurer and Secretary, Markman Capital
Management, Inc.
MICHAEL J. MONAHAN, One Shelby Place, St. Paul, Minnesota 55116 --
Vice President, External Relations, Ecolab, Inc. (June 1994 - Present)
(provider of premium institutional cleaning and sanitizing products and
services worldwide); Vice President, Investor Relations, Ecolab, Inc. (May
1992 - June 1994); Director, Strategic Planning, Ecolab, Inc. (July 1989 -
May 1992).
ROBERT G. DORSEY, 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45201 -- President and Treasurer of MGF Service Corp. (a registered
transfer agent) and Treasurer of Midwest Group Financial Services, Inc. (a
registered broker-dealer and investment adviser) and Leshner Financial,
Inc. (a financial services company and parent of MGF Service Corp. and
Midwest Group Financial Services, Inc.). He is also Vice President of
Brundage, Story and Rose Investment Trust, Leeb Personal Finance Investment
Trust and PRAGMA Investment Trust and Assistant Vice President of
Williamsburg Investment Trust, The Tuscarora Investment Trust, Schwartz
Investment Trust and Fremont Mutual Funds, Inc. (all of which are
registered investment companies).
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MARK J. SEGER, 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45201
- -- Vice President of Leshner Financial, Inc. and MGF Service Corp. He is also
Treasurer of Midwest Trust, Midwest Group Tax Free Trust, Midwest Strategic
Trust, Brundage, Story and Rose Investment Trust, Leeb Personal Finance
Investment Trust, PRAGMA Investment Trust and Williamsburg Investment Trust,
Assistant Treasurer of Schwartz Investment Trust and The Tuscarora Investment
Trust and Assistant Secretary, Fremont Mutual Funds, Inc. (all of which are
registered investment companies).
JOHN F. SPLAIN, 312 Walnut Street, 21st Floor, Cincinnati, Ohio 45201
- -- Secretary and General Counsel of MGF Service Corp., Midwest Group Financial
Services, Inc. and Leshner Financial, Inc. He is also Secretary of Midwest
Trust, Midwest Group Tax Free Trust, Midwest Strategic Trust, Brundage, Story
and Rose Investment Trust, Leeb Personal Finance Investment Trust, PRAGMA
Investment Trust, The Tuscarora Investment Trust and Williamsburg Investment
Trust and Assistant Secretary of Schwartz Investment Trust and Fremont Mutual
Funds, Inc.
The Trustees who are not employed by the Adviser each receive a
$3,000 annual retainer to be paid $750 per quarter, plus a $750 fee for each
Board meeting attended.
The Trust's Declaration of Trust provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved as a result of
their positions with the Trust, unless, as to liability to the Trust or its
shareholders, it is finally adjudicated that they engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in their offices, or unless with respect to any other matter it is
finally adjudicated that they did not act in good faith in the reasonable
belief that their actions were in the best interests of the Trust and its
Funds. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination, based upon
a review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent counsel, that such officers or
Trustees have not engaged in willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties.
IV. PRINCIPAL SECURITY HOLDERS
As of March 29, 1996, Charles Schwab & Co., Inc., 101 Montgomery
Street, San Francisco, California, owned of record 25.6% of the outstanding
shares of the Markman Aggressive Growth Fund, 27.0% of the outstanding shares
of the Markman Moderate Growth Fund and 21.9% of the outstanding shares of the
Markman Conservative Growth Fund. As of that date, Professional Associates
Inc. Profit Sharing Plan, 3266 North Meridian Street, Indianapolis, Indiana
46208, owned of record 6.0% of the outstanding shares of the Markman
Conservative Growth Fund.
As of March 29, 1996, the Trustees and officers of the Trust as a
group owned of record and beneficially less than 1% of the outstanding shares
of the Trust and of each Fund.
V. INVESTMENT MANAGER
Markman Capital Management, Inc. ("Markman Capital") serves as
investment manager to the Trust and its Funds pursuant to a written investment
management agreement. Markman Capital is a Minnesota corporation organized in
1990, and is a registered investment adviser under the Investment Advisers Act
of 1940, as amended. Robert J. Markman, Chairman of the Board of Trustees and
President of the Trust, is President, Treasurer and Secretary of Markman
Capital. Richard W. London and Judith E. Fansler, employees of Markman
Capital, also serve as Trustees of the Trust.
Certain services provided by Markman Capital under the investment
management agreement are described in the Prospectus. In addition to those
services, Markman Capital may, from time to time, provide the Funds with
office space for managing their affairs, with the services of required
executive personnel, and with certain clerical services and facilities. These
services are provided without reimbursement by the Funds for any costs
incurred. As compensation for its services, each Fund pays Markman Capital a
fee based upon average daily net asset value. This fee is computed daily and
paid monthly. The rate at which the fee is paid is described in the
Prospectus. For the fiscal period ended December 31, 1995, the Markman
Aggressive Growth Fund, the Markman Moderate Growth Fund and the Markman
Conservative Growth Fund paid advisory fees of $173,422, $202,419 and $38,783,
respectively.
Markman Capital pays out of the investment management fees it
receives from the Funds, all the expenses of the Funds except brokerage
commissions, taxes, interest, fees and expenses of the non-interested Trustees
of the Trust and extraordinary expenses. Markman Capital is contractually
required to reduce its management fee in an amount equal to each Fund's
allocable portion of the fees and expenses of the non-interested Trustees. The
investment management agreement with Markman Capital provides that if the
total expenses of a Fund in any fiscal year exceed the permissible limits
applicable to the Fund in any state in which shares of the Fund are then
qualified for sale, the compensation due Markman Capital for such fiscal year
shall be reduced by the amount of such excess by a reduction or refund thereof
at the time such compensation is payable after the end of each calendar month
during such fiscal year of the Fund, subject to readjustment during the Fund's
fiscal year. Currently, the only state expense limitation provision applicable
to the Funds limits each Fund's expenses to 2 1/2% of the first $30 million of
average net assets, 2% of the next $70 million of average net assets and 1
1/2% of any remaining average net assets. Taxes, brokerage costs, interest
expenses and extraordinary expenses are excluded from this limitation.
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By its terms, the Trust's investment management agreement will remain
in effect through January 19, 1997 and from year to year thereafter, subject
to annual approval by (a) the Board of Trustees or (b) a vote of the majority
of a Fund's outstanding voting securities; provided that in either event
continuance is also approved by a majority of the Trustees who are not
interested persons of the Trust, by a vote cast in person at a meeting called
for the purpose of voting such approval. The Trust's investment management
agreement may be terminated at any time, on sixty days' written notice,
without the payment of any penalty, by the Board of Trustees, by a vote of the
majority of a Fund's outstanding voting securities, or by Markman Capital. The
investment management agreement automatically terminates in the event of its
assignment, as defined by the Investment Company Act of 1940 and the rules
thereunder.
VI. TRANSFER AGENT AND DIVIDEND PAYING AGENT
MGF Service Corp., a subsidiary of Leshner Financial, Inc., serves as
the Trust's transfer and dividend paying agent and performs shareholder
service activities. The address of MGF Service Corp is P.O. Box 5354,
Cincinnati, Ohio 45201-5354. The services of MGF Service Corp. are provided
pursuant to a Transfer Agency and Service Agreement among the Trust, Markman
Capital and MGF Service Corp. Pursuant to such Agreement, MGF Service Corp.
will receive from Markman Capital, with respect to each Fund, a fee of $15 per
account per year, with a minimum payment of $1200 per Fund per month. MGF
Service Corp. also receives from Markman Capital, out of the investment
management fee paid by each Fund to Markman Capital, $2500 per month when the
Fund's average daily net assets are less than $100 million, $3000 per month
when the Fund's average daily net assets are between $100 million and $200
million and $3500 per month when the Fund's average daily net assets are $200
million or more for calculating daily net asset value per share and
maintaining such books and records as are necessary to enable MGF Service
Corp. to perform its duties. MGF Service Corp. also receives reimbursement
under the Transfer Agency and Service Agreement for certain out-of-pocket
expenses incurred in rendering such services.
VII. REDEMPTION OF SHARES
Detailed information on redemption of shares is included in the
Prospectus. The Trust may suspend the right to redeem its shares or postpone
the date of payment upon redemption for more than three business days (i) for
any period during which the New York Stock Exchange is closed (other than
customary weekend or holiday closings) or trading on the exchange is
restricted; (ii) for any period during which an emergency exists as a result
of which disposal by a Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for a Fund fairly to determine
the value of its net assets; or (iii) for such other periods as the Securities
and Exchange Commission may permit for the protection of shareholders of the
Trust.
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VIII. ADMINISTRATOR
The Board of Trustees of the Trust has approved an Administrative
Services Agreement among the Trust, MGF Service Corp. and Markman Capital
pursuant to which MGF Service Corp. serves as Administrator to the Trust and
to each of the Funds. The administrative services necessary for the operation
of the Trust and its Funds provided by MGF Service Corp. include among other
things (i) preparation of shareholder reports and communications, (ii)
regulatory compliance, such as reports to and filings with the Securities and
Exchange Commission and state securities commissions and (iii) general
supervision of the operation of the Trust and its Funds, including
coordination of the services performed by Markman Capital, the transfer agent,
custodian, independent accountants, legal counsel and others. In addition, MGF
Service Corp. furnishes office space and facilities required for conducting
the business of the Trust and pays the compensation of the Trust's officers
and employees affiliated with MGF Service Corp. For these services, MGF
Service Corp. receives from Markman Capital out of the investment advisory fee
paid to Markman Capital by each Fund a fee, as described under "The
Administrator" in the Prospectus. For the fiscal period ended December 31,
1995, Markman Capital paid administrative fees of $66,578 to MGF Service Corp.
MGF Service Corp. is a wholly-owned subsidiary of Leshner Financial,
Inc. and its affiliates currently provide administrative and distribution
services for certain other registered investment companies. The Funds will
not invest in these funds or in any other fund which may in the future be
affiliated with MGF Service Corp. or any of its affiliates. The principal
business address of MGF Service Corp. is 312 Walnut Street, 21st Floor,
Cincinnati, Ohio 45202-5354.
IX. SPECIAL REDEMPTIONS
If the Board of Trustees of the Trust determines that it would be
detrimental to the best interests of the remaining shareholders of a Fund to
make payment wholly or partly in cash, that Fund may pay the redemption price
in whole or in part by a distribution in kind of securities (mutual fund
shares) from the portfolio of that Fund, instead of in cash, in conformity
with applicable rules of the Securities and Exchange Commission. The Trust
will, however, redeem shares solely in cash up to the lesser of $250,000 or 1%
of its net assets during any 90-day period for any one shareholder. The
proceeds of redemption may be more or less than the amount invested and,
therefore, a redemption may result in a gain or loss for federal income tax
purposes.
X. CUSTODIAN
Pursuant to a Custodian Agreement between the Trust, The Fifth Third
Bank and Markman Capital, The Fifth Third Bank provides custodial services to
the Trust and each of the Funds. The principal business address of The
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Fifth Third Bank is 38 Fountain Square Plaza, Cincinnati, Ohio 45202.
XI. PORTFOLIO TRANSACTIONS
Markman Capital, is responsible for decisions to buy and sell
securities for the Funds and for the placement of the Funds' portfolio
business and negotiation of commissions, if any, paid on these transactions.
The Funds will arrange to be included within a class of investors
entitled not to pay sales charges by purchasing load fund shares under letters
of intent, rights of accumulation, cumulative purchase privileges and other
quantity discount programs.
XII. PERFORMANCE INFORMATION
A. TOTAL RETURN
From time to time, quotations of a Fund's performance may be included
in advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures may be calculated in the following
manner:
Total return is computed by finding the average annual compounded rates of
return over the designated periods that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the designated
period assuming a hypothetical $1,000 payment made at the
beginning of the designated period
The calculation set forth above is based on the further assumptions that:
(i) all dividends and distributions of a Fund during the period were
reinvested at the net asset value on the reinvestment dates; and (ii) all
recurring expenses that were charged to all shareholder accounts during the
applicable period were deducted.
Total returns quoted in advertising reflect all aspects of a Fund's
return, including the effect of reinvesting dividends and capital gain
distributions, and any change in the Fund's net asset value per share (NAV)
over the period. Average annual returns are calculated by determining the
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growth or decline in value of a hypothetical historical investment in a Fund
over a stated period, and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant over the period. For example, a cumulative return
of 100% over ten years would produce an average annual return of 7.18%, which
is the steady annual return rate that would equal 100% growth on a compounded
basis in ten years. While average annual returns are a convenient means of
comparing investment alternatives, investors should realize that a Fund's
performance is not constant over time, but changes from year to year, and that
average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
B. NONSTANDARDIZED TOTAL RETURN
In addition to the performance information described above, a Fund
may provide total return information for designated periods, such as for the
most recent rolling six months or most recent rolling twelve months. A Fund
may quote unaveraged or cumulative total returns reflecting the simple change
in value of an investment over a stated period. Average annual and cumulative
total returns may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments, and/or a series
of redemptions over any time period. Total returns may be broken down into
their components of income and capital (including capital gains and changes in
share price) in order to illustrate the relationship of these factors and
their contributions to total return. Total returns and other performance
information may be quoted numerically or in a table, graph or similar
illustration.
The total returns of the Funds for the period from the initial public
offering of shares on January 26, 1995 through December 31, 1995 were 31.21%,
24.50% and 18.00% for the Markman Aggressive Growth Fund, the Markman Moderate
Growth Fund and the Markman Conservative Growth Fund, respectively.
C. OTHER INFORMATION CONCERNING FUND PERFORMANCE
A Fund may quote its performance in various ways, using various types
of comparisons to market indices, other funds or investment alternatives, or
to general increases in the cost of living. All performance information
supplied by a Fund in advertising is historical and is not intended to
indicate future returns. A Fund's share prices and total returns fluctuate in
response to market conditions and other factors, and the value of a Fund's
shares when redeemed may be more or less than their original cost.
A Fund may compare its performance over various periods to various
indices or benchmarks, including the performance record of the Standard &
Poor's 500 Composite Stock Price Index (S&P), the Dow Jones Industrial Average
(DJIA), the NASDAQ Industrial Index, the Ten Year Treasury Benchmark and the
cost of living (measured by the Consumer Price Index, or CPI) over the same
period. Comparisons may also be made to yields on certificates of deposit,
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treasury instruments or money market instruments. The comparisons to the S&P
and DJIA show how such Fund's total return compared to the record of a broad
average of common stock prices (S&P) and a narrower set of stocks of major
industrial companies (DJIA). The Fund may have the ability to invest in
securities or underlying funds not included in either index, and its investment
portfolio may or may not be similar in composition to the indices. Figures for
the S&P and DJIA are based on the prices of unmanaged groups of stocks, and
nlike the Fund's returns, their returns do not include the effect of paying
brokerage commissions and other costs of investing.
Comparisons may be made on the basis of a hypothetical initial
investment in the Fund (such as $1,000), and reflect the aggregate cost of
reinvested dividends and capital gain distributions for the period covered
(that is, their cash value at the time they were reinvested). Such comparisons
may also reflect the change in value of such an investment assuming
distributions are not reinvested. Tax consequences of different investments
may not be factored into the figures presented.
A Fund's performance may be compared in advertising to the
performance of other mutual funds in general or to the performance of
particular types of mutual funds, especially those with similar objectives.
Other groupings of funds prepared by Lipper Analytical Services, Inc.
("Lipper") and other organizations may also be used for comparison to the
Fund. Although Lipper and other organizations such as Investment Company
Data, Inc. ("ICD"), CDA Investment Technologies, Inc. ("CDA") and
Morningstar Investors, Inc. ("Morningstar"), include funds within various
classifications based upon similarities in their investment objectives and
policies, investors should be aware that these may differ significantly
among funds within a grouping.
From time to time a Fund may publish the ranking of the performance
of its shares by Morningstar, an independent mutual fund monitoring service
that ranks mutual funds, including the Fund, in broad investment categories
(equity, taxable bond, tax-exempt and other) monthly, based upon each Fund's
one, three, five and ten-year average annual total returns (when available)
and a risk adjustment factor that reflects Fund performance relative to
three-month U.S. treasury bill monthly returns. Such returns are adjusted for
fees and sales loads. There are five ranking categories with a corresponding
number of stars: highest (5), above average (4), neutral (3), below average
(2) and lowest (1). Ten percent of the funds, series or classes in an
investment category receive 5 stars, 22.5% receive 4 stars, 35% receive 3
stars, 22.5% receive 2 stars, and the bottom 10% receive one star. Morningstar
ranks the shares of the Fund in relation to other taxable bond funds.
From time to time, in reports and promotional literature, a Fund's
yield and total return will be compared to indices of mutual funds and bank
deposit vehicles such as Lipper's "Lipper - Fixed Income Fund Performance
Analysis," a monthly publication which tracks net assets, total return, and
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yield on approximately 1,700 fixed income mutual funds in the United States.
Ibbotson Associates, CDA Wiesenberger and F.C. Towers are also used for
comparison purposes as well as the Russell and Wilshire Indices. Comparisons
may also be made to Bank Certificates of Deposit, which differ from mutual
funds, such as the Funds, in several ways. The interest rate established by
the sponsoring bank is fixed for the term of a CD, there are penalties for
early withdrawal from CDs, and the principal on a CD is insured. Comparisons
may also be made to the 10 year Treasury Benchmark.
Performance rankings and ratings reported periodically in national
financial publications such as Money Magazine, Forbes, Business Week, The Wall
Street Journal, Micropal, Inc., Morningstar, Stanger's, Barron's, etc.
will also be used.
Ibbotson Associates of Chicago, Illinois (Ibbotson) and others
provide historical returns of the capital markets in the United States. A Fund
may compare its performance to the long-term performance of the U.S. capital
markets in order to demonstrate general long-term risk versus reward
investment scenarios. Performance comparisons could also include the value of
a hypothetical investment in common stocks, long-term bonds or treasuries. A
Fund may discuss the performance of financial markets and indices over various
time periods.
The capital markets tracked by Ibbotson are common stocks, small
capitalization stocks, long-term corporate bonds, intermediate-term government
bonds, long-term government bonds, Treasury Bills, and the U.S. rate of
inflation. These capital markets are based on the returns of several different
indices. For COMMON STOCKS the S&P is used. For SMALL CAPITALIZATION STOCKS,
return is based on the return achieved by Dimensional Fund Advisors (DFA)
Small Company Fund. This fund is a marketvalue-weighted index of the ninth and
tenth decimals of the New York Stock Exchange (NYSE), plus stocks listed on
the American Stock Exchange (AMEX) and over-the-counter (OTC) with the same or
less capitalization as the upper bound of the NYSE ninth decile.
