Markman
MULTIFUNDS
Semi-Annual
Report
June 30, 1998
Unaudited
Conservative Allocation Portfolio
Moderate Allocation Portfolio
Aggressive Allocation Portfolio
<PAGE>
The Gain and Pain Continues
- --------------------------------------------------------------------------------
Second quarter delivers more of the same: a dream or a nightmare, depending on
where you're invested.
Talk about a second quarter minefield! Investors in large cap U.S. growth funds
saw another 2% or so tacked onto healthy first quarter gains. Small cap U.S.
funds, on the other hand, lost some 5%! Overseas, the story was the same.
European funds gained 5% while emerging markets funds plummeted an additional
20%! Makes for a pretty sloppy and confusing picture, especially for those who
constructed a "prudently diversified" portfolio. When all was said and done, the
average stock fund lost about a third of a percent.
We're pleased to report that, for the most part, we successfully navigated the
quarter. All three MultiFund portfolios ended in the black. Both the Moderate
and Aggressive Portfolios handily beat their comparative indices. The
Conservative Allocation, however, lagged its benchmark.
We did a fair amount of reallocating during the quarter, reducing or eliminating
positions in real estate, small caps, and international funds. Most of those
dollars went to expanding our exposure in large cap U.S. stock funds like
Marsico Focus, Janus Twenty, and White Oak Growth.
We remain extremely positive in our market outlook and expect the major averages
to end the year a good deal higher than they are now. The best returns will
continue to come from the largest companies; small caps and foreign holdings
will likely continue to disappoint. We caution, however, that the new highs we
see ahead are most likely to occur after a short-term -- and possibly painful --
sell off. So be prepared, ride it out, and reap the reward.
We remain extremely positive in our market outlook and expect the major averages
to end the year a good deal higher than they are now.
- ------------------------------------------------------------------------------
Markman
<PAGE>
LARGE CAP VS. SMALL CAP REVISITED
The most significant ongoing story for investors this year has been the
continued underperformance of small company stocks (and the funds that invest in
them) relative to large company stocks. Since their last surge in the spring of
1996, small caps have returned less than half as much as the S&P 500. As large
company shares continue to appreciate while small caps languish, one hears an
almost unanimous chorus from market observers and asset allocators that the
relative valuations favor small caps. In other words, the historic valuations of
large caps have gotten so "expensive" relative to small caps that smart
investors should cut back on the overpriced large issues and allocate more
dollars to the currently bargain priced small issues.
This argument appears intuitively obvious: sell high, buy low. What could be
more prudent? There's only one problem. In this case, it's wrong.
- --------------------------------------------------------------------------------
Small caps are highly unlikely to outperform large caps over any extended
period. And, then you adjust or the extra risk in small caps, they look even
worse. A quick look at the reasons why provides compelling evidence.
- --------------------------------------------------------------------------------
1. Remember the downsizing crisis in the early 1990s, when thousands of middle
managers were laid off? We are now seeing the gain from that pain. Large
companies are leaner, more agile, less bureaucratic and more forward looking
than ever.
2. Technological developments that lead to increased productivity (fax, modems,
computer networks, etc.) are finally beginning to reach a critical mass of
effectiveness. The technologies allow large multinationals to communicate and
respond in ways we previously thought only small companies could.
3. We are now a global market. With the growth of emerging economies and the
fall of communism, markets representing over two billion consumers now exist
that were simply not a factor 20 years ago. Large companies, with a depth of
financial and managerial resources are best able to take advantage of this.
4. The new global economy is certainly not without risk, as we've vividly seen
over the past year. We've also seen that those companies with the broadest, most
diversified base of operations will be best able to withstand the inevitable
storms.
Continued on the next page.
- --------------------------------------------------------------------------------
Markman 1
<PAGE>
- --------------------------------------------------------------------------------
Reasons for large cap dominance (cont.)
- --------------------------------------------------------------------------------
5. When recovery and future growth returns to troubled foreign economies, those
U.S. companies who will most benefit will be those who have significant market
penetration overseas such as Citicorp, Ford, Merrill Lynch, Merck, etc. So if
you want to be in on Asia's recovery, the safest way is with U.S.
multinationals.
6. Foreigners, particularly Europeans, are buying U.S. stocks like never before.
Net foreign purchases of U.S. equities so far this year exceeds that of the last
ten years combined! And what are they buying? Large caps, of course! This trend
is highly likely to continue as foreign institutions are currently still grossly
under-weighted in U.S. stocks.
7. U.S. retail investors are not contrarians: their dollars tend to follow the
leaders. Expect more money to flow to top performing large cap and index funds
and away from small cap laggards.
8. Institutional managers are increasingly afraid of getting into a stock they
cannot get out of. We call this the "roach motel" effect. The higher the market
climbs, the greater the fear of a painful correction. Institutions look ahead to
exit strategies and put a premium on liquidity, thus allocating more dollars to
large, easily sold stocks.
