THE MARKMAN MULTIFUNDS
ANNUAL REPORT
DECEMBER 31, 1996
HILLEL ON THE MARKET
1997: WILL LOWER RISK MEAN HIGHER GAIN?
UPDATES ON CONSERVATIVE, MODERATE, AGGRESSIVE PORTFOLIOS
Why is this man smiling?
photographic image of Bob Markman
<PAGE>
PPESIDENT'S MESSAGE
Photographic image of Bob Markman
Bob Markman
CEO & President
The Markman MultiFunds
Dear Fellow Investors,
Wait a second.
What is wrong with that picture? The guy is worried about the market; his
caution has caused his Funds to lag in 1996. So, yeah, why is this man
smiling?
The answer is simple: While I foresee a difficult year for the overall market,
there are, at the same time, opportunities for significant gains in areas with
more limited downside. More upside, less risk - I can't wait.
Of course, the minute I make a statement like that, our attorneys start
reaching for the Tagamet, so let me explain and put it in context.
<PAGE>
THE GOLDEN RULE:
IN ANCIENT TIMES, A STUDENT ASKED THE GREAT JEWISH SAGE HILLEL WHAT THE TRUE
MESSAGE WAS OF THE SCRIPTURES. HILLEL REPLIED, "THERE IS ONLY ONE MESSAGE,
`LOVE THY NEIGHBOR.' ALL ELSE IS COMMENTARY." THE GOLDEN RULE FOR US IS "BUY
LOW, SELL HIGH." ALL ELSE IS COMMENTARY.
Long term, prudent investing is, has always been, and always will be, grounded
in the concept of buying an asset at a bargain price and selling it when it is
overvalued - or at least fully valued.
This sounds simple enough on the surface until we confront the fact that
discussions and disagreements on full, fair, under and overvaluations are the
everyday coin of Wall Street, with thousands of differing opinions proclaimed
daily. Every trade on every stock is a microcosm inwhich one side says "cheap,"
the other says "dear." So the "truth" about values is elusive and difficult
to determine.
Only children, fools (and perhaps most baby boomers) believe that the world
was created fresh for them, with new rules designed to create maximum fun,
ease, and pleasure. The more unpleasant, dull, and realistic view of life is
that we all exist within an historic context; there are rules, norms, and
long-established processes.
Certainly change does occur. One can profit handsomely by recognizing when and
where it does, but there is good reason why smart investors know that the four
most dangerous words in the investment world are "this time it's different."
So a good starting point for cutting through all the noise of the marketplace
to attempt to recognize value is always to understand the historic context of
the situation. What can previous experiences about valuations, sentiment, and
cycles tell us about where we are now and what we might prudently do?
Buy low, sell high. Buy low, sell high. Buy low, sell high. Buy low, sell
high. Buy low, sell high. Buy low, sell high.
<PAGE>
Regression to the Mean: THE FIRST SHOE DROPS
In my last quarterly report to you (September 30, 1996), I laid out the case
that, given long-term historic ranges of returns, we are likely entering the
tail end of this incredible bull market. I made the point that the bloated
returns achieved by some funds over the past three to five years were simply
unsustainable. I specifically pointed out that:
"Risks are particularly acute in those funds that pursue aggressive momentum
strategies."
Accordingly, we cut way back on those holdings and noted in our report that in
our Aggressive Fund we eliminated eight small and mid-cap aggressive funds.
And what indeed happened? In a quarter of otherwise excellent returns, none of
these funds managed to show a gain; some sank like stones:
- ----------------------------------------------------
GRAVITY WORKS
Perkins Opportunity Down 12.3%
IAI Emerging Growth Down 11.7%
Van Wagoner Emerging Growth Down 10.9%
PBHG Growth Down 6.9%
Navallier Aggressive Small Cap Down 6.7%
Parkstone Small Cap Down 3.9%
Scudder Development Down 2.8%
Warburg Pincus Post Venture Down 1.9%
Average loss of aggressive
funds sold Down 7.14%
Gain of Markman Aggressive
Growth Fund in 4th Quarter Up +6.22%
These are all good (some excellent) funds with
experienced capable and, in some cases, brilliant
managers. We do NOT mean to imply that we are smarter
than they are. WE'RE NOT. Our only point is that nature
commands even the most magnificent high-flying bird to
return to earth eventually.
- ----------------------------------------------------
<PAGE>
The S&P and the Dow: THE OTHER SHOE WILL DROP
The aggressive small cap momentum funds moved furthest, fastest. So they began
to experience regression to the mean first. But the big blue chip stocks that
are propelling the Dow and S&P 500 are not immune from this immutable law of
market physics either. As we begin the new year, we are in the midst of a late
stage blue chip feeding frenzy; a buying panic just as mindless in its own way
as the momentum buying of last spring. This, too, will end badly. Perhaps not
in a vicious decline, but certainly in a way that causes expectations of index
fund investors to be crushed.
But I'm smiling.