LONG-TERM CORPORATE BOND returns are based on the performance of the
Salomon Brothers Long-Term-High-Grade Corporate Bond Index which includes
nearly all Aaa- and Aa-rated bonds. Returns on INTERMEDIATE-TERM GOVERNMENT
BONDS are based on a one-bond portfolio constructed each year, containing a
bond which is the shortest noncallable bond available with a maturity not less
than 5 years. This bond is held for the calendar year and returns are
recorded. Returns on LONG-TERM GOVERNMENT BONDS are based on a one-bond
portfolio constructed each year, containing a bond that meets several
criteria, including having a term of approximately 20 years. The bond is held
for the calendar year and returns are recorded. Returns on U.S. TREASURY BILLS
are based on a one-bill portfolio constructed each month, containing the
shortest-term bill having not less than one month to maturity. The total
return on the bill is the month-end price divided by the previous month-end
price, minus one. Data up to 1976 is from the U.S. Government Bond file at the
University of Chicago's Center for Research in Security Prices; the Wall
Street Journal is the source thereafter.
<PAGE>
INFLATION rates are based on the CPI. Ibbotson calculates total returns in the
same method as the Fund.
Other widely used indices that the Funds may use for comparison
purposes include the Lehman Bond Index, the Lehman Aggregate Bond Index, The
Lehman GNMA Single Family Index, the Lehman Government/Corporate Bond Index,
the Salomon Brothers Long-Term High Yield Index, the Salomon Brothers
Non-Government Bond Index, the Salomon Brothers Non-U.S. Government Bond
Index, the Salomon Brothers World Government Bond Index and the J.P. Morgan
Government Bond Index. The Salomon Brothers World Government Bond Index
generally represents the performance of government debt securities of various
markets throughout the world, including the United States. Lehman
Government/Corporate Bond Index generally represents the performance of
intermediate and long-term government and investment grade corporate debt
securities. The Lehman Aggregate Bond Index measures the performance of U.S.
corporate bond issues, U.S. government securities and mortgage-backed
securities. The J.P. Morgan Government Bond Index generally represents the
performance of government bonds issued by various countries including the
United States. The foregoing bond indices are unmanaged indices of securities
that do not reflect reinvestment of capital gains or take investment costs
into consideration, as these items are not applicable to indices.
The Fund may also discuss in advertising the relative performance of
various types of investment instruments, such as stocks, treasury securities
and bonds, over various time periods and covering various holding periods.
Such comparisons may compare these investment categories to each other or to
changes in the CPI.
A Fund may advertise examples of the effects of periodic investment
plans, including the principle of dollar cost averaging. In such a program,
the investor invests a fixed dollar amount in a fund at periodic intervals,
thereby purchasing fewer shares when prices are high and more shares when
prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share can
be lower than if fixed numbers of shares had been purchased at those
intervals. In evaluating such a plan, investors should consider their ability
to continue purchasing shares through periods of low price levels.
The Funds may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $1,000 investment
earning a taxable return of 10% annually, compounded monthly, would have an
after-tax value of $2,009 after ten years, assuming tax was deducted from the
return each year at a 31% rate. An equivalent tax-deferred investment would
have an after-tax value of $2,178 after ten years, assuming tax was deducted
at a 31% rate from the deferred earnings at the end of the ten year period.
Evaluations of Fund performance made by independent sources may also
<PAGE>
be used in advertisements concerning the Funds, including reprints of, or
selections from, editorials or articles about the Fund. These editorials or
articles may include quotations of performance from other sources such as
Lipper or Morningstar. Sources for Fund performance information and articles
about the Funds may include the following:
BANXQUOTE, an on-line source of national averages for leading money
market and bank CD interest rates, published on a weekly basis by
Masterfund, Inc. of Wilmington, Delaware.
BARRON'S, a Dow Jones and Company, Inc. business and financial weekly
that periodically reviews mutual fund performance data.
BUSINESS WEEK, a national business weekly that periodically reports
the performance rankings and ratings of a variety of mutual funds investing
abroad.
CDA INVESTMENT TECHNOLOGIES, INC., an organization which provides
performance and ranking information through examining the dollar results of
hypothetical mutual fund investments and comparing these results against
appropriate market indices.
CHANGING TIMES. THE KIPLINGER MAGAZINE, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
CONSUMER DIGEST, a monthly business/financial magazine that includes
a "Money Watch" section featuring financial news.
FINANCIAL WORLD, a general business/financial magazine that includes
a "Market Watch" department reporting on activities in the mutual fund
industry.
FORBES, a national business publication that from time to time
reports the performance of specific investment companies in the mutual fund
industry.
FORTUNE, a national business publication that periodically rates the
performance of a variety of mutual funds.
IBC/DONOGHUES' MONEY FUND REPORT, a weekly publication of the
Donoghue Organization, Inc. of Holliston, Massachusetts, reporting on the
performance of the nation's money market funds, summarizing money market fund
activity, and including certain averages as performance benchmarks,
specifically "Donoghue's Money Fund Average," and "Donoghue's Government
Money Fund Average."
IBBOTSON ASSOCIATES, INC., a company specializing in investment
research and data.
INVESTMENT COMPANY DATA, INC., an independent organization which
<PAGE>
provides performance ranking information for broad classes of mutual funds.
INVESTOR'S DAILY, a daily newspaper that features financial,
economic, and business news.
LIPPER ANALYTICAL SERVICES, INC.'S MUTUAL FUND PERFORMANCE ANALYSIS,
a weekly publication of industry-wide mutual fund averages by type of fund.
MONEY, a monthly magazine that from time to time features both
specific funds and the mutual fund industry as a whole.
MUTUAL FUND VALUES, a bi-weekly Morningstar, Inc. publication that
provides ratings of mutual funds based on fund performance, risk and
portfolio characteristics.
THE NEW YORK TIMES, a nationally distributed newspaper which
regularly covers financial news.
PERSONAL INVESTING NEWS, a monthly news publication that often
reports on investment opportunities and market conditions.
PERSONAL INVESTOR, a monthly investment advisory publication that
includes a "Mutual Funds Outlook" section reporting on mutual fund performance
measures, yields, indices and portfolio holdings.
SUCCESS, a monthly magazine targeted to the world of entrepreneurs
and growing business, often featuring mutual fund performance data.
USA TODAY, a nationally distributed newspaper.
U.S. NEWS AND WORLD REPORT, a national business weekly that
periodically reports mutual fund performance data.
WALL STREET JOURNAL, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
WIESENBERGER INVESTMENT COMPANIES SERVICES, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' background, management policies, salient features,
management results, income and dividend records, and price ranges.
WORKING WOMAN, a monthly publication that features a "Financial
Workshop" section reporting on the mutual fund/financial industry.
When comparing yield, total return and investment risk of shares of a
Fund with other investments, investors should understand that certain other
investments have different risk characteristics than an investment in shares
of the Funds. For example, certificates of deposit may have fixed rates of
return and may be insured as to principal and interest by the FDIC, while a
Fund's returns will fluctuate and its share values and
<PAGE>
returns are not guaranteed. Money market accounts offered by banks also
may be insured by the FDIC and may offer stability of principal. U.S.
Treasury securities are guaranteed as to principal and interest by the full
faith and credit of the U.S. government. Money market mutual funds may
seek to offer a fixed price per share.
The performance of the Funds is not fixed or guaranteed. Performance
quotations should not be considered to be representative of performance of a
Fund for any period in the future. The performance of a Fund is a function of
many factors including its earnings, expenses and number of outstanding
shares. Fluctuating market conditions, purchases and sales of underlying
funds, sales and redemptions of shares of beneficial interest, and changes in
operating expenses are all examples of items that can increase or decrease a
Fund's performance.
XIII. DESCRIPTION OF THE TRUST
The Trust is an open-end non-diversified series management investment
company established as an unincorporated business trust under the laws of The
Commonwealth of Massachusetts pursuant to a Declaration of Trust dated
September 7, 1994.
The Trustees of the Trust have authority to issue an unlimited number
of shares of beneficial interest in an unlimited number of series (each, a
"Series"), each share without par value. Currently, the Trust consists of
three Series. Each share in a particular Series represents an equal
proportionate interest in that Series with each other share of that Series and
is entitled to such dividends and distributions as are declared by the
Trustees of the Trust. Upon any liquidation of a Series, shareholders of that
Series are entitled to share pro rata in the net assets of that Series
available for distribution. Shareholders in one of the Series have no interest
in, or rights upon liquidation of, any of the other Series.
The Trust will normally not hold annual meetings of shareholders to
elect Trustees. If less than a majority of the Trustees of the Trust holding
office have been elected by shareholders, a meeting of shareholders of the
Trust will be called to elect Trustees. Under the Declaration of Trust of the
Trust and the Investment Company Act of 1940, the record holders of not less
than two-thirds of the outstanding shares of the Trust may remove a Trustee by
votes cast in person or by proxy at a meeting called for the purpose or by a
written declaration filed with the Trust's custodian bank. Except as described
above, the Trustees will continue to hold office and may appoint successor
Trustees.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust of the Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of this
disclaimer be given in each agreement, obligation or instrument entered into
or executed by the Funds or the Trustees. The Declaration of
<PAGE>
Trust of the Trust provides for indemnification out of the Trust's property
for all loss and expense of any shareholder held personally liable for
obligations of the Trust and its Funds. Accordingly, the risk of a shareholder
of the Trust incurring a financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The likelihood of such circumstances is remote.
XIV. ADDITIONAL INFORMATION
The Prospectus and this Statement of Additional Information
do not contain all of the information included in the Trust's Registration
Statement filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, with respect to the securities offered
hereby. Certain portions of the Registration Statement have been omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. Such Registration Statement, including the exhibits filed
therewith, may be examined at the offices of the Securities and Exchange
Commission in Washington, D.C.
Statements contained in the Prospectus and this Statement of
Additional Information as to the contents of any agreement or other documents
referred to are not necessarily complete, and, in each instance, reference is
made to the copy of such agreement or other documents filed as an exhibit to
the Registration Statement, each such statement being qualified in all
respects by such reference.
<PAGE>
The Markman MultiFunds
Annual Report
December 31, 1995
"I do believe 1996 could shape up to be a year to rival 1995."
- --Bob Markman
Graphic:
ABOUT OUR COVER
Minneapolis artist Bill Cannon has wittily captured the essential issue facing
the intelligent fund investor in the nineties: choosing from an explosion of
choices as the economic "seasons" change.
<PAGE>
President's Message
Photo of: Bob Markman
CEO & President
The Markman MultiFunds
Let me say unequivocally: I think 1996 will be a marvelously profitable year
for globally diversified investors. Just keep focused on the long term trends
and don't get spooked by the inevitable "panics du jour."But I could be wrong
(GASP!).What happens then?
Dear Investor,
HERE'S THE PLAN: I MOVE WE SKIP 1996. LET'S JUST REWIND THE TAPE AND DO 1995
ALL OVER AGAIN. ALL IN FAVOR...?
FANTASIES ASIDE, I DO BELIEVE 1996 COULD SHAPE UP TO BE A YEAR TO RIVAL '95. I
KNOW THAT MOST PUNDITS ARE EXPECTING SO-SO PERFORMANCE THIS YEAR ON THE HEELS
OF LAST YEAR'S OUTSIZED GAINS. BUT LET US NOT FORGET THAT THESE ARE THE SAME
GENIUSES WHO WERE BITING THEIR FINGERNAILS DOWN TO THE QUICK A YEAR AGO AS
THEY WORRIED ABOUT 1995.
I THINK IT COULD BE OF INTEREST TO YOU FOR ME TO RUN DOWN BOTH THE BULLISH AND
BEARISH SCENARIOS AND TELL YOU HOW WE MIGHT REACT IN THE PORTFOLIOS AS EITHER
SCENARIO UNFOLDS.
First, the Bull (no pun intended): Try as they might to screw it up, D.C.
Incompetents finally manage to cobble together a balanced budget agreement.
That creates the opening Alan Greenspan needs to aggressively loosen up on
interest rates, thus helping to jump-start a sputtering economy. Winter gloom
on the earnings front turns to positive surprises as we move into spring and
summer. Jim Crabbe starts a technology fund. DCIs (see above) get to the final
$100 billion in budget cuts by agreeing to recalculate the CPI, lowering by
almost 1% the official rate of inflation. The numbers are, of course, a
fantasy, but the bond market claps to signal that they do believe in fairies.
With inflation now hovering just below 2%, long-term Treasuries soar, with
yields dropping below 5% by Labor Day. Lenders throw 51/2% money at
homeseekers, creating the greatest buying binge in a decade.
With interest rates this low, we begin to see multiple expansion in the stock
market. Price earnings ratios climb to 18 to 20; Alan Abelson turns bullish as
the Dow hits 6000 by World Series time. (Which, in our bullish scenario, WILL
be played this year.)
Investors who are globally diversified, and have suffered for the past two
years as international investments lagged the U.S. market, finally get the
wind at their backs. Emerging markets, particularly those of the Pacific Rim,
bounce back strongly. Silently and with very little fanfare (compared with the
'93 boom), returns of 30%+ are seen once again. (Jimmy Rogers stuns CNBC
viewers by admitting he's bought the China Fund on margin.)
KEEP ON READING
Bullish
<PAGE>
Bearish
So what funds will do well in this scenario?
SURPRISINGLY, the exact same ones that did well in 1995. We would be heavy in
Health, Financial Services, Technology, Pacific Rim, and broad-based large cap
growth. If we operate under the premise that the market will always manage to
surprise the greatest number of people, what could be a greater surprise than
to produce a 1996 that in many ways replicates 1995?
AND NOW FOR SOMETHING COMPLETELY DIFFERENT (if you can Bear it): It is March
and the DCIs still have not managed to come to a budget accord. Both sides
agree that the only option at this point is to do nothing and let the voters
decide in November. The stock market, now looking at six months of total
uncertainty, sells off 15%.
Greenspan's Fed provides too little, too late in the way of easing and the
economy slows to a near recession. Earnings continue to weaken. The Fed
finally realizes its error, but by then we see inflation beginning to creep
slowly back into the system. By June, the CPI is growing at a 3 1/2 to 4% rate.
Any hopes for rate cuts are dashed and the long T-bond plummets, with yields
again hitting 8%.
There is no relief on the international front either. European economies
remain sluggish, confidence does not return to Latin America and China refuses
to reaffirm its commitment to a free and open Hong Kong, causing a 25% drop in
the Hang Seng Index. INVESTMENT BIKER hits number one on the N.Y. Times
bestseller list.
So what would be the best moves in this scenario? OBVIOUSLY, cash would be the
place to be, as both stocks and bonds would be weak. And I have no qualms
about raising cash in the portfolios. But I'm not sure that is a complete or
realistic answer to the essential question: "What do you do in a difficult
market?"
There are many ways to use the tools at our disposal to attempt to profit even
in a tough market. In a slow-growth economy, health care stocks and certain
small caps could do well relative to the overall market.
Also, if the economy slows but inflation does not accelerate, bond funds would
look attractive. On the other hand, inflation fears could prompt strong
performance in gold and natural resources funds. Further, a weak U.S. stock
market does not mean we have to see equally weak foreign markets.
There could certainly be pockets of superior relative performance overseas
even as we experience doldrums here in the U.S.
The message, I think, is clear. IT'S IN A DIFFICULT MARKET THAT A BROAD
KNOWLEDGE OF FUNDS AND THE ABILITY TO NIMBLY MOVE ARE MOST VALUED. A gently
rising tide raises all boats, but in choppy seas an experienced hand on the
helm might be the only thing standing between you and the abyss.
<PAGE>
FOCUS ON '96 STRATEGY:
THREE SECTORS WITH SPECIAL POTENTIAL ONE OF THE QUESTIONS WE REGULARLY ASK
MANAGERS OF THE MORE DIVERSIFIED FUNDS WE OWN IS "WHAT SECTORS DO YOU LIKE?"
"WHERE ARE YOU FINDING THE VALUES OR OPPORTUNITIES?" SOMETIMES THESE
DISCUSSIONS PRODUCE A TRENDLESS MIXED BAG OF IDEAS, SOMETIMES A PATTERN STARTS
TO EMERGE.
Why do we do this? Oftentimes these discussions can give us an "early warning"
as to what sectors are likely to do well (or poorly, for that matter). THIS
YEAR'S FOURTH QUARTER TALKS PRODUCED MANY IDEAS, BUT THREE STAND OUT BY VIRTUE
OF NUMBER OF MENTIONS AND INTENSITY OF FEELING. They are Biotechnology,
Financials, and the Pacific Rim.
1
Biotech is, of course, the quintessential risk sector and I imagine many more
people have lost than made money here. Biotech stocks began a new run in
1995's second half and have a lot of momentum as we move into 1996. There are
two significant reasons for this: a more reasonable regulatory environment and
record number of real products (yes, more than just stories!) well along in
the testing cycle. As all aggressive sector moves, this one too will end
badly; but that could be a year and a double away. OUR PLAY: FIDELITY SELECT
BIOTECH. (Indirect play: Invesco Health/Vanguard Health)
2
Financials (banks, insurance companies, brokerage firms, etc.) are seen as
benefitting from three things: low interest rates, continued merger and
acquisition activity, and Baby Boomer's insatiable demand for goods and
services to assist them in college and retirement planning. (I read that in
1996 someone will turn 50 every 71/2 seconds. I'm not sure what the
significance of that is, but it sounds like something that could produce one
helluva impact somewhere.) OUR PLAY: INVESCO FINANCIAL SERVICES, FIDELITY
SELECT REGIONAL BANKS.
3
The Tiger markets of the Pacific Rim (Hong Kong, Taiwan, Korea, Singapore,
Malaysia, Indonesia, and the Philippines) like all "emerging markets" are very
sensitive to money flows, with the effect of institutional buying magnifying
moves on both the upside and the downside. So we are excited to report THAT WE
HAVE YET TO TALK TO A MANAGER WHO IS NOT NOW INCLINED TO INCREASE HIS
ALLOCATION IN THIS AREA IN 1996. Their reasons are simple and sound: economies
that are growing at 6, 7, 8% rates and market multiples that are low enough to
make stocks attractive to even the most value conscious manager. OUR PLAY:
COLONIAL NEWPORT TIGER, MORGAN STANLEY ASIAN GROWTH.
Whatever the scenario that unfolds, you can be sure of one thing: we, as your
managers, will always remain open to new options and flexible in our response.
Our job is to listen to what the market tells us about how to make money for
you.
<PAGE>
THE BEST WE CAN FIND- NO COMPROMISES
MANY TIMES A WELL READ INVESTOR WILL COME ACROSS A FUND THAT LOOKS LIKE A
PERFECT CHOICE ONLY TO BE BROUGHT UP SHORT: THE FUND IS CLOSED OR THE FUND
SPORTS AN UP FRONT SALES CHARGE THAT DIMINISHES ITS ATTRACTIVENESS. AND SO
IT'S ON TO A SOMETIMES SECOND BEST ALTERNATIVE.