9. A large cap fund can theoretically own a stock that appreciates for a decade
or more. By contrast, a small cap fund inevitably sees its best picks leave the
portfolio due either to mergers or appreciation that turns the small cap stock
into a large cap stock. What remains over time are the losers and mediocre
performers. This makes for a difficult competitive situation.
- --------------------------------------------------------------------------------
So should one conclude that small cap investing is dead? No, there are still
fine small companies whose stock will return handsomely for investors.
Unfortunately, small cap funds must take small positions in many different
stocks; the "focused" approach (20 - 25 stocks) that is proving so successful in
large cap funds is nearly impossible to execute in the small cap arena.
Our judgment is that, given the relative market advantages of large caps and the
difficulty of small cap funds to take enough winning positions, it makes little
sense from a risk / reward perspective to maintain the traditional 20 - 30%
allocations in small caps. Unless and until the underlying fundamentals change,
our equity exposure will be predominantly large cap U.S.
Small caps are highly unlikely to outperform large caps over any extended
period.
- --------------------------------------------------------------------------------
2 Markman
<PAGE>
Revisiting Our Move to Large Cap Technology Funds
Earlier this year, we shared with you our conclusions that "the only good tech
stock is a big tech stock." Accordingly, we sold our positions in those tech
funds that owned small and mid-sized companies and added to Rydex OTC, a fund
that owns the 100 largest stocks on the NASDAQ. Here's how the numbers played
out in the second quarter:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Median Market Cap Percentage of Portfolio Second Quarter
of Top 10 holdings in Top 10 1998 Return
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rydex OTC $48.2 Billion 65% 9.90%
- ------------------------------------------------------------------------------------------------
T. Rowe Price Science & Tech $14.2 Billion 30% 1.10%
- ------------------------------------------------------------------------------------------------
PBHG Select Technology $941 Million 32% -1.50%
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Keeping Our Portfolios in Correct Correlation
(Chart illustrating comparative performance of Aggressive Allocation Portfolio,
Moderate Allocation Portfolio, and Conservative Allocation Portfolio from
12/31/97 to 6/30/98.)
- --------------------------------------------------------------------------------
In these types of market conditions, with differences of returns among asset
groups so large, traditional allocation choices and techniques often produce
results opposite of what is intended.
In this environment, our greatest challenge at Markman MultiFunds is to make
sure the relative dynamic of our three funds maintains its integrity and
predictability. We take our labels -- Conservative, Moderate, Aggressive --
seriously. The last thing we want, and the last thing you need, is for our
Conservative Portfolio to be more volatile than our Aggressive Portfolio. The
graph above illustrates the path each Portfolio has taken this year. As you can
see, we have created three very distinct risk/reward dynamics. By doing so, we
hope to help you create the allocations in our MultiFunds that will best fit
your expectations.
- --------------------------------------------------------------------------------
Markman 3
<PAGE>
Aggressive Allocation Portfolio
- --------------------------------------------------------------------------------
Our Goal: To achieve high long-term growth consistent with reasonable
diversification. A fully invested portfolio, largely stock oriented, will be
maintained at all times, thus creating relatively high volatility.
During the second quarter, we continued to position the portfolio to take
maximum advantage of what we continue to believe will be a positive market
environment. We aggressively increased our large cap growth positions, adding
dollars to Rydex Nova and Rydex OTC. We took advantage of the bond rally to
shift our zero coupon positions to White Oak Growth, a large-cap focused fund.
At the same time, we reduced our small cap and international positions. This
summer finds us with our largest exposure ever to large-cap U.S. stocks in
general, with an above market weighting in large-cap technology stocks. We do
not view these allocations as short-term tactical moves. They are long-term
strategic positionings we believe will enhance performance in the "large cap
dominant" environment we see ahead.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
U.S. Stocks................... 86%
International Stocks.......... 7%
Bonds......................... 0%
Cash.......................... 7%
- --------------------------------------------------------------------------------
Portfolio Comparison
- --------------------------------------------------------------------------------
***Bar Chart***
- --------------------------------------------------------------------------------
Markman Aggressive Lipper Global Flexible
Allocation Portfolio Fund Index
12 mos. ending 6/98 19.0% 11.3%
- --------------------------------------------------------------------------------
3 years annualized 16.7% 14.6%
- --------------------------------------------------------------------------------
Annualized since inception* 21.9% 15.8%
- --------------------------------------------------------------------------------
*from February 1, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
Markman Aggressive Allocation Portfolio -- June 30, 1998
- ------------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Rydex Series Nova Fund* 489,830 $15,072,057 16.8% +
- ------------------------------------------------------------------------------------------------------
White Oak Growth Stock Fund 384,856 14,074,200 15.7% new
- ------------------------------------------------------------------------------------------------------
The Rydex Series OTC Fund* 365,701 11,117,313 12.4% +
- ------------------------------------------------------------------------------------------------------
Franklin Mutual Financial Services Fund-- Class Z* 697,580 9,975,401 11.1% -
- ------------------------------------------------------------------------------------------------------
Stein Roe Growth Stock Fund* 239,101 9,772,043 10.9% +
- ------------------------------------------------------------------------------------------------------
Oakmark Small Cap Fund* 494,665 9,690,487 10.8% -
- ------------------------------------------------------------------------------------------------------
Transamerica Premier Equity Fund* 409,179 9,353,837 10.4% +
- ------------------------------------------------------------------------------------------------------
Franklin Mutual European Fund-- Class Z 345,472 5,188,988 5.8% -
- ------------------------------------------------------------------------------------------------------
CGM Focus Fund* 428,330 4,617,402 5.2%
- ------------------------------------------------------------------------------------------------------
Miscellaneous-- Money Market Fund 1,052,485 1,052,485 1.1%
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $75,295,710) 89,914,213 100.2%
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET (170,023) (0.2)%
- ------------------------------------------------------------------------------------------------------
NET ASSETS $ 89,744,190 100.0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
** A "+" indicates an increase and "-" indicates a decrease of 1% or greater,
compared to end of prior quarter; "new" means did not appear in prior quarter.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
4 Markman
<PAGE>
Moderate Allocation Portfolio
- --------------------------------------------------------------------------------
Our Goal: To blend our Conservative and Aggressive approach in a
middle-of-the-road portfolio that aims for higher return than a Conservative
approach but lower volatility than an Aggressive stance.