Even in the midst of stumbling momentum stocks and stalling blue chips, I see
exciting upside opportunities in several areas that will, I believe, help our
portfolios achieve impressive performance this year. Here's a quick look at
two:
<PAGE>
A Sampling:
REAL ESTATE FUNDS
Funds that invest in real estate investment trusts (REITS) have begun to
significantly outperform after an extended slumber. While they began to do
well again earlier in 1996, the real acceleration began just a month or so
ago. What's behind this? First, while the market begins to show concerns about
the prospect for earnings and cash flow in the blue chip sector, we are in a
period of strong earnings and cash flow for REITS. Fundamentally, the wind is
at our back here. Second, because the underlying "product" of a REIT is a real
piece of property, the movement of REIT prices does not always change in
lockstep with the market as a whole. They have historically provided
stabilizing diversification -- an attractive trait in a potentially rocky
year. Third, REITS sport healthy yields of 4-7%, very attractive compared to
the less than 2% offered by blue chips today. Because of their defensive
nature and high yield, REITS are seeing investment dollars flow to them that
normally, in other times like this, would have gone to utility stocks.
Increased cash flow into a sector never hurts it, and the significance and
potential of increased attention and direction of dollars loom large when you
consider one amazing fact: AS THE NEW YEAR BEGAN, THE MARKET CAP OF ONE BLUE
CHIP, MERCK, WAS 50% GREATER THAN THE COMBINED MARKET CAP OF ALL PUBLICLY
TRADED REITS.
<TABLE>
<CAPTION>
<S> <C>
S&P 500 +70%
Cohen & Steers Realty +42%
[mountain chart representing comparative performance of S&P 500 vs.
Cohen & Steers Realty from January 1994 through December 1996]
REITS (as illustrated by C&S Realty, a fund we consider the best run overall
in the sector) have lagged the broad market by a wide margin over the past
three years. We think it's time for some "catch up."
</TABLE>
S&P 500
Cohen & Steers Realty
[mountain chart representing comparative performance of S&P 500 vs.
Cohen & Steers Realty from January 1996 through December 1996]
1996 was a good year for REITS, but the outperformance only began as recently
as December. We think we're still in the early stages of the catch-up move.
<PAGE>
SMALL CAP VALUE
We have recently made additions to another area that we believe will produce
excellent risk-adjusted returns in 1997 and beyond: small cap value.
The seemingly inexorable rise in the dozen market-leading large cap growth
stocks has left many small caps in a sleepy and relatively stagnant backwater.
This is more a result of current fad and fashion than a reflection of the
underlying relative merits the two groups. From just about any perspective,
historic price earnings ratios, price-to-book, earnings growth, etcetera,
"bargains" in the small cap arena far exceed those in the narrow list of blue
chip high fliers.
Does that mean small caps must revive and begin to outperform their larger
brethren? We believe that while markets may act irrationally and inefficiently
in the short term, over the long haul we can expect efficient and rational
relationships. As you can see from the accompanying charts, blue chips (as
represented by the S&P 500) have moved well ahead of small caps (Russell 2000).
At some point (next week? next year?) the lines will begin to move closer,
probably due to some combination of strength in small caps and weakness in
blue chips. Thus, in a market that the casual observer sees as troubled, we
may be experiencing attractive gains. This should be especially noticeable
in the low PE, non-momentum value end of the small cap spectrum.
<TABLE>
<CAPTION>
<S> <C>
S&P 500 +70%
Russell 2000 +39%
[mountain chart representing comparative performance of S&P 500 vs.
Russell 2000 from January 1994 through December 1996]
Over the past three years, the large caps (S&P 500) have zoomed ahead of the
small caps (Russell 2000). Long-term historic relationships indicate that this
is an unrealistic margin, one that is likely to narrow at some point.
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
S&P 500 +23%
Russell 2000 +15%
[mountain chart representing comparative performance of S&P 500 vs.
Russell 2000 from January 1996 through December 1996]
Relative performance between large cap and small cap widened enormously in
1996. When these lines get closer (as they are likely to do) it will mean
superior small cap performance.
</TABLE>
In conclusion, we fully expect 1997 to be "pay back time" for those shareholders
who have shown the patience that is the hallmark of all long-term investors.
/s/ Bob Markman
<PAGE>
MANAGEMENT'S DISCUSSION OF PERFORMANCE
A representation of the graphic material contained in the Markman Multifund
Trust's December 31, 1996 Annual Report is set forth below.