THAT'S NOT GOOD ENOUGH FOR THE MARKMAN MULTIFUNDS. WE MAY NOT ALWAYS BE RIGHT
IN WHAT WE BUY AND WHEN WE BUY IT, BUT WE ALWAYS WANT TO BE ABLE TO SAY "WE
THINK THIS IS THE BEST FUND WE CAN BUY TO DO THE JOB." WITH THAT AS OUR
PARADIGM, WE THINK THAT OVER TIME THE HIGH QUALITY OF OUR CHOICES WILL
INEVITABLY PRODUCE ENVIABLE RESULTS.
SO YOU MIGHT BE INTERESTED TO KNOW THAT AS OF DECEMBER 31, 1995, SOME 34% OF
OUR TOTAL HOLDINGS WERE IN FUNDS THAT ARE CLOSED OR IN LOAD FUNDS THAT WE ARE
ABLE TO BUY NO LOAD.
Not Just a Fund...
A Management Relationship The Markman MultiFunds were created to be not just
another group of funds. Our background, as you know, is as private money
managers. As such, we know from experience how important the advisor/client
relationship is. WE ARE COMMITTED TO CREATING, TO AS GREAT A DEGREE AS
POSSIBLE, THE LOOK AND FEEL AND TEXTURE OF A PRIVATE PERSONAL RELATIONSHIP
WITH OUR SHAREHOLDERS. We have structured things to provide maximum possible
access for you to the staff of Markman Capital Management. Additionally, we
now receive over 1000 calls per week for our weekly portfolio update. (We're
told it gets addictive after a while.) We welcome your questions and comments
and hope to provide you with a level of personalization never seen before in
the public fund world.
I and my staff have already had the pleasure of speaking with many of you and
look forward to continuing to build a productive relationship.
What has been most gratifying is that our investors really seem to "get it."
Although some ignorant observers have viewed the fund of funds concept as
appropriate only for the small, inexperienced investor, WE HAVE SEEN A
SURPRISINGLY LARGE NUMBER OF VERY SOPHISTICATED INVESTORS PLACE SUMS WELL INTO
SIX FIGURES WITH OUR FUNDS. These high net worth investors, experienced in
private money management matters, quickly saw the Markman MultiFund Trust as
the MOST EFFICIENT AND COST-EFFECTIVE WAY TO CREATE STATE-OF-THE-ART POTENTIAL
IN A FUND PORTFOLIO. THE FACTS SPEAK FOR THEMSELVES: OUR AVERAGE ACCOUNT IS
SIX TIMES LARGER THAN THE AVERAGE EQUITY MUTUAL FUND ACCOUNT. Like I've always
said, "We're not just a fund, we're a complete portfolio." Thank you for your
confidence.
/s/ Bob Markman
BOB MARKMAN AND THE STAFF AT MARKMAN CAPITAL MANAGEMENT
December 31, 1995
<PAGE>
A WORD ABOUT PORTFOLIO MECHANICS
I'd like to take a moment to discuss a point relating to the mechanics of
portfolio management that I think you might find interesting. In the past,
I've written about how the Aggressive Fund is a CONCENTRATED portfolio. Yet
the NUMBER of funds used has steadily increased all year. That sounds almost
contradictory. The reasoning is this: as we grow larger, the position we take
in each fund we use grows larger. This is good in that it often gives us the
"clout" to get access to greater information about the fund than most
investors. But with that access comes responsibility. Some of the doors that
are now open to us would close quickly if we unnecessarily disrupted a fund by
pulling millions out too quickly.
Yet of paramount importance is our responsibility to you, the shareholder in
the MultiFunds. To make money (and at other times to preserve capital) we
sometimes have to move FAST. The solution? To do extra research and analysis
to find multiple funds with almost identical dynamics. So rather than owning
one fund in a particular category, we might own two or three. That way, if we
decide to quickly cut back on the position, no one fund is unduly affected. It
becomes a win/win for all involved. We have the luxury of taking concentrated
aggressive positions without losing the ability to quickly "go to cash." I've
always viewed this as one of the greatest mechanical advantages of a fund of
funds.
Although these tactics impact greatest on the Aggressive Fund, the Moderate
and Conservative portfolios also benefit from our access/flexibility balancing
act.
<PAGE>
Appendix
A representation of the graphic material contained in the Markman MultiFund
Trust's December 31, 1995 Annual Report is set forth below.
1. Growth of $10,000 invested on 1/31/95
MARKMAN AGGRESSIVE
GROWTH FUND S&P 500
------------------- --------------------
DATE BALANCE DATE BALANCE
------------------- --------------------
01/31/95 $ 10,000 01/31/95 $ 10,000
02/28/95 10,230 02/28/95 10,390
03/31/95 10,460 03/31/95 10,696
04/30/95 10,720 04/30/95 11,011
05/31/95 11,000 05/31/95 11,449
06/30/95 11,790 06/30/95 11,714
07/31/95 12,660 07/31/95 12,103
08/31/95 12,710 08/31/95 12,133
09/30/95 13,180 09/30/95 12,640
10/31/95 12,950 10/31/95 12,595
11/30/95 13,120 11/30/95 13,148
12/31/95 13,121 12/31/95 13,396
Past performance is not predictive of future performance.
2. Growth of $10,000 invested on 1/31/95
MARKMAN MODERATE
GROWTH FUND S&P 500
------------------- --------------------
DATE BALANCE DATE BALANCE
------------------- --------------------
01/31/95 $ 10,000 01/31/95 $ 10,000
02/28/95 10,320 02/28/95 10,390
03/31/95 10,450 03/31/95 10,696
04/30/95 10,630 04/30/95 11,011
05/31/95 10,860 05/31/95 11,449
06/30/95 11,210 06/30/95 11,714
07/31/95 11,730 07/31/95 12,103
08/31/95 12,750 08/31/95 12,133
09/30/95 12,150 09/30/95 12,640
10/31/95 12,060 10/31/95 12,595
11/30/95 12,360 11/30/95 13,148
12/31/95 12,450 12/31/95 13,396
Past performance is not predictive of future performance.
<PAGE>
3. Growth of $10,000 invested on 1/31/95
MARKMAN CONSERVATIVE LEHMAN INTERMEDIATE
GROWTH FUND GOVERNMENT BOND INDEX
------------------- --------------------
DATE BALANCE DATE BALANCE
------------------- --------------------
01/31/95 $ 10,000 01/31/95 $ 10,000
02/28/95 10,200 02/28/95 10,195
03/31/95 10,260 03/31/95 10,247
04/30/95 10,430 04/30/95 10,370
05/31/95 10,710 05/31/95 10,659
06/30/95 10,900 06/30/95 10,731
07/31/95 11,200 07/31/95 10,731
08/31/95 11,300 08/31/95 10,817
09/30/95 11,550 09/30/95 10,887
10/31/95 11,390 10/31/95 11,010
11/30/95 11,680 11/30/95 11,145
12/31/95 11,800 12/31/95 11,259
Past performance is not predictive of future performance.
<PAGE>
MANAGEMENT'S DISCUSSION OF PERFORMANCE
By its very nature, a fund of funds such as the Markman MultiFund Trust, will
tend to have a portfolio that is much more diversified than the contents of
most single market averages. There will be times when that diversification
leads to either a short period of out-performance or under-performance. The
theory is that over extended market cycles, a broadly diversified portfolio
may produce superior risk-adjusted returns. The Funds' first eleven months of
existence was marked by a sharp and steady advance in the S&P500. Not only was
1995 one of the S&P500's best years, its return was accomplished with the
lowest volatility on record. In this environment, the diversification of the
Markman Moderate Growth Fund and the Markman Aggressive Growth Fund into areas
such as international funds and small cap funds (that have historically
enhanced value) acted as a drag on performance.
Conversely, the Markman Conservative Growth Fund during this period benefitted
from this same concept of diversification relative to the Lehman Intermediate
Government Bond Index. A blend of cautious large cap stock funds, diversified
income funds, and international holdings enabled this portfolio to outperform
its index.
For more information on each Fund, see the subsequent discussions.
<PAGE>
The Markman MultiFunds Performance
Markman AGGRESSIVE Growth Fund
"The three sectors we expect to greatly outperform the market are Biotech,
Financials, and the Pacific Rim."
WEAKNESS IN SMALL CAP STOCKS COMBINED WITH A VICIOUS CORRECTION IN TECHNOLOGY
WAS ENOUGH TO OFFSET SOME OF OUR VERY STRONG PERFORMERS THIS PAST QUARTER. The
result was a temporary stall in previously strong upward momentum.
As I've written in the President's Message, the three sectors we expect to
greatly outperform the market are Biotech, Financials, and the Pacific Rim.
These three sectors are well represented in the Aggressive Fund, comprising
over 40% of the market value of the stocks held by the funds that we own.
As an Aggressive Fund shareholder, you know that markets (and more
specifically, subsectors of markets) inevitably tend to move from one extreme
to the other. The true aggressive embraces this, welcomes this, for it is the
way markets present us with significant buying opportunities. Our job remains
to spot those periods of extreme optimism and pessimism and rotate
accordingly.
We begin 1996 with our high tech positions at their lowest levels ever in the
portfolio. Clearly, the momentum has shifted in this sector but my instinct
tells me that "the baby is being thrown out with the bathwater." I would not
be surprised if by our next quarterly report we'd have significantly added to
these currently oversold positions.
I want to make clear to you as shareholders that this portfolio will only buy
aggressive or near aggressive funds. If I feel a need to temporarily get
defensive, I will use cash rather than other more conservative stock funds.
<PAGE>
<TABLE>
MARKMAN AGGRESSIVE GROWTH FUND COMPARISON
PUTTING IT IN PERSPECTIVE
<CAPTION>
4TH QTR. 1995 3RD QTR. 1995 SINCE INCEPTION*
<S> <C> <C> <C>
MARKMAN AGGRESSIVE GROWTH FUND -.4% 11.8% 31.2%
S&P 500 6.0% 7.9% 34.0%
LIPPER GROWTH FUND INDEX 1.5% 9.1% 31.0%
<FN>
*From February 1, 1995
</FN>
PORTFOLIO OF INVESTMENTS - Markman Aggressive Growth Fund - December 31, 1995
<CAPTION>
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
Invesco Strategic Health Sciences Portfolio 100,570 $ 5,264,828 12.4% +
Vanguard U.S. Growth Portfolio 239,926 4,882,492 11.5 +
PBHG Growth Fund t 169,884 4,063,630 9.6 +
Fidelity Select Biotechnology Portfolio 116,010 4,040,616 9.6 +
Colonial Newport Tiger Fund (class z) 324,517 4,040,234 9.6 +
Invesco Strategic Financial Services Portfolio 179,498 3,414,054 8.1 -
Heartland Value Fund 104,499 2,920,745 6.9 -
Brandywine Fund 89,664 2,517,761 6.0 new
PBHG Emerging Growth Fund 116,254 2,486,668 5.9 -
The Robertson Stephens Value + Growth Fund t 101,681 2,304,082 5.4 -
Fidelity Select Regional Banks Portfolio 96,623 2,216,530 5.2 new
T. Rowe Price Science & Technology Fund 46,368 1,350,230 3.2 new
Seligman Communications and Information Fund, Inc. 50,288 1,105,838 2.6 -
Twentieth Century Vista Investors 66,247 967,213 2.3 -
Miscellaneous - Money Market Fund 1,182,976 1,182,976 2.8 +
----------- -----
Total Investments (cost $42,663,515) 42,757,897 101.1
Other Assets and Liabilities (Net) (432,401) (1.1)
----------- -----
Net Assets $42,325,496 100.0%
=========== =====
<FN>
See accompanying notes to financial statements.
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
t Non-income producing security
</FN>
</TABLE>
<PAGE>
The Markman MultiFunds Performance
Markman MODERATE Growth Fund
"Should the tech sell off we saw in the fourth quarter continue, I expect
we'll get to levels that will make these stocks compelling low risk buys."
THERE WAS NOT MUCH IN THE WAY OF SIGNIFICANT CHANGES IN THE MODERATE PORTFOLIO
DURING THE FOURTH QUARTER, WITH OUR LARGE HOLDINGS REMAINING RELATIVELY
CONSTANT.
We did cut back our technology holdings a bit (as reflected in the reduced
Seligman and Robertson Stephens holdings) finishing the year in what I
consider to be an UNDERWEIGHTED technology position. Should the tech sell off
we saw in the fourth quarter continue, I expect we'll get to levels that will
make these stocks compelling low risk buys. Be assured that this is one of the
more significant things we are watching and we are prepared to jump right back
in at the appropriate time.
New to the portfolio is Colonial Newport Tiger; we've already discussed the
improved prospects for the Pacific Rim. We also added Fidelity Select Food and
Agriculture. This is one of the few funds that can legitimately claim to be a
defensive sector fund - somewhat of an oxymoron. The portfolio is comprised of
large cap consumer nondurables, companies like Pepsico, Kellogg,
Ralston-Purina, Nabisco, and Philip Morris. Go to the grocery store, then hit
the local Wal Mart, make a pit stop at McDonald's, and you've got the Select
Food and Agriculture portfolio.
I've written before that the Moderate Fund's true long-term capabilities are
only likely to be seen after we've experienced an extended choppy or downward
market. The kind of market I expect for 1996 (violent sector rotation within
an upward trend and better international results) should result in the kind of
risk-adjusted performance we hope for in this Fund.
<PAGE>
<TABLE>
MARKMAN MODERATE GROWTH FUND COMPARISON
PUTTING IT IN PERSPECTIVE
BEHIND THE COMPARISON
<CAPTION>
4TH QTR. 1995 3RD QTR. 1995 SINCE INCEPTION*
<S> <C> <C> <C>
MARKMAN MODERATE GROWTH FUND 2.5% 8.4% 24.5%
S&P 500 6.0% 7.9% 34.0%
LIPPER EQUITY INCOME FUND INDEX 5.2% 7.2% 27.5%
<FN>
*From February 1, 1995
</FN>
</TABLE>
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS - Markman Moderate Growth Fund - December 31, 1995
<CAPTION>
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
Vanguard U.S. Growth Portfolio 387,458 $ 7,884,763 20.2% -
Invesco Strategic Health Sciences Portfolio 90,118 4,717,663 12.1 +
Artisan Small Cap Fund 353,354 4,657,209 12.0 -
The Yacktman Fund, Inc 277,919 3,360,043 8.6 -
Fidelity Select Food & Agriculture Portfolio 82,982 3,259,539 8.4 new
Invesco Strategic Financial Services Portfolio 169,719 3,228,052 8.3 +
Colonial Newport Tiger Fund (class z) 178,754 2,225,482 5.7 new
PBHG Growth Fund t 87,926 2,103,193 5.4 new
Mutual Discovery Fund. 130,826 1,983,315 5.1 -
Mutual Beacon Fund 51,446 1,848,972 4.7 -
Cohen & Steers Realty Shares 31,089 1,076,314 2.8 new
Seligman Communications and Information Fund, Inc. 31,647 695,928 1.8 -
Fidelity Select Consumer Products Portfolio 34,195 592,934 1.5 new
The Robertson Stephens Value + Growth Fund t 21,390 484,707 1.2 -
Longleaf Partners Fund 13,611 287,881 .7 -
miscellaneous - Money Market Fund 481,751 481,751 1.2 +
----------- -----
Total Investments (cost $37,523,112) 38,887,746 99.7
Other Assets and Liabilities (Net) 99,892 .3
----------- ------
Net Assets . . . . . $38,987,638 100.0%
=========== ======
<FN>
See accompanying notes to financial statements.
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
t Non-income producing security
</FN>
</TABLE>
<PAGE>
The Markman MultiFunds Performance
Markman CONSERVATIVE Growth Fund
"As the quarter progressed, it became clear to us that the risk/return
potential in a couple of sectors merited our increased attention."
I like to think that our Conservative Fund shareholders got exactly what they
expected in the fourth quarter: low volatility, steady return, a well-hedged,
diversified portfolio, and just a smidgen of sector spice if the time is
right.
As you can see, we steadily rotated the portfolio toward the strength of the
market, putting a greater emphasis on mid to large cap growth holdings. We
slightly reduced our cautious small cap dollars and added a second small cap
fund, Baron Asset to the mix.
As the quarter progressed, it became clear to us that the risk/return
potential in a couple of sectors merited our increased attention. The ongoing
rally in health care stocks prompted us to buy Vanguard Health Care, the most
cautious of the health sector funds. This very well run fund has racked up
excellent long-term returns within its peer group by taking a consistently
lower relative risk.
Real estate investment trusts (REITS) finally broke out of an eighteen month
doldrum in December. Values in this sector have gotten to irresistable levels
and yields are quite attractive relative to other income producing
alternatives. I expect this to be a diversification move that will serve to
lower the overall volatility of the portfolio while at the same time
positively impacting our upside potential. We selected the fund that is the
nearly unanimous choice of fund pros, Cohen & Steers Realty Shares.
<PAGE>
<TABLE>
MARKMAN CONSERVATIVE GROWTH FUND COMPARISON
PUTTING IT IN PERSPECTIVE
BEHIND THE COMPARISON
<CAPTION>
4TH QTR. 1995 3RD QTR. 1995 SINCE INCEPTION*
<S> <C> <C> <C>
MARKMAN CONSERVATIVE GROWTH FUND 2.2% 6.0% 18.0%
LIPPER BALANCED FUND INDEX 4.2% 5.4% 23.1%
LEHMAN INT. GOV'T. BOND INDEX 3.4% 1.4% 12.6%
<FN>
* From February 1, 1995
</FN>
PORTFOLIO OF INVESTMENTS - Markman Conservative Growth Fund - December 31,
1995
<CAPTION>
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
Vanguard U.S. Growth Portfolio 58,777 $1,196,119 12.1% +
Oakmark Fund 38,239 1,137,598 11.6 +
Lindner Dividend Fund, Inc. 41,282 1,112,969 11.3 -
The Robertson Stephens Growth + Income Fund t 86,989 977,752 9.9 -
Vanguard Wellesley Income Fund 41,748 853,325 8.7 -
SoGen International Fund, Inc. 32,444 797,475 8.1 -
Vanguard Specialized Health Care Portfolio. 14,168 705,832 7.2 new
Cohen & Steers Realty Shares 19,579 677,828 6.9 new
Vanguard Wellington Fund 27,688 676,411 6.9 new
Mutual Qualified Fund 21,643 643,656 6.5 -
Baron Asset Fund 15,923 473,402 4.8 new
T. Rowe Price Small Cap Value Fund 27,021 446,664 4.5 -
Miscellaneous - Money Market Fund 245,419 245,419 2.5 +
---------- -----
Total Investments (cost $9,769,471) 9,944,450 101.0
Other Assets and Liabilities (Net) (92,290) (1.0)
---------- -----
Net Assets $9,852,160 100.0%
========== =====
<FN>
See accompanying notes to financial statements.