The Moderate Portfolio continues to blend the primary trend ideas from the
Conservative and Aggressive Portfolios. Thus, even though a comparison of the
Content Breakdown from March 31 and June 30 shows little difference, we have, in
reality, effected a significant change in dynamic. As noted in the Conservative
Portfolio, we have scaled back on the degree to which we have broadly
diversified. Those traditional techniques have not proven effective in achieving
the reduction of risk we have sought.
By "simplifying" our allocations, we are maximizing the positive impact of the
two strongest portfolio components, large cap U.S. stocks and U.S. bonds. We are
using "focused" funds like Marsico and Janus Twenty to get what we feel is the
best bang for our buck. These selections have enabled us to greatly increase our
correlation to the market (and thus potentially increase returns) while only
adding some 2-3 percent to our equity exposure.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
U.S. Stocks................... 69%
International Stocks.......... 8%
Bonds......................... 16%
Cash.......................... 7%
- --------------------------------------------------------------------------------
Portfolio Comparison
***Bar Chart***
- --------------------------------------------------------------------------------
Markman Moderate Lipper Flexible
Allocation Portfolio Fund Index
12 mos. ending 6/98 17.0% 19.3%
- --------------------------------------------------------------------------------
3 years annualized 17.5% 17.6%
- --------------------------------------------------------------------------------
Annualized since inception* 19.0% 19.3%
- --------------------------------------------------------------------------------
*from February 1, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
Markman Moderate Allocation Portfolio -- June 30, 1998
- ------------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marsico Focus Fund* 1,016,603 $13,978,291 16.0% +
- ------------------------------------------------------------------------------------------------------
The Rydex Series Nova Fund* 444,044 13,663,237 15.6%
- ------------------------------------------------------------------------------------------------------
Janus Twenty Fund 277,610 11,684,612 13.3% new
- ------------------------------------------------------------------------------------------------------
Northeast Investors Trust 876,418 10,411,851 11.9% +
- ------------------------------------------------------------------------------------------------------
PAAP America Abroad Fund 343,047 9,876,322 11.3% +
- ------------------------------------------------------------------------------------------------------
Franklin Mutual Beacon Fund-- Class Z 540,544 8,416,272 9.6% -
- ------------------------------------------------------------------------------------------------------
Franklin Mutual Discovery Fund-- Class Z 338,638 7,162,190 8.2%
- ------------------------------------------------------------------------------------------------------
Oakmark Small Cap Fund* 341,189 6,683,893 7.6% -
- ------------------------------------------------------------------------------------------------------
American Century Benham Target
Series 2020 Fund* 134,553 4,576,161 5.2% -
- ------------------------------------------------------------------------------------------------------
Miscellaneous -- Money Market Fund 1,158,256 1,158,255 1.3%
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $77,800,054) 87,611,084 100.0%
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET 16,576 0.0%
- ------------------------------------------------------------------------------------------------------
NET ASSETS $87,627,660 100.0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
** A "+" indicates an increase and "-" indicates a decrease of 1% or greater,
compared to end of prior quarter; "new" means did not appear in prior quarter.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman 5
<PAGE>
Conservative Allocation Portfolio
- --------------------------------------------------------------------------------
Our Goal: To capture returns close to that of a typical portfolio -- cautiously
balanced among stocks, bonds, and money market funds -- while keeping short-term
volatility closer to that of an intermediate bond portfolio.
We cannot stress enough that although our general market outlook is quite
positive, we feel compelled to manage the Conservative Portfolio in a more
"glass half-empty" fashion. As this is the portfolio for those with a very low
tolerance for market volatility, we have traditionally used a broad
diversification model to execute our strategy. Recently, as asset classes such
as small cap, international, and value have struggled, this broad mix has been
more of a hindrance than a help.