<TABLE>
<CAPTION>
1. Growth of $10,000 invested on 1/31/95
DATE MARKMAN CONSERVATIVE LEHMAN INTERMEDIATE LIPPER BALANCED
GROWTH FUND GOVERNMENT BOND FUND INDEX
INDEX
<S> <C> <C> <C>
1/31/95 10000 10000 10000
10140 10125 10032
10150 10152 10057
10140 10230 10094
10200 10276 10195
10040 10197 10143
10160 10362 10247
10190 10384 10237
10270 10500 10263
10350 10542 10302
10380 10577 10362
10390 10597 10382
10430 10662 10369
10600 10828 10500
10680 10908 10530
10630 10873 10527
10710 11007 10659
10780 11065 10692
10800 11105 10729
10900 11210 10742
10870 11200 10761
11070 11415 10814
11150 11456 10781
11030 11293 10685
11190 11439 10709
11180 11434 10739
11180 11404 10699
11250 11447 10724
11250 11487 10789
11420 11667 10846
11550 11834 10903
11550 11788 10867
11530 11794 10852
11510 11792 10934
11550 11855 10978
11490 11815 10961
11390 11781 11009
11490 11883 11038
11440 11906 11066
11490 12001 11078
11670 12124 11115
11760 12254 11160
11730 12231 11168
11650 12166 11182
11760 12266 11241
11832 12325 11255
11735 12200 11290
11810 12300 11306
11950 12405 11308
12198 12671 11352
12294 12758 11394
12241 12625 11282
12273 12607 11233
12380 12703 11250
12241 12547 11151
12359 12644 11179
12391 12614 11137
12423 12541 11076
12456 12599 11156
12553 12645 11167
12671 12705 11157
12617 12487 11092
12789 12809 11175
12897 12899 11187
12886 12824 11161
12864 12869 11128
12832 12816 11150
12692 12785 11160
12746 12890 11254
12596 12643 11160
12337 12411 11252
12413 12491 11257
12359 12448 11244
12520 12885 11378
12542 12850 11388
12628 12898 11393
12671 12889 11341
12660 12783 11307
12735 13085 11396
12725 13125 11368
12768 13204 11438
12875 13428 11522
12864 13424 11515
12886 13500 11550
12843 13358 11557
12940 13729 11663
13058 13852 11705
13133 13930 11717
13209 14113 11765
13176 13914 11717
13155 13797 11710
13273 13991 11710
12/31/96 13382 13940 11706
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
2. Growth of $10,000 invested on 1/31/95
DATE MARKMAN MODERATE S&P 500 LIPPER EQUITY
GROWTH FUND INCOME FUND INDEX
<S> <C> <C> <C>
1/31/95 10000 10000 10000
10220 10229 10136
10270 10276 10200
10220 10283 10254
10320 10389 10321
10240 10285 10212
10340 10521 10376
10350 10569 10397
10440 10763 10560
10550 10826 10681
10590 10822 10681
10580 10873 10741
10630 11011 10816
10730 11222 10975
10840 11310 11072
10860 11232 10988
10860 11448 11148
10970 11447 11180
11040 11526 11198
11180 11689 11275
11130 11711 11291
11420 11971 11515
11590 12049 11561
11430 11917 11471
11740 12120 11615
11600 12067 11645
11670 12070 11597
11710 12042 11641
11660 12087 11707
11980 12320 11899
12140 12610 12112
12150 12602 12087
12160 12671 12091
12060 12606 12088
12120 12652 12130
12160 12667 12061
12060 12594 11941
12130 12707 12061
12120 12782 12111
12140 13028 12322
12340 13196 12458
12440 13388 12613
12390 13411 12656
12280 13274 12600
12390 13354 12704
12395 13456 12815
12241 13241 12653
12483 13351 12723
12659 13593 12876
13033 14163 13243
13110 14297 13335
13110 14141 13214
13176 14285 13202
13253 14279 13361
13033 14008 13173
13121 14192 13314
13099 14191 13340
13132 14098 13250
13154 14116 13285
13286 14182 13335
13496 14322 13436
13320 13982 13189
13683 14595 13582
13804 14764 13713
13694 14664 13644
13716 14793 13693
13595 14638 13622
13309 14661 13612
13452 14749 13666
13165 14362 13417
12516 13833 13084
12615 13954 13138
12560 13894 13087
12868 14639 13575
12813 14603 13544
12835 14676 13643
12945 14675 13654
12879 14485 13551
13088 15044 13888
13143 15193 13952
13198 15201 13987
13364 15560 14251
13342 15571 14229
13353 15714 14368
13231 15436 14211
13452 16126 14601
13540 16318 14779
13584 16476 14889
13716 16801 15136
13617 16423 14925
13551 16187 14767
13716 16639 15021
12/31/96 13834 16469 15036
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3. Growth of $10,000 invested on 1/31/95
DATE MARKMAN AGGRESSIVE S&P 500 LIPPER GROWTH
GROWTH FUND FUND INDEX
<S> <C> <C> <C>
1/31/95 10000 10000 10000
10250 10229 10215
10270 10276 10329
10190 10283 10368
10230 10389 10371
10160 10285 10315
10300 10521 10510
10330 10569 10558
10590 10763 10783
10450 10826 10728
10620 10822 10827
10480 10873 10790
10720 11011 10986
10780 11222 11133
11010 11310 11293
11190 11232 11274
11000 11448 11318
11230 11447 11443
11440 11526 11568
11800 11689 11843
11620 11711 11745
12190 11971 12194
12530 12049 12350
12170 11917 12060
12710 12120 12416
12420 12067 12312
12620 12070 12416
12710 12042 12469
12560 12087 12419
13070 12320 12820
13250 12610 13021
13220 12602 12972
13190 12671 12931
12900 12606 12740
12930 12652 12836
13060 12667 12809
12950 12594 12730
12950 12707 12852
12840 12782 12827
12690 13028 12836
13050 13196 13082
13080 13388 13173
12960 13411 13049
12900 13274 12945
13030 13354 13030
12931 13456 13117
12720 13241 12858
13087 13351 13103
13298 13593 13294
13777 14163 13768
13776 14297 13862
13810 14141 13794
13866 14285 13843
13833 14279 13926
13632 14008 13758
13677 14192 13827
13632 14191 13810
13710 14098 13802
13855 14116 13868
14133 14182 13979
14511 14322 14161
14322 13982 13882
14945 14595 14401
15135 14764 14514
14868 14664 14335
14823 14793 14419
14589 14638 14316
14100 14661 14172
14322 14749 14272
13888 14362 13880
12942 13833 13230
13098 13954 13394
12965 13894 13348
13443 14639 14040
13321 14603 13989
13298 14676 14023
13432 14675 14111
13298 14485 13960
13655 15044 14448
13755 15193 14596
13799 15201 14675
14055 15560 15015
14033 15571 15035
14022 15714 15021
13777 15436 14752
14155 16126 15321
14311 16318 15479
14356 16476 15559
14534 16801 15826
14356 16423 15602
14278 16187 15353
14478 16639 15610
12/31/96 14658 16469 15527
Past performance is not predictive of future performance.