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
t Non-income producing security
</FN>
</TABLE>
<PAGE>
<TABLE>
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1995
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
ASSETS GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Investments in securities:
At acquisition cost $9,769,471 $37,523,112 $42,663,515
========== =========== ===========
At value (note 1) $9,944,450 $38,887,746 $42,757,897
Receivable for capital shares sold 34,458 410,750 678,370
Dividends receivable 804 692 1,740
---------- ----------- -----------
TOTAL ASSETS $9,979,712 $39,299,188 $43,438,007
========== =========== ===========
LIABILITIES
Payable for capital shares redeemed $ 5,704 $ 8,484 $ 6,600
Distributions payable to shareholders 4,694 31,695 55,094
Payable for bank overdraft 109,347 240,943 1,027,399
Payable to affiliates (note 3) 7,807 30,428 23,418
---------- ----------- -----------
TOTAL LIABILITIES $ 127,552 $ 311,550 $ 1,112,511
========== =========== ===========
NET ASSETS
Net assets consist of:
Capital shares $9,677,181 $37,623,004 $42,231,114
Net unrealized appreciation on investments 174,979 1,364,634 94,382
---------- ----------- -----------
NET ASSETS $9,852,160 $38,987,638 $42,325,496
========== =========== ===========
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value)(note 4) 897,990 3,445,994 3,588,830
========== =========== ===========
Net asset value, redemption price and offering
price per share (note 1) $ 10.97 $ 11.31 $ 11.79
========== =========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1995
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
INVESTMENT INCOME GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Dividend income $206,739 $ 387,087 $ 213,436
-------- ---------- ----------
EXPENSES
Investment advisory fees 38,783 202,419 173,422
Independent trustees' fees 10,500 10,500 10,500
-------- ---------- ----------
Total expenses (note 3) 49,283 212,919 183,922
-------- ---------- ----------
Net investment income 157,456 174,168 29,514
-------- ---------- ----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 340,634 2,000,269 2,755,722
Capital gain distributions from other investment companies 193,168 1,361,368 1,448,986
Net change in unrealized
appreciation/depreciation on investments 174,979 1,364,634 94,382
-------- ---------- ----------
Net realized and unrealized gains on investments 708,781 4,726,271 4,299,090
-------- ---------- ----------
Net increase in net assets from operations $866,237 $4,900,439 $4,328,604
======== ========== ==========
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS - FOR THE YEAR ENDED DECEMBER 31, 1995
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
FROM OPERATIONS GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Net Investment Income $ 157,456 $ 174,168 $ 29,514
Net realized gains from security transactions 340,634 2,000,269 2,755,722
Capital gain distributions from other investment companies 193,168 1,361,368 1,448,986
Net change in unrealized appreciation/
depreciation on investments 174,979 1,364,634 94,382
----------- ----------- -----------
Net increase in net assets from operations 866,237 4,900,439 4,328,604
----------- ----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income . . . . . . . . . . . . . (157,456) (174,168) (29,514)
Distributions in excess of net investment income (note 1) (33,397) (743,836) (728,239)
Distributions from net realized gains . . . . . . . . . . . . . . (500,405) (2,617,801) (3,476,469)
----------- ----------- -----------
Decrease in net assets from distributions to shareholders (691,258) (3,535,805) (4,234,222)
----------- ----------- -----------
FROM CAPITAL SHARE TRANSACTIONS (note 4)
Proceeds from shares sold 11,949,211 40,307,575 42,808,631
Net asset value of shares issued in reinvestment
of distributions to shareholders 686,564 3,504,110 4,179,128
Payments for shares redeemed (2,988,594) (6,228,681) (4,786,645)
----------- ----------- -----------
Net increase in net assets from
capital share transactions 9,647,181 37,583,004 42,201,114
----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS 9,822,160 38,947,638 42,295,496
NET ASSETS
Beginning of period (note 1) 30,000 40,000 30,000
----------- ----------- -----------
End of period $ 9,852,160 $38,987,638 $42,325,496
=========== =========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</TABLE>
<PAGE>
<TABLE>
Financial Highlights
<CAPTION>
FINANCIAL HIGHLIGHTS - MARKMAN AGGRESSIVE GROWTH FUND
Per share data for a share outstanding throughout the period ended December
31, 1995(A)
<S> <C>
Net asset value - beginning of period $ 10.00
Income from investment operations:
Net investment income 0.01
Net realized and unrealized gains on investments 3.11
------
Total from investment operations 3.12
------
Less distributions:
Dividends from net investment income (0.01)
Distributions in excess of net investment income (0.23)
Distributions from net realized gains (1.09)
------
Total distributions (1.33)
------
NET ASSET VALUE - END OF PERIOD $ 11.79
=======
TOTAL RETURN 31.21%
=======
NET ASSETS - END OF PERIOD (000'S) $42,325
=======
Ratio of expenses to average net assets 0.95%(B)
Ratio of net investment income to average net assets 0.15%(B)
Portfolio turnover rate 204%
<CAPTION>
FINANCIAL HIGHLIGHTS - MARKMAN MODERATE GROWTH FUND
Per share data for a share outstanding throughout the period ended December
31, 1995(A)
<S> <C>
Net asset value - beginning of period $ 10.00
-------
Income from investment operations:
Net investment income 0.06
Net realized and unrealized gains on investments 2.39
-------
Total from investment operations 2.45
-------
Less distributions:
Dividends from net investment income (0.06)
Distributions in excess of net investment income (0.24)
Distributions from net realized gains (0.84)
-------
Total distributions (1.14)
-------
NET ASSET VALUE - END OF PERIOD $ 11.31
=======
TOTAL RETURN 24.50%
=======
NET ASSETS - END OF PERIOD (000'S) $38,988
=======
Ratio of expenses to average net assets 0.95%(B)
Ratio of net investment income to average net assets 0.77%(B)
Portfolio turnover rate 141%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS - MARKMAN CONSERVATIVE GROWTH FUND
Per share data for a share outstanding throughout the period ended December
31, 1995(A)
<S> <C>
Net asset value - beginning of period $10.00
------
Income from investment operations:
Net investment income 0.19
Net realized and unrealized gains on investments 1.61
------
Total from investment operations 1.80
------
Less distributions:
Dividends from net investment income (0.19)
Distributions in excess of net investment income (0.04)
Distributions from net realized gains (0.60)
------
Total distributions (0.83)
------
NET ASSET VALUE - END OF PERIOD $10.97
======
TOTAL RETURN 18.00%
======
NET ASSETS - END OF PERIOD (000'S) $9,852
======
Ratio of expenses to average net assets 0.95%(B)
Ratio of net investment income to average net assets 3.02%(B)
Portfolio turnover rate 176%
<FN>
(A) Represents the period from the initial public offering of shares (January
26, 1995) through December 31, 1995. No income was earned or expenses incurred
from the date the initial shares were purchased by the Adviser through the
date of public offering.
(B) Annualized.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Markman MultiFund Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end non-diversified
management investment company. The Trust was organized as a Massachusetts
business trust on September 7, 1994. The Trust offers three series of shares
to investors: the Markman Conservative Growth Fund, the Markman Moderate
Growth Fund and the Markman Aggressive Growth Fund (collectively, the Funds).
The Trust was capitalized on November 28, 1994, when the Funds' investment
adviser, Markman Capital Management, Inc. (the dviser), purchased the initial
shares of each Fund at $10.00 per share. The public offering of shares
commenced on January 26, 1995. The Trust had no operations prior to the public
offering of shares except for the initial issuance of shares to the Adviser.
THE FOLLOWING IS A SUMMARY OF THE TRUST'S SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION -- The Funds' portfolio securities are valued as of the
close of business of the regular session of trading on the New York Stock
Exchange (currently 4:00 p.m., Eastern time). Shares of open-end management
investment companies (mutual funds) in which the Funds invest are valued at
their respective net asset values as determined under the 1940 Act. Such
mutual funds value securities in their portfolios for which market quotations
are readily available at their current market value (generally the last
reported sale price) and all other securities and assets at fair value
pursuant to methods established in good faith by the Board of Trustees or
Directors of the underlying mutual fund. Money market funds in which the Funds
also invest generally value securities in their portfolios on an amortized
cost basis, which approximates market.
SHARE VALUATION -- The net asset value per share of each Fund is calculated
daily by dividing the total value of that Fund's assets, less liabilities, by
the number of shares outstanding, rounded to the nearest cent. The offering
and redemption price per share of each Fund are equal to the net asset value
per share.
INVESTMENT INCOME -- Dividend income is recorded on the ex-dividend date. For
financial reporting purposes, the Funds record distributions of short-term and
long-term capital gains made by mutual funds in which the Funds invest as
realized gains. For tax purposes, the short-term portion of such distrubutions
is treated as dividend income by the Funds.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders arising from
each Fund's net investment income and net realized capital gains, if any, are
distributed at least once each year. Income distributions and capital gain
distributions are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
<PAGE>
FEDERAL INCOME TAX -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code (the Code) available to regulated
investment companies. As provided therein, in any fiscal year in which a Fund
so qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during
the twelve months ended October 31) plus undistributed amounts from prior
years.
Each of the Funds files a tax return annually using tax accounting methods
required under provisions of the Code which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. The differences arise primarily from the treatment of short-term
gain distributions made by mutual funds in which the Funds invest and the
deferral of certain losses under federal income tax regulations. Accordingly,
the amount of net investment income and net realized capital gain or loss
reported in the financial statements may differ from that reported in the
Fund's tax return and, consequently, the character of distributions to
shareholders reported in the Statement of Changes in Net Assets and the
Financial Highlights may differ from that reported to shareholders for federal
income tax purposes. As a result of such differences, reclassifications were
made to the components of net assets to conform with generally accepted
accounting principles.
<TABLE>
FEDERAL INCOME TAX
The following information is based upon the federal income tax cost of
portfolio investments as of December 31, 1995:
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Gross unrealized appreciation $ 223,502 $ 1,822,565 $ 1,205,271
Gross unrealized depreciation (66,544) (489,748) (1,198,114)
---------- ----------- -----------
Net unrealized appreciation $ 156,958 $ 1,332,817 $ 7,157
---------- ----------- -----------
Federal income tax cost $9,787,492 $37,554,929 $42,750,740
========== =========== ===========
</TABLE>
<PAGE>
Notes to Financial Statements
2. INVESTMENT TRANSACTIONS
During the year ended December 31, 1995, purchases and proceeds from sales and
maturities of portfolio securities, other than short-term investments,
amounted to $18,853,122 and $9,669,704, respectively, for the Markman
Conservative Growth Fund, $68,604,725 and $33,563,632, respectively, for the
Markman Moderate Growth Fund, and $81,266,630 and $42,541,813, respectively,
for the Markman Aggressive
Growth Fund.
3. TRANSACTIONS WITH AFFILIATES
The Chairman of the Board and President of the Trust is also the President of
Markman Capital Management, Inc. (the Adviser). Certain other trustees and
officers of the Trust are officers of the Adviser or of MGF Service Corp.
(MGF), the administrative services agent, shareholder servicing and transfer
agent, and accounting services agent for the Trust.
INVESTMENT ADVISORY AGREEMENT
The Funds' investments are managed by the Adviser pursuant to the terms of an
Investment Management Agreement. Each Fund pays the Adviser an investment
management fee, computed and accrued daily and paid monthly, at an annual rate
of .95% of average daily net assets of each Fund. The Adviser pays all
operating expenses of the Funds except brokerage commissions, taxes, interest,
fees and expenses of independent trustees and any extraordinary expenses. In
addition, the Adviser is contractually obligated to reduce its investment
management fee in an amount equal to each Fund's allocable portion of the fees
and expenses of the Trust's independent trustees.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of the Administrative Services Agreement between the Trust,
the Adviser and MGF, MGF supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services for each of the Funds. MGF supervises the preparation
of tax returns for the Funds, reports to shareholders of the Funds, reports to
and filings with the Securities and Exchange Commission and state securities
commissions and materials for meetings of the Board of Trustees. For the
performance of these administrative services, the Adviser, out of its
investment management fee, pays MGF a monthly fee at an annual rate of .10% of
each Fund's respective average daily net assets up to $25 million, .075% of
such net assets from $25 million to $100 million, .05% of such net assets from
$100 million to $200 million, and .025% of such net assets in excess of $200
million, subject to a $1,000 minimum monthly fee for each Fund.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust, the Adviser and MGF, MGF maintains
the records of each shareholder's account, answers shareholders' inquiries
concerning their accounts, processes purchases and redemptions of each Fund's
shares, acts as dividend and distribution disbursing agent and performs other
shareholder service functions. For the performance of these services, the
Adviser, out of its investment management fee, pays MGF a monthly fee with
respect to each Fund at an annual rate of $15.00 per shareholder account,
subject to a $1,200 minimum monthly fee for each Fund. In addition, the
Adviser pays out-of-pocket expenses including, but not limited to, postage and
supplies.
<PAGE>
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust, the
Adviser and MGF, MGF calculates the daily net asset value per share and
maintains the financial books and records of each Fund. For the performance of
these services, the Adviser, out of its investment management fee, pays MGF a
fee, based on current asset levels, of $2,500 per month with respect to each
Fund.
4. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital share transactions as shown in the Statement
of Changes in Net Assets are the result of
the following capital share activity for the year ended December 31, 1995:
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Shares sold 1,099,287 3,661,638 3,621,298
Shares issued in reinvestment
of distributions to shareholders 62,586 309,824 354,464
Shares redeemed (266,883) (529,468) (389,932)
---------- ---------- ----------
Net increase in shares outstanding 894,990 3,441,994 3,585,830
Shares outstanding, beginning of period 3,000 4,000 3,000
---------- ---------- ----------
Shares outstanding, end of period 897,990 3,445,994 3,588,830
========== ========== ==========
</TABLE>
<PAGE>
Report of Independent Public Accountants
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF THE MARKMAN MULTIFUND TRUST:
We have audited the accompanying statement of assets and liabilities of the
Markman Conservative Growth Fund, the Markman Moderate Growth Fund and the
Markman Aggressive Growth Fund of Markman MultiFund Trust (a Massachusetts
business trust), including the portfolios of investments, as of December 31,
1995, and the related statement of operations, the statement of changes in net
assets, and the financial highlights for the periods indicated thereon (see
pages 7, 9, 11-16). These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Markman Conservative Growth Fund, the Markman Moderate Growth Fund and the
Markman Aggressive Growth Fund as of December 31, 1995, the results of their
operations, the changes in their net assets, and their financial highlights
for the periods indicated thereon, in conformity with generally accepted
accounting
principles.
/s/ Authur Andersen LLP
Cincinnati, Ohio
January 12, 1996
<PAGE>
Application & Request Forms
YOUR MMFT APPLICATION & REQUEST FORMS
You may use the FOLLOWING APPLICATION AND REQUEST FORMS KIT to invest directly
in The Markman MultiFunds. The minimum direct investment is $25,000.
If you want to invest less than $25,000, you may purchase The Markman
MultiFunds through Charles Schwab & Company (1-800-266-5623), Jack White and
Company (1-800-323-3263), and Fidelity Investments (1-800-544-7558), among
others.
Mail us YOUR COMPLETED FORMS using the enclosed postage-paid business reply
envelope. You will be contacted by mail verifying your investment.
For ADDITIONAL FORMS or ANSWERS TO ANY QUESTIONS just contact The Markman
MultiFunds (between the hours of 8:30 AM and 6:00 PM EST):
Toll-free: 1-800-707-2771
In Cincinnati: 513-629-2070
THIS KIT INCLUDES:
* ACCOUNT APPLICATION
* IRA APPLICATION
* IRA TRANSFER REQUEST
THESE FORMS ARE AVAILABLE:
(CALL 1-800-707-2771)
* DOLLAR COST AVERAGING APPLICATION
* SYSTEMATIC WITHDRAWAL PLAN REQUEST
* AUTOMATIC INVESTMENT REQUEST
* COMPANY RETIREMENT ACCOUNT APPLICATION
* COMPANY RETIREMENT PLAN PROTOTYPE
(INCLUDES PROFIT SHARING, MONEY PURCHASE, 401(K))
* 403(B) PLAN AND APPLICATION
<PAGE>
The Markman MultiFunds
IMPORTANT INFORMATION
INVESTMENT ADVISER
Markman Capital Management, Inc.
6600 France Avenue South
Suite 565
Edina, Minnesota 55435
ADMINISTRATOR AND TRANSFER AGENT
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
CUSTODIAN
Fifth Third Bank, N. A.
38 Fountain Square Plaza
Cincinnati, Ohio 45202
INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
425 Walnut Street
Cincinnati, Ohio 45202
LEGAL COUNSEL
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
IMPORTANT TELEPHONE NUMBERS:
HOTLINE: 1-800-975-LINE
(1-800-975-5463)
For a current update on our views on the market and what funds are in each of
the portfolios
1-800-2DAISY2
(1-800-232-4792)
To order additional prospectuses
1-800-707-2771
For additional application forms, help completing an application, or
administrative questions.
AUTHORIZED FOR DISTRIBUTION ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS.
Logo: The Markman MultiFunds
Investment Adviser
Markman Capital Management, Inc.
6600 France Avenue South, Suite 565
Edina, Minnesota 55435
Telephone: 612-920-4848
Toll-free: 1-800-395-4848
Shareholder Services
c/o MGF Service Corp.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-3874
Telephone: 513-629-2070
Toll-free: 1-800-707-2771
100% NO-LOAD MUTUAL FUND COUNCIL LOGO
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
INCLUDED IN PART A:
Financial Highlights for the Period Ended December 31, 1995
INCLUDED IN PART B:
Portfolio of Investments, December 31, 1995
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the Period Ended December 31, 1995
Statement of Changes in Net Assets for the Period Ended December 31, 1995
Financial Highlights for the Period Ended December 31, 1995
Notes to Financial Statements, December 31, 1995
INCLUDED IN PART C:
The required Schedules are omitted because the required information is
included in the financial statements included in Part A or Part B, or because
the conditions requiring their filing do not exist.
<PAGE>
(B)EXHIBITS
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
*(1) Declaration of Trust of the Registrant
*(2) Bylaws of the Registrant
(3) Inapplicable
*(4) Form of Share Certificate of Registrant
*(5) Investment Advisory Agreement
between Registrant and Markman Capital
Management, Inc. ("Markman Capital")
(6) Inapplicable
(7) Inapplicable
*(8)(a) Custodian Agreement among Registrant,
Markman Capital and The Fifth Third Bank
*(9)(a) Transfer Agency and Shareholder
Services Agreement among Registrant,
Markman Capital and MGF Service Corp.