We have studied this long and hard and conclude our cautious risk/return
parameters will be better achieved by cutting back on some of our previous
allocations (small cap, international, sectors such as real estate, etc.) and
"bar belling" the portfolio with our best shot in equities (large cap U.S.)
balanced out with a healthy counterweighting of bonds and cash.
So far, this strategy seems to be working. As the quarter ended, performance had
picked up substantially though we actually had slightly less equity exposure
than at the beginning of the quarter.
- --------------------------------------------------------------------------------
Content Breakdown
- --------------------------------------------------------------------------------
Unaudited
U.S. Stocks .................. 45%
International Stocks ......... 5%
Bonds ........................ 40%
Cash ......................... 10%
- --------------------------------------------------------------------------------
Portfolio Comparison
***Bar Chart***
- --------------------------------------------------------------------------------
Markman Conservative Blended**
Allocation Portfolio Index
12 mos. ending 6/98 11.4% 15.9%
- --------------------------------------------------------------------------------
3 years annualized 13.7% 15.3%
- --------------------------------------------------------------------------------
Annualized since inception* 14.7% 16.8%
- --------------------------------------------------------------------------------
**A blend consisting of 75% Lipper Balanced Fund Index and 25%
Lehman Intermediate Bond Index.
*from February 1, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Portfolio of Investments (Unaudited)
Markman Conservative Allocation Portfolio -- June 30, 1998
- ------------------------------------------------------------------------------------------------------
Fund Shares Market Value % of Total Status**
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Northeast Investors Trust 440,860 $ 5,237,421 15.8%
- ------------------------------------------------------------------------------------------------------
Dodge & Cox Balanced Fund 74,030 5,136,961 15.5%
- ------------------------------------------------------------------------------------------------------
Janus Twenty Fund 113,757 4,788,026 14.4% new
- ------------------------------------------------------------------------------------------------------
UAM FPA Crescent Portfolio 285,588 4,563,704 13.8% new
- ------------------------------------------------------------------------------------------------------
Marsico Growth & Income Fund* 315,484 4,129,690 12.5% +
- ------------------------------------------------------------------------------------------------------
Franklin Mutual Qualified Fund-- Class Z 201,168 3,965,013 12.0% -
- ------------------------------------------------------------------------------------------------------
American Century Benham Target Series
2010 Fund* 45,841 2,573,517 7.8%
- ------------------------------------------------------------------------------------------------------
SoGen International Fund, Inc. 52,318 1,413,634 4.2% -
- ------------------------------------------------------------------------------------------------------
American Century Benham Target Series
2015 Fund* 27,504 1,265,163 3.7%
- ------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $30,557,178) 33,073,129 99.7%
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES, NET 106,727 0.3%
- ------------------------------------------------------------------------------------------------------
NET ASSETS $33,179,856 100.0%
- ------------------------------------------------------------------------------------------------------
</TABLE>
* Non-income producing security
** A "+" indicates an increase and "-" indicates a decrease of 1% or greater,
compared to end of prior quarter; "new" means did not appear in prior quarter.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
6 Markman
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities o June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------
ASSETS
Investments in securities:
<S> <C> <C> <C>
At acquisition cost ...................... $ 30,557,178 $ 77,800,054 $ 75,295,710
============ ============ ============
At value (Note 1) ........................ $ 33,073,129 $ 87,611,084 $ 89,914,213
Cash ..................................... -- 818 --
Receivable for securities sold .............. 1,200,000 -- --
Receivable for capital shares sold .......... 45,000 129,772 57,505
Dividends receivable ........................ 677 918 1,760
Other assets ................................ 6,416 -- --
------------ ------------ ------------
Total Assets ............................. $ 34,325,222 $ 87,742,592 $ 89,973,478
============ ============ ============
- ------------------------------------------------------------------------------------------
LIABILITIES
Bank overdraft .............................. $ 1,017,767 -- --
Payable for capital shares redeemed ......... 104,083 51,248 157,700
Payable to affiliates (Note 3) .............. 23,516 63,684 71,588
------------ ------------ ------------
Total Liabilities ........................ 1,145,366 114,932 229,288
------------ ------------ ------------
- ------------------------------------------------------------------------------------------
NET ASSETS .................................. $ 33,179,856 $ 87,627,660 $ 89,744,190
============ ============ ============
Net assets consist of:
Paid-in capital ............................. $ 29,439,274 $ 74,108,660 $ 73,237,984
Undistributed net investment income (loss) .. 262,119 64,243 (379,020)
Accumulated net realized gains from