</TABLE>
<PAGE>
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 23 months of
existence were marked by a sharp and steady advance in the S&P 500. Not only
was the two year period 1995-1996 one of the best in history for the S&P 500,
its return was accomplished without a significant correction. In this
environment, the diversification of the Funds acted as a drag on performance.
Additionally, all three portfolios suffered, to varying degrees, from the
buy/sell decisions that, in hindsight, were too short-term oriented. This
had particular impact during the summer months, when we experienced
the downside volatility of a relatively aggressive stance and then did not
rebound as strongly as the market due to more cautious repositioning.
As we noted in our 3rd quarter report, we have taken steps to avoid the
potential pitfalls associated with too frequent trading. Shareholders will note
that in all three portfolios the major positions as of 12/31 are essentially
the same as those on 9/30. This extension of time horizons along with selective
active allocation will, we believe, produce the returns we expect.
For more information on each Fund, see the subsequent discussions.
<PAGE>
THE MARKMAN MULTIFUNDS PERFORMANCE
Markman CONSERVATIVE Growth Fund
This is a good time to again stress how high a premium we place on stability
and regularity of return in this Fund.
We made very few changes in the portfolio in the past quarter; the same funds,
representing some 70%+ of our assets, remained in the top five spots. They are
a remarkable group managed by iconoclastic and independent thinking managers.
What is of particular comfort to our "steady as she goes" Conservative Fund
investors is that the average length of experience for these managers
approaches 25 years. I doubt there is much the market could show these guys
that would surprise them.
This is a good time to again stress how high a premium we place on STABILITY
and REGULARITY of return in this Fund. As our new quarterly snapshot feature,
the "HOW WE GOT THERE" graph illustrates, the ride a shareholder experiences
in the Conservative Fund bears little resemblance to the often
pothole-cluttered road of the market.
<PAGE>
<TABLE>
MARKMAN CONSERVATIVE GROWTH FUND COMPARISON
<CAPTION>
Markman Conservative Lipper Balanced Lehmen Int.
Growth Fund Fund Index Gov't. Bond Index
<S> <C> <C> <C>
4TH QTR. 1996 4.8% 5.6% 2.3%
1996 13.4% 13.0% 4.0%
SINCE INCEPTION* 16.4% 18.9% 8.6%
<FN>
* From February 1, 1995 (annualized)
</FN>
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS - MARKMAN CONSERVATIVE GROWTH FUND - DECEMBER 31, 1996
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
SOGEN INTERNATIONAL FUND, INC....................... 277,372 $ 7,236,632 17.0% +
NORTHEAST INVESTORS TRUST........................... 650,332 7,231,695 17.0 -
FRANKLIN MUTUAL QUALIFIED FUND...................... 219,842 7,138,262 16.8 +
THE MERGER FUND..................................... 459,485 6,483,338 15.2 +
THE ROBERTSON STEPHENS CONTRARIAN FUND**............ 194,691 3,226,024 7.6 -
YACKTMAN FUND, INC.................................. 226,021 3,015,124 7.1 +
COHEN & STEERS REALTY SHARES........................ 57,264 2,582,039 6.1 NEW
LINDNER DIVIDEND FUND, INC.......................... 73,151 2,011,662 4.7 -
T. ROWE PRICE SMALL CAP VALUE FUND.................. 102,202 1,999,066 4.7 -
VANGUARD SPECIALIZED HEALTH CARE PORTFOLIO.......... 27,058 1,578,835 3.7 -
---------- ------
TOTAL INVESTMENTS (COST $41,796,822)............................. 42,502,677 99.9
OTHER ASSETS AND LIABILITIES (NET)................................ 76,455 0.1
---------- ------
NET ASSETS........................................................ $42,579,132 100.0%
========== ======
See accompanying notes to financial statements.
<FN>
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
** Non-income producing security
</FN>
FUNDS ELIMINATED DURING
THE 4TH QUARTER: NONE
</TABLE>
<PAGE>
THE MARKMAN MULTIFUNDS PERFORMANCE
Markman MODERATE Growth Fund
We believe we have a lineup of winners in this portfolio; we intend to let
them do their thing for us.
We are pleased with the nearly 5% gain in the portfolio this quarter, given
the lower-risk stance we took.
As our "middle-of-the-road" offering, we continue to combine what we feel are
the best ideas from both the Conservative and Aggressive portfolios along with
choices that we believe will produce a balanced risk/reward profile. As we
proceed through 1997, we will continue to stress broad diversification and
greatly reduced turn-over. We believe we have a lineup of winners in this
portfolio; we intend to let them do their thing for us.
The "HOW WE GOT THERE" snapshot graph of the fourth quarter helps to give you
a fuller picture of the dynamic we are attempting to create. As you can see,
in a strong S&P 500 uptrend we WILL lag; but when things get rocky and
volatile (as in December), we have the potential to shine.