*(9)(b) Accounting and Pricing Services Agreement
among Registrant, Markman Capital and
MGF Service Corp.
*(9)(c) Administrative Services Agreement among
the Registrant, Markman Capital and
MGF Service Corp.
*(9)(d) Consent to Use of Name
*(10) Opinion and Consent of Counsel
(11) Consent of Independent Public Accountants
(12) Inapplicable
*(13) Subscription Agreement between Registrant
and Markman Capital
(14) Individual Retirement Account Plan
(15) Inapplicable
(16) Inapplicable
(17)(a) Financial Data Schedule - Markman Aggressive
Growth Fund
(17)(b) Financial Data Schedule - Markman Moderate
Growth Fund
(17)(c) Financial Data Schedule - Markman Conservative
Growth Fund
(18) Inapplicable
- --------------------
* Incorporated herein by reference to this Registration Statement as
originally filed with the Securities and Exchange Commission or as
subsequently amended.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
The Registrant is not directly or indirectly controlled by or under common
control with any person other than the Trustees. The Registrant does not have
any subsidiaries.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of March 1, 1996, of the
shares of beneficial interest of the Registrant:
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
Shares of Beneficial Interest 202
no par value, Conservative Growth Fund
Shares of Beneficial Interest 702
no par value, Moderate Growth Fund
Shares of Beneficial Interest 937
no par value, Aggressive Growth Fund
ITEM 27. INDEMNIFICATION
Under the Registrant's Declaration of Trust and Bylaws, any past or present
Trustee or Officer of the Registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by him
or her in connection with any action, suit or proceeding to which he or she
may be a party or is otherwise involved by reason of his or her being or
having been a Trustee or Officer of the Registrant. The Declaration of Trust
and Bylaws of the Registrant do not authorize indemnification where it is
determined, in the manner specified in the Declaration of Trust and the Bylaws
of the Registrant, that such Trustee or Officer has not acted in good faith in
the reasonable belief that his or her actions were in the best interest of the
Registrant. Moreover, the Declaration of Trust and Bylaws of the Registrant do
not authorize indemnification where such Trustee or Officer is liable to the
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his duties.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, Officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as
<PAGE>
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a Trustee, Officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, Officer or controlling person
in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
questions whether such indemnification is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
The Registrant, its Trustees and Officers, its investment adviser, and persons
affiliated with them are insured under a policy of insurance maintained by the
Registrant and its investment adviser, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might
be imposed as a result of such actions, suits or proceedings, to which they
are parties by reason of being or having been such Trustees or officers. The
policy expressly excludes coverage for any Trustee or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been adjudicated or may be established or who willfully
fails to act prudently.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Markman Capital Management, Inc. (the "Adviser"), is a registered
investment adviser providing investment advice to individuals, employee
benefit plans, charitable and other nonprofit organizations, and
corporations.
Set forth below is a list of the Officers and Directors of the Adviser
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years.
POSITION WITH
NAME THE ADVISER OTHER BUSINESSES, ETC.
Robert J. Markman Chairman of the None
Board, President,
Treasurer and
Secretary
Judith E. Fansler Chief Operations None
Officer
Jeffrey Caulfield Chief Compliance None
Officer
Richard W. London Chief Financial None
Officer
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
Inapplicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The Registrant maintains the records required by Section 31(a) of
the Investment Company Act of 1940, as amended and Rules 31a-1 to 31a-3
inclusive thereunder at its Cincinnati office located at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202. Certain records, including records
relating to the Registrant's shareholders and the physical possession of its
securities, may be maintained pursuant to Rule 31a-3 at the main offices of
the Registrant's transfer agent, dividend disbursing agent and custodian
located, as to the custodian, at 38 Fountain Square Plaza, Cincinnati, Ohio
45202, and, as to the transfer and dividend disbursing agent functions, at 312
Walnut Street, Cincinnati, Ohio 45202.
ITEM 31. MANAGEMENT SERVICES Inapplicable.
ITEM 32. UNDERTAKINGS
(a) Inapplicable
(b) Inapplicable
(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered a copy of the Registrant's
annual report (when available) to shareholders upon
request and without charge.
(d) The Registrant hereby undertakes that, if requested to do
so by holders of at least 10% of the Trust's outstanding
shares, it will call a meeting of shareholders for the
purpose of voting upon the question of removal of a
trustee or trustees and will assist in communications
between shareholders for such purpose as provided in
Section 16(c) of the Investment Company Act of 1940, as
amended.
<PAGE>
NOTICE
The names "Markman MultiFund Trust," "Markman Aggressive Growth Fund,"
"Markman Moderate Growth Fund" and "Markman Conservative Growth Fund" are the
designations of the Trustees under the Declaration of Trust of the Trust dated
September 7, 1994, as amended from time to time. The Declaration of Trust has
been filed with the Secretary of State of The Commonwealth of Massachusetts
and the Clerk of the City of Boston, Massachusetts. The obligations of the
Registrant are not personally binding upon, nor shall resort be had to the
private property of, any of the Trustees, shareholders, officers, employees or
agents of the Registrant, but only the Registrant's property shall be bound.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant,
Markman MultiFund Trust, certifies that it meets all of the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in The
City of Edina and the State of Minnesota on this 15th of April, 1996.
MARKMAN MULTIFUND TRUST
/s/ Robert J. Markman
By:-----------------------------------
Robert J. Markman,
Chairman of the Board and
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/S/ ROBERT J. MARKMAN Chairman of the April 15, 1996
- -------------------------
Robert J. Markman Board of Trustees
and President
(Principal execu-
tive officer)
/S/ MARK J. SEGER Treasurer (Principal April 15, 1996
- -------------------------
Mark J. Seger financial and
accounting officer)
* Trustee
Richard Edwin Dana
* Trustee
Peter Dross
* Trustee
Judith E. Fansler
* Trustee
Susan Gale
<PAGE>
* Trustee
Susan M. Hawkes
* Trustee
Richard W. London
* Trustee
Melinda S. Machones
* Trustee
Emilee Markman
* Trustee
Michael J. Monahan
/S/ DAVID M. LEAHY April 15, 1996
- -------------------------
David M. Leahy
Attorney-in-Fact*
<PAGE>
EXHIBIT INDEX
1. Consent of Independent Public Accountants
2. Individual Retirement Account Plan
3. Financial Data Schedule -- Markman Aggressive Growth Fund
4. Financial Data Schedule -- Markman Moderate Growth Fund
5. Financial Data Schedule -- Markman Conservative Growth Fund
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Post-Effective Amendment No. 2 of our report dated January 12, 1996 and to all
references to our Firm included in or made a part of this Post-Effective
Amendment.
/s/ Arthur Andersen LLP
------------------------
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
April 15, 1996
<PAGE>
IRA PLAN
Markman MultiFund Trust
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-707-2771
MARKMAN MULTIFUND TRUST IRA
DISCLOSURE STATEMENT
Markman MultiFund Trust has prepared this Disclosure Statement to set out
for you the manner in which an Individual Retirement Account (IRA) operates.
This Disclosure Statement will cover some areas with which you are already
familiar, but you should read this information along with the other parts of
this brochure, including the Custodial Agreement and the prospectus for each
fund in which your IRA contributions are invested. This is not a comprehensive
discussion of all the rules concerning IRAs nor is it designed to serve as a
substitute for the advice of your lawyer, accountant or other personal tax or
financial advisor.
REVOCATION PROCEDURE
You will have seven days from the date you complete the Adoption Agreement
and establish the Markman MultiFund Trust IRA to cancel the account for any
reason. If you cancel the IRA, Markman MultiFund Trust will refund all the
money you contributed, without increase or decrease for any reason.
You may cancel your IRA by sending a signed written notice
delivered or mailed within this seven-day period to:
Markman MultiFund Trust IRA
MGF Service Corp.
P.O. Box 5354
Cincinnati, OH 45201-5354
If mailed in a properly addressed, first class postage prepaid envelope,
the date of the postmark, or if certified or registered mail is used, the date
of certification or registration will be used to determine if you notified us
within the seven-day revocation period. If you have any questions about this
revocation procedure, please call us at 800-707-2771.
GENERAL RULES AFFECTING IRAS
As with most laws which provide special tax treatment, there are certain
restrictions and limitations on how you may use an IRA, and the IRS has
required this special statement covering these points. This statement is only
a general discussion of these rules. Further information concerning IRAs can
be obtained at any District Office of the Internal Revenue Service or by
reading IRA Publication 590 "Individual Retirement Arrangements." This
statement discusses only the federal tax treatment of your IRA. State and city
income tax treatment of your IRA may differ, and you should contact your local
tax authorities or your own tax advisor for further information in this area.
<PAGE>
An IRA is a Trust or Custodial Account created in the United States for the
exclusive benefit of an individual and his Beneficiary and for the purpose of
accumulating funds for retirement. Under the Markman MultiFund Trust IRA, a
separate account will be established for you and will be invested with one or
more of the funds currently offered under the Markman MultiFund Trust IRA as
you may direct the Custodian from time to time. The pertinent federal tax laws
include a number of requirements for IRAs, relating among other things to
contributions, use of account assets, when and how distributions can be made
to you and your Beneficiary and when and how distributions will be taxed.
CONTRIBUTIONS TO PERSONAL ACCOUNTS
In general, if you are not age 70 1/2 or older, you are eligible to
contribute to your own IRA. For any year in which you qualify, your
contribution is limited to 100% of your compensation for the year up to a
maximum of $2,000 per year. "Compensation" includes your wages and salary as
an employee and any earnings from self-employment, such as professional fees
and other amounts for your personal services. Compensation does not include
passive income such as dividends, interest, capital gains, income from
pensions, annuities or other deferred compensation or amounts which you
receive which are not includable in taxable income. After 1984, Compensation
also includes alimony received under a qualifying divorce or separation
agreement.
Contributions must be made only in cash. If you and your spouse are both
working and each is otherwise eligible, you may each establish a separate IRA
and each may contribute to your own separate account up to the $2,000/100%
limit based on your respective Compensation for the year. You must take any
contributions made to any other IRAs into account to determine the maximum
amount you can contribute and deduct under this IRA. If you acquire an IRA as
the Beneficiary of the IRA owner's estate and you are not the IRA owner's
spouse, you can not make any contributions to that "Inherited IRA."
If, after 1986, you are an active participant in an employer-sponsored
retirement plan, including a Simplified Employee Pension as noted later, the
amount of your contribution which is tax-deductible will be reduced if your
income is between $40,000 and $50,000 if you are married and file a joint
return, $25,000 and $35,000 if you are unmarried and between $0 and $10,000 if
you are married and file separate returns. Note that these rules only concern
the deductibility of your contribution. You can still make contributions under
the regular rules which, although nondeductible, will earn tax-free income.
Nondeductible IRA contributions are not taxable when distributed to you
because you did not get a tax deduction when you put them into your IRA. There
are special rules for determining what part of an IRA distribution is taxable
and what part represents a non-taxable return of your nondeductible
contributions. You must keep track of your nondeductible contributions under
this and any other retirement programs. All your IRAs are treated as one
account for these contribution and distribution rules.
<PAGE>
SPOUSAL ACCOUNTS
If you qualify to make regular IRA contributions but your spouse does not
because your spouse has no Compensation, or after 1986 has less than $250 in
Compensation, you may establish a separate "Spousal IRA" in addition to your
own IRA and, provided you file a joint tax return and further provided neither
you nor your spouse is age 70 1/2 or older for the year, you may contribute up
to a maximum of $2,250 per year, or 100% of your Compensation if less, between
these two separate IRAs. You may divide these contributions between your
personal IRA and the Spousal IRA as you wish, provided no more than $2,000 is
deposited to either account. If you are 70 1/2 and can no longer make a
contribution to your IRA but your spouse is not 70 1/2, you may make a
contribution to the Spousal IRA based on your Compensation if the other rules
for Spousal IRAs are met.
DUE DATE FOR IRA CONTRIBUTIONS
Your contribution for any year must be made no later than the date required
for filing your federal income tax return. An extension of time to file your
tax return does not extend your IRA contribution deadline. Unless instructed
otherwise, a contribution will be credited to your IRA for the year it is
received. If after year end, but before your return is filed, you make a
contribution which you want credited for the prior year, make a note of this
fact on your check and any forms you send with it.
SEP-IRA CONTRIBUTIONS
If your employer has established a Simplified Employee Pension ("SEP"),
your employer can deposit as much as 15% of your Compensation (up to $22,500
or the limit approved in future years) in your IRA or an IRA set up for you by
your employer as part of the SEP. In addition, if your employer has a "Salary
Reduction" feature to its SEP, you may elect to reduce the portion of your
Compensation reported as W-2 earnings by up to the $7,000 limit, as adjusted
each year, (the limit is $9,240 for 1994 and 1995) and have your employer
contribute that amount to the SEP on your behalf. If you are an active
participant in a SEP this may affect your ability to make a deductible
contribution as discussed earlier. SEP contributions must be freely
transferable to other IRA Sponsors. This means you can have your employer's
SEP-IRA contribution rolled over or transferred to this IRA if your employer
initially deposits it elsewhere.
DIRECT ROLLOVERS, ROLLOVER CONTRIBUTIONS FROM EMPLOYER-SPONSORED QUALIFIED
PLANS AND CONDUIT IRAS Under certain circumstances, all or part of a
distribution, less any nondeductible, voluntary contributions,
from an employer-sponsored retirement plan (i.e. a "Qualified Plan" like a
pension, profit sharing, stock bonus plan or certain tax-sheltered programs
under Section 403(b) of the Internal Revenue Code or governmental plans) may
be received without being immediately taxable provided the distribution is
reinvested in an IRA, or another Qualified Plan, within 60 days. If you
receive such a distribution, you may roll it over into this IRA within the
60-day period and avoid current taxes on the amount rolled over, although no
tax deduction is available for the rollover amount. Any part of a distribution
not rolled over will be subject to taxation and will not be eligible for any
of the special retirement plan income tax averaging methods.
<PAGE>
If you are entitled to receive an eligible rollover distribution from an
employer's qualified retirement plan, a tax-sheltered program under Section
403(b) of the Internal Revenue Code or a governmental plan, you may request
that the distribution be transferred directly to your IRA rather than be
distributed to you. If you do not choose this "Direct Rollover" option, your
employer will withhold 20% of your eligible rollover distribution and remit it
to the IRS on your behalf. The administrator of the distributing plan is
required to give you information regarding this tax-free Direct Rollover
option and the other tax rules affecting your eligible rollover distribution.
The Markman MultiFund Trust IRA may be used to receive a Direct Rollover from
an employer-sponsored qualified retirement plan, 403(b) tax-sheltered program
or certain governmental plans, provided the rollover consists solely of cash
or shares of any of the funds currently offered under the Markman MultiFund
Trust IRA.
IRAs have distribution rules which are similar, but not identical, to the
distribution rules for Qualified Plans. For example, there are special tax
averaging rules for Qualified Plan distributions which do not apply to IRA
distributions. A rollover from a Qualified Plan (or a rollover from an IRA
which contains amounts previously rolled over from a Qualified Plan) may be
preserved for future rollover into another employers' Qualified Plan so long
as the rollover funds are kept in their own separate IRA, often called a
"Conduit IRA," without any additional contributions being made to that
account. When you establish your "Rollover IRA", please inform us whether this
IRA is to be a Conduit IRA so we may treat the IRA accordingly.
The rules concerning tax-free rollovers are complicated. You should consult
with your financial or tax advisor to make sure your rollover is completed
properly.
<PAGE>
ROLLOVER CONTRIBUTIONS AND TRANSFERS FROM OTHER IRAS
Some distributions from IRAs are also eligible for tax-free rollover into
another IRA, as long as the distribution is reinvested in an IRA within 60
days. If you receive such a distribution, you may roll it over into this IRA
within the 60-day period and avoid current taxes on the distribution, although
no tax deduction is available for the rollover amount. You can make only one
rollover from the same IRA (or other individual retirement savings program) to
another IRA in any one-year period. This "once-a-year" rule applies only to
IRA rollovers and not to Qualified Plan rollovers. Also, if you have several
IRAs, you can make one rollover from each every year.
In addition to this rollover procedure, you can move funds between IRAs
through a "Trustee to Trustee Transfer." In this procedure, funds are not
distributed to or recontributed by you to another IRA. Instead, the Trustee or
Custodian of your present IRA would send your IRA funds directly to us for
credit to your Markman MultiFund Trust IRA under the same rules for rollovers.
The once-a-year limitation for IRA rollovers does not apply to these
transfers.
A rollover may be made to the Markman MultiFund Trust IRA provided it
consists solely of cash or shares of any of the funds currently offered under
the Markman MultiFund Trust IRA.
HOW THE CONTRIBUTIONS MUST BE INVESTED
Contributions to an IRA must be placed in a special custodial or trust
account and held by a bank Trustee or Custodian (or other person who has been
approved by the Secretary of the Treasury). No part of your IRA assets may be
invested in life insurance or collectibles or be commingled with other
property except in a common trust fund or common investment fund. Your
interest in the account must be nonforfeitable at all times. The purpose of
these rules is to segregate these savings from other assets so they will be
used for retirement purposes only.
Under the Markman MultiFund Trust IRA, your contributions and the earnings
on your IRA account will be invested in shares of one or more of the funds
offered under the Markman MultiFund Trust IRA, according to your instructions
to the Custodian from time to time.
DISTRIBUTIONS
Since the tax benefit of an IRA is intended to encourage people to save for
retirement, there are limitations on your right to withdraw money from an IRA
before you reach age 59 1/2 (unless earlier death or disability should occur).
While technically the money can be withdrawn at any time, the Internal Revenue
Service imposes a penalty tax of 10% of the taxable amount of any money or
property you receive or use (for example, as collateral for a loan) prior to
that time. Any funds withdrawn or used would also be included in your gross
income for tax purposes. Remember that part of any distribution representing a
return of nondeductible contributions will not be taxable.
<PAGE>
The taxable part of any distribution will be classified as ordinary income
even if the program you invest in earns capital gains or tax-exempt income
since you claimed your contribution as a deduction against your ordinary
income when contributed. Monies distributed from an IRA are not eligible for
the special lump sum tax provisions as are funds distributed from a Qualified
Plan.
Once you reach age 59 1/2 (or become disabled), you may begin to receive
taxable distributions from your account without the 10% penalty. You must
begin to receive distributions from an IRA by the first day of April of the
year after you reach age 70 1/2. Specifically, a minimum distribution is
required to be made each year beginning with the year in which you attain age
70 1/2. This minimum distribution is determined by dividing the entire account
balance at the beginning of each year by your life expectancy (or the joint
life and last survivor expectancy of you and your Beneficiary) determined as
of the date you reach age 70 1/2 and/or as recalculated under regulations
under the Code. If you do not receive the minimum distribution required in any
year, there is an IRS penalty of 50% of the amount which you should have
received.