security transactions .................... 962,512 3,643,727 2,266,723
Net unrealized appreciation on investments .. 2,515,951 9,811,030 14,618,503
------------ ------------ ------------
Net Assets ............................... $ 33,179,856 $ 87,627,660 $ 89,744,190
============ ============ ============
Shares of beneficial interest outstanding
(unlimited number of shares
authorized, no par value) (Note 5) ....... 2,681,307 6,696,654 6,227,140
============ ============ ============
Net asset value, redemption price and
offering price per share (Note 1) ........ $ 12.37 $ 13.09 $ 14.41
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman 7
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statements of Operations o For the six months ended June 30, 1998 (Unaudited)
<TABLE>
<CAPTION>
Markman Conservative Markman Moderate Markman Aggressive
Allocation Portfolio Allocation Portfolio Allocation Portfolio
INVESTMENT INCOME
<S> <C> <C> <C>
Dividend income ................................ $ 342,080 $ 471,412 $ 9,092
------------ ------------ ------------
EXPENSES
Investment advisory fees ....................... 162,135 400,169 402,320
Independent trustees' fees ..................... 7,000 7,000 7,000
------------ ------------ ------------
Total Expenses (Note 3) ..................... 169,135 407,169 409,320
------------ ------------ ------------
NET INVESTMENT INCOME (loss) ................... 172,945 64,243 (400,228)
------------ ------------ ------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from
security transactions .................... 893,528 3,690,526 2,617,674
Capital gain distributions from
other investment companies ............... 68,984 -- --
Net change in unrealized
appreciation/depreciation
on investments ........................... 542,045 4,464,343 8,473,611
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 1,504,557 8,154,869 11,091,285
============ ============ ============
NET INCREASE IN NET ASSETS FROM OPERATIONS ..... $ 1,677,502 $ 8,219,112 $ 10,691,057
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets o For the periods ended June 30, 1998 and
December 31, 1997
<TABLE>
<CAPTION>
Markman Conservative Markman Moderate
Allocation Portfolio Allocation Portfolio
Six months ended Year Ended Six months ended Year Ended
June 30,1998 Dec. 31, 1997 June 30,1998 Dec. 31, 1997
(Unaudited) (Unaudited)
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income (loss) ................... $ 172,945 $ 923,212 $ 64,243 $ 1,645,556
Net realized gains from security transactions .. 893,528 1,417,864 3,690,526 6,181,757
Capital gain distributions from other
investment companies ........................ 68,984 1,498,259 -- 3,734,672
Net change in unrealized appreciation/
depreciation on investments ................. 542,045 1,268,051 4,464,343 3,184,691
------------ ------------ ------------ ------------
Net increase in net assets from operations ..... 1,677,502 5,107,386 8,219,112 14,746,676
------------ ------------ ------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ........... -- (835,373) -- (1,645,585)
Distributions in excess of net investment
income (Note 1) ............................. -- (416,485) -- (1,325,397)
Distributions from net realized gains .......... -- (2,379,863) -- (8,443,248)
------------ ------------ ------------ ------------
Decrease in net assets from distributions
to shareholders ............................. -- (3,631,721) -- (11,414,230)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ...................... 5,062,034 12,294,435 6,503,136 18,522,359
Net asset value of shares issued in
reinvestment of distributions to shareholders -- 3,578,467 -- 11,294,729
Payments for shares redeemed ................... (10,239,871) (23,247,508) (13,482,881) (25,388,050)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. (5,177,837) (7,374,606) (6,979,745) 4,429,038
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........ (3,500,335) (5,898,941) 1,239,367 7,761,484
NET ASSETS:
Beginning of period ............................ 36,680,191 42,579,132 86,388,293 78,626,809
------------ ------------ ------------ ------------
End of period .................................. $ 33,179,856 $ 36,680,191 $ 87,627,660 $ 86,388,293
============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ............ $ 262,119 $ 89,174 $ 64,243 $ --
============ ============ ============ ==========
<CAPTION>
Markman Aggressive
Allocation Portfolio
Six months ended Year Ended
June 30,1998 Dec. 31, 1997
(Unaudited)
FROM OPERATIONS:
<S> <C> <C>
Net investment income (loss) ................... $ (400,228) $ 45,400
Net realized gains from security transactions .. 2,617,674 7,715,287
Capital gain distributions from other
investment companies ........................ -- 2,595,928
Net change in unrealized appreciation/
depreciation on investments ................. 8,473,611 3,812,227
------------ ------------
Net increase in net assets from operations ..... 10,691,057 14,168,842
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income ........... -- (24,224)
Distributions in excess of net investment
income (Note 1) ............................. -- (1,125,463)
Distributions from net realized gains .......... -- (9,531,600)
------------ ------------
Decrease in net assets from distributions
to shareholders ............................. -- (10,681,287)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ...................... 8,315,482 19,230,794
Net asset value of shares issued in
reinvestment of distributions to shareholders -- 10,481,739
Payments for shares redeemed ................... (13,663,515) (33,127,820)
------------ ------------
Net increase (decrease) in net assets from
capital share transactions .................. (5,348,033) (3,415,287)