<PAGE>
<TABLE>
MARKMAN MODERATE GROWTH FUND COMPARISON
<CAPTION>
Markman Moderate S&P 500 Lipper Equity
Growth Fund Income Fund Index
<S> <C> <C> <C>
4TH QTR. 1996 4.8% 8.3% 7.5%
1996 11.1% 22.9% 17.9%
SINCE INCEPTION* 18.5% 29.8% 23.7%
<FN>
* From February 1, 1995 (annualized)
</FN>
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS - MARKMAN MODERATE GROWTH FUND - DECEMBER 31, 1996
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
FRANKLIN MUTUAL DISCOVERY FUND........................ 683,101 $ 11,735,682 14.9% +
FRANKLIN MUTUAL BEACON FUND........................... 290,494 11,314,732 14.4 +
YACKTMAN FUND, INC.................................... 829,463 11,065,039 14.1 +
NORTHEAST INVESTORS TRUST............................. 965,281 10,733,922 13.6 +
JANUS WORLDWIDE FUND.................................. 235,394 7,930,420 10.1 +
VANGUARD U.S. GROWTH PORTFOLIO........................ 264,374 6,276,238 8.0 -
OAKMARK INTERNATIONAL FUND............................ 324,263 5,084,439 6.5
STEIN ROE CAPITAL OPPORTUNITY FUND**.................. 115,516 3,247,161 4.1 -
COHEN & STEERS REALTY SHARES.......................... 59,059 2,662,973 3.4 NEW
VANGUARD SPECIALIZED HEALTH CARE PORTFOLIO............ 43,447 2,535,145 3.2 +
ARTISAN SMALL CAP FUND**.............................. 180,241 2,400,813 3.1 NEW
FRANKLIN MUTUAL EUROPEAN FUND......................... 138,852 1,581,520 2.0 NEW
THE ROBERTSON STEPHENS PARTNERS FUND.................. 103,631 1,513,013 1.9 NEW
----------- -----
TOTAL INVESTMENTS (COST $75,919,101).............................. 78,081,097 99.3
OTHER ASSETS AND LIABILITIES (NET)................................ 545,712 .7
----------- -----
NET ASSETS........................................................ $78,626,809 100.0%
=========== =====
See accompanying notes to financial statements.
<FN>
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
** Non-income producing security
</FN>
FUNDS ELIMINATED DURING
THE 4TH QUARTER:
RYDEX SERIES TRUST-URSA FUND
PBHG SELECT EQUITY FUND
T. ROWE PRICE BLUE CHIP FUND
ARTISAN INTERNATIONAL FUND
</TABLE>
<PAGE>
THE MARKMAN MULTIFUNDS PERFORMANCE
Markman AGGRESSIVE Growth Fund
Our late summer rotation away from high price to earnings aggressive momentum
growth funds and into U.S. value and diversified international funds has paid
off thus far.
Our late summer rotation away from high price to earnings aggressive momentum
funds and into U.S. value and diversified international funds has paid off
thus far. While the Fund did slightly lag the blow-out numbers of the S&P 500,
during the 4th quarter we exceeded most other relevant comparative indices
including the Lipper Growth, NASDAQ, Russell 2000, and Investor's Daily Growth
Fund Index.
As with the Conservative and Moderate portfolios, reduced turnover and our
diversification helped us to weather a rocky year-end. As you can see in the
"snapshot" graph, we continued to move ahead in December while the S&P 500 was
LOSING 2%. While we would not want you to assume from that very brief period
that we could always make money in a down market, we do think it gives some
real confirmation that our well thought out diversification can help to
maintain an excellent upside while sidestepping overly speculative risk
levels.
<PAGE>
<TABLE>
MARKMAN AGGRESSIVE GROWTH FUND COMPARISON
<CAPTION>
Markman Aggresive S&P 500 Lipper Growth
Growth Fund Fund Index
<S> <C> <C> <C>
4TH QTR. 1996 6.2% 8.3% 5.8%
1996 11.7% 22.9% 17.5%
SINCE INCEPTION* 22.1% 29.8% 25.8%
<FN>
* From February 1, 1995 (annualized)
</FN>
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS - MARKMAN AGGRESIVE GROWTH FUND - DECEMBER 31, 1996
FUND SHARES MARKET VALUE % OF TOTAL STATUS*
(UNAUDITED)
<S> <C> <C> <C> <C>
FRANKLIN MUTUAL SHARES................................ 162,512 $ 15,089,231 17.8% +
VANGUARD U.S. GROWTH PORTFOLIO........................ 443,604 10,531,151 12.5 -
OAKMARK INTERNATIONAL FUND............................ 504,163 7,905,284 9.4 +
YACKTMAN FUND, INC.................................... 588,489 7,850,444 9.3 +
TWENTIETH CENTURY INTERNATIONAL DISCOVERY FUND........ 882,340 6,494,026 7.7 -
FRANKLIN MUTUAL EUROPEAN FUND......................... 553,936 6,309,329 7.5 +
OAKMARK SMALL CAP FUND**.............................. 418,971 6,049,945 7.1 +
INVESCO EUROPEAN FUND................................. 344,093 5,457,323 6.5 +
STEIN ROE CAPITAL OPPORTUNITY FUND**.................. 166,714 4,686,332 5.6 -
FEDERATED MINI-CAP FUND............................... 324,304 4,553,224 5.4 NEW
T. ROWE PRICE BLUE CHIP FUND.......................... 226,954 4,325,749 5.1 -
COHEN & STEERS REALTY SHARES.......................... 94,840 4,276,320 5.1 NEW
---------- ----
TOTAL INVESTMENTS (COST $81,195,693).............................. 83,528,358 99.0
OTHER ASSETS AND LIABILITIES (NET................................. 800,540 1.0
---------- ----
NET ASSETS........................................................ $84,328,898 100.0%
========== ======
See accompanying notes to financial statements.