Your account may be distributed to you in any one or combination of the
following ways:
1. Any part or all of your account may be paid to you in a lump-sum cash
payment.
2. Any part or all of your account may be paid to you in substantially
equal monthly or other periodic installments for any period not exceeding your
life expectancy or the combined life expectancies of you and your Beneficiary.
You may elect these installment payments under any of the available programs
in which your account is invested.
You may designate or change your Beneficiary at any time. You may also
designate the method of payment to be used after your death. If you die
without a valid designation of Beneficiary in effect, your account will be
paid to your estate. Also, if you fail to designate the method of payment to
be used, the distribution will be made to your designated Beneficiary or your
surviving spouse under the installment method chosen by such Beneficiary. Your
designation of Beneficiary will not be considered a transfer for federal gift
tax purposes. In addition, if you live in a community property state, your
spouse will not be deemed to have made a taxable gift when your entire account
is paid to your Beneficiary.
Distributions after your death will usually be taxable to your spouse or
other Beneficiary as ordinary income when received, just as they would have
been taxable to you. Before 1985, IRA distributions were excludable from your
gross estate for federal estate tax purposes, if they were paid in
substantially equal periodic installments over a period of at least 36 months
after your death. After 1984, all retirement distributions, including IRA
distributions are includable in your gross estate no matter how distributed
and as noted later may be subject to a 15% extra estate tax if they are
"Excess Distributions" as described later.
If an IRA owner dies after December 31, 1983, and the Beneficiary of the
IRA is not the owner's spouse, the Beneficiary may not make any contributions
to the IRA. In addition, this "Inherited IRA" cannot be rolled over to another
IRA and cannot receive any Rollover Contributions.
<PAGE>
PROHIBITED TRANSACTIONS
In general, you must treat your IRA as an investment solely for the purpose
of accumulating a retirement fund. Transactions between yourself (or your
Beneficiary) and the assets held in the account are not allowed. The specific
prohibited transactions are enumerated in the Internal Revenue Code but
include selling or exchanging a property with the account and other
transactions of this nature. Should a transaction of this type occur, your
entire account would lose its tax-exempt status and be treated as having been
distributed to you. The portion of your account representing deductible
contributions would then be included in your income for that year and could be
subject to the 10% penalty on early distributions.
You are also prohibited from pledging or using any portion of your IRA as
security for a loan. If you do this, the portion used will be treated as
having been distributed to you and will be includable in your income for the
year it was used. You may also incur the 10% tax on premature distributions
because of such a prohibited transaction.
PENALTY TAXES
In addition to the 10% penalty for distributions before 59 1/2, you may
also incur penalty taxes in connection with your account under the following
circumstances.
1. Excess Contributions. If part or all of your IRA contribution exceeds
the maximum contribution you are permitted for the year and does not qualify
as a Rollover Contribution, the Excess Contribution will be subject to a 6%
penalty tax unless the excess (along with any earnings) is withdrawn from your
account by the due date (including extensions) for your federal income tax
return for that year (the withdrawn portion may not be claimed as a deduction
for the year and the earnings withdrawn will be for the taxable year you made
the Excess Contribution, even if withdrawn later). But, if you fail to
withdraw the Excess Contribution by the due date of your return, you will
incur an additional 6% penalty tax for each year that it continues to be an
excess. To avoid this recurring penalty tax for later years, you must either
withdraw the excess from the account or absorb it by reducing your future
contributions by an amount corresponding to the excess. Note also that
withdrawal of the excess before you reach age 59 1/2 (unless you are disabled)
will result in imposition of a 10% penalty tax in addition to the ordinary
income taxes you must pay on the distribution. Remember, this 10% penalty tax
also applies to any portion of your account which is treated as having been
distributed to you because you engaged in a prohibited transaction.
2. Excess Accumulations. After you reach age 70 1/2, the 50% penalty tax
noted earlier will be imposed on any amount which is required to be
distributed to you because of the minimum distribution rules and which you
fail to withdraw. In certain cases, the IRS may waive this penalty.
<PAGE>
3. Excess Distributions. After 1986, certain "Excess Distributions" from
retirement plans and IRAs are subject to a 15% additional tax. A distribution
of more than the greater of $150,000, or $112,500 (indexed for inflation), in
any year is considered an Excess Distribution. A special additional 15% estate
tax applies to Excess Distributions after death. There are special rules and
exceptions to this 15% additional tax which you should review with your
financial or tax advisor.
REPORTS TO THE IRS
You are generally not required to file any special forms with the IRS
because you maintain an IRA. Contributions to and distributions from your IRA
are reported on your federal income tax return. However, you must file Form
5329 with the IRS as a part of your federal income tax return for any year in
which you incur a penalty tax due to Excess Contributions, accumulations or
distributions or premature distributions. There are penalties for failing to
file or late filing of the Form 5329 for any tax year it is required, so it is
extremely important to pay attention to this requirement.
The fund in which your IRA is invested is required to report annual
contributions to the account to the IRS on Form 5498.
If you made a nondeductible contribution to your IRA or if you receive a
distribution from your IRA and you have at any time made nondeductible
contributions, you are required to file a Form 8606, Nondeductible IRAs
(Contributions, Distributions and Basis), with your federal income tax return.
If you receive a distribution from your IRA, you are required to provide
certain information on your tax return for the year in which the distribution
was received. The fund in which your IRA is invested is required to report
distributions from the account on the Form 1099-R.
INCOME TAX WITHHOLDING
We are required to withhold income taxes on distributions from your IRA
unless you have supplied us with correct taxpayer identification information
(your Social Security Number and exempt status, if any). If you do not give us
a withholding certificate (IRS W-4P) we will withhold income tax at a rate of
10%. You can elect out of the IRA withholding rules by providing us with the
appropriately executed forms.
INVESTMENTS
Under the Markman MultiFund Trust IRA you may invest in selected mutual
funds. Neither investment results nor growth in the value of your account can
be projected or guaranteed for a mutual fund, but you should read the
prospectus to understand each fund's objective and past investment record.
FEES AND CHARGES
There are no fees for maintaining the Markman MultiFund IRA. Of course, the
shares of the fund in which your account is invested will be affected by
management fees and other expenses of that fund. These matters are also
discussed in each fund prospectus which you received prior to or along with
this brochure.
INSTRUCTIONS
In this booklet, we have attempted to answer many of the commonly asked
questions concerning IRAs. The Custodial Agreement and Disclosure Statement,
as required by Internal Revenue Regulations, explain the rules applicable to
IRAs in detail. If you need additional information ... to open an IRA ... or
to transfer an existing IRA from another institution to us, please call one of
the numbers listed below and talk with one of our qualified IRA
representatives. We will be happy to answer all of your questions.
Nationwide 800-707-2771
Cincinnati 513-629-2070
Markman MultiFund Trust IRA
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
<PAGE>
CUSTODIAL AGREEMENT
EFFECTIVE JANUARY 1, 1994
Approved by Internal Revenue Service
Favorable Opinion Letter Serial Number D180153a
Issued to Midwest Group Financial Services, Inc. on June 13, 1994
By executing the Adoption Agreement, the Participant hereby applies to
establish with Markman MultiFund Trust an Individual Retirement Account
intended to qualify under Section 408 of the Internal Revenue Code.
ARTICLE I DEFINITIONS
1.1 "Account" shall mean the assets held from time to time by the Custodian
under this Agreement as part of the Markman MultiFund Trust Individual
Retirement Account, on behalf of a Participant, a Participant's Spouse or his
or her Beneficiary or Beneficiaries.
1.2 "Adoption Agreement" shall mean the form prescribed by the Service
Company as executed by or on behalf of the Participant, the Custodian, and the
Service Company, by which the Participant adopted the IRA as set forth herein.
1.3 "Agreement" shall mean this Custodial Agreement, as amended for the Tax
Reform Act of 1986, and the Adoption Agreement.
1.4 "Beneficiary" shall mean the person or persons designated by a
Participant, a Participant's spouse or a person otherwise specified pursuant
to Section 4.5 to receive benefits by reason of the death of a Participant or
such Spouse.
1.5 "Code" shall mean the Federal Internal Revenue Code of 1986, as amended
from time to time, or other statute of similar import.
1.6 "Custodian" shall mean the bank or other person named as such in the
Adoption Agreement or any successor Custodian selected or approved by the
Sponsor.
1.7 "Excess Contribution" shall mean that portion of any contribution, other
than a Rollover Contribution under Section 2.2, by or on behalf of a
Participant which exceeds the limitations of the Code with respect to the Year
in question.
1.8 "Investment Company" shall mean any one or more of investment companies
for which Markman Capital Management, Inc. or its affiliates or successors
serve as an investment adviser or principal underwriter which has been
designated by the Participant in the Adoption Agreement or subsequent written,
or if authorized, telephone instructions, and "Investment Company Shares"
shall mean shares of any one or more of the Investment Companies, provided
that the then current form of Adoption Agreement and the prospectus of such
company offers its shares to a Participant. The word Fund(s) may be used to
mean investment companies.
1.9 "Participant" shall mean the individual whose name or names appear as
such in the Adoption Agreement and the individual's successors, assigns, or
Beneficiaries.
1.10 "IRA" shall mean an individual retirement account under Code Section
408(a), including the Markman MultiFund Trust Individual Retirement Account
under this Agreement, an individual retirement annuity under Code Section
408(b) and an individual retirement bond under Code Section 409, before repeal
by the Tax Reform Act of 1986. The term "IRA" shall also mean an IRA
established for a Participant's spouse under Code Section 219(c) (a "Spousal
IRA"); an IRA established by an employer or association of employees under
Code Section 408(c) (an "Employer IRA"); an IRA under a Simplified Employee
Pension ("SEP") under Code Section 408(k) (a "SEP-IRA"); an IRA established or
maintained to receive a Rollover Contribution from another IRA or a qualified
employer or governmental plan (a "Rollover IRA"); an IRA established solely to
receive distributions from an employer Qualified Plan which may be rolled over
to another employer Qualified Plan under Code Sections 402(a)(5), 402(a)(7),
(402(c) for years beginning after December 31, 1992), 403(a)(4) or 403(b)(8)
(a "Conduit IRA"); and an IRA acquired by an individual other than a surviving
spouse, upon the death of an IRA Participant under Code Section 408(d)(3)(C)
(an "Inherited IRA").
<PAGE>
1.11 "Rollover Contribution" shall mean a contribution described in Section
402(a)(5), 402(a)(7), (402(c) for years beginning after December 31, 1992),
403(a)(4), 403(b)(8) or 408(d)(3).
1.12 "Service Company" shall mean MGF Service Corp. or its successors and
assigns as designated by the Sponsor pursuant to this Agreement.
1.13 "Sponsor" shall mean Midwest Group Financial Services, Inc., its
successors and assigns.
1.14 "Year" shall mean the calendar year.
ARTICLE II CONTRIBUTIONS TO ACCOUNT
2.1 Annual Cash Contributions. Except in the case of a Rollover
Contribution, for each Year before age 70 1/2, there may be contributed to the
Account by or on behalf of a Participant such amount of cash not to exceed
whichever of the following is applicable, as determined by the Participant:
(a) the lesser of $2,000 or 100% of the Participant's Compensation for
such Year; or
(b) if either the Participant or the spouse with whom the Participant
files a joint tax return for the year has or elects to be treated as
having no Compensation for such Year, the aggregate amount contributed by
or on behalf of the Participant (or if the Participant has or elects to be
treated as having no Compensation, by or on behalf of such spouse) to this
Plan, and to a similar custodial account or trust fund for the
Participant's spouse, may not exceed the lesser of $2,250 or 100% of
Compensation for such Year provided, however, that no more than $2,000 may
be contributed in any Year to the Participant's Account, and no more than
$2,000 may be contributed in any Year to the custodial account or trust
fund for the Participant's spouse.
No contribution will be permitted to an Account which is an Inherited IRA.
Contributions in excess of the limitations in this Section 2.1 may be an
Excess Contribution subject to the 6% excise tax of Code Section 4973 unless
such Excess Contribution is corrected as provided in Section 2.3.
2.2 Rollover Contributions and Plan to Plan Transfers. In addition to any
annual contributions referred to in Section 2.1, but subject to this Section
2.2, a Participant may contribute or cause to be contributed to the Account at
any time a Rollover Contribution of such cash or other property as shall
constitute such Rollover Contribution. The Service Company will accept for the
Account all Rollover Contributions which consist of cash and/or Investment
Company Shares. The Service Company may, but shall be under no obligation to
accept any other form of property in a Rollover Contribution but if the
Service Company elects to accept such Rollover Contribution property, it will
accept all, but not less than all, of such Rollover Contribution.
No Rollover Contribution may be made to this Account from an IRA if within
the one year period before such distribution a Rollover Contribution had been
made from the same IRA. In addition, no Rollover Contributions may be made to
or from an IRA which is an Inherited IRA. Rollover Contributions will be
credited by the Service Company to any of the forms of IRAs described in
Section 1.10. In the event the Participant establishes a Conduit IRA no
further tax deductible contributions may be added to such Account.
In addition to Rollover Contributions, the Service Company may, at its
discretion, accept a transfer of assets directly from a Custodian or Trustee
of an IRA or qualified governmental or employer plan (a "Plan to Plan
Transfer"). The Participant may also request the Service Company to transfer
all or a portion of the Account to another IRA. Subject to the rules of this
Section 2.2 relating to Rollover Contributions, such Plan to Plan Transfers
may be in cash, Investment Company Shares or other property.
<PAGE>
2.3 Treatment of Excess Contribution. If a Participant notifies the Service
Company in writing that all or any portion of the amount contributed to the
Account by or on behalf of the Participant with respect to any Year is an
Excess Contribution, and if such written notice specifies the amount of such
Excess Contribution, the Service Company will at the election of the
Participant, either (a) distribute such Excess Contribution from the Account
to the Participant, or (b) subject to the limitations in Section 2.1, credit
such Excess Contribution as if it were a cash contribution by or on behalf of
the Participant for the current Year. If the Participant's notice indicates
that he intends for a distribution pursuant to subdivision (a) of the
preceding sentence to comply with Section 408(d)(4) of the Code (concerning a
return of Excess Contributions and net income thereon prior to the due date of
the Participant's tax return), the Service Company will, not later than the
tenth business day following receipt of the Participant's notice, distribute
to the Participant the Excess Contribution plus the amount of income
attributable to such Excess Contribution.
2.4 Responsibility of Service Company and Custodian. Neither the Service
Company nor the Custodian shall be responsible for the deductibility under
Section 219 of the Code of any contribution to the Account, for the
classification of any contribution as a Rollover Contribution or for the
propriety of any Plan to Plan Transfer and under no circumstances shall the
Service Company or the Custodian be liable to a Participant for any
disallowance of such deduction, for the failure of a contribution to qualify
as a Rollover Contribution or for the failure of a contribution to qualify as
a Plan to Plan Transfer.
2.5 Service Company to Maintain Records. The Service Company and the
Custodian shall maintain records showing the Investment Company Shares and any
other property credited to the Account of the Participant and shall maintain
such other accounts and records as it deems necessary to administer the
Accounts of all Participants in Markman MultiFund Trust IRAs. The Service
Company shall not maintain any records concerning the deductibility of
contributions to this Account.
ARTICLE III INVESTMENT OF ACCOUNT
3.1 Investment Company Shares. The Custodian will invest all contributions
by or on behalf of a Participant in accordance with the written instructions
of the Participant as set forth in the Adoption Agreement or in subsequent
writings or, if so authorized, by telephone instructions delivered to the
Service Company prior to or at the time of the contribution, in full and
fractional Investment Company Shares. The Custodian will invest contributions
in Investment Company Shares within a reasonable time after receipt. The
Participant acknowledges that neither the Service Company nor the Custodian
has rendered or undertakes to render any investment advice whatsoever, and
that the assets in the Account are to be invested and controlled exclusively
by the Participant (or Beneficiary, if applicable) pursuant to the provisions
of the Agreement, and the Participant may at any time alter the investment of
such assets by giving instructions as set forth in Section 3.5.
<PAGE>
3.2 Reinvestment of Earnings. All dividends, gains, or other distributions
received in respect of Investment Company Shares (unless received in
additional shares of Investment Companies held in Account), and all income and
distributions of every nature received in respect of any Rollover Contribution
or Plan to Plan Transfer (after liquidation to cash, if necessary, in
accordance with Section 3.3) will be reinvested in full and fractional
Investment Company Shares held in the Account. If any distribution in respect
of Investment Company Shares may be received, at the election of the
shareholder, in cash or other property, the Custodian will elect to receive
such distribution in additional shares. If a cash distribution is received in
respect of shares of a single Investment Company, the Custodian will reinvest
such cash in additional shares of that Investment Company. If any earnings or
other distribution is received in respect of the assets of the Account the
reinvestment of which is not covered by the two preceding sentences, then the
distribution will be liquidated to cash if necessary and will be reinvested in
additional full and fractional Investment Company Shares in proportion (to the
extent practicable) to the respective values of the Investment Company Shares
held in the Account on the date such reinvestment is made. The charges
described in the applicable prospectus(es) and other charges attributable to
the investment in such Investment Company Shares will be charged to the
Account.
3.3 Investment of Rollover Contribution and Plan to Plan Transfers.
Submission of a Rollover Contribution or Plan to Plan Transfer by or on behalf
of a Participant shall be deemed to be the instruction of the Participant to
the Service Company that, if such Rollover Contribution or Plan to Plan
Transfer is accepted, the Service Company will use its best efforts to sell
for the Participant's Account whatever portion of the Rollover Contribution or
Plan to Plan Transfer does not consist of cash and Investment Company Shares.
The Custodian shall invest the proceeds of any such sale in accordance with
Section 3.2. To the extent permitted by law, neither the Service Company nor
the Custodian shall be liable to anyone for any loss of income or appreciation
with respect to the proceeds thereof after such sale and prior to investment
pursuant to Section 3.2; or for any failure to effect such sale if such
property proves not readily marketable in the ordinary course of business.
Unless otherwise authorized by the Service Company and instructed by the
Participant, all brokerage and other costs incidental to the sale or attempted
sale of such property will be charged to the Account.
3.4 Insurance Contracts; Collectibles; Commingling. No part of the Account
will be invested in life insurance contracts. No part of the Account will be
invested in collectibles, as defined in Code Section 408(m). No part of the
Account will be commingled with any other property except in a common trust
fund or common investment fund which includes only assets of individual
retirement accounts and the assets of trusts exempt from taxation under
Section 501(a) of the Code which are parts of plans described in Section
401(a) of the Code.