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........ 5,343,024 72,268
NET ASSETS:
Beginning of period ............................ 84,401,166 84,328,898
------------ ------------
End of period .................................. $ 89,744,190 $ 84,401,166
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ............ $ (379,020) $ 21,208
============ ============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
8 Markman
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Year Ended Year Ended Period Ended
June 30, 1998 December 31, December 31, December 31,
(Unaudited) 1997 1996 1995(A)
- -----------------------------------------------------------------------------------------------------------------
MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C> <C>
Net asset value at beginning of period .............. $ 11.82 $ 11.49 $ 10.97 $ 10.00
-------- -------- -------- --------
Income from investment operations:
Net investment income ............................ 0.07 0.33 0.28 0.19
Net realized and unrealized
gains on investments .......................... 0.48 1.31 1.19 1.61
-------- -------- -------- --------
Total from investment operations .................... 0.55 1.64 1.47 1.80
-------- -------- -------- --------
Less distributions:
Dividends from net investment income ............. -- (0.30) (0.28) (0.19)
Distributions in excess of net investment income . -- (0.15) (0.18) (0.04)
Distributions from net realized gains ............ -- (0.86) (0.49) (0.60)
-------- -------- -------- --------
Total distributions ................................. -- (1.31) (0.95) (0.83)
-------- -------- -------- --------
Net asset value at end of period .................... $ 12.37 $ 11.82 $ 11.49 $ 10.97
======== ======== ======== ========
Total return ........................................ 4.65% 14.27% 13.41% 18.00%
======== ======== ======== ========
Net assets at end of period (000's) ................. $ 33,180 $ 36,680 $ 42,579 $ 9,852
======== ======== ======== ========
Ratio of expenses to average net assets ............. 0.95%(B) 0.95% 0.95% 0.95%(B)
Ratio of net investment income to
average net assets ............................... 0.48%(B) 2.38% 3.21% 3.02%(B)
Portfolio turnover rate ............................. 98%(B) 48% 104% 176%
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MARKMAN MODERATE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
<S> <C> <C> <C> <C>
Net asset value at beginning of period .............. $ 11.90 $ 11.49 $ 11.31 $ 10.00
-------- -------- -------- --------
Income from investment operations:
Net investment income ............................ 0.01 0.26 0.18 0.06
Net realized and unrealized gains
on investments ................................ 1.18 1.96 1.08 2.39
-------- -------- -------- --------
Total from investment operations .................... 1.19 2.22 1.26 2.45
-------- -------- -------- --------
Less distributions:
Dividends from net investment income ............. -- (0.26) (0.18) (0.06)
Distributions in excess of net investment income . -- (0.21) (0.14) (0.24)
Distributions from net realized gains ............ -- (1.34) (0.76) (0.84)
-------- -------- -------- --------
Total distributions ................................. -- (1.81) (1.08) (1.14)
-------- -------- -------- --------
Net asset value at end of period .................... $ 13.09 $ 11.90 $ 11.49 $ 11.31
======== ======== ======== ========
Total return ........................................ 10.00% 19.38% 11.11% 24.50%
======== ======== ======== ========
Net assets at end of period (000's) ................. $ 87,628 $ 86,388 $ 78,627 $ 38,988
======== ======== ======== ========
Ratio of expenses to average net assets ............. 0.95%(B) 0.95% 0.95% 0.95%(B)
Ratio of net investment income to average
net assets ....................................... 0.15%(B) 1.96% 1.34% 0.77%(B)
Portfolio turnover rate ............................. 108%(B) 82% 280% 141%
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO o FINANCIAL HIGHLIGHTS
Per Share Data for a Share Outstanding Throughout Each Period
Net asset value at beginning of period .............. $ 12.74 $ 12.26 $ 11.79 $ 10.00
-------- -------- -------- --------
Income from investment operations:
Net investment income (loss) ..................... (0.06) 0.01 0.05 0.01
Net realized and unrealized gains
on investments ................................ 1.73 2.32 1.34 3.11
-------- -------- -------- --------
Total from investment operations .................... 1.67 2.33 1.39 3.12
-------- -------- -------- --------
Less distributions:
Dividends from net investment Income ............. -- (0.01) (0.05) (0.01)
Distributions in excess of net investment income -- (0.19) (0.11) (0.23)
Distributions from net realized gains ............ -- (1.65) (0.76) (1.09)
-------- -------- -------- --------
Total distributions ................................. -- (1.85) (0.92) (1.33)
-------- -------- -------- --------
Net asset value at end of period .................... $ 14.41 $ 12.74 $ 12.26 $ 11.79
======== ======== ======== ========
Total return ........................................ 13.11% 18.96% 11.72% 31.21%
======== ======== ======== ========
Net assets at end of period (000's) ................. $ 89,744 $ 84,401 $ 84,329 $ 42,325
======== ======== ======== ========
Ratio of expenses to average net assets ............. 0.95%(B) 0.95% 0.95% 0.95%(B)
Ratio of net investment income (loss)
to average net assets ............................ (0.93%)(B) 0.05% 0.34% 0.15%(B)
Portfolio turnover rate ............................. 104%(B) 141% 340% 204%
</TABLE>
(A) Represents the period from the initial public offering of shares (January
26, 1995) through December 31, 1995.
(B) Annualized.