<FN>
* "+" means larger percentage than end of prior quarter, "-" means smaller
percentage than end of prior quarter, "new" means did not appear in prior
quarter.
** Non-income producing security
</FN>
FUNDS ELIMINATED DURING
THE 4TH QUARTER:
FIDELITY LATIN AMERICA FUND
PBHG SELECT EQUITY FUND
RYDEX SERIES TRUST - NOVA FUND
PBHG EMERGING GROWTH FUND
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
ASSETS GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
INVESTMENTS IN SECURITIES:
AT ACQUISITION COST........................... $ 41,796,822 $ 75,919,101 $ 81,195,693
============= ============= =============
AT VALUE (NOTE 1)............................. $ 42,502,677 $ 78,081,097 $ 83,528,358
CASH............................................. --- 741,470 1,290,398
RECEIVABLE FOR SECURITIES SOLD................... 399,990 --- ---
RECEIVABLE FOR CAPITAL SHARES SOLD............... 151,916 137,280 25,111
DIVIDENDS RECEIVABLE............................. 2,456 3,823 3,581
OTHER ASSETS 273 --- 8,294
------------- ------------- -------------
TOTAL ASSETS $ 43,057,312 $ 78,963,670 $ 84,855,742
------------- ------------- -------------
- -----------------------------------------------------------------------------------------------------
LIABILITIES
PAYABLE FOR CAPITAL SHARES REDEEMED.............. $ 266,788 $ 197,159 $ 381,944
DISTRIBUTIONS PAYABLE TO SHAREHOLDERS............ 69,715 73,666 75,398
PAYABLE FOR BANK OVERDRAFT....................... 107,346 --- ---
PAYABLE TO AFFILIATES (NOTE 3)................... 34,299 64,280 69,404
OTHER LIABILITIES................................ 32 1,756 98
------------- ------------- -------------
TOTAL LIABILITIES............................. $ 478,180 $ 336,861 $ 526,844
------------- ------------- -------------
- -----------------------------------------------------------------------------------------------------
NET ASSETS
NET ASSETS CONSIST OF:
CAPITAL SHARES................................... $ 41,991,717 $ 76,659,367 $ 82,001,304
UNDISTRIBUTED NET INVESTMENT INCOME.............. 1,335 29 32
DISTRIBUTIONS IN EXCESS OF NET REALIZED GAINS.... (119,775) (194,583) (5,103)
NET UNREALIZED APPRECIATION ON INVESTMENTS....... 705,855 2,161,996 2,332,665
------------- ------------- -------------
NET ASSETS.................................... $ 42,579,132 $ 78,626,809 $ 84,328,898
============= ============= =============
SHARES OF BENEFICIAL INTEREST OUTSTANDING
(UNLIMITED NUMBER OF SHARES AUTHORIZED,
NO PAR VALUE)(NOTE 4)......................... 3,706,796 6,842,584 6,879,341
============= ============= =============
NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE (NOTE 1)............. $ 11.49 $ 11.49 $ 12.26
============= ============= =============
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
INVESTMENT INCOME GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
DIVIDEND INCOME............................... $ 1,249,147 $ 1,897,127 $ 1,171,534
------------- ------------- -------------
EXPENSES
INVESTMENT ADVISORY FEES...................... 270,354 772,803 847,620
INDEPENDENT TRUSTEES' FEES.................... 14,000 14,000 14,000
------------- ------------- -------------
TOTAL EXPENSES (NOTE 3).................... 284,354 786,803 861,620
------------- ------------- -------------
NET INVESTMENT INCOME......................... 964,793 1,110,324 309,914
------------- ------------- -------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
NET REALIZED GAINS FROM SECURITY TRANSACTIONS. 612,693 1,942,355 1,705,972
CAPITAL GAIN DISTRIBUTIONS FROM OTHER
INVESTMENT COMPANIES....................... 1,573,569 3,505,633 3,846,983
NET CHANGE IN UNREALIZED
APPRECIATION/DEPRECIATION ON INVESTMENTS... 530,876 797,362 2,238,283
------------- ------------- -------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 2,717,138 6,245,350 7,791,238
------------- ------------- -------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,681,931 $ 7,355,674 $ 8,101,152
============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS - FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -----------------------------------------------------------------------------------------------------------------------------------
CONSERVATIVE MODERATE AGGRESSIVE
FROM OPERATIONS GROWTH FUND GROWTH FUND GROWTH FUND
1996 1995 1996 1995 1996 1995
------------------------ ------------------------ -------------------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME......................... $ 964,793 $ 157,456 $1,110,324 $ 174,168 $ 309,914 $ 29,514
NET REALIZED GAINS FROM SECURITY TRANSACTIONS. 612,693 340,634 1,942,355 2,000,269 1,705,972 2,755,722
CAPITAL GAIN DISTRIBUTIONS FROM OTHER
INVESTMENT COMPANIES....................... 1,573,569 193,168 3,505,633 1,361,368 3,846,983 1,448,986
NET CHANGE IN UNREALIZED APPRECIATION/
DEPRECIATION ON INVESTMENTS............... 530,876 174,979 797,362 1,364,634 2,238,283 94,382
----------- --------- --------- ---------- --------- ---------
NET INCREASE IN NET ASSETS FROM OPERATIONS.... 3,681,931 866,237 7,355,674 4,900,439 8,101,152 4,328,604
----------- --------- --------- ---------- --------- ---------
FROM DISTRIBUTIONS TO SHAREHOLDERS
DIVIDENDS FROM NET INVESTMENT INCOME.......... (963,458) (157,456) (1,110,295) (174,168) (309,882) (29,514)
DISTRIBUTIONS IN EXCESS OF