<PAGE>
3.5 Instructions as to Investments. A Participant (or following the death of
the Participant, his Beneficiary) may at any time, by written instructions
(or, if so authorized in the Adoption Agreement, by telephone instructions)
delivered to the Service Company:
(a) instruct the Service Company to exchange all or any part of the
Investment Company Shares held in the Account for shares of any other
Investment Company or Companies available under this Agreement, provided
(i) that the Custodian, as holder of such shares, then has the right to
exchange such shares for the shares designated by the Participant, and
(ii) that the then current prospectus for the shares so designated allows
such exchange on the basis requested;
(b) instruct the Service Company to exchange all or any part of the
Investment Company Shares held in the Account and to invest the redemption
proceeds in the shares of any other Investment Company available under the
Agreement, provided (i) that such other Investment Company is then making
a public offering of its shares, and (ii) that the shares of such other
Investment Company may be sold in the state of residence of the
Participant, or
(c) instruct the Service Company to invest all of any new contribution
made by or on behalf of the Participant (except for any non-cash portion
of a Rollover Contribution deemed not readily marketable by the Service
Company) in Investment Company Shares available under the Agreement but
not then held in the Account, provided (i) that such designated Investment
Company is then making a public offering of its shares, and (ii) that the
shares of such designated Investment Company may be sold in the state of
residence of the Participant.
All charges incidental to carrying out such instructions will be charged
to the Account, unless otherwise authorized by the Service Company and
instructed by the Participant. All such instructions will be in writing and
will be in a form acceptable to the Service Company. By delivering such
instructions to the Service Company, the Participant (or Beneficiary, if
applicable) will be deemed to have acknowledged receipt of the then current
prospectus for the shares of the Investment Company in which the investment is
to be made.
<PAGE>
ARTICLE IV DISTRIBUTIONS FROM ACCOUNT
4.1 General Requirements as to Distributions. Subject to the provisions of
this Article IV, the Custodian will distribute a specified portion of the
Account, the entire Account or the remaining balance thereof to the
Participant (or Beneficiary, if applicable) on such date and in such manner as
the Participant (or Beneficiary, if applicable) shall have specified in
written instructions to the Service Company. All instructions as to
distribution shall be written, shall be signed by the Participant (or
Beneficiary, if applicable), and shall be delivered to the Service Company.
The Service Company shall process the instructions no later than the tenth
business day after receipt thereof. If instructions as to distributions are,
in the opinion of the Service Company, not clear, the Service Company shall
request clarification from the Participant or other person requesting
distribution, and pending receipt of such clarification, no distribution shall
be made.
Except in the case of the Participant's death, disability (as defined in
Section 72(m)(7) of the Code) or attainment of age 59 1/2, or in the case of a
return of Excess Contribution under Section 2.3, before the Service Company
shall be required to cause distribution of any amount to the Participant to
occur, the Service Company shall have received from the Participant a written
declaration of his intention as to the disposition of the amount to be
distributed. The Service Company may require such certificates or other proof
as to the age, death, or disability of the Participant or other matters as the
Service Company deems necessary for it to establish the reasons for, or
intended disposition of, the distribution.
4.2 Methods of Distribution. Subject to the requirements of this Article IV
and any regulations issued under the Code, a Participant (or Beneficiary, if
applicable) may elect to have his Account distributed in one or more of the
following methods:
(a) Partial Distribution. The Participant (or Beneficiary, if applicable)
may request in writing that a specific amount of money or a specific number of
Investment Company Shares be liquidated and distributed from the Account to
the Participant.
(b) Periodic Distributions. The Participant (or Beneficiary, if applicable)
may request in writing that a specific amount of money or a specific number of
Investment Company Shares be liquidated and distributed from the Account on a
monthly, quarterly, or annual basis, subject to any minimum distribution
amounts required by the Service Company from time to time.
(c) Lump Sum Distribution. The Participant (or Beneficiary, if
applicable) may request in writing that the entire Account either be
distributed in kind or liquidated and distributed in cash to the Participant.
Notwithstanding that distribution may have commenced pursuant to this
Section 4.2, the Participant (or Beneficiary, if applicable) may, at any time,
instruct the Service Company to accelerate or decelerate payments or to make
distribution of the balance in the Account pursuant to Section 4.2(c).
4.3Required Minimum Distributions to Participant. Upon the written request
of the Participant, the entire value of the Account of the Participant will be
distributed or commence to be distributed, no later than the first day of
April following the Year in which such Participant attains age 70 1/2
(Required Beginning Date), over a period certain not extending beyond the life
expectancy of the Participant or the joint and last survivor expectancy of the
Participant and his Beneficiary.
<PAGE>
The amount to be distributed each year, beginning with the first Year for
which distributions are required and then for each succeeding Year, shall not
be less than the lesser of the entire value of the Account or the quotient
obtained by dividing the Participant's benefit by the lesser of (a) the
applicable life expectancy or (b) if the Participants' spouse is not the
Beneficiary, the applicable divisor determined from the table set forth in
Q&A-4 or Q&A-5, as applicable of Section 1.401(a)(9)-2 of the Proposed Income
Tax Regulations.
Distributions after the death of the Participant shall be distributed using
the applicable life expectancy as the relevant divisor without regard to
Proposed Regulation Section 1.401(a)(9)-2.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. The
Participant will make an election to either recalculate life expectancy
annually or not recalculate life expectancy annually. Such election shall be
irrevocable by the Participant and shall apply to all subsequent years. The
life expectancy of a non-spouse Beneficiary may not be recalculated. Instead,
life expectancy will be calculated using the attained age of such Beneficiary
during the Year in which the Participant attains age 70 1/2, and payment for
subsequent years shall be calculated based on such life expectancy reduced by
one for each Year which has elapsed since the Year life expectancy was first
calculated.
However, no distribution needs to be made in any Year, or a lesser amount
may be distributed, if at the Required Beginning Date, the aggregate amounts
distributed by such date are at least equal to the aggregate of the minimum
amounts required to have been distributed by such date in accordance with the
preceding paragraphs.
Notwithstanding anything to the contrary contained herein, a Participant
may satisfy the minimum distribution requirements under Sections 408(a)(6) and
408(b)(3) of the Code by receiving a distribution from one IRA that is equal
to the amount required to satisfy the minimum distribution requirements for
two or more IRAs. For this purpose, the owner of two or more IRAs may use the
"alternative method" described in Notice 88-38, 1988-1 C.B.524, to satisfy the
minimum distribution requirement described above.
4.4 Required Minimum Distributions Upon the Death of the Participant. If the
Participant dies after distribution of his interest has begun, the remaining
portion of such interest will continue to be distributed at least as rapidly
as under the method of distribution being used prior to the Participant's
death.
<PAGE>
If the Participant dies before distribution of his interest begins,
distribution of the Participant's entire interest shall be completed by
December 31 of the Year containing the fifth anniversary of the Participant's
death except to the extent that an election is made to receive distributions
in accordance with (a) or (b) below:
(a) If the Participant's interest is payable to a Beneficiary, then the
entire interest of the Participant may be distributed over a period
certain not greater than the life expectancy of the Beneficiary commencing
on or before December 31 of the Year immediately following the Year in
which the Participant died.
(b) If the Beneficiary is the Participant's surviving spouse, the date
distributions are required to begin in accordance with (a) above shall not
be earlier than the later of (1) December 31 of the Year immediately
following the Year in which the Participant died or (2) December 31 of the
Year in which the Participant would have attained age 70 1/2.
(c) If the Beneficiary is the Participant's surviving spouse, the spouse
may treat the account as his own Individual Retirement Arrangement (IRA).
This election will be deemed to have been made if such surviving spouse
makes a regular IRA contribution to the Account, makes a Rollover
Contribution to or from such Account or fails to elect any of the above
provisions.
Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. For purposes
of distributions beginning after the Participants' death, if the surviving
spouse is the Beneficiary, the surviving spouse will make an election to
either recalculate life expectancy annually or not recalculate life expectancy
annually. Such election shall be irrevocable by the surviving spouse and shall
apply to all subsequent years. In the case of any other Beneficiary, life
expectancies shall be calculated using the attained age of such Beneficiary
during the Year in which distributions are required to begin pursuant to this
section, and payments for any subsequent Year shall be calculated based on
such life expectancy reduced by one for each Year which has elapsed since the
Year life expectancy was first calculated.
Distributions under this section are considered to have begun if the
distributions are made on account of the Participant reaching his required
beginning date. If the Participant receives distributions prior to the
required beginning date and the Participant dies, distributions will not be
considered to have begun.
<PAGE>
4.5 Beneficiary. A Participant may designate a Beneficiary at any time and
any such prior designation may be changed or revoked at any time by a
Participant by written designation signed by the Participant on a form
acceptable to and filed with the Service Company; provided, however, that no
such designation, or change or revocation of a prior designation, shall be
effective unless received by the Service Company within thirty (30) days after
the death of the Participant, and provided further that the last such
designation of Beneficiary or change or revocation of Beneficiary executed by
the Participant, if received by the Service Company within the time specified,
shall control. If the Participant had not, by the date of his death properly
designated a Beneficiary in accordance with the preceding sentence, or if no
designated Beneficiary survives the Participant, the Participant's Beneficiary
for the purposes of this Agreement shall be the Participant's estate.
Unless otherwise specified in the form of designation of Beneficiary filed
by the Participant in accordance with the preceding paragraph, if a
Beneficiary shall die prior to receiving his entire interest in the Account,
such Beneficiary's remaining interest in the Account shall be paid to the
estate of such deceased Beneficiary; except that if (i) distribution to the
Participant had commenced pursuant to Section 4.3 under a method of
distribution providing for continuation of payments to the Participant's
surviving spouse, and if (ii) the Participant predeceases such surviving
spouse, and if (iii) the Participant did not otherwise specify in his written
form of designation of Beneficiary, then such surviving spouse shall be
entitled to designate a Beneficiary to receive the balance of the Account, if
any, remaining upon the death of such spouse.
4.6 Responsibility of the Custodian and Service Company. Neither the
Custodian nor the Service Company assumes, nor shall either of them have, any
responsibility to make any distribution unless and until instructions relating
thereto and in conformity with this Article IV have been received by the
Service Company. Neither the Custodian nor the Service Company assumes, nor
shall either of them have, any responsibility or liability for the timing,
purpose or propriety of any distribution from a Participant's Account, which
matters are and shall be the exclusive responsibility of the Participant or
his Beneficiary.
<PAGE>
ARTICLE V CONCERNING THE CUSTODIAN AND THE SERVICE COMPANY.
5.1 Powers and Duties of the Custodian. In addition to, and not in
limitation of, such powers as the Custodian has by law or under any other
provisions of this Agreement, the Custodian shall, subject to the limitations
set forth in Article III, have the following powers:
(a) to deal with all or any part of the assets in the Account;
(b) to retain uninvested (without liability for interest) such cash of
the Account held hereunder where investment of such cash in Investment
Company Shares is delayed for any reason;
(c) to enforce by suit or otherwise, or to waive its rights on behalf of
the Account held hereunder, and to defend claims asserted against it or
the Account, provided that the Custodian is indemnified to its
satisfaction against liability and expenses;
(d) to compromise, adjust and settle any and all claims against or in
favor of it or the Account;
(e) to vote, or give proxies to vote, any stock or other security, and
to waive notice of meetings, but only to the extent specified in Section
5.6 below;
(f) to oppose, or participate in and consent to, the reorganization,
merger, consolidation or readjustment of the finances or capitalization of
any enterprise, to pay assessments and expenses in connection herewith,
and to deposit securities under deposit agreements;
(g) to hold securities unregistered or to register them in its own name
or the name of nominees;
(h) to make, execute, acknowledge and deliver any and all instruments that
it deems necessary or appropriate to carry out the powers of an owner with
respect to all or any part of the Account.
5.2 Responsibility of Custodian and Service Company. To the extent permitted
by law, neither the Custodian nor the Service Company shall be liable for any
action or non-action taken pursuant to the instructions of the Participant (or
Beneficiary, if applicable), nor shall either of them be liable for any loss
which may be incurred by the Account held hereunder except to the extent that
such loss has been caused by its bad faith or negligence. The Custodian and
the Service Company serve solely to receive and invest contributions as
directed by the Participant, to hold such investments, to reinvest all
distributions made with respect thereto, to make distributions as directed by
a Participant, and to keep records with respect to the Participant's Account,
all in accordance with the provisions of this Agreement. To the extent
permitted by law, neither the Custodian nor the Service Company shall be
liable to anyone for any loss, or by reason of any breach, which results from
the Participant's (or Beneficiary's, if applicable) exercise of control over
the assets in his Account.
<PAGE>
5.3 Responsibility as to Contributions, Transfers or Distribution. Neither
the Custodian nor the Service Company will under any circumstances be
responsible for the timing, purpose or propriety of any contribution, any
transfer or any distribution made hereunder. The Code imposes a tax upon a
Participant if any Excess Contribution is made to a Participant's Account, or
if any early distribution (referred to in Section 72(t) of the Code) is made
from the Participant's Account prior to attaining the age of 59 1/2 years
(except in the case of death or disability), or if distributions to the
Participant are not made or commenced prior to the first day of April of the
Year following the Year in which the Participant attains age 70 1/2, or if
distributions are made in a timely fashion but are insufficient in amount.
Neither the Custodian nor the Service Company shall incur any liability or
responsibility for any such tax which shall be the sole responsibility of the
Participant.
5.4 Fees and Expenses. The fees of the Custodian and the Service Company for
performing their duties hereunder shall be in such reasonable amount as each
shall establish from time to time. Until further notice, the fees for the
Account shall be as set forth in the Disclosure Statement. The Account may
incur expenses for sales charges upon the investment of funds, and the
Custodian and the Service Company may incur expenses specifically attributable
to the Account of a Participant (such as, without limitation, fees for special
legal services, taxes levied or assessed on the Account, or special expenses
incurred in connection with the liquidation or retention of all or part of a
Rollover Contribution or Plan to Plan Transfer). All such fees and expenses
shall be collected by the Service Company, either by redemption or sufficient
Investment Company Shares and application of the redemption proceeds to pay
such fees and expenses or by billing the Participant directly.
5.5 Actions in the Absence of Specific Instructions. If the Service Company
receives no response to communications sent to the Participant at the
Participant's last known address as shown in the records of the Service
Company, or if the Service Company determines on the basis of evidence
satisfactory to it, that the Participant is legally incompetent, the Service
Company may make such determinations with respect to distributions,
investments and other administrative matters arising under the Agreement as it
considers reasonable (notwithstanding any instructions or directions given by
or on behalf of the Participant). However, no distributions will be made from
the Account unless and until written instructions are received from a court
appointed guardian or legally appointed representative. The Service Company
will require such documents as it deems necessary to determine the status of
the person requesting distribution from the Account on behalf of the
Participant prior to making such distribution.
<PAGE>
5.6 Voting with Respect to Investment Company Shares. A Participant may
direct the Custodian as to the manner in which any Investment Company Shares
(including fractional shares) held by the Custodian in such Participant's
Account shall be voted with respect to any matters coming before any meeting
of shareholders of the Investment Company which issued such shares. All such
directions by the Participant shall be in writing on a form approved by the
Service Company signed by the Participant, and delivered to the Service
Company within the time prescribed by it. The Custodian shall vote only those
Investment Company Shares with respect to which the Service Company has
received timely written directions from the Participant. Subject to any
requirements of applicable law, the Service Company shall deliver to a
Participant copies of any notice of shareholders' meetings, proxies and
proxy-soliciting materials, prospectuses, and the annual and other reports to
shareholders which have been received by the Custodian with respect to
Investment Company Shares held by the Custodian in the Participant's Account.
5.7 Nonforfeiture of Benefits. The Account shall be held for the exclusive
benefit of the Participant and his Beneficiary. The interest of the
Participant in the balance of the Account shall at all times be
nonforfeitable, but shall be subject to the fees and expenses described in
Section 5.4.
ARTICLE VI SPENDTHRIFT PROVISIONS
The interest of a Participant in the Account shall not be transferred,
pledged or assigned by a voluntary or involuntary act of the Participant or by
operation of law; nor shall it be subject to alienation, assignment,
garnishment, attachment, receivership, execution or levy of any kind. Any such
assignment or pledge of an IRA under this agreement shall be taxable as a
distribution and if the Participant has not attained age 59 1/2, shall be
subject to a 10% excise tax under the Code. Notwithstanding the foregoing, in
the event of a property settlement between a Participant and his former spouse
pursuant to which the transfer of a Participant's interest hereunder, or a
portion thereof, is incorporated in a divorce decree or in a written
instrument incident to such divorce, the interest so decreed to be the
property of such former spouse shall be re-registered in a separate Account
then established hereunder for the benefit of such former spouse. In the event
of such a transfer incident to a divorce, such former spouse shall be deemed
to be a Participant under this Agreement as to such new separate Account.
<PAGE>
ARTICLE VII AMENDMENT AND TERMINATION; RESIGNATION OR REMOVAL OF CUSTODIAN
7.1 Amendment. The Participant and Custodian may authorize and direct
the Service Company to amend this agreement in any respect at any
time (including retroactively) effective on a stated date, so that
it may conform with applicable provisions of the Code as in effect
from time to time or in order to obtain expeditiously an Internal
Revenue Service determination, opinion or ruling the such requirements are
met, or to conform this Agreement with other applicable law. Any such
amendment shall be effected by delivery to the Custodian and mailing to the
Participant at his address as shown in the records of the Service Company a
copy of a written instrument executed by the Service Company setting forth
such amendment.
Any amendment to this Agreement other than one made for the purposes set
forth in the preceding paragraph shall require the consent of the Participant
and the Custodian; provided, however, that no such amendment shall deprive a
Participant or his Beneficiary of any amount to which he was entitled prior to
such amendment (unless such amendment is necessary to conform this Agreement
to, or to satisfy the conditions of, Section 408 of the Code or other
applicable law), and provided further than no such amendment shall permit any
asset held hereunder to be diverted to a purpose other than for the exclusive
benefit of a Participant (or Beneficiary, if applicable) for whom it is then
held.
7.2 Resignation or Removal of Custodian and Service Company. The Custodian
or the Service Company may resign at any time, upon thirty (30) days' written
notice to the Participant; and the Custodian or the Service Company may be
removed at any time by the Participant upon thirty (30) days' written notice.