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
Markman 9
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Markman MultiFund Trust (the Trust) is registered under the Investment Company
Act of 1940, as amended (the 1940 Act), as an open-end, 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 Allocation Portfolio, the Markman Moderate Allocation
Portfolio and the Markman Aggressive Allocation Portfolio (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 of the Funds 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 Allocation Portfolio seeks to provide current income
and low to moderate growth of capital. The Markman Moderate Allocation Portfolio
seeks growth of capital and a reasonable level of current income. The Markman
Aggressive Allocation Portfolio 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.
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 -- Distri-butions 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. Securi-ties sold are valued on a specific identification basis.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles ("GAAP") 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 GAAP, 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 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 to
generally accepted accounting principles.
The following information is based upon the federal income tax cost of portfolio
investments as of June 30, 1998:
- --------------------------------------------------------------------------------
Markman Markman Markman
Conservative Moderate Aggressive
Allocation Allocation Allocation
Portfolio Portfolio Portfolio
Gross unrealized appreciation $ 2,526,113 $ 9,775,808 $ 14,343,580
Gross unrealized depreciation (10,162) (8,580) (76,047)
------------ ------------ ------------
Net unrealized appreciation 2,515,951 9,767,228 14,267,533
============ ============ ============
Federal income tax cost of
portfolio investments $ 30,557,178 $ 77,846,856 $ 75,646,680
============ ============ ============
- --------------------------------------------------------------------------------
10 Markman
<PAGE>
2. INVESTMENT TRANSACTIONS
During the six months ended June 30, 1998, purchases and proceeds from sales of
portfolio securities, other than short-term investments, amounted to $17,261,380
and $21,442,603, respectively, for the Markman Conservative Allocation
Portfolio, $46,113,197 and $52,228,860, respectively, for the Markman Moderate
Allocation Portfolio, and $44,620,049 and $49,863,142, respectively, for the
Markman Aggressive Allocation Portfolio.
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 also officers of the Adviser or of Countrywide Fund
Services, Inc. (CFS), 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 CFS, CFS supplies non-investment related
statistical and research data, internal regulatory compliance services and
executive and administrative services for each of the Funds. CFS 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, CFS 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. CFS 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 CFS 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. BANK LOANS
The Trust has an unsecured $10,000,000 bank line of credit; borrowings under
this arrangement bear interest at a rate determined by the bank at the time of
borrowing. For the six months ending June 30, 1998, the Trust had no borrowings
on this line of credit. No compensating balances are required.
5. FUND SHARE TRANSACTIONS
Proceeds and payments from capital share transactions as shown in the Statements
of Changes in Net Assets are the result of the following capital share
transactions:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
MARKMAN CONSERVATIVE MARKMAN MODERATE MARKMAN AGGRESSIVE
ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO ALLOCATION PORTFOLIO
Six Months Six Months Six Months
Ended, Year Ended, Ended, Year Ended, Ended Year Ended,
June 30, 1998 Dec. 31, 1997 June 30, 1998 Dec. 31, 1997 June 30, 1998 Dec. 31, 1997
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Shares sold 417,766 1,007,092 518,679 1,475,542 608,803 1,394,595
Shares issued in reinvestment
of distributions to shareholders -- 302,747 -- 949,137 -- 822,743
Shares redeemed (840,543) (1,912,551) (1,080,244) (2,009,044) (1,007,412) (2,470,930)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in
shares outstanding (422,777) (602,712) (561,565) 415,635 (398,609) (253,592)
Shares outstanding, beginning
of period 3,104,084 3,706,796 7,258,219 6,842,584 6,625,749 6,879,341
--------- --------- --------- --------- --------- ---------
Shares outstanding, end
of period 2,681,307 3,104,084 6,696,654 7,258,219 6,227,140 6,625,749
========= ========= ========= ========= ========= =========
</TABLE>
- --------------------------------------------------------------------------------
Markman 11
INVESTING IN THE MARKMAN MULTIFUNDS
- --------------------------------------------------------------------------------
Investment forms may be ordered by
calling 1-800-707-2771
These forms are available:
o Account Application
o IRA Application
o IRA Transfer Request
o Dollar Cost Averaging Application
o Systematic Withdrawal Plan Request
o Automatic Investment Request
o Company Retirement Account Application
o Company Retirement Plan Prototype [includes Profit Sharing, Money Purchase,
401(k)]
o 403(b) Plan and Application
- --------------------------------------------------------------------------------
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), Fidelity
Investments (1-800-544-7558), and Waterhouse Securities (1-800-934-4443), among
others. There is NO TRANSACTION FEE when you purchase the Markman MultiFunds
through these discount brokers.