NET INVESTMENT INCOME (NOTE 1).............. (627,137) (33,397) (860,538) (743,836) (689,085) (728,239)
DISTRIBUTIONS FROM NET REALIZED GAINS......... (1,678,900) (500,405) (4,782,033) (2,617,801) (4,868,973) (3,476,469)
----------- --------- ----------- ---------- ----------- ---------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS.............. (3,269,495) (691,258) (6,752,866) (3,535,805) (5,867,940) (4,234,222)
----------- --------- ----------- ---------- ----------- ---------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 4)
PROCEEDS FROM SHARES SOLD..................... 49,145,757 11,949,211 70,199,331 40,307,575 80,691,707 42,808,631
NET ASSET VALUE OF SHARES ISSUED IN
REINVESTMENT OF DISTRIBUTIONS
TO SHAREHOLDERS............................ 3,199,781 686,564 6,679,202 3,504,110 5,792,545 4,179,128
PAYMENTS FOR SHARES REDEEMED.................. (20,031,002) (2,988,594) (37,842,170) (6,228,681) (46,714,062) (4,786,645)
----------- ---------- ----------- ---------- ----------- ---------
NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS................ 32,314,536 9,647,181 39,036,363 37,583,004 39,770,190 42,201,114
----------- --------- ----------- ---------- ----------- ---------
TOTAL INCREASE IN NET ASSETS.................. 32,726,972 9,822,160 39,639,171 38,947,638 42,003,402 42,295,496
NET ASSETS:
BEGINNING OF YEAR............................. 9,852,160 30,000 38,987,638 40,000 42,325,496 30,000
----------- ----------- ----------- ---------- ----------- -----------
END OF YEAR................................... $42,579,132 $9,852,160 $78,626,809 $38,987,638 $84,328,898 $42,325,496
=========== =========== =========== =========== =========== ===========
UNDISTRIBUTED NET INVESTMENT INCOME $ 1,335 $ - $ 29 $ - $ 32 $ -
=========== =========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS - MARKMAN CONSERVATIVE GROWTH FUND Per share data for a
share outstanding throughout each period.
YEAR PERIOD
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1996 1995 (A)
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD........................................ $ 10.97 $ 10.00
----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME..................................................... 0.28 0.19
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS.......................... 1.19 1.61
----------- ----------
TOTAL FROM INVESTMENT OPERATIONS............................................. 1.47 1.80
----------- ----------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME...................................... (0.28) (0.19)
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME.......................... (0.18) (0.04)
DISTRIBUTIONS FROM NET REALIZED GAINS..................................... (0.49) (0.60)
----------- ----------
TOTAL DISTRIBUTIONS.......................................................... (0.95) (0.83)
----------- ----------
NET ASSET VALUE - END OF PERIOD.............................................. $ 11.49 $ 10.97
=========== ==========
TOTAL RETURN................................................................. 13.41% 18.00%
=========== ==========
NET ASSETS - END OF PERIOD (000'S)........................................... $ 42,579 $ 9,852
=========== ==========
RATIO OF EXPENSES TO AVERAGE NET ASSETS...................................... 0.95% 0.95%(B)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS......................... 3.21% 3.02%(B)
PORTFOLIO TURNOVER RATE...................................................... 104% 176%
<CAPTION>
FINANCIAL HIGHLIGHTS - MARKMAN MODERATE GROWTH FUND Per share data for a share
outstanding throughout each period.
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD........................................ $ 11.31 $ 10.00
----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME..................................................... 0.18 0.06
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS.......................... 1.08 2.39
----------- ----------
TOTAL FROM INVESTMENT OPERATIONS.......................................... 1.26 2.45
----------- ----------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME...................................... (0.18) (0.06)
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME.......................... (0.14) (0.24)
DISTRIBUTIONS FROM NET REALIZED GAINS..................................... (0.76) (0.84)
----------- ----------
TOTAL DISTRIBUTIONS.......................................................... (1.08) (1.14)
----------- ----------
NET ASSET VALUE - END OF PERIOD.............................................. $ 11.49 $ 11.31
=========== ==========
TOTAL RETURN................................................................. 11.11% 24.50%
=========== ==========
NET ASSETS - END OF PERIOD (000'S)........................................... $ 78,627 $ 38,988
=========== ==========
RATIO OF EXPENSES TO AVERAGE NET ASSETS...................................... 0.95% 0.95%(B)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS......................... 1.34% 0.77%(B)
PORTFOLIO TURNOVER RATE...................................................... 280% 141%
<PAGE>
<CAPTION>
FINANCIAL HIGHLIGHTS - MARKMAN AGGRESSIVE GROWTH FUND Per share data for a
share outstanding throughout each period.