Upon notice of such resignation or removal of the Custodian, the
Participant shall appoint a successor Custodian, which successor shall satisfy
the requirements set forth in Section 408(1)(2) of the Code. Upon receipt by
the Custodian of written notice of such appointment by the successor
Custodian, the assets of the Account, together with copies of relevant books
and records, shall be transferred to such successor Custodian. The Custodian
is authorized, however, to reserve such sum of money or property as it may
deem advisable for payment of any liabilities constituting a charge on or
against the assets of the Account held hereunder, or on or against the
Custodian or the Service Company, with any balance of such reserve remaining
after the payment of all such items to be paid over to the successor
Custodian. The successor Custodian shall hold the assets paid over to it under
terms similar to those of this Agreement that qualify under Section 408 of the
Code. The Custodian shall not be liable for the acts or omissions of any
successor to it. If within thirty (30) days after notice of the Custodian's
resignation or removal the Participant has not appointed a successor Custodian
which has accepted such appointment, the Custodian shall terminate the Account
in accordance with Section 7.3, and this Agreement shall thereupon terminate.
<PAGE>
Upon resignation of the Service Company, it may designate a successor to
take over its rights, functions and responsibilities hereunder, and upon such
successor's acceptance of such designation, the Service Company shall transfer
to such successor all records (or copies thereof) pertaining to the Account.
Upon removal of the Service Company, or if, upon its resignation, the Service
Company should fail to designate a successor to itself, the Service Company
shall transfer to the Participant, or to the person designated by the
Participant, all records (or copies thereof) pertaining to the Account,
provided that it may require, as a condition to such transfer, that the
transferee agrees not to dispose of any such records without the consent of
the Service Company.
7.3 Termination. The Participant may at any time terminate the Account under
the Agreement by delivering to the Service Company a written notice of
termination signed by the Participant; provided, however, that if such
termination occurs prior to the Participant's death, disability (as defined in
Section 72(m) of the Code), or attainment of age 59 1/2, the Participant shall
furnish the Service Company with a written declaration of his intention as to
the disposition of the amount to be distributed in accordance with the
requirement set forth in Section 4.1. The Custodian may terminate the Account
under this Agreement under circumstances described in Section 7.2.
Termination of an Account under this Agreement shall be effected by the
Custodian's distributing the assets held hereunder in a lump sum in cash or in
kind to or for the benefit of the Participant (or Beneficiary, if applicable),
subject to the reserving of such funds as may be necessary to pay the fees and
expenses referred to in Section 5.4. Termination of this Agreement shall occur
automatically upon distribution of all assets held hereunder. Upon such
termination, the Custodian and the Service Company shall be relieved from all
further liability with respect to this Agreement.
ARTICLE VIII MISCELLANEOUS
8.1 Notices. All notices required to be given by the Custodian or the
Service Company to the Participant shall be deemed to have been given when
sent by mail to the address of the Participant in the records of the Service
Company. All notices required to be given by the Participant to the Custodian
or the Service Company shall be deemed to have been given when received by the
Service Company at its principal office. Whenever the Custodian or the Service
Company is required or authorized to take any action under the Agreement on
the direction of a Participant, such action shall be taken on the direction of
the duly appointed representative of the Participant or his estate, in the
event of his incompetency or death.
8.2 Governing Law. This Agreement shall be construed, administered, and
enforced according to the laws of the State of Ohio, except as superseded by
Federal law or statute.
8.3 Prohibited Transactions. The Participant shall not engage in any
transaction with respect to the Account which, pursuant to Sections 408(e)(2)
and 4975 of the Code, might cause the Account to cease to qualify as an
"Individual Retirement Account."
<PAGE>
8.4 Construction of Terms. In this Agreement, the masculine gender shall
include the feminine, the plural shall include the singular, and the singular
the plural, unless the context otherwise requires.
8.5 Information and Reports. The Participant shall furnish to the Service
Company, and the Service Company shall furnish to the Participant and
appropriate governmental agencies, such information relevant to the Account as
may be required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder, or under the other applicable laws.
Notwithstanding anything to the contrary contained herein, and as governed by
the prospectus(es) of the particular Investment Company Shares which may be
held in the Account, the Participant will receive a report concerning the
status of the Account at least once each Year (as long as there are assets in
the Account at any time during that Year).
8.6 Tax Withholding. The Participant shall furnish to the Service Company,
at such times and in such manner as requested by the Service Company, all
information necessary to comply with Treasury Department laws and regulations
concerning withholding of income taxes from distributions from IRAs. The
Participant acknowledges and agrees that if such information, including but
not limited to the Participant's tax identification number, is not furnished
in a timely manner, the Service Company will withhold and pay over to the
Treasury Department, and any other state or local authorities, the amount of
income tax otherwise required to be withheld.
<PAGE>
MARKMAN MULTIFUND TRUST IRA
===============================================================================
WHAT IS AN IRA?
===============================================================================
An Individual Retirement Account is a special kind of personal savings plan
that will enable you to accumulate money for retirement. The key benefits of
an IRA are that, in many cases, contributions are tax-deductible and all
earnings (from dividends, interest and gains) accumulate tax-free. No taxes
are paid until you begin to withdraw funds from your IRA. Even if you already
participate in an employer-sponsored pension, profit sharing or other
retirement or savings plan, you are still eligible to establish an IRA.
===============================================================================
CONTRIBUTIONS
===============================================================================
HOW MUCH CAN I PUT INTO AN IRA?
If you are employed and under age 70 1/2, you may put in up to $2,000 from
your own income; $2,250 in two accounts if you are employed and your spouse is
not (with a maximum of $2,000 in any one account); $4,000 in two accounts if
both you and your spouse are employed and each earns at least $2,000 for the
year (with a maximum of $2,000 in any one account). Contributions may be made
during the calendar year, or no later than April 15 of the following year
(even if you obtain an extension for filing your tax return). Whether or not
your contribution is fully deductible depends upon whether you or your spouse
is covered by a qualified retirement plan at work and your income. The
following table illustrates the limitations on deductions:
LIMITS ON DEDUCTIBLE CONTRIBUTIONS FOR INDIVIDUALS
COVERED BY AN EMPLOYER-SPONSORED PLAN
GROSS INCOME FOR GROSS INCOME FOR
CLASSIFICATION FULLY DEDUCTIBLE IRA PARTIALLY DEDUCTIBLE IRA
- -------------------------------------------------------------------------------
Single $25,000 $35,000
Married/Joint $40,000 $50,000
- -------------------------------------------------------------------------------
WHEN SHOULD I CONTRIBUTE TO MY IRA?
To make the most of this tax break, you should consider making your yearly
contribution to your tax-deferred plan as soon after January 1 as possible.
(You are not just sheltering your contribution, you are also sheltering the
earnings, and the sooner you put money into the account, the sooner you
protect the earnings from taxes.) In order to qualify for a deduction on the
current year's tax return, your contribution must be made on or before April
15 of the following year.
MUST I CONTRIBUTE THE SAME AMOUNT EACH YEAR?
No - you may contribute any amount as long as you do not exceed the maximum
allowed.
<PAGE>
===============================================================================
DISTRIBUTIONS
===============================================================================
WHEN CAN I TAKE MONEY OUT OF MY IRA?
You can start withdrawing funds from your IRA when you reach age 59 1/2. You
must start taking funds out by April 1 of the year following the year you
reach 70 1/2. Withdrawals before age 59 1/2 can be made without any tax
penalty in the case of death or disability. Otherwise, you must pay a 10% tax
penalty on the amount withdrawn and declare the distribution as ordinary
income for federal income tax purposes.
BENEFITS OF THE
MARKMAN MULTIFUND TRUST IRA
===============================================================================
INVESTMENT FLEXIBILITY.
The Markman MultiFund Trust IRA offers a variety of mutual funds, each with
its own investment objective.
===============================================================================
EXCHANGE PRIVILEGE.
Your IRA investment can be exchanged among the funds of the Markman MultiFund
Trust. See the prospectus for details and limitations.
===============================================================================
PROFESSIONAL MANAGEMENT.
Investments are actively managed by full-time investment professionals.
===============================================================================
NO SET-UP FEE.
There is no fee for establishing an IRA.
===============================================================================
ROLLOVERS/TRANSFERS.
IRAs provide a continuing tax-deferral for rollovers from qualified
employer-sponsored retirement plans and from other IRAs. An IRA can also be
used to receive a transfer directly from the Trustee of another IRA or a
Direct Rollover from a qualified employer-sponsored retirement plan.
IRAs may also be used to receive an employer's Simplified Employee Pension
(SEP) contributions.
<PAGE>
===============================================================================
CONVENIENCE.
All safekeeping of securities, collection of interest and recordkeeping is
performed by the Custodian. You receive easy-to-read statements.
===============================================================================
BENEFITS OF AN IRA.
The following table demonstrates the substantial advantage of using an IRA to
accumulate a retirement fund.
- -------------------------------------------------------------------------------
HOW AN INDIVIDUAL RETIREMENT ACCOUNT GROWS
COMPOUNDED DAILY AT ASSUMED RATES OF INTEREST
- -------------------------------------------------------------------------------
8% 11% 14%
Total Approx. Approx. Approx.
deposits month month month
at age 65 Value at payment Value at payment Value at payment
Age (at$2,000/yr.) age 65 at age 65 age 65 at age 65 age 65 at age 65
- -------------------------------------------------------------------------------
20 $90,000 $961,713 $7,753 $2,845,142 $28,656 $8,958,466 $109,642
- -------------------------------------------------------------------------------
25 80,000 632,554 5,099 1,621,049 16,327 4,398,527 53,833
- -------------------------------------------------------------------------------
30 70,000 413,125 3,330 920,124 9,267 2,155,727 26,383
- -------------------------------------------------------------------------------
35 60,000 266,845 2,151 518,769 5,225 1,052,610 12,882
- -------------------------------------------------------------------------------
40 50,000 169,330 1,365 288,950 2,910 510,043 6,242
- -------------------------------------------------------------------------------
45 40,000 104,323 841 157,354 1,584 243,182 2,976
- -------------------------------------------------------------------------------
50 30,000 60,986 491 82,001 825 111,927 1,369
- -------------------------------------------------------------------------------
55 20,000 32,097 258 38,853 391 47,369 579
- -------------------------------------------------------------------------------
60 10,000 12,838 103 14,147 142 15,617 191
- -------------------------------------------------------------------------------
<PAGE>
BENEFICIARY
DESIGNATION FORM
Markman MultiFund Trust (MMFT)
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-707-2771
1 PARTICIPANT NAME AND ADDRESS PLEASE TYPE OR PRINT CLEARLY.
- -------------------------------------------------------------------------------
Name Telephone Number
- -------------------------------------------------------------------------------
Address
- -------------------------------------------------------------------------------
City State Zip
- -------------------------------------------------------------------------------
Social Security Number Account Number(s)
2 NEW PRIMARY BENEFICIARY(IES)
If you wish to add or change any information relating to the primary
Beneficiary(ies) whom you designated previously, please complete this section.
- ---------------------------- -------------- ------------------- ---------------
Name Relationship Date of Birth (mo-day-yr.)
- -----------------------------------
Share of Proceeds (as a percentage)
- -------------------------------------------------------------------------------
Address City State Zip
- -----------------------------
Social Security Number
- ---------------------------- -------------- ------------------- ---------------
Name Relationship Date of Birth (mo-day-yr.)
- -----------------------------------
Share of Proceeds (as a percentage)
- -------------------------------------------------------------------------------
Address City State Zip
- -----------------------------
Social Security Number
3 NEW SECONDARY BENEFICIARY(IES)
In the event there are no surviving primary Beneficiary(ies).
If you wish to add or change any information relating to the secondary
Beneficiary(ies) whom you designated previously, please complete this section.
- ---------------------------- -------------- ------------------- ---------------
Name Relationship Date of Birth (mo-day-yr.)
- -----------------------------------
Share of Proceeds (as a percentage)
- -------------------------------------------------------------------------------
Address City State Zip
- -----------------------------
Social Security Number
- ---------------------------- -------------- ------------------- ---------------
Name Relationship Date of Birth (mo-day-yr.)
- -----------------------------------
Share of Proceeds (as a percentage)
- -------------------------------------------------------------------------------
Address City State Zip
- -----------------------------
Social Security Number
4 YOUR SIGNATURE
Return completed form to:
Markman MultiFund Trust IRA
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
I hereby revoke all my prior designations and designate the above mentioned
person or persons to receive any interest remaining in the IRA upon my death.
X ___________________________________________________________________________
Signature of Participant Date
<PAGE>
DISTRIBUTION
REQUEST
Markman MultiFund Trust (MMFT)
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-707-2771
1 PARTICIPANT NAME AND ADDRESS PLEASE TYPE OR PRINT CLEARLY.
- -------------------------------------------------------------------------------
Name Telephone Number
_______________________________________________________ Social Security Number
Address
______________________________________________ Date of birth___________________
City State Zip mo. day yr.
- ---------------------------------------------------------------------
Account Number(s)
2 DISTRIBUTION INSTRUCTIONS SELECT THE TYPE AND FREQUENCY OF DISTRIBUTIONS.
o Total Distribution -- liquidate the account(s) shown above q Partial
Distribution -- distribute $_____________________ q Periodic Distributions --
distribute $___________________
on the last business day of: o each month (Monthly)
o March, June, September, and December (Quarterly)
o June and December (Semiannually)
o December or _____________________(Annually)
(Specify One Month)
o Check(s) should be made payable to and mailed to the Participant named above
OR
o Check(s) should be made payable to__________________________________________
and Check(s) should be mailed to____________________________________________
----------------------------------------------------------------------------
----------------------------------------------------------------------------
3 DISTRIBUTION CHOOSE THE DISTRIBUTION WHICH MOST APPROPRIATELY REFLECTS YOUR
SITUATION.
o Normal -- Participant is age 59 1/2 or older
o Premature -- Participant has not reached age 59 1/2 (choose this even if
you intend to roll this distribution into another IRA) (Distributions of
this type are normally subject to both ordinary income tax and an
additional tax of 10% unless they are rolled into another IRA within 60
days of this distribution)
o Disability -- Documentation substantiating claim of disability is required
o Death -- Attach a copy of the Death Certificate (Other documentation may be
required as well. Please contact MGF Service Corp. at
1-800-707-2771 for additional information)
o Other -- __________________________________________________________________
4 IMPORTANT TAX WITHHOLDING INFORMATION AND ELECTION
Federal income taxes will be withheld from distributions at a rate of 10%
unless the Participant (or Beneficiary) elects not to have withholding apply
or elects a different rate of withholding. If you elect not to have
withholding apply or elect a different rate by completing this form or if you
have previously elected not to have withholding apply, your election will
remain in effect for all future distributions from this IRA. You may revoke or
change your election in writing at any time. Please keep in mind that, if you
elect out of the withholding requirement, penalties may be incurred under the
estimated tax rules of the Internal Revenue Service if your withholding and/or
estimated tax payments are not sufficient.
o Please withhold 10% from my distribution(s) and remit it to the IRS on my
behalf
o Please withhold _______% from my distribution(s) and remit it to the IRS
on my behalf
o Please do not withhold income tax from my distribution(s)
5 YOUR SIGNATURE
X ___________________________________________________________________________
Signature of Participant (or Beneficiary) Requesting Distribution Date
<PAGE>
SYSTEMATIC WITHDRAWAL
PLAN REQUEST
Markman MultiFund Trust (MMFT)
P.O. Box 5354
Cincinnati, Ohio 45201-5354
1-800-707-2771
Please complete this form if you would like to have regular withdrawals from
your Markman MultiFund Trust account identified below. Markman will make
regular withdrawals from your account each month, quarter or once a year. If
you would like to make regular withdrawals from more than one Markman Account,
please fill out one form per account. Please complete and return this form in
the enclosed postage-paid envelope or send (along with application if this is
a new account) to: Markman MultiFund Trust, Shareholder Services, P.O. Box
5354, Cincinnati, OH 45201-5354
1 PLEASE DESCRIBE YOUR ACCOUNT
- -------------------------------------------------------------------------------
Name Telephone Number
_______________________________________________________ Social Security Number
Address
______________________________________________ Date of birth___________________
City State Zip mo. day yr.
- ---------------------------------------------------------------------
Account Number(s)
2 PLEASE INDICATE WITHDRAWAL SCHEDULE AND AMOUNT
o MONTHLY - Withdrawals will be made on the last business day of each month.
o QUARTERLY - Withdrawals will be made on or about 3/31, 6/30, 9/30, 12/31.
o ANNUALLY - Please make withdrawals on the last business day of the month
of:_____________________.
Systematic Withdrawal Amount: $_____________________per period
3 PLEASE SELECT PAYMENT METHOD (CHECK ONE)
o Please exchange the withdrawal proceeds into another Markman account number:
______________________________.
o CHECK: Please mail a check for my withdrawal proceeds to the mailing
address indicated above.
o ACH TRANSFER: Please send my withdrawal proceeds via ACH transfer to my
bank checking or savings account as indicated below. I understand that the
transfer will be completed in two to three business days and that there is
no charge.
o BANK WIRE: Please send my withdrawal proceeds via bank wire, to the account
indicated below. I understand that the wire will be completed in one
business day and that there is an $8.00 fee.
Please attach a voided check________________________________________________
here for ACH or bank wire Bank Name Bank Address
----------------------------------------------------------------------------
Bank ABA# Account# Account
Name
4 DISTRIBUTION (FOR IRA ACCOUNT WITHDRAWALS ONLY)
FOR IRA ACCOUNTS ONLY:
q NORMAL -- I am age 59 1/2 or older.
q EARLY -- Participant has not reached age 59 1/2 (choose even if you intend
to roll this distribution into another IRA) Distributions of this type are
normally subject to both ordinary income tax and an additional penalty tax
of 10% unless they are rolled into another IRA within 60 days of the
distribution.
q OTHER: ___________________________________________________________________
5 PLEASE INDICATE FEDERAL INCOME TAX WITHHOLDING (ON IRA ACCOUNT WITHDRAWALS
ONLY)
q Please withhold_______________________% federal income tax from my IRA
withdrawal (whole percentages only).If no box is checked, 10% will
q Please do not withhold federal income tax from my IRA withdrawal.
automatically be withheld for federal income tax
6 PLEASE SIGN HERE TO AUTHORIZE YOUR REGULAR WITHDRAWALS
- ----------------------------------------------------- ----------------------
Signature Date
- ----------------------------------------------------- ----------------------
Signature of Joint Tenant - if any Date
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000931465
<NAME> MARKMAN MULTIFUND TRUST
<SERIES>
<NUMBER> 1
<NAME> MARKMAN AGGRESSIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-26-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 42,663,515
<INVESTMENTS-AT-VALUE> 42,757,897
<RECEIVABLES> 680,110
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,438,007
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,112,511
<TOTAL-LIABILITIES> 1,112,511
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42,231,114
<SHARES-COMMON-STOCK> 3,588,830
<SHARES-COMMON-PRIOR> 3,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,382
<NET-ASSETS> 42,325,496
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