- --------------------------------------------------------------------------------
For ADDITIONAL FORMS or ANSWERS TO ANY QUESTIONS just contact The Markman
MultiFunds (between the hours of 8:30 AM and 7:30 PM EST): TOLL-FREE:
1-800-707-2771
- --------------------------------------------------------------------------------
PORTFOLIO/STRATEGY UPDATE
To hear Bob Markman's weekly market overview and
MultiFund activity report. 1-800-975-5463
- --------------------------------------------------------------------------------
PROSPECTUS
For copies of the Markman Prospectus. 1-800-395-4848
- --------------------------------------------------------------------------------
PRICELINE
For up-to-the-minute net asset values and account values. 1-800-536-8679
- --------------------------------------------------------------------------------
HELPLINE
For an application form, for assistance in completing as
application, or for general administrative questions. 1-800-707-2771
- --------------------------------------------------------------------------------
ONLINE
Check for net asset values and more! www.markman.com
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Markman Investment Adviser Shareholder Services
- ---------------- MULTIFUNDS Markman Capital Management, Inc. c/o Countrywide Fund Services, Inc.
NO-LOAD ---------- 6600 France Ave. So. 312 Walnut Street, 21st Floor
100% MUTUAL FUND For investors too smart Minneapolis, Minnesota 55435 Cincinnati, Ohio 45202-3874
COUNCIL to do it themselves Telephone: 612-920-4848 Telephone: 513-629-2070
- ---------------- Toll-free: 1-800-395-4848 Toll-free: 1-800-707-2771
</TABLE>
Authorized for distribution only if preceded or accompanied by a current
prospectus.
- --------------------------------------------------------------------------------
12 Markman
<PAGE>
Markman
MULTIFUNDS
- ---------- FIRST CLASS
For investors too smart
to do it themselves
6600 France Avenue South
Minneapolis, Minnesota 55435
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MARKMAN AGGRESSIVE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 75,295,710
<INVESTMENTS-AT-VALUE> 89,914,213
<RECEIVABLES> 59,265
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 89,973,478
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 229,288
<TOTAL-LIABILITIES> 229,288
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 73,237,984
<SHARES-COMMON-STOCK> 6,227,140
<SHARES-COMMON-PRIOR> 6,625,749
<ACCUMULATED-NII-CURRENT> (379,020)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,266,723
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,618,503
<NET-ASSETS> 89,744,190
<DIVIDEND-INCOME> 9,092
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 409,320
<NET-INVESTMENT-INCOME> (400,228)
<REALIZED-GAINS-CURRENT> 2,617,674
<APPREC-INCREASE-CURRENT> 8,473,611
<NET-CHANGE-FROM-OPS> 10,691,057
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 608,803
<NUMBER-OF-SHARES-REDEEMED> 1,007,412
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,343,024
<ACCUMULATED-NII-PRIOR> 21,208
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 350,951
<GROSS-ADVISORY-FEES> 402,320
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 409,320
<AVERAGE-NET-ASSETS> 86,916,333
<PER-SHARE-NAV-BEGIN> 12.74
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> 1.73
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.41
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> MARKMAN MODERATE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 77,800,054
<INVESTMENTS-AT-VALUE> 87,611,084
<RECEIVABLES> 130,690
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 818
<TOTAL-ASSETS> 87,742,592
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 114,932
<TOTAL-LIABILITIES> 114,932
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 74,108,660
<SHARES-COMMON-STOCK> 6,696,654
<SHARES-COMMON-PRIOR> 7,258,219
<ACCUMULATED-NII-CURRENT> 64,243
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,643,727
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,811,030
<NET-ASSETS> 87,627,660
<DIVIDEND-INCOME> 471,412
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 407,169
<NET-INVESTMENT-INCOME> 64,243
<REALIZED-GAINS-CURRENT> 3,690,526
<APPREC-INCREASE-CURRENT> 4,464,343
<NET-CHANGE-FROM-OPS> 8,219,112
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 518,679
<NUMBER-OF-SHARES-REDEEMED> 1,080,244
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,239,367
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 46,799
<GROSS-ADVISORY-FEES> 400,169
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 407,169
<AVERAGE-NET-ASSETS> 86,437,073
<PER-SHARE-NAV-BEGIN> 11.90
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 1.18
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.09
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> MARKMAN CONSERVATIVE ALLOCATION PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 30,557,178
<INVESTMENTS-AT-VALUE> 33,073,129
<RECEIVABLES> 1,245,677
<ASSETS-OTHER> 6,416
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 34,325,222
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,145,366
<TOTAL-LIABILITIES> 1,145,366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,439,274
<SHARES-COMMON-STOCK> 2,681,307
<SHARES-COMMON-PRIOR> 3,104,084
<ACCUMULATED-NII-CURRENT> 262,119
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 962,512
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,515,951
<NET-ASSETS> 33,179,856
<DIVIDEND-INCOME> 342,080
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 169,135
<NET-INVESTMENT-INCOME> 172,945
<REALIZED-GAINS-CURRENT> 962,512
<APPREC-INCREASE-CURRENT> 542,045
<NET-CHANGE-FROM-OPS> 1,677,502
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 417,766
<NUMBER-OF-SHARES-REDEEMED> 840,543
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (3,500,335)
<ACCUMULATED-NII-PRIOR> 89,174
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 162,135
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 169,135
<AVERAGE-NET-ASSETS> 35,883,074
<PER-SHARE-NAV-BEGIN> 11.82
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .48
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.37
<EXPENSE-RATIO> .95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