<S> <C> <C>
NET ASSET VALUE - BEGINNING OF PERIOD....................................... $ 11.79 $ 10.00
----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME.................................................... 0.05 0.01
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS......................... 1.34 3.11
----------- ----------
TOTAL FROM INVESTMENT OPERATIONS............................................ 1.39 3.12
----------- ----------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME..................................... (0.05) (0.01)
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME......................... (0.11) (0.23)
DISTRIBUTIONS FROM NET REALIZED GAINS.................................... (0.76) (1.09)
----------- ----------
TOTAL DISTRIBUTIONS......................................................... (0.92) (1.33)
----------- ----------
NET ASSET VALUE - END OF PERIOD............................................. $ 12.26 $ 11.79
=========== ==========
TOTAL RETURN................................................................ 11.72% 31.21%
=========== ==========
NET ASSETS - END OF PERIOD (000'S).......................................... $ 84,329 $ 42,325
=========== ==========
RATIO OF EXPENSES TO AVERAGE NET ASSETS..................................... 0.95% 0.95%(B)
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS........................ 0.34% 0.15%(B)
PORTFOLIO TURNOVER RATE..................................................... 340% 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 public offering.
(B) Annualized.
</FN>
See Accompanying Notes to Financial Statements
</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 Adviser), 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 Markman Conservative Growth Fund seeks to provide current income and low
to moderate growth of capital. The Markman Moderate Growth Fund seeks growth
of capital and a reasonable level of current income. The Markman Aggressive
Growth Fund seeks capital appreciation without regard to current income.
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.
<PAGE>
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 distributions
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.
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
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
Funds' tax returns and, consequently, the character of distributions to
shareholders reported in the Statements 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>
<CAPTION>
FEDERAL INCOME TAX
The following information is based upon the federal income tax cost of
portfolio investments as of December 31, 1996:
CONSERVATIVE MODERATE AGGRESSIVE
GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
GROSS UNREALIZED APPRECIATION $1,111,159 $2,512,204 $2,911,234
GROSS UNREALIZED DEPRECIATION (525,653) (544,794) (619,589)
- -------------------------------------------------------------------------------------------------------
NET UNREALIZED APPRECIATION $585,506 $1,967,410 $2,291,645
=======================================================================================================
FEDERAL INCOME TAX COST $41,917,171 $76,113,687 $81,236,713
=======================================================================================================
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. INVESTMENT TRANSACTIONS
During the year ended December 31, 1996, purchases and proceeds from sales of
portfolio securities, other than short-term investments, amounted to
$60,831,327 and $29,171,071, respectively, for the Markman Conservative Growth
Fund, $254,909,767and $217,973,558, respectively, for the Markman Moderate
Growth Fund, and $321,099,286 and $284,090,104, 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.
ADMINISTRATION, ACCOUNTING, AND TRANSFER AGENCY AGREEMENT
Under the terms of the Administration, Accounting, and Transfer Agency
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. In addition, 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. MGF also 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
monthly base fee, an asset based fee, and a fee based on the number of
shareholder accounts. In addition, the Adviser pays out-of-pocket expenses
including but not limited to, postage and supplies.
4. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital share transactions as shown in the State
ments of Changes in Net Assets are the result of the following capital share
transactions for the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996 CONSERVATIVE MODERATE AGGRESSIVE
GROWTH FUND GROWTH FUND GROWTH FUND
<S> <C> <C> <C>
Share Sold 4,224,322 5,984,900 6,577,451
Shares Issued in Reinvestment
of Distributions to Shareholders 278,484 581,306 472,475
Shares Redeemed (1,694,000) (3,169,616) (3,759,415)
---------- ----------- ----------
Net Increase in Shares Outstanding 2,808,806 3,396,590 3,290,511
Shares Outstanding, Beginning of Year 897,990 3,445,994 3,588,830
---------- ----------- ----------
Shares Outstanding, End of Year 3,706,796 6,842,584 6,879,341
========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
1995 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 Year 3,000 4,000 3,000
--------- ---------- ---------
Shares Outstanding, End of Year 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,
1996, 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 audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Markman Conservative Growth Fund, the Markman Moderate Growth Fund and the
Markman Aggressive Growth Fund as of December 31, 1996, 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/ Arthur Andersen LLP
CINCINNATI, OHIO
JANUARY 10, 1997
<PAGE>
FIRST CLASS
THE MARKMAN MULTIFUNDS
6600 France Avenue So., Suite 565
Minneapolis, Minnesota 55435
PORTFOLIO/STRATEGY UPDATE
To hear Bob Markman's weekly
market overview and
MultiFund activity report,
dial 1-800-975-5463.
PROSPECTUS
For copies of the
Markman Prospectus,
dial 1-800-232-4792.
PRICELINE
Call anytime for
up-to-the-minute net
asset values
at 1-800-536-8679.
HELPLINE
For an application form,
for assistance in
completing an application,
or for general administrative
questions, dial 1-800-707-2771.
ONLINE
Bob's on the Internet!
Check for net asset values and more
at http://www.markman.com
Authorized for distribution only if preceded or accompanied by a current
prospectus.
INVESTMENT ADVISER
Markman Capital Management, Inc.
6600 France Ave. So., Suite 565
Minneapolis, 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-LOADTM MUTUAL FUND COUNCIL
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000931465
<NAME> MARKMAN MULTIFUND TRUST
<SERIES>
<NUMBER> 1
<NAME> MARKMAN CONSERVATIVE GROWTH FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
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